Accounting Information Systems SUA Project

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1.  Read pages 3 through 12 (stopping at Waren’s Month‐End Procedures) in the “Instructions, Flowcharts, and Ledgers” book.

2.  Follow Option 1 and first process the Revenue Cycle transactions and then the Expenditure Cycle transactions.  Stop before the Month‐End Procedures, i.e., do not perform the month‐end and yearend procedures.

3.  Use Transaction List A (Document No. 1 with an A at the bottom left corner).  First complete the revenue transactions:  1, 2, 5, 6, 10, 12, 13, 14, 15, followed by the expenditure transactions: 3, 4, 7, 8, 9, 11, 16, 17, 18, 19, 20.

4.  Try to get most of the information on the source documents correct, but do not spend a lot of time on this.  Focus mostly on completing control activities correctly, e.g., signatures on source documents and attaching source documents together, and recording information in the journals and ledgers correctly.

5.  When working through the case, make sure to:

a.  Include all the information provided in the Transaction List.

b.  Perform all steps indicated in the flowchart related to the transaction (including updating of journals and ledgers as indicated by the flowchart).

c.  When completing source documents, use already completed documents as examples.

d.  When recording transactions in journals and posting to ledgers, use previous entries in respective journal and ledger as an aid.

e.  Use your knowledge of accounting!  For example, what are the journal entry when a sale is made on credit and what is the journal entry when the customer later pays within the discount period?

Systems Understanding Aid (SUA) Assignment

This assignment provides you an opportunity to gain an in depth understanding of how a traditional accounting system operates including the forms that have traditionally provided the documentation for the accounting process and how the information in these documents are used to update accounting journals and ledgers. This exercise will also provide you an introduction to business process internal controls and experience using flowcharts.

We will work on the assignment during class time, but you may also need to work on the assignment outside of class – do not procrastinate. You are allowed to discuss the SUA with others in the class, but you may not copy. You may work in pairs or individually. If you chose to work in pairs, each individual is still responsible for understanding the material. If you rely too heavily on your partner to complete the assignment then you will be less prepared for the exam.

When you have completed all transactions (as outlined below), you will take pictures of select journals, ledgers, and source documents to be uploaded to Blackboard for grading. I will provide you more details on what needs to be captured in your pictures one week before the due date on the syllabus.

Instructions:

1. Read pages 3 through 12 (stopping at Waren’s Month‐End Procedures) in the “Instructions, Flowcharts, and Ledgers” book.

2. Follow Option 1 and first process the Revenue Cycle transactions and then the Expenditure Cycle transactions. Stop before the Month‐End Procedures, i.e., do not perform the month‐end and yearend procedures.

3. Use Transaction List A (Document No. 1 with an A at the bottom left corner). First complete the revenue transactions: 1, 2, 5, 6, 10, 12, 13, 14, 15, followed by the expenditure transactions: 3, 4, 7, 8, 9, 11, 16, 17, 18, 19, 20.

4. Try to get most of the information on the source documents correct, but do not spend a lot of time on this. Focus mostly on completing control activities correctly, e.g., signatures on source documents and attaching source documents together, and recording information in the journals and ledgers correctly.

5. When working through the case, make sure to:

a. Include all the information provided in the Transaction List.

b. Perform all steps indicated in the flowchart related to the transaction (including updating of journals and ledgers as indicated by the flowchart).

c. When completing source documents, use already completed documents as examples.

d. When recording transactions in journals and posting to ledgers, use previous entries in respective journal and ledger as an aid.

e. Use your knowledge of accounting! For example, what are the journal entry when a sale is made on credit and what is the journal entry when the customer later pays within the discount period?

 
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Managerial Accounting

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Disk City, Inc. is a retailer for digital video disks. The projected net income for the current year is  $1,840,000 based on a sales volume of 230,000 video disks. Disk City has been selling the disks for $23 each. The variable costs consist of the $11 unit purchase price of the disks and a handling cost of $2 per disk. Disk City’s annual fixed costs are $460,000.
     Management is planning for the coming year, when it expects that the unit purchase price of the video disks will increase 30 percent. (Ignore income taxes.)

 

Required:

 

1. Calculate Disk city’s break-even point for the current year in number of video disks. (Round your answer to the nearest whole number.)

 

 

  Break-even point 46,000  units

 

2. What will be the company’s net income for the current year if there is a 15 percent increase in projected unit sales volume? (Omit the “$” sign in your response.)

 

  Net income 2,185,000 $

 

3. What volume of sales (in dollars) must Disk City achieve in the coming year to maintain the same net income as projected for the current year if the unit selling price remains at $23? (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the “$” sign in your response.)

 

  Volume of sales 7,895,522 $

 

4. In order to cover a 30 percent increase in the disk’s purchase price for the coming year and still maintain the current contribution-margin ratio, what selling price per disk must Disk City establish for the coming year? (Do not round intermediate calculations and round your final answer to 2 decimal places. Omit the “$” sign in your response.)

 

  Selling price 28.84 $

rev: 02_27_2014_QC_45987, 03_22_2014_QC_45987

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[The following information applies to the questions displayed below.]

 

Corrigan Enterprises is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.

 

Model no. 6754:
     Variable costs, $20.00 per unit
     Annual fixed costs, $985,900

 

Model no. 4399:
     Variable costs, $11.80 per unit
     Annual fixed costs, $1,114,200

 

Corrigan’s selling price is $64 per unit for the universal gismo, which is subject to a 10 percent sales commission. (In the following requirements, ignore income taxes.)

 

 

2.

value: 10.00 points

 

 

 

Required:

 

1. How many units must the company sell to break even if Model 6754 is selected? (Do not round intermediate calculations and round your final answer to the nearest whole number.)

 

 

  Break-even point 26, 221  units

 

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3.

value: 10.00 points

 

 

 

2-a. Calculate the net income of the two systems if sales and production are expected to average 42,000 units per year. (Omit the “$” sign in your response.)

 

  Net Income
  Model 6754 683,300 $
  Model 4399 809,400 $
 

 

 

2-b. Which of the two systems would be more profitable?
   
 
  Model 6754
 

 Model 4399 is profitable

 

 

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4.

value: 10.00 points

 

 

 

3. Assume Model 4399 requires the purchase of additional equipment that is not reflected in the preceding figures. The equipment will cost $430,000 and will be depreciated over a five-year life by the straight-line method. How many units must Corrigan sell to earn $958,000 of income if Model 4399 is selected? As in requirement (2), sales and production are expected to average 42,000 units per year. (Do not round intermediate calculations and round your final answer to the nearest whole number.)

 

  Required sales 47,122  units

 

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5.

value: 10.00 points

 

 

 

4. Ignoring the information presented in part (3), at what volume level will the annual total cost of each system be equal? (Round your answer to the nearest whole number.)

 

  Volume level 26,622  units

 

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6.

value: 10.00 points

 

 

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 41,000 speaker sets:

 

       
  Sales $ 3,280,000  
  Variable costs   820,000  
  Fixed costs   2,310,000  
 

 

Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $16 per set; annual fixed costs are anticipated to be $2,240,000. (In the following requirements, ignore income taxes.)

 

Required:
1. Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States. (Omit the “$” sign in your response.)

 

   
  Current income 150,000 $
  Required sales 3,480,000 $
 

 

2. Determine the break-even point in speaker sets if operations are shifted to Mexico.

 

  Break-even point 35,000  units

 

3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.

 

a. If variable costs remain constant, by how much must fixed costs change? (Input the amount as positive value. Omit the “$” sign in your response.)

 

  Fixed costsby 210,000 $

 

b. If fixed costs remain constant, by how much must unit variable cost change? (Input the amount as positive value. Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.)

 

  Variable costsby 6 $

 

4. Determine the impact (increase, decrease, or no effect) of the following operating changes.

 

     
a.  Effect of an increase in direct material costs on the break-even point.  
b.  Effect of an increase in fixed administrative costs on the unit contribution margin.  
c.  Effect of an increase in the unit contribution margin on net income.  
d.  Effect of a decrease in the number of units sold on the break-even point.  
 

rev: 10_30_2013_QC_38310, 02_27_2014_QC_46037

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7.

value: 10.00 points

 

 

Tim’s Bicycle Shop sells 21-speed bicycles. For purposes of a cost-volume-profit analysis, the shop owner has divided sales into two categories, as follows:

 

  Product Type Sales Price Invoice Cost Sales Commission
  High-quality $ 500   $ 275   $ 25  
  Medium-quality   300     135     15  
 

 

 

Three-quarters of the shop’s sales are medium-quality bikes. The shop’s annual fixed expenses are $65,000. (In the following requirements, ignore income taxes.)

 

Required:

 

 

1. Compute the unit contribution margin for each product type. (Omit the “$” sign in your response.)

 

 

  Bicycle Type Unit Contribution Margin
  High-quality 200 $
  Medium-quality 150 
 

 

2. What is the shop’s sales mix? (Omit the “%” sign in your response.)

 

 

  Sales mix
  High-quality bicycles 25  %
  Medium-quality bicycles 75  %
 

 

3. Compute the weighted-average unit contribution margin, assuming a constant sales mix. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

 

  Weighted-average unit contribution margin 162.50 $

 

4. What is the shop’s break-even sales volume in dollars? Assume a constant sales mix. (Round intermediate calculations to 2 decimal places. Omit the “$” sign in your response.)

 

  Break-even sales volume 140,000 $

 

5. How many bicycles of each type must be sold to earn a target net income of $48,750? Assume a constant sales mix. (Round intermediate calculations to 2 decimal places.)

 

  Number of bicycles
  High-quality 175 
  Medium-quality 525 
 

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8.

value: 10.00 points

 

 

A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.)

 

       
  Revenue $ 500,000  
  Less: Variable expenses   300,000  
       
  Contribution margin $ 200,000  
  Less: Fixed expenses   150,000  
       
  Net income $ 50,000  
   

 

  

 

  

 
 

 

Consider each requirement independently.

 

Required:

 

 

1. Show the hotel’s cost structure by indicating the percentage of the hotel’s revenue represented by each item on the income statement. (Input all amounts as positive values. Omit the “$” & “%” signs in your response.)

 

 

  Amount Percent
  Revenue 500,000   
  Variable expenses 300,000   
   

  
  Contribution margin 200,000   
  Fixed expenses 150,000   
   

  
  Net income 50,000   
   

 

  

 
 

 

2. Suppose the hotel’s revenue declines by 15 percent. Use the contribution-margin percentage to calculate the resulting decrease in net income. (Omit the “$” sign in your response.)

 

  Decrease in net income 30,000 $

 

3. What is the hotel’s operating leverage factor when revenue is $500,000?

 

  Operating leverage factor 4 

 

4. Use the operating leverage factor to calculate the increase in net income resulting from a 20 percent increase in sales revenue. (Omit the “%” sign in your response.)

 

  Percentage increase in net income 80  %

references

 

9.

value: 10.00 points

 

 

A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.)

 

       
  Revenue $ 500,000  
  Less: Variable expenses   300,000  
       
  Contribution margin $ 200,000  
  Less: Fixed expenses   150,000  
       
  Net income $ 50,000  
   

 

  

 

  

 
 

 

 

Required:

 

 

1. Prepare a contribution income statement if the hotel’s volume of activity increases by 20 percent, and fixed expenses increase by 40 percent. (Input all amounts as positive values. Omit the “$” sign in your response.)

 

 

   
  Revenue 600,000 $   
  Less: Variable expenses 360,000   
   
  Contribution margin 240,000 $   
  Less: Fixed expenses 210,000   
   
  Net income 30,000 $   
   

 
 

 

 

2. Prepare a contribution income statement if the ratio of variable expenses to revenue doubles. There is no change in the hotel’s volume of activity. Fixed expenses decline by $25,000. (Input all amounts as positive values except losses which should be indicated with a minus sign. Omit the “$” sign in your response.)

 

 

   
  Revenue 500,000 $
  Less: Variable expenses 600,000  
   
  Contribution margin (100,000) $
  Less: Fixed expenses 125,000  
   
  Net loss (225,000) $
 

10.

value: 10.00 points

 

 

Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 20 percent, and its annual fixed expenses are $120,000. The firm’s income-tax rate is 40 percent.

 

Consider each requirement independently.

 

 

Required:

 

1. Calculate the firm’s break-even volume of service revenue. (Omit the “$” sign in your response.)

 

 

  Break-even volume 600,000 $

 

2. How much before-tax income must the firm earn to make an after-tax net income of $48,000?. (Omit the “$” sign in your response.)

 

  Before tax income 80,000 $

 

3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $48,000? (Omit the “$” sign in your response.)

 

  Service revenue 1,000 000 $

 

4. Suppose the firm’s income-tax rate rises to 45 percent. What will happen to the break-even level of consulting service revenue?
   
 
  The break-even level of consulting service revenue will change.
  The break-even level of consulting service revenue will not change.

 

 

  

 

 

 

 

 

 

decrease

 

decrease

 

Increase

 

No effect

 

Increase

 

No effect

 

 

100

 

60

 

40

 

30

 

10

 
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Memo

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Read the attached files carefully. I need 2-3 pages memo on the given instructions. You must include 2-3 scholarly references must be cited in APA. Your answer must be properly addressed, must be 100% original.

 

Instructions

 

 

Read the attached files carefully, and write 2-3 pages memo on discussing our responsibilities for auditing the controls at a service organization, and whether a SSAE 16 report fulfills our obligations under Section 404 of SOX? Also, if I remember correctly, there are two types of SSAE 16 reports, but I don’t know which one we need and whether the attached letter is a Type 1 or Type 2 report. You need to discuss briefly that attached SSAE 16 report. Also, just include the service auditor’s report as a brief description in the memo.

Independent Service Auditor’s Report on a Description of a Service Organization’s System

and the Suitability of the Design and Operating Effectiveness of Controls

To the Board of Directors of Roll Pay Payroll Services, Inc.:

Scope

We have examined Roll Pay Payroll Services, Inc.’s description of its system for processing user entities’ payroll transactions throughout the period January 1, 2014 through December 31, 2014 and the suitability of the design and operating effectiveness of controls to achieve the related control objectives stated in the description.

Service organization’s responsibilities

On page 11 of the description, Roll Pay Payroll Services, Inc. has provided an assertion about the fairness of the presentation of the description and suitability of the design and operating effectiveness of the controls to achieve the related control objectives stated in the description. Roll Pay Payroll Services, Inc. is responsible for preparing the description and for the assertion, including the completeness, accuracy, and method of presentation of the description and the assertion, providing the services covered by the description, specifying the control objectives and stating them in the description, identifying the risks that threaten the achievement of the control objectives, selecting the criteria, and designing, implementing, and documenting controls to achieve the related control objectives stated in the description.

Service auditor’s responsibilities

Our responsibility is to express an opinion on the fairness of the presentation of the description and on the suitability of the design and operating effectiveness of the controls to achieve the related control objectives stated in the description, based on our examination. We conducted our examination in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform our examination to obtain reasonable assurance about whether, in all material respects, the description is fairly presented and the controls were suitably designed and operating effectively to achieve the related control objectives stated in the description throughout the period January 1, 2014 through December 31, 2014.

An examination of a description of a service organization’s system and the suitability of the design and operating effectiveness of the service organization’s controls to achieve the related control objectives stated in the description involves performing procedures to obtain evidence about the fairness of the presentation of the description and the suitability of the design and operating effectiveness of those controls to achieve the related control objectives stated in the description. Our procedures included assessing the risks that the description is not fairly presented and that the controls were not suitably designed or operating effectively to achieve the related control objectives stated in the description. Our procedures also included testing the operating effectiveness of those controls that we consider necessary to provide reasonable assurance that the related control objectives stated in the description were achieved. An examination engagement of this type also includes evaluating the overall presentation of the description and the suitability of the control objectives stated therein, and the suitability of the criteria specified by the service organization and described at page 12. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Inherent limitations

Because of their nature, controls at a service organization may not prevent, or detect and correct, all errors or omissions in processing or reporting transactions. Also, the projection to the future of any evaluation of the fairness of the presentation of the description, or conclusions about the suitability of the design or operating effectiveness of the controls to achieve the related control objectives is subject to the risk that controls at a service organization may become inadequate or fail.

Opinion

In our opinion, in all material respects, based on the criteria described in Roll Pay Payroll Services, Inc.’s assertion on page 11,

a. the description fairly presents the system for processing user entities’ payroll transactions throughout the period January 1, 2014 through December 31, 2014.

b. the controls related to the control objectives stated in the description were suitably designed to provide reasonable assurance that the control objectives would be achieved if the controls operated effectively throughout the period January 1, 2014 through December 31, 2014.

c. the controls tested, which were those necessary to provide reasonable assurance that the control objectives stated in the description were achieved, operated effectively throughout the period January 1, 2014 through December 31, 2014.

Description of tests of controls

The specific controls tested and the nature, timing, and results of those tests are listed on pages 15–18.

Restricted use

This report, including the description of tests of controls and results thereof on pages 15-18, is intended solely for the information and use of Roll Pay Payroll Services, Inc., user entities of Roll Pay Payroll Services, Inc.’s system for processing user entities’ payroll transactions during some or all of the period January 1, 2014 through December 31, 2014, and the independent auditors of such user entities, who have a sufficient understanding to consider it, along with other information including information about controls implemented by user entities themselves, when assessing the risks of material misstatements of user entities’ financial statements. This report is not intended to be and should not be used by anyone other than these specified parties.

Michael Scarn, CPA

January 25, 2015

Scranton, PA

 
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Export Summary

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Export Summary

This document was exported from Numbers. Each table was converted to an Excel worksheet. All other objects on each Numbers sheet were placed on separate worksheets. Please be aware that formula calculations may differ in Excel.
Numbers Sheet Name Numbers Table Name Excel Worksheet Name
Instructions
Table 1 Instructions
P1.3A
Table 1 P1.3A
P1.5A
Table 1 P1.5A
P2.4A
Table 1 P2.4A

Instructions

BUS591 Workbook Template
Tips for using the weekly workbook templates:
1) Locate the assigned exercises or problems at the end of the chapter reading in your textbook.
2) Download and save the workbook to your computer in a location where you will be able to easily find it and retrieve it.
3) The workbook has a separate tab designated for each exercise and problem. Be sure to complete all tabs each week.
4) Each tab is pre-designed to fit the assigned problem. This should save you some time in formatting and allow you to focus on mastering the learning objectives required to successfully complete each problem.
5) Remember that you can use the formula functions within Excel to simplify your computations and reduce opportunities for typographical errors.
6) After you have completed the assignment, save the document, and upload for grading.
*Note: Not all lines on the template will be used for every problem. The template is simply a guide to save you time in formatting. Feel free to modify, add lines, or delete lines as you feel appropriate for each problem.

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P1.3A

Problem 1.3A
Elite Service Co.
(a)
ELITE SERVICE CO.
Income Statement
For the Month Ended June 30, 2022
1 Revenues 1
2 2
3 3
4 Expenses 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 Net income 12
13 13
ELITE SERVICE CO.
Retained Earnings Statement
For the Month Ended June 30, 2022
1 1
2 2
3 3
4 4
5 5
6 6
ELITE SERVICE CO.
Balance Sheet
June” “30”, “2022
1 Assets 1
2 2
3 3
4 4
5 5
6 6
7 7
8 Liabilities and Stockholders’ Equity 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
(b) & (c)
1 (b) 1
2 2
3 3
4 4
5 5
6 (c) 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15

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P1.5A

Problem 1.5A
Rojo Corporation
(a)
1 Items to be included: 1
2 2
3 3
4 4
5 5
6 6
7 7
ROJO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2022
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
(b)
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8

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P2.4A

Problem 2.4A
Loeb Corporation and Bowsh Corporation
(a) Loeb Corporation Bowsh Corporation
1 1
2 2
3 3
4 4
5 5
6 Net income 6
7 7
8 Earnings per share 8
9 9
10 10
11 Analysis: 11
12 12
13 13
14 14
15 15
16 (b) 16
17 17
18 18
19 Working capital 19
20 20
21 Current ratio 21
22 22
23 23
24 24
25 Analysis: 25
26 26
27 27
28 28
29 29
30 (c) 30
31 Debt to assets ratio 31
32 32
33 33
34 34
35 35
36 36
37 Free cash flow 37
38 Analysis: 38
39 39
40 40

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