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Lindsey Contractors' borrowing agreements make certain demands on the business. Lindsey's Long-Term Debt may not exceed Stockholder's Equity, and the current ratio may not fall below 1.50. If Lindsey fails to meet this requirement, the company's lenders can take over management of the corporation.
Current Liabilities have mounted faster than current assets, causing the current ratio to fall to 1.47. Before releasing financial statements, Lindsey management is scrambling to improve the current ratio. The controller points out that an investment can be classified as either long-term or short-term, depending on management's intention. By deciding to convert an investment to cash within one year, Lindsey can classify the investment as short-term - a current asset. On the controller's recommendation, Lindsey's board of directors votes to reclassify long-term investments as short-term.
1. Do you think that the actions taken by Lindsey's controller and board of directors are ethical? Why or why not?
2. Shortly after the financial statements are released, sales improve and so does the current ratio. As a result, Lindsey management decides not o sell the investments it had reclassified as short-term. Accordingly, Lindsey reclassifies the investments as long-term. Has management behaved unethically? Why or why not?
David Corporation uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 18,000 units in its beginning work in process inventory that were 80% complete with resp..
Dec. 20 Reinstated the account of Dr. Pete Baker that had been written off on September 7 and received $8,400 cash in full payment.
Incognito Company is contemplating the purchase of a machine that provides it with net after-tax cash savings of $86,000 per year for 4 years. The discount rate is 6%. Calculate the present value of the cash savings.
Employees at B Corporation are paid $5,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?
Provide the necessary journal entries to record the transactions for Wilcox for the period January 2, 2011 through December 31, 2012.
Prior to the effect of tax credits, Eunice’s regular income tax liability is $225,000 and her tentative AMT is $212,000. Eunice has general business credits available of $15,000. Calculate Eunice’s tax liability after tax credits.
The income statement and a schedule reconciling cash flows from operating activities to net income are provided below ($ in 000s) for Peach Computers. Calculate each of the following amounts for Peach Computers:
Dorina Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's fixed expenses are 28800.
If there is no beginning work in process inventory and the ending work in process inventory complete, the number units would be:
The current controllable margin for Henry Division is $93,000. Its current operating assets are $300,000. The division is considering purchasing equipment for $90,000 that will increase annual controllable margin by an estimated $15,000. If the equip..
Estimate the stock price for year s two and three, assuming that the current PE multiple remains constant for each of the two forecasted years.
(Premium Entries and Financial Statement Presentation) Sycamore Candy Company offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers presented by customers together with $2.50. Prepare the journal entries that sho..
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