ASSIGNEMENT TASK 3

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ACADEMIC INTEGRITY STATEMENT

I hereby declare, that the work being presented in the assignment is an authentic record of my own work. None of the matter there in has been copied from anywhere else and all the sources from which the data has been extracted have been acknowledged.

I hereby declare that the facts mentioned above are true to the best of my knowledge. In case of any unlikely discrepancy that may possibly occur, I shall be the one to take complete responsibility.

Student Name

 

LIST OF QUESTION ATTEMPTED/ NOT ATTEMPTED

TABLE OF CONTENTS

Q2-1 NAMING CELLS IN SPREADSHEETS. 3

Q2-2 NEGATIVE NUMBERS. 3

Q2-3 SEPARATION OF DATA AND REPORT AREAS. 3

Q2-4 IF FUNCTIONS. 4

Q2-5 SPREADSHEET APPS. 4

Q2-6 PERPETUAL VERSUS PERIODIC SYSTEMS. 5

Q2-7 JOURNAL ENTRIES. 5

Q2-8 WORKSHEET AND FINANCIAL REPORTS. 5

Q2-9 ACCOUNTING PRINCIPLES` 8

Q2-10 INVENTORY FLOW ASSUMPTIONS. 8

Q2-11 APPLICATION OF INVENTORY FLOW ASSUMPTIONS. 9

Q2-12 THINKING ABOUT INTERNAL CONTROL ISSUES. 10

Q2-13 BANK RECONCILIATION.. 10

  1. EXAMPLE OF A BANK RECONCILIATION STATEMENT. 10
  2. B. WHY DO FIRMS CONSTRUCT BANK RECONCILIATION STATEMENTS ON A REGULAR BASIS?. 11

Q2-14 JOURNALISING ACCOUNTS RECEIVABLE ENTRIES. 11

Q2-15 ESTIMATING BAD DEBTS. 12

Q2-16 EVALUATION OF A FIRM’S FINANCIAL POSITION.. 13

Q2-17 PERCENTAGE OF SALES METHOD.. 13

  1. JOURNAL ENTRIES FOR THE SELECTED TRANSACTIONS OF DAVID JONES ARE AS FOLLOWS: 13

2.POSTING OF JOURNAL ENTRIES IN GENERAL LEDGER T ACCOUNTS FOR ALLOWANCE FOR DOUBTFUL DEBTS AND BAD DEBT EXPENSE FOR THE SELECTED TRANSACTIONS OF DAVID JONES ARE AS FOLLOWS: 14

3.ACCOUNTS RECEIVABLE WOULD BE REPORTED ON THE BALANCE SHEET AT 31, DECEMBER, 2014 LIKE THIS: 14

Q2-18 DISHONOR OF A NOTE RECEIVABLE. 15

Q2-19 ACCOUNT CLASSIFICATION.. 16

Q2-20 WORK INTEGRATED ASSESSMENT CASE STUDY. 16

  1. HOW MANY SHAREHOLDERS DO MCDONALD’S HAVE?. 16
  2. WHAT ARE THE TOTAL REVENUES FOR 2014?. 16
  3. FIND THE BALANCE SHEET AND IDENTIFY THE AMOUNTS AND EXPLAIN: GOODWILL, PREPAID EXPENSES, INCOME TAXES AND ACCRUED PAYROLL. 16
  4. CALCULATE THE WORKING CAPITAL RATIO. 17
  5. GO TO PAGE 54 OF THE ANNUAL REPORT. CREATE THIS CHART IN EXCEL SHOWING COLUMNS RATHER THAN A LINE GRAPH. PASTE THE SPREADSHEET GRAPH IN YOUR ASSIGNMENT. SHOW THE DATA AREA. 17
  6. SUMMARISE YOUR ADVICE TO JACK RE THE INVESTMENT DECISION. 17

BIBLIOGRAPHY. 18

 

 

 

Q2-1 NAMING CELLS IN SPREADSHEETS

The usual way of writing a formula in excel is to use cell referencing by the default cell references which is a mix of column and row number (For Example A1). However, excel provides an option of naming the cells or a number of cells. After a cell is named, the formula can be written with the cell name rather than the default cell reference. This helps to make the understanding of a formula where the cell name is used more understandable. It actually makes the formula self-explanatory to other users. (Mehta, n.d.) Example:

Normal ViewFormula View

 

ParticularsAmount
Revenues of Gulf Air ( In Million US$)70
Number of Passengers (‘000)38
Revenue per 1000 passenger ( In Million US$) 1.84
 

ParticularsAmount
Revenues of Gulf Air ( In Million US$)70
Number of Passengers (‘000)38
Revenue per 1000 passenger ( In Million US$)=Revenue/Passengers

 

Q2-2 NEGATIVE NUMBERS

Showing negative numbers in red color and inside bracket has been a common pattern in financial models prepared in excel. One can show a number in the above format through the following steps:

  • Select the cell to be formatted.
  • Right click on it and select format cells option
  • Select Custom tab from the displayed menu
  • In the area titled ‘Type’ type the following format – 0.00_ ;[Red](0.00)  Click OK, and check the cell. It should be showing the required format

(Finance Train, n.d.) Example:

Loss(5000.00)

 

Q2-3 SEPARATION OF DATA AND REPORT AREAS

Whenever a spreadsheet is prepared, it calculates certain amount and keeps a track of data. These amounts are calculated based on some data and formulas. If the data and report area where the formula is put are on the same area, the reader or the user who is not aware of the data cannot decipher the meaning out of the sheet. Thus it is recommended to keep a separate data entry and report area. Example:

Normal ViewFormula View

Data Entry AreaData Entry Area
ParticularsAmountParticularsAmount
Sales revenue1,000Sales revenue1000
Cost of sales800Cost of sales800
Gross profit200Gross profit200
Report AreaReport Area
ParticularsAmountParticularsAmount
Gross Profit Margin20%Gross Profit Margin=C5/C3

 

Q2-4 IF FUNCTIONS

One of the most popular and useful function in excel, The IF function helps to examine a condition given to excel and return a value if the condition is satisfied, otherwise another value if the condition is not satisfied. The syntax for IF function in excel is shown: IF(logical_test, [value_if_true], [value_if_false]) (Cheusheva, n.d.). Example:

Normal ViewFormula View

ParticularsIndiaEnglandParticularsIndiaEngland
Score46116Score46116
WinnerEnglandWinner=IF(D3>C3,D2,C

2

 

Q2-5 SPREADSHEET APPS

A list of four spreadsheet software other than Microsoft excel is given below:

  • Apache OpenOffice Calc
  • LibreOffice
  • Google Sheets
  • Zoho Sheet

The spreadsheet software has contributed a lot to the evolution of the computer development. When these software were not present, large amount of data were processed in mainframe computers which costed very high for organizations. The creation of these software revolutionized the personal computer category as they were low in cost as well as fast and flexible in performance. The productivity benefits achieved by these software has made the use of personal computer in office space very prominent. (J.T. Barett, n.d.)

 

 

 

Q2-6 PERPETUAL VERSUS PERIODIC SYSTEMS

Periodic and Perpetual are the two types of inventory system wherein the books of inventory are maintained differently. In a periodic inventory system, the inventory is not updated continuously but in periods. Here all the purchases and sales are recorded in separate account with the same name. The reconciliation is done at the end of the accounting cycle. On the other hand, in a perpetual inventory system, each and every change in the inventory are recorded continuously after every transaction. Here no separate purchase or sales account is maintained. All the change be it increase or decrease in inventory are directly recorded in the value of inventory. (Jan, n.d.)

Usually, periodic inventory system is used in smaller organizations which cannot afford the large expenses of following a perpetual system. For example a car dealership company. A perpetual inventory system can be followed by large organization who can follow technology-heavy perpetual system. For example a large retailer chain of FMCG products.

 

Q2-7 JOURNAL ENTRIES

The journal entries for perpetual inventory and periodic inventory systems for the purchase and sale of inventory are shown below (Perpetual vs. Periodic Inventory System Journal Entries, n.d.):

Perpetual Inventory System Periodic Inventory System
Purchase Entry
Inventory XXX

Acc. Payable XXX

Purchases XXX

Acc. Payable XXX

Sales Entry
Acc. Receivable XXX

Sales XXX

 

Cost of Goods Sold XXX

Inventory XXX

Acc. Receivable XXX

Sales XXX

 

No entry

 

Q2-8 WORKSHEET AND FINANCIAL REPORTS

Since the inception of computers, Mainframe computers have been used for doing heavy calculation. Some large organizations have used this machine to do business accounting, but this was not cost affective. Then came spreadsheet software which eased the task of recording data and accounting for business transaction. Available in small personal computers, these software revolutionized the task of recording data.

Spreadsheets not only provides an easy to use interface, but also use of formulas and functions which helps to make the task of accounting very quick and cost effective. Just one sheet stores a lot of data which the business house can manage in a small folder inside the computer. Nowadays every business houses uses a spreadsheet software, not only for accounting purposes, but also for its other functions. The use of spreadsheet have become so omnipresent that many open source free spreadsheet software have come into existence. Some of the cloud based spreadsheet helps multiple users to work on a sheet simultaneously providing an Enterprise resource Solution.

The solution of watch the Foot worksheet is given below:

Normal View

AccountTrial BalanceAdjustmentsAdjusted Trial BalanceIncome StatementBalance Sheet
Debit CreditDebit CreditDebit CreditDebit CreditDebit Credit
Cash124501245012450
Accounts Receivable176501765017650
Inventory569805698056980
Supplies7560240051605160
Inventory on hand78000
Building145000145000145000
Accumulated Depn, Building1760040002160021600
Furniture237802378023780
Accumulated Depn, Furniture5760370094609460
Accounts payable174001740017400
Salary Payable2300230023002300
Interest Payable140014001400
Unearned sales revenue76502900475047504750
Note Payable , long term3400023003170034000
Capital142675142675226930
Drawings459045904590
Sales Revenue1660002900168900168900
Sales Discount345034503450
Sales return and allowances343034303430
Purchases897008970089700
Purchase discount401540154015
Purchase return and allownaces769076907690
Selling expenses237002370023700
Supplies expense160016001600
Depreciation on building200020002000
Depreciation on Furiniture185018501850
General expenses145001450014500
Supplies expense800800800
Depreciation on building200020002000
Depreciation on Furiniture185018501850
Interest Expenses140014001400
Total4027904027901670016700411890411890153330237585293680310790
Net Income8425517110
Total237585237585310790327900

Formula View

AccountTrial BalanceAdjustmentsAdjusted Trial BalanceIncome StatementBalance Sheet
Debit CreditDebit CreditDebit CreditDebit CreditDebit Credit
Cash12450=B412450
Accounts Receivable17650=B517650
Inventory56980=B656980
Supplies75602400=B7-E7=F7-I7
Inventory on hand78000
Building145000=B9145000
Accumulated Depn, Building176004000=C10+E10=G10
Furniture23780=B1123780
Accumulated Depn, Furniture57603700=C12+E12=G12
Accounts payable17400=C1317400
Salary Payable2300=E1423002300
Interest Payable1400=E151400
Unearned sales revenue76502900=C16-D16=G16=H16
Note Payable , long term340002300=C17-D1734000
Capital142675=C18=142675+H36
Drawings4590=B194590
Sales Revenue1660002900=C20+E20=G20
Sales Discount3450=B213450
Sales return and allowances3430=B223430
Purchases89700=B2389700
Purchase discount4015=C244015
Purchase return and allownaces7690=C257690
Selling expenses23700=B26=B26
Supplies expense=2/3*2400=D27=D27
Depreciation on building=0.5*4000=D28=D28
Depreciation on Furiniture=0.5*3700=D29=D29
General expenses14500=B30=B30
Supplies expense=1/3*2400=D31=D31
Depreciation on building=0.5*4000=D32=D32
Depreciation on Furiniture=0.5*3700=D33=D33
Interest Expenses1400=D34=D34
Total=SUM(B4:B34)=SUM(C4:C34)=SUM(D4:D34)=SUM(E4:E34)=SUM(F4:F34)=SUM(G4:G34)=SUM(H4:H34)=SUM(I4:I34)=SUM(J4:J34)=SUM(K4:K34)
Net Income=I35-H35=K35-J35
Total=H35+H36=I35+I36=J35+J36=K35+J36

 

Q2-9 ACCOUNTING PRINCIPLES`

Two accounting principles related to inventory are:

  • Using LIFO method to determine the cost of goods sold is no longer allowed by accounting rules of several countries.
  • The values Inventories should be carried forward in the books of accounts to be carried at cost and or market value whichever is lower. (Spector, n.d.)

 

Q2-10 INVENTORY FLOW ASSUMPTIONS

Inventory costing concepts are imbibed into accounting rules to charge the cost of inventory to the cost of goods sold. This is done by any one of the following three major techniques:

  1. First In, First Out (FIFO) – In this system, the inventory costs which entered the first is released at first, thus becoming the cost of goods sold.
  2. Last In, First Out (LIFO) – In this system, the inventory costs which entered the last is released at first, thus becoming the cost of goods sold.
  3. Average – In this case, the average inventory costs are calculated by dividing the total cost by the amount of inventory present. This individual cost is allocated equally to each inventory when they go out to the cost of goods sold. (Inventory and Cost of Goods Sold (Explanation), n.d.)

Q2-11 APPLICATION OF INVENTORY FLOW ASSUMPTIONS.

Normal View

Particulars Date Units Cost Per Unit
Opening InventoryOct-0180$ 57
PurchaseOct-0310$ 65
PurchaseOct-1230$ 70
PurchaseOct-1870$ 72
Inventory On handOct-31115
Sales Revenue for October$ 22,000
Particulars FIFO LIFO Average
Opening Inventory$ 4,560$ 4,560$ 4,560
Purchase on Oct-03$ 650$ 650$ 650
Purchase on Oct-12$ 2,100$ 2,100$ 2,100
Purchase on Oct-18$ 5,040$ 5,040$ 5,040
Total Inventory Value$ 12,350$ 12,350$ 12,350
Units Sold757575
Sales$ 22,000$ 22,000$ 22,000
Cost of goods sold$ 4,275$ 5,390$ 4,875
Profit$ 17,725$ 16,610$ 17,125
Inventory on Oct-31$ 8,075$ 6,960$ 7,475

Formula View

ParticularsDateUnitsCost Per Unit
Opening InventoryOct-018057
PurchaseOct-031065
PurchaseOct-123070
PurchaseOct-187072
Inventory On handOct-31115
Sales Revenue for October22000
ParticularsFIFOLIFO Average
Opening Inventory=$D$3*$E$3=$D$3*$E$3=$D$3*$E$3
Purchase on Oct-03=$D$4*$E$4=$D$4*$E$4=$D$4*$E$4
Purchase on Oct-12=$D$5*$E$5=$D$5*$E$5=$D$5*$E$5
Purchase on Oct-18=$D$6*$E$6=$D$6*$E$6=$D$6*$E$6
Total Inventory Value=SUM(C11:C14)=SUM(D11:D14)=SUM(E11:E14)
Units Sold=SUM($D$3:$D$6)-$D$7=SUM($D$3:$D$6)-$D$7=SUM($D$3:$D$6)-$D$7
Sales=$D$8=$D$8=$D$8
Cost of goods sold=C16*E3=D14+(D16-D6)*E5=E16*(E15/SUM(D3:D6))
Profit=C17-C18=D17-D18=E17-E18
Inventory on Oct-31=D6*E6+D5*E5+D4*E4+(D7-D6-D5-D4)*E3=D3*E3+D4*E4+(D7-D3-D4)*E5=D7*(SUM(E11:E14)/SUM(D

3

Q2-12 THINKING ABOUT INTERNAL CONTROL ISSUES.

Segregation of duties helps to solve inventory control issues in asset management by the following:

  • It makes sure that there is a monitoring done to catch errors
  • It helps to prevent theft or fraud as more than one person need to come to terms in order to hide a deal (Internal controls in accounting: Key benefits, n.d.)

Two instances where segregation of duties can be implemented are:

  • The person approving the purchases and the person who is in custody of checks are different.
  • The person in charge of purchase requisitions and the person approving the purchase are different.

Q2-13 BANK RECONCILIATION

A. EXAMPLE OF A BANK RECONCILIATION STATEMENT

Company XYZ’s bank statement dated Dec 31, 2015 shows a balance of $5000. The company’s cash records on the same date show a balance of $5100. The following additional information is available:

 A check issued by the company on Nov 29 to its customers amounting to $200 is still outstanding  A deposit of $300 made on Dec 31 does not appear on bank statement.

The following Bank reconciliation gives the reasoning for the above happenings:

Normal ViewFormula View

 

Company XYZ

Bank Reconciliation Statement December 31,2015

Balance as per bank, Dec 31$ 5,000
Add: Deposit in Transit$ 300
$ 5,300
Less: Outstanding Check$ 200
Balance as per bank, Dec 31$ 5,100
 

Company XYZ

Bank Reconciliation Statement December 31,2015

Balance as per bank, Dec 315000
Add: Deposit in Transit300
=C7+C8
Less: Outstanding Check200
Balance as per bank, Dec 31=C9-C10

B. WHY DO FIRMS CONSTRUCT BANK RECONCILIATION STATEMENTS ON A REGULAR BASIS?

All the firms prepare a bank reconciliation statement in general because of the purpose it solves. Since bank and business entity are separate entities booking similar transactions, there can be some difference in the records of both the party. For example, a bank statement may not account for an issued check to a supplier which has not yet been presented for payment to the bank. The Preparation of a bank reconciliation statement helps to identify the differences between the business’s and bank’s records, reconciles them, and identifies the correcting entries that needs to be done either by the bank or the business in their respective records. It provides a more up-to-date record of the business’s true cash position. (Bank Reconciliation Statements are essential for your business, n.d.)

Q2-14 JOURNALISING ACCOUNTS RECEIVABLE ENTRIES.

Detail the journal entries needed to show sales on credit, the collection of part of the amount owing, the write off of accounts receivable, the reinstatement of an amount written off and the collection in full of the amount owing. Create your own numbers. A spreadsheet is not required.

  • Company XYZ sold goods to Company ABC worth $10,000 with its cost of goods at 75% of its sales value. The following Journal entry records the transaction:

Accounts Receivable $10,000

Sales $10,000

Cost of Goods Sold $7,500

Inventory $7,500

 

  • Company ABC pays 50% of the amount. The following Journal entry records the transaction:

Cash $5,000

Accounts Receivable $5,000

 

  • The recovery of other 50% of the amount from Company ABC becomes doubtful. The following Journal entry records the transaction:

Allowance for doubtful debts $5,000

Accounts Receivable $5,000

  • Reinstate the account of Company ABC that was written off by reversing the write-off entry. The following Journal entry records the transaction:

Accounts Receivable $5,000

Allowance for doubtful debts $5,000

 

  • Process the $5,400 received from Company ABC. The following Journal entry records the transaction:

Cash $5,000

Accounts Receivable $5,000

 

Q2-15 ESTIMATING BAD DEBTS

Two approaches of estimating bad debts can be followed. The description with examples are given below:

  • Income Statement Approach – Also called the sales approach, it estimates the bad debts as a percentage of total sales of the company for a particular period. Suppose Company ABC has a sales of $ 1,000 on its income statement and the company management has seen a trend that 5% of the sales is uncollectable. So they would estimate bad debts as $50 (0.05 X 1,000)
  • Balance Sheet Approach – It estimates the bad debts as a percentage of total accounts receivable by the company for a particular period. Suppose company ABC has $800 of accounts receivable in its balance sheet and it has seen a trend of 10% of the accounts receivable to turn up as uncollectable. So it would estimate its bad debt to be $80 (0.10 X 800) (Keela Helstrom, n.d.)

Q2-16 EVALUATION OF A FIRM’S FINANCIAL POSITION

A firm’s financial position can be estimated from the analysis of its financial statement. Each element of the statements provides valuable insights to this analysis. A firm’s account receivable is also one of such elements which helps to derive firm’s solvency. Two of the most common ratios calculated with the help of accounts receivable by financial analysts are:

  • Accounts receivable Turnover
  • Accounts receivable turnover in days

The above two methods helps to assess firm’s ability to collect its account receivable. The higher the turnover and lower the number of days, the better. These measures, when compared with other companies in industries provides valuable insights into company’s effectiveness.

 

Q2-17 PERCENTAGE OF SALES METHOD

1. JOURNAL ENTRIES FOR THE SELECTED TRANSACTIONS OF DAVID JONES ARE AS FOLLOWS:

 

Sl No Date Particulars Dr Amount Cr Amount
1 31/12/2013Bad Debt Expense$75,000
Allowance for Doubtful debts$75,000
2 31/12/2013Allowance for doubtful debts$75,000
Accounts Receivable$75,000
3 10/01/2014Mills & Brown$8,000
Sales$8,000
4 20/06/2013Bad Debt Expense$8,000
Mills & Brown$8,000
5 25/07/2014Bad Debt Expense$23,000
Accounts Receivable (BK)$13,000
Accounts Receivable(MM)$10,000
6 15/08/2014Mills & Brown$8,000
Bad Debt Expense$8,000
7 15/08/2014Cash$8,000
Mills & Brown$8,000
8 31/12/2014Bad Debt Expense$57,000
Allowance for Doubtful debts$57,000
9 31/12/2014Allowance for doubtful debts80,000
Accounts Receivable80,000

 

2.POSTING OF JOURNAL ENTRIES IN GENERAL LEDGER T ACCOUNTS FOR ALLOWANCE FOR DOUBTFUL DEBTS AND BAD DEBT EXPENSE FOR THE SELECTED TRANSACTIONS OF DAVID JONES ARE AS FOLLOWS:

Dr Cr

Allowance for Doubtful Debts

Particulars Amount Particulars Amount
Accounts Receivable75,000Bad debt expense$75,000
Balance C/D$0
Accounts Receivable80,000Bad debt expense$23,000
Bad debt expense$57,000
Balance C/D$0

 

Dr Cr

Bad Debt Expense
Particulars Amount Particulars Amount
Allowance for Bad debts75,000Profit and loss$75,000
Balance C/D$0
Mills and Brown$8,000Mills and Brown$8,000
Allowance for Bad debts23,000Profit and loss$80,000
Allowance for Bad debts$57,000
Balance C/D$0

 

3.ACCOUNTS RECEIVABLE WOULD BE REPORTED ON THE BALANCE SHEET AT 31, DECEMBER, 2014 LIKE THIS:

 

Balance sheet (extract)
Accounts receivable$5,80,000
Less allowance for doubtful debts$80,000
Accounts receivable net$500,000

 

Q2-18 DISHONOR OF A NOTE RECEIVABLE

Following is an example showing note receivable accounting.

  • Company XYZ sold goods to Company ABC worth $10,000 with its cost of goods at 75% of its sales value with payment due in 30 days. The following Journal entry records the transaction:

Accounts Receivable $10,000

Sales $10,000

Cost of Goods Sold $7,500

Inventory $7,500

  • After 45 days of non-payment, both the parties agreed Company ABC will issue a note payable to Company XYZ for $10,000, at an interest rate of 10% and with payment of the whole amount due at the end of the year. The following Journal entry records the transaction of conversion to note receivable:

Notes Receivable $10,000

Accounts Receivable $10,000

  • At the end of the year, company ABC defaults in payment of $10,000. The following Journal entry records the transaction of conversion to note receivable:

Allowance for doubtful debts $11,000

Note Receivable $10,000

Interest Receivable $1,000

  • At the end of the next year, company ABC makes the payment of $10,000. The following Journal entry records the transaction of conversion to note receivable:

Note Receivable $10,000

Interest Receivable $2,000

Allowance for doubtful debts $12,000

 

Cash $10,000

Note Receivable $10,000 Interest Receivable $2,000

Q2-19 ACCOUNT CLASSIFICATION

The following are the account classification:

  • Goodwill – Categorized as intangible asset in balance sheet, goodwill is a real account which has a positive amount. This account comes into effect when a company buys another company which has a value of good customer and stakeholder relationship.
  • Allowance for Bad debt – Categorized as a nominal account and debited in profit and loss account, allowance for bad debt is an estimation of bad debt the company would bear in near future and making a provision for it.
  • Accumulated Depreciation – Categorized as a real account as it’s a contra asset account and is shown in balance sheet, it accumulates depreciation provided over a period to help denote the real value of the asset.

 

Q2-20 WORK INTEGRATED ASSESSMENT CASE STUDY

1. HOW MANY SHAREHOLDERS DO MCDONALD’S HAVE?

 The number of shareholders for McDonald’s is estimated to be 1,663,000 (Pg 10)

2. WHAT ARE THE TOTAL REVENUES FOR 2014?

 The total revenues for 2014 is $18,169.3 million (Pg 30)

3. FIND THE BALANCE SHEET AND IDENTIFY THE AMOUNTS AND EXPLAIN: GOODWILL, PREPAID EXPENSES, INCOME TAXES AND ACCRUED PAYROLL.

  • Goodwill – $2735.3 million. Amount denoting the good customer experience and image of the company in consumer’s eyes. (Pg. 31)
  • Prepaid expenses – $783.2 million. Amount of expenses paid but not accrued. (Pg 31)
  • Income taxes – $166.8 million. Amount of income tax due but not paid. (Pg 31)
  • Accrued Payroll – $1,157.3 million. Amount of payroll accrued but not paid till now. (Pg 31)

4. CALCULATE THE WORKING CAPITAL RATIO.

 Working capital ratio or the current ratio = Current Asset/ Current Liabilities = 1.52 (4185.5/2747.9)

5. GO TO PAGE 54 OF THE ANNUAL REPORT. CREATE THIS CHART IN EXCEL SHOWING COLUMNS RATHER THAN A LINE GRAPH. PASTE THE SPREADSHEET GRAPH IN YOUR ASSIGNMENT. SHOW THE DATA AREA.

6. SUMMARISE YOUR ADVICE TO JACK RE THE INVESTMENT DECISION.

As seen from the above graph, McDonald share has not given more value than the index. So Jack should not invest in the stock.

 

BIBLIOGRAPHY

Bank Reconciliation Statements are essential for your business. (n.d.). Retrieved from Thinkbusiness.ie: https://www.thinkbusiness.ie/articles/bank-reconciliation-statements-are-essential-for-your-business/

Cheusheva, S. (n.d.). Using IF function in Excel: formulas for numbers, text, dates, blank cells. Retrieved from Ablebits: https://www.ablebits.com/office-addins-blog/2014/11/26/if-function-excel/

Finance Train. (n.d.). How to Show Non Negative Numbers in brackets in MS Excel. Retrieved from Finance Train: http://financetrain.com/show-negative-numbers-brackets-ms-excel/

Internal controls in accounting: Key benefits. (n.d.). Retrieved from marsdd: https://www.marsdd.com/mars-library/internalcontrols-accounting-key-benefits/

Inventory and Cost of Goods Sold (Explanation). (n.d.). Retrieved from accountingcoach: http://www.accountingcoach.com/inventory-and-cost-of-goods-sold/explanation

J.T. Barett, D. M. (n.d.). The Importance of an Electronic Spreadsheet. Retrieved from azcentral: http://yourbusiness.azcentral.com/importance-electronic-spreadsheet-7575.html

Jan, I. (n.d.). Perpetual vs Periodic Inventory System. Retrieved from http://accountingexplained.com: http://accountingexplained.com/financial/inventories/perpetual-vs-periodic-system

Keela Helstrom, D. M. (n.d.). How to Calculate Bad Debt Expenses with the Allowance Method. Retrieved from Chron: http://smallbusiness.chron.com/calculate-bad-debt-expenses-allowance-method-56460.html

Mehta, T. (n.d.). Names and Formatted Formulas. Retrieved from Tushar-mehta Consulting: http://www.tusharmehta.com/publish_train/data_analysis/08.htm

Perpetual vs. Periodic Inventory System Journal Entries. (n.d.). Retrieved from ccba.jsu.edu:

http://ccba.jsu.edu/accounting/PERPETUALPERIODICJE.HTML

Spector, S. (n.d.). Accounting for Inventories. Retrieved from cga-canada.org: http://www.cga-canada.org/enca/AboutCGACanada/CGAMagazine/2007/Jan-Feb/Pages/ca_2007_01-02_dp_standards.aspx

 

 

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