Calculate the balance in the lifo reserve at year-end 2014

Question

Accounts Receivable

1. Calculate the dollar amount of write-offs during 2015.

2. This question is a general question. Describe the difference between a write-off and bad debt expense.

3. Is there any evidence to show that the credit manager either over, under, or correctly estimated the 2014 accounts receivable default rate? Identify two pieces of evidence that supports your conclusion.

Inventory

LIFO/FIFO

4. Calculate the balance in the LIFO Reserve at year-end 2014 and 2015.

5. Calculate 2014 net income after tax under FIFO.

6. Calculate 2015 cash under FIFO.

Write-off

7. Explain how the 2013 write-off impacted the income statement, balance sheet, and statement of cash flows. Assume no taxes.

8. Explain the intuition behind how, on the write-off announcement date, the stock price declined by 11 percent.

Trading Securities

9. Prepare the 2015 t-account for trading securities.

10. Calculate the dollar return that the firm earned on its trading securities during 2015. Assume no taxes.

11. Calculate the percent return that the firm earned on its trading securities during 2015. Assume no taxes.

12. Did the firm earn a strong percent on its return? Comment.

Available for Sale Securities

13. Prepare the 2015 t-account for available for sale securities.

14. Calculate the original cost of available for sale securities held at year-end 2015.

Investment in Cunningham

15. Calculate the "cash received from dividends" for Cunningham only (not for TS or AS) that would be reported on the 2015 direct method cash flow statement.

16. Calculate the total assets, total liabilities, and total stockholders' equity of Cunningham at 12/31/15. Assume no taxes.

Research & Development and Patents

17. Recalculate the 2015 return on assets assuming that the firm capitalized the amount that it invested in its internally generated patents. Assume no taxes.

Treasury Stock

18. Prepare the journal entry to record the 2013 purchase of treasury stock.

Goodwill

19. Calculate the original purchase price that EAP paid for Jones Corporation during 2010.

20. Prepare the journal entry to record the goodwill write-off.

21. Upon the announcement of the goodwill write-off, the stock price decreased by .001 percent. Provide an explanation as to why this change is so small.

Pending Litigation

22. Assume that in 2016, the firm loses the lawsuit and pays out $1,200,000 of damages. Prepare the journal entry for this loss. Also show how this journal entry impacts the balance sheet, income statement, statement of cash flows, and statement of stockholders' equity.

Other Questions

23. How much of the 2015 ROE is derived from the operational strategy of the firm and how much from its financial strategy.

24. Prepare the 2015 operating activities section of the direct method statement of cash flows.

Attachment:- EAP_Corporation_Assignment_Financial Management & Reporting.docx

Answer 1

In regards of the Accounts Receivable problem discussion, answer the following questions in according to the information and details provided. 1) Compute the dollar amount of write-offs throughout 2015. 2) Illustrate the difference between a write-off and bad debt expenditure. 3) Is there any proof to illustrate that the credit manager either over, under or appropriately estimated the year 2014 accounts receivable default rate? Recognize two pieces of proof which supports your conclusion. 4) Compute the balance in the LIFO Reserve at year-end 2014 and 2015. 5) Compute the 2014 total income after tax under FIFO. 6) Compute 2015 cash in FIFO. 7) Describe how the 2013 write-off impacted the income statement, balance sheet and statement of cash flows. Suppose no taxes. 8) Describe the intuition behind how, on the write-off announcement date the stock price declined by 11 %.