Posted on

ACC 291 Business Accounting Trudy Company Answer

Q: Trudy Company incurred the following costs.

1 Sales tax on factory machinery purchased $ 5,000

2.Painting of and lettering on truck immediately upon purchase 700

3.Installation and testing of factory machinery 2,000

4.Real estate broker’s commission on land purchased 3,500

5.Insurance premium paid for first year’s insurance on new truck 880

6.Cost of landscaping on property purchased 7,200

7.Cost of paving parking lot for new building constructed 17,900

8.Cost of clearing, draining, and filling land 13,300

9.Architect’s fees on self-constructed building 10,000

Instructions

Indicate to which account Trudy would debit each of the costs.

E10-7 Brainiac Company purchased a delivery truck for $30,000 on January 1, 2008.The truck
has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated
useful life of 8 years.Actual miles driven were 15,000 in 2008 and 12,000 in 2009.
Instructions Compute depreciation using different methods
(a) Compute depreciation expense for 2008 and 2009 using (1) the straight-line method, (2) the
units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Brainiac uses the straight-line method.
(1) Prepare the journal entry to record 2008 depreciation.
(2) Show how the truck would be reported in the December 31, 2008, balance sheet.

E10-9 Presented below are selected transactions at Ingles Company for 2008.
Jan. 1 Retired a piece of machinery that was purchased on January 1, 1998.The machine cost
$62,000 on that date. It had a useful life of 10 years with no salvage value.
June 30 Sold a computer that was purchased on January 1, 2005.The computer cost $40,000. It
had a useful life of 5 years with no salvage value.The computer was sold for $14,000.
Dec. 31 Discarded a delivery truck that was purchased on January 1, 2004. The truck cost
$39,000. It was depreciated based on a 6-year useful life with a $3,000 salvage value.
Instructions Journalize entries for disposalof plant assets
Journalize all entries required on the above dates, including entries to update depreciation,
where applicable, on assets disposed of. Ingles Company uses straight-line depreciation. (Assume depreciation is up to date as of December 31, 2007.)

E10-13 Herzogg Company, organized in 2008, has the following transactions related to intangible
assets.
1/2/08 Purchased patent (7-year life) $560,000
4/1/08 Goodwill purchased (indefinite life) 360,000
7/1/08 10-year franchise; expiration date 7/1/2018 440,000
9/1/08 Research and development costs 185,000
Instructions
Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Makethe adjusting entries as of December 31, 2008, recording any necessary amortization and reportingall intangible asset balances accurately as of that date.

P10-5A At December 31, 2008, Jimenez Company reported the following as plant assets.
Land $ 4,000,000
Buildings $28,500,000
Less: Accumulated depreciation—buildings 12,100,000 16,400,000
Equipment 48,000,000
Less: Accumulated depreciation—equipment 5,000,000 43,000,000
Total plant assets $63,400,000
During 2009, the following selected cash transactions occurred.
April 1 Purchased land for $2,130,000.
May 1 Sold equipment that cost $780,000 when purchased on January 1, 2005.The
equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 1999, for $1,500,000.The land cost $400,000.
July 1 Purchased equipment for $2,000,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 1999. No salvage
value was received.
Instructions
(a) Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2009.
(c) Prepare the plant assets section of Jimenez’s balance sheet at December 31, 2009.

E9-3 The ledger of Hixson Company at the end of the current year shows Accounts
Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.
Instructions
(a) If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.

 

Please click on the below link to purchase the answer for the above tutorial.

purchase

Posted on

ACCT 567 Week 8 Final Exam On what should the government-wide financial statements Answer

1. (TCO A) On what should the government-wide financial statements report? (Points : 5)
Net position and results of the financial operations of the government as a whole.
Budgetary Compliance
The cost of government services
Fiscal accountability

2. (TCO B) According to GASB standards, when should transfers be recognized? (Points : 5)
When earned.
When collected in cash.
When authorized by the budget ordinance.
In the period the interfund receivable and payable arise.

3. (TCO C) Comparisons of budgeted versus actual revenues and expenditures are a requirement of which of the following situations? (Points : 5)
Required by GAAP for the general fund and major special revenue funds for which an annual budget has been legally adopted.
Required by GAAP for all government fund types.
Required by GAAP for internal management reports only, they are not permitted for external financial reporting.
It is optional under GASB standards for all funds.

4. (TCO D) The revenues account of a government entity is debited when (Points : 5)
the budget is recorded at the beginning of the year.
property taxes are recorded.
the account is closed to fund balance-unassigned at the end of the year.
property taxes are collected.

5. (TCO E) During the year, a wealthy local businessman donated a building to city of Perris. The original cost of the building was $340,000. Accumulated depreciation at the date of the gift amounted to $220,000. The appraised fair market value of the donation at the date of the gift was $525,000 of which $35,000 was the value of the land on which the building was situated. At what amount should the city record this donated property in the governmental activities accounts at the government-wide level? (Points : 5)
$220,000.
$120,000.
$340,000.
$525,000.

6. (TCO E) Which of the following resource inflows would be recorded as a revenue of a debt service fund? (Points : 5)
Receipt of the premium on a new bond issue.
Property taxes levied by the debt service fund for debt service purposes.
Taxes collected by the General Fund and transferred to the debt service fund.
Transfer of the residual equity of a capital projects fund to the debt service fund.

7. (TCO G) Which of the statements concerning agency funds is a true statement? (Points : 5)
Agency funds use the same basis of accounting as permanent funds.
Agency funds are reported only on the statement of fiduciary net position.
Agency funds use the temporary accounts—Additions and Deductions.
Agency funds never receive cash.

8. (TCO J) Which of the following items are typically reported differently between the governmental fund statements and the governmental activities column of the government-wide statements? (Points : 5)
Inventories
Cash collected on property taxes receivable
Capital outlays
Accounts Payable and other accrued expenses

9. (TCO H) A condition whereby the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis is called a(an) (Points : 5)
system design weakness.
deficiency.
unacceptable reportable condition.
audit alert item.

10. (TCO H) Under FASB Standards, how would a not-for-profit organization recognize a conditional pledge? (Points : 5)
It would disclose the amount of the conditional pledge in the notes to the financial statements.
It would debit Pledges Receivable and credit Deferred Contributions.
It would debit Pledges Receivable and credit Contributions—Temporarily Restricted.
It would not recognize the conditional pledge until pledge conditions are substantially met.

11. (TCO I) Which of the following items would not affect the amounts reported in the Revenues and Gains section of the statement of activities for a private college or university? (Points : 5)
Student tuition and fees
Net assets released from restriction
Tuition and fees discounts and allowances
Deferred revenues

12. (TCO I) The primary source of revenues for most hospitals are (Points : 5)
investment income.
capitation fees from health maintenance organizations.
exchange transactions, such as fees for services.
nonexchange transactions, such as contributions.

Page 2

1. (TCOs D, E, F, and G) Please list the name of the fund(s) in which each of the following transactions or events would be recorded.

(1) Bonds of $1,000,000 from which the proceeds are to be used for the construction of a new City Hall building.
(2) Salaries of $170,000 were paid to personnel in the office of the mayor.
(3) Installment payments of $75,000 were received from the property owners that were assessed for the street improvement project.
(4) Over $65,000 of funds were received by employees by payroll deductions that are to be used for the purchase of United States Government Bonds for those employees on an individual basis.
(5) Materials of $140,000 were to be used for the general repair of the streets that were purchased by the city.
(6) Excess funds of $60,000 were transferred from the water utility to the General Fund. (Points : 30)

2. (TCO F) The garbage collection of the city of Rockwell could be accounted for through the General Fund, a Special Revenue Fund, or an Enterprise Fund. Please identify the circumstances in which each of these fund types might be appropriate. (Points : 40)

3. (TCO I) During the fiscal year of June 2012, Jefferson General Hospital, a not-for-profit healthcare organization, had the following revenue-related transactions. (The amounts are summarized for the entire year.)

(1) Healthcare services that are provided to inpatients and outpatients amounted to $9,640,000, of which $420,000 were for charity cases, $865,000 was paid by uninsured patients, and $8,355,000 was billed to Medicare, Medicaid, and other insurance companies.
(2) Pharmaceutical drugs and medicines sold by the hospital pharmacy amounted to $830,000, all of which was paid by the customer or the insurance companies.
(3) Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $5,640,000 of the $8,355,000 billed by the hospital during the year (please review transaction #1).
(4) A contribution of $4,000,000 (of which is unconditional) was received in cash from a donor to construct a new facility for cancer patients. The full amount is expendable for that purpose. No activity has taken place during the current year.
(5) A total of $810,000 was received from the following activities/sources: cafeteria and gift shop sales, $630,000, unrestricted transfers from the Claremont Hospital Foundation, $110,000, and fees for medical transcripts, $70,000.
(6) The allowance for uncollectible receivables was increased by $1,350.

Enter the templates provided in the answer space and complete the following requirements:
Requirements:
a. Record the preceding transactions in general journal form.
b. Prepare the unrestricted revenues, gains, and other support section of Jefferson General Hospital’s statement of operations for the current year.

Templates:
Part A
……………………………………………………………………………..Debit…………………….. Credit
a. Cash
Accounts and Notes Receivable
Patient Service Revenue

b. Cash
Other revenues

c. Cash
Contractual adjustments
Accounts and Notes Receivable

d. Cash
Contributions-Temporarily Restricted

e. Cash
Other revenues

f. Provision for Bad Debts
Allowance for Uncollectible Receivables

Part B
Unrestricted Revenues, Gains, and Other Support:

Net Patient Service Revenue $ xxx
……………………..Other revenues xxx (Points : 40)

4. (TCO E) Enter the template provided in the answer space and record the following transactions in the Capital Projects Fund in the general journal for the following transactions.

a. McDowell County issued $4,000,000, 5% bonds with interest payable on a semiannual basis on July 1 and January 1. The bonds sold for 102 on July 30, 2012. Proceeds from the bond issue were to be used for construction of the new sheriff station with all interest and premiums received to be used to service the debt issue.
b. A state grant of $250,000 was received to help finance the construction of the sheriff station.
c. The General Fund transferred $300,000 for use in the construction of the new sheriff station.
d. A federal grant of $500,000 was received to help finance the construction of the new sheriff station.
e. A construction contract was awarded to the Young Construction Company in the amount of $4,750,000.
f. The new sheriff station was completed on May 1, 2013, three months ahead of schedule. The construction expenditures amounted to $4,870,000. When the project was completed, the cost of the sheriff station was allocated to the following, $310,000 for land, $4,180,000 for the building, and the remainder to equipment.
g. The temporary accounts of the capital projects were closed to Fund Balance-Restricted. The amounts are restricted due to the bond issue that is related to the construction of the sheriff station. The capital projects fund will be closed by transferring remaining funds to the debt service fund for repayment.

Template:

Capital Project Fund (only) ……………………………………….debit………………………. credit

a. Cash
Other Financing Sources-Bond Proceeds

b. Cash
Revenues

c. Cash
Other Financing Sources-Transfer In

d. Cash
Revenues

e. Encumbrances
Reserve for Encumbrances

f. Construction Expenditures
Cash
Reserve for Encumbrances
Encumbrances

g. To close the temporary accounts:
Other Financing Sources-Bond Proceeds
Other Financing Sources-Transfers In
Revenues
Construction Expenditures
Fund Balance-Restricted

To close the Capital Projects Fund:
Other Financing Uses-Transfers Out
Cash
Fund Balance-Restricted
Other Financing Uses-Transfers Out

(Points : 40)

5. (TCO F) The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of the City of Glass City Museum of Science. The museum is a component unit of the City of Glass City and must be included in the city’s financial statements. It began operations on January 1, 2012 with no liabilities or commitments and only two assets.

(1) $6,000 in cash and (2) Land that was acquired for $11,000.

Cash Basis
12 months
Cash Receipts:
Admission Fees $295,000
Loan from the Bank $50,000
Total deposits $345,000

Cash Disbursements:
Supplies $62,000
Wages 104,000
Utilities 48,000
Purchase of Equipment 70,000
Purchase of Fixtures 45,000
Interest on the Bank Loan 1,250
Total checks $330,250

Excess of Receipts Over Disbursements $14,750

Additional Information:

• The loan from the bank is dated April 1 and is for a five-year period. Interest (5% annual rate) is paid on Oct. 1 and April 1 of each year, beginning Oct. 1, 2012.
• The equipment was purchased on April 1, 2012 with the proceeds provided by the bank loan and has an estimated useful life of 10 years (please use the straight-line method of depreciation) for computing depreciation on the equipment. The fixtures were purchased on July 1, 2012 and has an estimated useful life of five years (please use the straight-line method of depreciation) for computing depreciation on the fixtures.
• Supplies on-hand amounted to $5,900 at December 31, 2012.
• All other bills and salaries related to 2012 had been paid by the close of business on December 31.

Required:
Enter the template provided in the answer space and complete the following requirements:
Please prepare a Statement of Revenues, Expenses, and Changes in Net Assets for the year ended December 31, 2012 assuming the city plans to account for its activities on the accrual basis.

Template:

Operating Revenues:
Charges for Services $

Operating Expenses:
Wages $
Supplies ($62,000-5,900)
Utilities
Depreciation ($70,000/10*9/12)
+ ($45,000/5*6/12)
Total Operating Expenses

Operating Income (Loss) $

Nonoperating Expenses:
Interest $1,250 + ($50,000*5%*3/12)

Change in Net Assets
Net Assets, Jan. 1, 2012
Net Assets, Dec. 31, 2012

(Points : 40)

To buy the solution for the above problem, please click on the below link for purchase.

purchase

Posted on

PROJ 592 Proj Cost and Schedule Control Week 6 Quiz – Set 1 and 2

Pm 592 Week 6 Quiz

  1. | Question : | (TCO B) Crashing Problem

 

Using the network below and the additional information provided, find:

(a) The crash cost per day per activity?

(b) Which activities should be crashed to meet a project deadline of 12 days at minimum cost?

(c) What is the extra cost to crash the project?

  Activity | Normal Time | Crash Time | Normal Cost | Crash Cost |

A | 5 | 3 | $300 | $600 |

B | 3 | 2 | $250 | $450 |

C | 6 | 4 | $400 | $500 |

D | 5 | 3 | $150 | $400 |

 

 

 

  | Student Answer: |   | a) Crash cost of A = (600-300)/(5-3) = $150; Crash Cost of B = (450-250)/(3-2) = $200; Crash Cost of C = (500-400)/(6-4) = $50; Crash Cost of D = (400-150)/(5-3) = $125 b) As per the above schedule, the activities on the critical path are B, C, D with a duration of 14 days, and hence 2 days need to be crashed. The lowest crash cost is for Activity C, and hence activity C should be crashed to meet project deadline of 12 days c) The cost of crashing C for 2 days is $100 |

  | Instructor Explanation: | (a) Crash cost per day: Activity | Normal Time | Crash Time | Normal Cost | Crash Cost | Crash Cost/day |

A | 5 | 3 | $300 | $600 | $150 |

B | 3 | 2 | $250 | $450 | $200 |

C | 6 | 4 | $400 | $500 | $50 |

D | 5 | 3 | $150 | $400 | $125 |

  | $1,100 |   |

 Critical path:  B – C – D   14 days

 

(b) To reduce the schedule 2 days crash task C for two days.

(c) Cost to crash the project:

           C                   $50

           C                   $50

    Total Extra cost   $100

 

 

  1. | Question : | (TCO F) We have discussed at length the Earned Value Management process. I am sure all of you have used the traditional process of assessing projects where we compare actual dollars spent to the amount we had planned to spend. This was quick and easy, but it has its shortcomings, and the Earned Value Management process is said to be better.

 

(a) Why is this traditional approach different from using earned value when assessing project performance?

(b) Describe the EVM process used to determine how far our project is ahead of or behind schedule. |

|

  | Student Answer: |   | a) Using the traditional method of assessing project performance, we would be able to see if we have been over or under budget and timelines, and we would only have this information once the project has been completed. However, with the traditional approach would not be able to effectively track project performance at a task level and at any given point in time. Due to this, decisions that may need to be taken during the project or identifying issues or project health during project execution is more difficult using traditional approaches than using the EVM process. b) The EVM process is based on tracking the schedule and cost performance at a task level on an on-going basis, that will help determine project task level and overall status with effective indicators that would help make project related decisions. In the EVM process, a baseline plan is made for project costs and timelines and then these are tracked against actual costs and work completion to find out the cost variances and schedule variances and cost and schedule indexes, that will help determine how the project is performing on these parameters. If the variances are in negative or if the indexes are less than 1, it means that the task or the project is behind on cost and schedule and work needs to be done to bring it back, while indexes greater than 1 or positive variances show that the project is doing ahead and well on cost and schedule. |

Set 1

1. Question : (TCO B) Crashing Problem

Using the network below and the additional information provided, find:
(a) The crash cost per day per activity?
(b) Which activities should be crashed to meet a project deadline of 12 days at minimum cost?
(c) What is the extra cost to crash the project?
Activity | Normal Time | Crash Time | Normal Cost | Crash Cost |
A | 5 | 3 | $300 | $600 |
B | 3 | 2 | $250 | $450 |
C | 6 | 4 | $400 | $500 |
D | 5 | 3 | $150 | $400 |

2. Question : (TCO F) We have discussed at length the Earned Value Management process. I am sure all of you have used the traditional process of assessing projects where we compare actual dollars spent to the amount we had planned to spend. This was quick and easy, but it has its shortcomings, and the Earned Value Management process is said to be better.

(a) Why is this traditional approach different from using earned value when assessing project performance?
(b) Describe the EVM process used to determine how far our project is ahead of or behind schedule.

3. Question : (TCO E) The following information is extracted from a project to develop a state of the art alternative power energy storage device:
Activity Duration Predecessors Resources
A 4 days — 1 Research Engineer
B 3 days A 1 Marketing Specialist
C 5 days A 1 Design Engineer
D 3 days A 1 Design Engineer
E 3 days B 1 Prototype Builder
F 2 days D 1 Test Engineer
The Owner has stipulated that in order to provide continuity throughout the project, the same individual must handle all activities under his or her discipline. Activities on this project cannot be split.

(a) Identify any resource conflicts in the above project. State the activities involved, the time frame of the conflict(s), which resources(s) are involved, and the quantity required.
(b) Given the owner’s stipulation regarding project continuity, and the need to minimize project duration, how can this conflict be resolved? What will be the effect on the project duration?

4. Question : (TCO F) The following data were obtained from an Information Systems project to upgrade and expand a Local Area Network:
Activity Duration Predecessors Task Budget
A 3 Days — $4,920
B 6 Days — $7,680
C 3 Days A $15,140
D 2 Days B $4,980
E 3 Days B $5,630
F 2 Days C, D $2,270

At the end of Day 7, the status of the project is as follows:
Activity % Complete Actual Cost
A 100% $4,200
B 100% $8,740
C 100% $18,250
D 55% $2,600
E 10% $560
F 0% $0

(a) Calculate the Cost and Schedule Variances and Indexes for tasks A, B, C, D, and E.
(b) As project manager, write a brief summary of the status of the project at this time

5. Question : (TCO E) We have all been associated with projects with resource problems. As a project manager, you will be responsible for resolving these problems. Remember, resources are human and otherwise. If you can name it, it may be a resource.

(a) When there are not enough resources available to fill all the needs in the project plan, what are some specific remedies a project manager can take to complete the project. How does each of these affect the project plan and performance?
(b) Describe 5 of the many benefits to resource leveling.

Set 2

Week 6 : Time and Cost Monitoring and Control Part 2 – Quiz

Question 1. 1. (TCO B) Using the network below and the additional information provided, find
(a) the crash cost per day per activity;
(b) which activities should be crashed to meet a project deadline of 12 days at minimum cost; and
(c) what the extra cost is to crash the project.
Activity Normal Time Crash Time Normal Cost Crash Cost
A 5 3 $300 $350
B 3 2 $250 $325
C 6 4 $400 $700
D 5 3 $150 $200

(Points : 20)

Question 2. 2. (TCO E) The following information is extracted from a project to develop a state-of-the-art alternative power energy storage device.
Activity Duration Predecessors Resources
A 4 days — 1 research engineer
B 3 days A 1 marketing specialist
C 5 days A 1 design engineer
D 3 days A 1 marketing specialist
E 3 days B 1 prototype builder
F 2 days D 1 test engineer

The owner has stipulated that in order to provide continuity throughout the project, the same individual must handle all activities under his or her discipline. Activities on this project cannot be split.

(a) Identify any resource conflicts in the above project. State the activities involved, the days that have conflict(s), which resources are involved, and the quantity required.
(b) Given the owner’s stipulation regarding project continuity and the need to minimize project duration, how can this conflict be resolved? What will be the effect on the project duration? (Points : 20)

Question 3. 3. (TCO F) The following data were obtained from an information systems project to upgrade and expand a local area network.
Activity Duration Predecessors Task Budget
A 3 days — $4,920
B 6 days — $7,680
C 3 days A $15,140
D 2 days B $3,980
E 3 days B $5,630
F 2 days C and D $2,270

At the end of Day 7, the status of the project is as follows.
Activity % Complete Actual Cost
A 100% $4,200
B 100% $8,740
C 100% $18,250
D 75% $2,600
E 10% $560
F 0% $0

(a) Calculate the cost and schedule variances and indexes for Tasks A, B, C, D, and E.
(b) As project manager, write a brief summary of the status of the project at this time. (Points : 20)

Question 4. 4. (TCO B) You are project manager for three different projects.

Project A: This project is behind schedule by 12 weeks. It was to have been completed in 3 months. The sponsor has additional funds to help complete the project on time if needed but does not want to increase risk to the project.
Project B: This project is scheduled to take 28 weeks to complete. You are in the planning stage of the project. You need to reduce the schedule for this project by 9 weeks. This project has a number of predecessors that were created by the project team’s preference. The sponsor insists on having all the work done on time without unduly increasing risk or costs to the project.
Project C: This project is in the execution stage of the project. It is behind schedule by 8 weeks; it was scheduled to be completed in 10 weeks. The sponsor is desperate to accomplish something on this project. The budget is limited to the original amount, and all soft predecessors have already been removed.

For each of the project above, choose an appropriate schedule compression technique. Explain your choice. (Points : 20)

Question 5. 5. (TCO F) Given the following information, calculate the CV, SV, CPI, and SPI for this project. Also provide recommendations to improve the project’s performance if needed.
Activity A: This activity is complete. It was completed in 6 weeks; it was supposed to be completed in 5 weeks. The original budget for this activity was $400,000; in the end, it cost $450,000.

Activity B: This activity is 50% complete. Its original budget was $100,000. The costs to date are $55,000. The original project plan had this activity scheduled for 5 weeks; currently it is entering its third week.

Activity C: This activity is 75% complete. Its costs so far are $100,000. It is entering Week 4 of 5. It was planned to cost $100,000 when completed.

Activity D: This activity is not started yet; it will start in 2 weeks. It is planned to cost $400,000. Its costs to date are $0. (Points : 20)

 

To purchase the solution of the above tutorial, please click on the below purchase link.

purchase

 

Posted on

Inform the President of any new internal control requirements if the company decides Answer

1. Inform the President of any new internal control requirements if the company decides to go public. (7 points)

Ans: The management of LJB Company is responsible for maintaining adequate internal control over financial reporting. The new internal control requirements that should be adhered to are as below:
 The company should be in compliance with Sarbanes-Oxley Act Regulations. The business should conduct an internal audit and should follow the SEC, GAAP and IFRS procedures to record all transactions. LJB Company will benefit a lot by formalizing and documenting their internal control procedures. Companies must develop sound principles of control over financial reporting and assess regularly that the controls are working.
 The new rules require management to disclose to the public any material weakness identified by management. The outside auditor is required to audit certain companies’ internal controls over financial reporting on an annual basis. While companies in the IPO process are not required to comply with these regulations immediately, but in order to prepare for certifications and audit, it is important to establish, document and monitor compliance of internal controls as early as possible.
 As per the section 404 of the Sarbanes-Oxley Act of 2002, Companies subject to the reporting requirements of the Securities Exchange Act of 1934, other than registered investment companies, have to include in their annual reports a report of management on the company’s internal control over financial reporting. (Sources: http://www.sec.gov).

2. Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine. When you advise the President, please be sure to reference the applicable internal control principle that applies. (13 points)


Ans: Though, the company has a very positive environment and has a lot of faith in their long-term employees, the managers of the company should still monitor some of the practices e.g. writing or processing of checks, handling petty cash etc. LJB Company needs to have a good segregation of duties amongst the employees for better work management and ownership. Accountant plays the role of being the treasurer and controller both which may not be desirable if the company is deciding to go public. Here are a few things that the business is doing positively in accordance with the Sarbanes-Oxley Act and GAAP regulations:
 President has been attending the interview
 The president and the company has been following ethical practices and took a swift action as he fired one of his employees for viewing pornography on the company’s computer
 There is loyalty and trust with long term employees
 Pre-numbered invoices are used for accounting
I would suggest that the business should go ahead and purchase the indelible ink machine because it would help them to keep track of the checks by having documentation and proof of cash transactions and events. An indelible check unit would help automate the accounting department by making it more efficient.

For complete answer, please purchase the solution at the below link.

purchase