WSP Accounting

WSP Accounting Assume US GAAP to answer this question. In 2017, $2 million in wages were earned and no cash wages were paid. In 2018, $8 million in wages were earned and $7 million in cash wages were paid. - Cash wages were used to first pay wages earned in 2017 with the remainder used to pay wages earned in 2018. - Any earned but unpaid wages will be paid during the first quarter of 2019. Using only the information provided, which of the following statements is most accurate? Liabilities increased by $1.0 million in 2018 Liabilities increased by $3.0 million in 2018 Assets decreased by $5.0 million in 2018 Retained earnings decreased by $10.0 million in 2018 Retained earnings decreased by $7.0 million in 2018 - Liabilities increased by $1.0 million in 2018 A company reported gross profit of $20 million in 2018. In addition, it recorded the following activities: Sales and marketing expenses were $5 million. Interest income was $2 million. Sold equipment for $5 million that had a net book value of $9 million. $3 million in preferred stock issuance. Company's tax rate is 40%. Calculate the company's net income. $5.4 million $6.0 million $6.8 million $7.2 million $7.8 million - $7,800,000 Gross Profit: 20,000,000 Sales and Marekting Exp: -5,000,000 = Operating Income: 15,000,000 Loss on Sale: -4,000,000 Interest Income: 2,000,000 = Adjusted Income: 13,000,000 Tax: -5,200,000 --> (13,000,000 x 40%) Net Income: 7,800,000 The next two questions use the following data from TGX Global, a heavy equipment manufacturer (this information will be repeated on the next question): TGX Global sells excavators, with an average sale price of $500,000 per excavator. TGX received new orders for 90 excavators in 2018. TGX produced & delivered 120 excavators in 2018: 50 excavators were ordered in 2017 and the rest (70 excavators) were ordered in 2018. TGX received payment for 110 excavators. TGX began selling 1-year maintenance services contracts for $50,000 per excavator in 2018, which begin after the excavator is delivered. Contracts were sold on 50% of all excavator orders made in 2018 (no contracts were sold on orders placed in 2017). Assume all excavators delivered in 2018 are delivered at year end, calculate TGX's 2018 revenue based on the transactions described above. - Total Revenue: 66,000,000 Excavators delivered in 2018: 120 Price per unit: 500,000 Total Rev 2018: = 60,000,000 Maintenance service rev: 50,000 at 120 units = 6,000,000 Final total: 66,000,000 Assume now that instead of the revenue recognized in the previous question, TGX recognized $50 million in revenue for 100 excavators (and assume no maintenance contract revenue was recognized). In addition, the following occurred in 2018: TGX recognized $2 million in shipping and delivery costs for the materials it uses to produce excavators. TGX recognized $6 million in direct labor expenses. TGX recognized $3 million in commissions paid to its salespeople for selling the excavators. TGX purchased $60 million in raw materials in 2018, of which $50 million was in cash. Raw materials required to assemble each excavator cost $300,000 per excavator. Calculate TGX's 2018 gross profit based on the transactions described above. $(15.0 million) $9.0 million $12.0 million $14.0 million $18.0 million - Gross Profit: 12,000,000 Revenue: 50,000,000 for 100 Raw Materials: -300,000*100 = 30,000,000 Labor: -6,000,000 Ship/Delivery: -2,000,000 GP = 12,000,000 Fairview Corporation recorded the following in 2018: After-tax net income was $20 million in 2018. The actual share count at the beginning of the year was 10.0 million. Fairview repurchased 2 million shares at $12/share in the middle of 2018. Fairview issued preferred dividends of $3 million and common dividends of $2 million. Fairview issued 4 million stock options in 2018 that begin to vest in 2019. Calculate 2018 basic earnings per share (EPS). 1.25 1.67 1.89 2.22 2.25 - 1.89 Dynamic Resources reported the following information for year ending June 30, 2016 (values in millions): Plant, Property & Equipment, gross: $3,000 Accumulated Depreciation: 1,400 Plant, Property & Equipment, net: 1,600 Salvage Value: 200 The company also reported the following transactions on the first day of fiscal 2017: Sale of asset with gross PP&E of $600 million for $500 million and useful life of 3 years and no salvage value. Recorded a gain on sale of $300 million. Write off of asset with gross PP&E of $400 million. Asset was purchased 3 years ago with original useful life of 4 years and salvage value of $200 million. Purchase of new equipment for $1,400 million with useful life of 8 years and no salvage value. Assuming the remaining useful life of other equipment is 10 years on a straight-line basis, what is the net PP&E as of June 30, 2017? $2,260 million $2,175 million $2,300 million $2,435 million - $2,260 million For this question, use the financials of Acme Corporation. Note the industry average ratios below: A/R days (based on average balances) = 57 days A/P days (based on average balances) = 23 days Current ratio (based on ending balance) = 1.8x Based on Acme's A/R days, A/P days and Current ratios for the nine months ending September 30, 2017, which of the following conclusions is most accurate? Assume 273 days in the nine months ending September 30, 2017 and 365 days in the year. Compared to the industry average: -