June 2019 – Page 311 – Homework Handlers

BANK RECONCILIATION

June 24, 2019/in Uncategorized /by John

Beeler Furniture Company deposits all cash

Coins, currency (paper money), checks, money orders, and money on deposit that is available for unrestricted withdrawal from banks and other financial institutions. To simplify, this chapter assumes that a company has only one bank account, which is identified in the Ledger as “Cash.”

receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement

A summary of all transactions mailed to the depositor or made available online by the bank each month.

as of June 30 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

CASH ACCOUNT:
Balance as of June 1	$9,317.40
CASH RECEIPTS FOR MONTH OF JUNE	$9,223.76

DUPLICATE DEPOSIT TICKETS: Date and amount of each deposit in June:

Date	Amount	Date	Amount	Date	Amount
June 1	$1,080.50	June 10	$996.61	June 22	$897.34
3	854.17	15	882.95	24	947.21
8	840.50	17	1,606.74	30	1,117.74

CHECKS WRITTEN: Number and amount of each check issued in June:

Check No.	Amount	Check No.	Amount	Check No.	Amount
740	$237.50	747	Void	754	$449.75
741	495.15	748	$450.90	755	272.75
742	501.90	749	640.13	756	113.95
743	761.30	750	276.77	757	407.95
744	506.88	751	299.37	758	259.60
745	117.25	752	537.01	759	901.50
746	298.66	753	380.95	760	486.39

Total amount of checks issued in June: $8,395.66

BANK RECONCILIATION FOR PRECEDING MONTH:

Question not attempted.

BEELER FURNITURE COMPANY

Bank Reconciliation

May 31, 2016

1	Cash balance according to bank statement		$9,447.20
2	Add deposit for May 31, not recorded by bank		690.25
3			$10,137.45
4	Deduct outstanding checks:
5	No. 731	$162.15
6	No. 736	345.95
7	No. 738	251.40
8	No. 739	60.55	820.05
9	Adjusted balance		$9,317.40
10
11	Cash balance according to company’s records		$9,352.50
12	Deduct service charges		35.10
13	Adjusted balance		$9,317.40

JUNE BANK STATEMENT:

	Required:
1.	Prepare a bank reconciliation as of June 30. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. To enter the Check number, please enter “No. ” preceeding the number. (Note: “Deduct”, “Add”, or colons (:) will automatically appear if required.)
2.	Journalize the necessary entries. The accounts have not been closed. Refer to the Chart of Accounts for exact wording of account titles.
3.	What is the amount of Cash that should appear on the balance sheet as of June 30?
4.	Assume that a canceled check for $390 has been incorrectly recorded by the bank as $930. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.

PAGE 1 MEMBER FDIC ACCOUNT NUMBER AMERICAN NATIONAL BANK OF CHICAGO FROM 6/01/2016 TO 6/30/2016 CHICAGO, IL 60603 (312) 441-1239 BALANCE 9,447.20 9 DEPOSITS 8,691.77 20 WITHDRAWALS 7,599.26 BEELER FURNITURE COMPANY 4 OTHER DEBITS AND CREDITS 3,088.00CR NEW BALANCE 13,624.71 CHECKS AND OTHER DEBITS DEPOSITS DATE BALANCE- No.731 162.18 No. 738 345.98 690.28 6/01 9,829.38 No.739 60.88 No.740 237.50 1,080.50 6/02 10,411.80 No. 741 49B.18 No.742 801.90 8B4.17 6/04 10,268.92 No. 743 671.30 No.744 BO6.88 840.50 6/09 9,931.24 No. 74B 117.28 No.746 298.66 MS 3,800.00 6/09 13,018.33 No. 748 4B0.90 No.749 640.13 210.00 6/09 12,134.30 299.37 No. 750 276.77 No.7B1 896.61 12,484.77 No. 753 380.95 6/16 No. 752 B37.01 882.98 12,419.76 No. 754 449.78 No.7BB 272.78 1,606.74 6/18 13,304.00 897.34 No. 757 407.98 No. 760 488.39 6/23 13,307.00 942.71 6/2B 14,249.71 NSF B50.00 6/28 13,699.71 13,624.71 SC 7B.00 6/30 EC ERROR CORRECTION OD OVERDRAFT MS MISCELLANEOUS PS PAT STOPPED YMENT NSF NOT SUFFICIENT FUNDS SC SERVICE CHARGE THE RECONCILEMENT OF THIS STATEMENT WITH YOUR RECORDS IS ESSENTIAL. ANY ERROR OR EXCEPTION SHOULD BE REPORTED IMMEDIATELY

COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY

June 24, 2019/in Uncategorized /by John

Comparative Analysis Case

The Coca-Cola Company and PepsiCo, Inc.

The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.

Instructions
Use the companies’ financial information to answer the following questions.

What was the effective tax rate in 2014 for Coca-Cola and PepsiCo? Why might their tax rates differ?

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,	2014	2013	2012
(In millions except per share data)
NET OPERATING REVENUES	$ 45,998	$ 46,854	$ 48,017
Cost of goods sold	17,889	18,421	19,053
GROSS PROFIT	28,109	28,433	28,964
Selling, general and administrative expenses	17,218	17,310	17,738
Other operating charges	1,183	895	447
OPERATING INCOME	9,708	10,228	10,779
Interest income	594	534	471
Interest expense	483	463	397
Equity income (loss) — net	769	602	819
Other income (loss) — net	(1,263)	576	137
INCOME BEFORE INCOME TAXES	9,325	11,477	11,809
Income taxes	2,201	2,851	2,723
CONSOLIDATED NET INCOME	7,124	8,626	9,086
Less: Net income attributable to noncontrolling interests	26	42	67
NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	$ 7,098	$ 8,584	$ 9,019
BASIC NET INCOME PER SHARE¹	$ 1.62	$ 1.94	$ 2.00
DILUTED NET INCOME PER SHARE1	$ 1.60	$ 1.90	$ 1.97
AVERAGE SHARES OUTSTANDING	4,387	4,434	4,504
Effect of dilutive securities	63	75	80
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION	4,450	4,509	4,584

¹Calculated based on net income attributable to shareowners of The Coca-Cola Company.

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,	2014	2013	2012
(In millions)
CONSOLIDATED NET INCOME	$ 7,124	$ 8,626	$ 9,086
Other comprehensive income:
Net foreign currency translation adjustment	(2,382)	(1,187)	(182)
Net gain (loss) on derivatives	357	151	99
Net unrealized gain (loss) on available-for-sale securities	714	(80)	178
Net change in pension and other benefit liabilities	(1,039)	1,066	(668)
TOTAL COMPREHENSIVE INCOME	4,774	8,576	8,513
Less: Comprehensive income (loss) attributable to noncontrolling interests	21	39	105
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	$ 4,753	$ 8,537	$ 8,408

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31,	2014	2013
(In millions except par value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 8,958	$ 10,414
Short-term investments	9,052	6,707
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS	18,010	17,121
Marketable securities	3,665	3,147
Trade accounts receivable, less allowances of $331 and $61, respectively	4,466	4,873
Inventories	3,100	3,277
Prepaid expenses and other assets	3,066	2,886
Assets held for sale	679	—
TOTAL CURRENT ASSETS	32,986	31,304
EQUITY METHOD INVESTMENTS	9,947	10,393
OTHER INVESTMENTS	3,678	1,119
OTHER ASSETS	4,407	4,661
PROPERTY, PLANT AND EQUIPMENT — net	14,633	14,967
TRADEMARKS WITH INDEFINITE LIVES	6,533	6,744
BOTTLERS’ FRANCHISE RIGHTS WITH INDEFINITE LIVES	6,689	7,415
GOODWILL	12,100	12,312
OTHER INTANGIBLE ASSETS	1,050	1,140
TOTAL	$92,023	$ 90,055Pepsico, Inc. is a leading global food and beverage company with a complementary portfolio of enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. Through its operations, authorized bottlers, contract manufacturers, and other third parties, PepsiCo makes, markets, distributes, and sells a wide variety of convenient and enjoyable beverages, foods, and snacks, serving customers and consumers in more than 200 countries and territories. To access PepsiCo’s complete annual report, including notes to the financial statements, follow these steps:Go to http://www.pepsico.com/Investors.Select SEC Filings and then the 10K, dated 2/12/2015 (select the pdf version).Select Entire document.The Notes to Consolidated Financial Statements begin on page 73.Consolidated Statement of IncomePepsiCo, Inc. and SubsidiariesFiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012(in millions except per share amounts

Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.

June 24, 2019/in Uncategorized /by John

Problem 3-3 (LO 4) Sophisticated equity method adjustments, consolidated worksheet.

(This is the same as Problem 3-2, except that the sophisticated equity method is used.) On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. On this date, Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar Company are as follows:

	2015	2016
Net income	$60,000	$90,000
Dividends	20,000	30,000

On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributable to goodwill.

The trial balances for Paro and Solar are as follows:

	Paro Company	Solar Company
Inventory, December 31	100,000	50,000
Other Current Assets	136,000	180,000
Investment in Solar Company	Note 1
Land	50,000	50,000
Buildingsand Equipment	350,000	320,000
Accumulated Depreciation	(100,000)	(60,000)
Goodwill
Other Intangibles	20,000
Current Liabilities	(120,000)	(40,000)
Bonds Payable		(100,000)
Other Long-Term Liabilities	(200,000)
Common Stock—Paro Company.	(200,000)
Other Paid-In Capital in Excess of Par—Paro Company	(100,000)
Retained Earnings—Paro Company	(203,600)
Common Stock—Solar Company		(50,000)
Other Paid-In Capital in Excess of Par—Solar Company		(100,000)
Retained Earnings—Solar Company		(190,000)
Net Sales	(520,000)	(450,000)
Cost of Goods Sold	300,000	260,000
Operating Expenses	120,000	100,000
Subsidiary Income	Note 1
Dividends Declared—Paro Company	50,000
Dividends Declared—Solar Company		30,000
Note 1: To be calculated

Required

1. Prepare a value analysis and a determination and distribution of excess schedule.

2. Paro Company carries the investment in Solar Company under the sophisticated equity method. In general journal form, record the entries that would be made to apply the equity method in 2015 and 2016.

3. Compute the balance that should appear in Investment in Solar Company and in Subsidiary Income on December 31, 2016 (the second year). Fill in these amounts on Paro Company’s trial balance for 2016.

4. Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.

Compare the new alternative (Cloud-Integrated Communications System) with the previously selected one (in the 2nd question) under the new conditions (including salvage values and for nine years).

June 24, 2019/in Uncategorized /by John

Middle East Technical University (METU) is currently using a Voice over IP (VoIP) phone system that was installed in 2007. The system is owned by Aftermath and is jointly managed by the METU telecommunications staff and Aftermath. The university staff is responsible for the day-to-day management, while Aftermath is responsible for the hardware and software maintenance, and licensing. Early cost models suggest that the university could save at least $56,000 annually and increase service by implementing and managing its own telecommunications infrastructure such as the Unified Communications System.

The main component of the existing VoIP system is shown in Figure 1.

Figure 1: Main component of the existing VoIP System

While the current VoIP implementation system serves well, the university seeks an advanced VoIP system, so-called the “Unified Communications System”. A market search on the new system reveals that the main services offered by the new system are: e-mail services, security systems, emergency communications systems. The “Unified Communications System” also provides mobility solutions using single-number reach and softphones installed on mobile devices and laptop computers, video, collaboration and conferencing tools, and instant messaging. Those features increase the attractiveness of the system for every increasing number of mobile professionals.

All relevant financial data for the existing and proposed VoIP systems are described in Table 1 and Table 2.

Table 1: Expenditure Data for the Existing VoIP System

Financial Data for the Existing VoIP System
	Quantity	VoIP Rate	VoIP Monthly	Annual
Standart Phone	120.00	20.45	2454.00	29448.00
Soft Phone Only	0.00	16.75
Advanced Phone	100.00	15.75	1575.00	18900.00
Staff (Salaries)				84900.00
VoIP Monthly Est.			20475.00
VoIP Annual (including staff)				214600.00
Contract renewal per 10 years				110000.00
Expected life time: 25 Years

Table 2: Expenditure Data for the Proposed System, Unified Communications System

Financial Data for the Proposed Unified Communications System
	Life(in years)	Quantity	Unit Cost (in Turkish Lira (TL))	Total
Hardware	8	5	35514.00	177570.00	At the beginning of each life cycle
Support and Maintenance	8	1	78100.00	781.00	Annual payment starting year 0

Conference Phone	10	20	8880.00	177600.00	At the beginning of each life cycle
License	10	20	2075.00	41500.00	At the beginning of each life cycle
Support and Maintenance	10	20	8.40	168.00	Annual payment starting year 2

Standard Phone	5	400	250.00	100000.00	At the beginning of each life cycle
License	5	400	130.75	52300.00	At the beginning of each life cycle
Support and Maintenance	5	400	9.15	3660.00	Annual payment starting year 1

Soft Phone Only	10	10	173.73	1737.30	At the beginning of each life cycle
License	10	10	43.92	439.20	At the beginning of each life cycle
Support and Maintenance	10	10	20.45	204.50	Once in 2 years, starting year 0

Professional Service (Installation)	One time	1	92850.00	92850.00	At the beginning

Staff (Salaries)	Annual		105850.00	105850.00	Starting year 1

After the proper engineering economic analysis of the existing and proposed systems, another alternative has investigated. The Cloud-Integrated Communications System makes use of the cloud technology and provides larger amount of data storage area. The relevant financial data for the IC communications system are given in Table 3.

Table 3: Expenditure Data for the new alternative – Cloud Integrated Communications System

Financial Data for the New alternative — Cloud-Integrated Communications Syste
	Life(in years)	Quantity	Unit Cost (in Turkish Lira (TL))	Total
Hardware	4	6	42000.00	252000.00	At the beginning of each life cycle
Support and Maintenance	4	2	147.00	294.00	Annual payment starting year 0

Conference Phone	10	20	7140.00	142800.00	At the beginning of each life cycle
License	10	20	25417.00	508340.00	At the beginning of each life cycle
Support and Maintenance	10	20	9.00	180.00	Annual payment starting year 2

Standard Phone	7	250	255.00	63750.00	At the beginning of each life cycle
License	7	250	128.00	32000.00	At the beginning of each life cycle
Support and Maintenance	7	250	17.87	4467.50	Annual payment starting year 1

Soft Phone Only	10	8	147.00	1176.00	At the beginning of each life cycle
License	10	8	347.00	2776.00	At the beginning of each life cycle
Support and Maintenance	10	8	4.45	35.60	Once in 2 years, starting year 0

Professional Service (Installation)	One time	1	47850.00	47850.00	At the beginning

Staff (Salaries)	Annual		83850.00	83850.00	Starting year 1

Table 3: Expenditure Data for the new alternative – Cloud Integrated Communications System

As a new alternative for the METU is introduced, a new engineering economy analysis between the previously selected and the Cloud-Integrated Communications System should be conducted. Considering the ever increasing advances in electronics technology, the university administration plans to change its communications system together with its components after 9 years of use. The estimated salvage values at the end of year 9, are 3,750,000?, 5,450,000? and 7,000,000?, for the existing, Unified Communications and Cloud-Integrated Systems respectively.

Questions and Discussions

METU uses 2% real interest rate per year. Since inflation estimates differ for each year, the university wants to use adjusted rates for the next ten years. The estimate of the tenth year will be used for all times. Unsurprisingly, the junior engineering economy (IE 347) class is well known by the METU, so, administrators ask for your help for the inflation estimates and market interest rates. Perform a small research on the long-term yearly inflation rate estimates for Turkey and discuss. Report the estimates you selected along with proper references and citations.

Compare the existing VoIP system with the proposed Unified Communications System by Annual Worth or Present Worth Analysis. For the existing system, use the market rate(s) you have found in the 1st question and, use the market rate of 1.0087% per month compounded monthly for the proposed system. Please, clearly show the steps of your analysis and indicate which alternative is better.

Compare the new alternative (Cloud-Integrated Communications System) with the previously selected one (in the 2nd question) under the new conditions (including salvage values and for nine years). Before conducting an analysis, define the type of investments for the two alternatives and find corresponding rates (Rate of Return or Internal Rate of Return) accordingly. After deciding the promise of the alternatives, conduct an Incremental Rate of Return Analysis to find the best alternative.

How sensitive are your findings against different realizations of the yearly inflation rate and real interest rate? For fixed real rate of return, compare the alternatives under 1% higher and 1% lower inflation rate cases. Select the best plan in each case and discuss. For fixed inflation rate, compare the alternatives under 1% higher and 1% lower real interest rate cases. Select the best plan in each case and discuss.

Remarks

State your assumptions clearly.

Present all your work in an appropriately organized report.

Use Excel as much as possible. If necessary, make your calculations in separate sheets of an Excel file.

Submit your Excel file along with your report. The quality of your Excel file will be a part of grading. To get a credit, your file should be neat, easily understandable and flexible such that the results of varying parameters can be obtained easily