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linda_us
linda_us, Master's Degree
Category: Business and Finance Homework
Satisfied Customers: 812
Experience:  A tutor for Business, Finance, Accounts and other related topics.
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1. (TCO 6) BagODonuts Company bought a used delivery truck on January 1, 2010, for $19,200. The van was expected to remain in service 4 years (30,000 miles). BagODonuts’ accountant estimated that the truck’s residual value would be $2,400 at the end of its useful life. The truck traveled 8,000 miles the first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the fourth year.

1. Calculate depreciation expense for the truck for each year (2010-2013) using the:
a. Straight-line method.
b. Double-declining balance method.
c. Units of Production method.
(For units-of-production and double-declining balance, round to the nearest two decimals after each step of the calculation.)
2. Which method best tracks the wear and tear on the van?
3. Which method would BagODonuts prefer to use for income tax purposes? Explain in detail why BagODonuts prefers this method. (Points : 25)

A. 6400
B. 16800
C.

2. (TCO 7) ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:
Preferred Stock: 7%, par value $100 per share, 100,000 shares.
Common Stock: $1 par value, 500,000 shares.

The following transactions occurred during the year:

1/19/12 – Issued 100,000 shares of common stock for $17 cash per share.
1/31/12 – Issued 3,000 shares of preferred stock for $115 cash per share.
11/1/12 – Repurchased 30,000 shares of common stock for $22 cash per share.
12/1/12 – Declared and paid a total dividend of $95,000.

Required:
1. Prepare the journal entry for each transaction listed above.
2. In your own words, explain the main differences between common and preferred stock.
(Points : 25)



3. (TCO 5) Fraud is an intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party. In our readings and discussions we have seen several examples of fraud in business. Using that experience (1) provide an example of a common fraudulent practice in business with an explanation of how the practice works and (2) name and describe each of the elements of the Fraud Triangle.
(Points : 25)

A.
Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.

B.
The three key elements in the fraud triangle are opportunity,
motivation, and rationalization.

Opportunity is the ability to commit fraud. Because fraudsters
don’t wish to be caught, they must also believe that
their activities will not be detected.

Motivation, or can be referred to as incentive, is another
aspect of the fraud triangle, it is a pressure or a “need” felt
by the person who commits fraud. It might be a real financial
or other type of need, such as high medical bills or debts.
Or it could be a perceived financial need, such as a person
who has a desire for material goods but not the means to
get them.

Rationalization involves a person reconciling his/her behavior
with the commonly accepted notions of decency and trust.
For those who are generally dishonest, it is probably easier
to rationalize a fraud. For those with higher moral standards,
it is probably not so easy. They have to convince themselves
that fraud is OK with “excuses” for their behavior.

4. (TCO 5) Internal Control Procedures are in place to protect the assets of every business as mentioned in the textbook and our discussions. Of the seven internal control procedures, list five of these controls and describe how each procedure is implemented (Points : 25)

Authorization
The objective is to ensure that all transactions are approved by responsible personnel in accordance with specific or general authority before the transaction is recorded.

Completeness
The objective is to ensure that no valid transactions have been omitted from the accounting records.

Accuracy
The objective is to ensure that all valid transactions are accurate, consistent with the originating transaction data and information is recorded in a timely manner.

Validity
The objective is to ensure that all recorded transactions fairly represent the economic events that actually occurred, are lawful in nature, and have been executed in accordance with management's general authorization.

Physical Safeguards & Security
The objective is to ensure that access to physical assets and information systems are controlled and properly restricted to authorized personnel

5. (TCO2) Below are the accounts of Super Pool Service, Inc. The accounts have normal balances on June 30, 2012. The accounts are listed in no particular order.
Account Balance
Common stock $5,100
Accounts payable $4,400
Service revenue $17,100
La
Submitted: 1 year ago.
Category: Business and Finance Homework
Expert:  F. Naz replied 1 year ago.
The data seems to be inocmplete, please complete it thanks.

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