Weez, Ltd, an insurance broker, prepares monthly financial statements. The company generates revenue by selling insurance...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Weez, Ltd, an insurance broker, prepares monthly financial statements. The company generates revenue by selling insurance policies on behalf of insurance companies, who then pay Weez, Ltd a commission for the service provided. Presented below is an incorrect Statement of Comprehensive Income for the month of June 2019. Commission Revenue Operating Expenses: Salary expense Dividends expense Rent expense Supplies expense Depreciation expense Advertising expense. Total expenses Profit and Total Comprehensive Income. b) 2. 3. Additional Data: When the SOCI was prepared, the company accountant neglected to take into consideration the following information: 1. A utility bill for $2,000 was received on the last day of the month for electric and gas service for the month of June. In June, Weez, Ltd sold a life insurance policy to a client. As a result, Weez Ltd is owed a $5,000 commission. Supplies on hand at the beginning of the month were $3,000. Weez, purchased additional supplies during the month for $3,500 in cash, debiting Supplies Expense for the full amount. At the end of June, supplies on hand were estimated to be $1,200. 4. 5. 6. 7. 8. Weez Ltd Statement of Comprehensive Income 30 June 2019 9. $6,000 1,300 4,200 3,500 2,800 800 $35,000 10. Required: a) 18,600 $16.400 Weez Ltd purchased a new car at the beginning of June for $24,000 cash. The car will depreciate $6,000 per year. The $2,800 shown in the SOCI relates to other depreciable assets, not the car. The $6,000 of salaries expense includes $1,200 relating to three days worked in May, and does not include $2,300 for four days worked at the end of June. The $2,300 will be paid in July. The Dividends Expense of $1,300 relates to a declared and paid dividend to the shareholders of Weez, Ltd. The balance in Rent Expense can be attributed to a 3 June cash payment for June rent. On 28 June, the company paid an additional $4,200 for July's rent, debiting Prepaid Rent and crediting Cash for that amount. Not shown on the SOCI is $2,000 of other comprehensive income; specifically, the $2,000 relates to foreign currency exchange gains. On 1 February 2019, Weez, Ltd borrowed $10,000 at an annual interest rate of 6%. Interest only payments are due every three months; the May payment occurred and was correctly journalised. Income tax expense is estimated at 30% of pre-tax profit. Prepare a correct SOCI in good form and format for the month ending 30 June 2019. The adjusting and correcting journal entries are not required. Re-read #3 above. Refer to the Conceptual Framework's qualitative characteristics and state what best justifies estimating the cost of the supplies on hand (resulting in measurement error) as opposed to precisely counting and costing the supplies. Weez, Ltd, an insurance broker, prepares monthly financial statements. The company generates revenue by selling insurance policies on behalf of insurance companies, who then pay Weez, Ltd a commission for the service provided. Presented below is an incorrect Statement of Comprehensive Income for the month of June 2019. Commission Revenue Operating Expenses: Salary expense Dividends expense Rent expense Supplies expense Depreciation expense Advertising expense. Total expenses Profit and Total Comprehensive Income. b) 2. 3. Additional Data: When the SOCI was prepared, the company accountant neglected to take into consideration the following information: 1. A utility bill for $2,000 was received on the last day of the month for electric and gas service for the month of June. In June, Weez, Ltd sold a life insurance policy to a client. As a result, Weez Ltd is owed a $5,000 commission. Supplies on hand at the beginning of the month were $3,000. Weez, purchased additional supplies during the month for $3,500 in cash, debiting Supplies Expense for the full amount. At the end of June, supplies on hand were estimated to be $1,200. 4. 5. 6. 7. 8. Weez Ltd Statement of Comprehensive Income 30 June 2019 9. $6,000 1,300 4,200 3,500 2,800 800 $35,000 10. Required: a) 18,600 $16.400 Weez Ltd purchased a new car at the beginning of June for $24,000 cash. The car will depreciate $6,000 per year. The $2,800 shown in the SOCI relates to other depreciable assets, not the car. The $6,000 of salaries expense includes $1,200 relating to three days worked in May, and does not include $2,300 for four days worked at the end of June. The $2,300 will be paid in July. The Dividends Expense of $1,300 relates to a declared and paid dividend to the shareholders of Weez, Ltd. The balance in Rent Expense can be attributed to a 3 June cash payment for June rent. On 28 June, the company paid an additional $4,200 for July's rent, debiting Prepaid Rent and crediting Cash for that amount. Not shown on the SOCI is $2,000 of other comprehensive income; specifically, the $2,000 relates to foreign currency exchange gains. On 1 February 2019, Weez, Ltd borrowed $10,000 at an annual interest rate of 6%. Interest only payments are due every three months; the May payment occurred and was correctly journalised. Income tax expense is estimated at 30% of pre-tax profit. Prepare a correct SOCI in good form and format for the month ending 30 June 2019. The adjusting and correcting journal entries are not required. Re-read #3 above. Refer to the Conceptual Framework's qualitative characteristics and state what best justifies estimating the cost of the supplies on hand (resulting in measurement error) as opposed to precisely counting and costing the supplies.
Expert Answer:
Answer rating: 100% (QA)
a statment the month Commission Revenue Lees operating of comprehensive 130 June Salara... View the full answer
Related Book For
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany
Posted Date:
Students also viewed these finance questions
-
Jen and Berry's sells ice-creams from its factory-shop in Petone. There is a managing director (Maynard Dibble), a marketing manager (Mary Salman) and a production manager (Peter Pritchard). Maynard...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
State with reasons, whether the following statements are true or false : (i) Overhauling expenses for the engine of motor car to get better fuel efficiency is revenue expenditure. (ii) Depreciation...
-
What knowledge, skills, and abilities must an IT auditor have?
-
Dundas Company uses an activity-based costing system. Consider the following information: During the past month, 60 units of a component were produced. Three setups were required. Each unit needs 35...
-
Following are observed frequencies. The null hypothesis is H0: p1 = 0.4, p2 = 0.25, p3 = 0.05, p4 = 0.1, p5 = 0.2. a. Compute the expected frequencies. b. Compute the value of X2. c. How many degrees...
-
The following information pertains to Godwin Motors, which uses the allowance method for receivables: Required a. Assuming that Godwin Motors recorded bad debt expense of $25,600 in 2012, what amount...
-
Total assets P 8 0 0 , Total deposits P 7 0 0 , Total loans P 4 5 0 , Net income P 8 0 . calculate the net interest margin of that bank
-
Assume that you have the following edge-weighted graph. Find the minimum spanning trees using Seattle 11 (1) SF LA Seattle SF 17 LA Las Vegas 20 Las Vegas 14 Denver 15 Alince 5 apalis 10 12 Delles...
-
Clearly compare and contrast the intrinsic and extrinsic motivation types and determine which type leads to extended higher productivity. Carefully describe at least one advantage and one...
-
How do various synchronization mechanisms, like mutexes, semaphores, and condition variables, address the problem of race conditions in a multi-threaded environment ?
-
Note that some of the possible refrigerants have previously or are currently being phased out of new production; it is recommended to research why this is so and include this as a consideration in...
-
Discuss the impact of architectural advancements, such as multi-core processors and heterogeneous computing platforms, on the design and optimization of operating systems for parallel and distributed...
-
Leon Tyler's VISA balance is $793.15. He may pay it off in 12 equal end-of-month payments of $75 each. What interest rate is Leon paying? (Round answer to 1 decimal place, e.g. 8.5%.) Interest rate %...
-
Examine the evolution of real-time operating systems (RTOS) and their applications in mission-critical systems, exploring topics such as task prioritization, interrupt handling, and deterministic...
-
A son inherits a house from his mother that has a fair market value (FMV) of $200,000 at the time of her death. Her tax basis was $75,000, the amount she paid for the house 30 years ago. Therefore,...
-
In Exercises, find the equation of the tangent line at the given point on each curve. 2y 2 - x = 4; (16, 2)
-
Multiple Choice Questions Select the best answer for each of the following. Explain the reasons for your selection. a. In planning and performing an audit, auditors are concerned about risk factors...
-
Evaluate the following statement: Identifying related parties and obtaining a client representation letter are two required audit procedures normally performed on the last day of fieldwork.
-
The City of Westmore is confused about the type of audit that it should obtain: an audit in accordance with generally accepted auditing standards, an audit in accordance with Generally Accepted...
-
CrossCanada Transport Inc. (CC) provides warehouse and distribution services. The excerpts that follow are adapted from CC's financial statements for fiscal year 2020. {Requirements} 1. How much was...
-
Part 1. The Coca-Cola Company's (CCC) balance sheet reports the asset Goodwill. Assume that CCC purchased an asset to be included in Goodwill as part of the acquisition of another company, which...
-
At the end of 2019, a telecommunications company had total assets of \(\$ 15.3\) billion and total liabilities of \(\$ 10.7\) billion. Included among the assets were property, plant, and equipment...
Study smarter with the SolutionInn App