Aug 29, 2021 | Uncategorized
Mobile computing has dramatically changed how information is accessed and shared. Wireless networking has been an enabler of mobile computing. One profession that mobile computing has had a big impact on is health care management. Patients are now able to monitor their vital signs such as blood pressure, glucose levels, etc. without having to periodically visit a doctor’s office or hospital. There are devices such as the Withings Blood Pressure Monitor that works with an iPhone, iPod Touch, or iPad to record, track, and graph a patient’s blood pressure. There are other devices that can measure blood glucose levels, oxygen levels, heart rate, etc. and use an iPhone to send the results to a clinical server. Doctors and caregivers are then able to access the data on the clinical server.
According to the American College of Gastroenterology, social networking sites like Facebook, Twitter, and YouTube are used as powerful platforms to deliver and receive health care information. Patients and caregivers are increasingly going online to connect and share experiences with others with similar medical issues or concerns Patients are able to take advantage of social networks to do more than just share pictures and tweets.
YOU WANT A PROFESSIONAL WRITER TO WORK ON THIS PAPER? CLICK HERE TO MAKE AN ORDER …..
Write a four to five (4-5) page paper in which you:
1. Compare and contrast monitoring of patient vital signs using mobile computing technology to in-patient visits to the doctor’s office or hospital.
2. Analyze the advantages and disadvantages of using mobile computing technology to monitor patients.
3. Assess the security concerns with regard to the transmission of personal medical information over wireless networks.
4. Assess the use of social networking for group support for patients with similar medical concerns.
5. Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites do not qualify as quality resources.
Your assignment must follow these formatting requirements:
· Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
· Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric.
Aug 29, 2021 | Uncategorized
Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is .40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.
1. Find the contribution margin per haircut. Assume that the barbers’ compensation is a fixed cost. Show calculations to support your answer.
2. Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.
3. What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.
4. Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? Show calculations to support your answer.
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Grading Criteria
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Percentage
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Find the contribution margin per haircut.
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25%
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Determine the annual break-even point, in number of haircuts.
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25%
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What will be the operating income if 20,000 haircuts are performed?
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25%
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|
Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)?
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25%
|
Aug 29, 2021 | Uncategorized
Question Submitted by swet_c on Tue, 2014-01-21 23:48 due on Wed, 2014-01-22 09:00 answered 2 time(s) Hand shake with phyllis young: In progress Hand shake with JustQuestionA…: In progress Hand shake with surayaTop rated: In progress Hand shake with archmage: In progress Hand shake with Charity the p…: Complete ($18.00 paid) Hand shake with Best of Best: In progress swet_c is willing to pay $60.00 swet_c bought 30 out of 32 answered question(s) More questions like this How do I calculate WACC,… 5 5.2 5 Finance 2 5 Final Assignment 5 Genesis Capital plan report 5 Genesis Project 5 not sure what to do 4 Assignment 2: Genesis Capital Plan… 1 Genesis Capital Plan Report Genesis Capital Plan Report Genesis plan report Genesis Capital Plan Report Genesis Capital Plan Report Genesis Capital Plan Report M6 A2 Assignment 2: Required Assignment 2—Genesis Capital Plan Report The Genesis operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to present a capital plan for the operating expansion.
The Genesis operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to present a capital plan for the operating expansion. The capital plan was not to be a wish list but an analysis of the necessary expenditures to successfully establish a fully equipped operating facility overseas.
In addition, senior management requested meaningful financial and operating metrics to ensure that the performance objectives for the facility were being met. The operations management team was given five days to accomplish the following:
Calculate the firm’s WACC.
Prepare and analyze each planned capital expenditure.
Evaluate, rank, and recommend the capital expenditures according to beneficial value to the organization, using the evaluation tools NPV, payback, and IRR. Evaluation, ranking, and recommendations should be by category of expenditures. For example, facility, equipment 1, 2, and 3, and inspection.
Using the selected choices in part three, calculate the full cost of establishing a fully equipped facility. This would include the facility, equipment 1, 2, and 3, and inspection. In addition, calculate the payback, NPV, and IRR for the completed facility.
Construct and recommend between three and five metrics to measure the performance of the organization. At least one metric should be dividend decision-making driven.
Prepare an executive summary along with a separate document showing the calculations.
Aug 29, 2021 | Uncategorized
Your assignment is to find information about the following organizational components discussed in this module as they relate specifically to the Kraft Foods Group. Do your best not to speculate but to find factual information concerning the topical areas below. The following list of questions may help you focus your search (source: Obtaining information about organizational components critical to implementation [adapted from Aaker, D.A. (2001) Developing Business Strategies. Wiley]):
Structure
1. What is the organization’s structure? How decentralized or centralized is it?
2. What are the lines of authority and communication?
3. What are the roles of teams, committees, and task forces?
Systems
1. How are budgets set?
2. How is planning done?
3. What measures are used to evaluate performance?
People
1. What are the skills, experience, and knowledge of the firm’s employees?
2. What is their depth and quality?
3. What are their attitudes about the company and their jobs?
Culture
1. What are the company’s values and are they widely shared and accepted by employees?
2. What are the key norms of behavior?
3. What are some significant symbols?
4. What is the dominant management style?
5. How is conflict resolved?
Aug 29, 2021 | Uncategorized
Browse the Internet to acquire a copy of the most recent annual report for a publicly traded company. (Go to the company’s website and the Annual Report is often listed under the “Investor Relations” tab or something similar. You’ll have to look through the report for the financial statements – they are usually just a few pages of a many-page report.)
Analyze the information contained in the company’s balance sheet and income statement to answer the following questions:
· What are the company’s total assets at the end of its most recent annual reporting period? Why is this important?
· What are the total assets at the end of the previous annual reporting period?
· How much cash and cash equivalents did the company have at the end of its most recent annual reporting period?
· What amount of accounts payable did the company have at the end of its most recent annual reporting period?
· What amount of accounts payable did the company have at the end of the previous annual reporting period?
· What are the company’s net revenues for the last three annual reporting periods?
· What is the change in dollars in the company’s net income from its most recent annual reporting period to the previous annual reporting period?
· What are the company’s total current assets at the end of its most recent annual reporting period?
· What are the total current assets at the end of the previous annual reporting period?
· What in the information above would be important to a potential investor, employee, and other interested parties?
Summarize the analysis in a 700- to 1,050-word paper in a Microsoft® Word document.
Include in your paper a copy of the company’s balance sheet and income statement (does not apply toward the word-count requirement).
Format your paper (just one file) consistent with APA guidelines
Aug 29, 2021 | Uncategorized
1. Discuss the steps involved in organizing an accident record system. Why are following each of these steps important? What type of data is required in an accident record?
Your response should be at least 300 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. Any references or citations used should be in APA style.
2. Describe the advantages of assigning a vehicle to an individual driver. Use examples to demonstrate how this action might save the company money, etc.
Your response should be at least 300 words in length. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. Any references or citations used should be in APA style.
3. Discuss the function of an accident investigator. What type of person should an accident investigator be? What kind of information should he or she gather from the accident?
Aug 29, 2021 | Uncategorized
You are a newly hired VP of mergers and special projects. You have noticed that there are shifts in the healthcare industry and you want to ensure your facility can continue to sustain itself in the future. You want to make a recommendation to pursue a specific population to increase funding, but you must make a logical explanation to the board.
Create a PowerPoint presentation (8-10 slides) and make a recommendation to the board. Use the notes section in PowerPoint to provide detailed speaker notes with your presentation that fully explain each point and justification for your recommendations.
Create a timeline of the development of the US healthcare system which includes the following :
The shift from physician power to insurance company control.
Public versus private sector institutions.
Medicare and Medicaid, Prospective Payment System, and the trend shift from private insurance to HMO.
Potential impact of U.S. healthcare system reform.
Discuss long-term care, special populations and palliative care. Also address insurance types for different populations and settings, systems for measuring quality, and types of providers working in each type of facility.
Aug 29, 2021 | Uncategorized
1. For questions 1-3 the three comparative analysis tools are:
1) In Horizontal Analysis (or trend analysis) you evaluate financial statement data over a certain period of time. Ex: You compare intracompany financials from 2 years at Parker Paper Products Company.
2) Vertical Analysis entails evaluation of the financial statement data whereby each data item is shown as a percent of the base amount. Using Net Sales as the base amount, in an income statement, you compute the percentage of income items for Parker Shoe Company and compare it to the percentage of income from Thomas Shoe Company.This way you can see how one is faring financially compared to the competitor.
3) Ratio Analysis involves analyzing data as an expression of relationship between certain financial statement data items. This tool is useful in detecting underlying problems that are not evident otherwise.
Decide which tool you would use based on each circumstance described.
Leatherbury Inc., which produces fine leather purses, wants to see how well it has performed during the last decade.
(Points : 2) Horizontal
Ratio Analysis
Vertical Analysis
Question 2. 2. Leatherbury Inc. management wants to explain to its financial backers how the data on its net sales relates to the inventory. (Points : 2)
Horizontal
Ratio Analysis
Vertical Analysis
Question 3. 3. The Leatherbury Inc. firm management wants to use percentage data to help investors understand their financial condition. (Points : 2)
Horizontal
Ratio Analysis
Vertical Analysis
Question 4. 4. Practice example: Nike, Inc. had current assets of $10,959 million and current liability of $3,364 million of current liabilities. Here we have basic information concerning current assets and current liabilities. What else does this tell us about the firm? If we apply ratio analysis we can determine that current assets are .326% of current liabilities and that current assets are 3.26 times current liabilities and that the relations of current assets to liabilities is 3.26:1
Now using your critical thinking skills (thinking beyond the obvious), the general use of financial statements, along with what you practiced concerning financial statement analysis tools, answer the following:
Scenario: Leatherbury Inc. a leading U.S. retailer has decided to expand globally by purchasing a small clothing manufacturing plant to reduce some of their production costs.
Discuss which of the financial statement analytical tools you would recommend be utilized before making this business decision. (Points : 3)
Aug 29, 2021 | Uncategorized
Research the Web, and select and discuss 3 tools that can be used to test network reliability.
Assignment Guidelines
· Research network reliability tools, and select 3 of them to analyze.
- Answer the following questions:
- What is the objective of each tool?
· How does each tool function with regard to network reliability testing?
· Use APA references and citations to support your assertions.
· Do not include a table of contents or abstract.
Grading Criteria:
Reliability is the ability of a system or component to perform its required functions under stated conditions for a specified period of time.
Examples of the tools that can be used include Windows Reliability and Performance Monitor tools and Vendor tools such as Insight Manager and Network Analyzer.
Aug 29, 2021 | Uncategorized
You work for Centervale Apparel, a large clothing manufacturing firm. Centervale Apparel has budgeted $9.7 million for new technology initiatives in the coming year but the project requests currently in the queue for next year total about $15 million. Your boss, the executive director of operations, has asked you to put together a proposal for this project to replace legacy order fulfillment technologies by implementing a supply chain management (SCM) system. Your boss wants to ensure this project will be prioritized over other projects on the list and will be implemented in the coming year. Use the following data to prepare a proposal using a balanced scorecard approach to demonstrate the project’s value to Centervale Apparel.
Here is your brief:
Business Problem: The order fulfillment team has been using several legacy technology systems to manage inventory and distribution. The current systems do not work together, requiring redundant information input and processing. Because of the redundant processes, work is duplicated requiring multiple data entry points and sometimes results in inaccurate and irreconcilable data. There is a constant overage or shortage of supply due to the time it takes for data to get from one point to another. This causes unhappy customers and inventory carrying costs that could be avoided.
Project Description: Replace legacy order fulfillment technologies by implementing a SCM system.
Project Cost: The project will cost approximately $1.2 million including infrastructure and resources to complete the implementation and $250,000 annually to support and maintain the new system with a ten-year lifecycle for the system.
Project Benefit: It is estimated that the implementation of a supply chain management system will improve the order fulfillment processing time and reduce inventory-carrying costs. Implementing the SCM system will also enable the retirement of several legacy systems. Estimated annual cost savings are:
Data entry staff reduced from 10 FTE to 8 FTE = $100,000/yr savings
Reduction in inventory carrying costs = $300,000/yr savings
Improved order fulfillment = 10–20% decrease in order to delivery time. This will improve customer satisfaction and retention
Improved data accuracy
Legacy system maintenance retirement savings = $100,000/yr
Using the information that details the primary business goals for the coming year, you will need to demonstrate how implementing the SCM system will help achieve the business objectives.
Note: Customers are retail companies who order from this clothing manufacturer. Assume a ten-year lifecycle for the SCM system.
Using the module readings and the Argosy University online library resources, research methods of developing proposals by applying the balanced scorecard approach. Select two scholarly resources for use in this assignment. You will use these resources to justify your recommendations.
The proposal should include the following:
Describe the measureable value. This should include a cost-benefit analysis, such as payback period or ROI that relies on tangible measures of organizational value through cost savings, revenue enhancements, or improvements in the speed, quality, or efficiency of key processes that help achieve competitive advantage (note the difference between tangible and intangible measures in this proposal).
Evaluate and choose alternatives. Make sure to identify any alternatives to the project implementation and provide a justification for each.
Complete a risk assessment of all risks associated with implementing the project using an enterprise risk management (ERM) model.
Describe total cost of ownership and include descriptions of implementation project and ongoing maintenance costs.
Explain the benefits of the project, which include tangible and intangible benefits.
Fully justify a recommendation with a compelling proposal that aligns to the business goals.
Aug 29, 2021 | Uncategorized
Suppose you are developing a statistical database in which information about professional football teams and records are stored.
Consider the following 2 sets of data that list football teams and quarterbacks:
D = {Jets, Giants, Cowboys, 49’ers, Patriots, Rams, Chiefs}
Q = {Tom Brady, Joe Namath, Troy Aikman, Joe Montana, Eli Manning}
Using D as the domain and Q as the range, show the relation between the 2 sets, with the correspondences based on which players are (or were) a member of which team(s). Show the relation in the following forms:
Set of ordered pairs
Directional graph
Is the relation a function? Explain.
Now, use set Q as the domain, and set D as the range. Show the relation in the following forms:
Set of ordered pairs
Directional graph
Is the relation a function? Explain.
Part II:
Mathematical sequences can be used to model real life applications. Suppose you want to construct a movie theater in your town. The number of seats in each row can be modeled by the formula C_n = 16 + 4n, when n refers to the nth row, and you need 50 rows of seats.
(a) Write the sequence for the number of seats for the first 5 rows
(b) How many seats will be in the last row?
(c) What will be the total number of seats in the theater?
Aug 29, 2021 | Uncategorized
Farm Branch Rentals has come to you and wants a review of the current financial position of the company as of December 31, 2011. Complete the following:
Prepare the 4 closing entries and post the transactions to the ledger accounts. Discuss the process and explain why these accounts are closed.
Explain those accounts that remain open and why.
In the review of the financials, be sure that you include all of the journal entries, adjustments, and employees that have been set up.
Discuss the 3 main financial statements and what information is revealed about the company’s current position and other related financials that are used during financial analysis.
Include at least 5 common financial ratios that help users of the financials understand the position of the company. Be sure to show your work on these ratios and explain why you are using specific numbers.
Include disclosures to accompany the December 31, 2011 financial statements.
Be sure to include a separate note addressing each of the following:
Maturity dates of major liabilities
Depreciation policy
Several examples of calculations of each to provide a thorough understanding
A memo of 350 words explaining the financial position of the company.
The deliverables for this part of the assignment are as follows:
PDF revealing the income statement
PDF revealing the statement of retained earnings (Your instructor will explain how to prepare this report.)
PDF revealing the balance sheet
PDF revealing the journal entry for the 4 closing processes
Memo of 350 words explaining the financial position of the company
Aug 29, 2021 | Uncategorized
Assignment 2: Cost of Debt and Equity
The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital. Nevertheless, the guidelines failed to fully demonstrate the essence of the cost of debt and equity, which is the required rate of return expected by suppliers of funds.
You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6–8 minutes using the examples and information below:
1. Debt: Jones Industries borrows $600,000 for 10 years with an annual payment of $100,000. What is the expected interest rate (cost of debt)?
2. Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones’s stock (cost of equity). Here are the details:
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Jones Total Assets
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$2,000,000
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Long- & short-term debt
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$600,000
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Common internal stock equity
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$400,000
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New common stock equity
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$1,000,000
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Total liabilities & equity
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$2,000,000
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Develop a 10–12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculation into your presentation. Include speaker’s notes to explain each point in detail. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M4_A2.ppt.
By Wednesday, January 15, 2014, deliver your assignment to the M4: Assignment 2 Dropbox.
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Assignment 2 Grading Criteria
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Maximum Points
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Calculated the expected interest rate (cost of debt).
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40
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Calculated the expected rate of return on Jones’s stock (cost of equity).
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40
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Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.
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20
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Total:
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100
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Aug 29, 2021 | Uncategorized
Assignment 1: Discussion—Managing Finance
The Genesis operations management team was excited to understand the various options for securing financing to fund the rapid growth plans. The team was surprised by the cost associated with using funds supplied by others after accounting for risk of investments in its small but profitable company. Sensible Essentials explained how the cost of external financing can be calculated.
Using the readings for the module, Argosy University online library resources, the Internet, and the sources you identified in Module 3, do the following:
Explain with examples how the cost of capital is determined.
Calculate the differences in cost and risk. Explain why the costs and risks of external financing are important for the organization to understand.
Explain why rapid growth plans are important to a small company. Would there be a more efficient way to fund a growing company? Why or why not? Justify your answer.
Aug 29, 2021 | Uncategorized
By Saturday, January 11, 2014, respond to the discussion question. Submit your responses to the appropriate Discussion Area. Use the same Discussion Area to comment on your classmates’ submissions by Saturday, January 11, 2014, and continue the discussion until Wednesday, January 15, 2014 of the week.
We make attributions every day about our own behaviors and the behaviors of the people that we interact with. And depending on what we attribute to the cause of a person or our behavior this directly affects our attitudes and behaviors toward that person. If our attributions are correct, then outcome can be positive, as they can help us to work more effectively with that person or to make better decisions for ourselves. However, if we make an error in our attribution of the cause of a behavior, then our own following behaviors can negatively compound the situation.
Consider the following situations that we have all experienced:
You go out to lunch with your friend and find that your waitress is a bit absentminded and is not in the best of mood as she takes your order and serves you. You tell your friend that this lady should not be a waitress and needs to find a new job because her attitude stinks.
You pull into a gas station and there is only one free pump, but you cannot get to it because there is a person at the first pump. You think to yourself “What a jerk, I can’t believe they did not pull up to the second pump.”
Why were these attributions and assumptions made in each situation? Are they most likely accurate or not?
What are some alternative explanations for the behaviors of the waitress and person pumping gas? Why do we typically not assume these later explanations but rather jump to the conclusions made in the examples?
If you were the person in each of these scenarios and took a minute to look back at these behaviors would you have the same thoughts about yourself (you are in the wrong job or that you are a jerk)? Why might the attributions of your own behaviors be different than your attributions of others’ behaviors?
With all of this in mind how will you apply this to your future attributions and associated behavior when faced with these types of situations?
Aug 29, 2021 | Uncategorized
Be sure to include both in-text or parenthetical citations as well as a Works Cited. Most of you did this, but some are lacking direct quotes and/or paraphrases to defend your responses.
Organize your response into meaningful paragraphs with a basic intro, body, and conclusion.
Label your blog as per the directions in the syllabus and my previous emails. (You WILL be counted off for this, as it has been pointed out to you multiple times. It may seem meaningless, but it DOES help with collaboration, organization, and grading.)
When you respond to your peers, be sure to actually continue the conversation. Do not simply agree or disagree. A good strategy might be to use the PQW method: Praise – What did the writer do well? What concepts do you agree with? Where was the support substantial or meaningful? Question – What are you still confused about? What questions do you still have about the writer’s explanation? Wish/Wonder – Where could the writer improve? Where is additional support or explanation needed? What concepts do you disagree with or have a contrasting experience?
Aug 29, 2021 | Uncategorized
If using the Ballard Integrated Managed Services, Inc., (BIMS) case study overview:
Revise the report submitted in Week Two based on the feedback provided by the instructor in the Learning Team assignment, and insight gained by reading.
Analyze the data included in BIMS case study Part 1 by computing descriptive statistics in the form of tables, charts, measures of central tendency, and variability.
Prepare a 1,050- to 1,750-word report of conclusions drawn from the data and make recommendations to the management.
If using the Ballard Integrated Managed Services, Inc., (BIMS) case study overview:
Revise the report submitted in Week Two based on the feedback provided by the instructor in the Learning Team assignment, and insight gained by reading.
Analyze the data included in BIMS case study Part 1 by computing descriptive statistics in the form of tables, charts, measures of central tendency, and variability.
Prepare a 1,050- to 1,750-word report of conclusions drawn from the data and make recommendations to the management.
Aug 29, 2021 | Uncategorized
Using the 8 elements of reasoning that were outlined in week 2 (Purpose, problem, information, concepts, assumptions, inferences, points of view, implications or consequences) choose a news article and break it down according to those elements. You will also describe how each of the 8 intellectual standards (clarity, accuracy, precision, relevance, depth, breadth, logic, and fairness) were used or not used in the article, supported by an example. The conclusion of your paper will then need to describe how you feel the article is biased. Please be sure to include the URL for the article that you have chosen. Your response should be at least 500 words.
Note** This assignment is not asking you to analyze a story. You need to analyze the presentation of the story. For example, examine the purpose the news media has in publishing the story… don’t examine the purpose ofthe story. In another example, in examining bias, find any logical fallacies in the publishing of the story, not the story itself. We are critically examining whether or not we should believe everything we see or read. Is the news media pushing an agenda, selling an idea or product? This is your task. Ask questions, if you are not sure.
Aug 29, 2021 | Uncategorized
1. The paper should be at least 4,000 words and include at least 10 references.
2. Pick a topic*that is interesting and has relevance for you.
3. In the first paragraph explain your topic and the key the questions you are trying to understand and/or solve.
4. In the middle paragraphs explain what your research has led you to believe about your topic and questions. State what you have learned about the topic and questions. State and support your opinions and conclusions.
5. In the last paragraph summarize your topic, questions, learning and conclusions. Also state further research opportunities (if any).
6. Use additional pages to further support or illustrate conclusions if needed (e.g. exhibits of data).
7. Use clear and concise language and sentence structure.
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Date(s)
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Paper
|
Topic
|
|
1/11
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Paper Topic&
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Brief Presentation/Discussion and One Page Summary of Paper Topic
|
|
1/14
|
Paper References
|
Brief Presentation/Discussion and One Page Summary of Paper References
|
|
1/20
|
Paper Outline
|
Brief Presentation/Discussion and One Page Summary of Paper Outline
|
|
1/25
|
Research Paper
|
Final Research Paper Due on 1/25/2014
|
Aug 29, 2021 | Uncategorized
Write a procedural email to employees reminding them of key components of a company policy on acceptable use of email and text messaging. The policy should address security issues, privacy issues, and company monitoring of messages. Consider policies on appropriate message content, the consequences for using company equipment to send harassing messages, and a policy on the use of company system for sending personal email messages.
The message should take the “form” of an email; however, you will submit your assignment to the online course shell.
For the procedural message, you must:
Follow proper format.
Use a descriptive title or heading.
Use bullets as needed to emphasize key points.
Include appropriate greeting and salutation.
Have the following content:
Introduce the main idea of the message in a concise, informative manner.
Itemize and explain three (3) to five (5) key points with details.
Provide information about where and to whom questions should be directed.
Clarity, writing mechanics, and formatting requirements.
Begin statements with action verbs.
Use correct grammar, punctuation, mechanics.
Avoid spelling errors.
Your assignment must:
Be typed, single spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Submitting your assignment:
Submit your assignment through the online course shell.
You do not need to email your assignment to your instructor.
The specific course learning outcomes associated with this assignment are:
Use writing process strategies to develop brief business documents, such as routine messages, bad news messages, and persuasive / sales messages.
Support ideas or claims in body paragraphs with clear details, examples, and explanations.
Organize ideas logically by using transitional words, phrases, and sentences.
Use sentence variety and effective word choice in written communication.
Write clearly and concisely using proper writing mechanics.
YOU WANT A PROFESSIONAL WRITER TO WORK ON THIS PAPER? CLICK HERE TO MAKE AN ORDER …..
Part 2
Assignment 1.2: Procedural Message – Revised Version
Due Week 3 and worth 100 points
Write a procedural email to employees reminding them of key components of a company policy on acceptable use of email and text messaging. The policy should address security issues, privacy issues, and company monitoring of messages. Consider policies on appropriate message content, the consequences for using company equipment to send harassing messages, and a policy on the use of company system for sending personal email messages.
The message should take the “form” of an email; however, you will submit your assignment to the online course shell.
Revise the procedural message to ensure you:
Follow proper format.
Use a descriptive title or heading.
Use bullets as needed to emphasize key points.
Include appropriate greeting and salutation.
Have the following content:
Introduce the main idea of the message in a concise, informative manner.
Itemize and explain three (3) to five (5) key points with details.
Provide information about where and to whom questions should be directed.
Clarity, writing mechanics, and formatting requirements.
Begin statements with action verbs.
Use correct grammar, punctuation, mechanics.
Avoid spelling errors.
Your assignment must:
Be typed, single spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Submitting your assignment:
Submit your assignment through the online course shell.
You do not need to email your assignment to your instructor.
The specific course learning outcomes associated with this assignment are:
Use writing process strategies to develop brief business documents, such as routine messages, bad news messages, and persuasive / sales messages.
Support ideas or claims in body paragraphs with clear details, examples, and explanations.
Organize ideas logically by using transitional words, phrases, and sentences.
Use sentence variety and effective word choice in written communication.
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clear answer. For example, if a person gets a divorce, shutters a plant, sells a losing investment, or closes their business, will he or she be better off? The following case incorporates nearly all of the material you have covered this far and presents an example of one such choice where nearly all of the alternatives have a significant downside risk.
Review the following information from the article “A Cost-Benefit Analysis of the New Orleans Flood Protection System” by Stéphane Hallegatte (2005):
Hallegatte, an environmentalist, assigns a probability (p) of a Katrina-like hurricane of 1/130 in his cost-benefit analysis for flood protection. However, the levees that protect New Orleans also put other regions at greater risk. You may assume the frequency of other floods is greater than Katrina-like events (Vastag & Rein, 2011).
The new levees that were built in response to Katrina cost approximately fourteen billion dollars (in 2010). This is in addition to the direct costs of Katrina (eighty-one billion dollars in 2005).
50 percent of New Orleans is at or below sea level.
A 100-year event means that there is a 63 percent chance that such an event will occur within a 100-year period.
The following are the interested (anchored and/or biased) constituencies:
Residents of New Orleans—both those that can move and those who cannot move
Residents of the surrounding floodplains at risk from New Orleans levees
The Mayor of New Orleans
The federal government—specifically taxpayers and the Federal Emergency Management Agency (FEMA)
YOU WANT A PROFESSIONAL WRITER TO WORK ON THIS PAPER? CLICK HERE TO MAKE AN ORDER …..
Assume that the availability heuristics make people more risk averse (populations drop, at least in the short term). Consider how this would affect the local economy.
You are an analyst at FEMA and are in charge of developing a recommendation for both the state and the local governments on whether or not to redevelop New Orleans.
Write a report with your recommendation. Address the following in your report:
Part A
Analyze the economics of New Orleans in light of the above parameters and develop your own Cost-Benefit Analysis (CBA) for rebuilding.
Evaluate the value of the CBA for each constituency and integrate these estimates into a scenario model and/or decision tree. Analyze the results.
Clearly each of these constituencies may both overlap and be prey to a variety of group dynamics internally. For one of these options, discuss the decision pitfalls to which they may be susceptible and make a recommendation on how to alleviate these pressures.
Starting with your CBA, estimate the relevant expected utility for theinterested constituencies.
Note: You need not have absolute amounts but your relevant utilities should be proportional to one another.
Hint: If you assume that your total CBA for New Orleans is fixed for each constituency (do not forget the overlaps), then each constituency will have a piece of the utility pie.
Part B
Make a case for or against rebuilding the city of New Orleans. This should be an executive summary; be concise and brief. Include exhibits.
Whether you are for or against, discuss how social heuristics could be used to your advantage, both ethically and unethically, in making your case. You may choose to fill the role of one of the constituents, if you prefer.
Write an 8–12-page report in Word format. Apply APA standards to citation of sources. Use proper spelling and grammar throughout, and keep the text legible and balanced with visuals.
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Preferred Stock Bailouts” Please respond to the following:
Section 306 of the IRC was enacted by Congress to prevent tax avoidance by distributing certain stock to a shareholder in a nontaxable stock dividend. Section 306 prevents shareholders from using a preferred stock bailout to convert ordinary income into a capital gain. Analyze the key provisions of Section 306 of the IRC, and outline a tax- planning strategy geared toward redeeming preferred stock with sale or exchange treatment as an alternative to Section 306.
From your analysis of Section 306 in the e-Activity, differentiate between the tax treatment of earnings and profit on the distributing corporation of both a sale of Section 306 stock and redemption of Section 306 stock. Suggest the most important reasons for this differentiation in tax treatment.
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Air France Flight 4590 was a Concorde flight operated by Air France which was scheduled to run from Charles de Gaulle International Airport near Paris, to John F. Kennedy International Airport in New York City. On 25 July 2000, it crashed in Gonesse, France. All one hundred passengers and nine crew members on board the flight died. On the ground, four people were killed with one left injured.
What most people don’t realize is that this was a FOD incident. During takeoff, an Air France Concorde (Flight 4590) ran over a piece of metal on the runway. The piece of metal caused a tire to fail; pieces of the tire ruptured the fuel tank, ignited the fuel and ultimately resulted in a loss of aircraft control that ended with the Concorde crashing into a nearby hotel.
An investigation found that a full runway inspection was canceled just hours before the crash. This is a clear example of why we have a 139 certification program, and an incident such as this would be included in Phase II of the SRM process.
Your turn; Choose a portion of the 139 certification process and tell us about why it is so important and initial post should be at least 250 words.
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Name Public Policy Theory Paper
Due Date Friday, March 14, 2014 6:00:00 PM PDT
Points Possible 300
The major project in the course is a public policy theory paper in which you apply course materials to a policy area (i.e., a model, theory, framework), which could include a topic relevant to your own interests and degree track (e.g., ocean policy, forest policy, water policy, health policy, rural policy, etc.). Length expectations will be discussed in class. The paper is worth a maximum of 300 points. Papers should use APA citation format, have proper grammar and spelling, and presents a proper introduction. If there are multiple spelling errors, bad grammar, or a failure to communicate the thrust of your paper in the introduction, I will not read the rest of the paper. An Initial Policy Theory Paper statement (1-2 pages plus outline) is due in class on January 16. This statement should look like a memo and include the topic, paper outline, proposed policy framework/theory, and at least 5 references on the topic. Failure to submit the statement will result in a lower final score. THE FINAL PAPER IS DUE March 14 BY 6:00 PM (Black Board submission)).
Your analysis should include the components below. In each case it is essential that you draw on and cite relevant course and other materials:
1. Introduce the topic and the issues raised: background, a quick overview of what has happened (e.g., on the agenda, passed, being implemented; or put on agenda but failed to pass), current status, AND what policy framework/theory/model you will use and why it is appropriate for you issue area. Failure to apply a policy framework/theory/model will lead to a failing score.
2. Examine the emergence of that topic as an issue, that is, agenda setting, including relating it to interests and ideas of important political participants. In addition, consider groups, if any, who might logically have been participants but who appear not to have been involved and examine reasons for non-involvement.
3. Policy development and adoption or non-adoption: Among the topics you should consider are the roles of various groups and individuals, the likely role of such analytic methods as cost-benefit-analysis and other methods discussed as part of policy development.
4. Policy implementation-if the policy was adopted-and examination of implementation successes and limits. Obviously this cannot be applied to policies that were not adopted.
5. Policy evaluation, whether or not the policy was adopted. If adopted, what evaluations and adjustments; if not adopted, what evaluation of the continuing “problems” addressed by the proposals.
6. Summary: an overall analysis of the policy area in terms of the themes, issues, and approaches developed in the course. Did your theory/framework/model explain developments for your policy topic?
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Dealing with the Global Workforce” Please respond to the following:
•From the scenario, assess the importance of developing and adhering to a strategic plan when a company attempts to expand beyond its domestic business operations. Suggest two (2) best practices that a company should follow when attempting to complete such an expansion. Justify your response.
•From the “Business Etiquette: Dealing with the Global Workforce” reading in Chapter 3 of the text, determine two (2) reasons why using the identified tips are important when you are using virtual team members for your organization. Provide at least two (2) examples of where these recommendations would be effective for a company that operates internationally.
•Journal Entry 2: Prepare a one to two (1-2) paragraph journal entry that examines your learning experiences with ORION in Week 2 of this course, that addresses the following:
1.Determine the primary manner in which ORION has increased your business knowledge in the related subject area.
2.Discuss specific challenges that you may have experienced with any of the subject matter presented, and point out the areas for which you would like more information.
3.Suggest at least two (2) possible applications of this week’s material to the company that you currently work for or hope to work for in the future
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Write a 2 page paper that addresses the following:
1. Describe the normal pathophysiology of gastric acid stimulation and production.
2. Explain the changes that occur to gastric acid stimulation and production with
a. GERD,
b. PUD,
c. Gastritis disorders.
3. Explain how the factor you selected might impact the pathophysiology of
a. GERD
b. PUD, and
c. Gastritis.
4. Describe how you would diagnose and prescribe treatment of these disorders for a patient based on behavioral factor you selected.
5. Construct a mind map for gastritis in the map include
a. The epidemiology,
b. Pathophysiology,
c. Clinical presentation, as well as the
d. Diagnosis and treatment you explained in your paper
6. Include all subheadings and references
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Research three articles (empirical) on ethics in information technology.
Read each article and prepare a summary of each article using the following format (for each article create the four sections as follows):
1.Problem addressed in the article.
2.Findings
3.Implications for the businesses and people
4.comments and Conclusions
5. Each article summary should be at least two-page long excluding figures, references, and cover page.
Cite the article accurately as shown in an example below:
Kirsten McKenzie & Robert Schweitzer, “Who Succeeds at University? Factors predicting academic performance in first year Australian university students” Higher Education Research & Development , Volume 20, Issue 1, 2001 pages 21-33
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Materials science is an interdisciplinary field where science and technology are used to develop and apply our understanding of matter at the atomic level to improve existing or to make new materials. It is a fusion of the basic scientific fields of physics and chemistry where knowledge of atomic theory, molecular bonding, and the macroscopic properties of metals, ceramics, and plastics come together to solve manufacturing and engineering problems.
Use the Internet, Argosy University library resources, and your textbook to research materials science. Do the following:
Discuss scientific and technical concepts related to materials science. Use the manufacturing of one of the following materials as the basis for your response:
Plastics
Glass
Metals
Discuss how materials science has advanced to the stage where materials can be engineered to fit a specific purpose.
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how it has influenced and made possible so much of our artistic heritage. Then, explore that issue at the two websites below. Explain how a shift in artistic patronage signified the diminishing power of the church and give an example of an artwork or musical composition, artist or composer, and patron indicating this change. The chapter has plenty to choose from, as do the websites.
?Explore these websites for patronage insights and examples –
Chapter 24 explores key developments and principles of the Enlightenment. It also (pp. 785-791) covers Europe’s increasing encounter with cultures around the globe that were very different. Besides this chapter, also review the summary at the link below. Then, discuss the notion of the “noble savage”, and explain whether this idea reflected or contradicted the philosophical views of the Enlightenment.
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How does a government budget surplus affect the U.S. economy? Identify two periods in recent history in which the United States has run budget surpluses. What were the reasons for the surpluses during those time periods?
What are the potential consequences of a country having a large overall debt? If you were in the position to implement a solution for the country’s long-term debt, what would it be and why?
How does a government budget deficit affect the economy? Identify two periods in recent history in which the United States has run budget deficits. What were the reasons for the deficits during those time periods?
What are the positive and negative aspects of budget deficits and surpluses? What policy is best for today’s economy? Explain your answer.
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Perform a financial analysis with the concepts discussed throughout this.
Requirement
You will individually perform an economic analysis of the Cemex Corporation ?To do so, you must take the following steps:?Use the attached accounts that can be downloaded from their last Annual Report published online, then take the following steps:?
1. Carefully read the annual report and the income and cash-flow statements?
2. Reclassify the expense and income statements by function. ?
3. Perform a horizontal analysis. Note the most significant aspects of the analysis in a Word document.?
4. Perform a vertical analysis. Note the most significant aspects of the analysis in a Word document.?
5. Define, calculate and interpret the main ratios related to profit, productivity and the rest of significant expenses and revenue.?
7. Propose indicators for intangibles and social accounting that the company should measure in its BSC.?
8. Draw up a scorecard of strengths and weaknesses. ?
9. Write a summary with the financial analysis of the company.??
?Evaluation
The weight of this activity accounts for 5% of the total grade.???
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Portfolio task 2
Portfolio task 2: How can we and should we assess, and what are some different ways of doing so?
Teachers and schools need to assess student progression in a broad, encompassing and systematic way. This paper will examine and discuss the aspects of student progression and development that are assessed in schools, and the strategies used to do so. It will also present a view regarding the value of assessing the various elements and the appropriateness of the methods and strategies used.
Students will need to consider readings from weeks 4 -10 in particular but should also draw from their earlier readings. They should discuss assessment at the individual, class and school level, and should consider affective as well as cognitive domains.
Portfolio task 3
Portfolio task 3: How might a teacher manage to monitor and evaluate student learning effectively?
This paper will identify the nature and purpose of feedback and should include its possible types, (nature and mode) and its appropriate timing. The value of feedback in its place as part of an overall quality assessment practice should be argued, and some effective strategies should be identified and evaluated. These strategies drawn from the research should be strongly linked to practical classroom examples. The risks to student progression of not giving good feedback should be understood. Constraints facing teachers in providing effective feedback should be acknowledged and strategies for overcoming these proposed.
Students focus on the material in weeks 5 and 6, but will also need to draw widely from their unit readings.
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Task
Background
The WBFK Transport Company operates throughout mainland Australia. The company specialize in fast delivery of pallet-loads of goods from one WBFK depot to another WBFK depot. It does not do pickups at a customers premises nor does it deliver door to door. It deals exclusively in Pallet size loads and is not involved in small parcel transport unless a customer with a small parcel is prepared to pay a full pallet price.
The business is thiving and has grown 60% in the last two years with 40% growth expected this financial year.
Currently there are depots in each State and Territory Capitals and additional depots as follows :
Three depots in Queensland located in Townsville, Mt Isa and the Gold Coast
Four depots in NSW located at Grafton, Dubbo, Newcastle and Woolongong
Four depots in Victoria at Geelong, Albury-Wodonga, Bendigo and Mildura
One depot in South Australia at Port Augusta
Two depots in WA at Freemantle and Broome
One depot at Alice Spring.
The business was originally started to carry freight between Melbourne and Sydney and has grown in answer to demand, rather than in a planned way. No attention has been paid to the efficiency of the business nor to analyzing costs. All freight from any depot outside a capital city is sent to that capital city then forwarded to the capital city in the state where it is addressed. Currently there is no direct transport from Queensland to any other State except through Sydney and all Ex-Sydney freight to States other than Queensland goes via Melbourne. Similarly, all Northern Territory freight is shipped via South Australia.
Your Project
You have been engaged as a project manager to scope a project which will analyze the freight currently handled by WPFK Transport.
The broad project brief is to find what volume of freight (number of pallets) goes between each depot.
It has been decided to survey each depot for two (2) two-monthly periods over the next eight months, once in November/December(very busy period) and again in March/April (quiet period).
The Company suspect they could make considerable savings and reduce delivery dates by initiating new routes. For example from Brisbane directly to Adelaide, via Dubbo and Mildura with drop-offs and pickups from interim depots along the way.
Your Project will define the Scope, construct the Work Breakdown Structure, define all of the activities and sequence these, schedule the project and then resource and budget the project using Microsoft Office Project.
NOTE:
You are not asked to design the survey document, nor produce a Business Report analysing the data collected during the two-monthly periods. Your project is to plan for and implement the project to collect the data.
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Research assignment:
“The impression one gains from the internal inconsistency of many of the arguments upon the which justification of conventional accounting, is made to rest is strongly reminiscent of the underlying philosophy of the rulers of Oceania in George Orwell’s Nineteen Eighty-Four. The distinctive feature of this philosophy is doublethink. Doublethink means the power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them”. Two examples are “ Valuations are incorporated in balance sheets, but the balance sheet is not a valuation document” and “ Fixed assets should be carried at cost…in historical cost, unless such cost is no longer meaningful”, [Chambers, R. (1969) ‘Implications of asset valuations and bonus issues’ in Accounting, Finance and Management, Sydney, Butterworths, p.122]
Required:
Discuss the above quotation, particularly as it applies to non-current assets. Do you consider Chamber’s assertion is justified?
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1. Analyze your current job, or a job with which you are familiar (for example, another job within your organization or perhaps the job of a family member or friend).
2. For the second part of the assignment, identify a job with the structure you did not use in your first example. For example, if the first job you identified has a job-based salary structure, then you will use the person-based salary structure for the second part of your assignment. You can use a job with which you are familiar, or conduct research about different jobs using sources like the Capella library.
Complete the following for each job:
•Identify the position using a descriptive job title.
•Define the pay structure.
•Explain a rationale about why this pay structure is appropriate for the position.
•Discuss the advantages and disadvantages of this type of pay structure.
Be sure to include citations for information obtained from at least two outside resources. Explain how each reference supports the advantages and disadvantages of the selected pay structure. Use a format similar to the example below:
Job Title: (For example, elementary school teacher.)
Pay Structure: (For example, person-based structure.)
Rationale: In this section, explain why you believe this is the appropriate structure for this type of job.
Advantages and Disadvantages: In this section, explain the advantages and disadvantages of the person-based structure from both the perspective of the employee and the organization.
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Module 3 – Case
Assignment Overview
The goal of this course is to gain a thorough familiarity with your role as a health educator. Draw from your knowledge and understanding of health promotion, health behavior theory or models and identify a need for health education, planning and implementing a health education program. It would be best if your selected program has ‘real world’ relevance and the need for its implementation is CURRENTLY urgent.
As evidence of progress on your final assignment submit a paper that contains the following:
•Identify and thoroughly explain how the proposed health education program will be carried out.
•Identify and provide rationale for any possible barriers or obstacles to implementation.
Demonstrate an ability to critique scholarly research by extensive use of pubmed/proquest.
Assignment Expectations
Please read before completing assignments.
•Assignment should be approximately 2-3 pages in length (double-spaced).
•Please use major sections corresponding to the major points of the assignment, and where appropriate use sub-sections (with headings).
•Remember to write in a Scientific manner (try to avoid using the first person except when describing a relevant personal experience).
•Quoted material should not exceed 10% of the total paper (since the focus of these assignments is on independent thinking and critical analysis). Use your own words and build on the ideas of others.
•When material is copied verbatim from external sources, it MUST be properly cited. This means that material copied verbatim must be enclosed in quotes and the reference should be cited either within the text or with a footnote.
•Use of peer-reviewed articles is required. Websites as references should be minimal.
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Each year the University of Maryland selects a book to provide a shared intellectual experience for faculty, staff and all first-year students. The First Year Book provides an opportunity for community dialogue on a topic from the perspective of different disciplines, from the sciences to the humanities. This year, the First Year Book committee selected journalist Brooke Gladstone’s The Influencing Machine. Gladstone, perhaps best known as the host of NPR’s “On the Media,” built a career covering the media in all of its intricacies. The book considers the role of “objectivity” and bias in the media, observing that we use social media to filter and make sense of what we hear from traditional journalism sources
Discuss a time when you witnessed the impact of citizen journalism in your community. What did this event teach you about the potential for an individual to influence public opinion?
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More info will be provided for teamwork and what we did in group for teamwork in class and seminar everything need to be interlink from filed work, presentation, seminar we did during our this course.
Students will individually prepare an essay to demonstrate an understanding of the theoretical underpinnings of the module (3,000 words ± 10%). The report will address the question.
‘How have the individual/group exercises and experiences on this module and (if applicable) from your experience of work confirmed or contradicted your understanding of [insert selected two areas of management theory]?
You should select three topic areas from the following;
Teamwork, motivation, leadership,
Your paper must address the following points, you may write in the first person:
a) demonstrate wide reading around the topics (you will be expected to have read, understood and correctly cited the key books and journal articles that are up to date)
b) critically analyse the findings of the key researchers/authors in the field
c) explore the different perspectives on the topics in a balanced way;
d) reflect on the implications for your approach to management, team working etc. as they relate to the group work you have undertaken on this module in particular focussing on the residential and presentation (including feedback sheets from the residential);
e) Follow the format for submission guidelines given in the table overleaf.
f) The paper should be logically structured with an introduction and conclusion that addresses the question set.
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Case Study – Pentangelli’s (P’s)
Pentangelli’s is a chain of restaurants within the North and East Ridings of Yorkshire specialising in Anglo-Italian Cuisine. Frankie Pentangelli, the original founder, set up his first restaurant in 1954 utilising a vacant village pub in Elloughton, East Yorkshire. He rapidly built an excellent reputation by providing innovative menus from locally sourced produce. This resulted in mention by Egon Ronay as ‘an oasis within a gastronomic desert!’
This sound foundation led to the opening up of a further 3 restaurants run by other family members including Frankie’s wife Jean, who had considerable experience in the hotel trade, and their daughter Tina, who had previously worked in public relations and developed some notoriety as the food critic of the local paper.
Luca, Frankie’s eldest son who had completed his training as a Sous Chef at the Savoy, ran the new prestigious restaurant within a five star hotel on the outskirts of York. This restaurant gained both rave reviews and a select clientele who would travel great distances to sample the food. The provision of catering at a couple of local society weddings had ensured that Luca’s restaurant had reservations 6 months in advance.
In 2002 Frankie retired from the business and Luca took the helm supported by his wife, Kathleen. Tina, with part time help from Jean, continued to run the original Elloughton restaurant and a manager, Sean, who had worked with Luca at The Savoy, was appointed to take on the other restaurant.
Luca saw this as an opportunity to exploit the brand of ‘Pentangelli’s whilst expanding the business rapidly. He decided to divide the business into 3 separate strands. The hotel restaurant was to remain exclusive and, although he appeared as ‘guest chef’ on special nights, Luca appointed a new chef to run the kitchens whilst maintaining creative control of the menus. The restaurant at Elloughton became a ‘gastro pub’ and Luca opened up a further 5 in village settings. The final restaurant which was situated in Beverley town centre became a Bistro known as ‘Take 5’ serving a lunchtime menu of light meals and a set menu in the evening. Another 2 Bistros were opened in York and Harrogate catering to the tourist and shopper trade. Luca announced that Tina would manage the Bistros and Jean was to take on the gastro pub’s.
This approach was opposed by Tina and Jean who felt that this strategy could result in the brand name being affected. In a heated exchange with her brother, Tina was heard to exclaim ‘we are likely to blacken both our family name and that of the restaurant if quality declines in any part of this business’. Shortly following these changes Jean decided to retire as the differences in the family were causing her distress.
Luca subsequently prompted Sean to run the 6 restaurants. Sean found the transition to this promotion problematical in that he appeared to have difficulty in organising both his own time and the managers he appointed to each restaurant. Sean, known for his attention to detail, was often frustrating to work with as he would prevent managers from making decisions without his approval. A well documented example was a meeting taking 2 hours to determine the shade of the napkins.
Recently, Sean was involved in a car accident as he rushed down country lanes from one gastro pub to another. He is likely to be off sick for at least two months and has been attempting to ‘manage’ the gastro pubs remotely.
Luca, has had to step in and close one of the gastro pub’s temporarily due to the Chef leaving following a visit from Environmental Health. Further complications have arisen in the local supply of meat products due to the recent outbreak of Foot and Mouth disease.
Take 5, however, has gone from strength to strength and has become very profitable. Under Tina’s management there have been a number of high profile newspaper articles praising the quality of food and service. Tine has achieved greater brand awareness through over-subscribed theme evenings including wine tastings and gastronomic events such as ‘taste the food of the Tudors’ and ‘Meet the big cheese’.
Luca, is now under pressure to ensure the brand of ‘Pentangellis’ does not suffer; he has therefore contracted you as a management consultant to advise him.
1.Critically evaluate how 2 key elements of the reward and development practices used either explicitly or implicitly in the case study organisation could contribute to the overall performance of the organisation (approx. 1000 words)
2.Outline, comment on and evaluate the challenges that the case study organisation has faced or could face when formulating a reward and development strategy. (approx. 1000 words)
You should consider the following when constructing this piece of work;
What are the reward and development practices that are used or could be used?
What are the good and bad pints about these practices?
What is the impact of these practices?
What gest in the way when the organisation is
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The purpose of this assignment is to develop a performance management process for an existing job, have a manager give you feedback on the process, then use the process and evaluate its effectiveness for yourself. The assignment will involve establishing methods for planning performance, providing feedback during the execution of performance, assessing performance, reviewing performance, and renewing and recontracting performance.
Part I – Create a performance management instrument/process.
Using your job description, and any additional materials you have at hand (e.g. past performance reviews, strategic planning documents, training materials, etc.), create a performance management process. The performance management process should include the following components:
1) Identify the purpose of rating – tell me how the rating system you are proposing will be used. Ratings that are done for developmental purposes are less likely to have an overall summary “number” as a final result, and are more likely to focus on how to help the employee improve after the rating has been given (thus, they may include developmental plans, educational goals, etc.) Ratings that are done for personnel decisions vary depending on the type of personnel decision made. For example, a raise-related rating may be a single number that expresses an overall performance level, whereas a layoff rating may involve ranking employees.
development
personnel decisions
raises
promotions
layoffs
etc.
2) Identify the people who have first-hand information about performance – who will participate in the performance management process. These are people you might talk with when determining performance expectations in step 3 below. Remember that you may need to consult with multiple people to get a complete picture of an employee’s overall performance.
employee
manager
subordinates
clients
3) Establish performance expectations.
be sure expectations are job related
align expectations with corporate goals
set expectations at “satisfactory” level
expectations should include both “hard numbers” and behaviors
make sure that expectations are consistent across all people who perform the job
involve people with information about performance in setting expectations
establish the circumstances under which the expectations are required to be met
distribute finalized expectations (including purpose of appraisal) to employees
4) Create process for collecting and giving feedback on performance information
determine who collects information, and from whom they collect it
who has the ability to rate performance information in comparison to standards?
who has information about performance?
self
supervisor
peers
clients
determine the rating scale that will be used in documenting performance. Consider using the following four-point scale, as follows:
1 = Does Not Meet Expectations
2 = Meets Expectations
3 = Exceeds Expectations
4 = Far Exceeds Expectations
create any forms that will be needed for data collection and the final performance appraisal report
determine how employee will get feedback on performance
feedback must be given as close in time as possible to actual performance
feedback must contain constructive suggestions for improvement
determine other means of collecting information
technical approaches (computer monitoring, etc.)
routine reports
create a communication process
training in giving feedback
training in using/accepting feedback
determine how performance information will be documented, collected, and stored
5) Establish results of performance appraisal process
Determine who will create an overall rating of performance
eliminate bias
authority
credibility
Determine how rating will be used
Establish process for combining performance information to create overall rating
averaging (best for evaluation)
emerging themes (best for development)
Create documentation & storage process for final ratings
Create links between rating and outcomes/rewards (note that ratings are rarely the ONLY criteria for personnel decisions – other factors should be identified and communicated.)
6) Feedback (Part II)
Determine when performance rating will be given
Determine how performance rating will be given (paper, in person, both)
Determine process for incorporating employee feedback into communication process (add listening to process.)
7) Establish an appeals process
Identify what employees should do when they disagree with rating
Part II – Evaluate your performance management process
The purpose of this part of the assignment is to give you feedback on your work – in particular to find out how well your “theoretical” process might work in the “real world.” There are two ways of doing this, do both.
First, use the process you have developed to evaluate someone’s performance. Using the forms and communication processes you have developed, either get feedback on your own work, or give someone else feedback on their work. It is likely that you will have to involve a supervisor (either your own or someone else’s) in this process. To do that, explain clearly that you have created a new process for a class, and that your professor has asked you to get feedback on how well it works. Be sure that everyone concerned knows that any information given will be for the class project only, and offer to sign a statement to that effect if necessary.
The second part of the evaluation process will be to get comments from the people who might use your process – both reviewers (managers) and reviewees (employees.) Talk to at least two people who might use the performance management form, and two people who might be reviewed using that form. Find out from them what they think of the process in terms of:
fairness
accuracy
usability (time needed to complete, complexity of process, et
Aug 29, 2021 | Uncategorized
We have studied multiple types of local government systems, from the simplest type of local government (the city/county model found in Hawaii), to extremely decentralized types of local government (often found in New England). After reviewing the different types of local government found in Chapter 9, which system of local government do you think is the most effective in terms of communicating the will of constituents, delivering public services, and in reducing red tape/bureaucracy? Which do you think is the worst? Or, do you think that there are no fundamental differences between these systems of local government in terms of the delivery of core government services? Respond to at least two of your classmates’ postings.
Where Do We Go From Here?
As we have studied over the previous four weeks, American government is highly unusual among Western industrialized nations because of the diffusion of power between multiple levels of government. Given the global economy, the rise of emerging economic superpowers such as China and India, and the challenges to remaining competitive in a global world, do you think that American federalism remains relevant? Do you agree with critics who argue that multiple layers of government slow down the machinery of government, making it virtually impossible to execute quick responses to society’s needs? Or do you believe that no fundamental changes are necessary to American federalism, and that despite changes in the modern world, the foundational features of American federalism remain as relevant today as they were at the nation’s founding? What changes, if any, would you integrate into the system of intergovernmental relations to effectuate better government and more efficient government? Respond to at least two of your classmates’ postings.
Aug 29, 2021 | Uncategorized
Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.
| Inventory, May 1 |
|
$178,400 |
| Purchases (gross) |
|
642,100 |
| Freight-in |
|
30,700 |
| Sales |
|
1,011,200 |
| Sales returns |
|
76,300 |
| Purchase discounts |
|
12,170 |
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
| The estimated inventory at May 31 |
|
$ |
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
| The estimated inventory at May 31 |
|
$ |
Aug 29, 2021 | Uncategorized
Firm H has the opportunity to engage in a transaction that will generate $100,000 of cash flow (and taxable income) in year 0. How does the net present value of the transaction change if the firm could restructure the transaction in a way that does not affect the before-tax cash flow but results in no taxable income in year 0, $50,000 of taxable income in year 1, and the remaining $50,000 of taxable income in year 2. Assume a 10 percent discount rate and a 34 percent marginal tax rate for the three-year period.
Do the problem as follows:
1) Calculate the net present value for the original transaction.
2) Calculate the net present value for the alternative transaction by figuring the tax cost at the end of year 1 and the end of the year 2 assuming taxable income of $50,000 at the end of each of those years.
3) Discount the tax cost for each of those two years to the present.
4) Subtract the net present value of the tax costs from the $100,000 of taxable income.
5) Compare the net present values for the original transaction and the alternative.
Aug 29, 2021 | Uncategorized
Bender Guitar Corporation, a manufacturer of custom electric guitars, is contemplating a $1,000,000 investment in a new production facility. The economic life of the facility is estimated to be five years, after which the facility will be obsolete and have no salvage value.
To make the new facility operational, building improvements costing $400,000 will be required. In addition, a $50,000 increase in working capital will be needed.
Bender’s accounting and marketing departments have provided the following information: the firm will use the straight-line method of depreciation; the Company is in the 30% tax bracket; the weighted average cost of capital is 8%.
Here are Earnings before Interest and Taxes (EBIT) estimates for the new facility:
Year 1………$80,000
Year 2…….$100,000
Year 3…….$120,000
Year 4……..$140,000
Year 5…….$165,000
Aug 29, 2021 | Uncategorized
After spending $300,000 for research and development chemists at diversified citrus Industries have developed a new breakfast drink. The drink called Zap will provide the consumer with twice the amount of vitamin c currently available in breakfast drinks. Zap will be packaged in an 8-ounce can and will be introduced to the breakfast drink market, which is estimated to be equivalent to 21 million 8-ounce can nationally.
One major management concerns is the lack of funds available for marketing. According management has decided to use newspapers (rather than television) to promote Zap in the introductory year and distribute Zap in major metropolitan areas that account for 65 percent. Newspaper advertising will carry a coupon that will entitle the consumer to receive $.20 off the price. The cost of the newspaper advertising campaign(excluding coupon returns). The cost of the newspaper advertising campaign will be $250,000. Other fixed overhead costs are expected to be $90,000.
Management has decided that the suggested retail price to the consumer for the 8-ounce can will be $0.05. The only unit variable costs for the product are $0.18 for materials and $0.06 for labor. The company intends to give retailers a margin of 20 percent off the suggested retail price and wholesalers a margin of 10 percent of the retailers cost of the item.
a. At what price will Diversified Citrus industries be selling its product to wholesalers, and what is the contributions per unit for zap and the break-even unit volume in the first year and also what is the first-year break-even share of market.
Aug 29, 2021 | Uncategorized
Financing activities for corporations include borrowing money and selling shares of their own stock. True or False 2) At December 31, 2014 Lowery Company had retained earnings of $2,384,000. During 2014 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2014 was $402,000. The retained earnings balance at the beginning of 2014 was a .$2,752,000 b $2,016,00 c $2,114,000 d $2,654,000 3) Current assets divided by current liabilities is known as the a working capital. b current ratio. c profit margin. d capital structure. 4) Ending retained earnings for a period is equal to beginning a Retained earnings + Net income + Dividends b Retained earnings – Net income – Dividends c Retained earnings + Net income – Dividends d Retained earnings – Net income + Dividends 5)The financial statement that summarizes the changes in retained earnings for a specific period of time is the a balance sheet. b income statement. c statement of cash flows. d retained earnings statement.
Aug 29, 2021 | Uncategorized
Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results
for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
Aug 29, 2021 | Uncategorized
Muscarella Inc. has the following balance sheet and income statement data:
|
Cash
|
$ 14,000
|
Accounts payable
|
$ 42,000
|
|
Receivables
|
70,000
|
Other current liabilities
|
28,000
|
|
Inventories
|
210,000
|
Total CL
|
$ 70,000
|
|
Total CA
|
$294,000
|
Long-term debt
|
70,000
|
|
Net fixed assets
|
126,000
|
Common equity
|
280,000
|
|
Total assets
|
$420,000
|
Total liab. and equity
|
$420,000
|
|
Sales
|
$280,000
|
Net income
|
$ 21,000
|
The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
a. 4.28%
b. 4.50%
c. 4.73%
d. 4.96%
e. 5.21%
Aug 29, 2021 | Uncategorized
Write a five-to seven-page financial statement analysis of a public company, formatted according to APA style as outlined in the Ashford Writing Center. In this analysis you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors. Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions. Your paper needs to include a minimum of two scholarly resources in addition to the textbook as references.
Here is a breakdown of the sections within the body of the assignment:
Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main products or services? Who are its competitors?
Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.
Aug 29, 2021 | Uncategorized
Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil produces 100,000 units of clothing per year and 50,000 cans of soda. The United States produces 65,000 units of clothing per year and 250,000 cans of soda. Assume that costs remain constant.
What would be the production possibility frontiers for Brazil and the United States?
Without trade, the United States produces 45,000 units of clothing and 150,000 cans of soda.
Without trade, Brazil produces 75,000 units of clothing and 30,000 cans of soda.
Denote these points on each other’s production possibility frontier.
What is the marginal transformation rate for each country?
Should the two countries specialize and trade?
If so, who has the comparative advantage in what product?
Once they specialize, how much does output increase?
What are the terms of trade if the United States trades 1 can of soda for 5 units of clothing?
Are the consumers in each country better off?
What is the labor-intensive good?
What is the labor-abundant country?
What is the capital-abundant country?
Could trade help reduce poverty in Brazil and other developing countries?
How do product and factor prices and wages eventually equalize between the two countries?
Aug 29, 2021 | Uncategorized
The assignments are a series of papers that are based on the same case, which is located in the Student Center of the course shell. The assignments are dependent upon one another.
In this assignment, you will create a risk management plan. You have a budget of $100,000 and a timeline of six (6) months for the plan. Please refer to Figure A-1, Risk Management Plan Template, from Appendix A of the Hillson and Simon text to create the plan.
Write an eight to ten (8-10) page Risk Management Plan Component paper in which you:
Prepare the Scope and Objectives of the Risk Management Process section of the Risk Management Plan based on the facts presented in the case study.
Determine the project size, based on the facts presented in the case study, and provide justification based on Figure 3-4, Example Project Sizing Tool (Chapter 3 of the Hillson and Simon text).
Select the risk tools and techniques, and complete the Risk Tools and Techniques section of the Risk Management Plan for both the qualitative and quantitative aspects of the project. Provide a rationale for the selection.
Develop the Risk Reviews and Reporting section of the Risk Management Plan based on the project size previously determined.
Define the Probability and Impacts section of the Risk Management Plan and justify the values assigned.
Define the Risk Thresholds section of the Risk Management Plan and justify the values assigned.
Aug 29, 2021 | Uncategorized
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Apply the concepts of risk management in a project context to develop an appropriate risk management plan as a key element of the project management process.
Survey the project sponsor, stakeholders, team membership and key decision influencers to develop a qualitative assessment of the project risks and apply the results to further refine the project risk management plan.
Create a schedule of project risk reviews appropriate to the organization and risk including major, minor, and post-project threats and opportunities, including archiving the results of the project risk plan is incorporated into this schedule.
Use technology and information resources to research issues in project risk management
Write clearly and concisely about project risk management using proper writing mechanics.
Aug 29, 2021 | Uncategorized
In this task you will prepare a report for the chief financial officer (CFO) to present to a bank vice president who may consider extending a long-term loan to Custom Snowboards, Inc. The CFO has requested that you analyze the financial statements to arrive at a selection of key financial statement line items, a risk assessment and ratios that the banker may use to assess and, if the loan is granted, track the progress of the company’s ability to repay the loan.
You will prepare another report to present directly to the chief executive officer (CEO) of Custom Snowboards Inc. and the board of directors. The report will include a recent history of the company and a recommendation on how to proceed with the expansion plans.
Be sure to enter your first initial and last name on the first worksheet in Custom Snowboards, Inc. Financial Data excel document.
Aug 29, 2021 | Uncategorized
Task:
Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 5 work. When you enter your first initial and last name at the top of the Income Statement you are given a dataset that is based on your name. The evaluator will need a copy of your data to ensure correct evaluation.
A. Create a report for the chief financial officer in which you do the following:
1. Summarize the key points of the company’s financial picture that could impact the bank officer’s decision.
Note: A variety of analyses that will provide a solid understanding of the highlights of the financial statements should be included.
2. Explain how any financial risks pointed out by the bank loan officer could be mitigated by the company.
3. Analyze the ratios that will indicate the ability to repay the principal and interest on the 5-year loan.
B. Create a report with your recommendations on the European expansion of Custom Snowboards Inc. for the chief executive officer (CEO) by doing the following:
1. Present a historical analysis of past performance.
a. Analyze what the historical analysis indicates about future performance.
2. Discuss how the current operations can be improved through better cost controls.
Note: Multiple cost controls should be discussed to address how operations can be improved.
3. Discuss both the internal risks and external risks that Custom Snowboards, Inc. will face with any expansion alternative into the European market.
a. Recommend strategies and techniques that can be used to mitigate those risks.
4. Discuss the potential returns of procuring a new plant in Europe that must be presented to and considered by the CEO and company board in your report.
Note: The discussion should include a logical interpretation of the NPV and IRR results.
5. Custom Snowboards, Inc. has the opportunity to enter the European market by procuring a new production plant, merging with European SnowFun, Inc. via a stock swap, or acquiring European SnowFun, Inc. outright via a stock purchase. After analyzing the data provided select the best option for expanding operations into Europe.
6. Based on the option selected in #5 above present a final financing recommendation to the CEO.
C. When you use sources, include all in-text citations and references in APA format.
Note: When bulleted points are present in the task prompt, the level of detail or support called for in the rubric refers to those bulleted points.
Note: For definitions of terms commonly used in the rubric, see the Rubric Terms web link included in the Evaluation Procedures section.
Note: When using sources to support ideas and elements in a paper or project, the submission MUST include APA formatted in-text citations with a corresponding reference list for any direct quotes or paraphrasing. It is not necessary to list sources that were consulted if they have not been quoted or paraphrased in the text of the paper or project.
Note: No more than a combined total of 30% of a submission can be directly quoted or closely paraphrased from sources, even if cited correctly. For tips on using APA style, please refer to the APA Handout web link included in the General Instructions section.
Aug 29, 2021 | Uncategorized
Write a three to five (3-4) page paper in which you:
1. Suggest the prototyping technique you would use for this system and support your rationale.
2. Create a management plan containing eight to ten (8-10) stages for proper design of such a
system.
3. Explain each stage of the management plan and justify your rationale.
4. Estimate the length of time it will take to complete each stage of the management plan.
5. Compare and contrast the self-check-in interface with the interface a receptionist would use.
6. Use Microsoft Visio or an open source alternative, Dia, to create a total of two (2) graphical
representations of your proposed interfaces, one (1) for the self-check-in and one (1) for the
receptionist. Note: The graphically depicted solution is not included in the required page length.
7. Use at least three (3) quality resources in this assignment. Note: Wikipedia and similar Websites
do not qualify as quality resources.
Aug 29, 2021 | Uncategorized
Sometimes, brands need to be re positioned in the marketplace for a variety of reasons, from gaining new market share to creating an image. You have suggested this during your previous meetings with your client over the last few weeks. As the marketing consultant for your client’s brand, the management team has requested a draft of the marketing plan proposal.
Some of the information you already know from working with your client for a few months. Other parts you will have to research and create now. You will have your colleagues and the client review most of it before completing the final sections of the plan and submitting it to the client for final review.
The first draft of the marketing plan must include the following sections:
Situational Analysis: Include the current industry, market size, growth potential, competitive environment, and future opportunities.
Product Positioning Strategy: Choose a positioning strategy for your product designed to change the perception of the current product by the targeted customer group.
Customer Profile: Include the details related to your customer’s demographics and psychographics.
Marketing Communications: Include 1 message appeal by designing an advertisement for your target market and 1 communication channel for delivering the message to your target market(s). Explain why this message and media matches your target market.
Distribution Placement Strategies: Include at least 2 distribution options/channels to get the product to your customer. Explain why you chose these channels.
Aug 29, 2021 | Uncategorized
DQ# 1
First, discuss B2B opportunities in social networking. Do you think this is an area that will see tremendous growth for companies; would you recommend that organizations pursue it in their marketing plans? As you ponder addressing the current topic, consider and discuss risk in B2B social networking for companies.
DQ#2
Please reread the closing case, Social Networking Initiatives by the New Zealand Government. Please read below and then answer the following question.
Given the richness of New Zealand’s offerings, do you believe that the portal style of e-government will disappear? As you can see, the issue revolves around the question of whether there will be the need for a centralized location as other networks continue to expand. What are the benefits of the internal initiatives?
Aug 29, 2021 | Uncategorized
(objectives and Principles for Accounting for Income Taxes)
The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense.
Instructions
(a)
Explain the objectives of accounting for income taxes in general-purpose financial statements.
(b)
Explain the basic principles that are applied in accounting for income taxes at the date of the financial statements to meet the objectives discussed in (a).
(c)
List the steps in the annual computation of deferred tax liabilities and assets.
i really need need help with this, it is due tomorrow. It is a team assignment but I have to do it in full and it has to be in APA format. It is acc/423
Aug 29, 2021 | Uncategorized
A capital investment project that generates new opportunities is more valuable than one that doesn’t. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is flexible or generates new opportunities for the company, it is said to contain real options.
In this assignment, you are to discuss the budgeting implications of different option strategies and the cost-benefit issues associated with such decisions.
Why might recognizing a real option raise but not lower a project’s net present value (NPV) as found in a traditional analysis?
Why do we tend to underestimate NPV when we ignore the option to abandon?
What do you suggest as a cost-effective approach to capital budgeting analysis when a project contains real options.
Aug 29, 2021 | Uncategorized
It probably goes without staying that a macroeconomy or national economy experiences periods of expansion (usually marked by increases in real GDP, employment, and production) and periods of decline (usually marked by decreases in real GDP, employment, and production). A prolonged period of decline across a national economy is called a recession. While some people define a recession as two consecutive quarters of declining real GDP, this is not the official definition which economists use:
Two of the most intense recessions in the past several generations in the United States were the Great Depression of 1929-1933 and the Great Recession of 2007-2009. Which recession or depression was the most destructive to the U.S. economy? Why?
2. WEEK 2 DQ 2 – Recent examples of expansionary fiscal policy
Expansionary fiscal policy is defined as a policy which a government implements which involves an increase in government spending and/or a decrease in taxation levels. Sometimes a budget deficit might be involved with expansionary fiscal policy. The goal with expansionary fiscal policy is to stimulate a national economy during times of declining economic activity.
Can you think of any recent examples of expansionary fiscal policy which have been used by the United States government during or since the Great Repression of 2007-2009? How did these stimulus programs impact the economy? Where they successful? Why or why not?
Aug 29, 2021 | Uncategorized
Write a four to six (4-6) page paper in which you:
Compute the elasticities for each independent variable. Note: Write down all of your calculations.
Determine the implications for each of the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results.
Recommend whether you believe that this firm should or should not cut its price to increase its market share. Provide support for your recommendation.
Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars.
Plot the demand curve for the firm.
Plot the corresponding supply curve on the same graph using the supply function Q = 5200 + 45P with the same prices.
Determine the equilibrium price and quantity.
Outline the significant factors that could cause changes in supply and demand for the product. Determine the primary manner in which both the short-term and the long-term changes in market conditions could impact the demand for, and the supply, of the product.
Indicate the crucial factors that could cause rightward shifts and leftward shifts of the demand and supply curves.
Use at least three (3) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Analyze how production and cost functions in the short run and long run affect the strategy of individual firms.
Apply the concepts of supply and demand to determine the impact of changes in market conditions in the short run and long run, and the economic impact on a company’s operations.
Use technology and information resources to research issues in managerial economics and globalization.
Write clearly and concisely about managerial economics and globalization using proper writing mechanics.
Aug 29, 2021 | Uncategorized
Lanny Beaudean joined the CPA firm of Cardinal & Coyote LLP in 2008 after working for two years for the IRS in Phoenix, Arizona. The firm is a second-tier CPA firm just below the Big Four in size. Beaudean had passed all four parts of the CPA Exam in Arizona and decided to work for a locally based CPA firm with international clients to gain a broad base of experience that might help him become a CFO at a public company in the future. Beaudean has been advancing rapidly and just became a senior at Cardinal & Coyote.
Yancy Corliss is a new audit partner at Cardinal & Coyote. One day Corliss was summoned to the office of Sharon Rules, the managing partner of the firm. Rules told Corliss that she had been approached by a new client, Jost Furniture International. Jost is a large southwestern chain of home furniture rental catering to young upscale individuals who might live in a city for two years or so and then move on. It recently opened an office in Canada and plans to expand to Europe in the not-too-distant future. Top management at Jost seemed to imply that the firm would get the audit as long as it submitted a reasonable bid.
Rules asked Corliss to do background checks on Jost and make whatever inquiries were necessary to assess the potential business risk of Jost as a future client. Corliss was given three days to do the work and report back to Rules with a recommendation. If the decision is to go ahead, then Cardinal & Coyote would submit a bid and compete with one other CPA firm for the account. The firm believes it will be a lucrative account, especially since the company has been in an expansion mode and will require advice on acquisitions and other advisory services in the future.
Corliss assembled his team to review the background and other information about Jost Furniture. Corliss asked Beaudean to head up the assessment and report back to Corliss in two days. During that time, Beaudean would have two other staff members to help with the assignment. Beaudean was excited about his first opportunity to work on new client assessment.
Beaudean met with Vinnie Gabelli, a transplanted Brooklyn native who had graduated from Arizona State University (ASU) at Phoenix. Gabelli was like a fish out of water in Arizona even though he had spent 16 months in the master’s of accounting program at ASU. Gabelli thought a prickly pear was someone who could not make it in Staten Island and moved to Brooklyn for a better life.
Gabelli told Beaudean that he welcomed the opportunity to work with a native of Phoenix and learn about its colorful history. Beaudean also asked Jackie Oloff, a native of Minneapolis, to join the team. Jackie had moved to Phoenix two years ago with her husband, who is a professor of accounting at ASU. The team discussed mutual responsibilities, data sources for the information, key areas of risk, and then they broke up to start their work. At the end of the day, the team reassembled to share information. Here is a brief list of the findings: Top of Form PageGoto the specified printed page number
- 1.The predecessor firm had helped Jost Furniture with its initial public offering and audited the financial statements of the company for five years. The firm resigned the account in 2007, following the issuance of a modified opinion on the 2006 financial statements. The firm had issued an unqualified opinion with an explanatory paragraph that raised questions about the ability of Jost to continue as a going concern because of persistent operating losses that threatened the company’s ability to secure needed financing.
- 2.A second firm audited the financial statements for 2007. That firm also raised going-concern questions and was dismissed by Jost’s top management.
- 3.Jost’s financial statements for 2008 and 2009 were audited by a third firm that was dismissed after two years.
- 4.The financial statements for 2010 had not been audited and on March 19, 2011, the CEO of Jost Furniture, Jerry Jost, approached Sharon Rules at a community event and asked her to submit a bid for the Jost audit. Jost asked that the bid be submitted by March 23.
- 5.A memorandum to the file prepared by Rules indicated that Jost had admitted to Rules that the company had past problems with various auditors, but Jost assured Rules the going-concern issues had been resolved. He also told Rules that the company’s controller had recently quit, the third time in four years there had been a turnover at that position. Jost told Rules the company had two candidates and he wanted her to help with the final decision since the CPA firm would work closely with the controller.
- 6.Beaudean, with the help of Gabelli and Oloff, reviewed the financial statements of Jost Furniture for the past four years during which time going-concern explanatory paragraphs had been issued. They went through a checklist of risk assessment issues for new clients and stopped when they came to the following: Verify the circumstances of any prior auditor dismissal or withdrawal by first asking the client for permission to approach the predecessor auditor(s). All three auditors felt this should be done by Yancy Corliss.
At the meeting at the end of the first day, the auditors discussed the unusual number of auditor changes in a short period of time apparently due to going-concern issues that were raised in the audit reports for the years 2006 through 2009. Beaudean asked Gabelli to contact the two banks where the company does business and check into its payment record. Oloff had a past business relationship with Miles247248Frazer, the attorney for Jost Furniture. Oloff agreed to contact Frazer to determine whether there are any outstanding litigation issues or other legal matters that the firm should know about. They all agreed to get these matters done by the end of the second day and a meeting was set for 5:00 p.m.
Gabelli found out that a $1 million loan payable to Phoenix Second National Bank had been overdue before payment had been made March 15, 2011. The president of the bank told Gabelli that Jost had been in violation of a debt covenant agreement that obligated Jost to maintain a current ratio of 1.5:1 at all times and that the bank was concerned about Jost’s ability to continue as a going concern, pointing out that Jost had gone below the ratio twice. The first time Jost had violated the covenant, the bank accepted the explanation of a temporary cash flow problem. The bank granted the company a three-month extension to meet the requirements of the debt covenant. The bank subsequently found out the cash flow problem had been due to the fact Jerry Jost withdrew $500,000 from the Jost cash account at Second National Bank to help put a down payment on a mortgage loan to buy an upscale house in Scottsdale. The second time it occurred, the bank began foreclosure on the loan on January 31, 2011, but by the time the process had been completed, Jost had paid off the entire $1 million balance.
Oloff had no luck with the Frazer, the attorney for Jost. When she called his offices, the secretary always told Oloff that Frazer was on another line and she’d take a message. When Oloff asked to leave a voice-mail message, she was told Frazer did not have voice mail. How about leaving an e-mail message? she asked. No e-mail either. Can I text him, tweet him, or just do it the old-fashioned way and set up an appointment? No, no, no were the answers. Oloff had left five messages for Frazer in the time before the meeting. She had nothing to report except to make an editorial comment about lawyer responsiveness, or lack thereof.
At first, Jost had side-stepped Corliss’s request for permission to speak with the predecessor auditor. Jost claimed that there had been a “personality conflict” and Jost was afraid the auditor would speak negatively about the company. Jost did agree after Corliss reminded him it was a required part of the procedures auditors follow in making the client acceptance decision.
At 5:00 p.m. on March 22, the auditors met in the firm’s conference room to discuss their findings. After hearing about Gabelli’s concerns and Oloff’s lack of success with Frazer, Beaudean expressed serious concerns about taking on Jost as a client.
Questions
- 1.Why is it important to do the kind of due diligence testing and risk assessment review conducted by Cardinal & Coyote prior to determining whether to make a bid for the audit of a potential client? What are the potential red flags with respect to the Jost audit? If you were Yancy Corliss, would you go ahead and recommend to Sharon Rules that the firm should submit a bid for the Jost audit? Why or why not?
- 2.Regardless of your answer to question 1, assume Corliss decides to recommend to Rules that the firm should make a bid for the Jost Furniture audit. Beaudean seems surprised and asks what other factors Corliss might have considered in making the decision. Corliss is quite blunt and says: “I am a new partner in the firm. I have to bring in new business. This client is a slam dunk. If we make a reasonably competitive bid, we will get the account.”
- a.Why do you think there is so much pressure in public accounting to bring in new clients? Is this a good thing or are there potential risks that might go unnoticed or ignored? How might the decision by Corliss present an impediment to making sound audit decisions later on?
- b.Some CPA firms have started to add indemnification clauses to their engagement letters that state the firm is not responsible for fraud when the client knowingly misrepresented financial information during the course of gathering evidence and testing account balances. Do you think these clauses are ethical? Why or why not?
- 3.Typically, when there is a going-concern issue with a client, the CPA firm issues an unqualified opinion with an explanatory paragraph. Given the limited facts of the case, do you believe this type of opinion is justified? Do you think the firm should consider issuing a qualified opinion or disclaim an opinion? Why or why not? How about withdrawal from the engagement?
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Case Study
Complete Case 5-4: Audit-Client Considerations, page 247.
Read the above case. Choose one of the individuals in the case and identify their actions and viewpoints. Write up an executive summary on the case, including answers to the following questions.
- Brief review of the case from your auditor’s point of view (one paragraph)
- Identification of the key behaviors, attitudes, and ethical dilemmas faced by or caused by the auditor
- Assessment of the philosophical and practical approaches to ethical decision-making that could have avoided the problems in the case
- Evaluation of alternatives to solve the situation in the case
- Summary of actions that you might have taken yourself if you had been in this situation in real life
- he grading rubric below shows the scoring for the case study reports and the papers:
| Category |
Points |
% |
Description |
| Documentation & formatting |
5 |
12.5 |
A quality paper will include a proper title page and references (as noted above). |
| Organization & cohesiveness |
10 |
25 |
A quality paper will include an introduction stating the purpose/intent of the paper (5%). The body of the paper will be derived from the assignment itself, and it will be properly subdivided into sections based upon what the paper must address (5%). In a quality paper, the conclusion will summarize the previously presented content (5%). |
| Editing |
5 |
12.5 |
A quality paper will be free of any spelling, punctuation, or grammatical errors. Sentences and paragraphs will be clear, concise, and factually correct. |
| Content |
20 |
50 |
A quality paper will have significant scope and depth of analysis/research to support any statements. Relevant illustration or examples are encouraged. A quality paper will employ sound use of reasoning and logic to reinforce conclusions, and opinions must be supported. |
| Total |
40 |
100 |
A quality paper (and presentation) will meet or exceed all of the above requirements. |
Aug 29, 2021 | Uncategorized
janus product inc/ this mercdishsing company sell paper and other school supplier.this company is planning its cash need 4 the 3rd quarter. in the past this company has had to borrow money during the 3rd quarter to support its peak sale sale of back to school material which occur during august.the following data has been assemble to assit in preparing a cash budget for the quarter/Sale- july=40k august=70k sept=50k oct=40k cost of good sold july=24k aug=42k sept=30k oct=27k gross margin- july=16k august=28k sept=20k oct=18k selling exp-july=7200 august=11.700 sept=8500 oct=7300 adm exp-july=5600 august=7200 sept=6100 oct=5900 total selling and adm exp-july=12800 august=18900 sept= 14600 oct=13200 net operating exp-july=3200 august=9100 sept=5400 oct=4800 sales are 20 percent for cash and 80 percent credit credit sale are collect over 3 months period with 10 percent collected in the month of sale 70 percent in the month following sale and 20 percent in the second month following sale in may sale total=30k in june sale was 36k inventory purchase are paid within 15 days 50 percent of a month inventory purchase are paid for in the month of purchase the remain 50 percent is paid the next month account payable 4 inventory purchase in june 30 is 11,700 this company maintain its ending inventory level at 75 percent of cost of the merchandisr to be sold the following month the merchansise inventory in june 30 was 18k land costing of 4500 will be purchase in july divided of 1000 will be declare and paid in sept the cash balance in june is 8k the company must maintain a cash balance of this amount at the end of each month this company has agree to borrow from a local bank 1000 at the beginning of each month total 40k. the intreste rate on this loan is 1 precent each month. the company must paty the loan plus intrest at the end of the quarter/ I need to prepare a schedule of expected cash collection for july; august; sept and 4 the quarter totali need to prepare the following for merchansise inventory a merchandise purchasebudget for july; august; and sept also I need to prepare a schedule of expected cash disdisburement for merchandise purchas for july ; august and sept and 4 the quarter total I need to prepae a cash budget for july august sept and 4 the quarter total can u assit me jacdumb
Aug 29, 2021 | Uncategorized
phototec inc balance sheet/ cash=8k account recieveable=72k inventory=30k bldg.;equipement etc=500k total asset=610k/ liablilities stockholder equity account payable=90k note payable=15k capital stock=420k retained earning=85k total liabilities stockholder equity=610k this company is in the process of preparing a budget 4 june and has assembled the following data question-1.sale are budget at 250k for june of these sale 60k will be for cash the remain will be credit. one half of a months credit sales are collected in the month the sale are made and the remain is collected the following month/ all of the may 31 account recievable will be collected in june.2.purchase of inventory are expected to total 200k during june these purchase will all be on account/ 40 percent of all inventory purchase are paid for in the month of purchase the remain are paid in the following month. all of the may 31 accountablepayable to supplier will be paide during june.3.june 39 inventory balance is budget at 40k selling and and exp for june =51k; these exenese will be paid in cash deprecation is at 2000 for the month. the note payable on may 31balance sheet will be paid dring june.this company interested expense for june on all borrowing will be 500 which will be pid in cash. new warehouse equipment cost 9k will be purchase for cash during june.during june this company will borrow 18k from its bank by giving a new note payable t the bank for that amount this new note will be due in one yr. I need to prepare a cash budget 4 june I need to support this budget with a schedule of expected cash collection from sale and a schedule of expected cash dsbrsment 4 inventory purchas. prepare a budget income statement 4 june using absorption cos income statement I need to prepare a budget balance sheet as of june 30 can assit me jacdumb
Aug 29, 2021 | Uncategorized
Type your question hThe following transactions occur over the remainder of the year.
| Aug. |
1 |
Suzie applies for and obtains a $42,000 low-interest loan for the company from the city council, which has recently passed an initiative encouraging business development related to outdoor activities. The loan is due in three years, and 6% annual interest is due each year on July 31.
|
| Aug. |
4 |
The company purchases 14 kayaks, costing $14,400. |
| Aug. |
10 |
Twenty additional kayakers pay $3,400 ($170 each), in addition to the $7,200 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic.
|
| Aug. |
17 |
Tony conducts a second kayak clinic and receives $12,300 cash. |
| Aug. |
24 |
Office supplies of $1,700 purchased on July 4 are paid in full. |
| Sep. |
1 |
To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed, purchasing a one-year rental policy for $4,440 ($370 per month).
|
| Sep. |
21 |
Tony conducts a rock-climbing clinic. The company receives $14,200 cash. |
| Oct. |
17 |
Tony conducts an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orient through heavily wooded areas. Clinic fees total $19,600.
|
| Dec. |
1 |
Tony decides to hold the company’s first adventure race on December 15. Four-person teams will race from checkpoint to checkpoint using a combination of mountain biking, kayaking, orienteering, trail running, and rock-climbing skills. The first team in each category to complete all checkpoints in order wins. The entry fee for each team is $500.
|
| Dec. |
5 |
To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $70 in salary for each team that competes in the race. His salary will be paid after the race.
|
| Dec. |
8 |
The company pays $1,600 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense. |
| Dec. |
12 |
The company purchases racing supplies for $2,300 on account due in 30 days. Supplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and drinks for participants, and field markers to prepare the racecourse.
|
| Dec. |
15 |
Forty teams pay a total of $20,000 to race. The race is held. |
| Dec. |
16 |
The company pays Victor’s salary of $2,800. |
| Dec. |
31 |
The company pays a dividend of $3,500 ($1,750 to Tony and $1,750 to Suzie). |
| Dec. |
31 |
Using his personal money, Tony purchases a diamond ring for $3,800. Tony surprises Suzie by proposing that they get married. Suzie accepts!
|
ere…
Aug 29, 2021 | Uncategorized
crydo inc a manuactur company advance swim in 4 scua diver.management is now preparing detailbudget 4 3rdquater,july thru sept and has assemble information in assiting in preparing the budget. the market dept 4 this company has estimate sale as follow the remain of the yr in pairs of swim fin/ the selling price of the swim fins is 50 dollar per pair/ july=6000 august=7000 sept=5000 oct=4000 nov=3000 dec SALE ARE EXPECT TO BE COLLECT IN THE FOLLOWING PATTERN 40 PERCENT IN THE MONTH= 50 PERCENT IN THE MONTH FOLLOWING SALE 10 PERCENT UNCOLLECTED THE BEGINNING ACCOUNT RECIEVABELE BALANC EXCLUDE UNCOLLECTED AMOUNT ON JULY1 WILL BE 130K THIS COMPANY MAINTAIN FINISH GOODS INVENTORY =TO 10 PERCENT OF THE FOLLOWING MOTH SALE THE INVENORY OF FINISH GOODS ON JULY1 WILL BE 600 PAIRS EACH PAIR OF SWIM FINS REQUIRE 2 POUND OF GEICO COMPOUND TO PREVENT SHORTAGE THE COMPANY WOULD LIKE THE INVENTORY OF THIS PRODUCT ON HAND AT THE END OF EACH MONTH TO BE =TO 20 PECENT OF THE PRODUCTION NEEDS THE INVENTORY OF THIS PRODUCT ON HAND ON JULY 11 WILL BE 2,440 POUND GEICO COMPOUND COST 2,50 PER POUND THIS COMPANY PAY 60 PERCENT OF ITS PURCHASE IN THE MONTH OF PURCHASE. THE REAN WILL BE PAID 4 THE FOLLOWING MONTH, THE ACCOUNT PAYABLE BALANCE 4 THIS COMPOUND WILL BE 11,400 ON JULY 1 I NEED TO PREPARE A SALE BUDGET BY MONTH AND IN TOTAL 4 THE 3RD QUATER, I NEED TO SHOW A BUDGET IN BOTH PAIR OF SWIM FIN AND DOLLAR I NEED TO PREPARE A SCHEDULE OF EXPECTED CASH COLLECTION BY MONTH AND IN TOTAL 4 THE 3RD QUARTER. I NEED TO PREPARE A PRODUCTION BUDGET 4 EACH OF THE MONTH JULY THRU OCT I NEED TO PREPARE A DIRECT MATERIAL BUDGET FOR GERICO COMPOUND BY MONTH AND IN TOTAL FOR THE 3RD QUARTER ASO I NEED TO PREPARE A SCEDULE OF EXPECTED DISBURMENT FOR GEICO COMPOUND BY MONTH AND IN TOTAL FOR THIRD QUARTER CAN U ASSIT ME JACDUMB
Aug 29, 2021 | Uncategorized
Retrieve the S&S In-Chapter Database (in Microsoft Access format) from the text’s Web site (or create the tables inTable 4-5 in a relational DBMS product). Write queries to answer the following questions. Note: For some questions, you may have to create two queries—one to calculate an invoice total and the second to answer the question asked
- How many different kinds of inventory items does S&S sell?
- b. How many sales were made during October?
- c. What were total sales in October?
- d. What was the average amount of a sales transaction?
- e. Which salesperson made the largest sale?
- f. How many units of each product were sold?
- g. Which product was sold most frequently?
You must include of the actual database file you used to get your screen shots from
You must include a screen shot of the query (or queries) created and a screen shot of the results for each question.
Be sure you include the question and label your queries as 4-4.x (where x=question letter).
Paste all screen shots into a Word document and save the word document
Aug 29, 2021 | Uncategorized
complete a master budget picanuy inc is a wholesale distributor of consume goods/ current asset as of 12/31 1.cash=6k account recievable=36k inventory=9,800 building and equipment net=110.885 account payable=32.550 capital stock=100k retain earning=30.135/the gross margin is 30 percent of sale another word cost of good is 70 percent of sale/sale datafor the month of December=60k jan=70k feb=80k march=85k april=55k/sale are 40 percent for cash and 60 percent credit/credit sale are collected in the month following sale.the account recievable in dec 31 are result of credit sale./each month end inventory purchase is paid in the mnth of purchase the other 3 quarter is paid the following month/the account payable in 12/31 are the result of dec purchase inventory/monthly expense are as follow commission 12k rent 1800 other expees exluding depreciation 8 percent of sale assume that these expense are paid monthly deperication is 2400 4 thequarter and include deprecation on new asset acqire during the qater/ equipment will be acquire 4 cash 3k in January and 8k for feb/ I need to complete a master budget I need to prepare the following by quarter a schedule of expected cash collection on sale a schedule of expected cash disbursement for merchandise purchase I need to prepare a cash budget can assit me jacdumb
Aug 29, 2021 | Uncategorized
Verona pizza inc is a small neighbor pizzara that has a small area for in store dining as well as offering takeout and free home delivery service..the owner has determine that the sop has 2 major cost drivers 1.number of pizza sold and the number of deliever made here are the data corcern cost./fixed cost per month-pizz ingredient =zero kitchen staff=5,870 utiles=590 delivery person=zero deliever vehicle=610 equipement depreciation=384 rent=1,790 misacellaneous=710/cost per pizza-pizza ngrediant=4.20 utilizes=0.10 miscellaneous=0.05/cost per delivery-delivery person=2.90 deliver car=1.30/in oct the pizzeria budget4 1,500 pizza at average selling rice of 3.00 per pizza and 4 200 deleveries here is the operation for oct/pizza=1.600 deliever=180 revenue=21,340 pizza ingredient=6.650 kitchen staff=5.810 utilizes=875 deliever prson=522 delerv car=982 eqipiment depreciation=384 rent=1790 miscellaneous=778/I need to prepare a flex budget perfoance report showing both activity variance and revnue and spending variance 4 the pizzeria for oct/ also need to explain the atvity variancr can u assitme jacdumb
Aug 29, 2021 | Uncategorized
activity/spending vaiance question/ js been hir by this company securidoor inc the manufacture of a new gargage door opening device the owner ask u to review the cost sysem and do what u can to get a btter control of overhead 4 this company overhead cost. I found ot this company never used a flexable budget and I mentin to the wner that by preparing such budget would be a excellent idea or step oin overhead planning and control/ after much effort u determine the cost formal and gather the acual cost data 4 april /utiles-cost formla=16,500 plus 0.15 per machines/actual cost in april=21.300/ maintain-38,600 plus 1.80 per machinesd hr actual cost 4 april=68.400/supplies-0.50 per machineshr-actual cost april=9.800 /indirect labor-94.300 plus 1.20 per machines hr actal cost in april=119.200 deperication cos formla=68k actua cost 4 april= 69.700/ I need to prepare a budget that can ct cos down and better control with overhead cs/ can u asst me jacdumb
Aug 29, 2021 | Uncategorized
The ledger of Mesa Corporation at December 31st of current year contains:
Net Sales – 1,500,000
Cost of goods sold – 800,000
Selling Expenses – 110,000
Admin Expenses – 140,000
Other revenue & gains – 40,000
interest expense – 30,000
The following data was not included:
1. Entire Ceramics division was discontinued at the beginning of the year and was sold in march at a loss of 60,000(before income tax)
2. On july 12, a fire occurred in one plant that resulted in a very large loss of 190,000(before income taxes)
3. On May 15, company property was condemned for and interstate highway. The settlement resulted in a before-tax gain of 90,000
4. The income tax rate for all items was 30%
Prepare an income statement as of December 31st using proper format.
Aug 29, 2021 | Uncategorized
Attached are two snapshots of the assignment. The first snapshot is the background history and/or story and the second snapshot depicts the 5 requirements to be completed. Please note that Access will be needed.
Aug 29, 2021 | Uncategorized
1) FIFO, weighted-average, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation. Provide reference for in APA Format and maximum of 300 words.
2) What are the major factors considered in determining what depreciation method to use? How often should you review these factors, and is it acceptable to change depreciation methods periodically? Provide 250 words and provide reference in APA Format ‘
3) How does unearned revenue arise? Why can it be classified properly as a current liability? Give several examples of business activities that result in unearned revenues. Provide reference in APA-Format and maximum of 250 words.
4) When is revenue normally recognized? What condition should exist for revenue recognition to be on the date of sale as opposed to some other time in the future? Provide reference in APA-Format and maximum of 250 words.
Aug 29, 2021 | Uncategorized
| Title:ACC 4700 QUIZ 4 Chapter 04 Consolidated Financial Statements and Outside Ownership Last Name First… |
| Question Detail: ACC 4700 QUIZ 4
Chapter 04 Consolidated Financial Statements and Outside Ownership
|
QUESTION #1
19. MacHeath Inc. bought 60% of the outstanding common stock of Nomes Inc. in an acquisition business combination that resulted in the recognition of goodwill. Nomes owned a piece of land that cost $250,000 but was worth $600,000 at the date of acquisition. What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?
A) $250,000.
B) $150,000.
C) $600,000.
D) $360,000.
E) $460,000.
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QUESTION #2
1. For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:
A) identifiable assets acquired, at fair value.
B) liabilities assumed, at book value.
C) noncontrolling interest, at fair value.
D) goodwill or a gain from bargain purchase.
E) none of these choices is correct.
|
|
REFERENCE: Ref. 04_1
When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land with a book value of $70,000 and a fair value of $100,000.
QUESTION #3
REFER TO: Ref. 04_1
2. What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?
A) $52,500.
B) $70,000.
C) $75,000.
D) $92,500.
E) $100,000.
QUESTION #4
REFER TO: Ref. 04_01
3. What is the total amount of excess land allocation at the acquisition date?
A) $0.
B) $30,000.
C) $22,500.
D) $25,000.
E) $17,500.
QUESTION #5
REFER TO: Ref. 04_01
4. What is the amount of excess land allocation attributed to the controlling interest at the acquisition date?
A) $0.
B) $30,000.
C) $22,500.
D) $25,000.
E) $17,500.
QUESTION #6
REFER TO: Ref. 04_01
5. What is the amount of excess land allocation attributed to the noncontrolling interest at the acquisition date?
A) $0.
B) $30,000.
C) $22,500.
D) $7,500.
E) $17,500.
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REFERENCE: Ref. 04_02
Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float’s individually identified net assets was $1,850,000, and the book value was $1,500,000. The noncontrolling interest shares of Float Corp. are not actively traded.
QUESTION #7
REFER TO: Ref. 04_02
7. What is the total amount of goodwill recognized at the date of acquisition?
A) $150,000.
B) $250,000.
C) $0.
D) $120,000.
E) $170,000.
QUESTION #8
REFER TO: Ref. 04_02
8. What amount of goodwill should be attributed to Perch at the date of acquisition?
A) $150,000.
B) $250,000.
C) $0.
D) $120,000.
E) $170,000.
QUESTION #9
REFER TO: Ref. 04_02
9. What amount of goodwill should be attributed to the noncontrolling interest at the date of acquisition?
A) $0.
B) $20,000.
C) $30,000.
D) $100,000.
E) $120,000.
QUESTION #10
REFER TO: Ref. 04_02
10. What is the dollar amount of noncontrolling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?
A) $350,000.
B) $300,000.
C) $400,000.
D) $370,000.
E) $0.
QUESTION #11
REFER TO: Ref. 04_02
11. What is the dollar amount of Float Corp.’s individually identified net assets that would be represented in a consolidated balance sheet prepared at the date of acquisition?
A) $1,600,000.
B) $1,480,000.
C) $1,200,000.
D) $1,780,000.
E) $1,850,000.
QUESTION #12
REFER TO: Ref. 04_02
12. What is the dollar amount of fair value over book value differences attributed to Perch at the date of acquisition?
A) $120,000.
B) $150,000.
C) $280,000.
D) $350,000.
E) $370,000.
|
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REFERENCE: Ref. 04_03
Femur Co. acquired 70% of the voting common stock of Harbor Corp. on January 1, 2010. During 2010, Harbor had revenues of $2,500,000 and expenses of $2,000,000. The amortization of excess cost allocations totaled $60,000 in 2010.
QUESTION #13
REFER TO: Ref. 04_03
13. The noncontrolling interest’s share of the earnings of Harbor Corp. is calculated to be
A) $132,000.
B) $150,000.
C) $168,000.
D) $160,000.
E) $0.
QUESTION #14
REFER TO: Ref. 04_03
14. What is the effect of including Harbor in consolidated net income for 2010?
A) $350,000.
B) $308,000.
C) $500,000.
D) $440,000.
E) $290,000.
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QUESTION #15
20. Kordel Inc. acquired 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory acquired over the past few months. In preparing consolidated financial statements, what amount of this debt should be eliminated?
A) $375,000
B) $125,000
C) $300,000
D) $500,000
E) $0.
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REFERENCE: Ref. 04_07
McGuire company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan’s total fair value. Hogan’s stockholders’ equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan’s net assets revealed the following:
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
QUESTION #16
REFER TO: Ref. 04_07
41. The acquisition value attributable to the noncontrolling interest at January 1, 2010 Is:
A) $23,400.
B) $24,000.
C) $24,900.
D) $26,000.
E) $20,000.
QUESTION #17
42. In consolidation at January 1, 2010, what adjustment is necessary for Hogan’s Buildings account?
A) $2,000 increase.
B) $2,000 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No change.
QUESTION #18
REFER TO: Ref. 04_07
43. In consolidation at December 31, 2010, what adjustment is necessary for Hogan’s Buildings account?
A) $1,620 increase.
B) $1,620 decrease.
C) $1,800 increase.
D) $1,800 decrease.
E) No adjustment is necessary.
QUESTION #19
REFER TO: Ref. 04_07
44. In consolidation at December 31, 2011, what adjustment is necessary for Hogan’s Buildings account?
A) $1,440 increase.
B) $1,440 decrease.
C) $1,600 increase.
D) $1,600 decrease.
E) No adjustment is necessary.
QUESTION #20
REFER TO: Ref. 04_07
45. In consolidation at January 1, 2010, what adjustment is necessary for Hogan’s Equipment account?
A) $4,000 increase.
B) $4,000 decrease.
C) $3,600 increase.
D) $3,600 decrease.
E) No adjustment is necessary.
QUESTION #21
REFER TO: Ref. 04_07
46. In consolidation at December 31, 2010, what adjustment is necessary for Hogan’s Equipment account?
A) $3,000 increase.
B) $3,000 decrease.
C) $2,700 increase.
D) $2,700 decrease.
E) No adjustment is necessary.
QUESTION #22
REFER TO: Ref. 04_07
48. In consolidation at January 1, 2010, what adjustment is necessary for Hogan’s Land account?
A) $7,000 increase.
B) $7,000 decrease.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.
QUESTION #23
REFER TO: Ref. 04_07
49. In consolidation at December 31, 2010, what adjustment is necessary for Hogan’s Land account?
A) $8,000 decrease .
B) $7,000 increase.
C) $6,300 increase.
D) $6,300 decrease.
E) No adjustment is necessary.
QUESTION #24
REFER TO: Ref. 04_07
51. In consolidation at January 1, 2010, what adjustment is necessary for Hogan’s Patent account?
A) $7,000.
B) $6,300.
C) $11,000.
D) $9,900.
E) No adjustment is necessary.
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REFERENCE: Ref. 04_08
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2010. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the equity method is applied.
QUESTION #25
REFER TO: Ref. 04_08
54. Compute Pell’s investment in Demers at December 31, 2010.
A) $580,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $541,000.
QUESTION #26
REFER TO: Ref. 04_08
55. Compute Pell’s investment in Demers at December 31, 2011.
A) $577,200.
B) $604,000.
C) $592,800.
D) $632,800.
E) $572,000.
QUESTION #27
REFER TO: Ref. 04_08
57. Compute Pell’s income from Demers for the year ended December 31, 2010.
A) $74,400.
B) $73,000.
C) $42,400.
D) $41,000.
E) $80,000.
QUESTION #28
REFER TO: Ref. 04_08
58. Compute Pell’s income from Demers for the year ended December 31, 2011.
A) $90,400.
B) $89,000.
C) $50,400.
D) $56,000.
E) $96,000.
QUESTION #29
REFER TO: Ref. 04_08
60. Compute the noncontrolling interest in the net income of Demers at December 31, 2010.
A) $20,000.
B) $12,000.
C) $18,600.
D) $10,600.
E) $14,400.
QUESTION #30
REFER TO: Ref. 04_08
61. Compute the noncontrolling interest in the net income of Demers at December 31, 2011.
A) $18,400.
B) $14,400.
C) $22,600.
D) $24,000.
E) $12,600.
QUESTION #31
REFER TO: Ref. 04_08
63. Compute the noncontrolling interest in Demers at December 31, 2010.
A) $135,600.
B) $137,000.
C) $112,000.
D) $100,000.
E) $118,600.
QUESTION #32
REFER TO: Ref. 04_08
64. Compute the noncontrolling interest in Demers at December 31, 2011.
A) $107,000.
B) $126,000.
C) $109,200.
D) $149,600.
E) $148,200.
|
|
Aug 29, 2021 | Uncategorized
Work in process units. June 1 Units started into production Work in prunes units. June 30 Wort in process percent compkte
Stamping Department
Plant A Plant B R12 Refrigerators F24 Fr • s
-0
Cost Data—June Work in process. June 1 $ -0- 5 -0– Materials $40.000 720.000 Labor 245.000 259.000 Overhead 420.000 292.000 Total 51.505.000 $1.271.000
Assbasrnisses 31 For each plant: 1) Compute the physical units of production. 2 • Compute equivalent units of production for materials and for conversion costs. = Determine the unit costs of production. 4 Slams the assignment of costs to units transferred out and in process. Prepare the production cost report for Plant A for June 2014. P14-411 Luxus= Compan. has several processing departments. Costs charged to the Assembly Department for October 2014 totaled S1 ‘oil Ann r-11
Aug 29, 2021 | Uncategorized
1) BAD DEBT
Chatter Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Chatter’s Accounts Receivable account was $389,000 and the Allowance for Doubtful Accounts had a debit balance of $5,000. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
| Days Account Outstanding |
Amount |
Probability of Collection |
| Less than 16 days |
$293,000 |
.97 |
| Between 16 and 30 days |
$102,000 |
.89 |
| Between 31 and 45 days |
$ 70,000 |
.83 |
| Between 46 and 60 days |
$ 55,000 |
.76 |
| Between 61 and 75 days |
$ 28,000 |
.60 |
| Over 75 days |
$ 8,000 |
.30 |
- What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
- Show how accounts receivable would be presented on the balance sheet.
- What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
- Cost of Goods Sold
Redster Company is a manufacturing firm. Presented below is information concerning one of its products, Ander:
| Date |
Transaction |
Quantity |
Price/Cost |
| 1/1 |
Beginning inventory |
2,900 |
$10 |
| 2/12 |
Purchase |
3,300 |
$15 |
| 3/2 |
Sale |
2,400 |
$28 |
| 4/18 |
Purchase |
4,500 |
$18 |
| 5/31 |
Sale |
3,800 |
$30 |
Compute the cost of goods sold under the following situations:
- Periodic system, FIFO cost flow
- Perpetual system, FIFO cost flow
- Periodic system, LIFO cost flow
- Perpetual system, LIFO cost flow
- Periodic system, weighted-average cost flow
- Perpetual system, moving-average cost flow
- Depreciation Expense
Valley Corporation purchased a new piece of equipment on June 1, 2011. The cost of this machine was $325,000. The company estimated that the machine would have a salvage value of $25,000 at the end of its service life. Its life is estimated at four years and its working hours are estimated at 50,000 hours. Year end is December 31.
Compute the depreciation expense under the following methods. Each of the following should be considered unrelated.
- Straight-line depreciation for 2011.
- Units of production method for 2011, assuming that machine usage was 13,000 hours.
- Sum-of-the-years’-digits for 2012.
- Double-declining balance for 2012.
- Remaining Life
Taylor Lewis Company has provided information on intangible assets as follows.
A patent was purchased from Craig Company for $4,000,000 on June 1, 2010. Lewis estimated the remaining useful life of the patent to be eight years. The patent was carried in Craig’s accounting records at a net book value of $3,500,000 when Craig sold it to Lewis.
During 2011, a franchise was purchased from Faragher Company for $360,000. In addition, 8% of revenue from the franchise must be paid to Faragher. Revenue from the franchise for 2011 was $1,950,000. Lewis estimates the useful life of the franchise to be 12 years and takes a full year’s amortization in the year of purchase.
Lewis incurred research and development costs in 2010 as follows.
| Materials and equipment |
$286,500 |
| Personnel |
$153,700 |
| Indirect costs |
$ 95,355 |
|
$535,555 |
Lewis estimates that these costs will be recouped by December 31, 2014. The materials and equipment purchased have no alternative uses.
On January 1, 2011, because of recent events in the field, Lewis estimates that the remaining life of the patent purchased on June 1, 2010, is only five years from January 1, 2011.
- Prepare a schedule showing the intangible section of Lewis’s balance sheet at December 31, 2011. Show supporting computations in good form.
- Prepare a schedule showing the income statement effect for the year ended December 31, 2011, as a result of the facts above. Show supporting computations in good form.
Aug 29, 2021 | Uncategorized
Question #1 (16 points)
List and describe the four standards in the IMA’s Statement of Ethical Practice. As part of your answer, be sure to provide an example of an action that violates the standard.
Question #2 (14 points)
Consider the following information, prepared based on a monthly capacity of 50,000 units:
Aug 29, 2021 | Uncategorized
During 2010, Von Co. sold inventory to its wholly-owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. From the perspective of the combination, when is the $14,000 gain realized?
A) When the goods are sold to a third party by Lord.
B) When Lord pays Von for the goods.
C) When Von sold the goods to Lord.
D) When the goods are used by Lord.
E) No gain can be recognized since the transaction was between related parties. |
QUESTION #2
17. Yukon Co. acquired 75% percent of the voting common stock of Ontario Corp. on January 1, 2011. During the year, Yukon made sales of inventory to Ontario. The inventory cost Yukon $260,000 and was sold to Ontario for $390,000. Ontario still had $60,000 of the goods in its inventory at the end of the year. The amount of unrealized intercompany profit that should be eliminated in the consolidation process at the end of 2011 is
A) $15,000.
B) $20,000.
C) $32,500.
D) $30,000.
E) $110,000. |
Aug 29, 2021 | Uncategorized
Olds Company declares Chapter 7 bankruptcy. The following are the asset and liability book values at that time; administrative expenses are estimated to be $12,000: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,000 Accounts receivable. . . . . . . . . . . . . . . . 60,000 (worth $28,000) Inventory . . . . . . . . . . . . . . . . . . . . . . . . 70,000 (worth $56,000) Land (secures note A) . . . . . . . . . . . . . . 200,000 (worth $160,000) Building (secures bonds) . . . . . . . . . . . . 400,000 (worth $320,000) Equipment. . . . . . . . . . . . . . . . . . . . . . . 120,000 (worth unknown) Accounts payable . . . . . . . . . . . . . . . . . 180,000 Taxes payable to government. . . . . . . . 20,000 Note payable A . . . . . . . . . . . . . . . . . . . 170,000 Note payable B . . . . . . . . . . . . . . . . . . . 250,000 Bonds payable . . . . . . . . . . . . . . . . . . . . 300,000 The holders of note payable B want to collect at least $125,000. To achieve that goal, how much does the company have to receive in the liquidation of its equipment?
Aug 29, 2021 | Uncategorized
Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).
| Miller Company |
|
|
| Sales |
$ |
1,000,000 |
| Variable expenses (80%) |
|
800,000
|
|
|
|
| Income before interest |
|
200,000 |
| Interest expense (fixed) |
|
60,000 |
|
|
|
| Net income |
$ |
140,000
|
|
|
|
|
| Weaver Company |
|
|
| Sales |
$ |
1,000,000 |
| Variable expenses (60%) |
|
600,000
|
|
|
|
| Income before interest |
|
400,000 |
| Interest expense (fixed) |
|
260,000 |
|
|
|
| Net income |
$ |
140,000
|
|
|
What happens to each company’s net income if sales increase by 30%?
|
Aug 29, 2021 | Uncategorized
Following is information taken from the accounting records of Kagawa Company at the end of 2009.
– Net sales, $660,000
– Operating Income (from discontinued operations) $64,000
– Cost of Goods Sold, $370,000
– Gain on sale of assets (from discontinued operations) $55,000
– Operating expenses $134,000
– Flood loss $167,000
– Kagawa had 150,000 shares of common stock issued and outstanding throughout the year
Kagawa’s effective tax rate is 40 percent and is based in an area that does not normally experience floods. Kagawa’s taxable income from the tax return is $100,000.
Prepare an income statement for Kagawa Company for 2009, including an earnings-per-share section.
Statement of Cash Flows
Following are the line items included in the 2009 statement of cash flows prepared by the Nine Muses, Inc. (amounts are in thousands)
Proceeds from saleof long-term investments – $14,077
Depreciation expense – 8,275
Increase in accounts receivable – 2,396
Increase in accounts payable – 6,590
Purchase of long-term investments – 29,939
Net Income – 22,214
Increase in accrued salaries – 4,072
Proceeds from sale of property and equipment – 2,468
Increase in inventories – 7,320
Issuance of Long-term notes – 126
Reductions of long-term debt – 572
Gain on disposal of long-term assets – 415
Issuance of common stock – 10,000
Cash and cash equivalents, beginning of the year – 21,750
Increase in income taxes payable – 5,608
Acquisitions of property and equipment – 31,083
Net increase (decrease) in cash and cash equivalents – ?
Cash and cash equivalents, end of year – ?
Prepare the Nine Muses’ statement of cash flows using the indirect method.
Aug 29, 2021 | Uncategorized
Allowance method: analysis of receivables. At a January 20X2 meeting, the president of Sonic Sound directed the sales staff “to move some product this year.” The president noted that the credit evaluation department was being disbanded because it had restricted the company’s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
20X2
20X1
Sales
$23,987,000
$8,423,000
Accounts Receivable, 12/31
12,444,000
1,056,000
Allowance for Uncollectible Accounts, 12/31
?
23,000 cr.
The $12,444,000 receivables balance was aged as follows:
Age of Receivable
Amount
Percentage of Accounts Expected to Be Collected
Under 31 days
$5,321,000
99%
31260 days
3,890,000
90
61290 days
1,067,000
80
Over 90 days
2,166,000
60
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company’s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president’s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
Inventory valuation methods: basic computations. The January beginning inventory of the White Company consisted of 300 units costing $40 each. During the first quarter, purchases were:
Date Quantity Cost
1/15 700 $45
1/31 1200 $48
2/12 800 $46
2/27 650 $51
Sales during the first quarter were.
Date Sold
1/19 500
2/2 600
2/13 500
2/28 100
The White Company uses a perpetual inventory system.
Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
FIFO
LIFO
Weighted Average
Goods available for sale
$
$
$
Ending inventory, March 31
Cost of goods sold
Aug 29, 2021 | Uncategorized
Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Below are the transactions for the year
:
1/3:
Purchase 100 boards @$125
3/17:
Sold 50 boards @ $250
4/3:
Purchase 200 boards @$135
5/17:
Sold 75 boards @ $250
6/3:
Purchase 100 boards @$145
1/3:
Purchase 100 boards @$155
3/17:
Sold 300 boards @ $250
1/3:
Purchase 100 boards @$140
Wave Riders uses a perpetual inventory system.
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
- First-in, first-out
- Last-in, first-out
- Weighted average
b. Which of the three methods would be chosen if management’s goal is to
(1) produce an up-to-date inventory valuation on the balance sheet?
(2) approximate the physical flow of a sand and gravel dealer?
Aug 29, 2021 | Uncategorized
Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.
Instructions
a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.
b. On January 1, 20X5, management shortened the remaining service life of the machine to 20 months. Assuming use of the straight-line method, compute the company’s depreciation expense for 20X5.
c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.
Aug 29, 2021 | Uncategorized
Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
• Social Security taxes: 6% on the first $55,000 earned
• Medicare taxes: 1.5% on the first $130,000 earned
• Federal income taxes withheld from wages: $7,500
• State income taxes: 5% of gross earnings
• Insurance withholdings: 1% of gross earnings
• State unemployment taxes: 5.4% on the first $7,000 earned
• Federal unemployment taxes: 0.8% on the first $7,000 earned
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end.
a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will include deductions for the following:
• Social Security taxes
• Medicare taxes
• Federal income taxes withheld
• State income taxes
• Insurance withholdings
b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will include the following:
• Matching Social Security taxes
• Matching Medicare taxes
• State unemployment taxes
• Federal unemployment taxes
Aug 29, 2021 | Uncategorized
Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following:
12/1
Borrowed $20,000 from the First City Bank by signing a 3- month, 15% note payable. Interest and principal are due at maturity.
2/10
Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month. Past experience with similar products indicates that 2% of the units will require repair, with warranty costs averaging $27 per unit.
12/22
Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
12/26
Borrowed $5,000 from First City Bank; signed a note payable due in 60 days.
12/31
Repaired six XY-80s during the month at a total cost of $162.
12/31
Accrued 3 days of salaries at a total cost of $1,400.
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on October 31 to record accrued interest.
c. Prepare the Current Liability section of Red Bank’s balance sheet as of October 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
Issuance of stock: organization costs. Snowbound Corporation was incorporated in July. The firm’s charter authorized the sale of 200,000 shares of $10 par-value common stock. The following transactions occurred during the year:
7/1:
Sold 45,000 shares of common stock to investors for $18 per share. Cash was collected and the shares were issued.
8/11
Sold 20,000 shares to investors for $22 per share. Cash was collected and the shares were issued.
9/1 Declared a cash dividend on 9/1 for $1.00 a share for shareholders on record 10/1 with payment being made on 11/1.
Instructions
a. Prepare journal entries for the two stock issues.
b. Prepare journal entries for the cash dividend declaration and payment.
Aug 29, 2021 | Uncategorized
Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
8/2:
Borrowed $75,000 from the Bank of Kingsville by signing a 120-day note.
8/20:
Issued a $40,000 note to Harris Motors for the purchase of a $40,000 delivery truck. The note is due in 180 days and carries a 12% interest rate.
9/10:
Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued a 30-day, 12% note in settlement of the balance owed.
9/11:
Issued a $60,000 note to Datatex Equipment in settlement of an overdue account payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
10/10:
The note to Pans Enterprises was paid in full.
10/31: The note to Datatex Equipment was paid in full.
11/30: Paid note to Bank of Kingville
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on October 31 to record accrued interest.
c. Prepare the Current Liability section of Red Bank’s balance sheet as of October 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Edison
Stagg
Thornton
Cash
$4,000
$2,500
$1,000
Short-term investments
3,000
2,500
2,000
Accounts receivable
2,000
2,500
3,000
Inventory
1,000
2,500
4,000
Prepaid expenses
800
800
800
Accounts payable
200
200
200
Notes payable: short-term
3,100
3,100
3,100
Accrued payables
300
300
300
Long-term liabilities
3,800
3,800
3,800
Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
Aug 29, 2021 | Uncategorized
Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2
20X1
Current Assets
$ 76,000
$ 80,000
Property, Plant, and Equipment (net)
99,000
90,000
Intangibles
25,000
50,000
Current Liabilities
40,800
48,000
Long-Term Liabilities
143,000
160,000
Stockholders’ Equity
16,200
12,000
Net Sales
500,000
500,000
Cost of Goods Sold
332,500
350,000
Operating Expenses
93,500
85,000
Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
Aug 29, 2021 | Uncategorized
Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2
20X1
Current Assets
$ 76,000
$ 80,000
Property, Plant, and Equipment (net)
99,000
90,000
Intangibles
25,000
50,000
Current Liabilities
40,800
48,000
Long-Term Liabilities
143,000
160,000
Stockholders’ Equity
16,200
12,000
Net Sales
500,000
500,000
Cost of Goods Sold
332,500
350,000
Operating Expenses
93,500
85,000
Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
Aug 29, 2021 | Uncategorized
Ratio computation. The financial statements of the Lone Pine Company follow.
LONE PINE COMPANY
Comparative Balance Sheets
December 31, 20X2 and 20X1 ($000 Omitted)
20X2
20X1
Assets
Current Assets
Cash and Short-Term Investments
$ 400
$ 600
Accounts Receivable (net
3,000
2,400
Inventories
2,000
2,200
Total Current Assets
$5,400
$5,200
Property, Plant, and Equipment
Land
$1,700
$ 600
Buildings and Equipment (net)
1,500
1,000
Total Property, Plant, and Equipment
$3,200
$1,600
Total Assets
$8,600
$6,800
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable
$1,800
$1,700
Notes Payable
1,100
1,900
Total Current Liabilities
$2,900
$3,600
Long-Term Liabilities
Bonds Payable
4,100
2,100
Total Liabilities
$7,000
$5,700
Stockholders’ Equity
Common Stock
$ 200
$ 200
Retained Earnings
1,400
900
Total Stockholders’ Equity
$1,600
$1,100
Total Liabilities and Stockholders’ Equity
$8,600
$6,800
LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales*
$36,000
Less: Cost of Goods Sold
$20,000
Selling Expense
6,000
Administrative Expense
4,000
Interest Expense
400
Income Tax Expense
2,000
32,400
Net Income
$ 3,600
Retained Earnings, Jan. 1
900
$ 4,500
Cash Dividends Declared and Paid
3,100
Retained Earnings, Dec. 31
$ 1,400
*All sales are on account.
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calculations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders’ equity
h. Debt-to-total assets
i. Number of times that interest is earned
j. Dividend payout rate
Aug 29, 2021 | Uncategorized
Poodle Company manufactures two products, Mini A and Maxi B. Poodle’s overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
|
|
Mini A
|
Maxi B
|
|
Direct labor hours
|
15,000
|
25,000
|
|
Machine setups
|
600
|
400
|
|
Machine hours
|
24,000
|
26,000
|
|
Inspections
|
800
|
700
|
Overhead applied to Mini A using activity-based costing is
Aug 29, 2021 | Uncategorized
Which of the following most accurately reflects the concept of depreciation as used in accounting?
A. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.
B. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
C. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.
D. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.
Aug 29, 2021 | Uncategorized
On June 10, Rebecca Company purchased $7,600of merchandise from Clinton Company, FOB shipping point, terms2/10, n/30. Rebecca pays the freight costs of $400on June 11. Damaged goods totaling $300are returned to Clinton for credit on June 12. The fair value of these goods is $70. On June 19, Rebecca pays Clinton Company in full, less the purchase discount. Both companies use a perpetual inventory system.
(a) Prepare separate entries for each transaction on the books of Rebecca Company.
(Record journal entries in the order in which they must have occurred. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(b) Prepare separate entries for each transaction for Clinton Company. The merchandise purchased by Rebecca on June 10 had cost Clinton $4,300.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Presented below is information related to Taylor Co. for the month of January 2014.
| Ending inventory per |
|
|
|
Insurance expense |
|
$12,000 |
| perpetual records |
|
$21,600 |
|
Rent expense |
|
20,000 |
| Ending inventory actually |
|
|
|
Salaries and wages expense |
|
59,000 |
| on hand |
|
21,000 |
|
Sales discounts |
|
8,000 |
| Cost of goods sold |
|
208,000 |
|
Sales returns and allowances |
|
13,000 |
| Freight-out |
|
7,000 |
|
Sales revenue |
|
378,000 |
(a) Prepare the necessary adjusting entry for inventory.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(b) Prepare the necessary closing entries.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
| Exercise 5-13 (Part Level Submission) |
|
Presented below is financial information for two different companies.
Warning
| Don’t show me this message again for the assignment |
Ok
Cancel
|
|
|
|
|
|
Determine the missing amounts.
|
|
Lee Company |
|
Chan Company |
| Sales revenue |
|
$90,000 |
|
|
$ |
(d) |
| Sales returns |
|
|
(a) |
|
5,000 |
|
| Net sales |
|
81,000 |
|
|
98,000 |
|
| Cost of goods sold |
|
56,000 |
|
|
|
(e) |
| Gross profit |
|
|
(b) |
|
37,500 |
|
| Operating expenses |
|
12,000 |
|
|
|
(f) |
| Net income |
|
|
(c) |
|
15,000 |
|
| Problem 5-3A (Part Level Submission) |
|
Starz Department Store is located near the Towne Shopping Mall. At the end of the company’s calendar year on December 31, 2014, the following accounts appeared in two of its trial balances.
|
|
Unadjusted |
|
Adjusted |
|
|
|
Unadjusted |
|
Adjusted |
| Accounts Payable |
|
$79,300 |
|
$80,300 |
|
Interest Revenue |
|
4,000 |
|
4,000 |
| Accounts Receivable |
|
50,300 |
|
50,300 |
|
Inventory |
|
75,000 |
|
75,000 |
| Accumulated Depr.—Buildings |
|
42,100 |
|
52,500 |
|
Mortgage Payable |
|
80,000 |
|
80,000 |
| Accumulated Depr.—Equipment |
|
29,600 |
|
42,900 |
|
Prepaid Insurance |
|
9,600 |
|
2,400 |
| Buildings |
|
290,000 |
|
290,000 |
|
Property Tax Expense |
|
|
|
4,800 |
| Cash |
|
23,800 |
|
23,800 |
|
Property Taxes Payable |
|
|
|
4,800 |
| Common Stock |
|
112,000 |
|
112,000 |
|
Retained Earnings |
|
64,600 |
|
64,600 |
| Cost of Goods Sold |
|
412,700 |
|
412,700 |
|
Salaries and Wages Expense |
|
108,000 |
|
108,000 |
| Depreciation Expense |
|
|
|
23,700 |
|
Sales Revenue |
|
724,000 |
|
724,000 |
| Dividends |
|
24,000 |
|
24,000 |
|
Sales Commissions Expense |
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10,200 |
|
14,500 |
| Equipment |
|
110,000 |
|
110,000 |
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Sales Commissions Payable |
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4,300 |
| Insurance Expense |
|
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|
7,200 |
|
Sales Returns and Allowances |
|
8,000 |
|
8,000 |
| Interest Expense |
|
3,000 |
|
8,600 |
|
Utilities Expense |
|
11,000 |
|
12,000 |
| Interest Payable |
|
|
|
5,600 |
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|
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Prepare a multiple-step income statement. (List other revenues before other expenses.)
STARZ DEPARTMENT STORE
Income Statement
For the Year Ended December 31, 2014 |
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Aug 29, 2021 | Uncategorized
LoBianco Company’s record of transactions for the month of April was as follows.
| Purchases |
|
Sales |
| April 1 |
(balance on hand) |
|
876 |
@ |
$6.0 |
|
April 3 |
|
730 |
@ |
$9 |
| 4 |
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2,190 |
@ |
6.4 |
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9 |
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1,898 |
@ |
9 |
| 8 |
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1,168 |
@ |
6.6 |
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11 |
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876 |
@ |
10 |
| 13 |
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1,752 |
@ |
6.8 |
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23 |
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1,752 |
@ |
10 |
| 21 |
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1,022 |
@ |
7.1 |
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27 |
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1,314 |
@ |
13 |
| 29 |
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730 |
@ |
7.5 |
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6,570 |
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7,738 |
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Aug 29, 2021 | Uncategorized
Exercise 12-2
Print by: IRENE CORDREY-WALKER 272.ZGS1.5p2014.Terrero / HW – Ch 12
Page 1 of 1
*Exercise 12-2
K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $53,120 of personal cash to the partnership. Rosen owns land worth $15,360 and a small building worth $78,610, which she transfers to the partnership. Toso transfers to the partnership cash of $12,580, accounts receivable of $32,580 and equipment worth $21,040. The partnership expects to collect $29,322 of the accounts receivable.
Prepare the journal entries to record each of the partners’ investments. (Credit account titles are automatically indented when amount is entered.. Do not indent manually.)
Account Titles and Explanation
(To record investment of Decker.)
(To record investment of Rosen.)
Debit
Credit
(To record investment of Toso.) What amount would be reported as total owners’ equity immediately after the investments?
Total owners’ equity $
Question Attempts: 0 of 5 used
Copyright © 2000.2014 by John Wiley & Sons, Inc, or related companies. All rights reserved.
http://edugen.wileyplus.com/edugen/shared/assignrnent/testiqprint.uni 2/3/2014
Aug 29, 2021 | Uncategorized
ACC514 FINANCIAL ACCOUNTING Session 201360 ADDITIONAL ASSESSMENT Assignment: Problem-solving Questions Value: 20% Due date: 7th February 2014 Submission method: email to Miranda Dyason (midyason@csu.edu.au) Task You are to complete all 4 problem-solving questions. A total of 60 marks are allocated to the questions below, which will then be converted to a mark out of 20%. Rationale This assessment task covers topics 4 -8.
Aug 29, 2021 | Uncategorized
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Learning Objectives 1, 2, 3
Sep. 10 Cash $4,455
P5-31A Journalizing purchase and sale transactions Journalize the following transactions that occurred in September 2015 for Aquamarines. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name.
Sep. 3 Purchased merchandise inventory on account from Shallin Wholesalers, $5,000. Terms 1/15, n/EOM, FOB shipping point. 4 Paid freight bill of $80 on September 3 purchase. 4 Purchased merchandise inventory for cash of $1,700. 6 Returned $500 of inventory from September 3 purchase. 8 Sold merchandise inventory to Hermosa Company, $6,000, on account. Terms 2/15, n/35. Cost of goods, $2,640. 9 Purchased merchandise inventory on account from Thomas Wholesalers, $8,000. Terms 2/10, n/30, FOB destination. 10 Made payment to Shallin Wholesalers for goods purchased on September 3, less return and discount. 12 Received payment from Hermosa Company, less discount. 13 After negotiations, received a $200 allowance from Thomas Wholesalers. 15 Sold merchandise inventory to Jordan Company, $2,500, on account. Terms 1/10, n/EOM. Cost of goods, $1,050. 22 Made payment, less allowance, to Thomas Wholesalers for goods purchased on
Aug 29, 2021 | Uncategorized
Luna Lighting, a retail firm, has experienced modest sales growth over the past three yearsbut has had difficulty translating the expansion of sales into improved profitability. Usingthree years’ financial statements, you have developed the following ratio calculations and industry comparisons. Based on this information, suggest possible reasons for Luna’s profitabilityproblems.
2009 2008 2007 2009
Industry
Current 2.3X 2.3X 2.2X 2.1X
Average collection period 45 days 46 days 47 days 50 days
Inventory turnover 8.3X 8.2X 8.1X 8.3X
Fixed asset turnover 2.7X 3.0X 3.3 3.5X
Total asset turnover 1.1 1.2X 1.3X 1.5X
Debt ratio 50% 50% 50% 54%
Times interest earned 8.1X 8.2X 8.1X 7.2X
Fixed charge coverage 4.0X 4.5X 5.5X 5.1X
Gross profit margin 43% 43% 43% 40%
Operating profit margin 6.3 7.2% 8.0% 7.5%
Net profit margin 3.5% 4.0% 4.3% 4.2%
Return on assets 3.7% 5.0% 5.7% 6.4%
Return on equity 7.4% 9.9% 11.4% 11.8%
Aug 29, 2021 | Uncategorized
Direct and absorption costing
The information that follows pertains to Consumer Products for the year ended December 31, 19X6.
Inventory, 1/1/X6
24,000 units
Units manufactured
80,000
Units sold
82,000
Inventory, 12/31/X6
? units
Manufacturing costs:
Direct materials
$3 per unit
Direct labor
$5 per unit
Variable factory overhead
$9 per unit
Fixed factory overhead
$280,000
Selling & administrative expenses:
Variable
$2 per unit
Fixed
$136,000
Assume that costs have been stable in recent years.
Instructions:
Compute the number of units in the ending inventory. Calculate the cost of a unit assuming use of: Direct costing. Absorption costing. Prepare an income statement for the year ended December 31, 19X6, by using direct costing. Prepare an income statement for the year ended December 31, 19X6, by using absorption costing.
Aug 29, 2021 | Uncategorized
Production and cash-outlay computations RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May31 follow.
1-May
31-May
Product K (Units)
55,000
60,000
Rate Materials A (Units)
40,000
37,000
Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices that account for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company to a 2% cash discount.
Determine the number of units of product K to be manufactured in May. Compute the May cash outlayfor purchases of raw material A.
July
August
September
Beginning cash balance
$10,000
$ ?
$ ?
Add: Cash receipts
50,000
63,000
71,000
Deduct: Cash payments
-64,000
-58,000
-64,000
Cash excess (deficiency) before financing
($4,000)
$ ?
$ ?
Financing Borrowing to maintain minimum balance
?
?
?
Principal repayment
?
?
?
Interest payment
?
?
?
Ending cash balance
$ ?
$ ?
$ ?
Aug 29, 2021 | Uncategorized
Comprehensive budgeting
The balance sheet of Watson Company as of December 31, 19X1, follows.
WATSON COMPANY
Balance Sheet December 31, 19X1
Assets
Cash
$4,595
Accounts receivable
10,000
Finished goods (575 units x $7.00)
4,025
Direct materials (2,760 units x $0.50)
1,380
Plant & equipment
$50,000
Less: Accumulated depreciation
10,000
40,000
Total assets
$60,000
Liabilities & Stockholders’ Equity
Accounts payable to suppliers
$14,000
Common stock
$25,000
Retained earnings
21,000
46,000
Total liabilities &. stockholders’ equity
$60,000
The following information has been extracted from the firm’s accounting records:
All sales are made on account at $20 per unit. Sixty percent of the sales are collected in the month of sale; the remaining 40% are collected in the following month. Forecasted sales for the first five months of 19X2 are: January, 1,500 units,- February, 1,600 units; March, 1,800 units; April, 2,000 units; May, 2,100units. Management wants to maintain the finished goods inventory at 30% of the following month’s sales. Watson uses four units of direct material in each finished unit. The direct material price has been stable and is expected to remain so over the next six months. Management wants to maintain the ending direct materials inventory at 60% of the following month’s production needs. Seventy percent of all purchases are paid in the month of purchase; the remaining 30% are paid in the subsequent month. Watson’s product requires 30 minutes of direct labor time. Each hour of direct labor costs $7.
Instructions:
Rounding computations to the nearest dollar, prepare the following for January through March:
1) Sales budget
2) Schedule of cash collections
3) Production budget
4) Direct material purchases budget
5) Schedule of cash disbursements for material purchases
6) Direct labor budget
Determine the balances in the following accounts as of March 31:
1) Accounts Receivable
2) Direct Materials
3) Accounts Payable
Aug 29, 2021 | Uncategorized
Cash flow calculation sand net present value
On January 2, 19X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 19X1 and 19X2; the dividend was raised to $3.10 per share in 19X3. On December 31, 19X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments.
Prepare a chronological list of the investment’s cash flows. Note: Greene is entitled to the 19X3 dividend. Compute the investment’s net present value, rounding calculations to the nearest dollar. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.
Aug 29, 2021 | Uncategorized
Straightforward net-present-value and payback computations STL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available: Cost of boat
$500,000
Service life
10 summer seasons
Disposal value at the end of 10 seasons
$100,000
Capacity per trip
300 passengers
Fixed operating costs per season (including straight-line depreciation)
$160,000
Variable operating costs per trip
$1,000
Ticket price
$5 per passenger
All operating costs, except depreciation, require cash outlays.
On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.
Instructions:
By using the net-present-value method, determine whether STL Entertainment should acquire the boat.
Assume a 14% desired return on all investments,- round calculations to the nearest dollar.
Aug 29, 2021 | Uncategorized
Equipment replacement decision Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000.
New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs$103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method.
Instructions:
By using the net-present-value method, determine whether Columbia should keep its present equipment or acquire the new equipment. Round all calculations to the nearest dollar, and ignore income taxes.
Columbia’s management feels that the time value of money should be considered in all long-term decisions. Briefly discuss the rationale that underlies management’s belief.
Aug 29, 2021 | Uncategorized
Current company cash flow
a. You need to complete a cash flow statement for the company using the direct method.
b. Once you’ve completed the cash flow statement, answer the following questions:
i. What does this statement of cash flow tell you about the sources and uses of the company?
ii. Is there anything ABC Company can do to improve the cash flow?
iii. Can this project be financed with current cash flow from the company? Why or why not?
iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why?
Aug 29, 2021 | Uncategorized
Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.
a. What is the product cost for the expansion product?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product?
d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?
Aug 29, 2021 | Uncategorized
Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years:
Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000
ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment.
a. What is the net present value of the proposed investment ignore income taxes and depreciation?
b. Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow?
c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not?
Aug 29, 2021 | Uncategorized
Conclusion:
a. What are the major risk factors that you see in this project?
b. As the controller and a management accountant, what is your responsibility to this project?
c. What do you recommend the CEO do?
1. Must be six to eight double-spaced pages in length, and formatted according to APA style as out lined in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document all sources in APA style, as outlined in the Ashford Writing Center.
7. Must include a separate reference page, formatted according to APA style as outlined in the Ash ford Writing Center.
Aug 29, 2021 | Uncategorized
Basic transaction processing
On November 1 of the current year, Richard Parker established a sole proprietorship. The following transactions occurred during the month:
1: Parker invested $19,000 into the business.
2: Paid $9,000 to acquire a used minivan.
3: Purchased $1,800 of office furniture on account.
4: Performed $2,100 of consulting services on account.
5: Paid $300 of repair expenses.
6: Received $800 from clients who were previously billed in item 4.
7: Paid $500 on account to the supplier of office furniture in item 3.
8: Received a $150 electric bill, to be paid next month.
9: Parker withdrew $600 from the business.
10: Received $250 in cash from clients for consulting services rendered.
Instructions
a. Arrange the following asset, liability, and owner’s equity elements of the account
in equation: Cash, Accounts Receivable, Office Furniture, Van, Accounts Payable, Investments/Withdrawals, and Revenues/Expenses. (See Exhibit 5)
b. Record each transaction on a separate line. After all transactions have been recorded, compute the balance in each of the preceding items.
c. Answer the following questions for Parker.
(1) How much does the company owe to its creditors at month-end? On which financial statement (s) would this information be found?
(2) Did the company have a “good” month from an accounting viewpoint? Briefly explain.
Aug 29, 2021 | Uncategorized
Transaction analysis and statement preparation . The transactions that follow relate to Burton Enterprises for March 20X1, the company’s first month of activity.
3/1: Joanne Burton, the owner invested $20,000 into the business.
3/4: Performed $2,400 of services on account.
3/7: Acquired a small parcel of land by paying $6,000 cash.
3/12: Received $700 from a client, who was billed previously on March 4.
3/15: Paid $800 to the Journal Herald for advertising expense.
3/18: Acquired $9,000 of equipment from Park Central Outfitters by paying$7,000 down and agreeing to remit the balance owed within the next2 weeks, (Accounts Payable).
3/22: Received $300 cash from clients for services.
3/24: Paid $1,500 on account to Park Central Outfitters in partial settlement of the balance due from the transaction on March 18.
3/28: Rented a car from United Car Rental for use on March 28. Total charges amounted to $75, with United billing Burton for the amount due.
3/31: Paid $900 for March wages.
3/31: Processed a $600 cash withdrawal from the business for Joanne Burton.
Instructions
a. Determine the impact of each of the preceding transactions on Burton’s assets, liabilities, and owner’s equity. See exhibit 1.5. Use the following format:
Assets = Liabilities + Owner’s Equity
Cash, Accounts Receivable, Land, Equipment Accounts Payable (+) Investments (+) Revenues (-Withdrawals (-) Expenses
a. Record each transaction on a separate line. Calculate balances only after the last transactionhas been recorded.
b. Prepare an income statement, a statement of owner’s equity, and a balance sheet.
Aug 29, 2021 | Uncategorized
Recognition of normal balances
The following items appeared in the accounting records of Triguero’s, a retail music store that also sponsors concerts. Classify each of the items as an asset, liability; revenue; or expense from the company’s viewpoint. Also indicate the normal account balance of each item.
a. The albums, tapes, and CDs held for sale to customers.
b. A long-term loan owed to Citizens Bank.
c. Promotional costs to publicize a concert.
d. Daily receipts for merchandise sold,
e. Amounts due from customers,
f. Land held as an investment,
g. A new fax machine purchased for office use.
h. Amounts to be paid in 10 days to suppliers.
i. Amounts paid to a mall for rent.
Aug 29, 2021 | Uncategorized
Trial balance preparation. Brighton, a sole proprietorship began operation on March 1 of the current year. The following account balances were extracted from the general ledger on March31; all accounts have normal balances.
Accounts Payable
$ 12,000
Interest Expense
$ 300
Accounts Receivable
8,800
Land
?
Advertising Expense
5,700
Loan Payable
26,000
Bob Brighton, Owners Equity
30,000
Salaries Expense
11,100
Cash
22,500
Utilities Expense
700
Fees Earned
18,900
a. Determine the cost of the company’s land by preparing a trial balance. (Remember, the trial balance debits must equal the credits, see Exhibit 2.9)
b. Determine the firm’s net income for the period ending March 31.
Aug 29, 2021 | Uncategorized
Entry and trial balance preparation . Lee Adkins is a portrait artist. The following schedule represents Lee’s combined chart of accounts and trial balance as of May 31.
Account number Account name Debit Credit
110
Cash
$ 2,700
120
Accounts Receivable
12,100
130
Equipment and Supplies
2,800
140
Studio
45,000
210
Accounts Payable
$2,600
310
Lee Adkins, Owners Equity
57,400
320
Lee Adkins, Drawing
30,000
410
Revenue
39,000
510
Advertising Expense
2,3005
20
Salaries Expense
2,1005
40
Utilities Expense
2,000
$99,000
$99,000
The general ledger also revealed account no. 530, Legal and Accounting Expense. The following transactions occurred during June:
6/2: Collected $7,500 on account from customers.
6/7:Sold 25% of the equipment and supplies to a young artist for $700 for cash
6/10: Received a $500 bill from the accountant for preparing last quarter’s financial statements.
6/15: Paid $2,100 to creditors on account.
6/27:Adkins withdrew $1,000 cash for personal use.
6/30:Billed a customer $3,000 for a portrait painted this month.
a. Record the necessary journal entries for June on page 2 of the company’s general journal. (See Exhibit 2.6)
b. Open running balance ledger “T” accounts by entering account titles, account numbers, and May 31 balances. (See exhibit 2.3 and 2.4)
c. Post the journal entries to the “T” accounts.
d. Prepare a trial balance as of June 30. (See exhibit 2.9)
Aug 29, 2021 | Uncategorized
Journal entry preparation.
On January 1 of the current year, Peter Houston invested$100,000 cash into his company Muni Serv. Shortly thereafter, the company acquired selected assets of a bankrupt competitor. The acquisition included land ($15,000), a building ($40,000), and vehicles ($10,000). MuniServ paid $45,000 at the time of the transaction and agreed to remit the remaining balance due of $20,000 (an account payable) by February 15.During January, the company had additional cash outlays for the following items:
Purchases of store equipment
$4,600
Loan payment
500
Salaries expense
2,300
Advertising expense
700
The January utilities bill of $200 was received on January 31 and will be paid on February 10.MuniServ rendered services to clients on account amounting to $9,400 and $3,700 had been received in settlement.
Instructions
a. Present journal entries that reflect MuniServ’s January transactions, starting with the$100,000 investment.
b. Compute the total debits, total credits, and ending balance that would be found in the company’s Cash account.
c. Prepare a trail balance as of January 31.
Aug 29, 2021 | Uncategorized
Recognition of concepts. Ron Carroll operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) prepaid expense, (2) unearned revenue, (3)accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a. Amounts paid on June 30 for a 1-year insurance policy
b. Professional fees earned but not billed as of June 30
c. Repairs to the firm’s copy machine, incurred and paid in June
d. An advance payment from a client for a performance next month at a convention
e. The payment in part (d) from the client’s point of view
f. Interest owed on the company’s bank loan, to be paid in early July
g. The bank loan payable in part (f)h. Office supplies on hand at year-end
Aug 29, 2021 | Uncategorized
Adjusting entries. You have been retained to examine the records of Kathy’s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
· On January 1, 20X3, the Supplies account had a balance of $2,350. During the year, $5,520worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
- Unrecorded interest owed to the center totaled $275 as of December 31.
· All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $75,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
·Depreciation on the school’s van was $3,000 for the year.
· On August 1, the center began to pay rent in 6-month installments of $21,000. Kathy wrote a check to the owner of the building and recorded the check in Prepaid Rent, a new account.
· Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
·
Kathy’s Day Care paid insurance premiums as follows, each time debiting
Prepaid Insurance: Date Paid
Policy No.
Length of Policy
Amount
Feb. 1, 20X2
1033MCM19
1 year
$540
Jan. 1, 20X3
7952789HP
1 year
912
Aug. 1, 20X3
XQ943675ST
2 years
840
Instructions
The center’s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
Aug 29, 2021 | Uncategorized
Allowance method: estimation and balance sheet disclosure. The following pre-adjusted information for the Maverick Company is available on December 31:
• Accounts receivable $107,000
• Allowance for uncollectible accounts 5,400 (credit balance)
• Credit sales 250,000
a. Prepare the journal entries necessary to record Maverick’s uncollectible accounts expense under each of the following assumptions:
(1) Uncollectible accounts are estimated to be 5% of Credit Sales.
(2) Uncollectible accounts are estimated to be 14% of Accounts Receivable.
b. How would Maverick’s Accounts Receivable appear on the December 31 balance sheet under assumption (1) of part (a)?
c. How would Maverick’s Accounts Receivable appear on the December 31 balance sheet under assumption (2) of part (a)?
Aug 29, 2021 | Uncategorized
Direct write-off and allowance methods: matching approach. The December 31, 20X2, year-end trial balance of Targa Company revealed the following account information:
Debits
Credits
Accounts Receivable
$252,000
Allowance for Uncollectible Accounts
$ 3,000
Sales
855,000
Instructions
a. Determine the adjusting entry for bad debts under each of the following conditions:
(1) An aging schedule indicates that $12,420 of accounts receivable will be uncollectible.
(2) Uncollectible accounts are estimated at 2% of net sales.
b. On January 19, 20X3, Targa learned that House Company, a customer, had declared bankruptcy. Present the proper entry to write off House’s $950 balance using the allowance method.
c. Repeat the requirement in part (b), using the direct write-off method.
d. In light of the House bankruptcy, examine the allowance and direct write-off methods in terms of their ability to properly match revenues and expenses.
Aug 29, 2021 | Uncategorized
Bob Night opened “”The General’s Favorite Fishing Hole.”” The fishing camp is open from April through September and attracts many famous college basketball coaches during the off-season.
Guests typically register for one week, arriving on Sunday afternoon and returning home the following Saturday afternoon.
The registration fee includes room and board, the use of fishing boats, and professional instruction in fishing techniques. The chart of accounts for the camping operations is provided below.
The General’s Favorite Fishing Hole
Chart of Accounts
|
Assets
|
|
|
101
|
Cash
|
|
142
|
Office Supplies
|
|
144
|
Food Supplies
|
|
145
|
Prepaid Insurance
|
|
181
|
Fishing Boats
|
|
181.1
|
Accumulated Depreciation – Fishing Boats
|
|
Liabilities
|
|
|
202
|
Accounts Payable
|
|
219
|
Wages Payable
|
|
Owner’s Equity
|
|
|
311
|
Bob Night, Capital
|
|
312
|
Bob Night, Drawing
|
|
313
|
Income Summary
|
|
Revenues
|
|
|
401
|
Registration Fees
|
|
Expenses
|
|
|
511
|
Wages Expense
|
|
521
|
Rent Expense
|
|
523
|
Office Supplies Expense
|
|
524
|
Food Supplies Expense
|
|
525
|
Telephone Expense
|
|
533
|
Utilities Expense
|
|
535
|
Insurance Expense
|
|
536
|
Postage Expense
|
|
542
|
Depreciation Expense – Fishing Boats
|
The following transactions took place during April 20__.
Apr. 1 Night invested in cash in business, $90,000.
1 Paid insurance premium for camping season, $9,000.
2 Paid rent for lodge and campgrounds for the month of April, $40,000.
2 Deposited registration fees, $35,000.
2 Purchased ten fishing boats on account for $60,000. The boats have estimated useful lives of five years, at which time they will be donated to a local day camp. Arrangements were made to pay for the boats in July.
3 Purchased food supplies from Acme Super Market on account, $7,000.
5 Purchased office supplies from Gordon Office Supplies on account, $500.
7 Deposited registration fees, $38,600.
10 Purchased food supplies from Acme Super Market on account, $8,200.
10 Paid wages to fishing guides, $10,000.
14 Deposited registration fees, $30,500.
16 Purchased food supplies from Acme Super Market on account, $9,000.
17 Paid wages to fishing guides, $10,000.
18 Paid postage, $150.
21 Deposited registration fees, $35,600.
24 Purchased food supplies from Acme Super Market on account, $8,500.
24 Paid wages to fishing guides, $10,000.
28 Deposited registration fees, $32,000.
29 Paid wages to fishing guides, $10,000.
30 Purchased food supplies from Acme Super Market on account, $6,000.
30 Paid Acme Super Market on account, $32,700.
30 Paid utilities bill, $2,000.
30 Paid telephone bill, $1,200.
30 Bob Night withdrew cash for personal use, $6,000.
Adjustment information for the end of April is provided below.
(a) Office supplies remaining on hand, $100.
(b) Food supplies remaining on hand, $8,000.
(c) Insurance expired during the month of April, $1,500.
(d) Depreciation on the fishing boats for the month of April, $1,000.
(e) Wages earned, but not yet paid, at the end of April, $500.
Requirements:
1. Enter the above transactions in a general journal. Enter transactions from April 1-5 on page 1, April 7-18 on page 2, April 21-29 and the first two entries for April 30 on page 3, and the remaining entries for April 30 on page 4.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Prepare the income statement.
6. Prepare the statement of owner’s equity.
7. Prepare the balance sheet.
8. Journalize the adjusting entries (page 5).
9. Post the adjusting entries to the general ledger.
10. Journalize the closing entries (pages 5 and 6).
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.
Aug 29, 2021 | Uncategorized
More Co.is a merchandising business. The account balances for More Co. as of November 30, 2008 (unless otherwise indicated), are as follows:
|
110
|
Cash
|
$ 13,920
|
|
112
|
Accounts Receivable
|
34,220
|
|
115
|
Merchandise Inventory
|
133,900
|
|
116
|
Prepaid Insurance
|
3,750
|
|
117
|
Store Supplies
|
2,550
|
|
123
|
Store Equipment
|
114,300
|
|
124
|
Accumulated Depreciation-Store Equipment
|
12,600
|
|
210
|
Accounts Payable
|
21,450
|
|
211
|
Salaries Payable
|
0
|
|
220
|
Note Payable (Due 2013)
|
10,000
|
|
310
|
P. Williams, Capital (January 1, 2008)
|
103,280
|
|
311
|
P. Williams, Drawing
|
10,000
|
|
312
|
Income Summary
|
0
|
|
410
|
Sales
|
715,800
|
|
411
|
Sales Returns and Allowances
|
20,600
|
|
412
|
Sales Discounts
|
13,200
|
|
510
|
Cost of Merchandise Sold
|
360,500
|
|
520
|
Sales Salaries Expense
|
74,400
|
|
521
|
Advertising Expense
|
18,000
|
|
522
|
Depreciation Expense
|
0
|
|
523
|
Store Supplies Expense
|
0
|
|
529
|
Miscellaneous Selling Expense
|
2,800
|
|
530
|
Office Salaries Expense
|
40,500
|
|
531
|
Rent Expense
|
18,600
|
|
532
|
Insurance Expense
|
0
|
|
539
|
Miscellaneous Administrative Expense
|
1,650
|
|
550
|
Interest Expense
|
240
|
During December, the last month of the accounting year, the following transactions were completed:
Dec. 1. Issued check number 2632 for the December rent, $1,600.
3. Purchased merchandise on account from Prince Co., terms 2/10, n/30, FOB shipping point, $15,000.
4. Issued check number 2633 to pay the transportation changes on purchase of December 3, $400.
6. Sold merchandise on account to Albert Co., invoice 891, terms 2/10, n/30, FOB shipping point, $8,500. The cost of the merchandise sold was $5,000.
7. Received $7,500 cash from Marie Co. on account, no discount.
10. Sold merchandise for cash, $18,300. The cost of the merchandise sold was $11,000.
11. Purchased store supplies on account from Matt Co., terms 1/10, n/30, $620.
13. Issued check number 2634 for merchandise purchased on December 3, less discount.
14. Issued credit memo for merchandise returned on sale of December 6, $1,500. The cost of the merchandise returned was $900.
15. Issued check number 2635 for advertising expense for last half of December, $1,500.
16. Received cash from sale of December 6, less return of December 14 and discount.
19. Issued check number 2636 for merchandise, $8,100.
19. Issued check number 2637 for $6,100 to Joseph Co. on account.
20. Sold merchandise on account to Cameron Co., invoice number 892, terms 1/10, n/30, FOB shipping point, $16,000. The cost of the merchandise sold was $9,600.
21. For the convenience of the customer, issued check number 2638 for shipping charges on sale of December 20, $600.
21. Received $11,750 cash from McKenzie Co. on account, no discount.
21. Purchased merchandise on account from Elisha Co., terms 1/10, n/30, FOB destination, $15,000.
24. Issued a debit memo for return of $3,500 of damaged merchandise purchased on December 21, receiving credit from the seller.
26. Issued check number 2639 for refund of cash on sales made for cash, $720. (Customer was going to return goods until partial refund was arranged.)
28. Issued check number 2640 for sales salaries of $1,750 and office salaries of $950.
27. Purchased store equipment on account from Matt Co., terms 2/10, n/30, FOB destination, $800.
29. Issued check number 2641 for store supplies, $550.
30. Sold merchandise on account to Randall Co., invoice number 893, terms 2/10, n/30, FOB shipping point, $18,750. The cost of the merchandise sold was $11,250.
30. Received cash from sale of December 20, less discount, plus transportation paid on December 21.
30. Issued check number 2642 for purchase of December 21, less return of December 24 and discount.
31. Issued a debit memo for $200 of the purchase returned from December 27.
Instructions:
1. Enter the balances of each of the accounts in the appropriate balance column of a four-column account (General Ledger). Write Balance in the item section, and place a check mark (v) in the Post Reference column.
2. Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers. Assume a perpetual inventory system.
3. Total each column on the special journals and prove the journal.
4. Post the totals of the account columns and individually post the other columns as well as the general journal.
5. Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).
6. Prepare the unadjusted trial balance on the worksheet.
7. Complete the worksheet for the year ended December 31, 2008, using the following adjustment data:
|
a. Merchandise inventory on December 31
|
$124,115
|
|
|
b. Insurance expired during the year
|
1,250
|
|
|
c. Store supplies on hand on December 31
|
975
|
|
|
d. Depreciation for the current year
|
7,400
|
|
|
e. Accrued salaries on December 31:
|
|
Sales salaries
|
$350
|
|
|
Office salaries
|
180
|
530
|
8. Prepare a multiple-step income statement, a statement of owner’s equity, and a report form classified balance sheet.
9. Journalize and post the adjusting entries.
10. Journalize and post the closing entries. Indicate closed accounts by inserting a line in
both balance columns opposite the closing entry.
11. Prepare a post-closing trial balance.
Aug 29, 2021 | Uncategorized
Delivery Service completed the following transactions during its first month of operations for Jan. 2012.
a. Delivery Service began operations by receiving $6,000 cash and a truck valued at $11,000. The business gave delivery company capital to aquire these assets. (put truck in at value)
b.Paid $300 cash for supplies
c. Prepaid insurance, $700
d. Performed delivery services for a customer and received $800 cash
e. Completed a large delivery job billed customer 1500 and received a promise to collect the $1,500 within one week.
f. Paid employee salary $700
g. Received $12,000 cash for performing delivery services
h. Collected $600 in advance for delivery service to be performed later .
i. Collected $1,500 cash from a customer on account
j. Purchased fuel for truck paying $200 with a company credit card(credit accounts payable)
K Performed delivery services on account $900.
l. Paid office rent $600. This rent is not paid in advance.
m. Paid $200 on account.
n. owner withdrew cash of $2,100.
Requirements:
1. Record each transaction in journal. Key each transaction by its letter . Explanations are not required.
2. Post transactions that you recorded in Requirement a in the in T-accounts.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery truck
Accumulated Depreciation
Accounts Payable
Salary Payable
Unearned Service Revenue
Delivery Service, Capital
Delivery Service, Withdrawals
Income Summary
Service Revenue
Salary Expense
Depreciation Expense
Insurance Expense
Fuel Expense
Rent Expense
Supplies Expense
Aug 29, 2021 | Uncategorized
Grossman Corporation issued 1,000 shares of stock.
Instructions:
Prepare the entry for the issuance under the following assumptions.
a. The stock had a par value of $5 per share and was issued for a total of $52,000. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
b. The stock had a stated value of $5 per share and was issued for a total of $52,000. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
c. The stock had no par or stated value and was issued for a total of $52,000.
d. The stock had a par value of $5 per share and was issued to attorneys for services during incorporation valued at $52,000. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
e. The stock had a par value of $5 per share and was issued for land worth $52,000. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Aug 29, 2021 | Uncategorized
Hayslett Corporation was organized on January 1, 2011. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year.
Jan. 10 Issued 100,000 shares of common stock for cash at $3 per share.
Mar. 1 Issued 10,000 shares of preferred stock for cash at $55 per share.
Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000. The fair market value of the land was $85,000.
1-May Issued 75,000 shares of common stock for cash at $4 per share.
Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill of $50,000 for services provided in helping the company organize.
Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $58 per share.
Instructions:
a. Journalize the transactions. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2. If amounts are the same, list alphabetically.)
b. Post to the stockholders’ equity accounts. (Use J1 as the posting reference.) (If answer is zero, please enter 0. Do not leave any fields blank.)
c. Complete the paid-in capital section of stockholders’ equity at December 31, 2011. (List entries by the format used in the text.)
Aug 29, 2021 | Uncategorized
Analyzing Capital Investment Proposals
Micro Technology is considering two alternative proposals for modernizing its production facilities. To provide a basis for selection, the cost accounting department has developed the following data regarding the expected annual operating results for the two proposals.
(Round the payback period to the nearest tenth of a year and the return on investment to the nearest tenth of a percent).
|
|
Proposal 1
|
Proposal 2
|
|
Required investment in equipment
|
360,000
|
350,000
|
|
Estimated service life of equipment (years)
|
8
|
7
|
|
Estimated salvage value
|
–
|
14,000
|
|
Estimated annual cost savings (net cash flow)
|
75,000
|
76,000
|
|
Depreciation on equipment (straight-line basis)
|
45,000
|
48,000
|
|
Estimated increase in annual net income
|
30,000
|
28,000
|
Instructions:
a. For each proposal, compute the (1) payback period, (2) return on average investment, and (3) net present value, discounted at an annual rate of 12 percent. (round the payback period tot eh nearest tenth of a year and the return on investment to the nearest tenth of a percent.) Use this exhibit when necessary.
b. Based on your analysis in part a, state which proposal you would recommend and explain the reason for your choice
Aug 29, 2021 | Uncategorized
The following stockholders’ equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011.
Common Stock ($10 stated value) 1,500,000
Paid-in Capital from Treasury Stock 6,000
Paid-in Capital in Excess of Stated Value-Common Stock 690,000
Paid-in Capital in Excess of Par Value-Preferred Stock 288,400
Preferred Stock (8%, $100 par, noncumulative) 400,000
Retained Earnings 776,000
Treasury Stock-Common (8,000 shares) 88,000
Instructions:
a. Complete the stockholders’ equity section at December 31, 2011. (List entries by the format used in the text. Enter all amounts as positive amounts and subtract where necessary.)
b. Compute the book value per share of the common stock, assuming the preferred stock has a call price of $110 per share. (Round answer to 2 decimal places, e.g. 10.50.)
Aug 29, 2021 | Uncategorized
At December 31, 2008, the trial balance of Worcester Company contained the following amounts before adjustment.
|
|
Debit
|
Credit
|
|
Accounts receivable
|
385,000
|
|
|
Allowance for doubtful accounts
|
|
2,000
|
|
Sales
|
|
950,000
|
Requirements:
a. Based on the information given, which method of accounting for bad debts is Worcester Company using-the direct write-off method or the allowance method?
b. Prepare the adjusting entry at December 31, 2008, for bad debts expense under each of the following independent assumptions. (1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible. (2) The company estimates that 1% of sales will be uncollectible.
c. Prepare the adjusting entry at December 31, 2008, for bad debts expense under each of the following independent assumptions. (1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible. (2) The company estimates that 1% of sales will be uncollectible. Assume there is an $2,000 debit balance in Allowance for Doubtful Accounts.
d. During the next month, January 2009, a $3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
e. Repeat the previous question assuming thatWorcesteruses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.
Aug 29, 2021 | Uncategorized
Kale Thompson, an auditor with Sneed CPAs, is performing a review of Strawser Company’s inventory account. Strawser did not have a good year and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount.
Instructions
Determine the correct inventory amount. (If answer is zero, please enter 0. Do not leave any fields blank. If amount has a negative effect, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
1. Included in the company’s count were goods with a cost of $250,000 that the company is holding on consignment. The goods belong to Superior Corporation.
2. The physical count did not include goods purchased by Strawser with a cost of $40,000 that were shipped FOB destination on December 28 and did not arrive at Strawser’s warehouse until January 3.
3. Included in the inventory account was $17,000 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year.
4. The company received an order on December 29 that was boxed and was sitting on the loading dock awaiting pick-up on December 31. The shipper picked up the goods on January 1 and delivered them on January 6. The shipping terms were FOB shipping point. The goods had a selling price of $40,000 and a cost of $30,000.The goods were not included in the count because they were sitting on the dock.
5. On December 29 Strawser shipped goods with a selling price of $80,000 and a cost of $60,000 to District Sales Corporation FOB shipping point. The goods arrived on January 3. District Sales had only ordered goods with a selling price of $10,000 and a cost of $8,000. However, a sales manager at Strawser had authorized the shipment and said that if District wanted to ship the goods back next week, it could.
6. Included in the count was $40,000 of goods that were parts for a machine that the company no longer made. Given the high-tech nature of Strawser’s products, it was unlikely that these obsolete parts had any other use. However, management would prefer to keep them on the books at cost, “”since that is what we paid for them, after all.””
Aug 29, 2021 | Uncategorized
There is also a practice case study to work on. Your Professor will provide the solution to the practice case study at the end of Week 5. This case study should be uploaded by 11:59PM Mountain time of the Sunday ending Week 6 to the Week 6 Assignment Dropbox. You are encouraged to use the Excel template file provided in Doc Sharing.
The Oxford Company has budgeted sales revenues as follows:
|
|
July
|
August
|
September
|
|
Credit sales
|
$30,000
|
$24,000
|
$18,000
|
|
Cash sales
|
$18,000
|
$ 51,000
|
$39,000
|
|
Total sales
|
$48,000
|
$75,000
|
$57,000
|
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month.
Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are $65,000 in July, $45,000 in August, and $21,000 in September.
Other budgeted cash receipts: (a) sale of plant assets for $12,350 in August, and (b) sale of new common stock for $16,850 in September. Other budgeted cash disbursements: (a) operating expenses of $6,750 each month, (b) selling and administrative expenses of $12,500 each month, (c) dividends of $19,000 will be paid in August, and (d) purchase of equipment for $6,000 cash in September.
The company has a cash balance of $10,000 at the beginning of August and wishes to maintain a minimum cash balance of $10,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate of 12%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all repayments are made on the last day of the month in which excess cash is available. Also assume that there is no outstanding financing as of August 1.
Requirements:
1. Use this information to prepare a Cash Budget for the months of August and September, using the template provided in Doc Sharing.
2. What are the three sections of a Cash Budget, and what is included in each section?
3. Why is a Cash Budget so vital to a company?
4. What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash?
Aug 29, 2021 | Uncategorized
Presented below are two independent situations.
On January 6, Arneson Co. sells merchandise on account to Cortez Inc. for $9,000, terms 2/10, n/30. On January 16, Cortez Inc. pays the amount due. Prepare the entries on Arneson’s books to record the sale and related collection. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
On January 10, Mary Dawes uses her Pierson Co. credit card to purchase merchandise from Pierson Co. for $9,000. On February 10, Dawes is billed for the amount due of $9,000. On February 12, Dawes pays $5,000 on the balance due. On March 10, Dawes is billed for the amount due, including interest at 2% per month on the unpaid balance as of February 12. Prepare the entries on Pierson Co.’s books related to the transactions that occurred on January 10, February 12, and March 10.
Aug 29, 2021 | Uncategorized
Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2008, the company reported the following operating results while operating at 90% of plant capacity and producing 112,500 units.
Amount
Sales 4,500,000
Cost of goods sold 3,600,000
Selling and administrative expenses 450,000
Net income 450,000
Fixed costs for the period were: cost of goods sold $1,080,000, and selling and administrative expenses $225,000.
In July, normally a slack manufacturing month, Pro Sports receives a special order for 10,000 basketballs at $28 each from the Italian Basketball Association (IBA). Acceptance of the order would increase variable selling and administrative expenses $0.50 per unit because of shipping costs but would not increase fixed costs and expenses.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Pro Sports Inc. accept the special order? Explain your answer.
(c) What is the minimum selling price on the special order to produce net income of $4.10 per ball?
(d) What nonfinancial factors should management consider in making its decision?
Aug 29, 2021 | Uncategorized
Why are noncash transactions, such as the exchange of common stock for a building, included on a statement of cash flows? How are these noncash transactions disclosed?
1. Classification of activities Classify each of the following transactions as arising from an operating (O),investing (I), financing (F), or noncash investing/financing (N) activity.
a. ________ Received $80,000 from the sale of land.
b. ________ Received $3,200 from cash sales.
c. ________ Paid a $5,000 dividend.
d. ________ Purchased $8,800 of merchandise for cash.
e. ________ Received $100,000 from the issuance of common stock.
f. ________ Paid $1,200 of interest on a note payable.
g. ________ Acquired a new laser printer by paying $650.
h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note.
Overview of direct and indirect methods Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow from operating activities.
b. Depreciation expense is added back to net income when the indirect method is used.
c. One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported.
d. The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed.
e. The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement preparation is used.
Aug 29, 2021 | Uncategorized
Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company’s current accounts:
19X5
19X4
(Increase / Decrease)
Current assets Cash
$55,400
$35,200
$20,200
Accounts receivable (net)
83,800
88,000-4,200
Inventory
243,400
233,800
9,600
Prepaid expenses
25,400
24,200
1,200
Current liabilities Accounts payable
$123,600
$140,600
($17,000)
Taxes payable
43,600
49,200-5,600
Interest payable
9,000
6,400
2,600
Accrued liabilities
38,800
60,400-21,600
Note payable
44,000
44,000
The accounts payable were for the purchase of merchandise. Prepaid expenses and accrued liabilities related to the firm’s selling and administrative expenses. The company’s condensed income statement follows.
SIGN GRAPHICS, INC. Income Statement For the Year Ended December 31, 19X5
Sales
$713,800
Less: Cost of goods sold
323,000= Gross profit $390,800
Less: Selling & administrative expenses $186,000 Depreciation expense 17,000 Interest expense 27,000 Total operating expenses: 230,000 $160,800 Add: Gain on sale of land 21,800 Income before taxes Income taxes $182,600 36,800 Net income $145,800 Other data:
1. Long-term investments were purchased for cash at a cost of $74,600.
2. Cash proceeds from the sale of land totaled $76,200.
3. Store equipment of $44,000 was purchased by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock.
4. A long-term note of $49,400 was repaid.
5. Twenty thousand shares of common stock were issued at $5.19 per share.
6. The company paid cash dividends amounting to $128,600. Instructions:
a. Prepare the operating activities section of the company’s statement of cash flows, assuming use of:1.
The direct method.
2. The indirect method.
b. Prepare the investing and financing activities sections of the statement of cash flows.
Aug 29, 2021 | Uncategorized
Analysis of stockholders’ equity.
Star Corporation issued both common and preferred stock during 19X6. The stockholders’ equity sections of the company’s balance sheets at the end of 19X6 and 19X5 follow. 19X6 19X5 Preferred stock, $100 par value, 10% $580,000 $500,000 Common stock, $10 par value 2,350,000 1,750,000 Paid-in capital in excess of par valuePreferred24,000 — Common 4,620,000 3,600,000 Retained earnings
8,470,000
6,920,000
Total stockholders’ equity
$16,044,000
$12,770,000
a. Compute the number of preferred shares that were issued during 19X6.
b. Calculate the average issue price of the common stock sold in 19X6.
c. By what amount did the company’s paid-in capital increase during 19X6?
d. Did Star’s total legal capital increase or decrease during 19X6? By what amount?
Aug 29, 2021 | Uncategorized
Bond computations: Straight-line amortization Southlake Corporation issued $900,000 of 8% bonds on March 1, 19X1. The bonds pay interest on March1 and September 1 and mature in 10 years. Assume the independent cases that follow. Case A
_______________
The bonds are issued at 100. Case B
_______________
The bonds are issued at 96. Case C
_______________
The bonds are issued at 105.Southlake uses the straight-line method of amortization. Instructions: Complete the following table: Case A Case B Case C
a. Cash inflow on the issuance date
________________
________________
________________
b. Total cash outflow through maturity _______ _______ _______
c. Total borrowing cost over the life of the bond issue _______ _______ _______
d. Interest expense for the year ended December 31, 19X1 _______ _______ _______
e. Amortization for the year ended December 31, 19X1 _______ _______ _______
f. Unamortized premium as of December 31, 19X1 _______ _______ _______
g. Unamortized discount as of December 31, 19X1 _______ _______ _______
h. Bond carrying value as of December 31, 19X1 _______ _______ _______
5. Monthly operating costs of pollution control equipment used in a steel mill
6. Weekly wages of a seamstress employed by a jeans maker
7. Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adamsa. Determine which of these costs are product costs and which are period costs. b. For the product costs only, determine those that are easily traced to the finished product and those that are not
Aug 29, 2021 | Uncategorized
Definitions of manufacturing concepts Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: Materials and supplies used Brass $75,000 Repair parts 16,000Machine lubricants 9,000 Wages and salaries Machine operators 128,000 Production supervisors 64,000Maintenance personnel 41,000 Other factory overhead Variable 35,000 Fixed 46,000 Sales commissions 20,000
Compute:
a. Total direct materials consumed
b. Total direct labor c. Total prime cost
d. Total conversion cost
Schedule of cost of goods manufactured, income statement The following information was taken from the ledger of Jefferson Industries, Inc.: Direct labor $85,000 Administrative expenses $59,000 Selling expenses 34,000 Work in. process Sales 300,000 Jan. 129,000 Finished goods Dec. 31.
21,000
Jan. 1115,000
Direct material purchases
88,000
Dec. 31
131,000
Depreciation: factory
18,000
Raw (direct) materials on hand Indirect materials used
10,000
Jan. 13
1,000
Indirect labor
24,000
Dec. 3140,000
Factory taxes
8,000
Factory utilities
11,000
Prepare the following:
a. A schedule of cost of goods manufactured for the year ended December 31.
b. An income statement for the year ended December 31.
Aug 29, 2021 | Uncategorized
Manufacturing statements and cost behavior Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-gauge aluminum, which the company sells for $36 per roll. Cost information for the year just ended follows. Per Unit Variable Cost Fixed Cost Direct materials$4.50$
—
Direct labor 6.5
—
Factory overhead
950,000 Selling
—
70,000
Administrative
—
135,000
Production and sales totaled
20,000 rolls and 17,000 rolls, respectively
There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production.
Instructions:
a. Determine the cost of the finished goods inventory of light-gauge aluminum.
b. Prepare an income statement for the current year ended December 31
c. On the basis of the information presented:
1. Does it appear that the company pays commissions to its sales staff? Explain.
2. What is the likely effect on the $4.50 unit cost of direct materials if next year’s production increases?
Aug 29, 2021 | Uncategorized
Cost flows and overhead application Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost. Data pertaining to recent operations follow.
Job no. 636 was the only job in process on January 1 of the current year. The Work in Process account contained a $24,600 balance on this date.
Jobs no. 637, 638, and 639 were started during January. Total direct material requisitions and direct labor incurred during January amounted to $89,200 and $114,500, respectively. The only job that remained in process on January 31 was job no. 638, with costs of $15,000 for direct materials and $20,000 for direct labor. Compute the total cost of the work in process inventory on January 31. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job completion.
Aug 29, 2021 | Uncategorized
Computations using a job order system
General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;
|
Work in process
|
$35,200
|
|
Finished goods
|
86,900
|
|
Cost of goods sold
|
128,700
|
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows:
Document*
Date
Department
Hours
Amount
MR 1165
19-Mar
Machining
—
$5,600
MR 1169
21-Mar
Machining
—
3,500
TT 1450-52
23-Mar
Machining
45
400
MUR 46
23-Mar
Machining
105
—
MR 4330
27-Mar
Finishing
—
700
TT 1475-76
31-Mar
Machining
30
300
MUR 47
31-Mar
Machining
50
—
TT 6608-13
31-Mar Finishing
200
2,000
Job no. 115 was the only job in process at the end of the month. Job no. 101 and three “”other”” jobs were sold during May at a profit of 20% of cost. The “”other”” jobs contained material and labor charges of $21,000 and $17,400, respectively
General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm’s fiscal year ends on May 31.
Instructions:
Compute the total overhead applied to production during May. Compute the cost of the ending work in process inventory. Compute the cost of jobs completed during May. Compute the cost of goods sold for the year ended May 31.
Aug 29, 2021 | Uncategorized
Kopecky Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
|
Direct materials (8 pounds at $2.50 per pound)
|
20
|
|
Direct labor (3 hours at $12.00 per hour)
|
36
|
During the month of April, the company manufactures 240 units and incurs the following actual costs.
|
Direct materials purchased and used (1,900 pounds)
|
4,940
|
|
Direct labor (700 hours)
|
8,120
|
Instructions
Compute the total, price, and quantity variances for materials and labor.
Aug 29, 2021 | Uncategorized
Blue Mountain Products manufactures and sells a variety of camping products. Recently the company opened a new plant to manufacture a light-weight, self-standing tent. Cost and sales data for the month of operations are shown below.
|
Manufacturing costs:
|
$200,000
|
|
Fixed overhead
|
$4 per tent
|
|
Variable overhead
|
$16 per tent
|
|
Direct labor
|
$40 per tent
|
|
Direct materials
|
0 tents
|
|
Beginning inventory
|
10,000
|
|
Tents produced
|
9,000
|
|
Tents sold
|
|
Selling and administrative costs:
|
Fixed
|
$400,000
|
|
Variable
|
$6 per tent sold
|
The tent sells for $150. Management is interested in the opening month’s results and has asked for an income statement.
Instructions:
(a) Assuming the company uses absorption costing, do the following. (i) Calculate the manufacturing cost per unit. (ii) Prepare an absorption costing income statement for the month of June 2005.
(b) Assuming the company uses variable costing, do the following. (i) Calculate the manufacturing cost per unit. (ii) Prepare a variable costing income statement for the month of June 2005.
(c) Reconcile the difference in net income between the two methods.
Aug 29, 2021 | Uncategorized
Journalize entries to record allowance for doubtful accounts using two different bases.
The ledger of Hixson Company at the end of the current year shows Accounts Receivable $120,000, Sales $840,000, and Sales Returns and Allowances $30,000.
Instructions
(a) If Hixson uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that Fell’s $1,400 balance is uncollectible.
(b) If Allowance for Doubtful Accounts has a credit balance of $2,100 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1% of net sales, and (2) 10% of accounts receivable.
(c) If Allowance for Doubtful Accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable
Aug 29, 2021 | Uncategorized
Presented below is an amortization schedule related to Spangler Company’s 5-year, $100,000 bond with a 7% interest rate and 5% yield, purchased on December 31, 2008, for $108,660.
|
Date
|
Cash Received
|
Interest Revenue
|
Bond Premium Amortization
|
Carrying Amount of Bonds
|
|
12/31/2008
|
|
|
108,660
|
|
12/31/2009
|
7,000
|
5.433
|
1.567
|
107,093
|
|
12/31/2010
|
7,000
|
5,354
|
1,646
|
105,447
|
|
12/31/2011
|
7,000
|
5,272
|
1,728
|
103,719
|
|
12/31/2012
|
7,000
|
5,186
|
1,814
|
101,905
|
|
12/31/2013
|
7,000
|
5,095
|
1,905
|
100,000
|
The following schedule presents a comparison of the amortized cost and fair value of the bonds at year-end.
|
|
12/31/2009
|
12/31/2010
|
12/31/2011
|
12/31/2012
|
|
Amortized Cost
|
107,093
|
105,447
|
103,719
|
101,905
|
|
Fair value
|
106,500
|
107,500
|
105,650
|
103,000
|
Instructions:
(a) Prepare the journal entry to record the purchase of these bonds on December 31, 2008, assumingthe bonds are classified as held-to-maturity securities.
(b) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2009.
(c) Prepare the journal entry(ies) related to the held-to-maturity bonds for 2011.
(d) Prepare the journal entry(ies) to record the purchase of these bonds, assuming they are classifiedas available-for-sale.
(e) Prepare the journal entry(ies) related to the available-for-sale bonds for 2009.
(f) Prepare the journal entry(ies) related to the available-for-sale bonds for 2011
Aug 29, 2021 | Uncategorized
On September 1, Howe Office Supply had an inventory of 30 pocket calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.
Sept.
6 Purchased 80 calculators at $20 each from De Vito Co. for cash.
9 Paid freight of $80 on calculators purchased from De Vito Co.
10 Returned 2 calculators to De Vito Co. for $42 credit (including freight) because they did not meet specifications.
12 Sold 26 calculators costing $21 (including freight) for $31 each to Mega Book Store, terms n/30.
14 Granted credit of $31 Mega Book Store for the return of one calculator that was not ordered.
20 Sold 30 calculators costing $21 for $31 each to Barbara’s Card Shop, terms n/30.
Instructions
Journalize the September transactions.
Aug 29, 2021 | Uncategorized
Millar, Inc., purchased a truck to use for deliveries and is attempting to determine how much depreciation expense would be recognized under three different methods. The truck cost $20,000 and is expected to have a value of $4,000 at the end of its five-year life. The truck is expected to be used at the rate of 10,000 miles in the first year, 20,000 miles in the second and third years, and 15,000 miles in the fourth and fifth years.
a. Determine the amount of depreciation expense that will be recognized under each of the following depreciation methods in the first and second years of the truck’s useful life. A full year’s depreciation will be recognized in the first year the truck is used. (Omit the “”$”” sign in your response.)
b. Prepare the plant assets section of the balance sheet at the end of the second year of the asset’s useful life under the double-declining-balance method, assuming the truck is the only plant asset owned by Millar, Inc. (Amounts to be deducted should be indicated with a minus sign. Omit the “”$”” sign in your response.)
Aug 29, 2021 | Uncategorized
From the Mini Case on page 329-330, parts “”a”” to “”d,”” summarize your analysis in a concise management statement not to exceed a total of 1,200 words. For parts “”e”” to “”k,”” use formulas to calculate the ratios and format the cells to insert a comma if there is more than three numbers. Round to the nearest whole number. Clearly label your analysis and your conclusions in not more than 500 words.
a. Should Caledonia focus on cash flows or accounting profits in making its capital-budgeting decisions? Should the company be interested in incremental cash flows, incremental profits, total free cash flows, or total profits?
b. How does depreciation affect free cash flows?
c. How do sunk costs affect the determination of cash flows?
d. What is the project’s initial outlay?
e. What are the differential cash flows over the project’s life?
f. What is the terminal cash flow?
g. Draw a cash flow diagram for this project.
h. What is its net present value?
i. What is its internal rate of return?
j. Should the project be accepted? Why or why not?
k. In capital budgeting, risk can be measured from three perspectives. What are those three measures of a project.
l. According to the CAPM, which measurement of a project’s risk is relevant? What complications does reality introduce into the CAPM view of risk, and what does that mean for our view of the relevant measure of a project’s risk?
m. Explain how simulation works. What is the value in using a simulation approach?
n. What is sensitivity analysis and what is its purpose?
Aug 29, 2021 | Uncategorized
At the beginning of 2006, Lehman Company acquired equipment costing $90,000. It was estimated that this equipment would have a useful life of 6 years and a residual value of $9,000 at that time.
The straight-line method of depreciation was considered the most appropriate to use with this type of equipment. Depreciation is to be recorded at the end of each year.
During 2008 (the third year of the equipment’s life), the company’s engineers reconsidered their expectations, and estimated that the equipment’s useful life would probably be 7 years (in total) instead of 6 years.
The estimated residual value was not changed at that time. However, during 2011 the estimated residual value was reduced to $5,000.
Instructions
Indicate how much depreciation expense should be recorded each year for this equipment, by completing the following table.
Aug 29, 2021 | Uncategorized
Prepare a direct materials purchases budget
Dewitt Industries has adopted the following production budget for the first 4 months of 2012.
|
Month
|
Units
|
Month
|
Units
|
|
January
|
10,000
|
March
|
5,000
|
|
February
|
8,000
|
April
|
4,000
|
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2011, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month’s production requirements.
Instructions:
Complete a direct materials purchases budget by month for the first quarter. (Enter all amounts as positive amounts and subtract where necessary.)
Aug 29, 2021 | Uncategorized
TLC Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn’t equipped to do. Estimates regarding each machine are provided below.
|
|
Machine A
|
Machine B
|
|
Original Cost
|
78,000
|
190,000
|
|
Estimated life(years)
|
8
|
8
|
|
Salvage value
|
–
|
–
|
|
Estimated annual cash inflows
|
20,000
|
40,000
|
|
Estimated annual cash outflows
|
5,000
|
9,000
|
Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. Round computations for Discount Factor to 5 decimal places.)
Aug 29, 2021 | Uncategorized
Alice Shoemaker is the advertising manager for Value Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $34,000 in fixed costs to the $270,000 currently spent. In addition, Alice is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $22 per pair of shoes. Management is impressed with Alice’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.
Instructions:
a) Compute the current break-even point in units, and compare it to the break-even point in units if Alice’s ideas are used.
b) Compute the margin of safety ratio for current operations and after Alice’s changes are introduced.
c) Prepare a CVP income statement for current operations and after Alice’s changes are introduced.
Aug 29, 2021 | Uncategorized
Hy and Lowe is a public accounting firm that offeres two primary services, auditing and tax return preparation. A controversy has developed between the partners of the two service lines as to who is contributing the greater amount to the bottom line. The area of contention is the assignment of overhead.
The tax partners argue for assigning overhead on the basis of 40% of direct labor dollars, while the audit partners argue for implementing acivity-based costing. The partners agree to use next year’s budgeted data for purposes of analysis and comparison. The following overhead data are collected to develop the comparison.
Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Expected Use of Cost Drivers per Service
Audit Tax
Employee training Direct labor dollars 216,000 1,800,000 1,000,000 800,000
Typing and Secretarial No. of reports/forms 76,200 2,500 600 1,900
Computing No. of minutes 204,000 60,000 25,000 35,000
Facility rental No. of employees 142,500 40 22 18
Travel Per expense reports 81,300 Direct 56,000 25,300
$720,000
Instructions:
a. Using traditional product costing as proposed by the tax partners, compute the total overhead cost assigned to both services (audit and tax) of Hy and Lowe.
b (1). Using activity-based costing, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver).
b(2). Prepare a schedule assigning each activity’s overhead cost pool to each service based on the use of the cost drivers.
c. Classify each of the activities as a value-added activity or a non-value added activity.
d. Comment on the comparative overhead cost for the two services under both traditional costing and ABC.
Aug 29, 2021 | Uncategorized
Minden Company is a wholesale distributor of premium European chocolates. The company’s balance sheet as of April 30 is given below:
The company is in the process of preparing budget data for May. A number of budget items have already been prepared, as stated below:
(a) Sales are budgeted at $200,000 for May. Of these sales, $60,000 will be for cash; the remainder will be credit sales. One-half of a month’s credit sales are collected in the month the sales are made, and the reminder is collected in the following month. All of the April 30 accounts receivable will be collected in May.
(b) Purchase of inventory are expected to total $120,000 during May. These purchases will all be on account. Forty percent of all purchases are paid for in the month of purchases; the remainder are paid in the following month. All of the April 30 accounts payable to suppliers will be paid during May.
(c) The May 31 inventory balance is budgeted at $40,000.
(d) Selling and administrative expenses for May are budget at $72,000, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $2,000 for the month.
(e) The note payable on the April 30 balance sheet will be paid during May, with $100 in interest, (All of the interest relates to May)
(f) New refrigerating equipment costing $6,500 will be purchased for cash during May.
(g) During May, the company will borrow $20,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due in one year.
Required:
1. Prepare a cash budget for May. Suppose your budget with a schedule of expected cash collections from sales and a schedule of expected cash disbursements for merchandise purchase
2. Prepare a budgeted income statement for May. Use the absorption costing income statement formal as shown in Schedule 3.
3. Prepare a budgeted balance sheet as of May 3l.
Aug 29, 2021 | Uncategorized
Phoenix-based CompTronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets:
|
Sales
|
4,032,000
|
|
Variable costs
|
1,008,000
|
|
Fixed costs
|
2,736,000
|
Management is considering relocating its manufacturing facilities to northern Mexicoto reduce costs. Variable costs are expected to average $21.60 per set; annual fixed costs are anticipated to be $2,380,800. (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 theUnited States.
2. Determine the break-even point in speaker sets if operations are shifted toMexico.
3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.
4. Determine the impact (increase, decrease, or no effect) of the following operating changes.
a. If variable costs remain constant, what must management do to fixed costs? By how much must fixed costs change?
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.
Aug 29, 2021 | Uncategorized
You are provided with the following transactions that took place during the year
Instructions
For each transaction listed above, indicate whether it will increase (I), decrease (D), or have no effect (NE) on the ratios:
Free Cash Flow ($125,000) Current Cash Debt Coverage Ratio (0.5 times) Cash Debt Coverage Ratio (0.3 times)
Transactions
a. Recorded credit sales $2,500.
b. Collected $1,900 owed by customers.
c. Paid amount owed to suppliers $2,750.
d. Recorded sales returns of $500 and credited the customer’s account.
e. Purchased new equipment $5,000; signed a long-term note payable for the cost of the equipment.
f. Purchased a patent and paid $65,000 cash for the asset.
Aug 29, 2021 | Uncategorized
Winningham Company maintains a petty cash fund for small expenditures. The following transactions occurred over a 2-month period.
July 1 Established petty cash fund by writing a check on Cubs Bank for $200.
July 15 Replenished the petty cash fund by writing a check for $196.00. On this date the fund consisted of $4.00 in cash and the following petty cash receipts: freight-out $94.00, postage expense $42.40, entertainment expense $46.60, and miscellaneous expense $11.20.
July 31 Replenished the petty cash fund by writing a check for $192.00. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts: freight-out $82.10, charitable contributions expense $45.00, postage expense $25.50, and miscellaneous expense $39.40.
Aug 15 Replenished the petty cash fund by writing a check for $187.00. On this date, the fund consisted of $13.00 in cash and the following petty cash receipts: freight-out $75.60, entertainment expense $43.00, postage expense $33.00, and miscellaneous expense $37.00.
Aug 16 Increased the amount of the petty cash fund to $300 by writing a check for $100.
Aug 31 Replenished petty cash fund by writing a check for $284.00. On this date, the fund consisted of $16 in cash and the following petty cash receipts: postage expense $140.00, travel expense $95.60, and freight-out $47.10.
Requirements:
1. Journalize the petty cash transactions. (List multiple debit/credit entries in order of magnitude. Round answers to 2 decimal places, i.e. $35.87)
2. Post to the Petty Cash account. (If answer is zero, please enter 0, do not leave any fields blank.)
3. What internal control features exist in a petty cash fund?
Aug 29, 2021 | Uncategorized
An investment banker is analyzing two companies that specialize in the production and sale of candied apples. Old-Fashion Apples uses a labor-intensive approach, and Mech-Apple uses a mechanized system. CVP income statements for the two companies are shown below.
| |
Old Fashion Apples
|
Mech-Apple
|
|
Sales
|
400,000
|
400,000
|
|
Variable costs
|
320,000
|
160,000
|
|
Contribution margin
|
80,000
|
240,000
|
|
Fixed costs
|
20,000
|
180,000
|
|
Net income
|
60,000
|
60,000
|
The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company’s cost structure might have on its profitability.
a. Calculate each company’s degree of operating leverage. (Round answers to 2 decimal places, e.g. 10.50.) Determine which company’s cost structure makes it more sensitive to changes in sales volume.
b. Determine the effect on each company’s net income if sales decrease by 10% and if sales increase by 5.0%. Do not prepare income statements. (Use the rounded amount from the previous question when calculating the answer for this question. Round answers to 2 decimal places, e.g. 10.50. If percentage change is negative use either a negative sign preceding the number eg -45 or parentheses eg (45).)
c. Which company should the investment banker acquire? Discuss.
Aug 29, 2021 | Uncategorized
Gruner Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,000 golf discs is:
|
Materials
|
10,000
|
0.50
|
|
Labor
|
30,000
|
1.50
|
|
Variable overhead
|
20,000
|
1.00
|
|
Fixed overhead
|
40,000
|
2.00
|
|
Total
|
100,000
|
5.00
|
Gruner also incurs 5% sales commission ($0.35) on each disc sold.
Travis Corporation offers Gruner $4.75 per disc for 5,000 discs.
Travis would sell the discs under its own brand name in foreign markets not yet served by Gruner. If Gruner accepts the offer, its fixed overhead will increase from $40,000 to $45,000 due to the purchase of a new imprinting machine. No sales commission will result from the special order.
Requirements:
1. Prepare an incremental analysis for the special order. (If answer is zero, please enter 0. Do not leave any fields blank. If amount decreases the income, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Enter all amounts in columns “”Reject Order”” and “”Accept Order”” as positive amounts and subtract where necessary.)
2. Should Gruner accept the special order?
3. What assumptions underlie the decision made in part B?
Aug 29, 2021 | Uncategorized
You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designer’s silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favorable impression on the president and have assembled the information below.
The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows:
|
January (actual)
|
20,000
|
|
February (actual)
|
24,000
|
|
March (actual)
|
28,000
|
|
April
|
35,000
|
|
May
|
45,000
|
|
June
|
60,000
|
|
July
|
40,000
|
|
August
|
36,000
|
|
September
|
32,000
|
The large buildup in sales before and during June is due to Father’s Day. Ending inventories are supposed to equal 90% of the next month’s sales in units. The ties cost the company $5 each.
Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible.
The company’s monthly selling and administrative expenses are given below:
|
Variable:
|
|
Sales commissions
|
$1 per tie
|
|
Fixed:
|
|
Wages and salaries
|
$22,000
|
|
Utilities
|
$14,000
|
|
Insurance
|
$1,200
|
|
Depreciation
|
$1,500
|
|
Miscellaneous
|
$3,000
|
All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet at March 31 is given below:
|
Assets
|
|
Cash
|
$14,000
|
|
Accounts receivable
|
216,000
|
|
Inventory
|
157,500
|
|
Unexpired insurance
|
14,400
|
|
Fixed assets, net of depreciation
|
172,700
|
|
Total assets
|
$574,600
|
| |
|
|
Liabilities and Stockholders’ Equity
|
|
Accounts payable
|
$85,750
|
|
Dividends payable
|
12,000
|
|
Capital stock
|
300,000
|
|
Retained earnings
|
176,850
|
|
Total liabilities and equity
|
$574,600
|
The company has an agreement with a bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $10,000 in cash.
Required:
Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:
1.
a. A sales budget by month and in total.
b. A schedule of expected cash collections from sales, by month and in total.
c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.
d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.
2. A cash budget. Show the budget by month and in total.
3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.
4. A budgeted balance sheet as of June 30.
Aug 29, 2021 | Uncategorized
Winterschid Company’s trial balance at December 31, 2010, is presented below. All 2010 transactions have been recorded except for the items described below and on page 480.
Unrecorded transactions:
1. On May 1, 2008, Winterschid purchased equipment for $13,200 plus sales taxes of $600 (all paid in cash).
2. On July 1, 2008, Winterschid sold for $3,500 equipment which originally cost $5,000. Accumulated depreciation on this equipment at January 1, 2008, was $1,800; 2008 depreciation prior to the sale of equipment was $450.
3. On December 31, 2008, Winterschid old for $9,000 on account inventory that cost $6,300.
4. Winterschid estimates that uncollectible accounts receivable at year-end is $4,000.
5. The note receivable is a one-year, 8% note dated April 1, 2008. No interest has been recorded.
6. The balance in prepaid insurance represents payment of a $3,600 6-month premium on September 1,2008.
7. The building is being depreciated using the straight-line method over 30 years. The salvage value is $30,000.
8. The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost.
9. The equipment purchased on May 1, 2008, is being depreciated using the straight-line method over 5 years, with a salvage value of $1,800.
10. The patent was acquired on January 1, 2008, and has useful life of 10 years from that date.
11. Unpaid salaries at December 31, 2008, total $2,200.
12. The unearned rent of $6,000 was received on December 1, 2008, for 3 months rent.
13. Both the short-term and long-term notes payable are dated January 1, 2008, and carry a 9% interest rate. All interest is payable in the next 12 months.
Requirements A to D.
Aug 29, 2021 | Uncategorized
Make or Buy a Component
Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is as follows:
|
Direct materials
|
3.60
|
|
Direct labor
|
10.00
|
|
Variable manufacturing overhead
|
2.40
|
|
Fixed manufacturing overhead
|
9.00
|
|
Total cost per part
|
25.00
|
An outside supplier has offered to sell 30,000 units of part S-6 each year to Han Products for $21 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $80,000. However, Han Products has determined that two-thirds of the fixed manufacturing overhead being applied to part S-6 would continue even if part S-6 were purchased from the outside supplier.
Prepare computations showing how much profits will increase or decrease if the outside supplier’s offer is accepted.
Aug 29, 2021 | Uncategorized
Net Present Value Analysis
In eight years, Kent Duncan will retire. He is exploring the possibility of opening a self-service car wash. The car wash could be managed in the free time he has available from his regular occupation, and it could be closed easily when he retires. After careful study, Mr. Duncan has determined the following:
A building in which a car wash could be installed is available under an eight-year lease at a cost of $1,700 per month.
Purchase and installation costs of equipment would total $200,000. In eight years the equipment could be sold for about 10% of its original cost.
An investment of an additional $2,000 would be required to cover working capital needs for cleaning supplies, change funds, and so forth. After. eight years, this working capital would be released for investment elsewhere. Both a wash and a vacuum service would be offered with a wash costing $2.00 and the vacuum costing $1.00 per use. The only variable costs associated with the operation would be 20 cents per wash for water and 10 cents per use of the vacuum for electricity. In addition to rent, monthly costs of operation would be: cleaning, $450; insurance, $75; and maintenance, $500.
Gross receipts from the wash would be about $1,350 per week. According to the experience of other car washes, 60% of the customers using the wash would also use the vacuum.
Mr. Duncan will not open the car wash unless it provides at least a 10% return.
a. Assuming that the car wash will be open 52 weeks a year, compute the expected annual net cash receipts (gross cash receipts less cash disbursements) from its operation. (Do not include the cost of the equipment, the working capital, or the salvage value in these computations.) (Ignore income taxes.)
b. Would you advise Mr. Duncan to open the car wash? Show computations using the net present value method of investment analysis. Round all dollar figures to the nearest whole dollar. (Ignore income taxes.)
Aug 29, 2021 | Uncategorized
Quasi reorganization
A new CEO was hired to revive the floundering Champion Chemical Corporation. The company had endured operating losses for several years, but confidence was emerging that better times were ahead. The board of directors and shareholders approved a quasi reorganization for the corporation. The reorganization included devaluing inventory for obsolescence by $105 million and increasing land by $5 million. Immediately prior to the restatement, at December 31, 2011, Champion Chemical Corporation’s balance sheet appeared as follows (in condensed form):
|
CHAMPION CHEMICAL CORPORATION
Balance Sheet
At December 31, 2009
($ in millions)
|
|
Cash
|
$ 20
|
|
Receivables
|
40
|
|
Inventory
|
230
|
|
Land
|
40
|
|
Buildings and equipment (net)
|
90
|
| |
|
| |
$420
|
| |
|
|
Liabilities
|
$240
|
|
Common stock (320 million shares at $1 par)
|
320
|
|
Additional paid-in capital
|
60
|
|
Retained earnings (deficit)
|
(200)
|
| |
|
| |
$420
|
Required:
1. Prepare the journal entries appropriate to record the quasi reorganization on January 1, 2012.
2. Prepare a balance sheet as it would appear immediately after the restatement.
Aug 29, 2021 | Uncategorized
Various shareholders’ equity topics; comprehensive
Part A
In late 2010, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2011, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 1,000,000 shares of preferred stock are issued at $20 per share.
Required:
1. Prepare journal entries to record these transactions.
2. Prepare the shareholders’ equity section of the Nicklaus balance sheet as of March 31, 2011. (Assume net income for the first quarter 2011 was $1,000,000.)
Aug 29, 2021 | Uncategorized
On October 1, 2011, Nicklaus Corporation receives permission to replace its $1 par value common stock (5,000,000 shares authorized, 3,000,000 shares issued, and 2,900,000 shares outstanding) with a new common stock issue having a $.50 par value. Since the new par value is one-half the amount of the old, this represents a 2-for-1 stock split. That is, the shareholders will receive two shares of the $.50 par stock in exchange for each share of the $1 par stock they own. The $1 par stock will be collected and destroyed by the issuing corporation.
On November 1, 2011, the Nicklaus Corporation declares a $.05 per share cash dividend on common stock and a $.25 per share cash dividend on preferred stock. Payment is scheduled for December 1, 2011, to shareholders of record on November 15, 2011.
On December 2, 2011, the Nicklaus Corporation declares a 1% stock dividend payable on December 28, 2011, to shareholders of record on December 14. At the date of declaration, the common stock was selling in the open market at $10 per share. The dividend will result in 58,000 (.01 × 5,800,000) additional shares being issued to shareholders.
Required:
1. Prepare journal entries to record the declaration and payment of these stock and cash dividends.
2. Prepare the December 31, 2011, shareholders’ equity section of the balance sheet for the Nicklaus Corporation. (Assume net income for the fourth quarter was $2,500,000.)
3. Prepare a statement of shareholders’ equity for Nicklaus Corporation for 2011.
Aug 29, 2021 | Uncategorized
Shareholders’ equity transactions; statement of shareholders’ equity
Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2011–2013. At December 31, 2010, the corporation’s accounts included:
|
|
($ in 000s)
|
|
Common stock, 105 million shares at $1 par
|
$105,000
|
|
|
630,000
|
|
Paid-in capital-excess of par
|
630,000
|
|
Retained earnings
|
970,000
|
a. November 1, 2011, the board of directors declared a cash dividend of $.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
b. On March 1, 2012, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $1.6 million, but were purchased two years previously for $1.3 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
c. On July 12, 2012, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $21 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares.
d. On November 1, 2012, the board of directors declared a cash dividend of $.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
e. On January 15, 2013, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $22 per share.
f. On November 1, 2013, the board of directors declared a cash dividend of $.65 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
Required:
1. Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions.
2. Prepare comparative statements of shareholders’ equity for Branch-Rickie for the three-year period ($ in 000s). Net income was $330 million, $395 million, and $455 million for 2011, 2012, and 2013, respectively
Aug 29, 2021 | Uncategorized
Reacquired shares—comparison of retired shares and treasury shares
National Supply’s shareholders’ equity included the following accounts at December 31, 2010:
|
Shareholders’ Equity
|
($ in millions)
|
|
Common stock, 6 million shares at $1 par
|
$ 6,000,000
|
|
Paid-in capital—excess of par
|
30,000,000
|
|
Retained earnings
|
86,500,000
|
Required:
1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Prepare the entries for each of the transactions under each of two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock
Feb. 15, 2011 Reacquired 300,000 shares at $8 per share
Feb. 17, 2011 Reacquired 300,000 shares at $5.50 per share
Nov. 9, 2011 Sold 200,000 shares at $7 per share (assume FIFO cost)
2. Prepares the shareholders’ equity section of National Supply’s balance sheet at December 31, 2013, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2011, $15 million in 2012, and $16 milion in 2013. No dividends were paid during the three year period.
Aug 29, 2021 | Uncategorized
One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Natalie’s fine European mixers, which would enable him to make larger batches of muffins and cookies. However, Curtis cannot afford to pay for the mixer for at least 30 days. He asks Natalie if she would be willing to sell him the mixer on credit.
Natalie comes to you for advice and asks the following questions.
1. “Curtis has provided me with a set of his most recent financial statements. What calculations should I do with the data from these statements, and what questions should I ask him after I have analyzed the statements? How will this information help me decide if I should extend credit to Curtis?”
2. “Is there an alternative other than extending credit to Curtis for 30 days?”
3. “I am thinking seriously about permitting my customers to use credit cards. What are some of the advantages and disadvantages of letting my customers pay by credit card?”
The following transactions occurred in June through August.
June 1 After much thought, Natalie sells a mixer to Curtis on credit, terms n/30, for $1,125 (cost of mixer $620).
2 Natalie meets with the bank manager and arranges to get access to a credit card account. The terms of credit card transactions are 3% of the sales transactions and a monthly equipment rental charge of $75.
30 Natalie teaches 12 classes in June. Seven classes were paid for in cash, $1,050; the other five classes were paid for by credit card, $750.
30 Natalie receives and reconciles her bank statement. She makes sure that the bank has correctly processed the monthly $75 charge for the rental of the credit card equipment and the 3% fee on the credit card transactions.
30 Curtis calls Natalie. He is unable to pay the amount outstanding for another month, so he signs a one-month, 8% note receivable.
July 15 Natalie sells a mixer to a friend of Curtis’s. The friend pays $1,125 for the mixer by credit card (cost of mixer $620).
30 Natalie teaches 15 classes in July. Eight classes are paid for in cash, $1,200; seven classes are paid for by credit card, $1,050.
31 Natalie reconciles her bank statement and makes sure the bank has recorded the correct amounts for the rental of the credit card equipment and the credit card sales.
31 Curtis calls Natalie. He cannot pay today but hopes to have a check for her at the end of the week. Natalie prepares the appropriate journal entry.
Aug. 10 Curtis calls again and promises to pay at the end of August, including interest for 2 months.
31 Natalie receives a check from Curtis in payment of his balance plus interest outstanding.
Instructions
(a) Answer Natalie’s questions.
(b) Prepare journal entries for the transactions that occurred in June, July, and August. The company uses a perpetual inventory system
Aug 29, 2021 | Uncategorized
Prepare Master Budget
You are the new manager of the Betterbuy Electronics store in the Mall of America. Top managers of Betterbuy Electronics is convinced that management training should include the active participation of store managers in the budgeting process. You have been asked to prepare a complete master budget for your store for June, July and August. All accounting is done centrally so you have no expert help on the premises. In addition, tomorrow the branch manager and the assistant controller will be here to examine your work; at that time, they will assist you in formulating the final budget document. The idea is to have you prepare the initial budget on your own so that you gain mor e confidence about accounting matters. You want to make a favorable impressions on your superiors, so you gather the following data as of May 31, 20X8.
Cash $29,000
Inventory $434,000
Accounts receivable $369,000
Net Furniture and fixtures $168,000
Total Assets $1,000,000
Accounts payable $489,000
Owners’ Equity 511,000
Total liabilities and owners’ equities $1,000,000
Recent and Projected Sales
April $300,000
May 350,000
June 700,000
July 400,000
August 400,000
September 300,000
Credit sales are 90% of total sales. Credit accounts are collected 80% in the month following the sale and 20% in the subsequent month. Assume that bad debts are negligible and can be ignored. The accounts receivable on May 31 are the result of the credit sales for April and May.
(.20 x .90 x $300,000) + (1.0 x .90 x $350,000) = $369,000.
The average gross profit on sales 38%.
The policy is to acquire enough inventory each month to equal the following month’s projected cost of goods sold. All purchases are paid for in the month following purchase.
Salaries, wages and commissions average 20% of sales; all other variable expenses are 4% of sales. Fixed expenses for rent, property taxes, and miscellaneous payroll and other items are $55,000 monthly. Assume that these variable and fixed expenses require cash disbursement each month Depreciation is $2,500 monthly.
In June, $55,000 is going to be disbursed for fixtures acquired and recorded in furniture and fixtures in May. The May 31 balance of accounts payable includes this amount.
Assume that a minimum cash balance of $25,000 is to be maintained. Also assume that all borrowings are effective at the beginning of the month and all repayments are made at the end of the month of repayment. Interest is compounded and added to the outstanding balance each month, but Interest is paid only at the ends of months when principal is repaid. The interest rate is 10% per annum; round interest interest computations and interest payments to the nearest dollar. Interest payment may be any dollar amount, but all borrowing and repayments of principal are made in multiples of $1,000.
Instructions:
1. Prepare a budgeted income statement for the coming June through August quarter, a cash budget (for each of the next three months), and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income tax basis, so income taxes may be ignored here.
2. Explain why there is a need for a bank loan and what operating sources supply cash for repaying the bank loan.
Aug 29, 2021 | Uncategorized
Accounting Adjusting Entries, Posting and Preparing an Adjusted Trial Balance
MASASI COMPANY, INC.
Trial Balance
June 30, 2008
Account Number Debit Credit
101 Cash $ 7,150
112 Accounts Receivable 6,000
126 Supplies 2,000
130 Prepaid Insurance 3,000
157 Office Equipment 15,000
201 Accounts Payable $ 4,500
209 Unearned Service Revenue 4,000
311 Common Stock 21,750
400 Service Revenue 7,900
726 Salaries Expense 4,000
729 Rent Expense 1,000
Total $38,150 $38,150
In addition to those accounts listed on the trial balance, the chart of accounts for Masasi Company,Inc. also contains the following accounts and account numbers: No. 158 Accumulated Depreciation—Office Equipment, No. 212 Salaries Payable,No. 244 Utilities Payable,No. 631 Supplies Expense,No. 711 Depreciation Expense,No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data:
1. Supplies on hand at June 30 are $600.
2. A utility bill for $150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $2,500 of unearned service revenue has been earned at the end of the month.
5. Salaries of $2,000 are accrued at June 30.
6. The office equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of June 30.
Instructions
(a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance atJune 30, 2008. Use the templates in Appendix D. Complete all three tabs.
Aug 29, 2021 | Uncategorized
The San Marcos Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows:
|
Costs
|
Amount
|
|
Salaries
|
$8,500 per month
|
|
Utilities
|
2,000 per month
|
|
Depreciation
|
1,000 per month
|
|
Maintenance
|
500 per month
|
|
Maid service
|
5 per room
|
|
Other costs
|
33 per room
|
Instructions:
(a) Determine the inn’s break-even point in
1. Number of rented rooms per month and
2. Dollars
(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is
1. The monthly margin of safety in dollars and
2. The margin of safety ratio
Aug 29, 2021 | Uncategorized
Preparing a sales budget and schedule of cash receipts
Dorough Pointers, Inc. expects to begin operations on January 1, 2009; it will operate as a specialty sales company that sells laser pointers over the Internet. Dorough expects sales in January 2009 to total $120,000 and to increase 10 percent per month in February and March. All sales are on account. Dorough expects to collect 70% of accounts receivable in the month of sale, 20% in the month following the sale and 10% in the second month following the sale.
Requirements:
a. Prepare a sales budget for the first quarter of 2009.
b. Determine the amount of sales revenue Dorough will report on the first 2009 quarterly pro forma income statement.
c. Prepare a cash receipts schedule for the first quarter of 2009.
d. Determine the amount of accounts receivable as of March 31, 2009.
Aug 29, 2021 | Uncategorized
Accounting for uncollectible accounts—two cycles using the percent of revenue allowance method
The following transactions apply to Puretz Consulting for 2010, the first year of operation.
1. Recognized $75,000 of service revenue earned on account.
2. Collected $62,000 from accounts receivable.
3. Adjusted accounts to recognize uncollectible accounts expense. Puretz uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account.
The following transactions apply to Puretz Consulting for 2011.
1. Recognized $86,500 of service revenue on account.
2. Collected $85,000 from accounts receivable.
3. Determined that $1,120 of the accounts receivable were uncollectible and wrote them off.
4. Collected $500 of an account that had been previously written off.
5. Paid $52,600 cash for operating expenses.
6. Adjusted accounts to recognize uncollectible accounts expense for 2011. Puretz estimates that uncollectible accounts expense will be 1 percent of sales on account.
Required:
Complete all the following requirements for 2010 and 2011. Complete all requirements for 2010 prior to beginning the requirements for 2011.
a. Identify the type of cash transaction (asset source, asset use, asset exchange or claims exchange).
b. Show the effect of each transaction on the elements of financial statements, using a horizontal statements model like the one shown here. Use + for increase, – for decrease, and NA for not affected. Also in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA) or financing activity (FA). The first transaction is entered as an example. (Hint: Closing entries do not affect the statements model).
c. Organize the transaction data in accounts under an accounting equation.
d. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet and statement of cash flows.
Aug 29, 2021 | Uncategorized
Listed below are five procedures followed by The Beat Company.
1. Several individuals operate the cash register using the same register drawer.
2. A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.
3. Ellen May writes checks and also records cash payment journal entries.
4. One individual orders inventory, while a different individual authorizes payments.
5. Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.
Instructions
Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below
Aug 29, 2021 | Uncategorized
Red Rider Company has the following stockholders’ equity section on its balance sheet as of December 31, 2012 and 2011.
Red Rider Company
(in millions)
Stockholders’ Equity
Contributed Capital: 2012 2011
Preferred stock 2.0 2.0
Common stock 32.0 32.0
Paid-in capital – various 12.4 11.2
Retained earnings 24.5 24.6
Total retained earnings and contributed capital 70.9 69.8
Accumulated foreign currency translation adjustments 5.2 4.5
Net unrealized gains on investments in certain debt and equity securities 25.6 20.0
Total Stockholders’ Equity 101.7 94.3
Based on this stockholders’ equity section, answer the following questions:
1. At the end of 2012, what was the total amount of equity financing provided by Red Rider’s investors?
2. At the end of 2012, how much of Red Rider’s earnings had not been distributed to investors?
3. What is the total amount of “”other equity items”” contained in the 2012 stockholders’ equity section?
4. What contributed most to the increased equity from 2011 to 2012?
Aug 29, 2021 | Uncategorized
CVP Analysis and Price Changes
Argentina Partners is concerned about the possible effects of inflation on its operations. Presently, the company sells 60,000 units for $30 per unit. The variable production costs are $15, and fixed costs amount to $700,000. Production engineers have advised management that they expect unit labor costs to rise by 15 percent and unit materials costs to rise by 10 percent in the coming year.
Of the $15 variable costs, 50 percent are from labor and 25 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 10 percent. It is also expected that fixed costs will rise by 5 percent as a result of increased taxes and other miscellaneous fixed charges.
The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 6 percent during the year.
Required:
a. Compute the volume in units and the dollar sales level necessary to maintain the present profit level, assuming that the maximum price increase is implemented.
b. Compute the volume of sales and the dollar sales level necessary to provide the 6 percent increase in profits, assuming that the maximum price increase is implemented.
c. If the volume of sales were to remain at 60,000 units, what price increase would be required to attain the 6 percent increase in profits?
Aug 29, 2021 | Uncategorized
The accounts listed below appeared in the December 31 trial balance of the Jane Alexander Theater.
|
|
DR.
|
CR
|
|
Equipment
|
192,000
|
|
|
Accumulated Depreciation-Equipment
|
|
60,000
|
|
Notes Payable
|
|
90,000
|
|
Admissions Revenues
|
|
380,000
|
|
Advertising Expenses
|
13,680
|
|
|
Salaries Expenses
|
57,000
|
|
|
Interest Expenses
|
1,400
|
|
Instructions:
(a)From the account balance listed above and the information given below, prepare the annual adjusting entries necessary on December 31 (omit explanations).
(1) The equipment has an estimated life of 16 years and a salvage value of $40,000 at the end of that time (use straight line method).
(2) The note payable is a 90-day note given to the bank October 20 and bearing interest at 10%.
(3) In December 2,000 coupon admission books were sold at $25 each. They could be used for admission any time after January 1.
(4) Advertising expense paid in advance and included in Advertising Expense $1,100.
(5) Salaries accrued but unpaid $4,700
(b) What amounts should be shown for each of the following on the income statement for the year?
(1) Interest expense
(2) Admission Revenue
(3) Advertising Expense
(4) Salaries Expense
Aug 29, 2021 | Uncategorized
Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is, or it can be processed further and sold for a higher price. The company incurs joint costs of $180,000 to process one batch of the raw material that produces the three joint products. The following cost and sales information is available for one batch of each product.
Sales Value at Split-off Point Allocated Joint Costs Cost to Process Further Sales Value of Processed Product
|
Sarco
|
$200,000
|
$40,000
|
$120,000
|
$300,000
|
|
Barco
|
300,000
|
60,000
|
89,000
|
400,000
|
|
Larco
|
400,000
|
80,000
|
250,000
|
800,000
|
Instructions:
Determine whether each of the three joint products should be sold as is, or processed further.
Aug 29, 2021 | Uncategorized
Mary Mahr has recently been promoted to production manager, and so she has just started to receive various managerial reports.
One of the reports she has received is the production cost report that you prepared.
It showed that her department had 1,000 equivalent units in ending inventory.
Her department has had a history of not keeping enough inventory on hand to meet demand.
She has come to you, very angry, and wants to know why you credited her with only 1,000 units when she knows she had at least twice that many on hand.
Instructions
Explain to her why her production cost report showed only 1,000 equivalent units in ending inventory. Write an informal memo. Be kind and explain very clearly why she is mistaken.
Aug 29, 2021 | Uncategorized
Sara Collier, the bookkeeper for Danner, Cheney, and Howe, a political consulting firm, has recently completed a managerial course at her local college. One of the topics covered in the course was the cost of goods manufactured schedule. Sara wondered if such a schedule could be prepared for her firm. She realized that, as a service-oriented company, it would have no Work-in-Process inventory to consider.
Listed below are the costs her firm incurred for the month ended August 31, 2008.
|
Supplies used on consulting contracts
|
1,200
|
|
Supplies used in the administrative offices
|
1,500
|
|
Depreciation on equipment used for contract work
|
900
|
|
Depreciation used on administrative office equipment
|
1,050
|
|
Salaries of professionals working on contracts
|
12,600
|
|
Salaries of administrative office personnel
|
7,700
|
|
Janitorial services for professional offices
|
400
|
|
Janitorial services for administrative offices
|
500
|
|
Insurance on contract operations
|
800
|
|
Insurance on administrative operations
|
900
|
|
Utilities for contract operations
|
1,400
|
|
Utilities for administrative offices
|
1,300
|
Instructions:
(a) Prepare a schedule of cost of contract services provided (similar to a cost of goods manufactured schedule) for the month. (List amounts from largest to smallest eg 10, 5, 3, 2.)
(b) For those costs not included in (a), explain how they would be classified and reported in the financial statements.
Aug 29, 2021 | Uncategorized
You have been retained to examine the records of Mary s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
Unrecorded interest owed to the center totaled $275 as of December 31.
All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
Depreciation on the school s van was $3,000 for the year.
On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Prepaid Rent, a new account.
Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
Mary s Day Care paid insurance premiums as follows, each time debiting Prepaid Insurance:
Date Paid Policy No. Length of Policy Amount
Feb. 1, 20X2 1033MCM19 1 year $540
Jan. 1, 20X3 7952789HP 1 year 912
Aug. 1, 20X3 XQ943675ST 2 years 840
Instructions:
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
Aug 29, 2021 | Uncategorized
Exercise 6
You have just been promoted to the position of budget analyst for Lansdale Corporation, a retailer of various gadgets. Your first responsibility as budget analyst is to develop the 2014 budget for the first quarter for Lansdale Corporation s Colmar Division.
On the next page are the actual first quarter results from 2013 for Colmar. When you discussed the first quarter budget for 2014 with the Controller, she asked that the budget be prepared using the following assumptions:
Sales revenue for each month of 2014 will be twenty percent more than it was for the same month of 2013.
Cost of goods sold will be budgeted as 30 percent of sales in 2014.
The selling price of the gadget that Colmar Division produces is $50. (Cost of goods sold will therefore be budgeted as $15 per unit.)
Payroll expense is expected to increase by 5 percent in 2014 compared to 2013. That is, each month of 2014 is expected to have payroll expense expense that is 5 percent more than the same month of 2013. (January, 2014 s payroll expense will be 5 percent greater than January, 2013 s payroll expense; February, 2014 s payroll expense will be 5 percent greater than February, 2013 s payroll expense, and so on.)
Payroll expense is a fixed cost for Colmar.
Depreciation expense will be the same in 2014 as it was in 2013. Depreciation expense is a fixed cost.
The Marketing Vice President has budgeted $15,000 in advertising expenses for each month of 2014. The amount spent on advertising is independent of sales revenue.
Shipping expenses will be 3 percent of sales.
Other expenses for each month of 2014 will be fifteen percent of sales revenue.
The Controller has asked you to prepare the first quarter budget and submit it to her for her review. Your budget should be in the same format as the income statement. Prepare your 2014 budget using an Excel Spreadsheet.
Lansdale Corporation
Quarterly Income Statement
1st Quarter, 2013
|
|
January
|
February
|
March
|
Quarter
|
|
|
|
|
|
|
|
Sales
|
1,000,000
|
1,200,000
|
1,250,000
|
3,450,000
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
320,000
|
350,000
|
360,000
|
1,030,000
|
|
|
|
|
|
|
|
Gross Margin
|
680,000
|
850,000
|
890,000
|
2,420,000
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Payroll
|
250,000
|
250,000
|
300,000
|
800,000
|
|
Depreciation
|
50,000
|
50,000
|
50,000
|
150,000
|
|
Advertising
|
10,000
|
10,000
|
10,000
|
30,000
|
|
Shipping
|
36,000
|
40,000
|
40,000
|
116,000
|
|
Other Expenses
|
150,000
|
155,000
|
160,000
|
465,000
|
|
|
|
|
|
|
|
Total Operating Expenses
|
496,000
|
505,000
|
560,000
|
1,561,000
|
|
|
|
|
|
|
|
Net Operating Income
|
184,000
|
345,000
|
330,000
|
859,000
|
Exercise 7
The Controller has also asked you to prepare a cash budget for the Colmar Division for the first quarter of 2014. Your cash budget should summarize all cash receipts and disbursements for Colmar, using the following assumptions in addition to the assumptions you used in exercise 6:
Colmar Division will have an opening cash balance of $20,000 on January 1, 2014.
Sales are collected entirely in the month of sale.
Colmar estimates that December, 2013 sales will be $1,600,000, and that cost of goods sold in the month of December will be 30 percent of sales revenue.
Colmar expects to pay for inventory (cost of goods sold) during the month after the inventory is sold. (Cost of goods sold for December, 2013 will be paid in January, 2014.)
Lansdale Corporation pays its employees once a month. Payroll expenses are paid in the month after they are earned. Colmar expects to have $300,000 in unpaid payroll expenses at December 31, 2013. Colmar will pay its employees the $300,000 in January, 2014.
Advertising expenses are paid once each quarter. They are paid in the third month of the quarter in which they are incurred.
Shipping expenses are paid entirely in the month incurred.
50 percent of other operating expenses are paid in the month in which they are incurred, and 50 percent are paid in the following month.
Colmar Division expects to have $120,000 in unpaid other operating expenses at December 31, 2013. You should assume that Colmar will pay the $120,000 that is unpaid at December 31, 2013 during January, 2014.
You do not need to do a financing section on your cash budget. However, Lansdale wants to maintain a minimum cash balance of $500 and intends to invest any surplus cash. Please indicate how much investable cash the Colmar Division will have at the end of each month of the first quarter. (On January 1, they will have $19,500 of investable cash – $20,000 cash with a maintained minimum balance of $500.)
Exercise 8
At the end of the first quarter, the Colmar Division reported the following results:
|
Sales
|
4,050,000
|
|
|
|
|
Cost of Goods Sold
|
1,260,000
|
|
|
|
|
Gross Margin
|
2,790,000
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
Payroll
|
870,500
|
|
Depreciation
|
150,000
|
|
Advertising
|
42,000
|
|
Shipping
|
128,000
|
|
Other Expenses
|
643,000
|
|
|
|
|
Total Operating Expenses
|
496,000
|
|
|
|
|
Net Operating Income
|
184,000
|
The Colmar Division sold 80,500 gadgets during the first quarter. Given this information and the information provided with Exercises 6 and 7, present a Flexible Budget Performance Report, including all activity, revenue, and spending variances.
Aug 29, 2021 | Uncategorized
1. You have a stock mutual fund in which you put $3,000 per year. How much will you accumulate in the account in 25 years if the interest rate is 10%?
What if instead you have $4,000 to deposit in the mutual fund earning 10%? If you add $2,000 to that account annually, how much will you have accumulated in 15 years? (Calculate the answer for each option. Show all work.)
2. Dick and Jane have just purchased a house and are calculating how much money they will need when the closing day rolls around. The purchase price is $200,000. They will make a 20% down payment, and they must pay two points on the loan. Closing costs should be 3% of the purchase price. What is the total dollar amount they will need at closing? (Show all work.)
3. Lindsey has a job with monthly take-home pay of $3,500. Using the suggested maximum debt safety ratio, what maximum debt burden per month can she assume? (Show all work.)
4. Joe is purchasing a new truck for $30,000. Joe is making a $2,000 down payment, and he will make 60 monthly payments of $541 each. What are the total finance costs on this loan?
Aug 29, 2021 | Uncategorized
Q. You own an automobile parts company and have been approached by a leading car manufacturer to supply parts to the company. How would you determine that the car manufacturer has a good record of servicing sales and paying its suppliers? What are the signs you would look out for in the financial statements for the possibility of bad debts? What are the advantages and disadvantages of allowing customers to make purchases on credit? Give reasons for your answers.
Q. You are a business consultant providing information and advice to future small business owners. Controls are especially important with respect to cash. Three of them are clear assignment of responsibility, specific procedures for documentation, and independent internal verification of the data. Create a PowerPoint presentation for a seminar aimed at future business owners who will be dealing with large amounts of cash. Explain the importance of the three areas of cash control and make recommendations for procedures that could be implemented
Aug 29, 2021 | Uncategorized
You will prepare three years of financial statements for the XXX Company, to include:
- Two-Statement Format of Comprehensive Income; See Illustration 4-19 in the textbook
- Balance Sheet
- Statement of Owners’ Equity
You will do this twice, each time using a different set of accounting rules. Recall that items of Other Comprehensive Income are reported net of taxes, in the same manner as Extraordinary Items are reported; See Illustration 4-17 in the textbook for how Extraordinary Items are reported. Do not call the company XXX, but instead give it your name (e.g. Lisa Smith Company, Dalai Lama Company, Jorge Martinez Company).
Problem Data: Deferred Revenue Recognition on a Rental Agreement
On September 30 20×1, XXX Company rented to a tenant a small office space in its Dilapitated Visions Complex.
The tenant is not obligated to continue the lease beyond Summer 20×2, but pays $25,000 cash upfront towards the $1,000 monthly rent (25 months’ rent received in advance).
This is not a capital lease.
Excluding income taxes and the income effects of this rental, XXX Company has (GAAP and Tax) income of $111,111 in 20×1, $222,222 in 20×2, and $333,333 in 20×3.
The IRS requires rent to be included in taxable income in the year received
The income tax rate is a flat 10% for all relevant years.
At January 1, 20×1, the balance sheet showed Common Stock of $444,444, Retained Earnings of $555,555, and zero Accumulated OCI.
The only change to Common Stock during these three years was an issuance of $88,888 of stock at par value in 20×2.
Report Using Current US-GAAP
Under current US-GAAP, the cash receipt is recorded as a liability (e.g. Unearned Revenue) and amortized to income at a rate of $1,000 per month. Prepare the statements, clearly labeling them as current GAAP.
Reporting Using “FASB Fantasy GAAP”
Suppose the FASB changed the appropriate accounting for the prepayment. The new rule says to recognize the cash receipt immediately in comprehensive income, and include it in Net Income only as earned (again, at $1,000 per month). Prepare the statements, clearly labeling them as FASB Fantasy GAAP.
Aug 29, 2021 | Uncategorized
| Your answer is partially correct. Try again. |
|
|
Jan Nab is the sole owner of Deer Park, a public camping ground near the Lake Mead National Recreation Area. Jan has compiled the following financial information as of December 31, 2010.
| Revenues during 2010 camping fees |
$140,000 |
|
Market value of equipment |
$140,000 |
| Revenues during 2010 general store |
50,000 |
|
Notes payable |
60,000 |
| Accounts payable |
11,000 |
|
Expenses during 2010 |
150,000 |
| Cash on hand |
23,000 |
|
Supplies on hand |
2,500 |
| Original cost of equipment |
105,500 |
|
|
|
Jan Nab began business on January 1, 2010, with an investment of $20,000.
Instructions
(a) Determine Jan Nab’s net income from Deer Park for 2010.
$
(b) Complete the balance sheet for Deer Park as of December 31, 2010. (List assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2.)
| Deer PARK |
| Balance Sheet |
| December 31, 2010For the year ended December 31, 2010 |
|
Assets
|
| CashAccounts payableJan Nab,CapitalCamping revenuesStore revenuesEquipmentExpensesSuppliesNotes payable |
$ |
| Jan Nab,CapitalCamping revenuesStore revenuesExpensesSuppliesAccounts payableEquipmentCashNotes payable |
|
| Camping revenuesNotes payableEquipmentCashStore revenuesSuppliesExpensesAccounts payableJan Nab,Capital |
|
| Total assets |
$
|
|
Liabilities and Owner’s Equity
|
| Liabilities |
|
| Camping revenuesAccounts payableJan Nab,CapitalExpensesEquipmentStore revenuesSuppliesNotes payableCash |
$ |
| ExpensesAccounts payableJan Nab,CapitalCashCamping revenuesStore revenuesSuppliesEquipmentNotes payable |
|
| Total Liabilities |
|
| Owner’s equity |
|
| ExpensesJan Nab,CapitalAccounts payableCashSuppliesEquipmentCamping revenuesNotes payableStore revenues |
|
| Total liabilities and owner’s equity |
$
|
| Click if you would like to Show Work for this question: |
Open blank Show WorkCopy Show Work from Previous attempt |
Aug 29, 2021 | Uncategorized
Scenario:
YUM YUM COOKIES Company manufactures cookies. Materials are added in the Baking Department. After processing, the cookies are moved to the Packing Department where more materials are added. The completed packages are then moved to Finished Goods.
Task:
Using the data below the month of July, determine the July Gross Profit using FIFO inventory methods.
June 30: Raw Material Inventory: $235,000
Baking Department : WIP # = 0 WIP $$ = 0
Packing Department : WIP # = 6000 cases at 80% completion, WIP$ = $95,000
Finished Goods Inventory : WIP # 20,000 cases WIP $ = $300,000
July Transactions:
Materials Purchased on Account: $520,000
# Cases started: Baking Department: 50,000
Packing Department: 35,000
Materials Requisitioned: Baking Dept: $225,000 DM, $25,000 IM
Packing Dept: $40,250 DM, $9,750 IM
Labor Costs: Baking Dept: $106,000 DL, $12,000 IL
Packing Dept: $60,000 DL, $17,000 IL
Misc. Expenses: Baking Dept: $18,000
Packing Dept: $14,600
Prepaid Expenses: Baking Dept: $4,500
Packing Dept: $1000
Depreciation Expenses: Baking Dept: $46,000
Packing Dept: $ 15,000
FOH Applied: Baking Dept: $86,700
Packing Dept: $30,345
Sales on Account: 47,000 cases at $42 per case
July 31 WIP Baking Dept: WIP = 40% complete
Packing Dept: 5000 cases at 10% completion
Aug 29, 2021 | Uncategorized
Zamatia Ltd. is an Italian upscale maker of eyewear. UV Inc. is one of their retailers in the US. Considering Zamatia’s entry-level sunglasses for the coming season, the Bassano UV purchases each one of those pairs of sunglasses from Zamatia for $75 and retails them for $115. Zamatia’s production and shipping costs per pair are $35. At the end of the season, UV generally needs to offer deep discounts to sell remaining inventory; UV estimates that it will only be able to fetch $25 pe leftover Bassano. UV believes this seasons demand for Bassano can be represented by a normal distribution with a mean of 250 and a standard deviation of 125.
How many units of Bassano should UV order?
What order quanity would a firm choose if the firm owned both Zamatia and UV? I.e, what is the optimal order quantity to maximize the integrated supply chain’s profit?
Suppose Zamatia agrees to buy back from UV all leftover sunglasses for partial refund of $65 per pair. UV must ship leftover inventory back to Zamatia, which it estimates cost about $1.50 per pair. How many units should UV order to maximize its expected profit given the buy-back offer?
Aug 29, 2021 | Uncategorized
LAWS301 Corporate Law 2013 S3 INDIVIDUAL ASSIGNMENT (20%) Nimit, Deepa, Shang and Libo propose to create an insurance company, Australasia Insurance Glory Pty Ltd (Glory). For this purpose, Nimit and Deepa were in charge of registering the company with ASIC, while Libo was asked to find suitable premises for the business. Shang is not involved in the creation of the company. However, there is an understanding that Shang will receive $6,000 from the creation of the company.
Aug 29, 2021 | Uncategorized
You have been hired to evaluate the payroll system for the Skip-Rope Manufacturing Company. The company processes its payroll in-house. Use Table 15-1 as a reference to prepare a list of questions to evaluate Skip-Rope’s internal control structure as it pertains to payroll processing for its factory employees. Each question should be phrased so that it can be answered with either a yes or a no; all “no” answers should indicate potential internal control weaknesses. Include a third column listing the potential problem that could arise if that particular control were not in place.
(CPA Examination, adapted
Aug 29, 2021 | Uncategorized
I have attached homework questions
Aug 29, 2021 | Uncategorized
I can send the pages from the book next. The due date is actually this coming Thursday 2/6 NOT 6/2, but it won’t let me change the formatting.
Chapter 3:
- Page 117 – Problem 7: Process Costing: One Process and Two Time Periods – FIFO Costing Method
Chapter 4:
- Page 153 – Problem 2: Activity-Based Costing
Chapter 8:
- Page 324 – Problem 5: Computing Variances and Evaluating Performance
Chapter 7: C4 on Pages 286 and 287. There is an Excel Template that has been provided for you to complete the assignment. Please complete the case by inputting the appropriate numbers into the cells colored light brown and avoid over-writing the cell formulae in blue.
The case covers material from Chapters 5, 6, 7 and 13 in weeks 4 and 5.
Aug 29, 2021 | Uncategorized
6. (TCO B) The financial statements for Metzger Inc. and Ortiz Corp., just prior to their combination, for the year ending December 31, 2012, follow. Ortiz’s buildings were undervalued on its financial records by $80,000.
|
Metzger Inc. |
Ortiz Corp. |
| Revenues |
$1,800,000 |
$700,000 |
| Expenses |
(1,580,000) |
(590,000) |
| Net income |
$220,000 |
$110,000 |
|
|
|
| Retained earnings, January 1, 2012 |
800,000 |
600,000 |
| Net income (above) |
220,000 |
110,000 |
| Dividends paid |
(130,000) |
(80,000) |
| Retained earnings, December 31, 2012 |
$890,000 |
$630,000 |
|
|
|
| Cash |
$240,000 |
$160,000 |
| Receivables and inventory |
270,000 |
260,000 |
| Buildings (net) |
850,000 |
500,000 |
| Equipment (net) |
800,000 |
490,000 |
| Total assets |
$2,160,000 |
$1,410,000 |
|
|
|
| Liabilities |
$310,000 |
$155,000 |
| Common stock |
850,000 |
530,000 |
| Additional paid-in capital |
110,000 |
95,000 |
| Retained earnings, December 31, 2012 (above) |
890,000 |
630,000 |
| Total liabilities and stockholders’ equity |
$2,160,000 |
$1,410,000 |
On December 31, 2012, Metzger issued 58,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Ortiz. Metzger’s shares had a fair value on that date of $40 per share. Metzger paid $38,000 to an investment bank for assisting in the arrangements. Metzger also paid $28,000 in stock issuance costs to effect the acquisition of Ortiz. Ortiz will retain its incorporation.
-1) Prepare the journal entry to record the issuance of common stock by Metzger.
-2) Prepare the journal entry to record the payment of combination costs.
-3) Determine consolidated net income for the year ended December 31, 2012.
-4) Determine consolidated additional paid-in capital at December 31, 2012. (Points : 25)
Aug 29, 2021 | Uncategorized
(TCO 3) Match the following terms with the examples as appropriate: (Points: 4)
Matching:
Answer
: Pure discount loan
: Amortized Loan
: Interest-only Loan
: Treasury Bill
Potential Matches:
1: You obtained a business loan for four months. The loan will allow you to paid $300 in interest for three months and a final payment of interest and principal at the end of the four month.
2: You obtained a mortgage to buy a home. You will pay $800 per month to cover both interest and principal.
3: a way used by theUSgovernment to borrow money on short-term basis.
4: You borrow $1,000 from your best friend. In return, you will give him back $1150 in 3 months.
Aug 29, 2021 | Uncategorized
E4-4 (Multiple-Step and Single-Step) Two accountants for the firm of Allen and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2012 information related to Webster Company ($000 omitted).
Administrative expense
Officers’ salaries
$ 4,900
Depreciation of office furniture and equipment
3,960
Cost of goods sold
63,570
Rent revenue
17,230
Selling expense
Transportation-out
2,690
Sales commissions
7,980
Depreciation of sales equipment
6,480
Sales revenue
96,500
Income tax expense
7,580
Interest expense
1,860
Instructions
(a) Prepare an income statement for the year 2012 using the multiple-step form. Common shares outstanding for 2012 total 40,550 (000 omitted).
(b) Prepare an income statement for the year 2012 using the single-step form.
(c) Which one do you prefer? Discuss.
Aug 29, 2021 | Uncategorized
Exercise 16-5 Determining net present value
Metro Shuttle Inc. is considering investing in two new vans that are expected to generate combined cash inflows of $28,000 per year. The vans’ combined purchase price is $91,000. The expected life and salvage value of each are four years and $21,000, respectively. Metro Shuttle has an average cost capital of 14 percent.
a. Calculate the net present value of the investment opportunity.
PV
= FV
X
Present Value = Present Value
Equivalent
Table Factor
Period 1 PV = 28,000 X
0.877193 =
$24,561
Period 2 PV = 28,000 X
0.769468 =
21,545
Period 3 PV = 28,000 X
0.674972 =
18,899
Period 4 PV = 28,000 X
0.592080 =
16,578
Total
$ 81,583
Present value of future cash inflows
81,583
Cost of Investment
91,000
Net present value
(9,417)
$
$
Aug 29, 2021 | Uncategorized
Your instructor will assign and send you a peer’s paper on Health Care Provider and Faith Diversity. Your job is to critically read the assignment and make corrections/comments using track changes and comments in Microsoft Word. Be sure to assess the paper using the following criteria:
a) Does the paper provide sufficient evidence for its hypothesis or claim?
b) Does the flow of the paper and sentence structure make sense?
c) Should it be organized in a different manner?
d) Are all the items listed in the assignment guidelines and rubric covered and in sufficient depth?
2) This assignment uses a grading rubric that can be viewed at the assignment’s drop box. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.
3) Submit the peer-reviewed assignment to the instructor by the end of Module 4.
Aug 29, 2021 | Uncategorized
(TCO F) Honeysuckle Corporation has provided the following data for the month of January:
Inventories
Beginning
Ending
Raw materials
$40,000
$23,000
Work In process
$9,000
$13,000
Finished goods
$52,000
$45,000
Additional Information
Raw material purchases
$68,000
Direct labor costs
$90,000
Manufacturing overhead cost incurred
$44,000
Indirect materials included in manufacturing overhead costs incurred
$8,000
Manufacturing overhead cost applied to work in process
$39,000
Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold in good form.
Aug 29, 2021 | Uncategorized
Anna Martinez, the financial manager at the Casa Real restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the following data for the past 10 months:
|
Month
|
Revenues
|
Advertising Costs
|
|
March
|
50,000
|
2,000
|
|
April
|
70,000
|
3,000
|
|
May
|
55,000
|
1,500
|
|
June
|
65,000
|
3,500
|
|
July
|
55,000
|
1,000
|
|
August
|
65,000
|
2,000
|
|
September
|
45,000
|
1,500
|
|
October
|
80,000
|
4,000
|
|
November
|
55,000
|
2,500
|
|
December
|
60,000
|
2,500
|
She estimates the following regression equation:
Monthly revenues = $39,502 + ($8.723 × Advertising costs)
1. Plot the relationship between advertising costs and revenues.
2. Draw the regression line and evaluate it using the criteria of economic plausibility, goodness of fit, and slope of the regression line.
3. Use the high-low method to compute the function, relating advertising costs and revenues.
4. Using (a) the regression equation and (b) the high-low equation, what is the increase in revenues for each $1,000 spent on advertising within the relevant range? Which method should Martinez use to predict the effect of advertising costs on revenues? Explain briefly.
Aug 29, 2021 | Uncategorized
Wayman Company wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Wayman’s gross profit rate averages 30%. The following information for the first quarter is available from its records:
|
January 1 beginning inventory
|
325,950
|
|
Cost of goods purchased
|
942,525
|
|
Sales
|
1,201,750
|
|
Sales returns
|
9,780
|
Required
Use the gross profit method to estimate the company’s first-quarter ending inventory.
Aug 29, 2021 | Uncategorized
Focus of the Final Paper
Due to varying business characteristics, the managerial accounting techniques applied in each business may differ. For example, a business in the start-up phase may rely heavily upon budgeting and capital investment techniques; whereas, a business in the mature/maintaining phase may rely heavily upon cost management and quality control. Ultimately, the techniques used by management should assist the business in achieving its short-term and long-term goals through effective decision-making.
For your Final Paper, you will analyze the role of managerial accounting in two parts. Part I will provide a general overview of managerial accounting. Part II will provide examples of how managerial accounting theories and principles are applied in the business world. You may find it helpful to reflect upon your own professional experiences for examples.
Part I (Three to four double-spaced pages)
Present the following:
- Definition of managerial accounting
- Role of managerial accounting and the management accountant in a business or organization
- Ethical issues/concerns for the management accountant
- General description of at least three managerial accounting techniques available and their application within a business or organization
Part II (Four to six double-spaced pages)
Select at least three of the five topics identified below:
- Cost Management Techniques
- Costing Methods
- Capital Investment Decision Techniques
- Budgeting
- Quality Control
For each topic selected present real world examples of the application of managerial accounting techniques within a business or organization. Examples may be gathered from your own professional experiences or from case studies obtained from credible sources (excluding textbook examples explored in previous weeks). Presentation of each example should include how a managerial accounting technique was applied in the business or organization s decision-making model. Be sure to support your example with calculations when applicable.
Writing the Final Paper
The Final Paper:
1. Must be eight to ten double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student s name
c. Course name and number
d. Instructor s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must use at least five scholarly sources.
7. Must document all sources in APA style, as outlined in the Ashford Writing Center.
8. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.
Aug 29, 2021 | Uncategorized
Wyalusing Industries has manufactured prefabricated houses for over 20 years. The houses are constructed
in sections to be assembled on customers lots. Wyalusing expanded into the precut housing market
when it acquired Fairmont Company, one of its suppliers. In this market, various types of lumber are
precut into the appropriate lengths, banded into packages, and shipped to customers lots for assembly.
Wyalusing designated the Fairmont Division as an investment center. Wyalusing uses return on investment
(ROI) as a performance measure with investment defined as average productive assets. Management
bonuses are based in part on ROI. All investments are expected to earn a minimum return of 15 percent
before income taxes. Fairmont s ROI has ranged from 19.3 to 22.1 percent since it was acquired. Fairmont
had an investment opportunity in 20×1 that had an estimated ROI of 18 percent. Fairmont s management
decided against the investment because it believed the investment would decrease the division s overall
ROI. The 20×1 income statement for Fairmont Division follows. The division s productive assets were
$12,600,000 at the end of 20×1, a 5 percent increase over the balance at the beginning of the year.
FAIRMONT DIVISION
Income Statement
For the Year Ended December 31, 20×1
(in thousands)
Sales revenue ………………………………………………………………………………………………………………………………. $24,000
Cost of goods sold …………………………………………………………………………………………………………………………. 15,800
Gross margin ……………………………………………………………………………………………………………………………. $ 8,200
Operating expenses:
Administrative ……………………………………………………………………………………………………………. $2,140
Selling ………………………………………………………………………………………………………………………. 3,600 5,740
Income from operations before income taxes ………………………………………………………………………………………. $ 2,460
Required:
1. Calculate the following performance measures for 20×1 for the Fairmont Division.
a. Return on investment (ROI).
b. Residual income.
2. Would the management of Fairmont Division have been more likely to accept the investment
opportunity it had in 20×1 if residual income were used as a performance measure instead of ROI?
Explain your answer.
Aug 29, 2021 | Uncategorized
Wyalusing Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers lots. Wyalusing expanded into the precut housing market when it acquired Fairmont Company, one of its suppliers. In this market, various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers lots for assembly. Wyalusing designated the Fairmont Division as an investment center. Wyalusing uses return on investment (ROI) as a performance measure with investment defined as average productive assets. Management bonuses are based in part on ROI. All investments are expected to earn a minimum return of 15 percent before income taxes. Fairmont s ROI has ranged from 19.3 to 22.1 percent since it was acquired. Fairmont had an investment opportunity in 20×1 that had an estimated ROI of 18 percent. Fairmont s management decided against the investment because it believed the investment would decrease the division s overall ROI. The 20×1 income statement for Fairmont Division follows. The division s productive assets were $12,600,000 at the end of 20×1, a 5 percent increase over the balance at the beginning of the year.
FAIRMONT DIVISION
Income Statement
For the Year Ended December 31, 20×1
(in thousands)
Sales revenue ………………………………………………………………………………………………………………………………. $24,000
Cost of goods sold …………………………………………………………………………………………………………………………. 15,800
Gross margin ……………………………………………………………………………………………………………………………. $ 8,200
Operating expenses:
Administrative ……………………………………………………………………………………………………………. $2,140
Selling ………………………………………………………………………………………………………………………. 3,600 5,740
Income from operations before income taxes ………………………………………………………………………………………. $ 2,460
Required:
1. Calculate the following performance measures for 20×1 for the Fairmont Division.
a. Return on investment (ROI).
b. Residual income.
2. Would the management of Fairmont Division have been more likely to accept the investment opportunity it had in 20×1 if residual income were used as a performance measure instead of ROI? Explain your answer.
Aug 29, 2021 | Uncategorized
Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.
Sales (400,000 units) $4,000,000
Cost of goods sold 2,400,000
Gross profit 1,600,000
Operating expenses 900,000
Net income $700,000
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were also 60% variable and 40% fixed.
In September, Wyco Company receives a special order for 40,000 toasters at $6.00 each from Salono Company ofMexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses.
Complete the incremental analysis for the special order. (If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease use either a negative sign in front of the number, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract where necessary. Round your answers to 0 decimal places, e.g. 5,210, round your computations of unit costs to 2 decimal places, e.g. 5.25.)
Reject Order Accept Order Net Income
Wyco Company should the special order.
Aug 29, 2021 | Uncategorized
1. CheckPoint:Ratio, Vertical, and Horizontal Analyses
The calculations you perform for this CheckPoint form the basis of your analysis of your capstone project.
Writein 100 to 200 words an explanation of the three tools of financial statement analysis and the function of each.
Examine PepsiCo, Inc. s Consolidated Balance Sheet on p. A6 in Appendix A of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculatethe following for PepsiCo, Inc. and show your work:
o The Current Ratio for 2005
o The Current Ratio for 2004
o Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
o Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
ExamineTheCoca-Cola Company s Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculatethe following for Coca-Cola and show your work:
o The Current Ratio for 2005
o The Current Ratio for 2004
o Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
o Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
Postyour explanation and calculations.
Aug 29, 2021 | Uncategorized
The calculations you perform for this CheckPoint form the basis of your analysis of your capstone project.
Writein 100 to 200 words an explanation of the three tools of financial statement analysis and the function of each.
ExaminePepsiCo, Inc. s Consolidated Balance Sheet on p. A6 in Appendix A of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculatethe following for PepsiCo, Inc. and show your work:
The Current Ratio for 2005
The Current Ratio for 2004
Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
ExamineTheCoca-Cola Company s Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculatethe following for Coca-Cola and show your work:
The Current Ratio for 2005
The Current Ratio for 2004
Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
Postyour explanation and calculations.
Aug 29, 2021 | Uncategorized
Writea 750- to 1,050-word paper in APA format, including citations and references, summarizing your ideas about internal controls.
Include the following:
An introduction to internal controls, explaining in your own words the two primary goals of internal control
A description of how the Sarbanes-Oxley Act of 2002 has affected internal controls
An explanation of why a company that announces deficiencies in its internal controls would probably experience a fall in the price of its stock
A synopsis of what you consider to be the limitations of internal controls Cite specific examples.
A conclusion that summarizes your main points
A comparison of the internal control principles of (1) establishing responsibility, (2) using physical, mechanical, and electronic controls, (3) segregation of duties, and (4) independent internal verification.
Postyour completed paper as an attachment.
Aug 29, 2021 | Uncategorized
- Reviewthe annual reports for PepsiCo, Inc. and The Coca-Cola Company in Appendixes A & B, especially the Consolidated Statements of Income and the Balance Sheets on pp. A4, A6, B1, & B2 of Financial Accounting.
- Writea 1750- to 2,050-word paper in APA format with citations and references that provides a financial comparison of the two companies and your recommendations to improve the financial status of each.
- Include the following:
- An introductory paragraph with a statement of the purpose of your paper and a synopsis of what readers may expect to find in the paper It is best to write this after writing the rest of the paper.
- Vertical analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
- Horizontal analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
Aug 29, 2021 | Uncategorized
|
Week 1 CheckPoint
Accounting Assumptions, Principles, and Constraints
|
Writean essay in 250 to 300 words, including the following:
The basic assumptions of accounting
The principles of accounting
The constraints of accounting
A conclusion stating how you think sound financial reporting depends on principles, assumptions, and constraints. Refer to the U.S. GAAP in your response.
|
|
Week 1 CheckPoint
The Accounting Equation
|
ViewPhxKlips The Accounting Equation on the student website.
Writean explanation of the function of each element in the accounting equation, using 100 to 150 words.
CompleteE1-5 on p. 34 of Financial Accounting.
Postyour explanation of the elements in the accounting equation with the answers to E1-5.
|
|
Week 2 CheckPoint
Debits and Credits
|
View PhxKlips Debits and Credits on the student website.
Complete the questions and fill in the Account Changes matrix in Appendix B.
Post the completed Appendix B as an attachment
|
|
Week 2 Individual
Journalizing, Posting, and Preparing a Trial Balance
|
Complete P2-2A on p. 81 of Financial Accounting, using the templates in Appendix C for your answers. Each part of the problem corresponds to one tab in Appendix C. Complete all three tabs of Appendix C.
Write a message of 250 to 400 words in the body of your posting that justifies what you did in Appendix C. This message constitutes part d of the assignment. Address your message to your creditors and explain:
The general goals of financial reporting
The steps you took in the recording process
How the steps you took support the principles of accounting
Post your message and the completed Appendix C as an attachment
|
|
Week 3 CheckPoint
Adjusting Entries, Posting, and Preparing an Adjusted Trial Balance
|
Complete parts a, b, and c of P3-1A on pp. 128 and 129 of Financial Accounting.
Use the templates in Appendix D. Complete all three tabs.
Post the completed Appendix D as an attachment.
|
|
Week 4 CheckPoint
Subsidiary Ledgers and Special Journals
|
Explain in 250 to 300 words, your answers to the following:
What are the advantages of the four different special journals? When would you use each type?
What is a subsidiary ledger and what purpose does it serve?
What is a control account and what purpose does it serve?
Which two general ledger accounts may act as control accounts for a subsidiary ledger?
What are the advantages of using subsidiary ledgers?
|
|
Week 4 Individual
Preparing a Financial Statement Worksheet
|
Complete E4-1 on pp. 176 and 177 of Financial Accounting.
Use the template in Appendix E to complete the 10-column worksheet.
Post the completed worksheet as an attachment.
|
|
Week 5 CheckPoint
Reversing Entries
|
Post your answers to BE4-12 on p. 176 of Financial Accounting.
|
|
Week 5 CheckPoint
Closing Entries and a Post-Closing Trial Balance
|
Complete E4-4 on p. 177 of Financial Accounting. Use the templates in Appendix F and complete all three tabs.
Post the completed Appendix F as an attachment.
|
|
Week 6 CheckPoint
The Nine Steps of the Accounting Cycle
|
Complete The Nine Steps of the Accounting Cycle multimedia activity.
Capture the screen of the completed accounting cycle in the multimedia activity.
Write a summary of the nine steps of the accounting cycle, in 100 to 200 words.
Post your screen capture and written summary.
|
|
Week 6 Exercise
Financial Statements
|
Post one or two new concepts you learned from each of the PhxKlips.
|
|
Week 6 Individual
Comprehensive Problem
|
Complete the Comprehensive Problem on pp. 189 and 190 of Financial Accounting.
Use the templates in Appendix G to complete the problem; complete all six tabs.
Post the completed Appendix G as an attachment.
|
|
Week 7 CheckPoint
Ratio, Vertical, and Horizontal Analyses
|
The calculations you perform for this CheckPoint form the basis of your analysis of your capstone project.
Write in 100 to 200 words an explanation of the three tools of financial statement analysis and the function of each.
Examine PepsiCo, Inc. s Consolidated Balance Sheet on p. A6 in Appendix A of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculate the following for PepsiCo, Inc. and show your work:
The Current Ratio for 2005
The Current Ratio for 2004
Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
Examine The Coca-Cola Company s Consolidated Balance sheet on p. B2 in Appendix B of Financial Accounting, especially its Current Assets, Current Liabilities, and Total Assets for years 2005 and 2004.
Calculate the following for Coca-Cola and show your work:
The Current Ratio for 2005
The Current Ratio for 2004
Two measures of vertical analysis for example, compute the current assets divided by total assets for each year, and express your result as a percentage
Two measures of horizontal analysis for example, compute the total change in assets by percentage, by dividing current assets in 2005 by current assets in 2004. Compute a similar percentage for current liabilities
Post your explanation and calculations.
|
|
Week 7 Exercise
Career Opportunities for Accountants
|
Post your response to the following items:
Describe two business sectors you might want to work in if you were an accountant and explain why in 150 to 200 words.
Research a specific company in one of the business sectors that interests you and describe how you imagine it might be to work there. Use 100 to 150 words for your description.
|
|
Week 8 CheckPoint
Impacts of Unethical Behavior
|
Research a company that has been in the news for unethical practices, such as Enron, Tyco, Global Crossing, or WorldCom.
Post a 250- to 300-word response that summarizes your ideas about the following:
What was the nature of the controversy regarding this company s practices?
How were accounting practices involved?
If you had been an accountant for this company, how would you have acted? Explain why.
What might have been done to prevent the controversy?
What was the affect of unethical behavior on the profitability of the company?
|
|
Week 8 CheckPoint
Regulatory Bodies
|
Post your response to the following question, using 250 to 300 words: What are the major regulatory bodies and their functions?
|
|
Week 8 Individual
Internal Controls
|
Write a 750- to 1,050-word paper in APA format, including citations and references, summarizing your ideas about internal controls.
Include the following:
An introduction to internal controls, explaining in your own words the two primary goals of internal control
A description of how the Sarbanes-Oxley Act of 2002 has affected internal controls
An explanation of why a company that announces deficiencies in its internal controls would probably experience a fall in the price of its stock
A synopsis of what you consider to be the limitations of internal controls Cite specific examples.
A conclusion that summarizes your main points
A comparison of the internal control principles of (1) establishing responsibility, (2) using physical, mechanical, and electronic controls, (3) segregation of duties, and (4) independent internal verification.
Post your completed paper as an attachment.
|
|
Week 9 Capstone Discussion Question
|
Respond to the capstone discussion question.
Review the annual reports for PepsiCo, Inc. and The Coca-Cola Company in Appendixes A & B of Financial Accounting. Select either PepsiCo, Inc. or The Coca-Cola Company. In your estimation, the company you chose may be financially healthier or weaker.
Would you invest in this company? Explain why or why not. Justify your reasoning, by presenting at least three key financial ratios that analyze the profitability, the liquidity, or the solvency of the company.
Respond to your classmates postings, by agreeing or disagreeing with their assessments, while pointing to the data.
o Respond to at least one classmate who selected different ratios than those you selected or a different company to analyze.
o Comment on the significance of the ratios and your classmates conclusions.
o Use the same or other ratios to bolster your opinion.
|
|
Week 9 Final Project
Financial Analysis
|
Review the annual reports for PepsiCo, Inc. and The Coca-Cola Company in Appendixes A & B, especially the Consolidated Statements of Income and the Balance Sheets on pp. A4, A6, B1, & B2 of Financial Accounting.
Write a 1750- to 2,050-word paper in APA format with citations and references that provides a financial comparison of the two companies and your recommendations to improve the financial status of each.
Include the following:
An introductory paragraph with a statement of the purpose of your paper and a synopsis of what readers may expect to find in the paper It is best to write this after writing the rest of the paper.
Vertical analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
Horizontal analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
|
Aug 29, 2021 | Uncategorized
Reviewthe annual reports for PepsiCo, Inc. and The Coca-Cola Company in Appendixes A & B, especially the Consolidated Statements of Income and the Balance Sheets on pp. A4, A6, B1, & B2 of Financial Accounting.
Writea 1750- to 2,050-word paper in APA format with citations and references that provides a financial comparison of the two companies and your recommendations to improve the financial status of each.
Include the following:
An introductory paragraph with a statement of the purpose of your paper and a synopsis of what readers may expect to find in the paper It is best to write this after writing the rest of the paper.
Vertical analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
Horizontal analyses for both companies You may use your calculations from the Checkpoint Ratio, Vertical, and Horizontal Analyses, providing you show your work.
XACC280 Week 9 Final Project Financial Analysis
XACC 280 Week 9 Final Project Financial Analysis
Aug 29, 2021 | Uncategorized
|
Write a response to the following scenario:
Chen, Inc. purchases 1,000 shares of its own previously issued $5 per common stock for $12,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders equity?
The treasury stock purchased in the above question was resold by Chen, Inc. for $15,000. What effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders equity?
Formatyour response consistent with APA guidelines.
|
Aug 29, 2021 | Uncategorized
XYZ Corporation is considering the introduction of a new product.
The project will last five years and then be terminated.
The company s marginal tax rate is 32%.
The company s cost of capital is 18%.
The cost of the new plant and equipment for the project is $6,000,000.
Shipping and Installation costs are $100,000.
Projected sales are:
Year Units Sold
1 60,000
2 110,000
3 130,000
4 90,000
5 80,000
Sales price per unit:
$125 per unit in years 1-3
$110 per unit in years 4
$90 per unit in year 5
Variable cost per unit: $75 per unit.
Annual fixed costs: $225,000.
Initial Working Capital Required is $250,000 to start the project.
For each year, the total investment in net working capital will be equal to 10% of sales. All working capital is liquidated at the termination of the project at the end of year 5.
Depreciation method: Use simplified straight-line depreciation over five years. It is assumed the plant and equipment will have no salvage value at the end of the project.
Based on the above information, answer the following question:
What is the Internal Rate of Return of the project?
Aug 29, 2021 | Uncategorized
One year ago XYZ Inc., issued $100 million of 11-year bonds with a 9% coupon, payable annually. The first coupon payment has just been paid. The bonds are callable at 103 beginning today. Floatation costs on that issue were $1 million. Copest has a 34% marginal tax rate.
Since interest rates have fallen, XYZ is considering calling in the bonds and refinancing at current rates. It has two, ten-year, financing alternatives.
1) A $100 million public issue of 8% annual coupon bon
2) An 8%, $100 million private placement with semi-annual coupons. There would be a front-end placement fee of $250,000.
Note: Call premiums and interest payments are tax deductible. However, front-end fees and floatation costs must be capitalized and amortized over the life of the bond.
Questions:
a) Calculate the effective cost of raising funds from the public bond issue. Use the IRR
procedure for all your calculations.
b) Calculate the effective cost of raising funds from the private placement of debt.
c) If XYZ Inc does call in the bonds, which of the two refinancing alternatives is preferable?
d) What is the effective, after-tax cost of leaving the existing bonds in place?
In other words, what would be the after-tax all-in cost of refinancing that would make XYZ Inc indifferent between calling the bonds and leaving them in place?
e) Should XYZ Inc call in the bonds?
Aug 29, 2021 | Uncategorized
Yadier Corporation s comparative balance sheets are presented below.
Cash $ 4,260 $ 3,960
Accounts receivable 22,190 23,910
Inventory 10,200 6,640
Land 19,830 26,090
Buildings 70,090 70,090
Accumulated depreciation buildings (15,130 ) (10,430 )
Total $111,440 $120,260
Accounts payable $ 12,480 $ 31,070
Common stock 75,460 70,740
Retained earnings 23,500 18,450
Total $111,440 $120,260
Yadier s 2014 income statement included net sales of $119,230, cost of goods sold of $59,480, and net income of $14,710.
Compute the following ratios for 2014. (Round percentage answers to 1 decimal place, e.g. 1.6% and all other answers to 2 decimal places, e.g. 1.64, or 1.64% .)
Current ratio :1
Acid-test ratio :1
Accounts receivable turnover times
Inventory turnover times
Profit margin %
Asset turnover times
Return on assets %
Return on common stockholders equity %
Debt to total assets ratio %
Accounting
Aug 29, 2021 | Uncategorized
You are considering the purchase of an apartment complex. The following assumptions are
made:
The purchase price is $1 million.
Potential gross income (PGI) for the first year of operations is projected to be $171,000.
PGI is expected to increase 4 percent per year.
No vacancies are expected.
Operating expenses are estimated at 35 percent of effective gross income.
The market value of the investment is expected to increase 4 percent per year.
Selling expenses will be 4 percent.
The holding period is four years.
The appropriate rate of return to discount projected
NOIs and the projected NSP is 12 percent.
The after-debt required rate of return is 14 percent.
70 percent of the purchase price can be borrowed with a 30-year, monthly payment mortgage.
The annual interest rate on the mortgage will be 11.5 percent.
Financing costs will equal 2 percent of the loan amount.
There are no prepayment penalties.
a. Calculate net operating income (NOI) for each of the four years.
b. Calculate the net selling price from the sale of the property.
c. Calculate the net present value of this investment (assuming no mortgage debt). Should you purchase? Why?
d. Calculate the internal rate of return of this investment (assuming no debt). Should you purchase? Why?
e. Calculate the monthly mortgage payment.
What is the total per year?
f. Calculate the loan balance at the end of years 1, 2, 3, and 4. (Note: the unpaid mortgage balance at any time is equal to the present value of the remaining payments, discounted at the contract [face] rate of interest).
Aug 29, 2021 | Uncategorized
You are considering the purchase of an apartment complex. The following assumptions are made: The purchase price is $1,000,000. Potential gross income (PGI) for the first year of operations is projected to be $171,000. PGI is expected to increase at 4 percent per year. No vacancies are expected. Operating expenses are estimated at 35 percent of effective gross income. Ignore capital expenditures. The market value of the investment is expected to increase 4 percent per year. Selling expenses will be 4 percent. The holding period is 4 years. The appropriate unlevered rate of return to discount projected NOIs and the projected NSP is 12 percent. The required levered rate of return is 14 percent. 70 percent of the acquisition price can be borrowed with a 30-year, monthly payment mortgage. The annual interest rate on the mortgage will be 8.0 percent. Financing costs will equal 2 percent of the loan amount. There are no prepayment penalties.
a. Calculate net operating income (NOI) for each of the four years. b. Calculate the net sale proceeds from the sale of the property. c. Calculate the net present value of this investment, assuming no mortgage debt. Should you purchase? Why? d. Calculate the internal rate of return of this investment, assuming no debt. Should you purchase? Why? e. Calculate the monthly mortgage payment. What is the total per year? f. Calculate the loan balance at the end of years 1, 2, 3, and 4. (Note: the unpaid mortgage balance at any time is equal to the present value of the remaining payments, discounted at the contract rate of interest.) g. Calculate the amount of principal reduction achieved during each of the four years. h. Calculate the total interest paid during each of the four years. (Note: Remember that debt service equals principal plus interest.) i. Calculate the levered required initial equity investment j. Calculate the before-tax cash flow (BTCF) for each of the four years. k. Calculate the before-tax equity reversion (BTER) from the sale of the property. l. Calculate the levered net present value of this investment. Should you purchase? Why? m. Calculate the levered internal rate of return of this investment (assuming no debt and no taxes). Should you purchase? Why? n. Calculate, for the first year of operations, the: (1) overall (cap) rate of return, (2) equity dividend rate, (3) gross income multiplier, (4) debt coverage ratio.
Aug 29, 2021 | Uncategorized
You are considering the purchase of an industrial warehouse. The purchase price is $1 million. You expect to hold the property for five years. You have decided to finance the acquisition with the $700,000 loan, 10 percent interest rate, 30-year term, and annual interest-only payments. (That is, the annual payment will not include any amortization of principal.) There are no up-front financing costs. You estimate the following cash flows for the first year of operations:
$135,000 Effective gross income
27,000 Operating expenses
$108,000 NOI
a. Calculate the overall rate of return (or cap rate ).
b. Calculate the debt coverage ratio.
c. What is the largest loan that you can obtain (holding the other terms constant) if the lender requires a debt service coverage ratio of at least 1.2?
Aug 29, 2021 | Uncategorized
You are given the following information for River Adventures Company:
|
RIVER ADVENTURES COMPANY
Bank Reconciliation
April 30, 2008
Cash balance per bank $9,009
Add Deposits in transit 846
9,855
Less: Outstanding cheques
#526 $1,358
#533 279
#541 363
#555 79 2,079
Adjusted cash balance per bank $7,776
|
The adjusted cash balance per bank agreed with the cash balance per books at April 30, 2008. The May bank statement showed the following:
|
RIVER ADVENTURES COMPANY
Bank Statement
May 31, 2008
|
|
Date
|
Cheques and Other Debits
|
Deposits
|
|
Number
|
Amount
|
Amount
|
Balance
|
|
Apr. 30
May 3
4
6
6
10
10
13
13
14
18
18
19
21
25
26
28
31
|
526
541
556
557
559
561
562
563
564
565
NSF
SC
|
$1,358
363
223
1,800
1,650
799
2,045
2,487
603
1,033
440
25
|
$ 846
1,250
980
426
1,650
222
980
1,771
|
$9,009
8,497
8,134
7,911
7,361
8,341
6,691
7,117
8,767
7,968
5,923
6,145
3,658
3,055
2,022
3,002
4,333
4,308
|
Additional information from the bank statement:
- The deposit of $1,650 on May 13 is an electronic transfer from a customer in payment of its account. The amount includes $35 of interest, which River Adventures Company had not previously accrued.
- The NSF for $440 is for a $425 cheque from a customer, Ralph King, in payment of his account, plus a $15 processing fee.
- SC represents bank service charges for the month.
- The bank made an error when processing cheque #564. The company also made two errors in the month. All cheques were written to pay accounts payable, all cash receipts were collections of accounts receivable.
Instructions
(a) Calculate the unadjusted cash balance in River Adventures general ledger at May 31.
(b) Prepare bank reconciliation and the necessary adjusting journal entries at May 31.
Aug 29, 2021 | Uncategorized
Assignment 3: You Are an Investment Analyst
Due Week 10 and worth 320 points
As the representative from your accounting firm or practice, you are in charge of stock market analysis that will be presented to clients as part of professional consultation process. One of your high-profile clients is trying to determine the possible investment potential between two companies. However, before you can recommend investments to clients, you need to familiarize yourself with the background of the companies, analyze stock trends, research current events, and analyze financial statements. Select one (1) pair of these companies and conduct your analysis.
- Pepsi versus Coca Cola, or
- Amazon versus eBay
Write an eight to ten (8-10) page paper in which you:
- Analyze each company s history, product / services, major customers, major suppliers, and leadership and provide a synopsis of each company.
- Based on the stock price for the timeline listed below, present a graph that illustrates the stock price of each company. Indicate conclusions that can be drawn based on the trend:
a. The day of its initial public offering
b. January 1, 2012
c. January 1, 2011
d. January 1, 2010
- Research and summarize at least two (2) news events (this may include mergers, acquisitions, or political issues) that occurred from 2010 to the present day and the potential impact on the stock price of each company. Indicate how this influences your investment decision related to the company.
- Provide an overall financial analysis for each company that highlights the key characteristics for investment and how this may impact an investor s decision.
- Based on your review of the financial data for each company, indicate the accuracy and reliability of the data for making investment decision. Provide support for your conclusion.
- Recommend which company you consider as the better investment for your client and how you will present your recommendation. Support your recommendation with data from your analysis.
- Use at least four (4) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student s name, the professor s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Analyze the accounting for corporation requirements related to stock valuation, dividends, and retained earnings.
- Determine how to value investments and how to report them based on that valuation.
- Use technology and information resources to research issues in financial accounting.
- Write clearly and concisely about financial accounting using proper writing mechanics
Aug 29, 2021 | Uncategorized
You are a quality analyst with John and Sons Company. Your company manufactures fax machines, copiers, and printers that use plain paper. The CEO of the company wants the machines to handle 99.5 percent of all the paper that is used in them without the paper getting jammed. The CEO asks you to determine the thickness of paper that the machines must be able to handle to achieve this target. Using the data provided below, prepare a two-page memo to the CEO in a Word document, detailing the appropriate confidence limits for the thickness of paper that the machines must be able to handle.
Use the data provided and calculated the average thickness of the paper.
Calculate the 99.5 percent confidence limits for the thickness of paper.
Create a two-page memo detailing their response.
Thickness of Selected Sheets of Paper.
Thickness
0.00385
0.00358
0.00372
0.00418
0.00380
0.00399
0.00424
0.00375
0.00449
0.00422
0.00407
0.00434
0.00381
0.00421
0.00397
0.00425
0.00449
0.00462
0.00467
0.00404
0.00391
0.00431
0.00398
0.00415
Used the data provided and calculated the average thickness of the paper. Calculated the 99.5 percent confidence limits for the thickness of paper. Included at least one data chart, one additional graphic and three resources.
Aug 29, 2021 | Uncategorized
13.8 – Vertical analysis (common-size) percentages for Vallejo Company’s sales, cost of goods, sold and expenses are listed here
vertical analysis 2012 2011 2010
Sales 100% 100% 100%
Cost of goods 60.5 62.9 64.8
Expense 26.0 26.6 27.5
Did Vallejo’s net income as a percent of sales increase, decrease, or remain unchanged over the 3 year period? Provide numerical support for your answer
13.9 Horizontal analysis (trend analysis percentages for Spartan company’s sales cost of goods and expenses are listed here
Horizontal Analysis 2012 2011 2010
Sales 96.2% 104.8% 100%
Cost of goods sold 101.0 98.0 100.0
Expenses 105.6 95.4 100.0
Explain whether Spartan’s net income increased, decreased or remained unchanged over the 3 year period.
I need help answering these 2 questions
Aug 29, 2021 | Uncategorized
1. Woodscross LLC had the following events occur during the month of July:
Received $40,000 from investors for contributed capital
Borrowed $15,500 from the bank
Paid $4,100 for rent
Made sales on account for $12,500
Made cash sales to customers totaling $29,700
Repaid part of bank loan for $6,000
Purchased new equipment for $5,000
Paid $13,000 for wages
Paid $1,900 for utilities
Prepare the nine journal entries. Each entry will have a debit and a credit entry. Indicate word debit followed by the Account title (name), Credit followed by the account title (name).
2. On December 31, 2008, Tie One On reported net income for the year of $265,000 and the following account balances:
Cash $175,000
Accounts receivable $21,000
Prepaid rent $6,000
Equipment and furnishings $230,000
Accumulated Depreciation Equipment and furnishings $(43,000)
Accounts payable $39,000
Wages payable $13,000
Owners equity (including net income of $265,000) $337,000
After this information was prepared, the bookkeeper discovered that they failed to prepare two adjusting entries. These were not reflected in the balances shown. Here is the information on these two entries.
The prepaid rent account was paid on April 1, 2008, for one year for $6,000. The account has not been adjusted since
A bill received in January 2009 for utilities incurred in December 2008 for $1,4000 was mistakenly not entered into the system.
Please calculate the year-end corrected balances for the following three accounts: assets, liabilities, and equity.
3. On December 31, 2008 Kings Bait and Tackle had the following ending account balances after all adjusting entries were complete:
Cash $35,000
Inventory $29,000
Prepaid Rent $8,500
Equipment $83,900
Accumulated depreciation ($17,400)
Accounts payable $41,2220
Wages payable $10,500
Owners equity $50,000
Sales revenue $99,000
Cost of goods sold $21,000
Wages expense $15,000
Utilities expense $1,020
Depreciation expense $3,200
Insurance expense $1,000
Supplies expense $1,500
Rent expense $12,000
Please post both closing entries that will be done at the end of the year.
What is the ending owners equity balance?
Please use the following format when recording your closing entries:
Debit account name $X
Credit account name $X
4. Prepare a bank reconciliation for XYZ company at September 30 using the following information:
Balance per DYZ Company Bank statement at September 30 $7,351.10
Outstanding checks $5,645.45
NSF checks from customer $444.22
Deposits in transit $7,135.46
Interest revenue $100.00
Service Charge $230.30
Cash balance per XYZ s records at September 30 $9,415.63
Aug 29, 2021 | Uncategorized
Budgets are the driving force behind all organizations. Whether a manufacturing organization, or a service organization such as a medical or public accounting firm, budgets are used not only for planning purposes but also for performance monitoring and evaluation of areas within an organization.
More than likely, you are often required to work with budgets within your organization. Using the module reading and the Argosy University online library resources, research budgets including multiple budgets.
Respond to the following:
- Describe in detail the budgets that you work with.
- In your description, what was the objective of the budget i.e., to motivate employees or control costs? (A budget could have more than one objective.) Was the use of the budget successful in achieving the objective?
- Based on the effectiveness of the budget, what recommendations would you suggest to improve the communication and/or utilization of the budget(s)?
- Assume your organization has multiple budgets and you are to work with these. Explain how these budgets should be linked together.
Give reasons and examples in support of your responses.
Write your initial response in 4 5 paragraphs. Apply APA standards to citation of sources.
Aug 29, 2021 | Uncategorized
Harvard Business Publishing: Working Capital Simulation: Managing Growth Assignment
Ch. 1 – 21 ofFundamentals of Corporate Finance
WileyPLUS Assignments
All additional resources from each week
Reviewthe following scenario:
Acting as the CEO of a small company called Sunflower Nutraceuticals (SNC), you will apply the principles of capital budgeting to invest in growth and cash flow improvement opportunities in three phases over 10 simulated years. Each opportunity has a unique financial profile and you must analyze the effects on working capital. Examples of opportunities include taking on new customers, capitalizing on supplier discounts, and reducing inventory.
You must understand how the income statement, balance sheet, and statement of cash flows are interconnected and be able to analyze forecasted financial information to consider possible effects of each opportunity on the firm’s financial position. The company operates on thin margins with a constrained cash position and limited available credit. You must optimize use of internal and external credit as you balance the desire for growth with the need for maintaining liquidity.
Sign-in to the simulation and review each of the following:
- Welcome Statement
- How to Play
- Terminology Primer
- More Details (this includes information to help you understand how to play the simulation)
Write a paper of no more than 1,400 words that analyzes your decisions during each phase (1-3) and how they influenced each of the following final outcomes (metrics) of SNC:
- Sales
- EBIT
- Net Income
- Free Cash Flow
- Total Firm Value
Address the following in your paper:
- A summary of your decisions and why you made them
- How they affected SNC’s working capital
- What general effects are associated with limited access to financing
Include scholarly references (in addition to your course textbook and simulation materials) to support your positions.
Format your paper consistent with APA guidelines
Aug 29, 2021 | Uncategorized
World Gourmet Coffee Company (WGCC) is a distributor and processor of different blends of coffee. The company buys coffee beans from around the world and roasts, blends, and packages them for resale. WGCC currently has 15 different coffees that it offers to gourmet shops in one-pound bags. The major
cost is raw materials; however, there is a substantial amount of manufacturing overhead in the predominantly
automated roasting and packing process. The company uses relatively little direct labor. Some of the coffees are very popular and sell in large volumes, while a few of the newer blends have very low volumes. WGCC prices its coffee at full product cost, including allocated overhead, plus a markup of 30 percent. If prices for certain coffees are significantly higher than market, adjustments are made. The company competes primarily on the quality of its products, but customers are priceconscious
as well.
Data for the 20×1 budget include manufacturing overhead of $3,000,000, which has been allocated
on the basis of each product s direct-labor cost. The budgeted direct-labor cost for 20×1 totals $600,000.
Based on the sales budget and raw-material budget, purchases and use of raw materials (mostly coffee
beans) will total $6,000,000.
The expected prime costs for one-pound bags of two of the company s products are as
follows:
Kona Malaysian
Direct material. $3.20 $4.20
Direct labor .30 .30
WGCC s controller believes the traditional product-costing system may be providing misleading cost information. She has developed an analysis of the 20×1 budgeted manufacturing-overhead costs shown in the following chart.
Activity Cost Driver Budgeted Activity Budgeted Cost
Purchasing ………………………….. Purchase orders ………………………
1,158 ………………… $ 579,000
Material handling ………………….. Setups …………………………………..
1,800 ………………… 720,000
Quality control………………………. Batches
…………………………………. 720 ………………… 144,000
Roasting ……………………………… Roasting hours
………………………… 96,100 …………………. 961,000
Blending ……………………………… Blending hours…………………………
33,600 …………………. 336,000
Packaging …………………………… Packaging hours ………………………
26,000 …………………. 260,000
Total manufacturing-overhead cost
$3,000,000
Data regarding the 20×1 production of Kona and Malaysian coffee are shown in the following table. There will be no raw-material inventory for either of these coffees at the beginning of the year.
Kona Malaysian
Budgeted sales
2,000 lb. 100,000 lb.
Batch size
500 lb. 10,000 lb.
Setups
3 per batch 3 per batch
Purchase order size
500 lb. 25,000 lb.
Roasting time
1 hr. per 100 lb. 1 hr. per 100 lb.
Blending time
.5 hr. per 100 lb. .5 hr. per 100 lb.
Packaging time
.1 hr. per 100 lb. .1 hr. per 100 lb.
1. Using WGCC s current product-costing system:
a. Determine the company s predetermined overhead rate using direct-labor cost as the single cost driver.
b. Determine the full product costs and selling prices of one pound of Kona coffee and one pound of Malaysian coffee.
2. Develop a new product cost, using an activity-based costing approach, for one pound of Kona coffee and one pound of Malaysian coffee.
3. What are the implications of the activity-based costing system with respect to
a. The use of direct labor as a basis for applying overhead to products?
b. The use of the existing product-costing system as the basis for pricing.
Aug 29, 2021 | Uncategorized
Wormy fruit trees. It is generally thought that the percentage of fruit attacked by codling moth larvae is greater on apple trees bearing a small crop. Apparently the density of the flying moths is unrelated to the size of the crop on a tree, so the chance of attack for any particular fruit is increased if few fruits are on the tree.
Data collected for a random sample of 10 trees gives a sample linear correlation coefficient of -0.8. Other summary statistics obtained from the sample are provided below.
variable sample mean sample stand dev
corp size (#of fruit) 110 40
% of wormy fruits 45 12
Write down the ANOVA table for the simple linear regression of percentage of wormy fruit on crop size. Compute the F statistic and find a p-value. Find a 99% confidence interval for B1, the slope of the least squares regression line for predicting the percentage of wormy fruit from crop size. What proportion of the variability in the percentage of wormy fruit is explained by the regression of percentage of wormy fruit on crop size? Estimate the mean percentage of wormy fruits for trees with a crop size of 150 fruit. Provide a 95% confidence interval for the mean percentage of wormy fruits for trees with a crop size of 150 fruit. Is there statistically significant evidence from these data that trees with a crop size of 150 have, on average, 50% wormy fruit? Provide a 90% prediction interval for the average percentage of wormy fruit for the first tree with 150 fruit that was selected to be part of the study.
Aug 29, 2021 | Uncategorized
Focus of the Final Paper
**********PLEASE READ ALL THE INSTRUCTIONS CAREFULLY!
NO PLAGIARISM. I WILL USE A PLAGIARISM CHECK SOFTWARE TO CHECK THE COMPLETED WORK
Write a five-to seven-page financial statement analysis of a public company, formatted according to APA style .
In this analysis you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors.
Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions.
Your paper needs to include a minimum of two scholarly resources in addition to the textbook as references.
Here is a breakdown of the sections within the body of the assignment:
Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main products or services? Who are its competitors
Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.
Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of competitive companies within the same industry.
Recommendation
Based on your analysis would you recommend an individual invest in this company? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company as long as you provide support for your position.
Writing the Final Paper
1. Must be five to seven double-spaced pages in length, and formatted according to APA style
2. Must include a title page with the following:
a. Title of paper
b. Student s name
c. Course name and number
d. Instructor s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document all sources in APA style,
7. Must include a separate reference page, formatted according to APA style
Aug 29, 2021 | Uncategorized
- Explain at least 2 different kinds of health plans.
- Choose 3 kinds of payments that may be rendered for services
- Explain why it is important for the patients and the health of the organization to correctly use and apply insurance, including verification of benefits.
- Explain why coding properly is important to your organization and the patient.
- Explain what is found in CPT coding, ICD coding, and in the HCPCS.
- Explain what an Explanation of Benefits (EOB) is.
- Explain to the new employees of Kyosha Valley at least 2 other important insurance terms, such as the birthday rule, assignment of benefits, clean claims, coordination of benefits, balanced billing, and so on.
Aug 29, 2021 | Uncategorized
There are multiple Internet browsers available today, and many people choose which to use without giving it consideration. However, there are advantages and disadvantages to each for your Discussion Board consider:
- Which is the better software tool: Internet Explorer, Mozilla Firefox, or Google Chrome?
- Supplement your argument with evidence, and indicate whether or not you changed your position based upon the discussion. Why or why not?
To write your analysis, consider using articles from computer magazines such as PC Magazine, Byte, or Computerworld,technical and nontechnical information systems journals, discussions of the browsers in business journals, Web resources, and advertising literature for both browsers.
Aug 29, 2021 | Uncategorized
BUS 630
Part I (Three to four double-spaced pages)
Present the following:
- Definition of managerial accounting
- Role of managerial accounting and the management accountant in a business or organization
- Ethical issues/concerns for the management accountant
- General description of at least three managerial accounting techniques available and their application within a business or organization
Part II (Four to six double-spaced pages)
Select at least three of the five topics identified below:
- Cost Management Techniques
- Costing Methods
- Capital Investment Decision Techniques
- Budgeting
- Quality Control
For each topic selected present real world examples of the application of managerial accounting techniques within a business or organization. Examples may be gathered from your own professional experiences or from case studies obtained from credible sources (excluding textbook examples explored in previous weeks). Presentation of each example should include how a managerial accounting technique was applied in the business or organization s decision-making model. Be sure to support your example with calculations when applicable.
Aug 29, 2021 | Uncategorized
1.
To pay the least income tax possible in periods of rising inventory costs, the company should use which
inventory costing method?
A.
FIFO
B.
LIFO
C.
Average cost
D.
Specific identification
2.
Which of the following is an incorrect statement if ending inventory is overstated?
A.
Net income is overstated.
B.
Gross profit is overstated.
C.
Cost of goods sold is overstated.
D.
Income tax is overstated.
3.
Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal
entry to record this purchase for Meranda under a perpetual inventory system is
A.
debit Accounts Payable-Ashley; credit Inventory.
B.
debit Inventory; credit Accounts Payable Meranda.
C.
debit Inventory; credit Accounts Payable Ashley.
D.
debit Inventory; credit Cash.
4.
Committing a fraud because the employee feels that it will be easy to do is indicative of which part of the fraud triangle?
A.
Perceived pressure
B.
Rationalization
C.
Perceived opportunity
D.
Realization
5.
Which items may not limit the effectiveness of internal control systems in an organization?
A.
Costs not worth benefits
B.
Collusion
C.
Overriding controls
D.
Properly designed controls
6.
Under a perpetual inventory system, the account to which transportation charges on incoming
merchandise is generally entered is
A.
inventory.
B.
FOB shipping.
C.
delivery expense.
D.
FOB destination.
7.
A company’s current ratio increased from 1.23 to 1.45. What does this mean?
A.
This means that current assets decreased and current liabilities decreased.
B.
This means that current assets increased and current liabilities decreased.
C.
This means that current assets increased and current liabilities increased.
D.
There isn’t enough information to explain the increase.
8.
Nick Company reports the following inventory information:
What is the total value of the merchandise under LCM (lower-of-cost or market)?
Inventory Number Inventory Quantity Unit Cost Unit Market Value
APD 4837 440 $51.29 $51.48
CPZ 2837 290 $76.59 $77.02
IXL 9291 310 $42.34 $42.47
EOD 1717 200 $22.19 $21.75
DKS 3088 180 $31.22 $31.17
A.
$67,864.70
B.
$67,961.70
C.
$68,210.30
D.
$68,113.30
9.
One of the biggest factors in implementing SOX was
A.
the cost of implementing the system.
B.
disclosing deficiencies in internal controls.
C.
establishing internal control procedures.
D.
reviewing the financial reports.
10.
Besides using an overstatement of earnings to inflate a company’s stock price, overstating earnings may
also be used to
A.
avoid paying raises to employees.
B.
ensure larger bonuses to upper management at year-end.
C.
deflate the amount of taxes the corporation pays.
D.
avoid paying dividends to stockholders.
11.
Casey Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012,
were as follows: (
Note: The company uses a perpetual system of inventory.)
What is the cost of goods sold for Casey Company for 2012 using LIFO?
Units Unit Price Total Cost
January 1 Beginning Inventory 20 $12 $240
March 8 Sold 14
April 2 Purchase 30 $13 $390
June 5 Sold 25
Aug 6 Purchase 25 $14 $350
Sept 11 Sold 22
Total Cost of Inventory $980
Ending inventory is 14 units.
A.
$308
B.
$801
C.
$264
D.
$784
12.
Physical inventory counts must be done
A.
when using the perpetual method of inventory.
B.
regardless of method inventory.
C.
when using the periodic method of inventory.
D.
when using bar-code scan technology.
13.
Goods available for sale are $118,000; beginning inventory is $37,000; ending inventory is $42,000;
and cost of goods sold is $77,000. The inventory turnover is
A.
1.53.
B.
1.95.
C.
1.83.
D.
2.99.
14.
Under Sarbanes-Oxley, those officers signing off on the reports must have evaluated the company’s
internal control within the previous
A.
nine months.
B.
six months.
C.
year.
D.
90 days.
15.
Bill’s Bikes had sales for the week of $3,569, of which $2,900 was on credit and $659 was in cash
sales. The cost of the bikes sold was $1,888. The journal entries would include a
A.
debit to Cash for $3569; credit to Sales for $3,569.
B.
debit to Cash for $3,569; credit to Cost of Goods Sold for $3,569.
C.
debit to Cost of Goods Sold for $1,888; credit to Sales of $1,888.
D.
debit to Cost of Goods Sold for $1,888; credit to Inventory for $1,888.
End of exam
16.
Which of the following would probably not cause inventory shrinkage?
A.
Spoilage of items
B.
Employee theft
C.
Spills of items
D.
Correct counting of all inventory
17.
ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to record
the payment of this invoice is
A.
debit Accounts Payable $340; debit Inventory $10; credit Cash $350.
B.
debit Accounts Payable $350; credit Inventory $10.50, credit Cash $339.50.
C.
debit Accounts Payable $340; credit Cash $340.
D.
debit Accounts Payable $350; credit Cash $350.
18.
If current assets decrease and current liabilities increase, the current ratio
A.
will change based on the change in total assets.
B.
decreases.
C.
remains the same.
D.
increases.
19.
Which of the following may not limit the effectiveness of internal control systems in an organization?
A.
Duties not segregated
B.
Understanding of policies and procedures
C.
Poorly designed controls
D.
Costs not worth benefits
20.
Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is
the inventory record for Product C124:
What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)?
Date
Received Sold Cost/Unit Balance
April 22 534 $6.58 $3,513.72
May 17 433 $6.70 $2,901.10
June 21 389 $6.76 $2,629.64
August 2 436 $6.44 $2,807.84
A.
$6.00
B.
$6.63
C.
$6.55
D.
$7.40
Aug 29, 2021 | Uncategorized
28.Which is the true statement?
a.In a CVP income Statement, costs and expenses are classified only by function
b.The CVP income statement is prepared for both internal and external use
c.The CVp income statement shows contribution margin instead of gross profit
d.In a traditional income statement,costs and expenses are classified as either variable or fixed
29.Variable costs are 60% of the unit selling price.
The contribution margin ratio is 40%
The contribution margin per unit is $500
The fixed costs are $300,000
Which of the following does not express the break-even point?
a.300,000+.60X=X
b.300,000+.40X=X
c.300,000/$500=X
d.300,000/.40=X
30.A CVP graph does not include a
a.variable cost line
b.fixed cost line
c.sales line
d.total cost line
31.Boswell company reported the following information for the current year:Sales(50,000 units)$1,000,000, direct materials and direct labor 500,000, other variable costs 50,000, and fixed costs 270,000.
31-1 What is Boswell’s break-even point in units?
a.24,546
b.30,000
c.38,334
d.42,188
31-2 What is Boswell’s contribution margin ratio?
a.68%
b.45
c.32
d.55
32.Walters Corporation sells radios for %50 per unit.The fixed costs are 420,000 and the variable costs are 60% of the selling price.As a result of new automated equipment,it is anticipated that fixed costs will increase by 100,000 and variable costs will be 50% of the selling price.The new break-even point in units is
a21,000
b20,800
c20,600
d16,800
33.Cunningham,Inc. sells MP3 players for $60 each.Variable costs are $40 per unit, and fixed costs total $90,000.What sales are needed by Cunningham to break even?
a.120,000
b.225,000
c.270,000
d.360,000
34.What is the key factor in determining sales mix if company has limited resources?
a.Contribution margin per unit of limited resource
b.The amount of fixed costs per unit
c.Total contribution margin
d.The cost of limited resources
35. (Oven Hours Required) (Contribution Margin Per Unit)
Muffins 0.2 $3 $15/hour
Coffee Cakes 0.3 $4 $13.33 / hour
The company has oven capacity of 1,200hours.How much will contribution margin be if it produces only the most profitable product?
a.12,000
b.16,000
c.18,000
d.24,000
36.Curtis Corporation’s contribution margin is $20 per unit for Product A and $24 for Product B.Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource of reach product?
A B
a.$10 $6
b.$10 $6.66
c.$8 $6
d.$8 $6.66
37.Reducing reliance on human workers and instead investing heavily in computers and online technology will
a.reduce fixed costs and increase variable costs
b.reduce variable costs and increase fixed costs
c.have no effect on the relative proportion of fixed and variable costs
d.make the company less susceptible to economic swings
38.Cost structure refers to the relative proportion of
a.selling expenses versus adminstrative expenses
b.selling and administrative expenses versus costs of goos sold
c.contribution margin versus sales
d.none of the above
39.Mercantile Corporation has sales of 2,000,000,variable costs of 1,100,000,and fixed costs of 750,000.
39-1)mercantile’s degree of operating leverage is
a1.22
b1.47
c1.20
d6.00
39-2)margin of safety ratio is
a .08
b .17
c .20
d .83
40.Which of the following statements is not true?
a.Operating leverage refers to the extent to which company’s net income reacts to given change in sales
b.Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c.when a company’s sales revenue is increasing,high operating leverage is good b/c it means profits will increase rapidly
d.When a company’s sales revenue is decreasing,high operating leverage is good b/c it means profits will decrease at slower pace than revenues decrease
42.Nielson Corp.sells its product for 8,800per unit. Variable costs per unit are:manufacturing,$4,800and selling and administrative,$100. Fixed costs are:24,000 manufacturing overhead,and 32,000selling and administrative. There was no beginning inventory at 1/1/12.Production was 20 units per year in 2012-14.Sales was 20units in 2012,16units in 2013, and 24units in 2014.
42-1)Income under absorption costing for 2014 is
a26,400
b31,200
c32,800
d37,600
42-2)Income under variable costing for 2013 is
a6,400
b11,200
c12,800
d17,600
42-3)Income under variable costing for 2014 is
a26,400
b31,200
c32,800
d37,600
42-4)For the 3years 2012-14
a.absorption costing income exceeds variable costing income by 8,000
b.absorption costing income equals variable costing income
c.variable costing income exceeds absorption costing income by 8,000
d.absorption costing income may be greater than,equal to,or less than variable costing income,depending on the situation
Aug 29, 2021 | Uncategorized
Case Study – Who Gets the Assignment
This is an International Management case study about the selection of a manager to be assigned to China to get a new operation up and running. Many factors have to be considered before making the selection to fill the vacancy and some believe that SocioEconomic considerations play the most important role. This and other factors will go into the final decision.
Directions:
- In this assignment you are to read the case study, Who Gets the Assignment.pdf, and look at Appendix B of your text and answer the following questions:
-
What criteria should be used to evaluate candidates for this position.
-
Explain how each candidate measures up to or does not have the required cultural background for this position.
-
What other qualifications would you consider important in a candidate for this position?
-
Who would be your choice for the position
Aug 29, 2021 | Uncategorized
Presented here are the components in Pedersen Company’s income statement. Determine the missing amounts.
|
Sales
|
|
Cost
of Goods Sold
|
|
Gross Profit
|
|
Operating Expenses
|
|
Net Income
|
|
$71,200
|
|
(b)$
|
|
$30,000
|
|
(d)$
|
|
$10,800
|
|
$108,000
|
|
$70,000
|
|
(c)$
|
|
(e)$
|
|
$29,500
|
|
(a)$
|
|
$71,900
|
|
$109,600
|
|
$46,200
|
|
(f)$
|
Prior Company buys merchandise on account from Wood Company. The selling price of the goods is $900 and the cost of goods is $630. Both companies use perpetual inventory systems. Journalize the transactions on the books of both companies.
Prior Company
|
Account/Description
|
Debit
|
Credit
|
|
Cost of Goods SoldAccounts PayableMerchandise InventoryCashSalesAccounts ReceivableSupplies
|
|
|
|
Accounts PayableMerchandise InventoryCashAccounts ReceivableCost of Goods SoldSuppliesSales
|
|
|
Wood Company
|
Account/Description
|
Debit
|
Credit
|
|
SalesAccounts ReceivableCost of Goods SoldMerchandise InventoryAccounts PayableCashSupplies
|
|
|
|
SalesMerchandise InventoryAccounts ReceivableAccounts PayableCashSuppliesCost of Goods Sold
|
|
|
|
(To record the sale)
|
|
|
|
Accounts ReceivableSuppliesSalesCost of Goods SoldMerchandise InventoryAccounts PayableCash
|
|
|
|
SuppliesCost of Goods SoldSalesMerchandise InventoryAccounts PayableCashAccounts Receivable
|
|
|
|
(To record the cost of inventory)
|
|
|
In its first month of operation, Maze Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 150 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. The company uses the periodic method.
Phantom Profit $
O’Connor Video Center accumulates the following cost and market data at December 31.
|
|
Inventory Categories
|
Cost Data
|
Market Data
|
|
|
Cameras
|
$12,500
|
|
$13,400
|
|
|
|
Camcorders
|
9,000
|
|
9,500
|
|
|
|
DVD’s
|
13,000
|
|
12,800
|
|
Compute the lower of cost or market valuation for O’Connor’s inventory.
$
Beaty Company has the following internal control procedures over cash receipts. Match the internal control principle that is applicable to each procedure.
|
Establishment of responsibility
|
– -12345
|
|
Segregation of duties
|
– -12345
|
|
Independent internal verification
|
– -12345
|
|
Human resource controls
|
– -12345
|
|
Physical controls
|
– -12345
|
|
1.
|
The duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals.
|
|
2.
|
All over-the-counter receipts are registered on cash registers.
|
|
3.
|
Only cashiers may operate cash registers.
|
|
4.
|
All cashiers are bonded.
|
|
5.
|
Daily cash counts are made by cashier department supervisors.
|
Aug 29, 2021 | Uncategorized
Presented here are the components in Pedersen Company’s income statement. Determine the missing amounts.
|
Sales
|
|
Cost
of Goods Sold
|
|
Gross Profit
|
|
Operating Expenses
|
|
Net Income
|
|
$71,200
|
|
(b)$
|
|
$30,000
|
|
(d)$
|
|
$10,800
|
|
$108,000
|
|
$70,000
|
|
(c)$
|
|
(e)$
|
|
$29,500
|
|
(a)$
|
|
$71,900
|
|
$109,600
|
|
$46,200
|
|
(f)$
|
Prior Company buys merchandise on account from Wood Company. The selling price of the goods is $900 and the cost of goods is $630. Both companies use perpetual inventory systems. Journalize the transactions on the books of both companies.
In its first month of operation, Maze Company purchased 100 units of inventory for $6, then 200 units for $7, and finally 150 units for $8. At the end of the month, 180 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. The company uses the periodic method.
Phantom Profit $
O’Connor Video Center accumulates the following cost and market data at December 31.
|
|
Inventory Categories
|
Cost Data
|
Market Data
|
|
|
Cameras
|
$12,500
|
|
$13,400
|
|
|
|
Camcorders
|
9,000
|
|
9,500
|
|
|
|
DVD’s
|
13,000
|
|
12,800
|
|
Compute the lower of cost or market valuation for O’Connor’s inventory.
Question 5
Beaty Company has the following internal control procedures over cash receipts. Match the internal control principle that is applicable to each procedure.
Aug 29, 2021 | Uncategorized
| Brief Exercise 5-1 |
| Presented here are the components in Casilla Company s income statement. |
| Determine the missing amounts. |
|
Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Net Income
| Brief Exercise 5-8 |
| Assume that Tracy Company uses a periodic inventory system and has these account balances: Purchases $404,000; Purchase Returns and |
| Allowances $13,000; Purchase Discounts $9,000; and Freight-in $16,000. |
| Determine net purchases and cost of goods purchased. |
| Net purchases $ |
|
|
Cost of goods purchased $
| Brief Exercise 5-9 |
| Assume that Tracy Company uses a periodic inventory system and has these account balances: Purchases $404,000; Purchase Returns and |
| Allowances $13,000; Purchase Discounts $9,000; and Freight-in $16,000. Tracy Company has beginning inventory of $60,000, ending |
| inventory of $90,000, and net sales of $612,000. |
| Determine the amounts to be reported for cost of goods sold and gross profit. |
|
| Cost of goods sold $ |
|
Gross profit $
| Brief Exercise 5-10 |
| Durbin Corporation reported net sales of $250,000, cost of goods sold of $150,000, operating expenses of $50,000, net income of $32,500, |
| beginning total assets of $520,000, and ending total assets of $600,000. |
| Calculate profit margin and gross profit rate. (Round answers to 0 decimal places, e.g. 10%.) |
|
|
| Profit margin % |
|
Gross profit rate %
| Exercise 5-6 (Part Level Submission) |
| Presented below is information for Zhou Co. for the month of January 2014. |
| Cost of goods sold $212,000 Rent expense $32,000 |
| Freight-out 7,000 Sales discounts 8,000 |
| Insurance expense 12,000 Sales returns and allowances 20,000 |
| Salaries and wages expense 60,000 Sales revenue 370,000 |
| (a) |
|
Prepare an income statement using the multi-step format. Assume a 25% tax rate.
| (b) |
|
Calculate the profit margin and the gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%.)
| Problem 5-2A |
| McCoy Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the |
| month of June, the following merchandising transactions occurred. |
| June 1 Purchased books on account for $1,040 (including freight) from Carlin Publishers, terms 2/10, n/30. |
| 3 Sold books on account to the Goldschmidt bookstore for $1,200. The cost of the merchandise sold was $720. |
| 6 Received $40 credit for books returned to Carlin Publishers. |
| 9 Paid Carlin Publishers in full. |
| 15 Received payment in full from the Goldschmidt bookstore. |
| 17 Sold books on account to Town Crier for $1,200. The cost of the merchandise sold was $730. |
| 20 Purchased books on account for $720 from Good Book Publishers, terms 1/15, n/30. |
| 24 Received payment in full from Town Crier. |
| 26 Paid Good Book Publishers in full. |
| 28 Sold books on account to Emporia Bookstore for $1,300. The cost of the merchandise sold was $780. |
| 30 Granted Emporia Bookstore $130 credit for books returned costing $80. |
| Journalize the transactions for the month of June for McCoy Warehouse, using a perpetual inventory system. (Credit account titles are |
| automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the |
|
problem. Round answers to 0 decimal places e.g. 15,222.)
| Problem 5-9A (Part Level Submission) |
| At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed Cash $ 2,500 ; Inventory $ 3,500 ; and Common |
| Stock $ 6,000 . The following transactions occurred during April 2014. |
| Apr. 5 Purchased golf bags, clubs, and balls on account from Akers Co. $ 1,500 , terms 3 /10, n/60. |
| 7 Paid freight on Akers Co. purchases $ 80 . |
| 9 Received credit from Akers Co. for merchandise returned $ 200 . |
| 10 Sold merchandise on account to members $ 1,340 , terms n/30. |
| 12 Purchased golf shoes, sweaters, and other accessories on account from Palmer Sportswear $ 830 , terms 1 /10, n/30. |
| 14 Paid Akers Co. in full. |
| 17 Received credit from Palmer Sportswear for merchandise returned $ 30 . |
| 20 Made sales on account to members $ 810 , terms n/30. |
| 21 Paid Palmer Sportswear in full. |
| 27 Granted credit to members for clothing that did not fit properly $ 80 . |
| 30 Received payments on account from members $ 1,220 . |
|
| (a) |
| Journalize the April transactions using a periodic inventory system. (Credit account titles are automatically indented when amount is |
| entered. Do not indent manually. Record journal entries in the order presented in the problem.) |
|
| (b) |
| Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (Post entries in the order of journal |
| entries posted in part a.) |
|
| (c) |
| Prepare a trial balance on April 30, 2014. |
|
| (d) |
| Prepare an income statement through gross profit, assuming inventory on hand at April 30 is $4,263. |
|
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
| Brief Exercise 5-1 |
| Presented here are the components in Casilla Company s income statement. |
| Determine the missing amounts. |
|
Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Net Income
| Brief Exercise 5-8 |
| Assume that Tracy Company uses a periodic inventory system and has these account balances: Purchases $404,000; Purchase Returns and |
| Allowances $13,000; Purchase Discounts $9,000; and Freight-in $16,000. |
| Determine net purchases and cost of goods purchased. |
| Net purchases $ |
|
|
Cost of goods purchased $
| Brief Exercise 5-9 |
| Assume that Tracy Company uses a periodic inventory system and has these account balances: Purchases $404,000; Purchase Returns and |
| Allowances $13,000; Purchase Discounts $9,000; and Freight-in $16,000. Tracy Company has beginning inventory of $60,000, ending |
| inventory of $90,000, and net sales of $612,000. |
| Determine the amounts to be reported for cost of goods sold and gross profit. |
|
| Cost of goods sold $ |
|
Gross profit $
| Brief Exercise 5-10 |
| Durbin Corporation reported net sales of $250,000, cost of goods sold of $150,000, operating expenses of $50,000, net income of $32,500, |
| beginning total assets of $520,000, and ending total assets of $600,000. |
| Calculate profit margin and gross profit rate. (Round answers to 0 decimal places, e.g. 10%.) |
|
|
| Profit margin % |
|
Gross profit rate %
| Exercise 5-6 (Part Level Submission) |
| Presented below is information for Zhou Co. for the month of January 2014. |
| Cost of goods sold $212,000 Rent expense $32,000 |
| Freight-out 7,000 Sales discounts 8,000 |
| Insurance expense 12,000 Sales returns and allowances 20,000 |
| Salaries and wages expense 60,000 Sales revenue 370,000 |
| (a) |
|
Prepare an income statement using the multi-step format. Assume a 25% tax rate.
| (b) |
|
Calculate the profit margin and the gross profit rate. (Round answers to 1 decimal place, e.g. 15.2%.)
| Problem 5-2A |
| McCoy Warehouse distributes hardback books to retail stores and extends credit terms of 2/10, n/30 to all of its customers. During the |
| month of June, the following merchandising transactions occurred. |
| June 1 Purchased books on account for $1,040 (including freight) from Carlin Publishers, terms 2/10, n/30. |
| 3 Sold books on account to the Goldschmidt bookstore for $1,200. The cost of the merchandise sold was $720. |
| 6 Received $40 credit for books returned to Carlin Publishers. |
| 9 Paid Carlin Publishers in full. |
| 15 Received payment in full from the Goldschmidt bookstore. |
| 17 Sold books on account to Town Crier for $1,200. The cost of the merchandise sold was $730. |
| 20 Purchased books on account for $720 from Good Book Publishers, terms 1/15, n/30. |
| 24 Received payment in full from Town Crier. |
| 26 Paid Good Book Publishers in full. |
| 28 Sold books on account to Emporia Bookstore for $1,300. The cost of the merchandise sold was $780. |
| 30 Granted Emporia Bookstore $130 credit for books returned costing $80. |
| Journalize the transactions for the month of June for McCoy Warehouse, using a perpetual inventory system. (Credit account titles are |
| automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the |
|
problem. Round answers to 0 decimal places e.g. 15,222.)
| Problem 5-9A (Part Level Submission) |
| At the beginning of the current season on April 1, the ledger of Flint Hills Pro Shop showed Cash $ 2,500 ; Inventory $ 3,500 ; and Common |
| Stock $ 6,000 . The following transactions occurred during April 2014. |
| Apr. 5 Purchased golf bags, clubs, and balls on account from Akers Co. $ 1,500 , terms 3 /10, n/60. |
| 7 Paid freight on Akers Co. purchases $ 80 . |
| 9 Received credit from Akers Co. for merchandise returned $ 200 . |
| 10 Sold merchandise on account to members $ 1,340 , terms n/30. |
| 12 Purchased golf shoes, sweaters, and other accessories on account from Palmer Sportswear $ 830 , terms 1 /10, n/30. |
| 14 Paid Akers Co. in full. |
| 17 Received credit from Palmer Sportswear for merchandise returned $ 30 . |
| 20 Made sales on account to members $ 810 , terms n/30. |
| 21 Paid Palmer Sportswear in full. |
| 27 Granted credit to members for clothing that did not fit properly $ 80 . |
| 30 Received payments on account from members $ 1,220 . |
|
| (a) |
| Journalize the April transactions using a periodic inventory system. (Credit account titles are automatically indented when amount is |
| entered. Do not indent manually. Record journal entries in the order presented in the problem.) |
|
| (b) |
| Using T accounts, enter the beginning balances in the ledger accounts and post the April transactions. (Post entries in the order of journal |
| entries posted in part a.) |
|
| (c) |
| Prepare a trial balance on April 30, 2014. |
|
| (d) |
| Prepare an income statement through gross profit, assuming inventory on hand at April 30 is $4,263. |
|
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
Sycamore Candy Company offers a CD single as a premium for every 5 candy bar wrappers presented by customers together with $2.70. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $2.45; in addition, it costs 50 cents to mail each CD. The results of the premium plan for the years 2012 and 2013 are as follows. (All purchases and sales are for cash.)
2012 2013
CDs purchased 270,000 356,400
Candy bars sold 2,909,600 2,752,200
Wrappers redeemed 1,296,000 1,620,000
2012 wrappers expected to be redeemed in 2013 313,200
2013 wrappers expected to be redeemed in 2014 378,000
(a) Prepare the journal entries that should be made in 2012 and 2013 to record the transactions related to the premium plan of the Sycamore Candy Company. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account Titles and Explanation Debit Credit
2012
1. (To record the pemium inventory.)
2. (To record the sales.)
3. (To record the expense associated with the sale.)
4. (To record the premium liability.)
2013
5.(To record the pemium inventory.)
6.(To record the sales.)
7.(To record the expense associated with the sale.)
8.(To record the premium liability.)
(b) Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2012 and 2013.
Amount
Account 2012 2013 Classification
Inventory of Premiums $
$
Premiums Liability
Premium Expense
Presented below are three independent situations. Answer the question at the end of each situation.
1. During 2012, Maverick Inc. became involved in a tax dispute with the IRS. Maverick s attorneys have indicated that they believe it is probable that Maverick will lose this dispute. They also believe that Maverick will have to pay the IRS between $800,000 and $1,400,000. After the 2012 financial statements were issued, the case was settled with the IRS for $1,200,000. What amount, if any, should be reported as a liability for this contingency as of December 31, 2012?
2. On October 1, 2012, Holmgren Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Holmgren s management along with its counsel have concluded that it is probable that Holmgren will be responsible for damages, and a reasonable estimate of these damages is $6,000,000. Holmgren s insurance policy of $9,000,000 has a deductible clause of $500,000. How should Holmgren Chemical report this information in its financial statements at December 31, 2012?
3. Shinobi Inc. had a manufacturing plant in Darfur, which was destroyed in the civil war. It is not certain who will compensate Shinobi for this destruction, but Shinobi has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant but more than its book value. How should the contingency be reported in the financial statements of Shinobi Inc.?
On December 31, 2012, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 13%, issued at par, $3,216,000 note receivable by the following modifications:
1. Reducing the principal obligation from $3,216,000 to $2,572,800.
2. Extending the maturity date from December 31, 2012, to January 1, 2016.
3. Reducing the interest rate from 13% to 10%.
Barkley pays interest at the end of each year. On January 1, 2016, Barkley Company pays $2,572,800 in cash to Firstar Bank.
(a) Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring?
(b) Can Barkley Company record a gain under the term modification mentioned above?
(c) Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (Round answers to 0 decimal places, e.g. $38,548.)
BARKLEY COMPANY
Interest Payment Schedule After Debt Restructuring
Effective-Interest Rate
Date
Cash
Paid
Interest
Expense Reduction
of Carrying
Amount Carrying
Amount of
Note
12/31/12 $
$
$
$
12/31/13
12/31/14
12/31/15
Total $
* Difference due to rounding
(d) Prepare the interest payment entry for Barkley Company on December 31, 2014. (Round answers to 0 decimal
Aug 29, 2021 | Uncategorized
WinstonCompanymanufactured5,000 unitsofacomponentpartthatisused initsproductand incurredthe followingcosts:
|
Directmaterials
|
35,000
|
|
Directlabor
|
25,000
|
|
Variablemanufacturingoverhead
|
20,000
|
|
Fixedmanufacturingoverhead
|
18,000
|
|
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98,000
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Anothercompanyhasofferedtosellthesamecomponenttothecompanyfor$17.50 perunit.The xed manufacturingoverheadconsistsmainlyofdepreciationonequipmentused tomanufacturethepartand wouldnotbereducedifthecomponentpartwaspurchasedfromtheoutside rm.Ifthecomponentpart is purchasedfromtheoutside rm, WinstonCompanyhastheopportunitytouse thefactoryequipment
toproduceanotherproductthatisestimatedtohaveacontributionmarginof$19,000
Instructions
Prepareanincrementalanalysisforthismakeorbuydecision.Shouldthecomponentbemadeor purchased?
Aug 29, 2021 | Uncategorized
Wiset Company completes these transactions during April of the current year (the terms of all its credit sales are 2/10, n/30).
Apr. 2
Purchased $14,500 of merchandise on credit from Noth Company, invoice dated April 2, terms 2/10, n/60.
3 Sold merchandise on credit to Brooke Page Alistair, Invoice No. 760, for $5,100 (cost is $2,100).
3
Purchased $1,480 of office supplies on credit from Custer, Inc. Invoice dated April 2, terms n/10 EOM.
4 Issued Check No. 587 to World View for advertising expense, $927.
5 Sold merchandise on credit to Paula Kohr, Invoice No. 761, for $8,400 (cost is $7,600).
6
Received an $95 credit memorandum from Custer, Inc., for the return of some of the office supplies received on April 3.
9
Purchased $10,995 of store equipment on credit from Hal s Supply, invoice dated April 9, terms n/10 EOM.
11 Sold merchandise on credit to Nic Nelson, Invoice No. 762, for $13,200 (cost is $7,500).
12 Issued Check No. 588 to Noth Company in payment of its April 2 invoice, less the discount.
13 Received payment from Page Alistair for the April 3 sale, less the discount.
13 Sold $8,500 of merchandise on credit to Page Alistair (cost is $4,300), Invoice No. 763.
14 Received payment from Paula Kohr for the April 5 sale, less the discount.
16
Issued Check No. 589, payable to Payroll, in payment of sales salaries expense for the first half of the month, $9,200. Cashed the check and paid employees.
16
Cash sales for the first half of the month are $61,990 (cost is $41,200). (Cash sales are recorded daily from cash register data but are recorded only twice in this problem to reduce repetitive entries.)
17
Purchased $11,200 of merchandise on credit from Grant Company, invoice dated April 17, terms 2/10, n/30.
18 Borrowed $58,000 cash from First State Bank by signing a long-term note payable.
20 Received payment from Nic Nelson for the April 11 sale, less the discount.
20
Purchased $970 of store supplies on credit from Hal s Supply, invoice dated April 19, terms n/10 EOM.
23
Received a $800 credit memorandum from Grant Company for the return of defective merchandise received on April 17.
23
Received payment from Page Alistair for the April 13 sale, less the discount.
25
Purchased $11,290 of merchandise on credit from Noth Company, invoice dated April 24, terms 2/10, n/60.
26
Issued Check No. 590 to Grant Company in payment of its April 17 invoice, less the return and the discount.
27 Sold $3,080 of merchandise on credit to Paula Kohr, Invoice No. 764 (cost is $2,640).
27 Sold $9,700 of merchandise on credit to Nic Nelson, Invoice No. 765 (cost is $5,110).
30
Issued Check No. 591, payable to Payroll, in payment of the sales salaries expense for the last half of the month, $9,200.
30 Cash sales for the last half of the month are $78,100 (cost is $65,200).
Assume that Wiset Co. uses the perpetual inventory system.
Prepare Journal entries.
Aug 29, 2021 | Uncategorized
Question 1 –
Weighted Average Cost of Capital (WACC). The target capital structure for QM Industries is 35% common stock 9% preferred stock, and 56% debt. If the cost of common equity for the firm is 17.5%, the cost of preferred stock is 9.6%, the before tax cost of debt is 8.8%, and the firm’s tax rate is 35%, what is QM’s Weighted Average Cost of Capital?
QM’s WACC is _____% (round to three decimal places
Question 2 –
3The target capital structure for Jowers Manufacturing is 50% common stock 15% preferred stock and 35% debt. If the cost of common equity for the firm is 19.4%, the cost of preferred stock is 12.4%, and the before tax cost of debt is 10.1%. What is Jowers cost of capital? The firm’s tax rate is 34%.
Aug 29, 2021 | Uncategorized
ACC202 Week 3 E14-2 E14-7 E14-13 E14-15 P14-16 P14-18 P14-20
14-2 PREPARING A SALES BUDGET
Welch Company, which expects to start operations on January 1, 2011, will sell digital cameras in shopping malls. Welch had budgeted sales as indicated in the following table…..
14-7 PREPARIN AN INVENTORY PURCHASE BUDGET
Naftel Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget.
14-13 PREPARING A CASH BUDGET
The accountant for Teresa s Dress Shop prepared the following cash budget. Teresa s desires to maintain a cash cushion of $14,000 at the end of the month
14-15 PREPARING PRO FORMA INCOME STATEMENTS WITH DIFFERENT ASSUMPTIONS
Norman Jelen, the controller of Wing Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow
14-16 PREPARING A SALES BUDGET AND SCHEDULE OF CASH RECEIPTS
McCarty Pointers Inc., expects to begin operations on January 1, 2012; it will operate as a specialty sales company that sells laser pointers over the Internet
14-18 PREPARING PRO FORMA INCOME STATEMENTS WITH DIFFERENT ASSUMPTIONS
Top executive officers of Zottoli Company, merchandising firm, are preparing the next year s budget controller has provided everyone with the current year s projected income
14-20 PREPARING A CASH BUDGET
Kinnion Medical Clinic has budgeted the following cash flows.
Aug 29, 2021 | Uncategorized
Week Three Exercise Assignment
Inventory
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.
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Painting
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Cost
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1/2 Beginning inventory
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Woods
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$11,000
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4/19 Purchase
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Sunset
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21,800
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6/7 Purchase
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Earth
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31,200
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12/16 Purchase
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Moon
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4,000
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|
|
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Woodsand Moonwere sold during the year for a total of $35,000. Determine the firm s
a. cost of goods sold.
b. gross profit.
c. ending inventory.
2. Inventory valuation methods: basic computations. The January beginning inven tory of the White Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
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FIFO
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LIFO
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Weighted Average
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|
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Goods available for sale
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$
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$
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$
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Ending inventory, March 31
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Cost of goods sold
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|
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|
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|
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3.Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:
1/2/20X3 Purchases on account: 500 units @$4 = $2,000
1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
1/20/20X3 Purchases on Account: 200 units @ $5 = $1,000
1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.
a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO.
b. Calculate the balance in the firm s Inventory account under each method.
c. Briefly explain the absence of the Purchases account to the company president.
4.Inventory valuation methods: computations and concepts. Wave Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:
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1/3:
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100 boards @$125
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3/17:
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50 boards @ $130
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5/9:
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246 boards @ $140
|
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7/3:
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400 boards @ $150
|
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10/23:
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74 boards @$160
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Wave Riders sold 710 boards at an average price of $250 per board. The company uses a periodic inventory system.
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
First-in, first-out
Last-in, first-out
Weighted average
b. Which of the three methods would be chosen if management s goal is to
(1) produce an up-to-date inventory valuation on the balance sheet?
(2) show the lowest net income for tax purposes?
5. Depreciation methods.Betsy Ross Enterprises purchased a delivery van for $30,000 in January 20X7. The van was estimated to have a service life of 5 years and a resid ual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:
a. Units-of-output, assuming 17,000 miles were driven during 20X8
b. Straight-line
c. Double-declining-balance
6. Depreciation computations.Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $1,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:
a. The machine s book value on December 31, 20X5, assuming use of the straight-line depreciation method.
b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.
c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.
7. Depreciation computations: change in estimate.Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.
Instructions
a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.
b. On January 1, 20X5, management shortened the remaining service life of the machine to 20 months. Assuming use of the straight-line method, compute the company s depreciation expense for 20X5.
c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000. In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.
Aug 29, 2021 | Uncategorized
1. The Wendt Corporation had $10.5 million of taxable income.
a. What is the company s federal income tax bill for the year?
b. Assume the firm receives an additional $1 million of interest income from some bonds it owns. What is the tax on this interest income?
c. Now assume that Wendt does not receive the interest income but does receive an additional $1 million as dividends on some stock it owns. What is the tax on this dividend income?
2. Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on equity equal to
20%. What is the company s total assets turnover? What is the firm s equity multiplier?
3. Complete the balance sheet and sales information in the table that follows for J. White
Industries using the following financial data:
Total assets turnover: 1.5
Gross profit margin on sales: (Sales Cost of goods sold)/Sales = 25%
Total liabilities-to-assets ratio: 40%
Quick ratio: 0.80 Days sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.75
Partial Income Statement Information
Sales _______
Cost of goods sold _______
Balance Sheet
Cash _______ Accounts payable ______
Accounts receivable _______ Long-term debt 50,000
Inventories _______ Common stock ______
Fixed assets _______ Retained earnings 100,000
Total assets $400,000 Total liabilities and equity ________
Aug 29, 2021 | Uncategorized
Wenner Furnace Corp. purchased machinery for $279,000 on May 1, 2010. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2011 Wenner Corp. uses the machinery for 2,650 hours, and the machinery produces 25,500 units.
From the information given, compute the depreciation charge for 2011 under each of the following methods:
(a) Straight-line. $
(b) Units-of-output. (Round depreciation cost per unit to 2 decimal places, i.e. 12.25 and and final answer to 0 decimal places, i.e. 25,240.) $
(c) Working hours. $
(d) Sum-of-the-years’-digits. $
(e) Declining-balance (use 20% as the annual rate).
Aug 29, 2021 | Uncategorized
Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you.
1. Werth uses the periodic method of recording inventory. A physical count reveals $234,890 of inventory on hand at December 31, 2010.
2. Not included in the physical count of inventory is $10,420 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31.
3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $12,800 on December 31. The merchandise cost $7,350, and Bubbey received it on January 3.
4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $15,630. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded.
5. Not included in inventory is $8,540 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30.
6. Included in inventory was $10,438 of inventory held by Werth on consignment from Jackel Industries.
7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $18,900 on December 31. The cost of this merchandise was $11,520, and Sims received the merchandise on January 5.
8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $1,500 which had been sold to a customer for $2,600. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(a)Determine the proper inventory balance for Werth Company at December 31, 2010.
$
(b)Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed.
(To reverse sale entry in 2010.)
(To record purchase of merchandise in 2010.)
(To record merchandise returned.)
Aug 29, 2021 | Uncategorized
he condensed financial statements of Westward Corporation for 2006 are presented below.
Westward Corporation Westward Corporation
Balance Sheet Income Statement
December 31, 2006 For the Year Ended December 31, 2006
Assets Revenues $2,000,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,080,000
investments $ 30,000 Selling and administrative
Accounts receivable 70,000 expenses 495,000
Inventories 120,000 Interest expense 30,000
Total current assets 220,000 Total expenses 1,605,000
Property, plant, and Income before income taxes 395,000
equipment (net) 780,000 Income tax expense 140,000
Total assets $1,000,000 Net income $ 255,000
Liabilities and Stockholders’ Equity
Current liabilities $ 80,000
Long-term liabilities 300,000
Common stockholders’ equity 620,000
Total liabilities and
stockholders’ equity $1,000,000
Westward Corporation Westward Corporation
Balance Sheet Income Statement
December 31, 2005 For the Year Ended December 31, 2005
Assets Revenues $2,500,000
Current assets Expenses
Cash and temporary Cost of goods sold 1,750,000
investments $ 40,000 Selling and administrative
Accounts receivable 90,000 expenses 500,000
Inventories 150,000 Interest expense 30,000
Total current assets 280,000 Total expenses 2,280,000
Property, plant, and Income before income taxes 220,000
equipment (net) 800,000 Income tax expense 77,000
Total assets $1,080,000 Net income $ 143,000
Liabilities and Stockholders’ Equity
Current liabilities $ 140,000
Long-term liabilities 320,000
Common stockholders’ equity 620,000
Total liabilities and
stockholders’ equity $1,080,000
2. Perform horizontal and vertical analysis on Westward both income statement and balance sheet, show your results.
3. Assess the financial performance of Westward, given the analysis tools used above.
Aug 29, 2021 | Uncategorized
TASK 1 FINANCIAL STATEMENT ANALYSIS AND CONTROLS
Requirements for Task 1:
A. Prepare a summary report in which you do the following:
1. Evaluate the company s operational strengths and weaknesses based on the following:
a. Review the horizontal analysis, analyze the results, and discuss operational areas of concern.
b. Review the vertical analysis, analyze the results, and discuss operational areas of concern.
c. Review the trend analysis, analyze the results, and discuss operational areas of concern.
d. Review the ratio analysis, analyze the results, and discuss operational areas of concern.
2. Analyze the working capital of Competition Bikes, Inc. Consider the following in your analysis:
a. Ways to improve the working capital
b. Ways to use excess working capital to generate an increase in profits
3. Evaluate the internal controls for the Competition Bikes, Inc. purchasing system.
a. Recommend corrective actions for any weaknesses.
b. Identify the risks to the company.
i. Discuss how to mitigate the risks arising from internal control weaknesses.
4. Analyze compliance with Sarbanes-Oxley requirements.
a. Recommend corrective actions for noncompliant areas
Aug 29, 2021 | Uncategorized
SUBDOMAIN 326.1 – MANAGING INTERNAL COST & CONTROLLING FINANCES
Competency 326.1.5: Budgets – The graduate utilizes budgets and a variety of pro-forma statements for planning and control purposes, including analyzing cash flows to assure adequacy of funds for capitalizing on business opportunities.
Introduction:
In this task, you will use the attached Competition Bikes Inc. Storyline” to review various budgets and budget planning for the company and provide your analysis and recommendations.
Task:
Note: Be sure to submit a copy of your Excel workbook when submitting your JET2 Task 2 work. The evaluator will need a copy of your data to ensure correct evaluation.
A. Prepare a summary report in which you do the following:
1. Discuss specific budgetary items that raise concern in the budget planning (Spreadsheet Tab: Task 2_Budgets_and_Proformas).
2. Evaluate the flexible budget and its variances (Spreadsheet Tab: Task_2_Budget_Variances).
a. Recommend corrective actions for areas of concern based on a variance analysis.
b. Discuss how the concept of management by exception could be applied to the variances.
B. When you use sources, include all in-text citations and references in APA format.
WG
Aug 29, 2021 | Uncategorized
JGT2 Decision Analysis Task 1, 2, 3, 4
JGT2 Decision Analysis Task 1
SUBDOMAIN 326.3 EVALUATING ECONOMICS OF MANAGEMENT DECISIONS
SUBDOMAIN 327.3 DEVELOPING & MAINTAINING QUALITY
SUBDOMAIN 329.4 MANAGING OPERATIONS
Competencies:
326.3.1: Decision Analysis The graduate analyzes risks and values and uses a variety of decision analysis tools and decision theory to evaluate alternatives during decision-making processes.
327.3.2: Metrics and Tools The graduate analyzes how work is accomplished and applies quality metrics and tools to increase efficiency, effectiveness, and quality.
329.4.1: Operational Design The graduate combines capacity, process, layout, and location strategies.
329.4.2: Process Analysis and Planning The graduate utilizes process and methods analysis, measurement techniques, and scheduling concepts to design the work environment and plan labor requirements.
329.4.3: Operating Efficiency The graduate employs just-in-time, lean systems, and constraint management concepts and scheduling methods to improve operating efficiency.
Introduction:
For this task, you will use the Shuzworld case study (see Web Links section below). As the operations consultant for Shuzworld, you have been asked to provide recommendations after you analyze the problems given in the task prompts, applying the appropriate decision analysis tool to help you with your recommendations.
Task:
Prepare a memo by doing the following:
A. Recommend how to improve the current workflow in the plant.
1. Justify your recommendation through a quantitative analysis, utilizing the appropriate decision analysis tool.
a. Submit a copy of the output from your decision analysis tool of choice.
i. Explain why you chose the decision analysis tool you used.
B. Analyze the initial and ongoing costs needed for the new sandal line being introduced, utilizing the appropriate decision analysis tool.
1. Discuss the impact of costs on the decision to continue producing the new line.
2. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
C. Recommend a staffing plan for the assignment of machine operators on a manufacturing shift at the Shuzworld Shanghai plant that will increase cost-effectiveness, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
D. Outline short-term scheduling techniques and rules that can be used to achieve efficient movement of units through Shuzworld s production systems.
E. If you use sources, include all in-text citations and references in APA format.
JGT2 Decision Analysis Task 2
SUBDOMAIN 326.3 EVALUATING ECONOMICS OF MANAGEMENT DECISIONS
SUBDOMAIN 327.3 DEVELOPING & MAINTAINING QUALITY
SUBDOMAIN 329.4 MANAGING OPERATIONS
Competencies:
326.3.1:Decision Analysis Tools The graduate analyzes risks and values and uses a variety of decision analysis tools and decision theory to evaluate alternatives during decision-making processes.
327.3.2: Metrics and Tools The graduate analyzes how work is accomplished and applies quality metrics and tools to increase efficiency, effectiveness, and quality.
329.4.3: Operating Efficiency The graduate employs just-in-time, lean systems, and constraint management concepts and scheduling methods to improve operating efficiency.
329.4.5: Requirements Planning The graduate applies operations and requirements planning and inventory management concepts to achieve operating objectives.
Introduction:
For this task, you will use the Shuzworld case study (see Web Links section below). As the operations consultant for Shuzworld, you will prepare a memo for your boss with your analysis and recommended solutions to the problems presented in the task. Each problem will most likely be solved using a different decision analysis tool.
Task:
A. Develop a distribution pattern that meets availability and demand constraints and minimizes total shipping costs for Shuzworld, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
B. Analyze the reliability of the computer-driven shoe machines process in the Shuzworld Shanghai plant.
1. Recommend ways to increase the reliability of the system, utilizing the appropriate decision analysis tool.
2. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used
C. Provide the optimum number of shoelaces to order for the Shuzworld Factory, considering appropriate cost balancing, utilizing the appropriate decision analysis tool.
1. Explain how an economic order quantity amount relates to the problem.
2. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
D. Compare the characteristics (e.g., number of customers waiting, waiting time, total checkout time) of one-cashier and two-cashier waiting-line systems.
1. Recommend a one-cashier or two-cashier waiting line system, utilizing the appropriate decision analysis tool.
2. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
E. If you use sources, include all in-text citations and references in APA format.
JGT2 Decision Analysis Task 3
SUBDOMAIN 326.3 EVALUATING ECONOMICS OF MANAGEMENT DECISIONS
SUBDOMAIN 327.3 DEVELOPING & MAINTAINING QUALITY
SUBDOMAIN 329.5 USING INFORMATION SYSTEMS FOR COMPETITIVE ADVANTAGE
Competencies:
326.3.1: Decision Analysis The graduate analyzes risks and values and uses a variety of decision analysis tools and decision theory to evaluate alternatives during decision-making processes.
326.3.3: Decision Strategies The graduate evaluates decision methods and develops strategies for organizational decision processes.
327.3.2: Metrics and Tools The graduate analyzes how work is accomplished and applies quality metrics and tools to increase efficiency, effectiveness, and quality.
329.5.2: Intelligence Systems and Knowledge Management Systems The graduate analyzes data from analytical and intelligence systems and knowledge management systems and uses the results to make recommendations to business decision makers.
Introduction:
For this task, you will use the Shuzworld case study (see Web Links section below). You will need to read the entire case study to be able to complete this task correctly.
Task:
Prepare a memo to your boss in which you do the following:
A. Recommend which method (i.e., using reconditioned equipment, purchasing new equipment in its Shanghai plant, or outsourcing to another manufacturing operation) Shuzworld should use for the manufacturing of its sneakers, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
B. Develop a sales volume forecast using the least squares method and one other forecasting method.
1. Submit a copy of the output from the decision analysis tools you used.
2. Compare the results between the two methods you used.
C. Discuss how to apply control chart metrics to improve quality in the Shuzworld production line.
D. If you use sources, include all in-text citations and references in APA format.
JGT2 Decision Analysis Task 4
SUBDOMAIN 326.3 EVALUATING ECONOMICS OF MANAGEMENT DECISIONS
SUBDOMAIN 329.4 MANAGING OPERATIONS
Competencies:
326.3.1: Decision Analysis The graduate analyzes risks and values and uses a variety of decision analysis tools and decision theory to evaluate alternatives during decision-making processes.
326.3.2: Mathematical Programming The graduate utilizes mathematical programming to identify optimum or overall-best decision alternatives.
326.3.3: Decision Strategies The graduate evaluates decision methods and develops strategies for organizational decision processes.
329.4.2: Process Analysis and Planning The graduate utilizes process and methods analysis, measurement techniques, and scheduling concepts to design the work environment and plan labor requirements.
329.4.3: Operating Efficiency The graduate employs just-in-time, lean systems, and constraint management concepts and scheduling methods to improve operating efficiency.
Introduction:
For this task, you will use the Shuzworld case study (see Web Links section below). You will need to read the entire case study to be able to complete this task correctly.
Scenario:
As the operations consultant for Shuzworld, you have been asked to provide recommendations after analyzing the following problems and applying the appropriate decision analysis tool to help you with your recommendation.
You have been asked to look at the data used to determine the various costs of building a new stand-alone store, building one in a strip mall, or not building one at all.
In addition, there is a store already under construction that must be built in time for the planned grand opening. It is currently behind schedule. It would be better to run over costs than to be late in finishing.
For this task, you will prepare a multimedia presentation (e.g., PowerPoint, Keynote) with speaker notes to present your analysis and recommend solutions to the problems presented in the following tasks. Senior management will be interested in understanding why you chose the decision analysis tool you did to develop your recommendations.
Task:
Create a multimedia presentation (e.g., PowerPoint, Keynote) in which you do the following:
Note: The slides in your presentation should include only the main points you wish to make, with more extensive information included in the presenter notes section of the presentation.
A. Recommend whether Shuzworld should build the proposed stand-alone store, the strip mall store, or not proceed with construction, utilizing the appropriate decision analysis tool.
1. Submit a copy of the output from your decision analysis tool of choice.
a. Explain why you chose the decision analysis tool you used.
2. Discuss two important factors that Shuzworld should consider while evaluating location alternatives for a new store.
B. Recommend project techniques that can be used with the construction project plan for the store being built.
1. Present a network diagram indicating the critical path.
C. Evaluate the trade-offs of allocating production line workers to minimize production costs.
1. Recommend a production mix that maximizes profits for Shuzworld s Shanghai plant, utilizing the appropriate decision analysis tool.
a. Submit a copy of the output from your decision analysis tool of choice.
i. Explain why you chose the decision analysis tool you used.
D. Evaluate Shuzworld s reordering practices at the Baltimore store, utilizing the results of a Monte Carlo simulation.
E. Discuss ways to give Shuzworld a competitive advantage by doing the following:
1. Recommend a human resources strategy to improve employee efficiency and effectiveness in the operations segments of Shuzworld.
2. Discuss applicable operations management philosophies that focus on reducing waste and increasing efficiency in Shuzworld s production processes.
F. If you use sources, include all in-text citations and references in APA format.
Aug 29, 2021 | Uncategorized
WGU RJFT/ JFT 2 TASK 1
A1) Illustrate how Bill Bailey, chairman of the board of the Utah Opera Organization might use ONE theory of motivation to oppose or support the merger.
A2) Illustrate how Scott Parker, chairman of the board of the Utah Symphony Organization, might use ONE theory of motivation to convince Mrs. Abravanel to support the merger.
A3) Describe Anne s positional power in relation to her personal power
A3a) Discuss how Anne could use her positional power to effectively lead the merger efforts.
A3b) Discuss how Anne could use her personal power to empower Keith Lockhart.
A4) Present a potential issue with the musicians that, if not resolved, would jeopardize the continuing organizational performance. A) Recommend how Anne could deal with the issue
A5) Discuss influence tactics Anne could use to persuade the opera s full-time staff and artists under contract to endorse the merger.
Aug 29, 2021 | Uncategorized
Organizational Management
Introduction:
In this task, you will analyze the Utah Symphony and Utah Opera: A Merger Proposal case study. You will develop a proposed action plan for the new leader, Anne Ewers, to help her in the development of a new strategy to measure the success of the ongoing merger process. The strategic goals for the first year of the merger include the following:
Integrate the business processes of the two companies
Reduce overall expenses as a percentage to profit
Retain key employees
Maintain audience base for both the Utah Opera and the Utah Symphony
Identify and pursue synergistic opportunities between the two companies
Task:
A. Develop an action plan for Anne Ewers by doing the following:
1. Analyze the financial and leadership strengths and weaknesses of the Utah Symphony before the merger.
a. Recommend the key steps Anne should take to address these weaknesses to ensure a successful start of the merger.
2. Analyze the financial and leadership strengths and weaknesses of the Utah Opera before the merger.
a. Recommend the key steps Anne should take to address these weaknesses to ensure a successful start of the merger.
3. Analyze the four aspects of the scorecard from the attached Business Scorecards for each company. Consider the following in your analysis:
How do these scorecards represent the differing cultures and visions of the companies?
Do the scorecards address the strengths and weaknesses you noted, and, if not, should they?
B. Develop a balanced scorecard for the merged company based on the specified strategic goals.
C. Analyze the strengths and weaknesses of the proposed merged company, addressing the four aspects of the scorecard you developed in part B.
D. Identify one highly probable issue that could arise during the merger process for each of the following areas:
Finance
Human resources
Customer satisfaction
1. Recommend mitigating actions that the new merged company executive could take.
E. If you use sources, include all in-text citations and references in APA format.
Aug 29, 2021 | Uncategorized
Master’s Level Organizational Management 3
In this task, you will develop a presentation with recommendations to the combined board of directors on key aspects of the merger process in Utah Symphony and Utah Opera: A Merger Proposal case study. The presentation will encompass the coming year s strategic goals, assuming the merger happens.
The strategic goals for the first year include the following:
Integrate the business process of the two companies
Reduce overall expenses as a percentage of profit
Retain key employees
Maintain audience base for both the opera and the symphony
Identify and pursue synergistic opportunities between the two companies
Task:
Prepare a multimedia presentation (e.g., PowerPoint, Keynote) (suggested length of 12 15 slides) in which you do the following:
Note: The slides in your presentation should include only the main points you wish to make, with more extensive information included in the presenter notes section of the presentation. Include slides that explain the objective of the presentation and lead the audience to the desired conclusion.
A. Compare the cultures of the two companies using the relevant values in the attached Competing Values Framework.
Note: It is not necessary to address each value individually. Rather, use the relevant values from the framework to draw a contrast between the two companies.
1. Compare how the organizational structure of each company differs in terms of distribution of authority and decision making.
2. Discuss what key factors will be critical in the new company s culture to best ensure it supports the first-year strategic goals.
B. Propose an audience strategy for Anne Ewers to use when preparing to speak with the opera contractors and orchestra employees.
1. Prepare a message strategy for Anne to use to best ensure key members of the opera contractors and the orchestra employees are retained.
C. Recommend two technology tools that can be used after the merger to help the companies merge their administrative technology applications.
1. Map the implementation of these tools to the company s strategic goals.
D. Include presenter notes for each slide.
Note: Presenter notes may be included either in the notes section of your presentation or may be in a word-processing document.
E. If you use sources, include all in-text citations and references in APA format
Aug 29, 2021 | Uncategorized
ABC Company enters into a lease agreement with XYZ Corporation for laser tech machines. The lease agreement qualifies as an operating lease. However, there is one thing that stands out. There is a bargain-purchase option. After the 3-year lease term, each laser tech machine can be purchased for $500, even though the market value is $850.
You are the controller of ABC Company. You feel that the machine should be recorded as a capital lease because of the bargain-purchase option. Your manager, Martha, feels that at the end of the 3-year term, the laser tech will not be worth $500 because of rapid advances in technology.
- What is the ethical issue?
- What should you, the controller, do?
- What are the generally accepted accounting principles (GAAP) for reporting a lease as a capital lease?
REQUIREMENTS:
1.) between 400-600 words
2.) original
Aug 29, 2021 | Uncategorized
Question 1 of 20 5.0 Points
What is a milestone?
A. A significant event in the project
B. A mark on a chart that depicts project progress
C. An activity on the critical path
D. An activity with an uncertain completion time
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Question 2 of 20 5.0 Points
What is project slack?
A. The amount of time a non-critical task can be delayed without making the project late
B. The amount of time the critical path of a project can be delayed without making the project late
C. The amount of time an activity on the critical path can be delayed without making the project late
D. The difference between how long the project would take if all tasks were completed based on their pessimistic versus optimistic time estimates
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Question 3 of 20 5.0 Points
For which purpose is simulation NOT used with regard to project scheduling?
A. To overcome the limitations associated with statistical techniques used to develop probability of completion time estimates
B. To investigate the range of project completion times
C. To investigate the distribution of project completion times
D. To verify the accuracy of the optimistic, pessimistic, and most likely time estimates
Question 4 of 20 5.0 Points
Technical dependencies on a project plan are easiest to see on a:
A. Gantt chart.
B. GERT chart.
C. PERT/CPM chart.
D. Work Breakdown Structure.
Question 5 of 20 5.0 Points
PERT was originally used for what type of project?
A. Construction
B. R & D
C. Military
D. Computer software development
Question 6 of 20 5.0 Points
Which of the following is NOT an element of the Gantt chart?
A. Actual progress
B. Variance of the critical path
C. The current date
D. Scheduled milestones
Question 7 of 20 5.0 Points
Which of the following is typically used as the best estimate of task duration?
A. Expected time
B. Pessimistic time
C. Optimistic time
D. Most likely time
Question 8 of 20 5.0 Points
Which of the following terms is most closely associated with a task required by the project?
A. Activity
B. Event
C. Milestone
D. Network
Question 9 of 20 5.0 Points
What is the expected time to complete a task with optimistic, most likely, and pessimistic times of 3, 4, and 7 days, respectively?
A. 3
B. 4
C. 4.3
D. 4.7
Question 10 of 20 5.0 Points
What is the standard deviation of a task with optimistic, most likely, and pessimistic times of 3, 4, and 7 days, respectively, assuming the estimates were made at the 99% plus level?
A. .444
B. .667
C. 1.212
D. 1.469
Question 11 of 20 5.0 Points
The amount of time a noncritical task can be delayed without delaying the project is called:
A. surplus.
B. flop.
C. slack.
D. critical time.
Question 12 of 20 5.0 Points
Slack is calculated as:
A. LFT EST.
B. LFT LST.
C. LST LFT.
D. LFT EFT.
Question 13 of 20 5.0 Points
Which of the following linkages is used to start two or more activities at the same time?
A. Finish-to-start
B. Start-to-start
C. Finish-to-finish
D. Start-to-finish
Question 14 of 20 5.0 Points
One shortcoming of the __________ network method is that it does not allow for leads and lags between two activities without greatly increasing the number of subactivities to account for this.
A. Gantt Chart
B. AON
C. MSP
D. PERT/CPM
Question 15 of 20 5.0 Points
An identifiable state resulting from the completion of one or more activities is called:
A. an event.
B. an activity.
C. a milestone.
D. a path.
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Question 16 of 20 5.0 Points
The major advantage of the Gantt chart is that it:
A. addresses all activities.
B. is easy to read.
C. highlights critical task of the project.
D. manages project scheduling.
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Question 17 of 20 5.0 Points
A(n) __________ is an identifiable state resulting from the completion of one or more activities.
A. path
B. milestone
C. critical path
D. event
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Question 18 of 20 5.0 Points
For any task on a critical path, its __________ must be the same as its __________.
A. LST; LFT
B. LFT; EFT
C. LST; EST
D. EST; EFT
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Question 19 of 20 5.0 Points
The amount of time a noncritical task can be delayed without delaying the project is called:
A. margin.
B. completion variance.
C. float.
D. variable duration.
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Question 20 of 20 5.0 Points
The square root of the variance of statistical distribution equals the __________ of that distribution.
A. standard deviation
B. normal probability
C. variance of the path
D. cumulative probability
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Aug 29, 2021 | Uncategorized
As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term investment opportunities.
You have agreed to provide a detailed report illustrating the use of several techniques for evaluating capital projects including the weighted average cost of capital to the firm, the anticipated cash flows for the projects, and the methods used for project selection. In addition, you have been asked to evaluate two projects, incorporating risk into the calculations.
You have also agreed to provide an 8-10 page report, in good form, with detailed explanation of your methodology, findings, and recommendations.
Company Information
Wheel Industries is considering a three-year expansion project, Project A. The project requires an initial investment of $1.5 million. The project will use the straight-line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million per year before tax and has additional annual costs of $600,000. The Marginal Tax rate is 35%.
Required:
Wheel has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of six percent per year forever. If the stock is currently selling for $50 per share with a 10% flotation cost, what is the cost of new equity for the firm? What are the advantages and disadvantages of using this type of financing for the firm?
The firm is considering using debt in its capital structure. If the market rate of 5% is appropriate for debt of this kind, what is the after tax cost of debt for the company? What are the advantages and disadvantages of using this type of financing for the firm?
The firm has decided on a capital structure consisting of 30% debt and 70% new common stock. Calculate the WACC and explain how it is used in the capital budgeting process.
Calculate the after tax cash flows for the project for each year. Explain the methods used in your calculations.
If the discount rate were 6 percent calculate the NPV of the project. Is this an economically acceptable project to undertake? Why or why not?
Now calculate the IRR for the project. Is this an acceptable project? Why or why not? Is there a conflict between your answer to part C? Explain why or why not?
Wheel has two other possible investment opportunities, which are mutually exclusive, and independent of Investment A above. Both investments will cost $120,000 and have a life of 6 years. The after tax cash flows are expected to be the same over the six year life for both projects, and the probabilities for each year’s after tax cash flow is given in the table below.
Investment B Investment C
Probability After Tax Cash Flow Probability After Tax Cash Flow
0.25 $20,000 0.30 $22,000
0.50 32,000 0.50 40,000
0.25 40,000 0.20 50,000
What is the expected value of each project s annual after tax cash flow? Justify your answers and identify any conflicts between the IRR and the NPV and explain why these conflicts may occur.
Assuming that the appropriate discount rate for projects of this risk level is 8%, what is the risk-adjusted NPV for each project? Which project, if either, should be selected? Justify your conclusions.
Aug 29, 2021 | Uncategorized
As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term investment opportunities. You have agreed to provide a detailed report illustrating the use of several techniques for evaluating capital projects including the weighted average cost of capital to the firm, the anticipated cash flows for the projects, and the methods used for project selection. In addition, you have been asked to evaluate two projects, incorporating risk into the calculations.
You have also agreed to provide an 8-10 page report, in good form, with detailed explanation of your methodology, findings, and recommendations.
Company Information
Wheel Industries is considering a three-year expansion project, Project A. The project requires an initial investment of $1.5 million. The project will use the straight-line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million per year before tax and has additional annual costs of $600,000. The Marginal Tax rate is 35%.
Required:
A.Wheel has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of six percent per year forever. If the stock is currently selling for $50 per share with a 10% flotation cost, what is the cost of new equity for the firm? What are the advantages and disadvantages of using this type of financing for the firm?
B.The firm is considering using debt in its capital structure. If the market rate of 5% is appropriate for debt of this kind, what is the after tax cost of debt for the company? What are the advantages and disadvantages of using this type of financing for the firm?
C.The firm has decided on a capital structure consisting of 30% debt and 70% new common stock. Calculate the WACC and explain how it is used in the capital budgeting process.
D.Calculate the after tax cash flows for the project for each year. Explain the methods used in your calculations.
E.If the discount rate were 6 percent calculate the NPV of the project. Is this an economically acceptable project to undertake? Why or why not?
F.Now calculate the IRR for the project. Is this an acceptable project? Why or why not? Is there a conflict between your answer to part C? Explain why or why not?
Wheel has two other possible investment opportunities, which are mutually exclusive, and independent of Investment A above. Both investments will cost $120,000 and have a life of 6 years. The after tax cash flows are expected to be the same over the six year life for both projects, and the probabilities for each year’s after tax cash flow is given in the table below.
Investment B
Investment C
Probability
After Tax
Cash Flow
Probability
After Tax
Cash Flow
0.25
$20,000
0.30
$22,000
0.50
32,000
0.50
40,000
0.25
40,000
0.20
50,000
G.What is the expected value of each project s annual after tax cash flow? Justify your answers and identify any conflicts between the IRR and the NPV and explain why these conflicts may occur.
H.Assuming that the appropriate discount rate for projects of this risk level is 8%, what is the risk-adjusted NPV for each project? Which project, if either, should be selected? Justify your conclusions.
Turn in your completed work to the M5: Assignment 1 Dropbox by Saturday, December 7, 2013.
Assignment 1 Grading Criteria
Maximum Points
Correctly calculated the cost of new equity and explained the calculations, as well as the advantages and disadvantages of using this type of financing for the firm. (CO4)
20
Correctly calculated the cost of new debt and explained the calculations, as well as the advantages and disadvantages of using this type of financing for the firm. (CO4)
20
Correctly calculated the weighted average cost of capital and explained how and why it is used in the capital budgeting process. (CO4)
20
Correctly calculated the annual cash flows for the projects and explained the methods used in the calculations. (CO1)
44
Evaluated the projects using the NPV method and came to the correct conclusions based on the decision rules for the NPV. (CO2)
44
Evaluated the projects using the IRR method and came to the correct conclusion based on the decision rules for the IRR. Identified any conflicts between the IRR and the NPV and explained why these conflicts may occur. (CO 3)
44
Correctly introduced risk into the evaluation by using the expected values as the cash flows and evaluated these cash flows using risk adjusted discounted rates. (CO 5)
44
Written in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation.
64
Total:
300
Aug 29, 2021 | Uncategorized
Which of the following is considered a hybrid organizational form?
sole proprietorship
partnership
limited liability partnership
corporation
Which of the following is a principal within the agency relationship?
the board of directors
a shareholder
a company engineer
the CEO of the firm
Which of the following presents a summary of the changes in a firm s balance sheet from the beginning of an accounting period to the end of that accounting period?
The statement of retained earnings.
The statement of net worth.
The statement of working capital.
The statement of cash flows.
Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales in inventory?
65.2 days
64.3 days
61.7 days
57.9 days
Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?
0
1.47
0.60
1.74
Which of the following is not a method of benchmarking
Identify a group of firms that compete with the company being analyzed.
Evaluating a single firm s performance over time.
Conduct an industry group analysis.
Utilize the DuPont system to analyze a firm s performance
Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)
$26,454
$16,670
$22,680
$19,444
Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows $450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)
$2,735,200
$2,815,885
$2,615,432
$2,431,224
Ajax Corp. is expecting the following cash flows $79,000, $112,000, $164,000, $84,000, and $242,000 over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
$429,560
$414,322
$480,906
$477,235
Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)
$5,233,442
$2,667,904
$1,745,600
$3,594,524
Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
40%
16%
12%
32%
Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
$923
$1,014
$972
$1,066
Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?
$12.50
$11.63
$13.50
$9.72
TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
0.90
1.90
0.11
1.11
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
The discounted payback.
The profitability index.
The internal rate of return.
The modified internal rate of return
The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?
33%
50%
70%
30%
Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm’s growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?
15.36%
15.00%
12.00%
14.65%
If a company’s weighted average cost of capital is less than the required return on equity, then the firm:
Must have preferred stock in its capital structure
Is financed with more than 50% debt
Has debt in its capital structure
Is perceived to be safe
A firm’s capital structure is the mix of financial securities used to finance its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock
Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?
$375
$600
$321
$225
Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
$1,334 million
$1,787 million
$453.6 million
$1,315 million
Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
30.3%
25.1%
27.3%
32.9%
Which of the following cannot be engaged in managing the business?
a limited partner
a sole proprietor
a general partner
none of these
Which of the following does maximizing shareholder wealth not usually account for?
Risk.
Amount of Cash flows.
Government regulation.
The timing of cash flows.
The strategic plan does NOT identify
working capital strategies.
the lines of business a firm will compete in.
major areas of investment in real assets.
future mergers, alliances, and divestitures
Firms that achieve higher growth rates without seeking external financing
none of these.
have a low plowback ratio.
are highly leveraged.
have less equity and/or are able to generate high net income leading to a high ROE.
Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm’s dividend payout ratio and retention ratio.
15%, 85%
55%, 45%
45%, 55%
85%, 15%
The cash conversion cycle
shows how long the firm keeps its inventory before selling it.
estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.
begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.
begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
You are provided the following working capital information for the Ridge Company:
Ridge Company
Account
$
Inventory
$12,890
Accounts receivable
12,800
Accounts payable
12,670
Net sales
$124,589
Cost of goods sold
99,630
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
83.5 days
38.3 days
129.9 days
46.4 days
Aug 29, 2021 | Uncategorized
1. Which of the following is not an asset:
a. Accounts Payable
b. Furnishing and Equipment
c. Supplies
d. Cash
2. Amy Co. acquired $500 worth of supplies on credit. Which of the following journal entries would be recorded?
a. Debit supplies, credit cash
b. Debit cash, credit supplies
c. Debit supplies, credit accounts payable
d. Debit accounts payable, credit supplies payable
3. Baker Company earned $10,000 revenue for services provided. Which of the following is correct?
a. Baker would credit Revenue.
b. Baker would debit Revenue.
c. Baker must first collect the revenue before recognizing it.
d. Baker would credit an asset.
4. Candy Company collected $5,000 from a customer on account. What journal entry will Candy Company record?
a. Debit cash, credit accounts receivable
b. Debit cash, credit revenue
c. Debit accounts receivable, credit revenue
d. Debit accounts receivable, credit cash
e. None of the above
5. Ernie Corporation capitalized a $20,000 automobile. Which of the following is mostly likely true?
a. Ernie recorded a liability for $20,000.
b. Ernie recorded an asset for $20,000.
c. Ernie recorded an expense for $20,000.
d. Ernie recorded revenue for $20,000.
6. Liabilities are generally classified on a balance sheet as
a. small liabilities and large liabilities.
b. present liabilities and future liabilities.
c. tangible liabilities and intangible liabilities.
d. current liabilities and long-term liabilities.
7. Office equipment is classified on the balance sheet as
a. a current asset.
b. property, plant, and equipment.
c. an intangible asset.
d. a long-term investment.
Use the following information to answer questions 8 12:
Benton Office Supplies
Balance Sheet
December 31, 2007
Cash $ 65,000 Accounts Payable $ 70,000
Prepaid Insurance 30,000 Salaries Payable 10,000
Accounts Receivable 50,000 Mortgage Payable 80,000
Inventory 70,000 Total Liabilities $160,000
Land held for investment 75,000
Land 90,000
Building $100,000 Common Stock $120,000
Less Accumulated Retained Earnings 250,000
Depreciation (20,000) 80,000 Total stockholders equity $370,000
Trademark 70,000 Total Liabilities and
Total Assets $530,000 Stockholders Equity $530,000
8. The total dollar amount of assets to be classified as current assets is
a. $290,000.
b. $215,000.
c. $180,000.
d. $145,000.
9. The total dollar amount of assets to be classified as property, plant, and equipment is
a. $320,000.
b. $170,000.
c. $245,000.
d. $190,000.
10. The total dollar amount of assets to be classified as investments is
a. $0.
b. $150,000.
c. $75,000.
d. $180,000.
11. The total amount of working capital is
a. $135,000.
b. $295,000.
c. $75,000.
d. $60,000.
12. The current ratio is
a. 1.94 : 1.
b. 1.57 : 1.
c. 3.14 : 1.
d. 2.69 : 1.
13. Which of the following is a measure of liquidity?
a. Working capital
b. Profit margin
c. Earnings per share
d. Debt to equity ratio
14. Current assets divided by current liabilities is known as the
a. working capital.
b. current ratio.
c. profit margin.
d. capital structure.
15.State the accounting equation:
a. Assets + Liabilities = Equity
b. Assets + Equity = Liabilities
c. Assets = Liabilities Equity
d. Assets = Liabilities + Equity
16.On which of the following financial statements would you expect to find revenues and expenses?
a. Balance Sheet
b. Income Statement
c. Statement of Cash Flows
d. Statement of Changes in Equity
17.On which of the following financial statements would you expect to find financing, operating, and investing activities?
a. Balance Sheet
b. Income Statement
c. Statement of Cash Flows
d. Statement of Changes in Equity
18.On which of the following financial statements would you expect to find assets, liabilities, and stockholders equity?
a. Balance Sheet
b. Income Statement
c. Statement of Cash Flows
d. Statement of Changes in Equity
19. Based on the following data, what is the amount of current assets?
Accounts payable .. $31,000
Accounts receivable .. 50,000
Cash . 15,000
Intangible assets 50,000
Inventory . 69,000
Long-term investments . 80,000
Long-term liabilities . 100,000
Marketable securities . 40,000
Notes payable . 28,000
Plant assets 670,000
Prepaid expenses .. 1,000
a. $ 96,000
b. $175,000
c. $106,000
d. $105,000
Use the following balance sheet and income statement information to answer questions 20 23:
Current assets $ 7,000 Net income $ 12,000
Current liabilities 4,000 Stockholders equity 27,000
Average assets 40,000 Total liabilities 9,000
Total assets 30,000
Average common shares outstanding was 10,000
20. What is the total amount of working capital?
a. $1,000
b. $7,000
c. $2,000
d. $3,000
21. What is the current ratio?
a. 1.75 : 1
b. 1.6 : 1
c. 0.57 : 1
d. 2 : 1
22. What is the earnings per share?
a. $3.60
b. $4.00
c. $1.20
d. $0.83
23. What is the debt to total assets?
a. 22.5 percent
b. 13 percent
c. 75 percent
d. 30 percent
24. In 2006 Fione Corporation had cash receipts of $14,000 and cash disbursements of $8,000. Their ending cash balance at December 31, 2006 was $22,000. What was their beginning cash balance?
a. $16,000
b. $20,000
c. $30,000
d. $28,000
25. The cost principle requires that when assets are acquired, they be recorded at
a. market value.
b. the amount paid for them.
c. selling price.
d. list price.
The following information applies to Questions 26 – 29.
At the beginning of 2006 Oslo Co. had the following account balances:
Assets $10,000
Liabilities 6,000
Common stock 3,000
Retained Earnings 1,000
During 2006 the following cash events occurred:
a. Provided services to customers for $8,000.
b. Repaid $2,000 of debt.
c. Owners invested an additional $3,000 in the business.
d. Incurred operating expenses of $5,000.
e. Dividends amounted to $1,000.
26. Oslo’s net income for 2006 was:
a. $1,000
b. $2,000
c. $3,000
d. $4,000
27. Total assets at the end of 2006 are:
a. $ 3,000
b. $13,000
c. $15,000
d. $18,000
28. Total liabilities at the end of 2006 are:
a. $ 0
b. $4,000
c. $6,000
d. $8,000
29. Retained earnings at the end of 2006 are:
a. $1,000
b. $2,000
c. $3,000
d. $4,000
30. The following amounts were drawn from the records of Gregory Co.: Total Assets = $1,100; Common stock = $300; Retained Earnings = $200. Based on this information, total liabilities must be equal to:
a. $300
b. $600
c. $800
d. $900
31. Hines Co. purchased land for $2,000 cash. As a result of this event:
a. Cash flow from operating activities would decrease.
b. Cash flow from investing activities would increase.
c. Cash flow from financing activities would decrease.
d. Cash flow from investing activities would decrease.
32. Which of the following is a stockholders equity item:
a. Property, Plant and Equipment
b. Accounts Payable
c. Inventory
d. Contributed Capital
33. Net Income is
a. Assets minus Liabilities
b. Revenues minus Expenses
c. Contributed Capital minus Dividends
d. Stockholders Equity minus Liabilities
34. The Injoy Corp. has assets of $20,000 and stockholders equity of $12,000. The amount of its liabilities is:
a. $8,000
b. $12,000
c. $20,000
d. $32,000
35. Jumpy Company sold merchandise for $500,000. The merchandise that it sold had a cost of $300,000. Jumpy Company has net income of:
a. $200,000
b. $300,000
c. $500,000
d. $800,000
36. Which of the following would appear in the cash flow from operations section of the statement of cash flows?
a. cash paid to suppliers and employees
b. cash paid to purchase equipment
c. cash paid on notes payable
d. cash paid for dividends
37. ___________ includes cash, equipment and inventory.
c. Stockholders Equity
b. Net Income
c. Revenues
d. Assets
Aug 29, 2021 | Uncategorized
Question 1 of 20
5.0 Points
Which statement is NOT correct about the business-government-society interdependence?
A. Most business actions impact others in society.
B. Few governmental actions have a direct or indirect impact on business.
C. Business and government continuously affect all segments of the general public.
D. It demands that managers acquire a conceptual understanding of these relationships.
Question 2 of 20
Which of the following is the result of an inseparable relationship between business and society?
A. All business decisions have a social impact.
B. The vitality of business depends on society’s actions and attitudes.
C. The survival of business is independent of society.
D. Both A and B, but not C
Question 3 of 20
Which argument says that stakeholder management realistically depicts how companies really work?
A. Descriptive argument
B. Instrumental argument
C. Normative argument
D. Fiduciary argument
Question 4 of 20
Which of the following is NOT considered to be a nonmarket stakeholder?
A. Government agencies
B. The natural environment
C. Activist groups
D. Non-governmental organizations
Question 5 of 20
A stakeholder analysis:
A. creates equality among all stakeholder interests.
B. allows managers to examine two primary questions.
C. involves understanding the nature of stakeholder interests.
D. All of the above
Question 6 of 20
Which of the following is NOT an example of stakeholders’ economic power?
A. A toy manufacturer halts supplies to a customer that demanded very low prices
B. A social group protests a government’s decision to raise taxes
C. A local community boycotts a grocery store suspected of inaccurate weight scales
D. A social organization demands the closure of a business that has a discriminatory hiring policy
Question 7 of 20
When a community group sues a company for health effects caused by unsafe toxic chemicals disposal, it is an exercise of a stakeholders’:
A. legal power.
B. voting power.
C. economic power.
D. political power.
Question 8 of 20
Stakeholders stand out to managers when they exhibit:
A. integrity, power, and legitimacy.
B. power, legitimacy, and urgency.
C. integrity, loyalty, and power.
D. legitimacy, loyalty, and urgency.
Question 9 of 20
Stakeholders have been able to form international coalitions more successfully through use of:
A. government regulation.
B. community involvement.
C. communications technology.
D. unions.
Question 10 of 20
Businesses’ relationships with stakeholders have evolved in the following order:
A. reactive, proactive, interactive, and cyberactive relationships.
B. inactive, reactive, proactive, and interactive relationships.
C. self-active, interactive, proactive, and cyberactive relationships.
D. inactive, internally-active, externally-active, and change-active relationships.
Question 11 of 20
(SORRY NOT SURE)
McDonalds’ response to critics of the company’s treatment of animals include:
A. hiring experts to analyze options.
B. experimenting with slaughter house audits.
C. convening an Animal Welfare Council.
D. All of the above
Question 12 of 20
5.0 Points
The emergence of a public issue indicates that:
A. a gap has developed between what stakeholders expect and what an organization is actually doing.
B. technology is forcing ethics and business strategy closer together.
C. consumers are unaware of how an organization’s actions affect them.
D. All of the above
Question 13 of 20
5.0 Points
Public affairs management addresses government issues through:
A. advocacy ads.
B. liability lawsuits.
C. proxy election management.
D. All of the above
Question 14 of 20
5.0 Points
The issues management process is a:
A. beneficial tool used only to maximize the positive effects of a public issue for the organization’s advantage.
B. beneficial tool used only to minimize the negative effects of a public issue for the organization’s advantage.
C. systematic process companies use when responding to public issues that are of greatest importance to the business.
D. confusing process that is rarely used to help top management within an organization.
Question 15 of 20
5.0 Points
Legal environmental intelligence includes:
A. patterns of aggressive growth versus static maintenance.
B. analysis of local, state, national, and international politics.
C. considerations of patents, copyrights, or trademarks.
D. information regarding costs, prices, and international trade.
Question 16 of 20
5.0 Points
One of the most valued benefits of the public affairs function is:
A. The ability to acquire competitive intelligence that may not be available through legal means.
B. The ethical acquisition of competitor intelligence.
C. To enforce the company’s code of conduct against using illegally obtained competitor intelligence.
D. To influence top managers that competitive intelligence is important.
Question 17 of 20
5.0 Points
Once an organization has implemented the issue management program, it must:
A. use trade associations or consultants to follow high priority issues.
B. study the results and make necessary adjustments.
C. not limit the number of public issues the firm can address.
D. pick a selected number of issues to address immediately.
Question 18 of 20
5.0 Points
Issue management:
A. often under-emphasizes technique.
B. often overemphasizes technique.
C. often overemphasizes creative problem solving.
D. is an art, not a science.
Question 19 of 20
5.0 Points
Which of the following supported WalMart’s proposal to build stores in Inglewood, CA?
A. Ingelwood’s Mayor
B. Church groups
C. Community groups
D. The United Food and Commercial Workers Union
Question 20 of 20
5.0 Points
Harnessing human imagination to create new approaches to the concerns of modern society is an example of:
A. personal identification.
B. networks.
C. business profits.
D. technology.
Aug 29, 2021 | Uncategorized
Week Four Exercise Assignment
Liability
1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 4% on the first $55,000 earned per employee
Medicare taxes: 1.5% on the first $130,000 earned per employee
Federal income taxes withheld from wages: $7,500
State income taxes: 4% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned per employee
Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
2. Current liabilities: entries and disclosure. A review of selected financial activities of Visconti s during 20XX disclosed the following:
|
|
|
|
1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.
|
|
Interest and principal are due at maturity.
|
|
|
|
10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
|
|
total 1,000 units during the month. Past experience with similar products indicates
|
|
that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
|
|
22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
|
|
26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
|
|
31-Dec: Repaired six XY-80s during the month at a total cost of $162
|
|
|
31-Dec: Accrued three days of salaries at a total cost of $1,400.
|
|
|
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest.
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
3. Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
|
2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.
|
|
20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
|
|
10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
|
|
a 30-day, 12% note in settlement of the balance owed.
|
|
11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account
|
|
payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
|
|
10-Oct: The note to Pans Enterprises was paid in full.
|
|
11-Oct: The note to Datatex Equipment was paid in full.
|
|
30-Oct: Paid note to Bank of Kingsville.
|
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
Week Four Exercise Assignment
Liability
1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 4% on the first $55,000 earned per employee
Medicare taxes: 1.5% on the first $130,000 earned per employee
Federal income taxes withheld from wages: $7,500
State income taxes: 4% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned per employee
Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
2. Current liabilities: entries and disclosure.A review of selected financial activities of Visconti s during 20XX disclosed the following:
|
|
|
|
|
|
1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.
|
|
|
Interest and principal are due at maturity.
|
|
|
|
|
10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
|
|
|
total 1,000 units during the month. Past experience with similar products indicates
|
|
|
that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
|
|
|
22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
|
|
|
26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
|
|
|
31-Dec: Repaired six XY-80s during the month at a total cost of $162
|
|
|
|
31-Dec: Accrued three days of salaries at a total cost of $1,400.
|
|
|
|
|
|
|
|
|
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.
3.Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
|
2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.
|
|
20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
|
|
10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
|
|
a 30-day, 12% note in settlement of the balance owed.
|
|
11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account
|
|
payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
|
|
10-Oct: The note to Pans Enterprises was paid in full.
|
|
11-Oct: The note to Datatex Equipment was paid in full.
|
|
30-Oct: Paid note to Bank of Kingsville.
|
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
the following for Joe s Fly-By-Night Oil Company, whose financial statements are shown below:
Joe s Fly-By-Night Oil Company
NET INCOME $1,800
Addition to retained earnings $1,200
Total assets $40,000
Prepare a ratio analysis for the fiscal year ended Dec 31, 2011. Organize your analysis per the following outline:
(1) Liquidity
– Current ratio
– Quick ratio
Comments on liquidity
(2) Asset management
– Total Asset turnover
– Average collection period (ACP)
Comments on asset management
(3) Debt management
– Debt ratio
– Times interest earned
Comments on debt management
(4) Profitability
– Net profit margin
– Return on Assets (ROA)
– Return on Equity (ROE)
– Extended Du Pont equation
Comments on profitability to include your comments on the sources of ROE
revealed by the Du Pont equation
(5) Market value ratios
– PE ratio
– Market to book ratio
Comments on the market value ratios
For the purposes of this exercise, assume the following data for Joe s Fly-By-Night Oil:
Stock price on Dec 31, 2011 $50.00
Number of common shares outstanding on Dec 31, 2011…1,000
Aug 29, 2021 | Uncategorized
Week Five Exercise Assignment
Financial Ratios
- Liquidity ratios.Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
|
Edison
|
Stagg
|
Thornton
|
|
Cash
|
$6,000
|
$5,000
|
$4,000
|
|
Short-term investments
|
3,000
|
2,500
|
2,000
|
|
Accounts receivable
|
2,000
|
2,500
|
3,000
|
|
Inventory
|
1,000
|
2,500
|
4,000
|
|
Prepaid expenses
|
800
|
800
|
800
|
|
Accounts payable
|
200
|
200
|
200
|
|
Notes payable: short-term
|
3,100
|
3,100
|
3,100
|
|
Accrued payables
|
300
|
300
|
300
|
|
Long-term liabilities
|
3,800
|
3,800
|
3,800
|
- Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
- Computation and evaluation of activity ratios.The following data relate to Alaska Products, Inc:
|
|
20X5
|
20X4
|
|
Net credit sales
|
$832,000
|
$760,000
|
|
Cost of goods sold
|
530,000
|
400,000
|
|
Cash, Dec. 31
|
125,000
|
110,000
|
|
Average Accounts receivable
|
205,000
|
156,000
|
|
Average Inventory
|
70,000
|
50,000
|
|
Accounts payable, Dec. 31
|
115,000
|
108,000
|
|
Instructions
- Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
|
3. Profitability ratios, trading on the equity.Digital Relay has both preferred and common stock outstanding. The com pany reported the following information for 20X7:
|
Net sales
|
$1,750,000
|
|
Interest expense
|
120,000
|
|
Income tax expense
|
80,000
|
|
Preferred dividends
|
25,000
|
|
Net income
|
130,000
|
|
Average assets
|
1,200,000
|
|
Average common stockholders’ equity
|
500,000
|
- Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
- Does the firm have positive or negative financial leverage? Briefly ex plain.
- Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
|
|
20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
90,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
160,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
- Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
|
5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
|
20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
80,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
150,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
- Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
|
6. Ratio computation. The financial statements of the Lone Pine Company follow.
|
|
LONE PINE COMPANY
|
|
Comparative Balance Sheets
|
|
December 31, 20X2 and 20X1 ($000 Omitted)
|
|
20X2
|
20X1
|
|
Assets
|
|
Current Assets
|
|
Cash and Short-Term Investments
|
$400
|
$600
|
|
Accounts Receivable (net)
|
3,000
|
2,400
|
|
Inventories
|
3,000
|
2,300
|
|
Total Current Assets
|
$6,400
|
$5,300
|
|
Property, Plant, and Equipment
|
|
Land
|
$1,700
|
$500
|
|
Buildings and Equipment (net)
|
1,500
|
1,000
|
|
Total Property, Plant, and Equipment
|
$3,200
|
$1,500
|
|
Total Assets
|
$9,600
|
$6,800
|
|
Liabilities and Stockholders Equity
|
|
Current Liabilities
|
|
Accounts Payable
|
$2,800
|
$1,700
|
|
Notes Payable
|
1,100
|
1,900
|
|
Total Current Liabilities
|
$3,900
|
$3,600
|
|
Long-Term Liabilities
|
|
Bonds Payable
|
4,100
|
2,100
|
|
Total Liabilities
|
$8,000
|
$5,700
|
|
Stockholders Equity
|
|
Common Stock
|
$200
|
$200
|
|
Retained Earnings
|
1,400
|
900
|
|
Total Stockholders Equity
|
$1,600
|
$1,100
|
|
Total Liabilities and Stockholders Equity
|
$9,600
|
$6,800
|
|
LONE PINE COMPANY
|
|
Statement of Income and Retained Earnings
|
|
For the Year Ending December 31,20X2 ($000 Omitted)
|
|
Net Sales*
|
$36,000
|
|
Less: Cost of Goods Sold
|
$20,000
|
|
Selling Expense
|
6,000
|
|
Administrative Expense
|
4,000
|
|
Interest Expense
|
400
|
|
Income Tax Expense
|
2,000
|
32,400
|
|
Net Income
|
$3,600
|
|
Retained Earnings, Jan. 1
|
900
|
|
Ending Retained Earnings
|
$4,500
|
|
Cash Dividends Declared and Paid
|
3,100
|
|
Retained Earnings, Dec. 31
|
$1,400
|
|
*All sales are on account.
|
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calcu lations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders equity
h. Debt-to-total assets
i. Number of times that interest is earned
Aug 29, 2021 | Uncategorized
Final Paper
Focus of the Final Paper
You ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities.
As the controller of ABC Company, the CEO has come to you with a new opportunity that he s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide.
In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations.
Final Paper Spreadsheet
I. An overall risk profile of the company based on current economic and industry issues that it may be facing.
II. Current company cash flow
a. You need to complete a cash flow statement for the company using the direct method.
b. Once you ve completed the cash flow statement, answer the following questions:
i. What does this statement of cash flow tell you about the sources and uses of the company funds?
ii. Is there anything ABC Company can do to improve the cash flow?
iii. Can this project be financed with current cash flow from the company? Why or why not?
iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why?
III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.
a. What is the product cost for the expansion product under absorption and variable costing?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product?
d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?
IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years:
Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000
ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment.
a. What is the net present value of the proposed investment (ignore income taxes and depreciation)?
b. Assuming a 5-year straight-line depreciation, how will this impact the factory s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow?
c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not?
V. Conclusion:
a. What are the major risk factors that you see in this project?
b. As the controller and a management accountant, what is your responsibility to this project?
c. What do you recommend the CEO do?
Writing the Final Paper
1. Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student s name
c. Course name and number
d. Instructor s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
Aug 29, 2021 | Uncategorized
Riordan Manufacturing has decided to make a change to company s customer management system. The company does not currently have any formal system for managing their customer information and has traditionally left this up to individual employees. This new system will require all employees to use one customer management system. Your team is now working to help Riordan implement this planned change. Your team must do the following in your role as consultants:
Resource: Riordan Manufacturing Virtual Organization
Review the intranet site for Riordan Manufacturing including Human Resources Organizational Charts, Employee Files, etc., and Sales & Marketing Marketing Information Systems.
Create a change management plan and communication plan Your plan should include the details from section I and section II outlined below.
Section I: Change Management Plan
Identify the current formal and informal power structures in the organization. How might the power and political structure of the organization affect employee behavior?
Identify the most appropriate and effective organizational structures for Riordan Manufacturing that will help them accomplish their planned changes.
What are the potential effects of this selected structure on employee behavior?
Identify characteristics of the company s culture. What are the potential influences of the corporate culture on employee behavior?
400 hundred words count
Aug 29, 2021 | Uncategorized
1.(TCO A) Below you will find selected information (in millions) from Coca-Cola Co. s 2012 Annual Report:
|
Income Taxes Payable
|
$471
|
|
Short-term Investments and Marketable Securities
|
8,109
|
|
Cash
|
8,442
|
|
Other non-current Liabilities
|
10,449
|
|
Common Stock
|
1,760
|
|
Receivables
|
4,812
|
|
Other Current Assets
|
2,973
|
|
Long-term Investments
|
10,448
|
|
Other Non-current Assets
|
3,585
|
|
Property, Plant and Equipment
|
23,486
|
|
Trademarks
|
6,527
|
|
Other Intangible Assets
|
20,810
|
|
Allowance for Doubtful Accounts
|
53
|
|
Accumulated Depreciation
|
9,010
|
|
Accounts Payable
|
8,680
|
|
Short Term Notes Payable
|
17,874
|
|
Prepaid Expenses
|
2,781
|
|
Other Current Liabilities
|
796
|
|
Long-Term Liabilities
|
14,736
|
|
Paid-in-Capital in Excess of Par Value
|
11,379
|
|
Retained Earnings
|
55,038
|
|
Inventories
|
3,264
|
|
Treasury Stock
|
35,009
|
Other information taken from the Annual Report:
|
Sales Revenue for 2012
|
$48,017
|
|
Cost of Goods Sold for 2012
|
19,053
|
|
Net Income for 2012
|
9,019
|
|
Inventory Balance on 12/31/11
|
3,092
|
|
Net Accounts Receivable Balance on 12/31/11
|
4,920
|
|
Total Assets on 12/31/11
|
79,974
|
|
Equity Balance on 12/31/11
|
31,921
|
Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above, calculatetheCurrent Ratioand Return on common stockholders equity ratio. (Make sure to show all your work).
(Points : 36)
|
| Question 2.2.
(TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:
|
Accounts Payable
|
$38,080
|
|
Accounts Receivable
|
6,768
|
|
Cash
|
7,781
|
|
Common Stock
|
3,952
|
|
Cost of Goods Sold
|
352,488
|
|
Income Tax Expense
|
7,981
|
|
Interest Expenses
|
2,064
|
|
Membership Revenues
|
3,048
|
|
Net Sales
|
466,114
|
|
Operating, Selling and Administrative Expenses
|
88,873
|
|
Retained Earnings
|
72,978
|
Required:
Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.
(Points : 36)
|
Question 3.3.(TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:
|
Cash flow from operating activities
|
In millions
|
In millions
|
|
For the year ended 2012
|
For the year ended 2011
|
|
Net (loss) earnings
|
$(12,650)
|
$7,074
|
|
Depreciation and amortization
|
5,095
|
4,984
|
|
Impairment of goodwill and purchased intangible assets
|
18,035
|
885
|
|
Stock-based compensation expense
|
635
|
685
|
|
Provision for doubtful accounts
|
142
|
81
|
|
Provision for inventory
|
277
|
217
|
|
Restructuring charges
|
2,266
|
645
|
|
Deferred taxes on earnings
|
(711)
|
166
|
|
Excess tax benefit from stock-based competition
|
(12)
|
(163)
|
|
Other, net
|
265
|
(46)
|
|
Accounts and financing receivables
|
1,269
|
(227)
|
|
Inventory
|
890
|
(1,252)
|
|
Accounts payable
|
(1,414)
|
275
|
|
Taxes on earnings
|
(320)
|
610
|
|
Restructuring
|
(840)
|
(1,002)
|
|
Other assets and liabilities
|
(2,356)
|
(293)
|
|
Net cash provided by operating activities
|
10,571
|
12,639
|
|
Cash flows from investing activities:
|
|
|
|
Investment in property, plant, and equipment
|
(3,706)
|
(4,539)
|
|
Proceeds from sale of property, plant, and equipment
|
617
|
999
|
|
Purchases of available-for-sale securities and other investments
|
(972)
|
(96)
|
|
Maturities and sales of available-for-sale securities and other investment
|
662
|
68
|
|
Payments in connection with business acquisitions, net of cash acquired
|
(141)
|
(10,480)
|
|
Proceeds from business divestiture, net
|
87
|
89
|
|
Net cash used in investing activities
|
(3,453)
|
(13,959)
|
|
Cash flow from financing activities:
|
|
|
|
(Payments) issuance of commercial paper and notes payable, net
|
(2,775)
|
(1,270)
|
|
Issuance of debt
|
5,154
|
11,942
|
|
Payment of debt
|
(4,333)
|
(2,336)
|
|
Issuance of common stock under employee stock plans
|
716
|
896
|
|
Repurchase of common stock
|
(1,619)
|
(10,117)
|
|
Excess tax benefit from stock-based compensation
|
12
|
163
|
|
Cash dividends paid
|
(1,015)
|
(844)
|
|
Net cash used in financing activities
|
(3,860)
|
(1,566)
|
|
Increase (decrease) in cash and cash equivalents
|
3,258
|
(2,886)
|
|
Cash and cash equivalents at beginning of period
|
8,043
|
10,929
|
|
Cash and cash equivalents at end of period
|
$11,301
|
$8,043
|
Required:
1)Please calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded aboveand explain the major reasons for the increase or decrease for each of these sections.
2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
(Points : 36)
|
| Question 4.4.(TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company s net income can vary widely depending on which accounting choices are made from the GAAP menu.
Assuming the goal is tomaximizenet income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.
Required:
a. Goforit carries significant electronics inventory in a competitive environment where prices are actually falling. Which inventory valuation method would you choose LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.
b. Goforit has a large investment in warehouse equipment including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: Straight line (SL) or double declining balance (DDB)?
(Points : 36)
|
Question 5.5.(TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.
|
Ratio Name
|
Johnson & Johnson
|
Pfizer
|
|
|
|
|
Profit margin
|
16.1%
|
24.7%
|
|
Inventory turnover ratio
|
3.1
|
1.7
|
|
Average collection period
|
59.4 days
|
69.1 days
|
|
Cash debt coverage ratio
|
.27
|
.16
|
|
Debt to Total assets
|
46.6%
|
127.5%
|
Required:
1)Please explain the meaning of each of the Pfizer ratios above.
2)Please state which company performed better for each ratio.
(Points : 36) |
Aug 29, 2021 | Uncategorized
|
Week Five Exercise Assignment WITH DQ ASHFORD THIS IS FOR MARTIN
|
Question Detail:
Week Five Exercise Assignment
Financial Ratios
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
| |
Edison
|
Stagg
|
Thornton
|
|
Cash
|
$6,000
|
$5,000
|
$4,000
|
|
Short-term investments
|
3,000
|
2,500
|
2,000
|
|
Accounts receivable
|
2,000
|
2,500
|
3,000
|
|
Inventory
|
1,000
|
2,500
|
4,000
|
|
Prepaid expenses
|
800
|
800
|
800
|
|
Accounts payable
|
200
|
200
|
200
|
|
Notes payable: short-term
|
3,100
|
3,100
|
3,100
|
|
Accrued payables
|
300
|
300
|
300
|
|
Long-term liabilities
|
3,800
|
3,800
|
3,800
|
a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid Why?
|
2. Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:
|
| |
|
|
|
|
| |
20X5
|
20X4
|
|
Net credit sales
|
$832,000
|
$760,000
|
|
|
Cost of goods sold
|
530,000
|
400,000
|
|
|
Cash, Dec. 31
|
125,000
|
110,000
|
|
|
Average Accounts receivable
|
205,000
|
156,000
|
|
|
Average Inventory
|
70,000
|
50,000
|
|
|
Accounts payable, Dec. 31
|
115,000
|
108,000
|
|
|
Instructions
a. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
|
|
|
|
|
| |
|
|
|
|
3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The company reported the following information for 20X7:
| |
|
|
Net sales
|
$1,750,000
|
|
Interest expense
|
120,000
|
|
Income tax expense
|
80,000
|
|
Preferred dividends
|
25,000
|
|
Net income
|
130,000
|
|
Average assets
|
1,200,000
|
|
Average common stockholders’ equity
|
500,000
|
| |
|
| |
|
a. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
b. Does the firm have positive or negative financial leverage Briefly explain.
|
4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
|
| |
|
|
|
|
20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
90,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
160,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
| |
|
|
|
|
a. Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
|
5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
|
20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
80,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
150,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
a. Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
|
6. Ratio computation. The financial statements of the Lone Pine Company follow.
|
| |
|
|
|
|
LONE PINE COMPANY
|
|
Comparative Balance Sheets
|
|
December 31, 20X2 and 20X1 ($000 Omitted)
|
|
20X2
|
20X1
|
|
Assets
|
|
Current Assets
|
|
Cash and Short-Term Investments
|
$400
|
|
$600
|
|
Accounts Receivable (net)
|
3,000
|
|
2,400
|
|
Inventories
|
3,000
|
|
2,300
|
|
Total Current Assets
|
$6,400
|
|
$5,300
|
|
Property, Plant, and Equipment
|
|
Land
|
$1,700
|
|
$500
|
|
Buildings and Equipment (net)
|
1,500
|
|
1,000
|
|
Total Property, Plant, and Equipment
|
$3,200
|
|
$1,500
|
|
Total Assets
|
$9,600
|
|
$6,800
|
|
Liabilities and Stockholders Equity
|
|
Current Liabilities
|
|
Accounts Payable
|
$2,800
|
|
$1,700
|
|
Notes Payable
|
1,100
|
|
1,900
|
|
Total Current Liabilities
|
$3,900
|
|
$3,600
|
|
Long-Term Liabilities
|
|
Bonds Payable
|
4,100
|
|
2,100
|
|
Total Liabilities
|
$8,000
|
|
$5,700
|
|
Stockholders Equity
|
|
Common Stock
|
$200
|
|
$200
|
|
Retained Earnings
|
1,400
|
|
900
|
|
Total Stockholders Equity
|
$1,600
|
|
$1,100
|
|
Total Liabilities and Stockholders Equity
|
$9,600
|
|
$6,800
|
| |
|
|
|
| |
|
|
|
|
LONE PINE COMPANY
|
|
Statement of Income and Retained Earnings
|
|
For the Year Ending December 31,20X2 ($000 Omitted)
|
|
Net Sales*
|
|
$36,000
|
|
|
Less: Cost of Goods Sold
|
$20,000
|
|
|
|
Selling Expense
|
6,000
|
|
|
|
Administrative Expense
|
4,000
|
|
|
|
Interest Expense
|
400
|
|
|
|
Income Tax Expense
|
2,000
|
32,400
|
|
|
Net Income
|
|
$3,600
|
|
|
Retained Earnings, Jan. 1
|
|
900
|
|
|
Ending Retained Earnings
|
|
$4,500
|
|
|
Cash Dividends Declared and Paid
|
|
3,100
|
|
|
Retained Earnings, Dec. 31
|
|
$1,400
|
|
|
*All sales are on account.
|
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calculations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders equity
h. Debt-to-total assets
i. Number of times that interest is earned
DQ’S
- Ratios
Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story How could liquidity ratios be used by investors to determine whether or not to invest in a company
Guided Response:
Let at least two of your peers know how debt service ratios can be used by a lender in determining whether or not to lend money to a company.
- Profit Margin
| |
Year Ending December 2012
|
Year Ending December 2011
|
Year Ending December 2010
|
|
Revenues
|
40,000
|
35,000
|
33,000
|
|
Operating Expenses
|
|
|
|
|
Salaries
|
15,000
|
10,000
|
9,000
|
|
Maintenance and Repairs
|
6,000
|
9,000
|
10,000
|
|
Rental Expense
|
2,500
|
2,500
|
2,500
|
|
Depreciation
|
2,000
|
2,000
|
2,000
|
|
Fuel
|
4,000
|
3,500
|
2,500
|
|
Total Operating Expenses
|
29,500
|
27,000
|
26,000
|
|
Operating Income
|
10,500
|
8,000
|
7,000
|
|
Sales and Administrative Expenses
|
6,000
|
4,000
|
3,000
|
|
Interest Expense
|
2,500
|
2,000
|
1,000
|
|
Net Income
|
2,000
|
2,000
|
3,000
|
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.
|
Aug 29, 2021 | Uncategorized
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Edison Stagg Thornton
Cash $6,000 $5,000 $4,000
Short-term investments 3,000 2,500 2,000
Accounts receivable 2,000 2,500 3,000
Inventory 1,000 2,500 4,000
Prepaid expenses 800 800 800
Accounts payable 200 200 200
Notes payable: short-term 3,100 3,100 3,100
Accrued payables 300 300 300
Long-term liabilities 3,800 3,800 3,800
a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
2. Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:
20X5 20X4
Net credit sales $832,000 $760,000
Cost of goods sold 530,000 400,000
Cash, Dec. 31 125,000 110,000
Average Accounts receivable 205,000 156,000
Average Inventory 70,000 50,000
Accounts payable, Dec. 31 115,000 108,000
Instructions
a. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com pany reported the following information for 20X7:
Net sales $1,750,000
Interest expense 120,000
Income tax expense 80,000
Preferred dividends 25,000
Net income 130,000
Average assets 1,200,000
Average common stockholders’ equity 500,000
a. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
b. Does the firm have positive or negative financial leverage? Briefly ex plain.
4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2 20X1
Current Assets $86,000 $80,000
Property, Plant, and Equipment (net) 99,000 90,000
Intangibles 25,000 50,000
Current Liabilities 40,800 48,000
Long-Term Liabilities 153,000 160,000
Stockholders Equity 16,200 12,000
Net Sales 500,000 500,000
Cost of Goods Sold 322,500 350,000
Operating Expenses 93,500 85,000
a. Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2 20X1
Current Assets $86,000 $80,000
Property, Plant, and Equipment (net) 99,000 80,000
Intangibles 25,000 50,000
Current Liabilities 40,800 48,000
Long-Term Liabilities 153,000 150,000
Stockholders Equity 16,200 12,000
Net Sales 500,000 500,000
Cost of Goods Sold 322,500 350,000
Operating Expenses 93,500 85,000
a. Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
6. Ratio computation. The financial statements of the Lone Pine Company follow.
LONE PINE COMPANY
Comparative Balance Sheets
December 31, 20X2 and 20X1 ($000 Omitted)
20X2 20X1
Assets
Current Assets
Cash and Short-Term Investments $400 $600
Accounts Receivable (net) 3,000 2,400
Inventories 3,000 2,300
Total Current Assets $6,400 $5,300
Property, Plant, and Equipment
Land $1,700 $500
Buildings and Equipment (net) 1,500 1,000
Total Property, Plant, and Equipment $3,200 $1,500
Total Assets $9,600 $6,800
Liabilities and Stockholders Equity
Current Liabilities
Accounts Payable $2,800 $1,700
Notes Payable 1,100 1,900
Total Current Liabilities $3,900 $3,600
Long-Term Liabilities
Bonds Payable 4,100 2,100
Total Liabilities $8,000 $5,700
Stockholders Equity
Common Stock $200 $200
Retained Earnings 1,400 900
Total Stockholders Equity $1,600 $1,100
Total Liabilities and Stockholders Equity $9,600 $6,800
LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales* $36,000
Less: Cost of Goods Sold $20,000
Selling Expense 6,000
Administrative Expense 4,000
Interest Expense 400
Income Tax Expense 2,000 32,400
Net Income $3,600
Retained Earnings, Jan. 1 900
Ending Retained Earnings $4,500
Cash Dividends Declared and Paid 3,100
Retained Earnings, Dec. 31 $1,400
*All sales are on account.
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calcu lations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders equity
h. Debt-to-total assets
i. Number of times that interest is earned
Aug 29, 2021 | Uncategorized
Week Five Exercise Assignment
Financial Ratios
1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
Edison Stagg Thornton
Cash $6,000 $5,000 $4,000
Short-term investments 3,000 2,500 2,000
Accounts receivable 2,000 2,500 3,000
Inventory 1,000 2,500 4,000
Prepaid expenses 800 800 800
Accounts payable 200 200 200
Notes payable: short-term 3,100 3,100 3,100
Accrued payables 300 300 300
Long-term liabilities 3,800 3,800 3,800
a. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
2. Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:
20X5 20X4
Net credit sales $832,000 $760,000
Cost of goods sold 530,000 400,000
Cash, Dec. 31 125,000 110,000
Average Accounts receivable 205,000 156,000
Average Inventory 70,000 50,000
Accounts payable, Dec. 31 115,000 108,000
Instructions
a. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com pany reported the following information for 20X7:
Net sales $1,750,000
Interest expense 120,000
Income tax expense 80,000
Preferred dividends 25,000
Net income 130,000
Average assets 1,200,000
Average common stockholders’ equity 500,000
a. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
b. Does the firm have positive or negative financial leverage? Briefly ex plain.
4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2 20X1
Current Assets $86,000 $80,000
Property, Plant, and Equipment (net) 99,000 90,000
Intangibles 25,000 50,000
Current Liabilities 40,800 48,000
Long-Term Liabilities 153,000 160,000
Stockholders Equity 16,200 12,000
Net Sales 500,000 500,000
Cost of Goods Sold 322,500 350,000
Operating Expenses 93,500 85,000
a. Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
20X2 20X1
Current Assets $86,000 $80,000
Property, Plant, and Equipment (net) 99,000 80,000
Intangibles 25,000 50,000
Current Liabilities 40,800 48,000
Long-Term Liabilities 153,000 150,000
Stockholders Equity 16,200 12,000
Net Sales 500,000 500,000
Cost of Goods Sold 322,500 350,000
Operating Expenses 93,500 85,000
a. Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
6. Ratio computation. The financial statements of the Lone Pine Company follow.
LONE PINE COMPANY
Comparative Balance Sheets
December 31, 20X2 and 20X1 ($000 Omitted)
20X2 20X1
Assets
Current Assets
Cash and Short-Term Investments $400 $600
Accounts Receivable (net) 3,000 2,400
Inventories 3,000 2,300
Total Current Assets $6,400 $5,300
Property, Plant, and Equipment
Land $1,700 $500
Buildings and Equipment (net) 1,500 1,000
Total Property, Plant, and Equipment $3,200 $1,500
Total Assets $9,600 $6,800
Liabilities and Stockholders Equity
Current Liabilities
Accounts Payable $2,800 $1,700
Notes Payable 1,100 1,900
Total Current Liabilities $3,900 $3,600
Long-Term Liabilities
Bonds Payable 4,100 2,100
Total Liabilities $8,000 $5,700
Stockholders Equity
Common Stock $200 $200
Retained Earnings 1,400 900
Total Stockholders Equity $1,600 $1,100
Total Liabilities and Stockholders Equity $9,600 $6,800
LONE PINE COMPANY
Statement of Income and Retained Earnings
For the Year Ending December 31,20X2 ($000 Omitted)
Net Sales* $36,000
Less: Cost of Goods Sold $20,000
Selling Expense 6,000
Administrative Expense 4,000
Interest Expense 400
Income Tax Expense 2,000 32,400
Net Income $3,600
Retained Earnings, Jan. 1 900
Ending Retained Earnings $4,500
Cash Dividends Declared and Paid 3,100
Retained Earnings, Dec. 31 $1,400
*All sales are on account.
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calcu lations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders equity
h. Debt-to-total assets
i. Number of times that interest is earned
Aug 29, 2021 | Uncategorized
Week Four Exercise Assignment
Liability
1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 4% on the first $55,000 earned per employee
Medicare taxes: 1.5% on the first $130,000 earned per employee
Federal income taxes withheld from wages: $7,500
State income taxes: 4% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned per employee
Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
2. Current liabilities: entries and disclosure.A review of selected financial activities of Visconti s during 20XX disclosed the following:
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1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.
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Interest and principal are due at maturity.
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10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
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total 1,000 units during the month. Past experience with similar products indicates
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that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
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22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
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26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
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31-Dec: Repaired six XY-80s during the month at a total cost of $162
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31-Dec: Accrued three days of salaries at a total cost of $1,400.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.
3.Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
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2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.
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20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
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10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
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a 30-day, 12% note in settlement of the balance owed.
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11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account
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payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
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10-Oct: The note to Pans Enterprises was paid in full.
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11-Oct: The note to Datatex Equipment was paid in full.
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30-Oct: Paid note to Bank of Kingsville.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 4% on the first $55,000 earned per employee
Medicare taxes: 1.5% on the first $130,000 earned per employee
Federal income taxes withheld from wages: $7,500
State income taxes: 4% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned per employee
Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
2. Current liabilities: entries and disclosure.A review of selected financial activities of Visconti s during 20XX disclosed the following:
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1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.
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Interest and principal are due at maturity.
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10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
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total 1,000 units during the month. Past experience with similar products indicates
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that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
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22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
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26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
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31-Dec: Repaired six XY-80s during the month at a total cost of $162
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31-Dec: Accrued three days of salaries at a total cost of $1,400.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.
3. Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
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2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.
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20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
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10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
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a 30-day, 12% note in settlement of the balance owed.
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11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account
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payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
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10-Oct: The note to Pans Enterprises was paid in full.
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11-Oct: The note to Datatex Equipment was paid in full.
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30-Oct: Paid note to Bank of Kingsville.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
Week Three Assignment Intermediate I
P7-10 Miscellaneous receivable transactions
Evergreen Company sells lawn and garden products to wholesalers. The company s fiscal year-end is December 31. During 2011, the following transactions related to receivables occurred:
Feb. 28 Sold merchandise to Lennox, Inc. for 10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note.
Mar. 31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The 8,000 payment is due on March 31,2012.
Apr. 3 Sold merchandise to Carr Co. for 7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.
11 Collected the entire amount due from Carr Co.
17 A customer returned merchandise costing 3,200. Evergreen reduced the customer s receivable balance by 5,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur.
30 Transferred receivables of 50,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the receivables transferred. The sale criteria are met.
June 30 Discounted the Lennox, Inc. note at the bank. The bank s discount rate is 12%. The note was discounted without recourse.
Aug. 31 Lennox, Inc. paid the note amount plus interest to the bank.
Required:
1. 1.Prepare the necessary journal entries for Evergreen for each of the above dates. The transaction involving the sale of merchandise, ignore the entry for the cost of goods sold (round all calculations to the nearest dollars).
2. 2.Prepare any necessary adjusting entries at December 31, 2011. Adjusting entries are only recorded at year-end (round all calculations to the nearest dollar).
3. 3.Prepare a schedule showing the effect of the journal entries in requirements 1 and 2 on 2011 income before taxes.
P 7-14 Bank Reconciliation and adjusting entries
El Gato Painting Company maintains a checking account at American Bank. Bank statements are prepared at the end of each month. The November 30, 2011, reconciliation of the bank balance is as follows:
Balance per bank, November 30
Add: Deposits outstanding 3,231
Less: Checks outstanding 1,200
#363 123
#365 201
#380 56
#381 86
#382 340
Adjusted balance per bank, November 30 (806)
3,625
The company s general ledger checking account showed the following for December:
Balance, December 1 3,625
Receipts 42,650
Disbursements (41,853)
Balance, December 31 4,422
The December bank statement contained the following information:
Balance, December 1 3,231
Deposits 43,000
Checks processed (41,918)
Service charges (22)
NSF checks (440)
Balance, December 31 3,851
The checks that were processed by the bank in December include all of the outstanding checks at the end of November except for check #365. In addition, there are some December checks that had not been processed by the bank by the end of the month. Also, you discover that check #411 for $320.00 was correctly recorded by the bank but was incorrectly recorded on the books as a $230 disbursement for advertising expense. Included in the bank s deposit is a $1,300 deposit incorrectly credited to the company s account. The deposit should have been posted to the credit of the Los Gatos Company. The NSF checks have no ben redeposited and the company will seek payment from the customers involved.
Required:
1. 1.Prepare a bank reconciliation for the El Gato checking account at December 31, 2011.
2. 2.Prepare any necessary adjusting journal entries indicated.
Aug 29, 2021 | Uncategorized
Week Three Exercise Assignment
Inventory
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.
Painting Cost
1/2 Beginning inventory Woods $21,000
4/19 Purchase Sunset 21,800
6/7 Purchase Earth 31,200
12/16 Purchase Moon 4,000
Woods and Moon were sold during the year for a total of $35,000. Determine the firm s
a. cost of goods sold.
b. gross profit.
c. ending inventory.
2. Inventory valuation methods: basic computations. The January beginning inven tory of the Gilette Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
FIFO LIFO Weighted Average
Goods available for sale $ $ $
Ending inventory, March 31
Cost of goods sold
3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:
1/2/20X3 Purchases on account: 500 units @ $6 = $3,000
1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550
1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000
1/25/20X3 Sales on Account: 300 units @ $8.50 = $2,550
The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.
a. Duplicate the journal entries that would have appeared on the computer printout under FIFO & LIFO
b. Calculate the balance in the firm s Inventory account under each method.
c. Briefly explain the absence of the Purchases account to the company president.
4. Inventory valuation methods: computations and concepts.
Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:
Date Quantity Unit Cost Total Cost
1/3 100 $125 $12,500
4/3 200 $135 $27,000
6/3 100 $145 $14,500
7/3 100 $155 $15,500
Total 500 $69,500
Wild Riders sold 400 boards at $250 per board on the dates listed below. The company uses a perpetual inventory system.
Date Quantity Sold Unit Price Total Sales
3/17 50 $250 $12,500
5/17 75 $250 $18,750
8/10 275 $250 $68,750
Total 400 $100,000
Instructions
a. Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:
First-in, first-out
Last-in, first-out
Weighted average
b. Which of the three methods would be chosen if management s goal is to
(1) produce an up-to-date inventory valuation on the balance sheet
(2) show the lowest net income for tax purposes
5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a resid ual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:
a. Units-of-output, assuming 17,000 miles were driven during 20X8
b. Straight-line
c. Double-declining-balance
6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:
a. The machine s book value on December 31, 20X5, assuming use of the straight-line depreciation method
b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.
c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.
7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.
Instructions
a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.
b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company s depreciation expense for 20X5.
c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.
Aug 29, 2021 | Uncategorized
Week Two Assignment Intermediate Accounting
E 4-16 Statement of cash flows preparation
The flowing summary transactions occurred during 2011 for Bluebonnet Bakers
Cash received from:
Customers 380,000
Interest on note receivable 6,000
Sale of investments 30,000
Proceeds from note payable 100,000
Cash paid for:
Purchase of inventory 160,000
Interest on note payable 5,000
Purchase of equipment 85,000
Salaries to employees 90,000
Principal on note payable 25,000
Payment of dividends to shareholders 20,000
The balance of cash and cash equivalents at the beginning of 2011 was 17,000.
Required:
Prepare a statement of cash flows for 2011 for Bluebonnet Bakers. Use the direct method for reporting operating activities.
E 4-19 Statement of cash flows directly from transactions
The following transactions occurred during March 2011 for Wainwright Corporation. The company owns and operates a wholesale warehouse.
1. Issued 30,000 shares of capital stock in exchange for 3000,000 in cash.
2. Purchased equipment at a cost of 40,000. 10,000 cash was paid and a note payable was signed for balance owed.
3. Purchased inventory on account at a cost of 90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled 120,000. The cost of the goods sold was 70,000.
5. Paid 5,000 in rent on the warehouse building for the month of March
6. Paid 6,000 to an insurance company for fire and liability insurance fo a one-year period beginning April 1, 2011.
7. Paid 70,000 on account for the merchandise purchased in 3.
8. Collected 55,000 from customers on account.
9. Recorded depreciation expense of 1,000 for the month on the equipment.
Required:
1. Analyze each transaction and classify each as a financing, investing and/or operating activity ( a transaction can represent more than one type of activity). In doing so, also indicate the cash effect of each, if any. If there is no cash effect, simply place a check mark in the appropriate column(s). Example:
Financing Investing Operating
1. 300,000
2. Prepare a statement of cash flows, using the direct method to present cash flows from operating activities. Assume the cash balance at the beginning of the month was 40,000.
E 4-22 Statement of cash flows; indirect method
Presented below is the 2011 income statement and comparative balance sheet information for Tiger Enterprises
Tiger Enterprises
Income Statement
For the Year Ended December 31, 2011
($ in thousands)
Sales Revenue 7,000
Operating Expense:
Cost of goods sold 3,360
Depreciation 240
Insurance 100
Administrative and other 1,800
Total operating expenses 5,000
Income before income taxes 1,500
Income tax expense 600
Net income 900
Balance Sheet Information($ in thousands) Dec 31,11 Dec 31,10
Assets:
Cash 300 200
Accounts receivable 750 830
Inventory 640 600
Prepaid insurance 50 20
Plant and equipment 2,100 1,800
Less: Accumulated depreciation (840) (600)
Total assets 3,000 2,850
Liabilities and Shareholders Equity:
Accounts Payable 300 360
Payables for administrative and other expenses 300 400
Income taxes payable 200 150
Note payable (due 12/31/12) 800 600
Common stock 900 800
Retained earnings 500 540
Total liabilities and shareholders equity 3,000 2,850
Required:
Prepare Tiger s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments.)
Judgment Case 4-9 Income Statement presentation
Each of the following situations occurred during 2011 for one of your audit clients:
1. The write-off of inventory due to obsolescence.
2. Discovery that depreciation expenses were omitted by accident from 2010 s income statement.
3. The useful lives of all machinery were changed from eight to five years.
4. The depreciation method used for all equipment was changed from the declining-balance to the straight-line method.
5. Ten million dollars face value of bonds payable were repurchased (paid off) prior to maturity resulting in a material loss of 500,000. The company considers the event unusual and infrequent.
6. Restructuring cost were incurred
7. The Stridewell Company, manufacturing of shoes, sold all of its retail outlets. It will continue to manufacture and sell its shoes to other retailers. A loss was incurred in the disposition of the retail stores. The retail stores are considered components of the entity.
8. The inventory costing method was changed from FIFO to average cost.
Required:
1. For each situation, identify the appropriate reporting treatment from the list below (consider each event to be material):
a. As an extraordinary item.
b. As an unusual or infrequent gain or loss
c. As a prior period adjustment.
d. As a change in accounting principle
e. As a discontinued operation.
f. As a change in accounting estimate.
g. As a change in accounting estimate achieved by a change in accounting principle.
2. Indicate whether each situation would be included in the income statement continuing operations (CO) or below continuing operations (BC), or if it would appear as an adjustment to retained earnings (RE). Use the format shown below to answer requirements 1 and 2.
Situation Treatment Financial Stmt Presentation
(CO, BC, or RE)
1
2
3
4
5
6
E 5-3 Installment sales method; journal entries
Charter Corporation, which began business in 2011, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2011 and 2012:
2011 2012
Installment sales 360,000 350,000
Cost of installment sales 234,000 245,000
Cash collections on installment sales during:
2011 150,000 100,000
2012 – 120,000
Required:
Prepare summary journal entries for 2011 and 2012 to account for the installment sales and cash collections. The company uses the perpetual inventory system.
E 5-10 Long-term contract; percentage of completion and completed contract and cost recovery methods
On June 15, 2011, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.C. for 220 million. The expected completion date is April 1, 2013, just in time for the 2013 baseball season. Cost incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions)
2011 2012 2013
Cost incurred during the year $ 40 $ 80 $ 50
Estimated cost to complete as of 12/31 120 60 –
Required:
1. Determine the amount of gross profit or loss to be recognized in each of the three years using the percentage-of completion method.
2. How much revenue will Sanderson report in its 2011 and 2012 income statements related to this contract using the completed contract method?
3. Determine the amount of gross profit or loss to be recognized in each of the three years using the completed contract method.
4. Determine the amount of revenue, cost and gross profit or loss to be recognized in each of the three years under IFRS, assuming that using the percentage-of-completion method is not appropriate.
5. Suppose the estimated costs to complete at the end of 2012 are 80 million instead of 60 million. Determine the amount of gross profit or loss to be recognized in 2012 using the percentage-of-completion method.
Case 5-23 Using ratios to test reasonableness of data
You are a new staff accountant with a large regional CPA firm, participating in your first audit. You recall from your auditing class that CPA s often use ratios to test the reasonableness of accounting numbers provided by the client. Since ratios reflect the relationships among various account balances, if it is assumed that prior relationships still hold, prior years ratios can be used to estimate what current balances should approximate. However, you never actually performed this kind of analysis until now. The CPA in charge of the audit of Covington Pike Corporation brings you the list of ratios shown below and tells you these reflect the relationships maintained by Covington Pike in recent years.
Profit margin on sales = 5 %
Return on assets = 7.5%
Gross profit margin = 40%
Inventory turnover ratio = 6 times
Receivables turnover ratio = 25
Acid-test ratio = 9
Current ratio = 2 to 1
Return on shareholders equity = 10%
Debt to equity ratio = 1/3
Times interest earned ratio = 12 times
Jotted in the margins are the following notes:
Net income 15,000
Only one short-term not (5,000); all other current liabilities are trade accounts
Property, plant, and equipment are the only noncurrent assets
Bonds payable are the only noncurrent liabilities
The effective interest rate on short-term notes and bonds is 8%
No investment securities
Cash balance totals 15,000
Required: You are requested to approximate the current year s balances in the form of a balance sheet and income statement to the extent the information allows. Accompany those financial statements with the calculations you use to estimate each amount reported.
Aug 29, 2021 | Uncategorized
Week Two Exercise Assignment
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books enter tainers for theaters, parties, conventions, and so forth. The company s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a Interest owed on the company’s bank loan, to be paid in early July
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client’s point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm’s copy machine, incurred and paid in June
2. Understanding the closing process. Examine the following list of accounts:
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Note Payable
|
Accumulated Depreciation: Building
|
|
Alex Kenzy, Drawing
|
Accounts Payable
|
|
Product Revenue
|
Cash
|
|
Accounts Receivable
|
Supplies Expense
|
|
Utility Expense
|
Which of the preceding accounts
a. appear on a post-closing trial balance?
b. are commonly known as temporary, or nominal, accounts?
c. generate a debit to Income Summary in the closing process?
d. are closed to the capital account in the closing process?
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
Salaries owed to employees at year-end amounted to $1,000.
The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months rent of Sally Corporation s headquarters, beginning on November 1.
Sally Corporation s accounting year ends on December 31.
Instructions
Analyze the five preceding cases individually and determine the following:
a. The typeof adjusting entry needed at year-end (Use the following codes: A, adjust ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
b. The year-end journal entry to adjust the accounts
c. The income statement impact of each adjustment (e.g., increases total revenues by $500)
4. Adjusting entries. You have been retained to examine the records of Mary s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
Unrecorded interest owed to the center totaled $275 as of December 31.
All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
Depreciation on the school s van was $3,000 for the year.
On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Pre paid Rent, a new account.
Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
Mary s Day Care paid insurance premiums as follows, each time debiting Pre paid Insurance:
|
Date Paid
|
Policy No.
|
Length of Policy
|
Amount
|
|
Feb. 1, 20X2
|
1033MCM19
|
1 year
|
$540
|
|
Jan. 1, 20X3
|
7952789HP
|
1 year
|
912
|
|
Aug. 1, 20X3
|
XQ943675ST
|
2 years
|
840
|
Instructions
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January:
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Balance per bank
|
$6,150
|
|
Balance per company records
|
3,580
|
|
Bank service charge for January
|
20
|
|
Deposits in transit
|
940
|
|
Interest on note collected by bank
|
100
|
|
Note collected by bank
|
1,000
|
|
NSF check returned by the bank with the bank statement
|
650
|
|
Outstanding checks
|
3,080
|
Instructions:
a. Prepare Palmetto s January bank reconciliation.
b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly s account.
b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi dent of Sonic Sound directed the sales staff to move some product this year. The president noted that the credit evaluation department was being disbanded be cause it had restricted the company s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
|
20X2
|
20X1
|
|
Sales
|
$23,987,000
|
$8,423,000
|
|
|
Accounts Receivable, 12/31
|
12,444,000
|
1,056,000
|
|
|
Allowance for Uncollectible Accounts, 12/31
|
?
|
23,000 cr.
|
|
|
|
|
|
|
The $12,444,000 receivables balance was aged as follows:
|
Age of Receivable
|
Amount
|
Percentage of Accounts Expected to Be Collected
|
|
Under 31 days
|
$4,321,000
|
99%
|
|
31260 days
|
4,890,000
|
90
|
|
61290 days
|
1,067,000
|
80
|
|
Over 90 days
|
2,166,000
|
60
|
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
Week Two Exercise Assignment
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books enter tainers for theaters, parties, conventions, and so forth. The company s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a Interest owed on the company’s bank loan, to be paid in early July
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client’s point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm’s copy machine, incurred and paid in June
2. Understanding the closing process. Examine the following list of accounts:
|
Note Payable
|
Accumulated Depreciation: Building
|
|
Alex Kenzy, Drawing
|
Accounts Payable
|
|
Product Revenue
|
Cash
|
|
Accounts Receivable
|
Supplies Expense
|
|
Utility Expense
|
Which of the preceding accounts
a. appear on a post-closing trial balance?
b. are commonly known as temporary, or nominal, accounts?
c. generate a debit to Income Summary in the closing process?
d. are closed to the capital account in the closing process?
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
Salaries owed to employees at year-end amounted to $1,000.
The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months rent of Sally Corporation s headquarters, beginning on November 1.
Sally Corporation s accounting year ends on December 31.
Instructions
Analyze the five preceding cases individually and determine the following:
a. The typeof adjusting entry needed at year-end (Use the following codes: A, adjust ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
b. The year-end journal entry to adjust the accounts
c. The income statement impact of each adjustment (e.g., increases total revenues by $500)
4. Adjusting entries. You have been retained to examine the records of Mary s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
Unrecorded interest owed to the center totaled $275 as of December 31.
All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
Depreciation on the school s van was $3,000 for the year.
On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Pre paid Rent, a new account.
Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
Mary s Day Care paid insurance premiums as follows, each time debiting Pre paid Insurance:
|
Date Paid
|
Policy No.
|
Length of Policy
|
Amount
|
|
Feb. 1, 20X2
|
1033MCM19
|
1 year
|
$540
|
|
Jan. 1, 20X3
|
7952789HP
|
1 year
|
912
|
|
Aug. 1, 20X3
|
XQ943675ST
|
2 years
|
840
|
Instructions
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January:
|
Balance per bank
|
$6,150
|
|
Balance per company records
|
3,580
|
|
Bank service charge for January
|
20
|
|
Deposits in transit
|
940
|
|
Interest on note collected by bank
|
100
|
|
Note collected by bank
|
1,000
|
|
NSF check returned by the bank with the bank statement
|
650
|
|
Outstanding checks
|
3,080
|
Instructions:
a. Prepare Palmetto s January bank reconciliation.
b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly s account.
b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi dent of Sonic Sound directed the sales staff to move some product this year. The president noted that the credit evaluation department was being disbanded be cause it had restricted the company s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
|
20X2
|
20X1
|
|
Sales
|
$23,987,000
|
$8,423,000
|
|
|
Accounts Receivable, 12/31
|
12,444,000
|
1,056,000
|
|
|
Allowance for Uncollectible Accounts, 12/31
|
?
|
23,000 cr.
|
|
|
|
|
|
|
The $12,444,000 receivables balance was aged as follows:
|
Age of Receivable
|
Amount
|
Percentage of Accounts Expected to Be Collected
|
|
Under 31 days
|
$4,321,000
|
99%
|
|
31260 days
|
4,890,000
|
90
|
|
61290 days
|
1,067,000
|
80
|
|
Over 90 days
|
2,166,000
|
60
|
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
Week Two Exercise Assignment Revenue and Expenses
1. Recognition of concepts. Ron Carroll operates a small company that books enter tainers for theaters, parties, conventions, and so forth. The company s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing. a. Amounts paid on June 30 for a 1-year insurance policy. b. Professional fees earned but not billed as of June 30. c. Repairs to the firm s copy machine, incurred and paid in June. d. An advance payment from a client for a performance next month at a convention. e. The payment in part (d) from the client s point of view. f. Interest owed on the company s bank loan, to be paid in early July. g. The bank loan payable in part (f). h. Office supplies on hand at year-end.
2. Understanding the closing process. Examine the following list of accounts: Interest Payable Accumulated Depreciation: Equipment Alex Kenzy, Drawing Accounts Payable Service Revenue Cash Accounts Receivable Supplies Expense Interest Expense
Which of the preceding accounts a. appear on a post-closing trial balance? b. are commonly known as temporary, or nominal, accounts? c. generate a debit to Income Summary in the closing process? d. are closed to the capital account in the closing process? 3. Adjusting entries and financial statements. The following information pertains to Fixation Enterprises: The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one third of this amount had been earned. Fixation provided $2,500 of services to Artech Corporation; no billing had been made by December 31. Salaries owed to employees at year-end amounted to $1,650. The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period. The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months rent of Fixation s headquarters, beginning on November 1. Fixation s accounting year ends on December 31.
Instructions Analyze the five preceding cases individually and determine the following: a. The type of adjusting entry needed at year-end (Use the following codes: A, adjust ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue). b. The year-end journal entry to adjust the accounts. c. The income statement impact of each adjustment (e.g., increases total revenues by $500).
4. Adjusting entries. You have been retained to examine the records of Kathy s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following: On January 1, 20X3, the Supplies account had a balance of $2,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31. Unrecorded interest owed to the center totaled $275 as of December 31. All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $75,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31. Depreciation on the school s van was $3,000 for the year. On August 1, the center began to pay rent in 6-month installments of $21,000. Kathy wrote a check to the owner of the building and recorded the check in Pre paid Rent, a new account. Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday. Kathy s Day Care paid insurance premiums as follows, each time debiting Pre paid Insurance:
Date Paid Policy No. Length of Policy Amount Feb. 1, 20X2 1033MCM19 1 year $540 Jan. 1, 20X3 7952789HP 1 year 912 Aug. 1, 20X3 XQ943675ST 2 years 840 Instructions
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January: Balance per bank $6,150 Balance per company records $3,580 Bank service charge for January $20 Deposits in transit $940 Interest on note collected by bank $100 Note collected by bank $1,000 NSF check returned by the bank with the bank statement $650 Outstanding checks $3,080
Instructions: a. Prepare Palmetto s January bank reconciliation. b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly s account. b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi dent of Sonic Sound directed the sales staff to move some product this year. The president noted that the credit evaluation department was being disbanded be cause it had restricted the company s growth. Credit decisions would now be made by the sales staff. By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department: 20X2 20X1 Sales $23,987,000 $8,423,000 Accounts Receivable, 12/31 12,444,000 1,056,000 Allowance for Uncollectible Accounts, 12/31 ? 23,000 cr.
The $12,444,000 receivables balance was aged as follows: Age of Receivable Amount Percentage of Accounts Expected to Be Collected Under 31 days $5,321,000 99% 31260 days 3,890,000 90 61290 days 1,067,000 80 Over 90 days 2,166,000 60
Assume that no accounts were written off during 20X2. Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2. b. What is the company s Uncollectible Accounts expense for 20X2? c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2. d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
|
Acme Manufacturing Company of Portland, Oregon has a Research & Development department that currently provides services to in-house manufacturing departments. Other manufacuturers have expressed interested in using Acme’s R&D department for special projects. Management has decided to conduct an activity-based costing system in order to determine charges for both outside and in-house users of the department’s services.
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R&D activities fall into four pools with the following annual costs: |
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Market Analysis |
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10,50,000 |
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Product Design |
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23,50,000 |
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Product Development |
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36,00,000 |
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Prototype Testing |
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14,00,000 |
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Activity analysis determines that the appropriate cost drivers and their usage for the four activities are: |
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Activities |
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Cost Drivers |
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Total Estimated Drivers |
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Market Analysis |
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Hours of analysis |
1500 hours |
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Product Design |
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Number of designs |
2500 designs |
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Product Development |
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Number of products |
90 products |
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Prototype Testing |
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Number of tests |
500 tests |
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a) Compute the activity-based overhead rate for each pool. Use appropriate excel formulas to show your work |
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Market Analysis |
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Product Design |
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Product Development |
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Prototype Testing |
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b) How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of |
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market analysis time, was provided 280 designs relating to 10 products and requested 92 engineering tests |
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Show your work. |
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Market Analysis |
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Product Design |
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Product Development |
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Prototype Testing |
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Total |
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c) How much cost would serve as the basis for for pricing an R&D bid with an outside company on a contract that |
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would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests? |
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Show your work. |
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Market Analysis |
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Product Design |
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Product Development |
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Prototype Testing |
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Total |
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Aug 29, 2021 | Uncategorized
ACC/561 Wiley Plus
E20-3Garza and Neely, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,400 1,860 2,310 2,680
Tax 3,360 2,800 2,240 2,820
Consulting 1,730 1,730 1,730 1,730
Average hourly billing rates are: auditing $83, tax $93, and consulting $105.
Instructions
Prepare the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue
E22-1 Stanton Company is planning to produce 1,400 units of product in 2012. Each unit requires 3.50 pounds of materials at $7.00 per pound and a half-hour of labor at $12.60 per hour. The overhead rate is 40% of direct labor.
Instructions
(a)Compute the budgeted amounts for 2012 for direct materials to be used, direct labor, and applied overhead.
(b)Compute the standard cost of one unit of product.
BE23-3In Harley Company, it costs $29 per unit ($20 variable and $9 fixed) to make a product that normally sells for $52. A foreign wholesaler offers to buy 3,180 units at $26 each. Harley will incur special shipping costs of $2 per unit. Assuming that Harley has excess operating capacity, prepare an incremental analysis that indicates the net income (loss) Harley would realize by accepting the special order. Should the order be accepted?
BE23-4Vintech Manufacturing incurs unit costs of $8 ($5 variable and $3 fixed) in making a subassembly part for its finished product. A supplier offers to make 19,700 of the part at $5.90 per unit. If the offer is accepted, Beamer will save all variable costs but no fixed costs.
Prepare an analysis showing the total cost saving, if any, Beamer will realize by buying the part. What should they do?
BE23-6Ridley Company has a factory machine with a book value of $97,200 and a remaining useful life of 4 years. A new machine is available at a cost of $190,800. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $556,000 to $402,200.
Prepare an analysis showing whether the old machine should be retained or replaced.
Aug 29, 2021 | Uncategorized
Uzi Company received a charter granting the right to issue 200,000 shares of $1 par value common stock and 10,000 shares of 8% cumulative and nonparticipating, $50 par value preferred stock that is callable at $80 per share. Selected transactions are presented below.
2011
Feb. 19 Issued 45,000 shares of common stock at par for cash.
22 Gave the corporation s promoters 30,000 shares of common stock for their services in getting the corporation organized. The directors valued the services at $50,000.
Mar 30 Exchanged 100,000 shares of common stock for the following assets at fair market values: land, $25,000; building, $100,000; and machinery, $125,000.
Dec. 31 Closed the Income Summary account. A $25,000 loss was incurred.
2012
Jan. 12 Issued 1,000 shares of preferred stock at $75 per share.
Dec. 15 The board of directors declared an 8% dividend on preferred shares and $0.10 per share on outstanding common shares, payable on January 31 to the January 17 stockholders of record.
31 Closed the Income Summary account. A $69,000 net income was earned.
2013
Jan. 31 Paid the previously declared dividends.
Required:
Prepare general journal entries to record the selected transactions.
Prepare a stockholders equity section as of the close of business on December 31, 2012.
Determine the book value per preferred share and per common stock as of December 31, 2012.
Provide a rationale between 200 and 300 words in length for buying or not buying this stock based on the financial information presented.
Aug 29, 2021 | Uncategorized
1.Vaden Company produces a single product. The cost of producing and selling a single unit of this product at the company s normal activity level of 50,000 units per month is as follows:
Direct materials$32.50
Direct labor 7.20
Variable manufacturing overhead 1.30
Fixed manufacturing overhead 20.90
Variable selling & administrative expense 1.90
Fixed selling & administrative expense 7.30
The normal selling price of the product is $75.00 per unit.
An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would have no effect on the company s normal sales price and would not change the total amount of the company s fixed costs. The variable selling and administrative expense would be $0.30 less per unit on this order than on normal sales.
Direct labor is a variable cost in this company.
Required (10 points):
a.Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $65.60 per unit. By how much would this special order increase (decrease) the company s net operating income for the month?
b.Suppose the company is already operating at capacity when the special order is received from the overseas customer. What would be the opportunity cost of each unit delivered to the overseas customer?
Aug 29, 2021 | Uncategorized
*Problem 12-11A
The comparative balance sheets for Vanco Company as of December 31 are presented below.
VANCO COMPANY
Comparative Balance Sheets
December 31
Assets 2012 2011
Cash $ 99,688 $ 65,970
Accounts receivable 73,300 85,028
Inventory 222,026 208,172
Prepaid expenses 22,400 30,786
Land 212,570 190,580
Equipment 329,850 227,230
Accumulated depreciation equipment (65,970 ) (51,310 )
Buildings 293,200 293,200
Accumulated depreciation buildings (87,960 ) (58,640 )
Total $1,099,104 $991,016
Liabilities and Stockholders Equity
Accounts payable $ 65,574 $ 52,776
Bonds payable 439,800 439,800
Common stock, $1 par 293,200 234,560
Retained earnings 300,530 263,880
Total $1,099,104 $991,016
Additional information:
1. Operating expenses include depreciation expense of $61,572.
2. Land was sold for cash at book value.
3. Cash dividends of $17,592 were paid.
4. Net income for 2012 was $54,242.
5. Equipment was purchased for $134,872 cash. In addition, equipment costing $32,252 with a book value of
$14,660 was sold for $11,728 cash.
6. 58,640 shares of $1 par value common stock were issued in exchange for land with a fair value of $58,640.
Prepare a statement of cash flows for the year ended December 31, 2012, using the indirect method. (Show
amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000)
Aug 29, 2021 | Uncategorized
1) Vaughn Company, which uses a periodic inventory system, had a beginning inventory on May 1, of 400 units of Product A at a cost of $7 per unit. During May, the following purchases and sales were made.
Purchases
May 6 ——–375 units at $9
May 14——– 250 units at $10
May 21 ——- 300 units at $11
May 28 ——- 452 units at $13
—————- 1350 ———-
Sales
May 4 ——— 275 units
May 8 ——— 300 units
May 22——– 400 units
May 24 ——– 225 units
—————–1200—-
Instructions: Compute the May 31 ending inventory and May cost of goods sold under (a) Average Cost, (b) FIFO, and (c) LIFO. Provide appropriate supporting calculations.
(a) Average Ending Inventory = $_________;
Cost of Goods Sold = $_________.
(b) FIFO Ending Inventory = $_________;
Cost of Goods Sold = $_________.
(c) LIFO Ending Inventory = $_________;
Cost of Goods Sold = $_________.
Part 2 Which of the following accounts should be closed with a debit or a credit to Income Summary at the end of the fiscal year? If it is not closed to Income
Summary, mark as n/a.
1. Sales
2. Cost of Goods Sold
3. Accumulated Depreciation
4. Merchandise Inventory
5. Sales Returns and Allowances
6. H. Denton, Drawing
7. Freight-out
8. Sales Discounts
9. JInterest Expense
10. H. Denton, Capital
——————————————————————————–
Please help me solve the missing amounts.
1)”All three are related because they are from the same business.” —- This threw me off… please help.
Beginning of the year
Total Assets = $85,000
Total Liabilities =
Total Owner’s Equity = 35,000
End of the Year
Total Assets = $90,000
Total Liabilities = 40,000
Total Owner’s Equity =
Owner’s Equity Changes During the year
Investments = $12,000
Drawings = 20,000
Revenues = 80,000
Expenses =
—————————————…
2)Calculate B. Petry company’s 2010 net income.
B. Petry, Capital January 1, 2010 = $125,000
B. Petry, Capital December 31, 2010 = 160,000
Petry investments during 2010 = 20,000
Aug 29, 2021 | Uncategorized
Problem 19-1
Veronica Company allocates overhead costs to jobs on the basis of direct labor-hours. Its estimated average monthly factory costs for 2005 were as follows:
Average Monthly Costs
Direct material cost $60,000
Direct labor cost 300,000
Overhead cost 180,000
Its estimated average monthly direct labor-hours are 20,000. Among the jobs worked on November 2005 were two jobs, G and H, for which the following information was collected:
Job G Job H
Direct material cost $10,000 $10,000
Direct labor cost 28,000 32,000
Direct labor-hours 2,400 2,800
Required:
a) Compute the overhead rate for Veronica Company.
b) Compute the total production costs of jobs G and H.
c) At what amounts would customers be billed if the company’s practice was to charge 180 percent of the production cost of each job?
Aug 29, 2021 | Uncategorized
Problem 19-1
Veronica Company allocates overhead costs to jobs on the basis of direct labor-hours. Its estimated average monthly factory costs for 2005 were as follows:
Average Monthly Costs
Direct material cost $60,000
Direct labor cost 300,000
Overhead cost 180,000
Its estimated average monthly direct labor-hours are 20,000. Among the jobs worked on November 2005 were two jobs, G and H, for which the following information was collected:
Job G Job H
Direct material cost $10,000 $10,000
Direct labor cost 28,000 32,000
Direct labor-hours 2,400 2,800
Required:
a) Compute the overhead rate for Veronica Company.
b) Compute the total production costs of jobs G and H.
c) At what amounts would customers be billed if the company’s practice was to charge 180 percent of the production cost of each job?
Aug 29, 2021 | Uncategorized
Vintage Cellars manufactures a 1,000-bottle wine storage system that maintains optimum temperature (55-57 F) and humidity (50-80%) for aging wines. The system has a backup battery for power failures and can store red and white wines at different temperatures. The following table depicts how average cost varies with the number of units manufactured and sold (per month):
Required: Prepare a table that computes the total cost and marginal cost for each quantity between 1 and 10 units. What is the relation between average cost and marginal cost? What is the opportunity cost of producing one more unit if the company is currently producing and selling four units? Vintage Cellars sells the units for $9,000 each. This price does not vary with the number of units sold. How many units should Vintage manufacture and sell each month?
Aug 29, 2021 | Uncategorized
Your Company is planning an expansion and needs to develop an estimate of the firm s cost of capital. You have gathered the following data:
Tax rate is 40%
The price of Your Company s 12 percent coupon, annual payment, noncallable $1,000 face value bonds with 15 years to maturity is $1,153.72. The company does not use short-term debt on a permanent basis. New bonds would be privately placed with no flotation cost.
The price of Your Company s 10 percent, $100 par value, quarterly dividend preferred stock is $111.10.
Your Company s common stock is selling for $50 per share. Its last dividend was $4.19, and dividends are expected to grow at a constant 5 percent rate.
If Your Company issues new common stock, it will incur a 15 percent flotation cost.
Your Company s target capital structure is 30 percent long-term debt, 10 percent preferred stock, and 60 percent equity.
Determine:
(a) The cost of debt.
(b) The cost of retained earnings.
(c) The cost of new equity.
(d) The WACC using retained earnings.
Aug 29, 2021 | Uncategorized
PROBLEMS
WACC Calculation
1. Blazingame Inc.’s capital components have the following market values:
Debt $35,180,000
Preferred Stock $17,500,000
Common Equity $48,350,000
Calculate the firm’s capital structure and show the weights that would be used for a weighted average cost of capital (WACC) computation.
2. The Aztec Corporation has the following capital components and costs. Calculate Aztec’s WACC.
Component Value Cost
Debt $23,625 12.0%
Preferred Stock $ 4,350 13.5%
Common Equity $52,275 19.2%
3. Willerton Industries Inc. has the following balances in its capital accounts as of 12/31/x3:
Long Term Debt $65,000,000
Preferred Stock $15,000,000
Common Stock $40,000,000
Paid in Excess $15,000,000
Retained Earnings $37,500,000
Calculate Willerton s capital structure based on book values.
5. Again referring to Willerton of the two previous problems, assume the firm s cost of retained earnings is 11% and its marginal tax rate is 40%, calculate its WACC using its book value based capital structure ignoring floatation costs. Make the same calculation using the market value based capital structure. How significant is the difference?
6. A relatively young firm has capital components valued at book and market and market component costs as follows. No new securities have been issued since the firm was originally capitalized.
Values Market
Component Market Book Cost
Debt $42,830 $40,000 8.5%
Preferred Stock $10,650 $10,000 10.6%
Common Equity $65,740 $32,000 25.3%
a. Calculate the firm’s capital structures and WACCs based on both book and market values, and compare the two.
b. What appears to have happened to interest rates since the company was started
c. Does the firm seem to be successful Why
d. What would be the implication of using a WACC based on book as opposed to market values In other words, what kinds of mistakes might management make by using the book values?
7. Five years ago Hemingway Inc. issued 6,000 thirty-year bonds with par values of $1,000 at a coupon rate of 8%. The bonds are now selling to yield 5%. The company also has 15,000 shares of preferred stock outstanding that pay a dividend of $6.50 per share. These are currently selling to yield 10%. Its common stock is selling at $21, and 200,000 shares are outstanding. Calculate Hemingway s market value based capital structure.
8. The Wall Company has 142,500 shares of common stock outstanding that are currently selling at $28.63. It has 4,530 bonds outstanding that won t mature for 20 years. They were issued at a par value of $1,000 paying a coupon rate of 6%. Comparable bonds now yield 9%. Wall s $100 par value preferred stock was issued at 8% and is now yielding 11%; 7,500 shares are outstanding. Develop Wall s market value based capital structure.
9. The market price of Albertson Ltd. s common stock is $5.50, and 100,000 shares are outstanding. The firm’s books show common equity accounts totaling $400,000. There are 5,000 preferred shares outstanding that originally sold for their par value of $50, pay an annual dividend of $3, and are currently selling to yield an 8% return. Also, 200 bonds outstanding that were issued five years ago at their $1,000 face values for 30-year terms pay a coupon rate of 7%, and are currently selling to yield 10%. Develop Albertson’s capital structure based on both book and market values.
10. Asbury Corp. issued 30-year bonds 11 years ago with a coupon rate of 9.5%. Those bonds are now selling to yield 7%. The firm also issued some 20-year bonds two years ago with an 8% coupon rate. The two bond issues are rated equally by Standard and Poors and Moody s. Asbury s marginal tax rate is 38%.
a. What is Asbury s after-tax cost of debt
b. What is the current selling price of the 20-year bonds?
11. The Dentite Corporation s bonds are currently selling to yield new buyers a 12% return on their investment. Dentite s marginal tax rate including both federal and state taxes is 38%. What is the firm s cost of debt?
12. Kleig Inc.’s bonds are selling to yield 9%. The firm plans to sell new bonds to the general public and will therefore incur flotation costs of 6%. The company’s marginal tax rate is 42%.
a. What is Kleig’s cost of debt with respect to the new bonds? (Hint: Adjust the cost of debt formula to include flotation costs.)
b. Suppose Kleig also borrows directly from a bank at 12%.
1. What is its cost of debt with respect to such bank loans? (Hint: Would bank loans be subject to flotation costs?)
2. If total borrowing is 60% through bonds and 40% from the bank, what is Kleig’s overall cost of debt (Hint: Think weighted average.)
Cost of Preferred Stock: Example 13-4 (page 568)
13. Harris Inc. s preferred stock was issued five years ago to yield 9%. Investors buying those shares on the secondary market today are getting a 14% return. Harris generally pays flotation costs of 12% on new securities issues. What is Harris s cost of preferred financing
14. Fuller, Inc. issued $100, 8% preferred stock five years ago. It is currently selling for $84.50. Assuming Fuller has to pay floatation costs of 10%, what is Fuller s cost of preferred stock?
15. A few years ago Hendersen Corp issued preferred stock paying 8% of its par value of $50. The issue is currently selling for $38. Preferred stock flotation costs are 15% of the proceeds of the sale. What is Hendersen’s cost of preferred stock?
16. New buyers of Simmonds Inc. stock expect a return of about 22%. The firm pays flotation costs of 9% when it issues new securities. What is Simmonds cost of equity (Hint: This problem is very simple since we don t have to estimate the investors return.)
a. From retained earnings?
b. From new stock?
17. Klints Inc. paid an annual dividend of $1.45 last year. The firm s stock sells for $29.50 per share, and the company is expected to grow at about 4% per year into the foreseeable future. Estimate Klints cost of retained earnings.
Cost of RE and New Stock: Examples 13-6 and 13-8 (pages 570 and 572)
18. The Pepperpot Company’s stock is selling for $52. Its last dividend was $4.50, and the firm is expected to grow at 7% indefinitely. Flotation costs associated with the sale of common stock are 10% of the proceeds raised. Estimate Pepperpot’s cost of equity from retained earnings and from the sale of new stock.
19. The Longlife Insurance Company has a beta of .8. The average stock currently returns 15% and short-term treasury bills are offering 6%. Estimate Longlife’s cost of retained earnings.
20. The Longlife Insurance Company of the preceding problem has several bonds outstanding that are currently selling to yield 9%. What does this imply about the cost of the firm’s equity?
21. Hammell Industries has been using 10% as its cost of retained earnings for a number of years. Management has decided to revisit this decision based on recent changes in financial markets. An average stock is currently earning 8%, treasury bills yield 3.5%, and shares of Hammell s stock are selling for $29.44. The firm just paid a dividend of $1.50, and anticipates growing at 5% for the foreseeable future. Hammell s CFO recently asked an investment banker about issuing bonds and was told the market was demanding a 6.5% coupon rate on similar issues. Hammell stock has a beta of 1.4. Recommend a cost of retained earnings for Hammell.
Aug 29, 2021 | Uncategorized
The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:
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Accounts Payable
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$38,080
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Accounts Receivable
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6,768
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Cash
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7,781
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Common Stock
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3,952
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Cost of Goods Sold
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352,488
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Income Tax Expense
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7,981
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Interest Expenses
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2,064
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Membership Revenues
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3,048
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Net Sales
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466,114
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Operating, Selling and Administrative Expenses
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88,873
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Retained Earnings
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72,978
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Required:
Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results
Aug 29, 2021 | Uncategorized
At year-end 2013, Wallace Landscaping s total assets were $1.8 million and its accounts payable were $440,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $390,000 in 2013, and retained earnings were $280,000. Wallace has arranged to sell $160,000 of new common stock in 2014 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2014. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its profit margin on sales is 6%, and 55% of earnings will be paid out as dividends.
a. What was Wallace’s total long-term debt in 2013? Round your answer to the nearest dollar.
What were Wallace’s total liabilities in 2013? Round your answer to the nearest dollar.
b. How much new long-term debt financing will be needed in 2014? (Hint: AFN – New stock = New long-term debt.) Round your answer to the nearest dollar.
Aug 29, 2021 | Uncategorized
1.Wasson Company reported the following year-end information:Beginning work in process inventory$35000 Beginning raw materials inventory18000 Ending work in process inventory 38000 Ending raw materials inventory 15000 Raw materials purchased 56000 Direct labor180000 Manufacturing overhead 120000
How much is Wasson’s total cost of work in process for the year?
a608000
b863000
c860000
d898000
2.Edmiston Company reported the following year-end information:beginning work in process inventory $80000;cost of goods manufactured 780000;beginning finished goods inventory 50000;ending work in process inventory 70,000;and ending finished goods inventory 40000. How much is Edmiston’s cost of goods sold for the year?
a780000
b790000
c770000
d800000
3.Using the following information, compute the direct materials used
Raw materials inventory, Jan.1 $20000
Raw materials inventory, Dec.31 40000
Work in process, Jan.1 18000
Work in process, Dec.31 12000
Finished goods, Jan.1 40000
Finished goods, Dec.31 32000
Raw materials purchases(NNN) NNN-NNNN
Direct labor 560000
Factory utilities 150000
Indirect labor 50000
Factory depreciation 400000
Operating expenses 420000
a1460000
b1420000
c1400000
d1380000
4.Assuming that the cost of goods manufactured is $2960000 compute the cost of goods sold using the following information
Raw materials inventory, Jan.1 $30000
Raw materials inventory, Dec.31 60000
Work in process, Jan.1 27000
Work in process, Dec.31 18000
Finished goods, Jan.1 60000
Finished goods, Dec.31 48000
Raw materials purchases(NNN) NNN-NNNN
Direct labor 690000
Factory utilities 225000
Indirect labor 75000
Factory depreciation 500000
Operating expenses 630000
a2969000
b2912000
c2948000
d2972000
5.Samson Company reported total manufaturing costs of $300000,manufacturing overhead totaling $52000 and direct materials totaling $64000. How much is direct labor cost?
a.Cannot be determined from the information provided
b416000
c416000
d184000
6.Given the following data for Mehring Company,compute (A) total manufacturing costs and (B) cost of goods manufactured:
Direct materials used $230000 Beginning work in process 30000 Direct labor 150000 Ending work in process 15000 Manufacturing overhead 225000 Beginning finished goods 38000 Operating expenses 263000 Ending finished goods 23000
(A) (B)
a$590000 620000
b605000 590000
c605000 620000
d620000 635000
7.Gulick Company developed the following data for the current year:
Beginning work in process inventory $160,000
Direct materials used 96,000
Actual overhead 192,000
Overhead applied 144,000
Cost of goods manufactured 176,000
Total manufacturing costs 480,000
7-1 Gulick Company’s direct labor cost for the year is
a.48,000
b.240,000
c.144,000
d.192,000
7-2 Gulick Company’s ending work in process inventory is
a.464,000
b.320,000
c.304,000
d.144,000
8.Hayward Manufacturing Company eveloped the following data:
Beginning work in process inventory 450000
Direct materials used 350000
Actual overhead 550000
Overhead applied 400000
Cost of goods manufactured 600000
Ending work in process 750000
Hayward Manufacturing Company’s total manufacturing costs for the period is
a950,000
b900,000
c650,000
d.cannot be determined from the data provided
9.Greer Company developed the following data for the current year:
Beginning work in process inventory $102000
Direct materials used 156,000
Actual overhead 132,000
Overhead applied 138,000
Cost of goods manufactured 675,000
Total manufacturing costs 642,000
9-1 How much is Greer Company’s direct labor cost for the year?
a.381,000
b.450,000
c.348,000
d.246,000
9-2 How much is Greer Company’s ending work in process inventory for the year?
a.69,000
b.363,000
c.63,000
d.279,000
10.Chmelar Manucfacturing Company developed the following data:
Beginning work in process inventory $80,000
Direct materials used 480,000
Actual overhead 560,000
Overhead applied 540,000
Cost of goods manufactured 1,280,000
Ending work in process 60,000
How much are total manufacturing cost for the period?
a.1,580,000
b.1,260,000
c.1,100,000
d.1,220,000
11.Maisley Company decided to analyze certain costs for June of the current year.Units started into production equaled 28,000 and ending work in process equaled 4,000.With no beginning work in process inventory,how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled 105,000?
a.$3.30
b.3.75
c.4.20
d.2.10
12.materials costs of 800,000 and conversion costs of 1,020,000 were charged to a processing department in the month of Sep. Materials are added at the beginning of the process,while conversion costs are incurred uniformly throughout the process.There were no units in beginning work in process,20,000 units were started into production in Sep. and there were 5,000 units in ending work in process that were 40%complete at the end of Sep.
What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in Sep.?
a1,500,000
b2,000,000
c1,606,000
d1,365,000
13.Materials costs of 800,000and conversion costs of 1,020,000were charged to processing department in the month of Sep. Materials are added at the beginning of the process,while conversion costs are incurred uniformly throughout the process.There were no units in beginning work in process, 20,000units were started into production in Sep. and there were 5,000units in ending work in process that were 40%complete at the end of Sep.
What was the total amount of manufacturing costs assigned to the 5,000 units in the ending work in process?
a455,000
b500,000
c320,000
d200,000
14.Mayer Company has recently tried to improve it’s analysis for its manufacturing process.Units started into production equaled 18,000 and ending work in process equaled 1,200units.Mayer had no beginning work in process inventory.Conversion costs are applied equally throughout production,and materials are applied at the beginning of the process.How much is the materials cost per unit if ending work in process was 25%completed and total materials costs equaled 90,000?
a5.00
b5.27
c20.00
d4.69
15.For the Assembly Department,unit materials cost is $8 and unit conversion cost is $12.If there are 10,000units in ending work in process 75% complete as to converstion costs, the costs to be assigned to the inventory are
a.200,000
b.170,000
c.150,000
d.180,000
16.The total costs accounted for in production cost report equal the
a.cost of units completed and transferred out only
b.cost of units started into production
c.cost of units completed and transferred out plus the cost of ending work in process
d.cost of beginning work in process plus the cost of units completed and transferred out
17.In a production cost report,which one of the following sections is not shown under costs?
a.Unit costs
b.Costs to be accounted for
c.Costs during the period
d.Units accounted for
18.A company incurs 2,400,000 of overhead each year in three departments:Processing,Packaging,and Testing.The company performs 800 processing transactions,200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge.The following data are available:
(Department) (Expected Use of Driver) (Cost)
Processing 800 1,000,000
Packaging 200,000 1,000,000
Testing 2,000 400,000
Production information for the two products is as follows:
(Department) (Oil Expected Use of Driver) (Sludge Expected Use of Driver)
Processing 300 500
Packaging 120,000 80,000
Testing 160,000 400
18-1 The amount of overhead assigned to Oil is:
a1,200,000
b1,295,000
c1,105,000
d920,000
18-2 The amount of overhead assigned to Sludge is
a1,200,000
b1,105,000
c1,295,000
d920,000
19.Which of the following statements is false?
a.ABC can weaken control over overhead costs
b.Under ABC,companies can trace many overhead costs directly to activities
c.ABC allows some indirect costs to be identified as direct costs
d.managers become more aware of their responsibility to control the activities that generated costs
20.Which of the following is a value-added activity?
a.Inventory storage
b.Machining
c.Building maintenance
d.Bookkeeping
21.Which of the following is value-added activity?
a.Inventroy control
b.Inspections
c.Packaging
d.Repair of machines
22.Which of the following is a non-value-added activity?
a.Inventory control
b.Machining
c.Assembly
d.Painting
23.Which of the following is a non-value-added activity?
a.painting
b.Finishing
c.Packaging
d.Building maintenance
24.A non-value-added activity in service enterprise is
a.providing legal research
b.delivering packages
c.consulting
d.bookkeeping
25.A division sold 100,000 calculators during 2013:
Sales 2,000,000
Variable Costs:
Materials 380,000
Order processing 150,000
Billing labor 110,000
Selling expenses 60,000
Total variable costs 700,000
Fixed costs 1,000,000
How much is the contribution margin per unit?
a.2
b.7
c.17
d.13
26.At the break-even point of 2,000units, variable costs are 110,000 and fixed costs are 64,000.How much is the selling price per unit?
a87
b23
c32
d Not enough information
27.The following information is available for Wade Corp:
Sales 550,000
Total fixed expenses 150,000
Cost of goods sold 390,000
Total variable expenses 360,000
A CVP income statement would report
a.gross profit of 160,000
b.contribution margin of 400,000
c.gross profit of 190,000
d.contribution margin of 190,000
28.Which is the true statement?
a.In a CVP income Statement, costs and expenses are classified only by function
b.The CVP income statement is prepared for both internal and external use
c.The CVp income statement shows contribution margin instead of gross profit
d.In a traditional income statement,costs and expenses are classified as either variable or fixed
29.Variable costs are 60% of the unit selling price.
The contribution margin ratio is 40%
The contribution margin per unit is $500
The fixed costs are $300,000
Which of the following does not express the break-even point?
a.300,000+.60X=X
b.300,000+.40X=X
c.300,000/$500=X
d.300,000/.40=X
30.A CVP graph does not include a
a.variable cost line
b.fixed cost line
c.sales line
d.total cost line
31.Boswell company reported the following information for the current year:Sales(50,000 units)$1,000,000, direct materials and direct labor 500,000, other variable costs 50,000, and fixed costs 270,000.
31-1 What is Boswell’s break-even point in units?
a.24,546
b.30,000
c.38,334
d.42,188
31-2 What is Boswell’s contribution margin ratio?
a.68%
b.45
c.32
d.55
32.Walters Corporation sells radios for %50 per unit.The fixed costs are 420,000 and the variable costs are 60% of the selling price.As a result of new automated equipment,it is anticipated that fixed costs will increase by 100,000 and variable costs will be 50% of the selling price.The new break-even point in units is
a21,000
b20,800
c20,600
d16,800
33.Cunningham,Inc. sells MP3 players for $60 each.Variable costs are $40 per unit, and fixed costs total $90,000.What sales are needed by Cunningham to break even?
a.120,000
b.225,000
c.270,000
d.360,000
34.What is the key factor in determining sales mix if company has limited resources?
a.Contribution margin per unit of limited resource
b.The amount of fixed costs per unit
c.Total contribution margin
d.The cost of limited resources
35. (Oven Hours Required) (Contribution Margin Per Unit)
Muffins 0.2 $3
Coffee Cakes 0.3 $4
The company has oven capacity of 1,200hours.How much will contribution margin be if it produces only the most profitable product?
a.12,000
b.16,000
c.18,000
d.24,000
36.Curtis Corporation’s contribution margin is $20 per unit for Product A and $24 for Product B.Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource of reach product?
A B
a.$10 $6
b.$10 $6.66
c.$8 $6
d.$8 $6.66
37.Reducing reliance on human workers and instead investing heavily in computers and online technology will
a.reduce fixed costs and increase variable costs
b.reduce variable costs and increase fixed costs
c.have no effect on the relative proportion of fixed and variable costs
d.make the company less susceptible to economic swings
38.Cost structure refers to the relative proportion of
a.selling expenses versus adminstrative expenses
b.selling and administrative expenses versus costs of goos sold
c.contribution margin versus sales
d.none of the above
39.Mercantile Corporation has sales of 2,000,000,variable costs of 1,100,000,and fixed costs of 750,000.
39-1)mercantile’s degree of operating leverage is
a1.22
b1.47
c1.20
d6.00
39-2)margin of safety ratio is
a .08
b .17
c .20
d .83
40.Which of the following statements is not true?
a.Operating leverage refers to the extent to which company’s net income reacts to given change in sales
b.Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c.when a company’s sales revenue is increasing,high operating leverage is good b/c it means profits will increase rapidly
d.When a company’s sales revenue is decreasing,high operating leverage is good b/c it means profits will decrease at slower pace than revenues decrease
42.Nielson Corp.sells its product for 8,800per unit.Variable costs per unit are:manufacturing,$4,800and selling and administrative,$100.Fixed costs are:24,000 manufacturing overhead,and 32,000selling and administrative.There was no beginning inventory at 1/1/12.Production was 20 units per year in 2012-14.Sales was 20units in 2012,16units in 2013, and 24units in 2014.
42-1)Income under absorption costing for 2014 is
a26,400
b31,200
c32,800
d37,600
42-2)Income under variable costing for 2013 is
a6,400
b11,200
c12,800
d17,600
42-3)Income under variable costing for 2014 is
a26,400
b31,200
c32,800
d37,600
42-4)For the 3years 2012-14
a.absorption costing income exceeds variable costing income by 8,000
b.absorption costing income equals variable costing income
c.variable costing income exceeds absorption costing income by 8,000
d.absorption costing income may be greater than,equal to,or less than variable costing income,depending on the situation
Aug 29, 2021 | Uncategorized
Waterways puts much emphasis on cash flow when it plans for capital investments.
The company chose its discount rate of 8% based on the rate of return it must pay its owners and
creditors. Using that rate,Waterways then uses different methods to determine the best decisions
for making capital outlays.
In 2009 Waterways is considering buying five new backhoes to replace the backhoes it now
has. The new backhoes are faster, cost less to run, provide for more accurate trench digging,
have comfort features for the operators, and have 1-year maintenance agreements to go with
them.The old backhoes are working just fine, but they do require considerable maintenance.The
backhoe operators are very familiar with the old backhoes and would need to learn some new
skills to use the new backhoes.
The following information is available to use in deciding whether to purchase the new
backhoes.
Old Backhoes New Backhoes
Purchase cost when new $90,000 $200,000
Salvage value now $42,000
Investment in major overhaul needed in next year $55,000
Salvage value in 8 years $15,000 $90,000
Remaining life 8 years 8 years
Net cash flow generated each year $40,425 $53,900
(a) Evaluate in the following ways whether to purchase the new equipment or overhaul the old
equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For
the new machine, subtract the salvage value of the old machine to determine the initial cost
of the investment.)
(1) Using the net present value method for buying new or keeping the old.
(2) Using the payback method for each choice. (Hint: For the old machine, evaluate the payback
of an overhaul.)
(3) Comparing the profitability index for each choice.
(4) Comparing the internal rate of return for each choice to the required 8% discount rate.
(b) Are there any intangible benefits or negatives that would influence this decision?
(c) What decision would you make and why
Aug 29, 2021 | Uncategorized
WCP24 Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and overhead costs for March 2014. WATERWAYS CORPORATION WATERWAYS CORPORATION Manufacturing Overhead Budget Manufacturing Overhead Costs (Actual) (Static) For the Month of March 2014 For the Month of March 2014 Budgeted production in units 117,500 Production in units 118,500 Budgeted costs Costs Indirect materials $ 5,875 Indirect materials $ 5,910 Indirect labor 14,100 Indirect labor 14,195 Utilities 11,750 Utilities 11,880 Maintenance 8,225 Maintenance 8,275 Salaries 42,000 Salaries 42,000 Depreciation 16,800 Depreciation 16,800 Property taxes 3,000 Property taxes 3,000 Insurance 1,200 Insurance 1,200 Janitorial 1,500 Janitorial 1,500 Total budgeted costs $104,450 Total costs $104,760 Waterways produced 118,500 units in March rather than the budgeted number of units. Instructions (a) Prepare a flexible overhead budget based on the following amounts produced. (1) 115,500 units (2) 116,500 units (3) 117,500 units (4) 118,500 units (5) 119,500 units (b) Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March.
Aug 29, 2021 | Uncategorized
We are considering the introduction of a new product. Currently we are in the 34% tax bracket with a 15% discount rate.This project is expected to last five years and then, because this is somewhat of a fad project, it will be terminated. The following information describes the new project:
Cost of new plant and equipment:
$ 7,900,000
Shipping and installation costs:
$ 100,000
Unit sales:
Year Units Sold
1
70,000
2
120,000
3
140,000
4
80,000
5
60,000
Sales price per unit:
$300/unit in years 1 4 and $260/unit in year 5.
Variable cost per unit:
$180/unit
Annual fixed costs:
$200,000 per year
Working capital requirements: There will be an initial working capital requirement of $100,000 just to get production started. For each year, the total investment in net working capital will be equal to 10% of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4.Finally, all working capital is liquidated at the termination of the project at the end of year 5.
Depreciation method: Straight-line over 5 years assuming the plant and equipment have no salvage value after 5 years.
What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from accounting profits or earnings?
Aug 29, 2021 | Uncategorized
We are considering the introduction of a new product. Currently we are in the 34% tax bracket with a 15% discount rate.This project is expected to last five years and then, because this is somewhat of a fad project, it will be terminated. The following information describes the new project:
Cost of new plant and equipment:
$ 7,900,000
Shipping and installation costs:
$ 100,000
Unit sales:
Year Units Sold
1
70,000
2
120,000
3
140,000
4
80,000
5
60,000
Sales price per unit:
$300/unit in years 1 4 and $260/unit in year 5.
Variable cost per unit:
$180/unit
Annual fixed costs:
$200,000 per year
Working capital requirements: There will be an initial working capital requirement of $100,000 just to get production started. For each year, the total investment in net working capital will be equal to 10% of the dollar value of sales for that year. Thus, the investment in working capital will increase during years 1 through 3, then decrease in year 4.Finally, all working capital is liquidated at the termination of the project at the end of year 5.
Depreciation method: Straight-line over 5 years assuming the plant and equipment have no salvage value after 5 years.
What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from account
Aug 29, 2021 | Uncategorized
Week Two Exercise Assignment
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books enter tainers for theaters, parties, conventions, and so forth. The company s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a Interest owed on the company’s bank loan, to be paid in early July
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client’s point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm’s copy machine, incurred and paid in June
2. Understanding the closing process. Examine the following list of accounts:
|
Note Payable
|
Accumulated Depreciation: Building
|
|
Alex Kenzy, Drawing
|
Accounts Payable
|
|
Product Revenue
|
Cash
|
|
Accounts Receivable
|
Supplies Expense
|
|
Utility Expense
|
Which of the preceding accounts
a. appear on a post-closing trial balance?
b. are commonly known as temporary, or nominal, accounts?
c. generate a debit to Income Summary in the closing process?
d. are closed to the capital account in the closing process?
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
Salaries owed to employees at year-end amounted to $1,000.
The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months rent of Sally Corporation s headquarters, beginning on November 1.
Sally Corporation s accounting year ends on December 31.
Instructions
Analyze the five preceding cases individually and determine the following:
a. The typeof adjusting entry needed at year-end (Use the following codes: A, adjust ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
b. The year-end journal entry to adjust the accounts
c. The income statement impact of each adjustment (e.g., increases total revenues by $500)
4. Adjusting entries. You have been retained to examine the records of Mary s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
Unrecorded interest owed to the center totaled $275 as of December 31.
All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
Depreciation on the school s van was $3,000 for the year.
On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Pre paid Rent, a new account.
Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
Mary s Day Care paid insurance premiums as follows, each time debiting Pre paid Insurance:
|
Date Paid
|
Policy No.
|
Length of Policy
|
Amount
|
|
Feb. 1, 20X2
|
1033MCM19
|
1 year
|
$540
|
|
Jan. 1, 20X3
|
7952789HP
|
1 year
|
912
|
|
Aug. 1, 20X3
|
XQ943675ST
|
2 years
|
840
|
Instructions
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January:
|
Balance per bank
|
$6,150
|
|
Balance per company records
|
3,580
|
|
Bank service charge for January
|
20
|
|
Deposits in transit
|
940
|
|
Interest on note collected by bank
|
100
|
|
Note collected by bank
|
1,000
|
|
NSF check returned by the bank with the bank statement
|
650
|
|
Outstanding checks
|
3,080
|
Instructions:
a. Prepare Palmetto s January bank reconciliation.
b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly s account.
b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi dent of Sonic Sound directed the sales staff to move some product this year. The president noted that the credit evaluation department was being disbanded be cause it had restricted the company s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
|
20X2
|
20X1
|
|
Sales
|
$23,987,000
|
$8,423,000
|
|
|
Accounts Receivable, 12/31
|
12,444,000
|
1,056,000
|
|
|
Allowance for Uncollectible Accounts, 12/31
|
?
|
23,000 cr.
|
|
|
|
|
|
|
The $12,444,000 receivables balance was aged as follows:
|
Age of Receivable
|
Amount
|
Percentage of Accounts Expected to Be Collected
|
|
Under 31 days
|
$4,321,000
|
99%
|
|
31260 days
|
4,890,000
|
90
|
|
61290 days
|
1,067,000
|
80
|
|
Over 90 days
|
2,166,000
|
60
|
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
Complete the following assignment:
This week you will be working on a three (3) part essay assignment. As you work through this
assignment, please read each part carefully, work through the calculations, and then answer the
question at the end of each part in an MS Word document or wordpad.
Part #1
Dr. Jones is interested in expanding his practice by adding a piece of radiology equipment. The basic
cost of the equipment would be $79,000 for the first year. The monthly loan cost for this equipment
is $1,564.29 for five years. Additionally Dr. Jones will have to factor in the cost to hire a radiology tech
with a predicted $39,600 annual salary (this includes all taxes and fringe benefits). The office already
has a radiology room so there is no fixed costs associated with this purchase.
You help Dr. Jones determine that the office will do 1100 studies per year with an average
reimbursement of $51.63. The variable cost per study is $3.24.
Using the standard pro forma sheet, is this a good purchase
Part #2
Dr. Jones office has purchased the above equipment. It is now Year #2 and there is a $7,000 annual
maintenance fee that needs to be added to the costs of the equipment. The variable cost is now
$3.37 per study but Dr. Jones office is planning on doing 1675 studies because there has been an
addition of two new managed contracts and there has been a reimbursement increase to $53.16
What is the profit or loss this year? Looking at the two years together, was this a good purchase
Part #3
Using the information in Part #1 and #2, calculate the standard pro forma sheet years #3 through year
#6.
The changes to be considered in your calculations are the following:
Year #3 Variable Costs $3.43
Staff Costs $ 40,500
# of Estimated Studies 1750
Reimbursement $54.26
Year #4 Variable Costs $3.68
Staff Costs $ 40,500
# of Estimated Studies 1800
Reimbursement $54.99
Aug 29, 2021 | Uncategorized
- Current Liability
What is a current liability? From the perspective of a user of financial statements, why do you believe current liabilities are separated from long-term liabilities? Based on your current experience as well as and any additional research you may have done provide two examples of situations where businesses collect monies from customers and employees and report these amounts as a current liability.
Guided Response:
Review several of your peers posts and identify the core components of a current liability. Respond to at least two of your peers and provide recommendations to extend their thinking. Challenge your peers by asking a question that may cause them to reevaluate if their example is a current liability.
- Client Recommendations
A client comes to you thinking about starting a consulting business. Your client is specifically interested in what type of entity should be created for this new business. Based on your readings or any additional research you may have done, discuss the advantages and disadvantages of the following: sole proprietorship, partnership, and corporation. Based on these advantages and disadvantages provide a clear recommendation to your client.
Aug 29, 2021 | Uncategorized
Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2011 is available:
Aug. 1 Inventory on hand-2000 units; cost $6.10 each
8 Purchased 10,000 units for $5.50 each
14 Sold 8,000 units for $12.00 each
18 Purchased 6,000 units for $5.00 each
25 Sold 7,000 units for $11.00 each
31 Inventory on hand-3,000 units
Required:
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. FIFO
2. LIFO
3. Average cost
E8-14 Inventory cost flow methods: perpetual system
(This is a variation of exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.)
Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2011:
Aug. 1 Inventory on hand-2000 units; cost $6.10 each
8 Purchased 10,000 units for $5.50 each
14 Sold 8,000 units for $12.00 each
18 Purchased 6,000 units for $5.00 each
25 Sold 7,000 units for $11.00 each
31 Inventory on hand-3,000 units
Required:
Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. FIFO
2. LIFO
3. Average Cost
E8-18 Supplemental LIFO disclosures; LIFO reserve: Steelcase
Steelcase Inc. is the global leader in providing furniture for office environments. The company uses the LIFO inventory method for external reporting and for income tax purposes but maintains its internal records using FIFO. The following disclosure note was included in a recent annual report:
5 Inventories ($ in millions):
February 27, 2009 February 29, 2008
Raw materials 61.3 67.5
Work-in-process 15.9 20.9
Finished goods 79.9 87.9
157.1 176.3
LIFO reserve (27.2) (29.6)
$129.9 $146.7
The company s income statement reported cost of goods sold of 2,236.7 million fo the fiscal year ended February 27, 2009.
Required:
1. Steelcase adjusts the LIFO reserve at the end of its fiscal year. Prepare the February 27, 2009, adjusting entry to make the cost of goods sold adjustment.
2. If Steelcase had used FIFO to value its inventories, what would cost of goods sold have been for the 2009 fiscal year
P 8-5 Various inventory costing methods
Ferris Company began 2011 with 6,000 unitsof its principal product. The cost of each unit is $8. Merchandise transactions for the month of January 2011 are as follows:
Purchases
Date of purchase Units Unit Cost* Total Cost
Jan. 10 5,000 $ 9 $ 45,000
Jan. 18 6,000 10 60,000
Totals 11,000 105,000
*Includes purchase price and cost of freight.
Sales
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
8,000 units were on hand at the end of the month.
Required:
Calculate January s ending inventory and cost of goods sold for the month using each of the following alternatives:
1. FIFO, periodic system
2. LIFO periodic system
3. LIFO, perpetual system
4. Average cost, periodic system
5. Average cost, perpetual system
Aug 29, 2021 | Uncategorized
Twyla Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.
Current Machine New Machine
Original purchase cost $15,000 $25,000
Accumulated depreciation 6,000
Estimated annual operating costs $24,000 $18,000
Useful life 5 years 5 years
If sold now, the current machine would have a salvage value of $5,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after five years.
Instructions:
Should the current machine be replaced?
Make incremental analysis concerning elimination of division.
Aug 29, 2021 | Uncategorized
Tyler Tooling Company uses a job order costing system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $241,410 and total machine hours at 61,900. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job:
Job 101 Job 102 Job 103 Total
Direct materials cost$11,700 $7,500 $5,000 $24,200
Direct labor cost $17,300 $5,100 $4,300 $26,700
Machine hours 1,300 hours 2,200 hours 1,000 hours 4,500 hours
Job 101 was completed and sold for $51,800.
Job 102 was completed but not sold.
Job 103 is still in process.
Actual overhead costs recorded during the first month of operations totaled $18,150.
Requirement 1: Calculate the predetermined overhead rate.
Requirement 2: Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations.
Requirement 3: Compute the balance in the Work in Process Inventory account at the end of the first month.
Requirement 4: How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead
Requirement 5: Determine the balance in the Manufacturing Overhead Account at the end of the first month. Is it over- or underapplied
Aug 29, 2021 | Uncategorized
It is May 1985 and UAL, Inc., parent of United Airlines, needs to borrow $500 million to finance the purchase of Hertz Auto Rental. You are Assistant Treasurer and must make a recommendation about the choice between borrowing in the USA in U. S. Dollars or in Japan in Yen ( ). As background, UAL, Inc. owns United Airlines and Westin Hotels. It is buying Hertz from RCA. United Airlines will generate about 80% of the UAL revenue and the remainder will be evenly split between Hertz and Westin. United Airlines, Hertz, and Westin Hotels are worldwide service companies that generate revenue in many countries and currencies, mainly in the U.S., Canada, Latin America, and Europe. The Treasurer considers this to be a No Brainer or easy choice. If the loan is in U. S. Dollars in the USA, company policy requires the use of a specific investment banker. This firm describes the terms of the USA loan as follows: An interest rate of 11% per year paid semi-annually in December and June for 10 years. The principal of $500 million would be repaid at the end of the 10-years. There would be a one-time underwriting fee of 0.5% to be paid when the loan funds are received. A leading Japanese bank is offering a loan with the interest and principal denominated in Yen. The interest rate will be 5% and there are no upfront fees. Both loans require interest payments in December and in June. The entire principal is due in June 1995. In May 1985, the exchange rate fluctuated between 250 and 252 yen to the dollar. For convenience, use 250 to the $ as the exchange rate in May 1985, but the later exchange rate cannot be known for certain. Recommend one alternative and discuss why your alternative is wise.
Aug 29, 2021 | Uncategorized
Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:
Amount per unit
Direct Material – $6.00
Direct Labor – $3.50
Variable manufacturing overhead – $1.50
Fixed manufacturing overhead – $4.00
Fixed selling expense – $3.00
Fixed administrative expense – $2.00
Sales commissions – $1.00
Variable administrative expense – $0.50
Required
1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?
2. For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units?
3. If 8,000 units are sold, what is the variable cost per unit sold?
4. If 12,500 units are sold, what is the total amount of variable costs related to the units sold?
5. If 8,000 units are sold, what is the total amount of variable costs related to the units sold?
6. If 12,500 units are sold, what is the total amount of variable costs related to the units sold?
7. If 8,000 units are produced, what is the average fixed manufacturing cost per unit produced?
8. If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced?
9. If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?
10. If 12,500 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?
11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis?
12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is the total amount expressed on a per unit basis?
13. If the selling price is $22 per unit, what is the contribution margin per unit sold?
14. If 11,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?
15. What total incremental costs will Martinez incur if it increases production from 10,000 to 10,001 units?
Aug 29, 2021 | Uncategorized
Unit 1 – Not-for-profit vs. Governmental Accounting One of the characteristics unique to governmental and not-for-profit organizations is the inability to eliminate unprofitable activities. Clearly, in the case of these activities, you cannot use profitability to evaluate success. How is success determined in service programs that must be subsidized, and how does it differ between governmental organizations and nonprofit organizations? Identify a governmental and a not-for-profit program of this nature and then do the following: o Offer some background on each program. o Indicate how success is measured in these programs. o Offer any differences or similarities you find when comparing these programs with regard to how the success is measured. You recently landed your dream job working for the state as an accountant. You are given the task to research several state and local governmental financial accounting issues. For each of the following issues, rank the guidance based on the governmental GAAP hierarchy. Issue 1: o Governmental accounting textbook o GASB Technical Bulletin o FASB statement o GASB interpretation Issue 2: o AICPA Practice Bulletins (applying specifically to state and local government) o AICPA Industry Audit and Accounting Guides o AICPA issue papers o Widely recognized industry practice Issue 3: o International Accounting Standards Committee Statements o AIPCA Statements of Position (applying specifically to state and local government) o GASB Q&As o GASB Statement Issue 4: o Article in a leading audit journal o FASB Statement o Leading accounting textbook o Position statement from GASB Emerging Issues Taskforce Issue 5: o GASB Technical Bulletin o FASB Technical Bulletin o Speech from a leading accounting professor o GASB concept statement
Aug 29, 2021 | Uncategorized
Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below:
Alpha Beta
Direct Materials $30 $12
Direct labor $20 $15
Variable manufacturing overhead $7 $5
Traceable fixed manufacturing overhead $16 $18
Varaible selling expenses $12 $8
Common Fixed Expenses $15 $10
Total cost per unit $100 $68
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.
Required:
1. What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?
2. What is the company’s total amount of common fixed expenses?
3. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 10,000 additional Alphas for a price of $80 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
4. Assume that Cane expects to produce 90,000 Betas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 5,000 additional Betas for a price of $39 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
5. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 10,000 additional Alphas for a price of $80 per unit. If Cane accepts the customer’s offer, it will decrease Alpha sales to regular customers by 5,000 units. Should Cane accept this order?
6. Assume that Cane normally produces and sells 90,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?
7. Assume that Cane normally produces and sells 40,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?
8. Assume that Cane normally produces and sells 60,000 Betas and 80,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 15,000 unites. If Cane discontinues the Beta product line, how much would profits increase or decrease?
9. Assume that Cane expects to produce and sell 80.000 Alphas during the current year. A supplier has offered to manufacture and deliver 80,000 Alphas to Cane for a price of $80 per unit. If Cane buys 80,000 units from the supplier instead of making those units, how much will profits increase or decrease?
10. Assume that Cane expects to produce and sell 50.000 Alphas during the current year. A supplier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. If Cane buys 50,000 units from the supplier instead of making those units, how much will profits increase or decrease?
Aug 29, 2021 | Uncategorized
During the 1990s, business and personal bankruptcies soared. This happened in spite of the greatest economic boom in U.S. history. It was also a booming time for lawyers who specialize in the intricacies of bankruptcy law. In 1998, a record 1.4 million businesses and individuals filed for protection under the bankruptcy code, which was a 300 percent increase since 1980. 96% of the filings were personal bankruptcies. However, in 1999, that number dropped 8.5%.
Many analysts attribute the high number of bankruptcies to aggressive credit offers by banks and (to a lesser extent) department stores. These companies lure even the most credit-challenged (young people and those who have problems managing money) into accepting their credit cards by sometimes offering secured lines of credit, in which the cardholder places as little as $100 in a savings account and receives a line of credit that is five times that amount.
Another reason cited by analysts for the increase is that the old stigma associated with bankruptcy if you filed for bankruptcy protection, you were somehow inferior no longer exists in most areas of the country.
A third reason is a change in attitude regarding the credit cards issuers. Not long ago, if an individual filed for bankruptcy, that person was unable to obtain credit for years (a bankruptcy filing remains on your credit bureau file for 10 years). However, credit card companies operated on a different premise. If you had recently filed bankruptcy, you were no longer in debt. Therefore, you must have had sufficient cash flow to service new debt. Within a month of filing, your mailbox would have been flooded with credit card offers.
In the business arena, filing for bankruptcy (thus stopping creditors from taking legal action) has evolved into just another business strategy.
The three most common types of bankruptcy are as follows:
- Chapter 7: The debtor’s assets are sold to pay creditors, and creditors have no right to the debtor’s future earnings.
- Chapter 11: A business continues to operate, and creditors receive a portion of both current assets and future earnings. This form of bankruptcy is also available to wealthy individuals.
- Chapter 13: For the typical consumer, creditors usually receive a portion of the individual’s current assets and future earnings.
Although bankruptcy laws are sometimes abused an individual may file personal bankruptcy every seven years and some individuals do exactly that bankruptcy is designed as a safety net for individuals or businesses that experience financial difficulties for whatever reason.
Discussion Board Assignment Guidelines:
Research the three types of bankruptcy, and answer the following questions:
- Who may file Chapter 7 bankruptcy?
- What are some of the reasons that people file bankruptcy?
- How does bankruptcy affect interest rates on loans? Credit cards?
Aug 29, 2021 | Uncategorized
Unit 2 Individual Project
Deliverable Length: Excel Spreadsheet and 4-5 body pages
Details: Consider the following scenario:
the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.
Program Area
Costs
Administration
Salaries:
Administrator
$60,000
Assistant
$35,000
Two Secretaries
$42,000
Supplies
$35,000
Advertising and promotion
$9,000
Professional meetings/dues
$14,000
Purchased Services:
Accounting and billing
$15,000
Custodial
$13,000
Security
$12,000
Consulting
$10,000
Community Mental Health Services
Salaries (two social workers)
$46,000
Transportation
$10,000
Outpatient mental health treatment
Salaries:
Psychiatrist
$86,000
Two Social Workers
$70,000
In an Excel spreadsheet:
Provide a dollar range of costs to reduce budgets (worst and best case analysis).
She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
Aug 29, 2021 | Uncategorized
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operation:
a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 unites, respectively. All sales are on credit.
b. Forty-percent (40%) of credit sales are collected in the month of the sale and 60% in the following month.
c. The ending finished goods inventory equals 20% of the following month’s unit sales.
d. The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
e. Thirty-percent (30%) of raw materials purchases are paid for in the month of purchase and 70% in the following month.
f. The direct labor wage is $15 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000.
Required:
1. What are the budgeted sales for July?
2. What are the expected cash collections for July?
3. What is the accounts receivable balance at the end of July?
4. According to the production budget, how many units should be produced in July?
5. If 61,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?
6. What is the estimated cost of raw materials purchases for July?
7. If the cost of raw materials purchases in June is $88.880, what are the estimated cash disbursements for raw materials purchases in July?
8. What is the estimated accounts payable balance at the end of July?
9. What is the estimated raw materials inventory balance at the end of July?
10. What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
11. If the company always used an estimated predetermined plantwide overhead rate of $10 per direct labor-hour, what is the estimated unit product cost?
12. What is the estimated finished goods inventory balance at the end of July?
13. What is the estimated cost of goods sold and gross margin for July?
14. What is the estimated total selling and administrative expense for July?
15. What is the estimated net operating income for July?
Aug 29, 2021 | Uncategorized
Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $1,751,133. have a life of five years, and would produce the cash flows shown in the following table.
|
Year
|
Cash Flow
|
|
1
|
$619,915
|
|
2
|
-277,771
|
|
3
|
717,544
|
|
4
|
1,014,631
|
|
5
|
592,847
|
What is the NPV if the discount rate is 14.95 percent?(Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.)
Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investment will consist of $2.90 million for land and $9.10 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.07 million, $2.26 million above book value. The farm is expected to produce revenue of $2.10 million each year, and annual cash flow from operations equals $1.97 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment.(Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
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The project should be
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.
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Problem 11.24
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|
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Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain s opportunity cost of capital is 12.5 percent, and the costs and values of investments made at different times in the future are as follows:
|
Year
|
Cost
|
Value of Future Savings
(at time of purchase)
|
|
0
|
$5,000
|
$7,000
|
|
|
1
|
4,600
|
7,000
|
|
|
2
|
4,200
|
7,000
|
|
|
3
|
3,800
|
7,000
|
|
|
4
|
3,400
|
7,000
|
|
|
5
|
3,000
|
7,000
|
|
Calculate the NPV of each choice.(Round answers to the nearest whole dollar, e.g. 5,275.)
The NPV of each choice is:
NPV0 = $
NPV1 = $
NPV2 = $
NPV3 = $
NPV4 = $
NPV5 = $
Suggest when should Bell Mountain buy the new accounting system?
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Bell Mountain should purchase the system in .
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Problem 12.24
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Chip s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 88 percent as high if the price is raised 16 percent. Chip s variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm s FCF for the year?(Round answers to nearest whole dollar, e.g. 5,275.)
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At $20 per bottle the Chip s FCF is $ and at the new price Chip s FCF is $.
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Your answer is incorrect. Try again.
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Capital Co. has a capital structure, based on current market values, that consists of 50 percent debt, 11 percent preferred stock, and 39 percent common stock. If the returns required by investors are 9 percent, 13 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital s after-tax WACC? Assume that the firm s marginal tax rate is 40 percent.(Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Aug 29, 2021 | Uncategorized
You are a quality analyst with John and Sons Company. Your company manufactures fax machines, copiers, and printers that use plain paper. The CEO of the company wants the machines to handle 99.5 percent of all the paper that is used in them without the paper getting jammed. The CEO asks you to determine the thickness of paper that the machines must be able to handle to achieve this target. Using the data provided below, prepare a two-page memo to the CEO in a Word document, detailing the appropriate confidence limits for the thickness of paper that the machines must be able to handle.
Use the data provided and calculated the average thickness of the paper.
Calculate the 99.5 percent confidence limits for the thickness of paper.
Create a two-page memo detailing their response.
Thickness of Selected Sheets of Paper.
Thickness
0.00385
0.00358
0.00372
0.00418
0.00380
0.00399
0.00424
0.00375
0.00449
0.00422
0.00407
0.00434
0.00381
0.00421
0.00397
0.00425
0.00449
0.00462
0.00467
0.00404
0.00391
0.00431
0.00398
0.00415
Used the data provided and calculated the average thickness of the paper. Calculated the 99.5 percent confidence limits for the thickness of paper. Included at least one data chart, one additional graphic and three resources.
Aug 29, 2021 | Uncategorized
acc201 week 5
P9-23 Use the financial statements for Bernard Company from Problem 9-22 to calculate the following ratios for 2012 and 2011:
a. Working capital
b. Current ratio
c. Quick ratio
d. Receivables turnover (beginning receivables at January 1, 2011, were $47,000.)
e. Average days to collect accounts receivable
f. Inventory turnover (beginning inventory at January 1, 2011, was $140,000.)
g. Number of days to sell inventory
h. Debt to assets ratio
i. Debt to equity ratio
j. Number of times interest was earned
k. Plant assets to long-term debt
l. Net margin
m. Turnover of assets
n. Return on investment
o. Return on equity
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share: 2011, $11.75; 2012, $12.50)
s. Dividend yield on common stock
Aug 29, 2021 | Uncategorized
Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
ABC Music Co.
Income Statement
For the Year Ended June 30, 2016
Net Sales $350,000
Less Expenses
Cost of Goods Sold $200,000
Depreciation Expense 20,000
Administrative Expenses 52,000
Selling Expenses 45,000
Loss on Sale of Investment 500
Total Expenses 317,500
Net Income $ 32,500
ABC Music Co.
Comparative Balance Sheets
June 30 2016 and 2015
Assets
2016 2015
Cash 4,500 $ 15,000
Accounts Receivable (net) 35,000 27,500
Inventory 40,000 50,000
Prepaid Expenses 3,000 2,500
Long Term Investments 20,000 25,000
Plant and Equipment 80,000 40,000
Accumulated Depreciation (20,000) (12,000)
Total Assets $162,500 $148,000
Liabilities
Accounts Payable $ 2,000 $ 6,000
Wages Payable 220 260
Taxes Payable 780 740
Notes Payable 20,000 12,000
Total Liabilities $23,000 $ 19,000
Stockholders Equity
Common Stock $ 65,000 $ 65,000
Retained Earnings 81,500 64,000
Total Paid in Capital and Retained Earnings 146,500 129,000
Less: Treasury Stock ( 7,000) 0
Total Stockholders Equity $139,500 $129,000
Total Liabilities and Stockholders Equity $162,500 $148,000
Additional Information:
A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
A long term investment was sold for $4,500.
The outstanding notes are long term. An $8,000 note was issued during 2016.
Common stock was repurchased.
Aug 29, 2021 | Uncategorized
Use the following data for ABC Music Co. to prepare a statement of cash flows using the indirect method for the year ended June 30, 2016.
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ABC Music Co.
|
|
Income Statement
|
|
For the Year Ended June 30, 2016
|
|
|
|
|
|
Net Sales
|
|
$350,000
|
|
Less Expenses
|
|
|
|
Cost of Goods Sold
|
$200,000
|
|
|
Depreciation Expense
|
20,000
|
|
|
Administrative Expenses
|
52,000
|
|
|
Selling Expenses
|
45,000
|
|
|
Loss on Sale of Investment
|
500
|
|
|
Total Expenses
|
|
317,500
|
|
Net Income
|
|
$ 32,500
|
|
ABC Music Co.
|
|
Comparative Balance Sheets
|
|
June 30 2016 and 2015
|
|
Assets
|
2016
|
2015
|
|
Cash
|
$ 4,500
|
$ 15,000
|
|
Accounts Receivable (net)
|
35,000
|
27,500
|
|
Inventory
|
40,000
|
50,000
|
|
Prepaid Expenses
|
3,000
|
2,500
|
|
Long Term Investments
|
20,000
|
25,000
|
|
Plant and Equipment
|
80,000
|
40,000
|
|
Accumulated Depreciation
|
(20,000)
|
(12,000)
|
|
Total Assets
|
$162,500
|
$148,000
|
|
|
|
|
|
Liabilities
|
|
|
|
Accounts Payable
|
$ 2,000
|
$ 6,000
|
|
Wages Payable
|
220
|
260
|
|
Taxes Payable
|
780
|
740
|
|
Notes Payable
|
20,000
|
12,000
|
|
Total Liabilities
|
$23,000
|
$ 19,000
|
|
|
|
|
|
Stockholders Equity
|
|
|
|
Common Stock
|
$ 65,000
|
$ 65,000
|
|
Retained Earnings
|
81,500
|
64,000
|
|
Total Paid in Capital and Retained Earnings
|
146,500
|
129,000
|
|
Less: Treasury Stock
|
( 7,000)
|
0
|
|
Total Stockholders Equity
|
$139,500
|
$129,000
|
|
Total Liabilities and Stockholders Equity
|
$162,500
|
$148,000
|
Additional Information:
A plant asset costing $20,000 was sold for its book value of $8,000. And additional plant asset was purchased for $60,000.
A long term investment was sold for $4,500.
The outstanding notes are long term. An $8,000 note was issued during 2016.
Common stock was repurchased.
Aug 29, 2021 | Uncategorized
Use the following information to answer questions 1 through 10.
Financial statements for Praven Company appear below:
Praven Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2 Year 1
Currrent assets:
Cash and marketable securities 150 130
Accounts receivable, net 190 160
Inventory 170 180
Prepaid expenses 50 40
Total current assets 560 510
Noncurrent assets:
Plant & equipment, net 1,420 1,330
Total assets $1,980 $1,840
Current liabilities:
Accounts payable 110 100
Accrued liabilities 90 60
Notes payable, short term 260 260
Total current liabilities 460 420
Noncurrent liabilities:
Bonds payable 400 400
Total liabilities 860 820
Stockholder s equity:
Preferred stock, $5 par, 15% 120 120
Common stock, $10 par 240 240
Additional paid-in capital common stock 210 210
Retained earnings 550 450
Total stockholders equity 1,120 1,020
Total liabilities & stockholders equity $1,980 $1,840
Dividends during Year 2 totaled $89 thousand, of which $18 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $130.
Praven Company
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account) 1,700
Cost of goods sold 1,190
Gross margin 510
Selling and administrative expense 200
Net operating income 310
Interest expense 40
Net income before taxes 270
Income taxes (30%) 81
Net income $189
Required:
Compute the following for Year 2:
1. Book value per share
2. Working capital
3. Current ratio
4. Acid-test ratio
5. Accounts receivable turnover
6. Average collection period
7. Inventory turnover
8. Average sale period
9. Times interest earned
10. Debt-to-equity ratio
Aug 29, 2021 | Uncategorized
Accounting Adjusting Entries, Posting and Preparing an Adjusted Trial Balance MASASI COMPANY, INC. Trial Balance June 30, 2008 Account Number Debit Credit 101 Cash $ 7,150 112 Accounts Receivable 6,000 126 Supplies 2,000 130 Prepaid Insurance 3,000 157 Office Equipment 15,000 201 Accounts Payable $ 4,500 209 Unearned Service Revenue 4,000 311 Common Stock 21,750 400 Service Revenue 7,900 726 Salaries Expense 4,000 729 Rent Expense 1,000 Total $38,150 Total $38,150 In addition to those accounts listed on the trial balance, the chart of accounts for Masasi Company,Inc. also contains the following accounts and account numbers:No. 158 Accumulated Depreciation Office Equipment, No. 212 Salaries Payable,No. 244 Utilities Payable,No. 631 Supplies Expense,No. 711 Depreciation Expense,No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. Supplies on hand at June 30 are $600. 2. A utility bill for $150 has not been recorded and will not be paid until next month. 3. The insurance policy is for a year. 4. $2,500 of unearned service revenue has been earned at the end of the month. 5. Salaries of $2,000 are accrued at June 30. 6. The office equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months. 7. Invoices representing $1,000 of services performed during the month have not been recorded as of June 30. Instructions (a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal. (b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column. (c) Prepare an adjusted trial balance at June 30, 2008. Use the templates in Appendix D. Complete all three tabs.
Aug 29, 2021 | Uncategorized
Calculate and compare the financial ratios
Using the financial statements for Tootsie Roll and Hershey located in Appendix A and B, respectively, you will calculate and compare the financial ratios listed below for the year ended in 2004.In Word, write a two-page analysis evaluating and comparing Hershey’s and Tootsie Roll’s overall liquidity, solvency, and profitability. In your two-page analysis, assume you are considering investing in one of these companies. The report should be organized into sections and paragraphs with appropriate headings to explain which company you would choose based on your analysis.
Financial Ratio Calculations*
A. Liquidity Ratio
Current ratio
Working Capital
Current Cash Debt Coverage ratio
Receivables Turnover Ratio
Average Collection Period (Average Age of Receivables)
Inventory Turnover Ratio
Days in Inventory (Average Age of Inventory)
B. Solvency Ratios
Debt-to-Total Assets ratio
Times Interest Earned (Interest Coverage) ratio
Cash Debt Coverage ratio
Free Cash Flow
C. Profitability Ratios
Gross Profit Rate
Profit Margin Ratio
Asset Turnover Ratio
Return-on-Assets (ROA)
Earnings per Share
Payout ratio
*Note: If you are unable to locate an item needed for a ratio, make an assumption and make sure you note your assumption in your work.
Aug 29, 2021 | Uncategorized
Using the following information for Bob s Flowers for 200x, and trial balance accounts and balances on the work sheet provided, complete the work sheet, prepare adjusting and closing journal entries, and (in good form) prepare a Income Statement, Statement of Retained Earnings and Balance Sheet.
Expired insurance totals $8. Of the unearned revenue, all has been earned by the balance sheet date. Estimated depreciation of equipment is $6. Accrued wages equal $4. Unused supplies on hand are $4. Estimated income taxes are $2.
Account Name
Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 30
Account Receivable 20
Prepaid Insurance 12
Supplies 10
Equipment 40
Supplies expense
Accumulated Depreciation, Equipment 6
Account Payable 12
Unearned Revenue 8
Common Stock 64
Dividends 2
Service Revenue 48
Wages Expense 24
138 138
Aug 29, 2021 | Uncategorized
Using a Spreadsheet to Calculate Yield to Maturity. What is the yield to maturity on the following bonds; all have a maturity of 10 years, a face value of $1,000, and a coupon rate of 9 percent (paid semiannually). The bonds current market values are $945.50, $987.50, $1,090.00, and $1,225.875, respectively. (LG 3-2)
market value tot pymnts period coupon pymnt face value yield to maturity will be
945.50 10*5=20 1000(.09)/2=45 1000 9.87
987.50 20 45 1000 9.19
1090 20 45 1000 7.69
1225.875 20 45 1000 5.97
10.
Calculate the yield to maturity on the following bonds. (LG 3-2)
a.A 9 percent coupon (paid semiannually) bond, with a $1,000 face value and 15 years remaining to maturity. The bond is selling at $985.
b.An 8 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $915.
c.An 11 percent coupon (paid annually) bond, with a $1,000 face value and 6 years remaining to maturity. The bond is selling at $1,065.
22.
A stock you are evaluating just paid an annual dividend of $2.50. Dividends have grown at a constant rate of 1.5 percent over the last 15 years and you expect this to continue. (LG 3-3)
a.If the required rate of return on the stock is 12 percent, what is its fair present value?
b.If the required rate of return on the stock is 15 percent, what is its expected price four years from today?
30.
Consider the following two banks: (LG 3-4)
Bank 1 has assets composed solely of a 10-year, 12 percent coupon, $1 million loan with a 12 percent yield to maturity. It is financed with a 10-year, 10 percent coupon, $1 million CD with a 10 percent yield to maturity.
Bank 2 has assets composed solely of a 7-year, 12 percent, zero-coupon bond with a current value of $894,006.20 and a maturity value of $1,976,362.88. It is financed by a 10-year, 8.275 percent coupon, $1,000,000 face value CD with a yield to maturity of 10 percent.
All securities except the zero-coupon bond pay interest annually.
a.If interest rates rise by 1 percent (100 basis points), how do the values of the assets and liabilities of each bank change?
b.What accounts for the differences between the two banks accounts?
32.
What is the duration of a five-year, $1,000 Treasury bond with a 10 percent semiannual coupon selling at par? Selling with a yield to maturity of 12 percent? 14 percent? What can you conclude about the relationship between duration and yield to maturity? Plot the relationship. Why does this relationship exist?
Aug 29, 2021 | Uncategorized
THE UTEASE CORPORATION
The Utease Corporation has many production plants across the U.S. A newly opened plant, the Bellingham plant, produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows:
|
STANDARD PRODUCTION COSTS
Manufacturing costs (per unit based on expected activity of 24,000 units or 36,000 direct labor hours):
|
|
Direct materials (2 pounds at $20)
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$ 40.00
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|
Direct labor (1.5 hours at $90)
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$135.00
|
|
Variable overhead (1.5 hours at $20)
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$ 30.00
|
|
Fixed overhead (1.5 hours at $30)
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$ 45.00
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|
Standard cost per unit
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$250.00
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|
Budgeted selling and administrative costs:
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|
|
Variable
|
$5 per unit
|
|
Fixed
|
$1,800,000.00
|
|
Expected sales activity: 20,000 units at $425.00 per unit
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|
Desired ending inventories: 10% of sales
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|
|
|
ACTUAL PRODUCTION COSTS
Assume this is the first year of operations for the Bellingham plant. During the year, the company had the following activity:
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|
|
|
|
Units produced
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23,000 units
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|
Units sold
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21,500 units (Inventory = 1,500)
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|
Unit selling price
|
$420.00
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|
Direct labor hours worked
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34,000hrs
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|
Direct labor costs
|
$3,094,000.00
|
|
Direct materials purchased
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50,000 pounds
|
|
Direct materials costs
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$1,000,000.00
|
|
Direct materials used
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50,000 pounds
|
|
Actual fixed overhead
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$1,080,000.00
|
|
Actual variable overhead
|
$620,000.00
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|
Actual selling and administrative costs
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$2,000,000.00
|
A. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.
B. Prepare a budgeted responsibility income statement for the Bellingham plant for the coming year.
C. Find the direct labor variances. Indicate if they are favorable or unfavorable and why they would be considered as such.
D. Find the direct materials variances (materials price variance and quantity variance)
E. Find the total over- or under applied (both fixed and variable) overhead. Would cost of goods sold be a larger or smaller expense item after the adjustment for over- or under applied overhead?
F. Calculate the actual plant operating profit for the year
G. Use a flexible budget to explain the difference between the budgeted operating profit and the actual operating profit for the Bellingham plant for its first year of operation. What part of the difference do you believe is the plant manager s responsibility?
H. Assume Utease Corporation is planning to change its evaluation of business operations in all plants from the profit center format to the investment center format. If the average invested capital at the Bellingham plant is $8,950,000, compute the return on investment (ROI) for the first year of operation. Use the DuPont method of evaluation to compute the return on sales (ROS) and Capital turnover (CT) for the plant.
I. Assume that under the investment center evaluation plan the plant manager will be awarded a bonus based on ROI. If the manager has the opportunity in the coming year to invest in new equipment for $500,000 that will generate incremental earnings of $75,000 per year, would the manager undertake the project? Why or why not? What other evaluation tools could Utease use for their plants that might be better?
J. The chief financial officer of Utease Corporation wants to include a charge in each investment center s income statement for corporate-wide administrative expenses. Should the Bellingham plant manager s annual bonus be based on plant ROI after deducting the corporatewide administrative fee? Why or why not?
Aug 29, 2021 | Uncategorized
You have already generated a project charter and a project schedule for the TopLiance Corporation, which sells home appliances. The company has over 50 sales agents across multiple states. It has decided to implement an online sales program. The new Internet-based sales program is expected to increase the sales volume and enhance the profit margin. Your team has already started executing the project plan you created.
The director of your department has asked you to provide on outline on how you will assure the successful completion of the project. She is concerned that if the scope of the project changes, your team will not meet the deadline.
Based on what you have learned, write a 1 2 page e-mail response to the director, discussing the following:
What have you done to ensure a successful execution of the project plan?
What are you doing to control the project and quality of the project?
What measurements will or have you put in place to handle scope changes?
What decisions have you made in assigning tasks?
How will you monitor and report the closing of the project?
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.
Aug 29, 2021 | Uncategorized
Topper Sports, Inc. produces high quality sports equipment. The company s Racket Division manufactures three tennis rackets- the Student, the Deluxe, and the Pro- that are widely used in amateur day. Selected information on the rackets is given below:
Standard
Selling Price per racket: $43.00
Variable Expenses per racket:
Production: $17.20
Selling (5% of selling price): $2.15
Deluxe
Selling Price per Racket: $62.00
Variable Expenses Per Racket:
Production: $21.70
Selling (5% of selling price): $3.10
Pro
Selling Price per Racket: $87.00
Variable Expenses per Racket:
Production: $26.10
Selling (5% of selling price): $4.35
All sales are made through the company s own retail outlets. The Racket Division has the following fixed costs:
Per Month
Fixed Production Costs: $107,000
Advertising Expense: $108,000
Administrative Salaries: $52,000
Total: $267,000
Sales, in units, over the past two months have been as follows:
Standard (April): 4,000
Deluxe (April): 3,000
Pro (April): 7,000
Total (April): 14,000
Standard (May): 11,000
Deluxe (May): 3,000
Pro (May): 6,000
Total (May): 20,000
a. Prepare contribution format income statements for April. (Round the Total percent answers to one decimal place. Input all amounts as positive values except losses which should be indicated by minus sign. Omit the $ and % signs in your response).
Aug 29, 2021 | Uncategorized
Topple Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below:
Units in beginning inventory 2,000
Units produced 9,000
Units sold 10,000
Sales $100,000
Less cost of goods sold:
Beginning inventory 12,000
Add cost of goods manufactured 54,000
Goods available for sale 66,000
Less ending inventory 6,000
Cost of goods sold 60,000
Gross margin 40,000
Less selling and admin. expenses 28,000
Net operating income$ 12,000
Variable manufacturing costs are $4 per unit. Fixed factory overhead totals $18,000 for the year. This overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold.
Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.
Aug 29, 2021 | Uncategorized
The Town of Frostbite self-insures for some of its liability claims and purchases insurance for others. In an effort to consolidate its risk management activities, the Town recently decided to establish an internal service fund, the Risk Management Fund. The Risk Management Fund s purpose is to obtain liability coverage for the Town, to pay claims not covered by the insurance, and to charge individual departments in amounts sufficient to cover current year costs and to establish a reserve for losses. The Town reports proprietary fund expenses by object classification using the following accounts: Personnel services (salaries), Contractual services (for the expired portion of prepaid service contracts), Depreciation, and Insurance Claims. The following transactions relate to the year ended December 31, 2012, the first year of the Risk Management Fund s operations.
1. The Risk Management Fund is established through a transfer of $500,000 from the General Fund and a long-term advance from the water utility enterprise fund of $250,000. 2. The Risk Management Fund purchased (prepaid) insurance coverage through several commercial insurance companies for $200,000. The policies purchased require the Town to self-insure for $25,000 per incident. 3. Office Equipment is purchased for $10,000. 4. $450,000 is invested in marketable securities. 5. Actuarial estimates were made in the previous fiscal year to determine the amount necessary to attain the goal of accumulating sufficient funds to cover current-year claims and to establish a reserve for losses. It was determined that the General Fund and water utility be assessed a fee of 6 percent of total wages and salaries (Interfund premium). Wages and salaries by department are as follows:
Public Safety 5,000,000 General Administrative Operations 1,500,000 Education 1,500,000 Water Utility 2,500,000 Total 10,500,000
6. Cash received in payment of interfund premiums from the General Fund totaled $275,000 and cash received from the Water Utility totaled $100,000. 7. Interest and dividends received totaled $27,000. 8. Salaries for the Risk Management Fund amounted to $200,000 (all paid during the year). 9. Claims paid under self-insurance totaled $150,000 during the year. 10. The office equipment is depreciated on the straight-line basis over 5 years. 11. At year-end, $190,000 of the insurance policies purchased in January had expired. 12. The market value of investments at December 31 totaled $456,000 (Hint: credit Net Increase in Fair Market Value of Investments ). 13. In addition to the claims paid in entry 9 above, estimates for the liability for the Town s portion of known claims since the inception of the Town s self-insurance program totaled $90,000.
Required:
b. Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Assets for the year ended December 31, 2012, for the Risk Management Fund. c. Prepare a Statement of Net Assets as of December 31, 2012, for the Risk Management Fund. d. Prepare a Statement of Cash Flows for the year ended December 31, 2012, for the Risk Management Fund. Assume $10,000 of the transfer from the General Fund was for the purchase of the equipment. Further, assume the remainder of the transfer from the General Fund and all of the advance from the enterprise fund are to establish working capital (noncapital related financing). e. Comment on whether the inter fund premium of 6 percent of wages and salaries is adequate.
Aug 29, 2021 | Uncategorized
Chapter 4 Exercise 7
7. Overhead application: Working backward
The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following divisional information is presented for your review:
Division A Division B
Actual machine hours 22,500 ?
Estimated machine hours 20,000 ?
Overhead application rate $4.50 $5.00
Actual overhead $110,000 ?
Estimated overhead ? $90,000
Applied overhead ? $86,000
Over- (under-) applied overhead ? $6,500
FIND THE UNKNOWNS FOR EACH OF THE DIVISIONS.
Chapter 4 Problem 2
2. Computations using a job order system
General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;
Work in process $ 35,200
Finished goods 86,900
Cost of goods sold 128,700
Work in Process consisted of two jobs, no. 101 ($20,400) and no. 103 ($14,800). During May, direct materials requisitioned from the storeroom amounted to $96,500, and direct labor incurred totaled $114,500. These figures are subdivided as follows:
Direct Materials Direct Labor
Job No. Amount Job No. Amount
101 $5,000 101 $7,800
115 19,500 103 20,800
116 36,200 115 42,000
Other 35,800 116 18,000
$96,500 Other 25,900
$114,500
Job no. 115 was the only job in process at the end of the month. Job no. 101 and three “other” jobs were sold during May at a profit of 20% of cost. The “other” jobs contained material and labor charges of $21,000 and $17,400, respectively.
General applies overhead daily at the rate of 150% of direct labor cost as labor summaries are posted to job orders. The firm’s fiscal year ends on May 31.
Instructions:
a. Compute the total overhead applied to production during May.
b. Compute the cost of the ending work in process inventory.
c. Compute the cost of jobs completed during May.
d. Compute the cost of goods sold for the year ended May 31.
Chapter 5 Exercise 1
1. High-low method
The following cost data pertain to 20X6 operations of Heritage Products:
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Shipping costs $58,200 $58,620 $60,125 $59,400
Orders shipped 120 140 175 150
The company uses the high-low method to analyze costs.
a. Determine the variable cost per order shipped.
b. Determine the fixed shipping costs per quarter.
c. If present cost behavior patterns continue, determine total shipping costs for 20X7 if activity amounts to 570 orders.
Chapter 5 Exercise 3
3. Break-even and other CVP relationships
Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year.
a. How many patient days does the hospital need to break even?
b. What level of revenue is needed to earn a target income of $540,000?
c. If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?
Chapter 5 Problem 6
6. Direct and absorption costing
The information that follows pertains to Consumer Products for the year ended December 31, 20X6.
Inventory, 1/1/X6 24,000 units
Units manufactured 80,000
Units sold 82,000
Inventory, 12/31/X6 ? units
Manufacturing costs:
Direct materials $3 per unit
Direct labor $5 per unit
Variable factory overhead $9 per unit
Fixed factory overhead $280,000
Selling & administrative expenses:
Variable $2 per unit
Fixed $136,000
The unit selling price is $26. Assume that costs have been stable in recent years.
Instructions:
a. Compute the number of units in the ending inventory.
b. Calculate the cost of a unit assuming use of:
1. Direct costing.
2. Absorption costing.
c. Prepare an income statement for the year ended December 31, 20X6, by using direct costing.
d. Prepare an income statement for the year ended December 31, 20X6, by using absorption costing.
Aug 29, 2021 | Uncategorized
Toy Box Inc. is contemplating expanding their sales of their children s toys. The have an opportunity to stock and sell the X toy that has been a big hit with children everywhere. They need to order the X toys from the manufacturer in a minimum order of 100 at a cost of $12 each. They could resell the X toy in their store for $22 each.
Due to anticipated demand, Toy Box Inc. will need to hire an additional part-time cashier at $600 a month which will be classified as a fixed-cost attributable to the X toy. Also, they have offered a $1 sales commission per toy to their floor sales representative. They will also include a package of trading cards with every purchase of an X toy, which will cost them an additional $2 each.
Required:
-
- To make the project worthwhile, Toy Box Inc. would require a $5,000 profit per month. What level of sales in units and in dollars would be required to reach this target profit? Show all computations.
- Assume that the venture is undertaken and an order is placed for 100 X toys. What would be Toy Box s break-even point in units and in sales dollars? Show computations and explain the reasoning behind your answer. You can ignore the fixed cost of $600 for this part
Aug 29, 2021 | Uncategorized
Toy Box Inc. is contemplating expanding their sales of their children s toys. The have an opportunity to stock and sell the X toy that has been a big hit with children everywhere. They need to order the X toys from the manufacturer in a minimum order of 100 at a cost of $12 each. They could resell the X toy in their store for $22 each.
Due to anticipated demand, Toy Box Inc. will need to hire an additional part-time cashier at $600 a month which will be classified as a fixed-cost attributable to the X toy. Also, they have offered a $1 sales commission per toy to their floor sales representative. They will also include a package of trading cards with every purchase of an X toy, which will cost them an additional $2 each.
Required:
To make the project worthwhile, Toy Box Inc. would require a $5,000 profit per month. What level of sales in units and in dollars would be required to reach this target profit? Show all computations.
Assume that the venture is undertaken and an order is placed for 100 X toys. What would be Toy Box s break-even point in units and in sales dollars? Show computations and explain the reasoning behind your answer. You can ignore the fixed cost of $600 for this part.
Aug 29, 2021 | Uncategorized
Toy Company has 4% credit/debit card service fees deducted monthly by the bank from Toy Company s bank account. Toy Company has $75,000 in sales for the month. At what amount will Toy Company record this month s sales?
a. $78,000
b. $75,000
c. $72,000
d. $3,000
U. S. Treasury notes must mature within ____________ days of the balance sheet date in order to be considered cash equivalents.
a. 60
b. 90
c. 120
d. 180
A company has $235,000 in credit sales. The company uses the allowance method of determining uncollectible accounts expense. The allowance for doubtful accounts now has a $7,250 credit balance. If the company uses the allowance method based on 7% of credit sales, what will be the amount of the journal entry credited to allowance for uncollectible accounts?
a. $16,450
b. $23,700
c. $7,250
d. $9,200
The aging method is called the:
a. Balance sheet approach
b. Income statement approach
c. Allowance approach
d. Direct write-off approach
Using a 360-day year, the maturity value of a 90-day note for $3,500 at 8% annual interest is:
a. $3,780
b. $3,710
c. $3,570
d. $3,500
A 135-day note issued on May 17 will mature on:
a. September 28
b. September 29
c. September 30
d. October 1
Mike Company has cash of $56,000; net accounts receivable of $67,000; short-term investments of $12,000 and inventory of $40,000. It also has $45,000 in current liabilities and $75,000 in long-term liabilities. The quick ratio for Mike Company is:
a. 2.33
b. 2.73
c. 3.00
d. 3.89
On April 23, Lauren paid $4,750 to Ryan Company to fulfill her promissory note agreement. Of the $4,750, $750 is interest. The journal entry Ryan Company will record is:
a. Debit cash, $4,750; credit note receivable/Lauren, $4,750
b. Debit cash, $4,750; credit note receivable/Lauren, $4,000; credit interest income $750
c. Debit note receivable/Lauren, $4,750; credit cash $4,700; credit interest income $750
d. Debit note receivable/Lauren, $4,750; credit cash $4,750.
A company with an accounts receivable turnover of 11.78 would be collecting its receivables about:
a. Once a week
b. Once a month
c. Once a quarter
d. Once a year
A company has a petty cash fund of $350. At the end of the month, $7.89 remains in the fund along with $340.56 in various receipts. The journal entry to replenish the fund would show a debit(s) to:
a. Various expenses for $340.56 and cash short of $1.55
b. Various expenses for $340.56 and cash over of $1.55.
c. Cash for $342.11.
d. Cash for $340.56.
Aug 29, 2021 | Uncategorized
1) Travelers Aids most recent Income statement follows
Total Per Unit
Sales (3000 units) $90,000 $30.00
Variable expenses $54,000 $18.00
Contribution Margin $36,000 $12.00
Fixed expenses $22,000
Net operating income $14,000
Prepare a new contribution format income statement under the following condition: The sales volume increased by 150 units. (New sales are 3,150 Units)
2) Housewares Inc. distributes a single product, food processors whose selling price is $200 and whose variable cost is $140 per unit. The company s monthly fixed expense is $18,000.
A) What is the company s breakeven point in unit sales using the equation method? Show computations.
B) What is the company s breakeven point in sales dollars using the contribution margin method with the CM ratio? Show computations.
3) Strong wood company is a distributor of patio furniture. Data concerning the next month s budget appear below
Selling price $290 per unit
Variable expense $174 per unit
Fixed expenses $158,000 per month
Unit sales 1,500 units per month
A) What is the company s margin of safety? Show computations.
B) What is the company s margin of safety as a percentage of sales? Show computations.
4) Sharpens inc. produces knife sets for use in commercial kitchens. They sell them for $400 each. Selected data for the company s operations last year follow.
Units in beginning inventory 0
Units produced 3,000
Units sold 2,500
Units in ending inventory 500
Variable cost per unit:
Direct materials $120
Direct Labor 80
Variable manufacturing overhead 40
Variable selling administrative 20
Fixed costs:
Fixed manufacturing overhead $300,000
Fixed selling and administrative $200,000
A) Assume that the company uses variable costing. Compute the unit cost for one knife set. Show computations.
B) Assuming that the company uses absorption costing, compute the unit cost for one knife set. Show computations.
5) Soccer nets used for professional games they sell them for $200 each. Selected data for the company s operations last year follow:
Units in beginning inventory 0
Units produced 500
Units Sold 300
Units in ending inventory 200
Variable costs per unit:
Direct materials $75
Direct labor 30
Variable manufacturing overhead 10
Variable selling and administrative 5
Fixed costs:
Fixed Manufacturing overhead $2,000
Fixed selling and administrative $1,000
A) Assume that the company uses variable costing. Compute the net operating income. Show computations.
B) Assuming that the company uses absorption costing, compute the net operating income. Show computations.
Aug 29, 2021 | Uncategorized
Trial Balance
Debit credit
Cash 24,600
prepaid insruance 5400
supplies 4300
land 40,000
buildings 132,000
equipment 36000
accounts payable 6,500
unearned rent revenue 6,800
mortgage payable 120,000
common stock 100,00
dividends 5,000
rent revenue 80,000
salaries& wages expense 53,000
utilites expense 9,400
maintenance & repairs expense 3600
313,300 313,300
1. Insurance expires at the rate of 450 per month
2. A count of supplies on August 31 shows $700 of supplies on hand.
3. Annual depreciation is $6,600on buildings and $4,000 on equipment.
4. Unearned rent of $5000 was earned prior to augus 31
5. Salaries of $600 were unpaid at August 31.
6. Rentals of $1,600 were due from tenants at August 31(use accounts receivable)
7. The mortgage interest rate is 95 per year. (The mortgage was taken out August 1)
Instructions
a) journalize the adjusting entries on august 31 for the 3 month period juen 1-august 31
b) prepare a ledger using t accounts. enter the trial balance amounts and post the the adjusting entries
c) prpare an adjusted trial balance on august 31
d) prepare an income statement and a retained earnings statement for the 3 months ended august 31 and a classified balance sheet as of august 31.
e) identify which accounts should be closed on august 31.
Aug 29, 2021 | Uncategorized
The trial balance of the Coleman-Foose Company was prepared from the record of the company on November 30, 20X2, the close of its fiscal year:
Trial Balance
November 30, 20X2
Cash 12200
Accounts receivable 16300
Aloowance for doubtful accounts 200
Inventory – 12/1/X1 14175
Unexpired insurance 660
Supplies on hand 265
Land 18000
Building 22000
Accumulated depreciation – building 6000
Office equipment 6800
Accumulated depreication – office equipment 2100
Accounts payable 11400
Mortgage payable 9000
Capial stock 40000
Retained earnings 2200
Dividends 8000
Sales 172000
Sales returns and allowances 600
Sales discounts 2700
Purchases 109800
Purchases returns and allowances 1200
Purchase discounts 2300
Transportation-in 900
Salaries expense 23000
Travel expense 5200
Office expense 1300
Professional fee expense 2500
Telephone expense 1200
Building repair expense 800
Total 246400 246400
Additional data:
A. The allowance for doubtful accounts should be increase by $400
B. Merchandise inventory at november 30, 20×2 was 16200
C. Unexpired insurance on november 30, 20×2 amounted to 440
D. Supplies on hand november 30, 20×2, 120
E. Building depreciation is calculated at 5% per year
F. Office depreciation is calculated at 10% per year
G. Salaries accrued at november 30, 20×2, are 400
1. Prepare a work sheet
2. Prepare an income statement for the year
3. Prepare closing entries
Aug 29, 2021 | Uncategorized
|
The trial balance for Pioneer Advertising Agency shows the following:
| PIONEER ADVERTISING AGENCY |
| Trial Balance |
| October 31, 2010 |
|
|
Debit |
|
Credit |
| Cash |
$15,346 |
|
|
| Advertising Supplies |
2,362 |
|
|
| Prepaid Insurance |
864 |
|
|
| Office Equipment |
7,800 |
|
|
| Notes Payable |
|
|
$5,007 |
| Accounts Payable |
|
|
2,362 |
| Unearned Revenue |
|
|
1,236 |
| C.R. Byrd, Capital |
|
|
10,080 |
| C.R. Byrd, Drawing |
478 |
|
|
| Service Revenue |
|
|
12,813 |
| Salaries Expense |
3,879 |
|
|
| Rent Expense |
769 |
|
|
|
$31,498
|
|
$31,498
|
Assume the following adjustment data.
- Advertising supplies on hand at October 31 total $530.
- Expired insurance for the month is $144.
- Depreciation for the month is $78.
- Unearned revenue earned in October totals $618.
- Services provided but not recorded at October 31 are $228.
- Interest accrued at October 31 is $87.
- Accrued salaries at October 31 are $1,489.
Instructions
Prepare the adjusting entries for the items above.
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Date |
Account/Description |
Debit |
Credit |
| 1. |
Oct.31 |
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| 2. |
Oct.31 |
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| 3. |
Oct.31 |
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| 4. |
Oct.31 |
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| 5. |
Oct.31 |
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| 6. |
Oct.31 |
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| 7. |
Oct.31 |
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Aug 29, 2021 | Uncategorized
Trimble Company sells an electronic toy for $40. The variable cost is $24 per unit and the fixed cost is $32,000 per year. Management is considering the following changes:
Alternative #1
Lease a new packaging machine for $4,000 per year, which will reduce variable cost by $1 per unit.
Alternative #2
Increase selling price 10 percent to counteract an expected 25 percent increase in fixed cost.
Alternative #3
Reduce fixed cost by 25 percent by moving to a lower rent location. This would have the effect of increasing variable costs by 10 percent.
Required:
Answer each of the following questions independently, showing your calculations. Also, provide a few sentences explaining your answers. Round calculations to the nearest unit
1. Determine the current break-even point in units and dollars.
2. Determine the expected profit assuming alternative #1 and sales of 3,200 units.
3. Determine the break-even point in units and dollars assuming alternative #2.
4. Determine the break-even point required in units and dollars assuming alternative #3.
5. Determine the volume of sales required to earn $23,600 assuming alternative #3.
Aug 29, 2021 | Uncategorized
TRUE-FALSE QUESTIONS CHAPTER 23
1. The decedent’s final income tax return is due four months after the date of death.
2. A joint income tax return which includes a decedent may not be filed if the surviving spouse has remarried before the end of the tax year in which the decedent dies.
3. The decedent’s medical expenses paid by the estate can be treated as paid at the time they are incurred and deducted on the decedent’s final income tax return as long as they are paid within two years of the decedent’s death.
4. A decedent is allowed a full personal exemption on a final income tax return regardless of date of death.
5. Income in respect of the decedent can only be included on the decedent’s final income tax return.
6. All estates must file an estate income tax return regardless of gross income.
7. The estate’s first income tax return must cover a period of 12 months.
8. An estate is entitled to the standard deduction.
9. Income distributed to beneficiaries by an estate will retain the same character on the beneficiaries’ income tax returns as it had on the estate’s income tax return.
10. In determining what is income to a trust, federal laws always take precedence over laws of the state in which the trust is created.
MULTIPLE CHOICE QUESTIONS CHAPTER 23
11. Business losses or capital losses incurred by a decedent prior to death:
a. Can be carried over to an estate’s income tax return.
b. Can be deducted by estate beneficiaries on their income tax returns.
c. End with the decedent’s final income tax return.
d. Are not deductible on a decedent’s final income tax return.
12. All valid tax deductions paid by a cash basis decedent before death:
a. Can be deducted on the decedent’s final income tax return.
b. Cannot be deducted on the decedent’s final income tax return
c. Can be deducted by the decedent’s estate on its income tax return.
d. Can be deducted by beneficiaries of the decedent’s estate.
13. If named in a decedent’s will, a fiduciary of an estate would be called an:
a. Administrator
b. Executor
c. Trustee
d. Advisor
14. Each estate must file an estate income tax return if the estate has the following income:
a. $100
b. $300
c. $600
d. $1,000
15. Charitable contributions can be deducted on an estate’s income tax return but are limited to the following percentage of gross income:
a. 30 percent
b. 50 percent
c. 80 percent
d. No percentage limitation
16. A trust created by a grantor during his own lifetime is called a:
a. Grantor trust
b. Inter vivos trust
c. Testamentary trust
d. Simple trust
17. A simple trust is entitled to a personal exemption of:
a. $100
b. $300
c. $600
d. $1,000
18. Charitable contributions cannot be made by a(n):
a. Testamentary trust
b. Inter vivos trust
c. Complex trust
d. Simple trust
19. Trust throwback rules apply to:
a. Grantor trusts
b. Multiple trusts
c. Accumulation distributions
d. None of the above.
20. Income distributions from an estate to estate beneficiaries are recognized as income by beneficiaries on their tax returns for the year in which the:
a. Distribution is received.
b. Estate’s tax year ends.
c. Income distribution was earned by the estate.
d. Income distribution was received by the estate.
21. Charitable contributions can be deducted on an estate’s income tax return up to whatpercentage of income?
a. 20 percent
b. 30 percent
c. 50 percent
d. Unlimited percentage of income
Aug 29, 2021 | Uncategorized
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| True Note Audio Company manufactures two models of speakers, DL and XL. True Note posted the following production and sales data for the month of November. prepare (a) a sales budget and (b) a production budget. |
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DL |
XL |
|
| Estimated inventory in units November 1 |
380 |
140 |
|
| Desired Inventory in units November 30 |
450 |
110 |
|
| Expected sales volume in units: |
|
|
|
| North region |
4,400 |
3,200 |
|
| South region |
2,950 |
2,100 |
|
| Unit sales price |
$120 |
$170 |
|
Aug 29, 2021 | Uncategorized
True or False: Please indicate whether each statement is true or false. (2 points per question)
1. The standard cost is how much a product should cost to manufacture.
2. Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.
3. An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.
4. A centralized business organization is one in which all major planning and operating decisions are made by top management.
5. The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.
6. Property tax expense for a department store’s store equipment is an example of a direct expense.
7. Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.
8. The product cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.
9. When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.
10. Care must be taken involving capital investment decisions, since normally a long-term commitment of funds is involved and operations could be affected for many years.
11. Average rate of return equals average investment divided by estimated average annual income.
12. Managers depend on product costing to make decisions regarding continuing operations, advertising, and product mix.
13. The single plantwide overhead rate method is very expensive to apply.
14. In the just-in-time (JIT) philosophy, unexpected downtime is the result of unreliable processes.
15. In a just-in-time (JIT) system, the work in process account will show more transactions than in a traditional cost system.
Multiple Choice (2 points per question):
16. If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed:
a. controllable variance
b. price variance
c. quantity variance
d. rate variance
17. The Joyner Corporation purchased and used 126,000 board feet of lumber in production, at a total cost of $1,449,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.5 board feet per unit and a standard price of $12 per board foot. Actual production was 23,000 units.
Compute the material price variance.
a. 63,000F
b. 63,000U
c. 6,000F
d. 6,000U
18. The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows:
Standard: 25,000 hours at $10 $250,000
Actual: Variable factory overhead 202,500
Fixed factory overhead 60,000
What is the amount of the factory overhead volume variance?
a. $12,500 favorable
b. $10,000 unfavorable
c. $12,500 unfavorable
d. $10,000 favorable
19. Espinosa Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $242,000, and a desired minimum rate of return of 15%.
The profit margin for Espinosa is:
a. 20%
b. 22%
c. 15%
d. 32%
20. Materials used by Bristol Company in producing Division C’s product are currently purchased from outside suppliers at a cost of $10 per unit. However, the same materials are available from Division A. Division A has unused capacity and can produce the materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of $9.50 per unit is negotiated and 30,000 units of material are transferred, with no reduction in Division A’s current sales.
How much would Division C’s income from operations increase?
a. $0
b. $90,000
c. $15,000
d. $60,000
21. The balanced scorecard measures
a. only financial information
b. only nonfinancial information
c. both financial and nonfinancial information
d. external and internal information
22. All of the following should be considered in a make or buy decision except
a. cost savings
b. quality issues with the supplier
c. future growth in the plant and other production opportunities
d. the supplier will make a profit that would no longer belong to the business
23. What cost concept used in applying the cost-plus approach to product pricing includes only desired profit in the “markup”?
a. Product cost concept
b. Variable cost concept
c. Sunk cost concept
d. Total cost concept
Aug 29, 2021 | Uncategorized
True/False
1. The cash budget is an operating budget–(T or F)
2. The extent of internal control features adopted by a company must be evaluate in terms of cost benefit.–(T or F)
3. If a lease qualifies as an operating lease, it does not add debt to the balance sheet. (T/F)
4. The allowance method of accounting for bad debts violates the matching principle. (T/F)
5. When the disposal of a significant segment occurs, the income statement should report both income from continuing operations and income (loss) from discontinued operations. (T/T)
6. Interest expense on a note payabe is only recorded at maturity. (T/F)
7. Treasury stock is reported as an asset on the balance sheet because treasury stock may later be resold. (T/F)
8. Paid-in capital is the amount paid in to the corporation by stockholders in exchange for shares of ownership (T/F)
9. A machine is purchased for $5,000 plus additional freight costs of $500. Major modification and installation costs will be $1,200. What is the amount of the cost basis for this asset?
A.) $5,000
B.) $6,700
C.) $6,200
D.) $5,500
10. The adjusted trial balance for Lifesaver Corp. at the end of the current year, 2007, contained the following accounts.
5-year Bonds Payable 8% $1,000,000
Bond Interest Payable 50,000
Premium on Bonds Payable 100,000
Notes Payable (3 mo.) 40,000
Notes Payable (5 yr.) 165,000
Mortgage Payable ($15,000 due currently) 200,000
Salaries Payable 18,000
Taxes Payable (due 3/15 of next yr) 25,000
The total long-term liabilities reported on the balance sheet are:
A.) $1,365,000
B.) $1,350,000
C.) $1,465,000
D.) $1,450,000
11. Which of the following is not true of a corporation?
A.) It may buy, own, and sell property.
B.) It may sue and be sued.
C.) The acts of its owners bind the corporation.
D.) It may enter into binding legal contracts in its own name.
12. Janway sells softball equipment. On November 14, they shipped $1,000 worth of softball uniforms to Chris Middle School, terms 2/10, n/30. On November 21, they received an order from Douglas High School for $600 worth of custom printed bats to be produced in December. On November 30, Chris Middle School returned $100 of defective merchandise. Janway has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the Balance Sheet as of November 30?
A.) $1,600
B.) $1,500
C.) $1,000
D.) $ 900
13. Which of the following is NOT a benefit of budgeting?
A.) Budgeting enhances management responsibility.
B.) Budgeting assigns decision-making responsibilities.
C.) Budgeting prevents net losses from occurring.
D.) Budgeting coordinates activities among subunits of the organization
.
14. Small repairs made to keep a truck running over its useful life have been debited to the Vehicles account. As a result of this, which of the following occurred?
A.) The balance in the Vehicles account was correctly stated.
B.) The balance in the Vehicles account was overstated.
C.) The expenses for the period were overstated.
D.) The net income for the period was understated.
15. Sales Taxes collected by a retailer are reported as
A.) contingent liabilities.
B.) revenues.
C.) expenses.
D.) current liabilities.
16. Which one of the following would be classified as an extraordinary item?
A.) Expropriation of property by a foreign government
B.) Losses attributed to a labor strike
C.) Write-down of inventories
D.) Gains or losses from sales of equipment
17. Internal auditors
A.) are hired by CPA firms to audit business firms.
B.) are employees of the IRS who evaluate the internal controls of companies filing tax returns.
C.) evaluate the system of internal controls for the companies that employ them.
D.) cannot evaluate the system of internal controls of the company that employs them because they are not independent.
18. The return on common stockholders equity is computed by dividing net income
A.) by ending common stockholders equity.
B.) by average common stockholders equity.
C.) less preferred dividends by ending common stockholders equity.
D.) less preferred dividends by average common stockholders equity
19. In a small business, the lack of certain separations of duties can best be overcome by
A.) bonding the employees.
B.) getting the owner actively involved.
C.) hiring only honest employees.
D.) holding one person responsible for a given set of transactions.
20. In a recent year Dillon Corporation had net income of $130,000, interest expense of $20,000, and tax expense of $30,000. What was Dillon Corporation s times interest earned ratio for the year?
A.) 6.50
B.) 7.50
C.) 8.00
D.) 9.00
21. A company has an average inventory on hand of $60,000 and its average days in inventory is 29.2 days. What is the cost of goods sold?
A.) $750,000
B.) $1,752,000
C.) $1,680,000
D.) $876,000
22. On April 5 Sally s Boutique accepted a VISA card for a $400 purchase. VISA charges a 2% service fee. The entry to record this transaction would include a
A.) credit to Cash of $392.
B.) debit to Cash of $400.
C.) debit to Service Charge Expense of $8.
D.) credit to Service Charge Expense of $8.
23. The following selected amounts are available for Sanders Company.
Retained earnings (beginning) $1,000
Net loss 100
Cash dividends declared 100
Stock dividends declared 50
What is its ending retained earnings balance?
A.) $850
B.) $900
C.) $750
D.) $800
24. Under the allowance method, Bad Debt Expense is recorded
A.) when an individual account is written off.
B.) when the loss is known.
C.) for an amount the company estimates it will not collect
D.) several times during the accounting period.
25. The principle of internal control that prevents one individual from being responsible for all the related activities of a given task is ______________.
26. Most publicly held corporations are required to make extensive disclosure of their financial affairs to the ______.
27. For analysis of the financial statements, ratios can be classified into three types: (1)________ ratios, (2)___ ratios, and (3)_____ ratios.
28. The two methods used in accounting for uncollectible accounts are the
____ method and the _____ method.
29. Obligations in written form are called ____ and usually require the borrower to pay interest.
30. The two criteria necessary for an item to be classified as an extraordinary item are that the transaction or event must be (1) and (2)
Aug 29, 2021 | Uncategorized
Trustme Vehical Rental Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways.
Car Rental Truck Rental
Number of vehicles in fleet 700 300
Number of employees 150 50
Sales $1,500,000 $750,000
1. If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the truck rental department would be
2. If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the car rental department would be
3. If advertising expense of $150,000 is allocated on the basis of sales, the amount allocated to the car rental department would be
4. If advertising expense of $225,000 is allocated on the basis of sales, the amount allocated to the truck rental department would be
5. If the facility lease expense of $350,000 is allocated on the basis of vehicles in the fleet, the amount allocated to the truck rental department would be
Aug 29, 2021 | Uncategorized
Duopoly: Two identical firms have MC = $3 (no fixed costs) and face a market demand of QD = 9-P. a) If the firms compete on the basis of price: i. What kind of duopoly is this? ii. If they compete a finite number of times, what price will each firm choose? Why? How much profit will each firm earn ? iii. If they compete an indefinite number of times, under what circumstances can they sell at a higher price? What is this price and how much profit will each earn in a Nash Equilibrium? What is the optimal discount factor? b) If the firms are competing on the basis of quantity (one the leader, other the follower): i. What kind of duopoly is this? ii. What are the firms’ reaction functions? iii. Assume one firm enters the market first. Find the profit maximizing price, output, and profit of the leader and the follower .
Aug 29, 2021 | Uncategorized
1. Two mutually exclusive investments cost $10,000 each and have the following cash inflows. The firm s cost of capital is 12%.
Investment
Cash inflow A B
Year 1 $12,407
Year 2
Year 3
Year 4 $19,390
A. What is the net present value of each investment?
B. What is the internal rate of return of each investment?
C. Which investment(s) should the firm make?
D. Would your answers be different to C if the funds received in Year 1 for investment A could be reinvested at 16%? Show your work.
2. Given the following information, answer the following questions:
TR = $3Q
TC = $1,500 + $2Q
A. What is the break-even level of output?
B. If the firm sells 1,300 units, what are its earnings or losses?
C. If sales rise to 2,000 units, what are the firm s earnings or losses?
D. If the total cost equation were TC = $2,000 + $1.80Q, what happens to the break-even level of output units?
3. Determine the current market prices of the following $1,000 bonds if the comparable rate is 10% and answer the following questions.
XY 5.25% (interest paid annually) for 20 years
AB 14% (interest paid annually) for 20 years
A. Which bond has a current yield that exceeds the yield to maturity?
B. Which bond may you expect to be called? Why?
C. If CD, Inc., has a bond with a 5.25% coupon and a maturity of 20 years but which was lower rated, what would be its price relative to the XY, Inc., bond? Explain.
Part B: Indicate whether the statement is True or False. Each answer is worth 2 points.
______ 1. Discounting refers to the process of bringing the future back to the present.
______ 2. An increase in retained earnings is a cash inflow.
______ 3. If a firm doesn t pay cash dividends, it may reinvest the earnings and grow.
______ 4. Total revenue equals price times quantity.
______ 5. The internal rate of return equates the present value of an investment s cash inflows and its cost (outflows).
Part C: Select the one best answer to each question. Each answer is worth 4 points.
1. An investor may place a limit order that
A. limits the amount of commissions.
B. specifies when the stock will be purchased.
C. establishes the exchange on which the security is to bebought or sold.
D. states a price at which the investor seeks to buy or sellthe stock.
2. Which of the following is nota financial intermediary?
A. New York Stock Exchange
B. Washington Savings and Loan
C. First National City Bank
D. Merchants Savings Bank
3. Using accelerated depreciation
A. initially increases the firm s profits.
B. initially decreases the firm s taxes.
C. discourages investment in plant and equipment.
D. increases expenses and decreases cash flow.
4. The current yield on a bond is
A. interest paid divided by the bond s price.
B. the bond s coupon.
C. the interest rate stated on the bond.
D. the yield over the lifetime of the bond.
5. The increased use of financial leverage may
I. affect the firm s credit rating.
II. decrease risk.
III. alter the firm s earnings.
A. I and II
B. I and III
C. II and III
D. I, II, and III
Part D: Solve each of the following problems. Each answer is worth 5 points.
1. If a new college graduate wants a car costing $15,000, how much must be saved annually over the next four years if the funds earn 5%?
2. You purchase a bond for $875. It pays $80 a year (that is, the semiannual coupon is 4%), and the bond matures after 10 years. What is the yield to maturity?
Aug 29, 2021 | Uncategorized
1.Individual proprietors report their business income and deductions on:
Form 1065
Form 1120S
Schedule C
Schedule A
Form 1041
2.According to the Internal Revenue Code 162, deductible business expenses must be one of the following?
incurred for the production of investment income
ordinary and necessary
minimized
appropriate and measurable
personal and justifiable
3.Which of the following is NOT likely to be allowed as a current deduction for a landscaping and nursery business?
cost of fertilizer
accounting fees
cost of a greenhouse
cost of uniforms for employees
a cash settlement for trade name infringement
4.The IRS would most likely apply the arm’s length transaction test to determine which of the following?
whether an expenditure is related to a business activity
whether an expenditure will be likely to produce income
timeliness of an expenditure
reasonableness of an expenditure
All of these
5.Which of the following business expense deductions is most likely to be unreasonable in amount?
Compensation paid to the taxpayer’s spouse in excess of salary payments to other employees.
Amounts paid to a subsidiary corporation for services where the amount is in excess of the cost of comparable services by competing corporations.
Cost of entertaining a former client when there is no possibility of any future benefits from a relation with that client.
None of these is likely to be unreasonable in amount.
Compensation paid to the taxpayer’s spouse in excess of salary payments to other employees, amounts paid to a subsidiary corporation for services where the amount is in excess of the cost of comparable services by competing corporations, and cost of entertaining a former client when there is no possibility of any future benefits from a relation with that client are all likely to be considered unreasonable in amount.
6.Which of the following is a true statement?
Interest expense is not deductible if the loan is used to purchase municipal bonds.
Insurance premiums are not deductible if paid for “key man” life insurance.
One half of the cost of business meals is not deductible.
All of these are true.
None of these is true.
7.Which of the following expenditures is most likely to be deductible for a construction business?
A fine for a zoning violation.
A tax underpayment penalty.
An “under the table” payment to a government representative to obtain a better price for raw materials.
A payment to a foreign official to expedite an application for a business permit.
An arm’s length payment to a related party for emergency repairs of a sewage line.
8.Which of the following is an explanation for why insurance premiums on a key employee are not deductible?
The insurance deduction would offset taxable income without the potential for the proceeds generating taxable incom0065.
The federal government does not want to subsidize insurance companies.
It is impractical to trace insurance premiums to the receipt of proceeds.
Congress presumes that all expenses are not deductible unless specifically allowed in the Internal Revenue Code.
This rule was grandfathered from a time when the IRC disallowed all insurance premiums deductions.
9.Paris operates a talent agency as a sole proprietorship, and this year she incurred the following expenses in operating her talent agency. What is the total deductible amount of these expenditures?
$1,000 dinner with a film producer where no business was discussed
$500 lunch with sister Nicky where no business was discussed
$700 business dinner with a client but Paris forgot to keep any records (oops!)
$900 tickets to the opera with a client following a business meeting
$450
$900
$1,100
$1,200
$800
10.Dick pays insurance premiums for his employees. What type of insurance premium is not deductible as compensation paid to the employee?
Health insurance with benefits payable to the employee.
Whole life insurance with benefits payable to the employee’s dependents.
Group term life insurance with benefits payable to the employee’s dependents.
key man life insurance with benefits payable to Dick.
All of these are deductible by Dick.
11.Tax cost recovery methods do not include:
Amortization
Capitalization
Depletion
Depreciation
All of these are tax cost recovery methods
12.Which of the following is not depreciated?
Automobile
Building
Patent
Machinery
All of these are depreciated
13.Which of the following is not usually included in an asset’s tax basis?
Purchase price
Sales tax
Shipping
Installation costs
All of these are included in an asset’s tax basis
14.Which of the following would be considered an improvement rather than a routine maintenance?
Oil change
Engine overhaul
Wiper blade replacement
Air filter change
15.Tax depreciation is currently calculated under what system?
Sum of the years digits
Accelerated cost recovery system
Modified accelerated cost recovery system
Straight line system
None of these
16.Which is not an allowable method under MACRS?
150 percent declining balance
200 percent declining balance
Straight line
Sum of the years digits
All of these are allowable methods under MACRS
17.Which of the allowable methods allows the most accelerated depreciation?
150 percent declining balance
200 percent declining balance
Straight line
Sum of the years digits
None of these allow accelerated depreciation
18.How is the recovery period of an asset determined?
Estimated useful life
Treasury regulation
Revenue Procedure 87 – 56
Revenue Ruling 87 – 56
None of these
19.Which of the following depreciation conventions are not used under MACRS?
Full-month
Half-year
Mid-month
Mid-quarter
All of these are used under MACRS
20.
Which depreciation convention is the general rule for tangible personal property?
Full-month
Half-year
Mid-month
Mid-quarter
None of these are conventions for tangible personal property
21.
Which of the following is not true regarding an asset’s adjusted basis?
Tax adjusted basis is usually greater than book adjusted basis.
Tax adjusted basis is usually less than book adjusted basis.
Adjusted basis is cost basis less cost recovery deductions.
Tax adjusted basis may change over time.
22.
Which of the following is not usually included in an asset’s tax basis?
Purchase price
Sales tax
Shipping costs
Installation costs
None of these
23.
Which of the following is how gain or loss realized is calculated?
Cash less selling costs.
Cost basis less cost recovery.
Cash less cost recovery.
Amount realized less adjusted basis.
None of these.
24.
Which of the following realized gains results in a recognized gain?
Farm machinery traded for farm machinery.
Sale to a related party.
Involuntary conversion.
Iowa cropland exchanged for a Minnesota warehouse.
25.
Leesburg sold a machine for $2,200 on November 10th of the current year. The machine was purchased for $2,600. Leesburg had taken $1,200 of depreciation deductions. What is Leesburg’s gain or loss realized on the machine?
$800 gain.
$1,000 gain.
$1,200 loss.
$1,400 loss.
None of these.
26.
The sale of land held for investment results in the following type of gain or loss?
Capital.
Ordinary.
1231.
1245.
None of these.
27.
The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss?
Capital.
Ordinary.
1231.
1245.
None of these.
28.
The sale of computer equipment used in a trade or business for 9 months results in the following type of gain or loss?
Capital.
Ordinary.
1231.
1245.
None of these.
29.
The sale of machinery for more than the original cost basis (before depreciation), used in a trade or business, and held for more than one year results in the following types of gain or loss?
Capital and Ordinary.
Ordinary only.
Capital and 1231.
1245 and 1231.
None of these.
30. Which of the following results in an ordinary gain or loss?
Sale of a machine at a gain.
Sale of stock held for investment.
Sale of a 1231 asset.
Sale of inventory.
None of these.
Aug 29, 2021 | Uncategorized
Taylor Lewis Company has provided information on intangible assets as follows.
A patent was purchased from Craig Company for $4,000,000 on June 1, 2010. Lewis estimated the remaining useful life of the patent to be eight years. The patent was carried in Craig s accounting records at a net book value of $3,500,000 when Craig sold it to Lewis.
During 2011, a franchise was purchased from Faragher Company for $360,000. In addition, 8% of revenue from the franchise must be paid to Faragher. Revenue from the franchise for 2011 was $1,950,000. Lewis estimates the useful life of the franchise to be 12 years and takes a full year s amortization in the year of purchase.
Lewis incurred research and development costs in 2010 as follows.
Materials and equipment $286,500
Personnel $153,700
Indirect costs $ 95,355
$535,555
Lewis estimates that these costs will be recouped by December 31, 2014. The materials and equipment purchased have no alternative uses.
On January 1, 2011, because of recent events in the field, Lewis estimates that the remaining life of the patent purchased on June 1, 2010, is only five years from January 1, 2011.
1.) Prepare a schedule showing the intangible section of Lewis s balance sheet at December 31, 2011. Show supporting computations in good form.
2.) Prepare a schedule showing the income statement effect for the year ended December 31, 2011, as a result of the facts above. Show supporting computations in good form.
Aug 29, 2021 | Uncategorized
1. (TCO A) Below you will find selected information (in millions) from Coca-Cola Co. s 2012 Annual Report:
Income Taxes Payable $471
Short-term Investments and Marketable Securities 8,109
Cash 8,442
Other non-current Liabilities 10,449
Common Stock 1,760
Receivables 4,812
Other Current Assets 2,973
Long-term Investments 10,448
Other Non-current Assets 3,585
Property, Plant and Equipment 23,486
Trademarks 6,527
Other Intangible Assets 20,810
Allowance for Doubtful Accounts 53
Accumulated Depreciation 9,010
Accounts Payable 8,680
Short Term Notes Payable 17,874
Prepaid Expenses 2,781
Other Current Liabilities 796
Long-Term Liabilities 14,736
Paid-in-Capital in Excess of Par Value 11,379
Retained Earnings 55,038
Inventories 3,264
Treasury Stock 35,009
Other information taken from the Annual Report:
Sales Revenue for 2012 $48,017
Cost of Goods Sold for 2012 19,053
Net Income for 2012 9,019
Inventory Balance on 12/31/11 3,092
Net Accounts Receivable Balance on 12/31/11 4,920
Total Assets on 12/31/11 79,974
Equity Balance on 12/31/11 31,921
Required:
1. Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
2. Using the Balance Sheet from your answer above calculate; Current Ratio, Days in Inventory, Average Collection Period, Return on Assets Ratio, Debt to Total Assets and Return on common stockholders equity ratio. (Make sure to show all your work . (TCO B) The following selected data was retrieved from the Wal-Mart, Inc. financial statements for the year ending January 31, 2013:
Accounts Payable $38,080
Accounts Receivable 6,768
Cash 7,781
Common Stock 3,952
Cost of Goods Sold 352,488
Income Tax Expense 7,981
Interest Expenses 2,064
Membership Revenues 3,048
Net Sales 466,114
Operating, Selling and Administrative Expenses 88,873
Retained Earnings 72,978
Required:
Using the information provided above:
1. Prepare a multiple-step income statement
2. Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings/results.
(Points : 36)
Aug 29, 2021 | Uncategorized
| 2.
(TCO A) The Dividends account _____. (Points : 5)
|
appears on the income statement along with the expenses of the business
must show transactions every accounting period
is increased with debits and decreased with credits
is considered a long-term asset of the firm
| 3.
(TCOs A, B) Below is a partial list of account balances for Cerner Company:
Cash $5,000
Prepaid insurance 500
Accounts receivable 2,500
Accounts payable 2,000
Notes payable 3,000
Common stock 1,000
Dividends 500
Revenues 15,000
Expenses 12,500
What did Cerner Company show as total credits? (Points : 5)
|
$21,500
$21,000
$20,500
$22,000
|
| 4.
(TCOs B, E) Using accrual accounting, expenses are recorded and reported only _____. (Points : 5)
|
when they are incurred, whether or not cash is paid
when they are incurred and paid at the same time
if they are paid before they are incurred
if they are paid after they are incurred
|
| 5.
(TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5)
|
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
FIFO will have the highest ending inventory
LIFO will have the lowest cost of goods sold
|
| 6.
(TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
|
$48,000
$52,500
$49,500
$43,500
|
| 7.
(TCOs D, G) Lopez Corporation issues 500 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 96. The journal entry to record the issuance will show a _____. (Points : 5)
|
debit to Cash of $500,000
credit to Discount on Bonds Payable for $20,000
credit to Bonds Payable for $480,000
debit to Cash for $480,000
|
| 8.
(TCO C) Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
|
$120,000
$125,000
$155,000
$115,000
|
| 9.
(TCO F) One variation of the horizontal analysis is known as _____. (Points : 5)
|
nonlinear analysis
vertical analysis
trend analysis
common-size analysis
|
| 10.
(TCO F) Vertical analysis is also known as _____. (Points : 5)
|
perpendicular analysis
common-size analysis
trend analysis
straight-line analysis
|
| 11.
(TCO F) Which one of the following is not a characteristic generally evaluated in ratio analysis? (Points : 5)
|
Liquidity
Profitability
Marketability of the product
Solvency
|
| 12.
(TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
|
solvency
liquidity
marketability
profitability
|
| 13.
(TCO F) Return-on-assets ratio is most closely related to _____. (Points : 5)
|
profit margin and debt-to-total-assets ratio
profit margin and asset-turnover ratio
times interest earned and debt-to-stockholders equity ratio
profit margin and free cash flow
|
| 14.
(TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____. (Points : 5)
|
compounding
extrapolation
discounting
None of the above
|
Aug 29, 2021 | Uncategorized
Teldar Paper Company manufactures three products (computer paper, newsprint, and specialty paper) in a continuous production process. Senior management has asked the controller to conduct an activity-based costing study. The controller identified the amount of factory overhead required by the critical activities of the organization as follows:
Activity Activity Cost Pool
Production $640,000
Setup 211,200
Moving 35,100
Shipping 131,625
Product Engineering 161,500
Total $1,179,425
The activity bases identified for each activity are as follows:
Activity Activity Base
Production Machine hours
Setup Number of setups
Moving Number of moves
Shipping Number of customer orders
Product engineering Number of test runs
The activity-base usage quantities and units produced for the three products were determined from corporate records and are as follows:
Number of
Machine Number of Number of Customer Number of
Hours Setups Moves Orders Test Runs Units
Computer Paper 1,400 180 400 660 120 1,750
Newsprint 1,600 75 165 210 40 2,000
Specialty Paper 1,000 405 605 885 220 1,250
Total 4,000 660 1,170 1,755 380 5,000
Each product requires 0.8 machine hour per unit.
Required:
If required, round all per unit amounts to the nearest cent.
1. Determine the activity rate for each activity.
Production
Setup
Moving
Shipping
Product Engineering
2. Determine the total and per-unit activity cost for all three products.
Total Activity Cost Activity Cost Per Unit
Computer Paper
Newsprint
Specialty Paper
Aug 29, 2021 | Uncategorized
Template case 8-3
1. The Artist s Palette purchases its inventory from a number of suppliers and each supplier offers different purchasing discounts. The manager of The Artist s Palette, Marty Parma, is currently comparing two offers for purchasing modeling clay and supplies. The first company offers a chain discount of 20/10/5, and the second company offers a chain discount of 18/12/7 as long as the total purchases are $300 or more. Assuming Parma purchases $300 worth of supplies, a) what is the net price from supplier 1? And b) From supplier 2? And c) From which supplier would you recommend Parma purchase her modeling clay and supplies?
2. What is the net decimal equivalent for supplier 1? For supplier 2?
3. What is the trade discount from supplier 1? From supplier 2
4. The Artist s Palette recognizes that students may purchase supplies at the beginning of the term to cover all of their art class needs. Because this could represent a fairly substantial outlay, the Artist s Palette offers discounts to those students who pay sooner than required. Assume that if students buy more than $250 of art supplies in one visit, they may put it on a student account with terms of 2/10, n/30. If a student purchases $250 of supplies on September 16, what amount is due by September 26? How much would the student save by paying early?
5. Assume that if students buy more than $250 of art supplies in one visit, they may put the charge on a student account with terms of 2/10 EOM. If a student
makes the purchase on September 16, on what day does the 2% discount expire? If the purchase is made on September 26, on what day does the 2% discount expire? If you were an art student, which method would you prefer: 2/10, n/30, or 2/10 EOM?
CASE 9-1
1. What is the markup percentage for a box of ginger tea?
2. If the rice-filled heating pads sell for $7.00, $10.00, and $15.00 for small, medium, and large, respectively, what is the markup percentage on each one?
3. Karen wants to compare using the cost plus method to the percentage markup method. If she sells 2 small rice pads, 4 medium rice pads, 2 large rice pads, and 20 boxes of $3.50 tea in a month, how much profit does she accumulate? What markup percentage based on cost would she have to use to make the same amount of profit on this month s sales
4. What prices should Karen charge (using the markup percentage) to obtain the same amount of profit as she did with the cost plus method? Do not include shipping.
Aug 29, 2021 | Uncategorized
Refer to and use the following abbreviations for the problems below: R = Royalty Payment CT = Artist Credit Total SV = Share Value CV = Credit Value RP = Retail Price PD= Packaging Deduction R%=Royalty Percentage of Suggested Retail Price minus packaging
1. Ziam wants to know how much his royalty will be for a song he has written. How will it be calculated? Write the steps or the formulas that will be used to calculate his royalty payment.
2. Ziam has written a popular song titled Going There, which has been recorded by a well-known performer. He recently received a royalty check for $7,000. If Ziam gets a 0.5 share of the royalties and the credit value is $3.50, what was the credit total that his song earned? Write out the problem in the form of an equation and solve it.
3. Ziam quickly published another song, Take Me There, that is played even more often than Going There. If his first song earns 4,000 credits and his second song earns 6,000 credits, what will the royalty payment be from the two songs if the credit value remains at $3.50?
4. Ziam is considering an offer to perform his own songs on a CD to be titled Waiting There. In the past, he has written but not performed his music. If Ziam s royalty is 0.12 of the suggested retail price of $15.00, but 0.25 of the retail price is deducted for packaging before Ziam s royalty is calculated, how much will he receive for sale of the CD? Write your answer in the form of an equation and solve it.
Use the equation below and show your work in this cell to solve for the royalty payment. Manual Equation: R = (CT)(SV)(CV)
Case 6-2 Template
1. What percentage of the total does each of the four customer groups represent? Round to the nearest hundredth of a percent.
2. Minh s data shows that on average only 4.6% of customers were purchasing complementary services available within Media Systems. By using his company s services, Minh was projecting that these percentages would triple across all user groups within 1 year. a) How many customers would that equate to in total for each group b) What would be the difference compared to current levels?
3. Customer complaint data showed that within the last year, complaints by category were as follows: publication subscribers, 1,174; advertisers, 423; telephone service customers, 4,411; and ISP customers 823. a) What percentage of customers (round to two decimal places)complained within the last year in each category b) If the CRM software were able to reduce complaints by 50% each year over the next 2 years, how many complaints would there be by category at the end of that time period? And c) What would the number of complaints at the end of 2 years represent on a percentage basis?
Aug 29, 2021 | Uncategorized
Teradyne Crystal makes fine tableware in its Ireland factory. The following data are taken from its production plans for 2011.
|
|
|
|
|
| Direct labor costs |
|
|
5,870,000 |
|
| Setup costs |
|
|
630,000 |
|
|
|
Wine Glasses |
Commemorative Vases |
| Expected production |
|
211,000 |
units |
|
|
17,000 |
units |
|
| Direct labor hours required |
|
254,000 |
DLH |
|
|
16,400 |
DLH |
|
| Machine setups required |
|
200 |
setups |
|
|
800 |
setups |
|
|
| Required: |
| 1. |
Determine the setup cost per unit for the wine glasses and for the commemorative vases if setup costs are assigned using a single plantwide overhead rate based on direct labor hours. (Round your answers to 2 decimal places. Omit the ” ” sign in your response.)
|
|
Cost |
| Wine glasses |
/ unit |
| Vases |
/ unit |
Aug 29, 2021 | Uncategorized
15 P 1.Analyze each transaction listed in the table that follows and place X s in the
appropriate columns to indicate the transaction s classification and its effect on
cash flows using the indirect method.
16. P5. Lim Corporation engaged in the transactions listed in the first column of
the following table. Opposite each transaction is a ratio and space to indicate the
effect of each transaction on the ratio.
Show that you understand the effect of business activities on performance measures
by placing anXin the appropriate column to show whether the transaction
increased, decreased, or had no effect on the indicated ratio.
Please let me know if you need me to resend the spreadsheets.
Aug 29, 2021 | Uncategorized
A Theater is interested in estimating fixed and variable costs. The following data are available:
Total Cost No. of Tickets Sold
January $172,000 20,000
February $176,000 19,500
March $180,500 25,500
April $170,500 21,500
May $190,000 25,000
June $188,000 26,500
Use regression analysis to estimate fixed cost per month and variable costs per ticket sold, show your output and answer the following questions:
REQUIRED:
a. How much is the variable cost per ticket?
b. How much is total fixed cost?
c. What percentage of variance in Total Cost is explained by the number of tickets sold ?
d. Write the total cost equation in good form.
e. MovieTown Theater is considering an advertising campaign that is expected to increase annual sales by 7,000 tickets. Assume that the ticket selling price is $9. What is the expected increase in profit associated with the advertising campaign?
Aug 29, 2021 | Uncategorized
Thelma’s Amusements completed the following transactions during November 2012:
Nov 1 Purchased supplies for cash, $700.
Nov 4 Purchased inventory on credit terms of 3/10, n/eom, $9,600.
8 Returned half the inventory purchased on November 4. It was not the inventory ordered.
10 Sold goods for cash, $1,200 (cost, $700).
13 Sold inventory on credit terms of 2/15, n/45, $9,900 (cost, $5,300).
14 Paid the amount owed on account from November 4, less the return (November 8) and the discount.
17 Received defective inventory as a sales return from the November 13 sale, $600. Thelma’s cost of the inventory received was $450.
18 Purchased inventory of $4,100 on account. Payment terms were 2/10, net 30.
26 Paid the net amount owed for the November 18 purchase.
28 Received cash in full settlement of the account from the customer who purchased inventory on November 13, less the return and the discount.
29 Purchased inventory for cash, $12,000, plus freight charges of $200.
Requirement
1. Journalize the transactions on the books of Thelma’s Amusements.
Aug 29, 2021 | Uncategorized
1. There are three (and only three) paths through a network (project), each with a probability of completion in less than 24 months as indicated:
a. S-a-b-F P1(b. S- d-e-F P2(c. S- g-h-F P3(If the tasks are independent, what is the probability of the network being completed within 24 months? Note: S is the start node, F is the finish node.
2. You have been assigned to estimate the cost of installing fiber optic cable in a country. Fortunately, you have done a number of similar projects in this area in the past and you have accumulated the following parametric cost estimates based on this experience:
Mobilization/demobilization Cost = $10,000
Buried cable construction:
Cost per kilometer = $10,000 Sand
Cost per kilometer = $17,500 Sand & Clay
Cost per 100 meters = $ 5,500 Rock
Overhead cable installation:
Cost per kilometer = $ 7,500
Cost per Road Crossing = $12,500
Cost per pipeline Crossing = $ 5,000
The scope of the new project is as follows:
Predominately sand 150 km
Predominately sand & clay 100 km
Rock 500 meters
overhead XXXXXcrossings 3
pipeline crossings 5
Estimate the cost of construction for this project. Assume the estimates are fully loaded, ie they include labor, materials, applicable indirect costs such as overhead, etc. Must show your work.
Aug 29, 2021 | Uncategorized
1. Three activities are candidates for crashing on a CPM network. Activity details are in the table below.
. Activity . Normal Time . Normal Cost . Crash Duration . Crash Cost
. A . 9 days . $8,000 . 7 days . $12,000 .
B . 5 days . $2,000 . 3 days . $10,000
. C . 12 days . $9,000 . 11 days . $12,000
a. What is the crash cost per unit time for activity A?
b. What is the crash cost per unit time for activity B?
c. Which activity should be crashed first to cut one day from the project’s duration; how much is added to project cost?
d. Which activity should be the next activity crashed to cut a second day from the project’s duration; how much is added to project cost?
e. Assuming no other paths become critical, how much can this project be shortened at what total added cost?
2. Martin Manufacturing has implemented several programs to improve its productivity. They have asked you to evaluate the firm’s productivity by comparing this year’s performance with last year’s. The following data are available:
.
Has Martin Manufacturing improved its productivity during the past year?
. . Last Year . This Year
. Output . 10,500 units . 12,100 units
. Labor Hours . 12,000 . 13,200
. Utilities . $7,600 . $8,250
. Capital . $83,000 . $88,000
Has Martin Manufacturing improved its productivity during the past year?
Aug 29, 2021 | Uncategorized
Tim Duggan owns and manages Sky Restaurant, a 24-hour restaurant near the city’s medical complex. Tim employs 9 full-time employees and 16 part-time employees. He pays all of the full-time employees by check, the amounts of which are determined by Tim’s public accountant, Cheryl Williams. Tim pays all of his part-time employees in currency. He computes their wages and withdraws the cash directly from his cash register. Cheryl has repeatedly urged Tim to pay all employees by check. But as Tim has told his competitor and friend, Sara Hill, who owns the Sara’s Diner, “First of all, my part-time employees prefer the currency over a check, and secondly I don’t withhold or pay any taxes or workmen’s compensation insurance on those wages because they go totally unrecorded and unnoticed.”
Required:
1. Who are the stakeholders in this situation?
2. What are the legal and ethical considerations regarding Tim’s handling of payroll?
3. Cheryl is aware of Tim’s method of payment of his part-time employees. What are her ethical responsibilities in this situation?
4. What internal control principle is being violated
Aug 29, 2021 | Uncategorized
When the Genesis and Sensible Essential teams held their weekly meeting, the time value of money and its applicability yielded an extremely stimulating discussion. However, most of the team members from Genesis were very perplexed. Sensible Essentials decided the most expedient way to demonstrate how interest rates as well as time impact the value of money was to use examples. You have been asked to prepare a report analyzing your findings of the three example calculations listed below.
In this assignment, you will do the following:
- Calculate the future value of $100,000 ten years from now based on the following annual interest rates:
- 2%
- 5%
- 8%
- 10%
- Calculate the present value of a stream of cash flows based on a discount rate of 8%. Annual cash flow is as follows:
- Year 1 = $100,000
- Year 2 = $150,000
- Year 3 = $200,000
- Year 4 = $200,000
- Year 5 = $150,000
- Years 6-10 = $100,000
- Calculate the present value of the cash flow stream in problem 2 with the following interest rates:
- Year 1 = 8%
- Year 2 = 6%
- Year 3 = 10%
- Year 4 = 4%
- Year 5 = 6%
- Years 6-10 = 4
Perform your calculations in an Excel spreadsheet. Copy the calculations in a Word document. In addition, write a 2- to 3-page executive summary in Word format. Your summary should reflect a proper analysis of your findings, including a comparison and contrast of data. Apply APA standards to citation of sources. Use the following file naming convention
Aug 29, 2021 | Uncategorized
Please ,all calculations must be shown,step by step, done by using Excel providing a well labeled table for input used, and all answers should be thoroughly explained.
Problem Assignment: Time Value of Money
1. If you deposit $15,000 today and earn 8% annual interest, how much will you have in 9 years?
2. Tiffany will receive a graduation gift of $10,000 from her parents in 3 years. If the discount rate is 7%, what is this gift worth today?
3. What is the present value of a 20-year ordinary annuity of $30,000 using a 6% discount rate?
4. You deposit $5,000 in an account that pays 8% interest per annum. How long will it take to double your money?
5. The Johnsons have $60,000 to use as a down-payment on a house, and they want to borrow $240,000 from the bank. The current mortgage interest rate is 5%. If they make equal monthly payments for 30 years, how much will the monthly payment be?
6. Tim paid $250 per month into his 401K retirement plan. After 30 years, he had accumulated $500,000. What average annual rate of interest had he earned over the 30 years?
7. Charlotte’s firm had sales of $525,000 in the year 2001. By 2012, sales had increased to $1,200,000. What was the average annual rate of increase?
8. Alan had saved up $252,000. How much more must he save each year over the next 20 years in order to have a total of $1 million? Alan earns 5% interest, compounded annually.
Aug 29, 2021 | Uncategorized
Please help me with this problem Calculating Cash Flows. Titan Football Manufacturing had the following operating results for 2010:
sales = $19,780;
cost of goods sold = $13,980;
depreciation expense = $2,370; interest expense = $345;
dividends paid = $550.
At the beginning of the year,
net fixed assets were $13,800,current assets were $2,940,
and current liabilities were $2,070.
At the end of the year,
net fixed assets were $16,340,
current assets were $3,280, and current liabilities were $2,160.
The tax rate for 2010 was 35 percent.
a) What is net income for 2010?
b) What is the operating cash flow from assets for 2010?
c) What is the cash flow from assets for 2010? Is this possible? Explain.
d) If no new debt was issued during the year, what is the cash flow to creditors? What is the cash flow to stockholders? Explain and interpret the positive and negative signs of your answers in (a) through (d).
Aug 29, 2021 | Uncategorized
Please help me with this problem Calculating Cash Flows. Titan Football Manufacturing had the following operating results for 2010:
sales = $19,780;
cost of goods sold = $13,980;
depreciation expense = $2,370; interest expense = $345;
dividends paid = $550.
At the beginning of the year,
net fixed assets were $13,800,
current assets were $2,940,
and current liabilities were $2,070.
At the end of the year,
net fixed assets were $16,340,
current assets were $3,280, and current liabilities were $2,160.
The tax rate for 2010 was 35 percent.
a) What is net income for 2010?
b) What is the operating cash flow from assets for 2010?
c) What is the cash flow from assets for 2010? Is this possible? Explain.
d) If no new debt was issued during the year, what is the cash flow to creditors? What is the cash flow to stockholders? Explain and interpret the positive and negative signs of your answers in (a) through (d).
Aug 29, 2021 | Uncategorized
The TMA Questions Financial Reporting on the Internet (Tyco Electronics Ltd.) TE Connectivity Ltd. is a global company that designs and manufactures…
The TMA Questions
Financial Reporting on the Internet
(Tyco Electronics Ltd.)
TE Connectivity Ltd. is a global company that designs and manufactures approximately 500,000 products that connect and protect the flow of power and data inside millions of products used by consumers and industries. We partner with ******ers in a broad array of industries from consumer electronics, energy, and healthcare to automotive, aerospace, and communication networks.
Tyco Electronics Ltd. was incorporated in Bermuda in fiscal 2000 as a wholly-owned subsidiary of then Bermuda-based Tyco International Ltd. ( Tyco International ). Effective June 29, 2007, Tyco International distributed all of our shares to its common shareholders (referred to in this report as the separation ). Tyco became an independent, publicly traded company owning the former electronics businesses of Tyco International.
Access the Tyco Electronics Ltd. web page at: www.te.com. From Tyco s home page, choose Investors, and then Annual Reports , followed by clicking on 2012 Annual Report to download the annual report on Form 10-K (PDF).
Instructions:
Use the annual report to answer the following questions:
1-
Who is responsible for the preparation of the financial statements and related information that are presented in this report? Support your answer by evidence from the annual report.
[6 marks]
2-What are the objectives of financial reporting by Tyco Electronics Ltd.?
[8 marks]
3-How does the definition of accounting as the language of business relate to accounting as being useful for Tyco Electronics investors and board of directors?
[10 marks]
4-For the two most recent years, 2012 and 2011, list the amounts reported for Revenue , Operating Income , and Net Income . Is Tyco Electronics growing and expanding? Is Global Inc. a profitable company Comment whether the three years trend of revenues is favorable or unfavorable.
[10 marks]
5-Briefly explain what is meant by the term property, plant and equipment, identifying at least three items included in this category. Support your answer by suitable figures from the Tyco Electronics 2012 annual report.
[7 marks]
6-Which form(s) did Tyco Electronics Ltd. use to present its income and balance sheet?
[6 marks]
7-Tyco Electronics Consolidated Statements of Cash Flows, for the Fiscal Years Ended September 28, 2012, September 30, 2011, report depreciation and amortization. What types of intangible assets would you guess require amortization? Support your answer by suitable figures from the Tyco Electronics 2012 annual report.
[8 marks]
8-Identify four accounts on Tyco Electronics balance sheet that provide evidence that Tyco uses accrual accounting. In each case, identify the income statement account that would be affected by the adjustment process.
[10 marks]
9-Find Tyco Electronics 2012 consolidated statements of cash flows.
a-What journal entry did Tyco Electronics make in 2012 to record:
1-Proceeds from long-term debt.
2-Payment of common share dividends and cash distributions to shareholders.
b-What is meant by Net cash provided by continuing investing activities. Explain the change in Net cash provided by continuing investing activities between 2011 and 2012.
[12 marks]
10- For the two most recent years (2012 and 2011), p. 14. Tyco Electronics Ltd. discloses that, as of September 28, 2012 and September 30, 2011 respectively, the working capital was (in millions) $2,499 and $3,571, respectively. What is meant by the working capital? Explain your reasoning.
[8 marks]
11-For the two most recent years (2012 and 2011), are Tyco Electronics assets primarily financed by debt or owner s equity? Explain your reasoning.
[10 marks]
In your answer, you should explain each point or inquire separately. Use the following headings (below) to make up the different sections of your answer
Aug 29, 2021 | Uncategorized
Congress recently enacted an non refundable credit based on the cost of the qualifying alcohol and drug abuse counseling programs provided by and corporate employer to its employees . The credit is limited to 50 % of the total cost of the program .if a corporation elects the credit, none of the program costs are allowed as a deduction. Any credit in excess of current year tax may not be carried back to forward to another year.
A. TMM Corporation spent $ 80,000 for a qualifying counseling program this year .if TMM has $ 500,000 taxable income before considering this expense .should it elect the credit or deduct the program’s cost as an ordinary business expense?
B. Would your answer change if TMM had only $ 70,000 taxable income before consideration of the expense?
Aug 29, 2021 | Uncategorized
Complete the following exercise. Fill in the Excel spreadsheet provided via the link below to provide your answers to part a. Then paste the Excel data into a Word document on which you can also write the answer to part b.
income_statement.xlsx
Administrative Expenses…………………………………………………………………………….
$ 70,000
Finished Goods Inventory January 1, 2011……………………………………………………..
120,000
Cost of Goods Manufactured during the year…………………………………………………
200,000
Finished Goods Inventory December 31, 2011………………………………………………..
60,000
Selling Expenses……………………………………………………………………………………….
40,0 00
Sales……………………………………………………………………………………………………….
680,000
Required:
Using the information for Superior Manufacturing Company, prepare the income statement for the year ended December 31, 2011. (Assume a 30 % income tax.)
Create a report between 200 and 300 words in length for leadership. The topic is the state of this company. Make some suggestions if there are areas you feel need to be further investigated.
Aug 29, 2021 | Uncategorized
Fill in the Excel spreadsheet provided via the link below to provide your answers to part a.
Then paste the Excel data into a Word document on which you can also write the answer to part b.
Administrative Expenses…………………………………………………………………………….
$ 70,000
Finished Goods Inventory January 1, 2011……………………………………………………..
120,000
Cost of Goods Manufactured during the year…………………………………………………
200,000
Finished Goods Inventory December 31, 2011………………………………………………..
60,000
Selling Expenses……………………………………………………………………………………….
40,0 00
Sales……………………………………………………………………………………………………….
680,000
Required:
Using the information for Superior Manufacturing Company, prepare the income statement for the year ended December 31, 2011. (Assume a 30 % income tax.)
Create a report between 200 and 300 words in length for leadership. The topic is the state of this company. Make some suggestions if there are areas you feel need to be further investigated.
Aug 29, 2021 | Uncategorized
Fill in the Excel spreadsheet provided via the link below to provide your answers to part a.
Then paste the Excel data into a Word document on which you can also write the answer to part b.
Administrative Expenses…………………………………………………………………………….
$ 70,000
Finished Goods Inventory January 1, 2011……………………………………………………..
120,000
Cost of Goods Manufactured during the year…………………………………………………
200,000
Finished Goods Inventory December 31, 2011………………………………………………..
60,000
Selling Expenses……………………………………………………………………………………….
40,0 00
Sales……………………………………………………………………………………………………….
680,000
Required:
Using the information for Superior Manufacturing Company, prepare the income statement for the year ended December 31, 2011. (Assume a 30 % income tax.)
Create a report between 200 and 300 words in length for leadership. The topic is the state of this company. Make some suggestions if there are areas you feel need to be further investigated.
Aug 29, 2021 | Uncategorized
Problem
1. Define the following principles, concepts and terminology. Give an example of each:
Matching
Cost
Conservatism
Entity
Going Concern
Depreciation
Breakeven
Variable cost
2. Under the balance sheet classification of property, plant, and equipment, some accounts need ad at the end of each month and others do not. Which do and why? Which do NOT and why?
3. Classify the following items as:
a. accrued revenue (accrued asset)
b. deferred revenue (unearned revenue)
c. accrued expense (accrued liability)
d. deferred expense (prepaid expense)
(1) Three months’ rent paid in advance
(2) Rental income for six months received in advance
(3) Jobs completed but not yet billed at month-end
(4) Interest payable accrued on a note, but not yet paid
(5) Telephone bill owed but not yet paid
(6) A three-year premium paid on auto fleet insurance policy
4. Details of invoices for purchases of merchandise are as follows:
Merchandise Transportation Terms Returns and Allowances
a. $1,000 $25 FOB shipping point, 1/10, n/30 $200
b. 5,000 FOB destination, n/30 400
c. 4,000 50 FOB shipping point, 2/10, n/30 150
d. 5,000 FOB destination, 1/10, n/30
Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount.
5. Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases:
(a) Balance of $500 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $9,500.
(b) Balance of $950 in the allowance account just prior to adjustment. Uncollectible are estimated at 3.5% of sales, which totaled $1,000,000 for the year.
6. The following units are available for sale during the year:
January 1 Beginning Inventory 10 Units @ 18
April 3 Purchases 30 Unis @ 20
August 31 Purchases 28 Units @ 25
September 29 Purchases 17 Units @ 30
December 31 Ending Inventory 21 Units
Determine ending inventory cost by (a) FIFO, (b) LIFO, and (c) average cost.
7.On the basis of the following data related to current assets for Mission Co. at December 2010, prepare a partial balance sheet in good form.
Cash and cash equivalents $100,000
Notes receivable 50,000
Accounts receivable 290,000
Allowance for doubtful accounts 20,000
Interest receivable 750
Merchandise inventory-at lower of cost (first-in, first-out method) or market 120,000
8. Indicate the section of the balance sheet (current assets, fixed assets, investments, current liabilities, long- term liabilities, and stockholders’ equity) in which each of the following is reported:
(a) Note receivable due in 3 years
(b) Note receivable due in 90 days
(c) Allowance for doubtful accounts
9. You have been hired by a high-growth startup company to assist in the determination of what depreciation method to employ for financial reporting. The company’s fixed assets are equally divided among buildings and high-tech equipment (heavily used in the initial years).
(a) Can the company select different methods of depreciation for financial reporting? Explain.
(b) Explain to company management which method of depreciation would be suitable for each type of fixed assets the company employs. Also, state why.
(c) Which method of depreciation would the company choose for taxes? Explain why.
10. A machine with a useful life of 6 years and a residual value of $3,000 was purchased at the beginning of year 1 for $30,000. The machine was sold for $15,000 on April 1 in year 4.
(a) What was the book value of the equipment at the end of year 3 assuming the straight-line method of depreciation is used?
(b) Illustrate the effects on the accounts and financial statements of the depreciation from January 1 to April 1 of year 4.
(c) Illustrate the effects on the accounts and financial statements of the sale of the machine on April 1.
11. A company acquired mineral rights for $7,500,000. The mineral deposit is estimated at 600,000 tons and during the year 100,000 tons were extracted and sold.
(a) Calculate depletion expense for the year.
(b) Show the effects on the accounts and financial statements of the company.
(c) What is the book value of the mineral rights at the end of the current year?
12. During 2009, Lexie, Inc. acquired Lena, Inc. for $10,000,000. The fair market value of the net assets of Lena, Inc. was $8,500,000 on the date of purchase. During 2012, Lexie, Inc. determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000.
(a) Determine the amount of goodwill implied during 2009.
(b) Illustrate the effects on the accounts and the financial statements of the amortization for 2012.
13. For each of the following items indicate whether the transactions listed below increased (+), decreased (-)or had no effect (o)by inserting the appropriate symbol.
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Net Income
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Assets
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Liabilities
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Owner’s Equity
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Cash Flow
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(a)
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Sold Equipment for cash at a gain
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(b)
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Recorded amortization expense on patents
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Paid Cash for minor repairs to an asset
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(d)
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Recorded a revenue expenditure incurred on account
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Paid Cash to remove old building from land being prepared for use
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14. Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company’s total assets, liabilities, and stockholders’ equity.
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Assets
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Liabilities
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Stockholder’s Equity
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(1)
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Declaring a cash dividend
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(2)
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Paying the cash dividend declared in (1)
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(3)
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Declaring a stock dividend
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(4)
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Issuing stock certificates for the stock dividends declared in (3)
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15. Tops Company sells Products D and E and has made the following estimates for the coming year:
Product Unit Selling Price Unit Variable Cost Sales Mix
D $30 $24 60%
E 70 56 40
Fixed costs are estimated at $202,400. Determine (a) the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, (b) the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and (c) the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.
(a) If Henry Company’s budgeted sales are $800,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio?
(b) If the contribution margin ratio is 30% for Gray Company, sales are $900,000, and fixed costs are $180,000, what is the operating profit?
16. A corporation, which had 20,000 shares of common stock outstanding, declared a 3-for-l stock split.
(a) What will be the number of shares outstanding after the split?
(b) If the common stock had a market price of $240 per share before the stock split, would be an approximate market price per share after the split?
17. Smith Co. is considering the following alternative plans for financing the company:
Plan I Plan II
Issue 10% Bonds (at face) $1,000,000
Issue $10 Common Stock $3,000,000 $2,000,000
Income tax is estimated at 40% of income.
Determine the earnings per share of common stock under the two alternative financing plans, assuming income before bond interest and income tax is $1,000,000.
Aug 29, 2021 | Uncategorized
1) As of January 1, 2011, Survival Industries, Inc. purchased a boat at a cost of $490,000.
When purchased, the company was using the double declining depreciation method.
Key info on the asset at time of purchase is the following.
Estimated useful life is 7 years.
Residual Value is $0.
At the beginning of 2014, the CFO decided to change to straight-line depreciation method. Compute the depreciation expense for 2014.
It was explained to me that the correct answer is:
[(490,000 – (140,000 100,000 71,429)] / 3 = $44,643
Purchase Price of Boat = $490,000
3 = 3 years depreciation?
However, I do not understand how the other numbers ($140,000, $100,000, and $71,429) were arrived at.
2) Mystical Corporation found the following errors in their year-end financial statements.
As of Dec. 2012 As of Dec. 2013
Ending Inventory $32,000 understated $46,000 overstated
Depreciation Exp. $7,000 understated
On December 31, 2013, a fully depreciated machine was sold for $35,000 but the sale was not recorded until January 15, 2014 when the cash was received. In 2012, a three-year insurance premium was prepaid for $45,000, of which the entire amount was expensed in the first year.
There were no other errors or corrections. Ignore any tax considerations.
What is the total net effect of errors on Mystical’s 2013 net income?
As explained, $32,000 + $46,000 + $15,000 – $35,000
= overstated Net Income by $58,000,
where $32,000 = understated ending inventory for 12/31/2012
$46,000 = overstated ending inventory for 12/31/2013
$35,000 = depreciated sale price of the machine
Is $15,000 = $45,000/3 years or the amount of depreciation for 2013 only?
Why is it important that the sale was not recorded until 1/15/2014 when the cash was received?
Could you explain in detail how the answer was arrived at.
3) Financial Data of Johnson Company for 2013 & 2012:
Comparative Balance Sheet as of 12/31/2013 & 12/31/2012
2013 2012
Cash $260,000 $230,000
Receivables $156,000 $130,000
Inventory $180,000 $220,000
Plant Assets $160,000 $135,000
Accumulated Deprec. ($80,000) ($76,000)
Long Term Invest
(Held-To-Maturity) $80,000 $93,000
Total $756,000 $722,000
Accounts Payable $135,000 $122,000
Accrued Liabilities $30,000 $33,100
Bonds Payable $135,000 $166,000
Common Stock $180,000 $165,000
Retained Earnings $276,000 $235,000
Total $756,000 $722,000
Income Statement
For the Year Ended 12/31/2013
Sales $750,000
Cost of Goods Sold $530,000
Gross Margin $220,000
Selling & Administrative Expenses $106,000
Income from Operations $114,000
Other Revenues & Gains
Gain on Sale of Investments $7,000
Income Before Tax $121,000
Income Tax Expense $48,400
Net Income $72,600
Additional Information:
During the year, $9,000 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were $32,500.
Required:
1) Prepare a statement of cash flows using the Indirect Method
2) Prepare a statement of cash flows using the Direct Method. (Do not prepare a Reconciliation Schedule.)
Aug 29, 2021 | Uncategorized
On December 1, 2009, John and Patty Driver formed a corporation called Susquehanna Equipment Rentals. The new corporation was able to begin operations immediately by purchasing the assets and taking over the location of Rent- It, an equipment rental company that was going out of business. The newly formed company uses the following accounts: Cash Income Taxes Payable Accounts Receivable Capital Stock Prepaid Rent Retained Earnings Unexpired Insurance Dividends Office Supplies Income Summary Rental Equipment Rental Fees Earned Accumulated Depreciation Salaries Expense Rental Equipment Maintenance Expense Notes Payable Utilities Expense Accounts Payable Rent Expense Interest Payable Office Supplies Expense Salaries Payable Depreciation Expense Dividends Payable Interest Expense Unearned Rental Fees Income Taxes Expense The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered into the following transactions: Dec. 1 Issued to John and Patty Driver 20,000 shares of capital stock in exchange for a total of $ 200,000 cash. Dec. 1 Purchased for $ 240,000 all of the equipment formerly owned by Rent- It. Paid $ 140,000 cash and issued a one- year note payable for $ 100,000. Dec. 1 Paid $ 12,000 to XXXXX as three months advance rent on the rental yard and office formerly occupied by Rent- It. Dec. 4 Purchased office supplies on account from Modern Office Co., $ 1,000. Payment due in 30 days. (These supplies are expected to last for several months; debit the Office Supplies asset account.) Dec. 8 Received $ 8,000 cash as advance payment on equipment rental from McNamer Construction Company. (Credit Unearned Rental Fees.) Dec. 12 Paid salaries for the first two weeks in December, $ 5,200. Dec. 15 Excluding the McNamer advance, equipment rental fees earned during the first 15 days of December amounted to $ 18,000, of which $ 12,000 was received in cash. Dec. 17 Purchased on account from Earth Movers, Inc., $ 600 in parts needed to repair a rental tractor. (Debit an expense account.) Payment is due in 10 days. Dec. 23 Collected $ 2,000 of the accounts receivable recorded on December 15. Dec. 23 Rented a backhoe to Mission Landscaping at a price of $ 250 per day, to be paid when the backhoe is returned. Mission Landscaping expects to keep the backhoe for about two or three weeks. Dec. 26 Paid biweekly salaries, $ 5,200. Dec. 27 Paid the account payable to XXXXX $ 600. Dec. 28 Declared a dividend of 10 cents per share, payable on January 15, 2010. Dec. 29 Susquehanna Equipment Rentals was named, along with Mission Landscaping and Collier Construction, as a co- defendant in a $ 25,000 lawsuit filed on behalf of Kevin Davenport. Mission Landscaping had left the rented backhoe in a fenced construction site owned by Collier Construction. After working hours on December 26, Davenport had climbed the fence to play on parked construction equipment. While playing on the backhoe, he fell and broke his arm. The extent of the company s legal and financial responsibility for this accident, if any, cannot be determined at this time. (Note: This event does not require a journal entry at this time, but may require disclosure in notes accompanying the statements.) Dec. 29 Purchased a 12- month public- liability insurance policy for $ 9,600. This policy protects the company against liability for injuries and property damage caused by its equipment. However, the policy goes into effect on January 1, 2010, and affords no coverage for the injuries sustained by Kevin Davenport on December 26. Dec. 31 Received a bill from Universal Utilities for the month of December, $ 700. Payment is due in 30 days. Dec. 31 Equipment rental fees earned during the second half of December amounted to $ 20,000, of which $ 15,600 was received in cash. Data for Adjusting Entries: a. The advance payment of rent on December 1 covered a period of three months. b. The annual interest rate on the note payable to XXXXX is 6 percent. c. The rental equipment is being depreciated by the straight- line method over a period of eight years. d. Office supplies on hand at December 31 are estimated at $ 600. e. During December, the company earned $ 3,700 of the rental fees paid in advance by McNamer Construction Co. on December 8. f. As of December 31, six days rent on the backhoe rented to Mission Landscaping on December 23 has been earned. g. Salaries earned by employees since the last payroll date (December 26) amounted to $ 1,400 at month- end. h. It is estimated that the company is subject to a combined federal and state income tax rate of 40 percent of income before income taxes (total revenue minus all expenses other than income taxes). These taxes will be payable in 2010. Instructions a. Perform the following steps of the accounting cycle for the month of December: Journalize the December transactions. Do not record adjusting entries at this point. Post the December transactions to the appropriate ledger accounts. Prepare the unadjusted trial balance columns of a 10- column worksheet for the year ended December 31. Prepare the necessary adjusting entries for December. Post the December adjusting entries to the appropriate ledger accounts. Complete the 10- column worksheet for the year ended December 31. b. Prepare an income statement and statement of retained earnings for the year ended December 31, and a balance sheet (in report form) as of December 31. c. Prepare required disclosures to accompany the December 31 financial statements. Your solution should include a separate note addressing each of the following areas: (1) depreciation policy, (2) maturity dates of major liabilities, and (3) potential liability due to pending litigation. d. Prepare closing entries and post to ledger accounts. e. Prepare an after- closing trial balance as of December 31. f. During December, this company s cash balance has fallen from $ 200,000 to $ 65,000. Does it appear headed for insolvency in the near future? Explain your reasoning. g. Would it be ethical for Patty Driver to maintain the accounting records for this company, or must they be maintained by someone who is independent of the organization?
Aug 29, 2021 | Uncategorized
Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during March Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the March. The company uses a plant-wide predetermined overhead rate based on direct labor-hours. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):
Estimated total fixed manufacturing overhead $ 10,000
Estimated variable manufacturing overhead per direct labor-hour $ 1.00
Estimated total direct labor-hours to be worked 2,000
Total actual manufacturing overhead costs incurred $12,500
Job P Job Q
Direct materials $ 13,000 $ 8,000
Direct labor cost $ 21,000 $ 7,500
Actual direct labor-hours worked 1,400 500
1. What is the company s predetermined overhead rate?
Predetermined overhead rate $ ___per DLH
2.How much manufacturing overhead was applied to Job P and Job Q?
Job P Job Q
Manufacturing overhead applied $ ___ $___
3. What is the direct labor hourly wage rate?
Job P Job Q
Direct labor hourly wage rate___$ ___$
4. Required:
a. If Job P included 20 units, what is its unit product cost?
Unit product cost___ $
b. What is the total amount of manufacturing cost assigned to Job Q as of the end of March (including applied overhead)?
Total manufacturing cost___ $
5. Assume the ending raw materials inventory is $1,000 and the company does not use any indirect materials. Prepare the journal entries to record raw materials purchases and the issuance of direct materials for use in production.
6. Assume that the company does not use any indirect labor. Prepare the journal entry to record the direct labor costs added to production.
7. Prepare the journal entry to apply manufacturing overhead to production.
Aug 29, 2021 | Uncategorized
1. Swenson s Incorporated issues a $400,000, 8%, 10-year mortgage note on December 31,2007. The proceeds from the note are to be used in financing a new muffin accelerator research laboratory. The terms of the note provide for semiannual installment payments, exclusive of real estate taxes and insurance, of $29,433. Payments are due June 30 and December 31.
Instructions
(a) Prepare an installment payments schedule for the first 2 years.
(b) Prepare the entries for (1) the loan and (2) the first two installment payments.
(c) Show how the total mortgage liability should be reported on the balance sheet at December 31, 2008.
2. On July 1, 2008, Tardis Company issued $4,000,000 face value, 8%, 10-year bonds
at $3,501,514.This price resulted in an effective-interest rate of 10% on the bonds. Tardis uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
Instructions
(Round all computations to the nearest dollar.)
(a) Prepare the journal entries to record the following transactions.
(1) The issuance of the bonds on July 1, 2008.
(2) The accrual of interest and the amortization of the discount on December 31, 2008.
(3) The payment of interest and the amortization of the discount on July 1, 2009, assuming no accrual of interest on June 30.
(4) The accrual of interest and the amortization of the discount on December 31, 2009.
(b) Show the proper balance sheet presentation for the liability for bonds payable on the
December 31, 2009, balance sheet.
Aug 29, 2021 | Uncategorized
E9-6: SY Telc has recently started the manufacture of RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 20,000 RecRobo s is as follows.
Cost
Direct materials ($40 per robot) $ 800,000
Direct labor ($30 per robot) 600,000
Variable overhead ($6 per robot) 120,000
Allocated fixed overhead ($25 per robot) 500,000
Total $2,020,000
SY Telc is approached by Chen Inc. which offers to make RecRobo for $90 per unit or $1,800,000.
Instructions:
(a) Using incremental analysis, determine whether SY Telc should accept this offer under each of the following independent assumptions.
(1) Assume that $300,000 of the fixed overhead cost can be reduced (avoided).
(2) Assume that none of the fixed overhead can be reduced (avoided). However, if the robots are purchased from Chen Inc., SY Telc can use the released productive resources to generate additional income of $300,000.
(b) Describe the qualitative factors that might affect the decision to purchase the robots from an outside supplier.
Use incremental analysis for further processing of materials decision.
Aug 29, 2021 | Uncategorized
Question 1:
Tamworth Truck manufactures part YYY used in several of its truck models. 10,000 units are produced each year with production costs as follows:
Direct materials $ 45,000
Direct manufacturing labour 15,000
Variable support costs 35,000
Fixed support costs 25,000
Total costs $120,000
Tamworth Truck has the option of purchasing part YYY from an outside supplier at $11.20 per unit. If part YYY is outsourced, 40% of the fixed costs cannot be immediately converted to other uses (i.e. cannot be avoided).
a. Describe avoidable costs. What amount of the YYY production costs is avoidable?
b. Should Tamworth Truck outsource YYY? Why or why not?
c. What other items should Tamworth Truck consider before outsourcing any of the parts it currently manufactures?
Question 2:
Tamworth Pet Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:
Product Number of Setups Number of Components Direct Labour Hours
Standard 3 30 650
Deluxe 7 50 150
Overhead Costs $20,000 $60,000
Required:
Assume a traditional costing system applies the $80,000 of overhead costs based on direct labour hours.
a. What is the total amount of overhead costs assigned to the standard model?
b. What is the total amount of overhead costs assigned to the deluxe model?
AND,
Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.
c. What is the total amount of overhead costs assigned to the standard model?
d. What is the total amount of overhead costs assigned to the deluxe model?
e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?
Question 3:
Tamworth Company has the following information:
Month Budgeted Sales
March $50,000
April 53,000
May 51,000
June 54,500
July 52,500
In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month’s cost of sales.
Required:
Prepare a purchases budget for April through June (one column for each month), giving total figures for the quarter in the forth column.
Question 4:
Tamworth Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfil a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
Direct materials $100
Direct labour 125
Variable manufacturing support 60
Fixed manufacturing support 75
Total manufacturing costs 360
mark-up (60%) 216
Targeted selling price $576
Tamworth Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.
Required:
a. For Tamworth Cabinets, what is the minimum acceptable price of this one-time-only special order?
b. Other than price, what other items should Tamworth Cabinets consider before accepting this one-time-only special order?
c. How would the analysis differ if there was limited capacity?
Aug 29, 2021 | Uncategorized
Question 1:
Tamworth Truck manufactures part YYY used in several of its truck models. 10,000 units are produced each year with production costs as follows:
Direct materials $ 45,000
Direct manufacturing labour 15,000
Variable support costs 35,000
Fixed support costs 25,000
Total costs $120,000
Tamworth Truck has the option of purchasing part YYY from an outside supplier at $11.20 per unit. If part YYY is outsourced, 40% of the fixed costs cannot be immediately converted to other uses (i.e. cannot be avoided).
a. Describe avoidable costs. What amount of the YYY production costs is avoidable?
b. Should Tamworth Truck outsource YYY? Why or why not?
c. What other items should Tamworth Truck consider before outsourcing any of the parts it currently manufactures?
Question 2:
Tamworth Pet Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:
Product Number of Setups Number of Components Direct Labour Hours
Standard 3 30 650
Deluxe 7 50 150
Overhead Costs $20,000 $60,000
Required:
Assume a traditional costing system applies the $80,000 of overhead costs based on direct labour hours.
a. What is the total amount of overhead costs assigned to the standard model?
b. What is the total amount of overhead costs assigned to the deluxe model?
AND,
Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.
c. What is the total amount of overhead costs assigned to the standard model?
d. What is the total amount of overhead costs assigned to the deluxe model?
e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?
Question 3:
Tamworth Company has the following information:
Month Budgeted Sales
March $50,000
April 53,000
May 51,000
June 54,500
July 52,500
In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month’s cost of sales.
Required:
Prepare a purchases budget for April through June (one column for each month), giving total figures for the quarter in the forth column.
Question 4:
Tamworth Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfil a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
Direct materials $100
Direct labour 125
Variable manufacturing support 60
Fixed manufacturing support 75
Total manufacturing costs 360
mark-up (60%) 216
Targeted selling price $576
Tamworth Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.
Required:
a. For Tamworth Cabinets, what is the minimum acceptable price of this one-time-only special order?
b. Other than price, what other items should Tamworth Cabinets consider before accepting this one-time-only special order?
c. How would the analysis differ if there was limited capacity?
Aug 29, 2021 | Uncategorized
Tarass Inc. is an accrual-method calendar-year corporation. Tarass, Inc. did not qualify for the domestic production activities deduction. The following information has been provided about the activities occurring in 2013: Reported on the financial statement income after taxes $2,585,000 Life insurance proceeds from CFO s death 100,000 Revenue from sales 3,500,000 Key-person life insurance policies premium 15,000 Cost of goods sold (reported on book) 275,000 MACRS depreciation 65,000 Book depreciation 40,000 AMT depreciation 60,000 Interest income on private activity tax-exempt bonds 25,000 Interest paid on loan to purchase tax-exempt bonds 25,000 Net capital loss 35,000 Rental income received and earned in 2013 5,000 Rental income received in 2012 but earned in 2013 10,000 Rental income received in 2013 but not earned 5,000 Overhead costs expensed for financial reporting but are included in ending inventory for tax purposes under 263A4 5,000 Overhead costs expensed for financial reporting in 2012 but included in 2012 ending inventory. All 2012 ending inventory was sold in 2013. Charitable contributions 315,000 Federal income tax expense reported on financial statements 350,000 Using the information provided, complete the following tasks: Using Excel, prepare a reconciliation of book income and tax income. Set up the Excel spreadsheet using the example below: Line Item Book Income (Dr) Cr Book-tax adjustments Taxable Income (Dr) Cr (Dr) Cr Calculate Tarass Inc. s tax liability for 2013.
Calculate Tarass Inc. s alternate minimum tax for 2013, if any applies.
The calculation must be shown to receive full credit.
Aug 29, 2021 | Uncategorized
- (Weighted average cost of capital) The target capital structure for QM Industries is 35% common stock, 5% preferred stock, and 60% debt. If the cost of common equity for the firm is 17.6%, the cost of preferred stock is 10.3%, the before-tax cost of debt is 7.1%, and the firm’s tax rate is 35%, what is QM’s weighted average cost of capital?
QM’s WACC is ___%. (Round to three decimal places.)
- (Weighted average cost of capital) Crypton Electronics has a capital structure consisting of 43% common stock and 57% debt. A debt issue of $1000 par value, 5.9% bonds that mature in 15 years and pay annual interest will sell for $975. Common stock of the firm is currently selling for $29.29 per share and the firm expects to pay a $2.25 dividend next year. Dividends have grown at the rate of 4.9% per year and are expected to continue to do so for the foreseeable future. What is Crypton’s cost of capital where the firm’s tax rate is 30%?
Crypton’s cost of capital is ___% (Round to three decimal places.)
- (Weighted average cost of capital) The target capital structure for lowers Manufacturing is 55% common stock, 19% preferred stock, and 26% debt. If the cost of common equity for the firm is 19.1%, the cost of preferred stock is 11.2%, and the beforetax cost of debt is 10.1%, what is Jowers’ cost of capital? The firm’s tax rate is 34%.
Jowers’ WACC is ___%. (Round to three decimal places.)
- As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate of use when evaluating the purchase of new packing equipment for the plant. You have determined the market value of the firm’s capital structure as follows:
Source of Capital/Market Values
Bonds/$4,300,000
Preferred Stock/$2,200,000
Common Stock $5,700,000
To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying 6.6% per year at the market price of $1028. Preferred Stock paying $1.91 dividend can be sold $24.46. Common Stock for Ranch Manufacturing is currently selling for $54.38 per share. The firm paid a $3.03 dividend last year and expects dividends to continue growing at a rate of 5.4% per year into the indefinite future. If the firm’s tax rate is 30 percent, what discount rate should you use to evaluate the equipment purchase?
Ranch Manufacturing’s WACC is ___%. (Round to three decimal places.)
- (EBIT-EPS analysis) Abe Forrester and three of his friends from college have interested a group of venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonio. To finance the new venture two plans have been proposed:
Plan A is an all-common-equity structure in which $2.1 million dollars would be raised be selling 88,000 shares of common stock.
Plan B would involve issuing $1.3 million dollars in long-term bonds with an effective interest rate of 11.8% plus $0.8 million would be raised by selling 44,000 shares of common stock. The debt funds raised under Plan B have no fixed maturity date, in that this amount of financial leverage is considered a permanent part of the firm s capital structure.
Abe and his partners plan to use a 35% tax rate in their analysis, and they have hired you on a consulting basis to do the following:
a. Find the EBIT indifference level associated with the two financing plans.
b. Prepare a pro forma income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regardless whether Plan A or B is chosen.
a. Find the EBIT indifference level associated with the two financing plans.
The EBIT indifference level associated with the two financing plans is $____. (Round to the nearest dollar.)
b. Prepare a pro forma income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regardless whether Plan A or B is chosen.
Complete the segment of the income statement for Plan A below (Round income statement amounts to the nearest dollar except the EPS to the nearest cent.)
Stock Plan
EBIT $________
Less: Interest Expense _________
Earnings Before Taxes ________
Less: Taxes at 35% _________
Net Income ________
Number of Common Shares ________
EPS ________
Complete the segment of the income statement for Plan B below: (Round income statement amounts to the nearest dollar except the EPS to the nearest cent.)
Bond/Stock Plan _________
EBIT _________
Less: Interest Expense ______
Earnngs Before Taxes _______
Less: Taxes at 35% ________
Net Income ________
Number of Common Shares ________
EPS __________
Aug 29, 2021 | Uncategorized
Target Corporation Project
Financial Statement Analysis of Target.
Industry/Strategy Analysis
Begin your project with an introduction that briefly discusses your company and the products/services that it provides. You may discuss the firm s strategy here or in the next section. Obtain the industry survey for your company s industry via the Rider Library Site as discussed in class. Read the survey and comment on the variables discussed in the survey that are most relevant to analyzing your company. For example, comment on the nature of competition within the industry and macro or micro economic variables such as interest rates, disposable income, etc. that might have a bearing on the industry and the future prospects of your firm. Be sure to read the section on how to analyze a firm in the industry so you will have an understanding of what drives the industry and how your firm measures up. Areas such as marketing, finance, research and development, and management/strategy may be discussed here.
Accounting Analysis
Please read the footnotes in the financial statements and comment on the methods used to recognize revenue, value inventories, depreciation expense, leases, pensions, and other accounting principles covered in class. Ignore complicated notes involving material that was not discussed in class such as derivatives, etc.
Financial Analysis
After you have completed the Industry/Strategy and Accounting Analysis portions of your project as discussed in class use that information and the financial statements of your company to complete the final part, financial analysis, for your company.
The following will describe some of the tools as well as expected items to use in your analysis.
Please examine major components of the income statement and note the major trends. This will involve a discussion of the major sources of revenues and expenses and the growth of these components. Also examine the balance sheet and discuss the major items that comprise the asset and liability sections.
Use the following ratios to examine liquidity, solvency and profitability of your firm:
Current Ratio
Quick Ratio
Inventory Turnover
Accounts Receivable Turnover
Debt Ratio
Times Interest Earned
Asset Turnover
Assets to Equity
Rate of Return on Equity
Remember that your analysis for the above items should include some reference to a benchmark such as an industry average or key competitors. These may be obtained from library reference materials, the internet or in some cases the S&P industry surveys.
You should also summarize your findings in a brief conclusion.
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Aug 29, 2021 | Uncategorized
Instructions:
Please complete the required federal individual income tax return forms for the following taxpayers. Unless instructed otherwise, the information provided is for the taxpayers 2012 tax year. Please complete their 2012 tax return. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps.
Joseph and Diana Cohen live in Pleasantville, New Jersey. Joseph is the Vice President of Sales at a small start-up company. Diana is a former advertising executive who currently consults with former clients. She also serves on the Board of Directors of an advertising company. The Cohens have three children: Rebecca (18), Alan (15) and David (12). During the year, Rebecca left home to attend a liberal arts college. The Cohens plan to file a joint tax return. The Cohens provided the following information: Joseph s Social Security number isNNN-NN-NNNN/p>
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- Diana s Social Security number isNNN-NN-NNNN/li>
- Rebecca s Social Security number isNNN-NN-NNNN/li>
- Alan s Social Security number isNNN-NN-NNNN/li>
- David s Social Security number isNNN-NN-NNNN/li>
- The Cohen s mailing address is 85 North Maple Drive, Pleasantville, New Jersey 08233
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- Rebecca, Alan, and David are tax dependents for federal tax purposes
Joseph Cohen reported the following the following information relating to his employment during the year:
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Company
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Gross Wages
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Federal Income Tax Withholding
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State Income Tax Withholding
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Alternative Energy
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$115,325
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$28,230
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$13,400
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The above amounts do not reflect any income items described below. . Joseph s employer withheld all applicable and appropriate payroll taxes on all income for which it was required to withhold.
Diana Cohen received the following revenue during the year (she uses the cash method of accounting).
Consulting revenue reported to her on a form 1099-MISC, Box 7
High-end Retail $32,000
Jensen s Health Products $8,500
Strategic Solutions $3,750
Board of Directors fees reported to her on a form 1099-MISC, Box 7
Natural Sunshine, Inc. $6,500
During the year, Diana paid the following business expenses:
Consultant-related
Airfare $2,900
Hotel $1,450
Meals $390
Parking $320
She drove 290 business miles for her consulting related activities (she has documentation to verify)
Board of Director-related-
Meals $125
Hotel $225
She drove 315 business miles for her Board of Director activities (she has documentation to verify)
Neither business required the filing of forms 1099 to report payments made during the tax year. In addition, Ms. Cohen drove a 2010 Lexus purchased on January 1, 2010 for all of her business mileage. She drove the vehicle a total of 10,605 miles during the year for all purposes. She has written documentation to support the mileage amounts. She also has access to another vehicle for personal purposes.
The Cohens also received the following during the year:
Interest income from First Bank of New Jersey $320
Interest income from Patterson, New Jersey School District $200
Interest income from U.S. Treasury Bond $350
Interest income from General Mills corporate bond $400
Qualified dividend income from Rio Tinto $1,500
Qualified dividend income from Microsoft $750
Qualified dividend income from Cooper Tire $200
Qualified dividend income from Cardinal Health $425
Qualified dividend income from Union Pacific $140
Qualified dividend income from Procter & Gamble $190
Qualified dividend income from PepsiCo $225
Qualified dividend income from Kellogg $200
Qualified dividend income from Abbott Labs $275
Qualified dividend income from 3M $350
Dividend income (not qualified) from China Fund $2,000
The Cohens did not own, control or manage any foreign bank accounts nor were they a grantor or beneficiary of a foreign trust during the tax year.
The Cohens had the following activity in their brokerage account during the year. All transactions were reported on a form 1099-B with Box A checked:
Sold 2,000 shares of Microsoft 7/1/CY (current year) $22,500
Sold 75 shares of Apple 4/15/CY $28,750
Sold 350 shares of Cooper Tire 10/14/CY $14,700
Sold 1,000 shares of Cardinal Health 9/3/CY $35,000
Sold 50 shares of Union Pacific 1/7/CY $2,750
Purchased 100 shares of Procter & Gamble 7/10/CY $7,700
Purchased 75 shares of Apple 4/18/CY $29,000
Purchased 350 shares of Cooper Tire 11/1/CY $14,000
Purchased 350 shares of PepsiCo 5/14/CY $32,000
Purchased 300 shares of Kellogg 10/14/CY $21,000
Relevant tax basis/holding period information related to sales of securities in the current year:
Purchased 2,000 shares of Microsoft on 5/1/CY for $21,000
Purchased 200 shares of Apple on 3/8/2010 for $90,000
Purchased 300 shares of Cooper Tire on 1/12/2009 for $9,000
Purchased 50 shares of Cooper Tire on 6/28/CY for $2,000
Received 1,000 shares of Cardinal Health from Diana s father as a gift on 10/10/96. Donor s basis was $7,000. FMV at the date of the gift was $41,000
Purchased 100 shares of Union Pacific on 9/5/PY (prior year) for $6,000
The Cohens have a $43,000 long-term capital loss carry forward from their prior tax year.
The Cohens received a New Jersey state tax refund of $400 in the current year relating to their prior year New Jersey Individual Income Tax return filed in April of the current year. The Cohens did not pay the alternative minimum tax in the prior year and they received full benefit for all of the state tax income taxes they paid and deducted in the prior year.
Diana is a 10% owner in an advertising agency Bright Ideas ( BI ) (EIN 20-1234567). BI is a Subchapter S corporation. The company reported ordinary business income for the 2013 year of $150,000. Sarah acquired the stock several years ago. Her basis in the stock before considering her income allocation was $92,000. Sarah is a passive owner with respect to this entity.
Diana is a 20% owner in Natural Sunshine, Inc. ( NS ) (EIN 24-9876543). NS is a Subchapter S corporation. The company reported an ordinary business loss for the year of ($80,000). Sarah acquired the stock several years ago. Her basis in the stock before considering her loss allocation was $45,000. Sarah is a passive owner with respect to this entity.
Joseph received 5,000 shares of restricted (common) stock from his employer on July 1 of the current year. The terms of the restricted stock grant are such that if Joseph is still employed by Alternative Energy on July 1 in five years the entire 5,000 shares will vest and become his property. Joseph, upon the advice of his tax advisor, prepared and filed an IRC Section 83(b) election on July 8, of the current year. The value of the shares on July 1 was $5 per share. Joseph estimates the value of the shares in five years will be at least $150 per share. Joseph notified Alternative Energy about the IRC Sec. 83(b) in a timely manner. None of the income tax consequences of this restricted stock grant were reported in the $115,325 reported as part of his gross wages above.
In May, Joseph was injured at home in an accident. The accident restricted Joseph from working for about a month. During this time, Joseph received $15,000 in disability payments attributable to a disability insurance policy. The disability policy premiums were paid on Joseph s behalf as a nontaxable fringe benefit.
The Cohens paid the following expenses during the year:
Dentist (unreimbursed by insurance) $1,500
Doctors (unreimbursed by insurance) $ 2,425
Prescriptions (unreimbursed by insurance) $ 675
Real property taxes on residence $7,525
Vehicle property tax based upon value $1,250
Mortgage interest on principal residence $12,550
Margin interest paid to broker $600
Contribution to United Way $2,000
Contribution to American Cancer Society $5,000
Contribution to neighborhood drive to oppose development project $500
Contribution to the Temple Mount Synagogue $12,000
Fee paid to Mouser, Johnson, and Hintze CPAs for tax preparation $450
The Cohens also donated clothing, electronics, furniture and other household goods to the Salvation Army of Pleasantville, New Jersey on April 15. Estimated thrift value of the goods donated is $275.
Miscellaneous Information
On September 1, the Cohens paid $200 in foreign taxes attributable to the dividend received from the China Fund.
During the year, the Cohens paid for Rebecca s tuition payments to attend The College of Liberal Arts of New Jersey (CLA). Rebecca attended the spring/summer and the fall semesters as a full-time student. Total amount paid by the Cohens during the year for tuition was $9,000 and $2,000 for books. Rebecca also used $6,000 from a scholarship received from CLA to pay the rest of the tuition. Rebecca was not required to perform any services as a condition of accepting the scholarship. Rebecca was not employed during the year. CLA s address and employer identification number (EIN) is as follows:
The College of Liberal Arts of New Jersey
65 Ivory Tower
Penns Grove, NJ 08069
EIN- 22-5698324
The Cohens would like to contribute to the Presidential Election Campaign. The Cohens would also like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund is by check.
Aug 29, 2021 | Uncategorized
Understanding the tax consequences of your financial planning decisions is very important. These decisions may sometimes have life-long consequences in addition to a one-time result. For example, when a person decides to save for retirement, there are tax consequences for each year when money is added to the account as well as when it grows. There are additional consequences later when that person decides to retire and use the money to live on.
This assignment looks at another example of tax issues associated with financial planning. You will look at the use of tax-exempt investment instruments such as municipal bonds, as an alternative to traditional investments, and corporate bonds or stocks.
Consider the following:
Bill Smith, a manager of a restaurant/bar in Los Angeles, is in the 25% marginal tax bracket and pays an additional 5% in taxes to the state of California. Bill has $20,000 invested in corporate bonds which is currently earning an average annual return of 7.5%.
Additionally, Bill also has another $20,000 invested in municipal bonds from the city of Los Angeles that are being used to redevelop depressed areas downtown. These bonds pay an average return of 5.4%.
Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years.
Answer the following:
What is the after-tax return on Bill s corporate bonds for the current year?
What is the after-tax return on his municipal bonds for the current year?
Which investment earns more returns: corporate or municipal bonds?
What would the balance in each account be at the end of the fifteenth year?
Present the calculations and answers in Excel spreadsheet format or in Word format. Write the interpretation of results in a Word document. Apply APA standards to citation of sources.
Aug 29, 2021 | Uncategorized
| Tax Questions |
| Question Detail:
1. Carlton executed and delivered to Raymond a $1,000 negotiable note payable to Raymond or bearer. Raymond then negotiated it to Fred and endorsed it on the back by merely signing his name. Which of the following is a true statement?
a. The instrument is bearer paper, and Fred can convert it to order paper by writing pay to the order of Fred above Raymond s signature.
b. Raymond s endorsement was a special endorsement.
c. The instrument was initially bearer paper and cannot be converted to order paper.
d. Raymond s endorsement was necessary to Fred s qualification as a holder.
2. Under the Secured Transactions Article of the UCC, which of the following remedies is available to a secured creditor when a debtor fails to make a payment when due?
Proceed Obtain a General
against the Judgment against
Collateral__ the Debtor_
a. Yes Yes
b. Yes No
c. No No
d. No Yes
3. On July 27, 2011 Summerson sent Fallson a letter offering to sell Fallson a vacation home for $150,000. On August 2, 2011 Fallson replied by mail agreeing to buy the home for $145,000. Summerson did not reply to Fallson. Do Summerson and Fallson have a binding contract?
a. Yes, because Summerson s silence is an implied acceptance of Fallson s letter.
b. No, because Fallson failed to sign the letter that was sent by Fallson.
c. No, because Fallson s letter was a counteroffer.
d. Yes, because Summerson s offer was validly accepted.
4. Cindy, Odsen Corp. s agent, needs a written agency agreement to
a. Hire an attorney to collect a business debt owed Odsen.
b. Purchased an interest in undeveloped land for Odsen.
c. Retain an independent general contractor to renovate Odsen s office building.
d. Enter into a series of sales contracts on Odsen s behalf.
5. A party who filed a financing statement covering inventory on April 1, 2010 would have a superior interest to which of the following parties?
a. A holder of a mechanic s lien whose lien was filed on March 15, 2010.
b. A judgment lien creditor who filed its judgment on April 15, 2010.
c. A holder of a purchase money security interest in after-acquired inventory filed on March 20, 2010.
d. A purchaser in the ordinary course of business who purchased on April 10, 2010.
6. In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be
a. Fair and reasonable under the circumstances.
b. Legally sufficient.
c. Exchanged simultaneously by the parties.
d. Of approximately equal value.
7. Pavers Roadway, Inc., contracts with Best Building Corporation to repave Best Building Corporation’s parking lot. The elements of a contract do not include
a. consideration.
b. contractual capacity.
c. legality.
d. practicality.
8. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. Holly is
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not liable for payment under any circumstances.
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primarily liable.
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secondarily liable.
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simultaneously liable.
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9. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Jerry
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if Lisa timely notifies Jerry.
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only if Holly refuses to pay the check.
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only if Holly and Kelly refuse to pay the check.
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under no circumstances.
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10. Nora enters into a contract with Owen’s Transport Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
11. On November 1, 2013, Ted sent by overnight mail a letter to Zena in which Ted offered to sell a rare vase. The offer requested that Zena s respond by telegram and that the response be sent on or before 5:00 p.m. on November 2, 2013. On November 2, 2013 at 3:00 p.m., Zena sent an acceptance by overnight mail. It did not reach Ted until November 5, 2013. Ted refused to complete the sale to Zena. Is there an enforceable contract?
a. No, because Zena did not accept by telegram.
b. No, because the offer required receipt of the acceptance within the time specified.
c. Yes, because the acceptance was effective when sent.
d. Yes, because the acceptance was made within the time specified.
12. Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is
a. liable for payment of the $10,000.
b. liable only if Ned still works for Mary.
c. not liable, because the consideration is in the past.
d. not liable, because the consideration was unintentional.
13. Collection of EZ Sales Company’s debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt
a. may become enforceable if payments are made.
b. must be in writing.
c. requires consideration.
d. will not revive the obligation.
14. Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on
a. an illusory promise.
b. a release.
c. past consideration.
d. promissory estoppel.
15. Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
16. Jill and Karl contract for the sale of Jill’s horse for $1,000. Unknown to either party, the horse has died. Karl is
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a. entitled to another horse of equivalent value.
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b. not required to pay due to the mutual mistake.
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c. not required to pay due to the unilateral mistake.
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d. required to pay because he assumed the risk the horse might die.
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17. Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal
a. a contract is formed.
b. no contract is formed, because Alpha asked for a response by fax.
c. no contract is formed, because Alpha received the acceptance late.
d. no contract is formed, because Beta sent the acceptance late.
18. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Kelly
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if Lisa timely notifies Kelly.
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only if Holly refuses to pay the check.
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only if Holly and Jerry refuse to pay the check.
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under no circumstances.
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19. Furnishings, Inc., agrees to lease a desk to Better Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suffered by
a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.
20. John, the secured party, perfects its security interest by filing a financing statement. What is the effect of perfection of John s security interest?
a. The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.
b. The security interest becomes enforceable against the debtor.
c. The debtor is protected against all other parties who acquire an interest in the collateral after the filing.
d. None of the above.
21. Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ample refuses to go through with the deal. Blacksmith can recover
a. $1,500.
b. $1,000.
c. $500.
d. 0.
22. Farm Equipment, Inc., makes farming machinery. Gail discovers that her Farm Equipment tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that
a. Farm Equipment sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the “defect” was a commonly known danger.
23. Ida signs a check payable to Jane and gives it to her. Jane indorses the back, and transfers the check to Kyle. To negotiate the check to Leo, Kyle must
a. indorse “Kyle” on the back and deliver the check to Leo.
b. indorse “pay to the order of Leo [signed] Kyle” on the back and deliver the check to Leo.
c. only deliver the check to Leo.
d. transfer the check through the drawee bank.
24. Local Appliance Store, the secured party, sells a refrigerator to John, a consumer, for the use of John s family. John signs a sales agreement, a loan note, and a security agreement. Local Appliance Store fails to file either the security agreement or a financing statement with the secretary of state. Which of the following statements is accurate?
a. The secured party has priority in the collateral over most creditors who subsequently acquire a security interest in the same collateral.
b. The security interest is not enforceable against the debtor.
c. The security interest is not enforceable against subsequent creditors.
d. The assets subject to the security interest cannot become part of the bankruptcy estate in the event the creditor files an involuntary petition against the debtor.
25. Ruth, a minor, charges groceries at Sam’s Mini-Mart. Two days later, Ruth disaffirms the purchase. Ruth owes Sam’s Mini Mart
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the reasonable value of the groceries.
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the retail value of the groceries.
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the wholesale value of the groceries.
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26. With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?
a. The trustee in bankruptcy of the debtor.
b. Lien creditors of the debtor.
c. A buyer of goods in the ordinary course of business.
d. A subsequent buyer of consumer goods who purchased the goods from another consumer.
27. Beth is convicted of arson for burning down her warehouse.. On an application for insurance from Cover-All Insurance Company on a new building, in answer to a question about prior convictions, Beth does not disclose her conviction. This makes the contract
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binding because the omission is immaterial to Cover-All’s decision to issue coverage.
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binding due to Cover-All’s failure to discover Beth’s conviction.
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voidable by Beth because the omission is immaterial to Cover-All’s decision to issue coverage.
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voidable by Cover-All because the omission is material to its decision to issue coverage.
|
Fact Pattern for Question 28
Fred enters into a contract under Gene’s threats. Later, Fred refuses to perform, claiming that he acted under duress.
28. Refer to Fact Pattern B. Gene sues to enforce the contract. In order for Fred to establish duress, Gene must have threatened
|
a. a civil suit.
|
|
b. a lost opportunity.
|
|
c. a social snubbing.
|
|
d. a wrongful act.
e. none of the above.
|
29. Century Properties. Inc., and Dandy Capital Corporation enter into a contract for a sale of land. To be enforceable, the contract must be in writing
|
Only if the land is valued at $50 or more.
|
|
Only if the land is valued at $500 or more.
|
|
Only if the land is valued at $5,000 or more.
|
|
In any case.
|
30. Timber Trees, Inc., and Land Corporation enter into an oral contract for Timber Trees, Inc. to sell its lumber mill to Land Corporation . Before Land Corporation takes possession, this contract is enforceable by
|
either party.
|
|
neither party.
|
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Timber Trees only.
|
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Land Corporation only because only the buyer can get specific performance.
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31. Lola agrees to pay Mira’s debt to New Sales Corporation if Mira does not pay it. Lola does not get any personal benefit for or from the agreement. To be enforceable against Lola, the promise must be in writing
|
if the debt is paid by Mira.
|
|
if the debt is for at least $50.
|
|
if the debt is for at least $500.
|
|
in any case.
|
Fact Pattern for Question 32
Macro Marketing, Inc. (Macro), and National Food Corporation (NFC) discuss the terms of a contract under which NFC is to provide personal services to Macro. The next day, Macro faxes NFC a memo on Macro’s letterhead that summarizes the items on which they agreed, including a two-year term. NFC immediately begins to perform, but Macro refuses to pay. NFC promptly institutes a law suit seeking damages.
32. Refer to Fact Pattern for question 32. The contract between Macro and NFC is
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subject to the Statute of Frauds collateral-promise provision, and is probably unenforceable.
|
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subject to the Statute of Frauds services rule, and is probably enforceable.
|
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barred by the statute of limitations, and is therefore probably unenforceable.
|
|
subject to the Statute of Frauds one-year rule, and is probably unenforceable.
|
Fact Pattern for Question 33
Jeff and Kris sign a written contract for the sale of Jeff’s Koffee Kiosk to Kris. The parties intend their written contract to be a final statement of the terms of their agreement.
33. Refer to Fact Pattern for question 33. Kris later disputes some of the provisions of the deal with Jeff. The dispute results in litigation, and the court finds the terms of the agreement are ambiguous. The court will most likely
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exclude evidence that buttresses the written terms.
|
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exclude evidence that contradicts the written terms.
|
|
allow evidence that explains the terms.
|
|
dismiss the action because there was a lack of mutual asset and no contract was formed.
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34. Tom dies owning stock as joint tenant with right of survivorship with his son, having bank accounts in his name in trust for his daughter, and owning real estate as tenants by the entirety with his wife. The trustee of Tom s revocable trust holds title the rest of his assets. Under the terms of the revocable trust, all assets of the trust will be distributed to Tom s son and daughter on Tom s death. Tom s wife, son and daughter survive him. Under the terms of Tom s will, Tom leaves all of his property to his mother, who also survived him. Tom died
a. intestate.
b. without any probate assets.
c. with a last will that will controls the disposition of his assets.
d. None of the above.
35. Manny, as buyer, wants to transfer his rights under a written real estate contract with Nila, as seller, to Opie. To ensure that the transfer of rights is valid, Manny must
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have this right expressly stated in the contract.
|
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file a notice of assignment in the public records.
|
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have the contract recorded in the public records.
|
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none of the choices.
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36. Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC’s fifty-acre tract for which RDC agrees to pay Sid. Sid is the owner of Timber Logging Company. Sid transfers his duty to log the tract under the contract to Timber Logging Company. Timber Logging Company is
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a delegatee and is subject to the terms of the agreement between RDC and Sid.
|
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a delagetee and is not entitled to collect under the contract from RDC for services provided by Timber.
|
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an obligee and is not required to perform under the contract.
|
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a prohibitee.
|
37. Mke, a physician, renders aid to Nancy, who is injured and unconscious after an avalanche. Mike can recover the cost of the aid from Nancy
|
even if Nancy was not aware of the aid when it was given.
|
|
only if Nancy recovers because of the aid.
|
|
only if Noel was aware of the aid at the time it was given.
|
|
under no circumstances.
|
38. Pat, a world famous musician, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to transfer his contract duties to Ruth, an inexperienced pianist, will probably be
|
permitted because contracts may be freely delegated.
|
|
prohibited in this case unless the contract expressly permits delegation.
|
|
permitted if the contract is silent on the issue.
|
|
prohibited in any case.
|
39. Chaz and Dolly enter into a five year contract under which Chaz agrees to provide maintenance services for Dolly’s Ski Resort. Chaz transfers his rights and obligations under the contract to Mark. Mark
|
performs
|
under the contract, and Dolly is aware of the Mark s performance of the contract. However, Dolly refuses to pay Mark. Assuming Mark s services are properly performed and Mark sues Dolly, Mark
|
|
a. will be successful in enforcing the contract if performance depends on the personal skills or talents of the obligor.
|
|
b. will probably not be able to recover under the express terms of the contract.
|
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.
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c. may be able to recover the value of his services.
d. may not recover.
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40. On August 1, 2010 Delia and Edwin entered into an agreement for Edwin to lease Delia s country home for two months during the following summer for $1000 per month. Delia promised to vacate the property for Edwin by July 1, 2011 with the lease to begin on July 1, 2011. If these promises are not in writing, they are most likely
41. To avoid liability for intentional injuries, Power Corporation includes in its contracts an exculpatory clause. This is
|
enforceable if the other parties are protected from liability.
|
|
enforceable if the other parties sign the contract.
|
|
enforceable if the other parties have equal bargaining power.
|
|
not enforceable.
|
42. MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick’s salary. This agreement is
|
enforceable because an employment contract is an adhesion contract.
|
|
enforceable because the parties have executed an accord and satisfaction.
|
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unenforceable because Nick has incurred no additional detriment in exchange for MicroCorp’s promise.
|
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unenforceable because Nick’s performance is uncertain.
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43. Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This instrument is
|
|
|
nonnegotiable, because it does not recite any consideration.
|
|
nonnegotiable, because it does not state any conditions to payment.
d. none of the above.
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44. Pam signs an instrument payable to the order of Quick Credit, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Pam fails to make a payment. This instrument is
|
|
|
nonnegotiable, because a holder can move up the payment date.
|
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nonnegotiable, because moving up the payment date is conditional.
|
|
nonnegotiable, because the exact payment date cannot be determined from the face of the instrument.
|
45. Wyatt inherits a promissory note from Xena, his aunt. Wyatt has no notice that the note has been dishonored or is overdue. Wyatt has the rights of
|
a holder and an HDC.
|
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a holder only.
|
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an HDC only.
|
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neither a holder nor an HDC.
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46. Kettlecorn Investment Bank, Inc., and Lone Bank are secured parties with security interests in property owned by Metal Fabrication Corporation. Priority between these security interests is generally determined by
|
the amount of the claim.
|
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the custom in the trade.
|
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the time of perfection.
|
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the date of the loan.
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47. General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1,000,000 from Helpful Finance Corporation (Helpful), with Helpful taking back a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank (Interstate), which loan is also secured by a security interest in the equipment. GLC defaults on both loans. Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is
|
|
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Helpful and Interstate proportionately.
|
|
Helpful only.
|
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Interstate Bank only
|
48. Which is not allowed as a federal exemption under the Federal Bankruptcy Code?
- A specified amount of equity in one motor vehicle.
- Unemployment compensation.
- A specified amount of value in books and tools of one s trade.
- All of the above are allowed.
49. Under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code, a debtor will be denied a discharge in bankruptcy if the debtor
- Fails to list a creditor.
- Owes alimony or child support.
- Cannot pay administration expenses.
- Refuses to satisfactorily explain a loss of assets.
50. Which of the following transfers by a debtor, within 90 days prior to the filing for bankruptcy, could be set aside as a preferential payment?
- Making a gift to charity.
- Paying a business utility bill.
- Borrowing money from a bank secured by a mortgage on the debtor s business property.
- Prepaying an installment loan on inventory.
|
Aug 29, 2021 | Uncategorized
| Tax Questions |
| Question Detail:
1. Carlton executed and delivered to Raymond a $1,000 negotiable note payable to Raymond or bearer. Raymond then negotiated it to Fred and endorsed it on the back by merely signing his name. Which of the following is a true statement?
a. The instrument is bearer paper, and Fred can convert it to order paper by writing pay to the order of Fred above Raymond s signature.
b. Raymond s endorsement was a special endorsement.
c. The instrument was initially bearer paper and cannot be converted to order paper.
d. Raymond s endorsement was necessary to Fred s qualification as a holder.
2. Under the Secured Transactions Article of the UCC, which of the following remedies is available to a secured creditor when a debtor fails to make a payment when due?
Proceed Obtain a General
against the Judgment against
Collateral__ the Debtor_
a. Yes Yes
b. Yes No
c. No No
d. No Yes
3. On July 27, 2011 Summerson sent Fallson a letter offering to sell Fallson a vacation home for $150,000. On August 2, 2011 Fallson replied by mail agreeing to buy the home for $145,000. Summerson did not reply to Fallson. Do Summerson and Fallson have a binding contract?
a. Yes, because Summerson s silence is an implied acceptance of Fallson s letter.
b. No, because Fallson failed to sign the letter that was sent by Fallson.
c. No, because Fallson s letter was a counteroffer.
d. Yes, because Summerson s offer was validly accepted.
4. Cindy, Odsen Corp. s agent, needs a written agency agreement to
a. Hire an attorney to collect a business debt owed Odsen.
b. Purchased an interest in undeveloped land for Odsen.
c. Retain an independent general contractor to renovate Odsen s office building.
d. Enter into a series of sales contracts on Odsen s behalf.
5. A party who filed a financing statement covering inventory on April 1, 2010 would have a superior interest to which of the following parties?
a. A holder of a mechanic s lien whose lien was filed on March 15, 2010.
b. A judgment lien creditor who filed its judgment on April 15, 2010.
c. A holder of a purchase money security interest in after-acquired inventory filed on March 20, 2010.
d. A purchaser in the ordinary course of business who purchased on April 10, 2010.
6. In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be
a. Fair and reasonable under the circumstances.
b. Legally sufficient.
c. Exchanged simultaneously by the parties.
d. Of approximately equal value.
7. Pavers Roadway, Inc., contracts with Best Building Corporation to repave Best Building Corporation’s parking lot. The elements of a contract do not include
a. consideration.
b. contractual capacity.
c. legality.
d. practicality.
8. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. Holly is
|
not liable for payment under any circumstances.
|
|
primarily liable.
|
|
secondarily liable.
|
|
simultaneously liable.
|
9. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Jerry
|
if Lisa timely notifies Jerry.
|
|
only if Holly refuses to pay the check.
|
|
only if Holly and Kelly refuse to pay the check.
|
|
under no circumstances.
|
10. Nora enters into a contract with Owen’s Transport Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
11. On November 1, 2013, Ted sent by overnight mail a letter to Zena in which Ted offered to sell a rare vase. The offer requested that Zena s respond by telegram and that the response be sent on or before 5:00 p.m. on November 2, 2013. On November 2, 2013 at 3:00 p.m., Zena sent an acceptance by overnight mail. It did not reach Ted until November 5, 2013. Ted refused to complete the sale to Zena. Is there an enforceable contract?
a. No, because Zena did not accept by telegram.
b. No, because the offer required receipt of the acceptance within the time specified.
c. Yes, because the acceptance was effective when sent.
d. Yes, because the acceptance was made within the time specified.
12. Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is
a. liable for payment of the $10,000.
b. liable only if Ned still works for Mary.
c. not liable, because the consideration is in the past.
d. not liable, because the consideration was unintentional.
13. Collection of EZ Sales Company’s debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt
a. may become enforceable if payments are made.
b. must be in writing.
c. requires consideration.
d. will not revive the obligation.
14. Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on
a. an illusory promise.
b. a release.
c. past consideration.
d. promissory estoppel.
15. Pat, a world famous musician and composer, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to delegate his contract to Ruth, an inexperienced pianist, will probably be
a. permitted because contracts may be freely delegated.
b. permitted because the contract is concerned with music lessons.
c. prohibited because contracts may not be freely delegated.
d. prohibited because Pat and Ruth have very different skill levels.
16. Jill and Karl contract for the sale of Jill’s horse for $1,000. Unknown to either party, the horse has died. Karl is
|
a. entitled to another horse of equivalent value.
|
|
b. not required to pay due to the mutual mistake.
|
|
c. not required to pay due to the unilateral mistake.
|
|
d. required to pay because he assumed the risk the horse might die.
|
17. Alpha Company offers to sell Beta, Inc., 1,000 computers for a $1 million, states that the offer will be open for six days, and asks for a response by fax. On the fourth day, Beta sends an acceptance to Alpha via the mail, which is received on the sixth day. In this deal
a. a contract is formed.
b. no contract is formed, because Alpha asked for a response by fax.
c. no contract is formed, because Alpha received the acceptance late.
d. no contract is formed, because Beta sent the acceptance late.
18. Holly writes a check on her account at Investment Bank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly, who negotiates the check by indorsement to Lisa, who presents it for payment to Interstate Bank. If Investment Bank dishonors the check, Lisa can obtain payment from Kelly
|
if Lisa timely notifies Kelly.
|
|
only if Holly refuses to pay the check.
|
|
only if Holly and Jerry refuse to pay the check.
|
|
under no circumstances.
|
19. Furnishings, Inc., agrees to lease a desk to Better Resources, Inc. (BRI), which requests that the desk be left outside City Warehouse for BRI to pick up. Before BRI retrieves the desk, it is stolen. The loss is suffered by
a. A-1 Furnishings and BRI, but not City Warehouse.
b. A-1 Furnishings, BRI, and City Warehouse.
c. A-1 Furnishings only.
d. BRI only.
20. John, the secured party, perfects its security interest by filing a financing statement. What is the effect of perfection of John s security interest?
a. The secured party has priority in the collateral over most creditors who acquire a security interest in the same collateral after the filing.
b. The security interest becomes enforceable against the debtor.
c. The debtor is protected against all other parties who acquire an interest in the collateral after the filing.
d. None of the above.
21. Ample Country Stables contracts to buy 1,000 horseshoes from Blacksmith, Inc., for $1 per shoe. When the market price decreases to 50 cents per shoe, Ample refuses to go through with the deal. Blacksmith can recover
a. $1,500.
b. $1,000.
c. $500.
d. 0.
22. Farm Equipment, Inc., makes farming machinery. Gail discovers that her Farm Equipment tractor is defective and sues the maker for product liability based on negligence. To win, Gail must show that
a. Farm Equipment sold the tractor to Gail.
b. Gail knew and appreciated the risk caused by the defect.
c. Gail suffered an injury caused by the defect.
d. the “defect” was a commonly known danger.
23. Ida signs a check payable to Jane and gives it to her. Jane indorses the back, and transfers the check to Kyle. To negotiate the check to Leo, Kyle must
a. indorse “Kyle” on the back and deliver the check to Leo.
b. indorse “pay to the order of Leo [signed] Kyle” on the back and deliver the check to Leo.
c. only deliver the check to Leo.
d. transfer the check through the drawee bank.
24. Local Appliance Store, the secured party, sells a refrigerator to John, a consumer, for the use of John s family. John signs a sales agreement, a loan note, and a security agreement. Local Appliance Store fails to file either the security agreement or a financing statement with the secretary of state. Which of the following statements is accurate?
a. The secured party has priority in the collateral over most creditors who subsequently acquire a security interest in the same collateral.
b. The security interest is not enforceable against the debtor.
c. The security interest is not enforceable against subsequent creditors.
d. The assets subject to the security interest cannot become part of the bankruptcy estate in the event the creditor files an involuntary petition against the debtor.
25. Ruth, a minor, charges groceries at Sam’s Mini-Mart. Two days later, Ruth disaffirms the purchase. Ruth owes Sam’s Mini Mart
|
the reasonable value of the groceries.
|
|
the retail value of the groceries.
|
|
the wholesale value of the groceries.
|
|
|
26. With regard to a prior perfected security interest in goods for which a financing statement has been filed, which of the following parties is most likely to have a superior interest in the same collateral?
a. The trustee in bankruptcy of the debtor.
b. Lien creditors of the debtor.
c. A buyer of goods in the ordinary course of business.
d. A subsequent buyer of consumer goods who purchased the goods from another consumer.
27. Beth is convicted of arson for burning down her warehouse.. On an application for insurance from Cover-All Insurance Company on a new building, in answer to a question about prior convictions, Beth does not disclose her conviction. This makes the contract
|
binding because the omission is immaterial to Cover-All’s decision to issue coverage.
|
|
binding due to Cover-All’s failure to discover Beth’s conviction.
|
|
voidable by Beth because the omission is immaterial to Cover-All’s decision to issue coverage.
|
|
voidable by Cover-All because the omission is material to its decision to issue coverage.
|
Fact Pattern for Question 28
Fred enters into a contract under Gene’s threats. Later, Fred refuses to perform, claiming that he acted under duress.
28. Refer to Fact Pattern B. Gene sues to enforce the contract. In order for Fred to establish duress, Gene must have threatened
|
a. a civil suit.
|
|
b. a lost opportunity.
|
|
c. a social snubbing.
|
|
d. a wrongful act.
e. none of the above.
|
29. Century Properties. Inc., and Dandy Capital Corporation enter into a contract for a sale of land. To be enforceable, the contract must be in writing
|
Only if the land is valued at $50 or more.
|
|
Only if the land is valued at $500 or more.
|
|
Only if the land is valued at $5,000 or more.
|
|
In any case.
|
30. Timber Trees, Inc., and Land Corporation enter into an oral contract for Timber Trees, Inc. to sell its lumber mill to Land Corporation . Before Land Corporation takes possession, this contract is enforceable by
|
either party.
|
|
neither party.
|
|
Timber Trees only.
|
|
Land Corporation only because only the buyer can get specific performance.
|
31. Lola agrees to pay Mira’s debt to New Sales Corporation if Mira does not pay it. Lola does not get any personal benefit for or from the agreement. To be enforceable against Lola, the promise must be in writing
|
if the debt is paid by Mira.
|
|
if the debt is for at least $50.
|
|
if the debt is for at least $500.
|
|
in any case.
|
Fact Pattern for Question 32
Macro Marketing, Inc. (Macro), and National Food Corporation (NFC) discuss the terms of a contract under which NFC is to provide personal services to Macro. The next day, Macro faxes NFC a memo on Macro’s letterhead that summarizes the items on which they agreed, including a two-year term. NFC immediately begins to perform, but Macro refuses to pay. NFC promptly institutes a law suit seeking damages.
32. Refer to Fact Pattern for question 32. The contract between Macro and NFC is
|
subject to the Statute of Frauds collateral-promise provision, and is probably unenforceable.
|
|
subject to the Statute of Frauds services rule, and is probably enforceable.
|
|
barred by the statute of limitations, and is therefore probably unenforceable.
|
|
subject to the Statute of Frauds one-year rule, and is probably unenforceable.
|
Fact Pattern for Question 33
Jeff and Kris sign a written contract for the sale of Jeff’s Koffee Kiosk to Kris. The parties intend their written contract to be a final statement of the terms of their agreement.
33. Refer to Fact Pattern for question 33. Kris later disputes some of the provisions of the deal with Jeff. The dispute results in litigation, and the court finds the terms of the agreement are ambiguous. The court will most likely
|
exclude evidence that buttresses the written terms.
|
|
exclude evidence that contradicts the written terms.
|
|
allow evidence that explains the terms.
|
|
dismiss the action because there was a lack of mutual asset and no contract was formed.
|
34. Tom dies owning stock as joint tenant with right of survivorship with his son, having bank accounts in his name in trust for his daughter, and owning real estate as tenants by the entirety with his wife. The trustee of Tom s revocable trust holds title the rest of his assets. Under the terms of the revocable trust, all assets of the trust will be distributed to Tom s son and daughter on Tom s death. Tom s wife, son and daughter survive him. Under the terms of Tom s will, Tom leaves all of his property to his mother, who also survived him. Tom died
a. intestate.
b. without any probate assets.
c. with a last will that will controls the disposition of his assets.
d. None of the above.
35. Manny, as buyer, wants to transfer his rights under a written real estate contract with Nila, as seller, to Opie. To ensure that the transfer of rights is valid, Manny must
|
have this right expressly stated in the contract.
|
|
file a notice of assignment in the public records.
|
|
have the contract recorded in the public records.
|
|
none of the choices.
|
36. Rural Development Corporation (RDC) and Sid enter into a contract for the clear-cutting of RDC’s fifty-acre tract for which RDC agrees to pay Sid. Sid is the owner of Timber Logging Company. Sid transfers his duty to log the tract under the contract to Timber Logging Company. Timber Logging Company is
|
a delegatee and is subject to the terms of the agreement between RDC and Sid.
|
|
a delagetee and is not entitled to collect under the contract from RDC for services provided by Timber.
|
|
an obligee and is not required to perform under the contract.
|
|
a prohibitee.
|
37. Mke, a physician, renders aid to Nancy, who is injured and unconscious after an avalanche. Mike can recover the cost of the aid from Nancy
|
even if Nancy was not aware of the aid when it was given.
|
|
only if Nancy recovers because of the aid.
|
|
only if Noel was aware of the aid at the time it was given.
|
|
under no circumstances.
|
38. Pat, a world famous musician, agrees to give ten piano lessons to Quinn in exchange for $1,000. Pat’s attempt to transfer his contract duties to Ruth, an inexperienced pianist, will probably be
|
permitted because contracts may be freely delegated.
|
|
prohibited in this case unless the contract expressly permits delegation.
|
|
permitted if the contract is silent on the issue.
|
|
prohibited in any case.
|
39. Chaz and Dolly enter into a five year contract under which Chaz agrees to provide maintenance services for Dolly’s Ski Resort. Chaz transfers his rights and obligations under the contract to Mark. Mark
|
performs
|
under the contract, and Dolly is aware of the Mark s performance of the contract. However, Dolly refuses to pay Mark. Assuming Mark s services are properly performed and Mark sues Dolly, Mark
|
|
a. will be successful in enforcing the contract if performance depends on the personal skills or talents of the obligor.
|
|
b. will probably not be able to recover under the express terms of the contract.
|
|
.
|
c. may be able to recover the value of his services.
d. may not recover.
|
40. On August 1, 2010 Delia and Edwin entered into an agreement for Edwin to lease Delia s country home for two months during the following summer for $1000 per month. Delia promised to vacate the property for Edwin by July 1, 2011 with the lease to begin on July 1, 2011. If these promises are not in writing, they are most likely
41. To avoid liability for intentional injuries, Power Corporation includes in its contracts an exculpatory clause. This is
|
enforceable if the other parties are protected from liability.
|
|
enforceable if the other parties sign the contract.
|
|
enforceable if the other parties have equal bargaining power.
|
|
not enforceable.
|
42. MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick’s salary. This agreement is
|
enforceable because an employment contract is an adhesion contract.
|
|
enforceable because the parties have executed an accord and satisfaction.
|
|
unenforceable because Nick has incurred no additional detriment in exchange for MicroCorp’s promise.
|
|
unenforceable because Nick’s performance is uncertain.
|
43. Karen writes on a piece of paper, “I owe you $600,” signs it, and gives it to Lou. This instrument is
|
|
|
nonnegotiable, because it does not recite any consideration.
|
|
nonnegotiable, because it does not state any conditions to payment.
d. none of the above.
|
44. Pam signs an instrument payable to the order of Quick Credit, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Pam fails to make a payment. This instrument is
|
|
|
nonnegotiable, because a holder can move up the payment date.
|
|
nonnegotiable, because moving up the payment date is conditional.
|
|
nonnegotiable, because the exact payment date cannot be determined from the face of the instrument.
|
45. Wyatt inherits a promissory note from Xena, his aunt. Wyatt has no notice that the note has been dishonored or is overdue. Wyatt has the rights of
|
a holder and an HDC.
|
|
a holder only.
|
|
an HDC only.
|
|
neither a holder nor an HDC.
|
46. Kettlecorn Investment Bank, Inc., and Lone Bank are secured parties with security interests in property owned by Metal Fabrication Corporation. Priority between these security interests is generally determined by
|
the amount of the claim.
|
|
the custom in the trade.
|
|
the time of perfection.
|
|
the date of the loan.
|
47. General Leasing Company (GLC) buys equipment for use as inventory, borrowing $1,000,000 from Helpful Finance Corporation (Helpful), with Helpful taking back a security interest in the equipment. The next day, GLC borrows $500,000 from Interstate Bank (Interstate), which loan is also secured by a security interest in the equipment. GLC defaults on both loans. Suppose that two weeks after GLC takes possession of the equipment, Helpful and Interstate file financing statements, with Interstate filing first. In that circumstance, the party with priority to the equipment is
|
|
|
Helpful and Interstate proportionately.
|
|
Helpful only.
|
|
Interstate Bank only
|
48. Which is not allowed as a federal exemption under the Federal Bankruptcy Code?
- A specified amount of equity in one motor vehicle.
- Unemployment compensation.
- A specified amount of value in books and tools of one s trade.
- All of the above are allowed.
49. Under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code, a debtor will be denied a discharge in bankruptcy if the debtor
- Fails to list a creditor.
- Owes alimony or child support.
- Cannot pay administration expenses.
- Refuses to satisfactorily explain a loss of assets.
50. Which of the following transfers by a debtor, within 90 days prior to the filing for bankruptcy, could be set aside as a preferential payment?
- Making a gift to charity.
- Paying a business utility bill.
- Borrowing money from a bank secured by a mortgage on the debtor s business property.
- Prepaying an installment loan on inventory.
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Aug 29, 2021 | Uncategorized
Do not worry about the potential income limits on the applications to Schedule A.
1.Marital Status All tax returns are Married Filing Joint
2.Age 35
3.Spouse Age 53
4.Children you have 14 dependents
5.Wages
a.You are a CPA in your first job earning $125,000
b.barista at Starbucks in your second job 16,250
6.Spouses Wages your spouse earns $44,900 as a salesperson
7.Interest 12,350 paid by Bank of America
8.State Income Tax take your wages and multiply by 12%
9.Real Estate Taxes – $43,957 (Actual Dollar Amount)
10.Personal Property Taxes – $9,750 (Actual Dollar Amount)
11.Point paid on the mortgage $1450 (Actual Dollar Amount
12.Mortgage Interest from Form 1098 16,750
13.Charitable Gifts
a.Cash
i.paid to United Way 9,331
ii.donated each week at church $75 every other week
b.Other than Cash (Form 8283)
i.Donations to Goodwill of various household items- 2,312
14.You have an accident in your home where you spill hot coffee on your stamp collection that you received from your grandmother. The collection has a basis of $75,500.
15.You also lost while swimming the Ohio river a fake Rolex watch that cost you $750.
16.You had a car accident that totaled your car. You paid $17,500 on the car and had replacement insurance on the car that bought you a new model.
Rental Real Estate Sch E
1.You have a rental property located at 9645 Merkner Drive, Pittsburgh, PA 15228.
a.You leased the property for the entire year to Tom Weaver and his family.
b.3rd party payments 48,000
c.Advertising 397
d.Cleaning and Maintenance 752
e.Commissions 124
f.Management Fees 12,000 (actual Amount)
g.Mortgage Interest – $23,400 (actual Amount)
h.Depreciation – $5,513
2.You also have a rental property at 1394 Sandfiddler Road, Virginia BEACH, VA 23060
a.Personal Use Days 36
b.Rental Days 243
c.3rd party payments $148,000
d.Advertising $20,987
e.Cleaning and Maintenance 1,200
f.Commissions $14,800
g.Mortgage Interest – $30,844
h.Depreciation – $14,000
Small Business Sch C
1.You are the sole proprietor of the business. You do not have a separate EIN or business name for the business.
2.Address is the same as your home address.
3.Cash basis
4.You DID materially participate in the business operations.
5.The business was started 1/1/09
6.No Form 1099s are required.
7.3rd party payments 366,546
8.Advertising 23,500
9.Insurance 24,500
10.Commissions 126,500
11.Supplies – $41,000
Estimated payments withheld from paycheck each month ZERO no taxes were withheld. DO NOT CALCULATE THE PENALTY FOR UNDERPAYMENT OR THE INTEREST DUE ON THE RETURN.
Aug 29, 2021 | Uncategorized
1. Paul J. and Judy L. Vance are married and file a joint return. Paul is self-employed as a dentist, and Judy is a college professor. Paul and Judy have three children. The oldest is Vince who lives at home. Vince is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Paul and Judy provided $6,000 toward Vince’s support (including $4,000 for Vince’s fall tuition). They also provided over half the support of their daughter, Joan, who is a full-time student at Edgecliff College in Cincinnati. Joan worked part-time as an independent contractor during the year, earning $3,200. Joan lived at home until she was married in December 2012. She filed a joint return with her husband, Patrick, who earned $20,000 during the year. Jennifer is the youngest and lived in the Vances’ home for the entire year. The Vances provide you with the following additional information:
o Paul and Judy would like to take advantage on their return of any educational expenses paid for their children.
o The Vances do not want to contribute to the presidential election campaign.
o The Vances live atXXXXX Cincinnati, OH 45211.
o Paul’s birthday is XXXXX and his Social Security number isNNN-NN-NNNN
o Judy’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o Vince’s birthday is XXXXX and his Social Security number isNNN-NN-NNNN
o Joan’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o Jennifer’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o The Vances do not have any foreign bank accounts or trusts.
2. Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, state income tax of $900, Cincinnati city income tax of $375, $1,260 of Social Security tax and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary, and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $420, and Medicare tax of $145.
3. The Vances received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $1,100 on the loan. Paul received a dividend of $540 on General Bicycle Corporation stock he owns. Judy received a dividend of $390 on Acme Clothing Corporation stock she owns. Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2012 are qualified dividends.
4. Paul practices under the name Paul J. Vance, DDS. His business is located atXXXXX Cincinnati, OH 45211, and his employer identification number is XXXXX Paul’s gross receipts during the year were $111,000. Paul uses the cash method of accounting for his business. Paul’s business expenses are as follows:
Advertising $ 1,200
Professional dues 490
Professional journals 360
Contributions to employee benefit plans 2,000
Malpractice insuranc e 3,200
Fine for overbilling State of Ohio for work performed on welfare patient 5,000
Insurance on office contents 720
Interest on money borrowed to refurbish office 600
Accounting services 2,100
Miscellaneous office expense 388
Office rent 12,000
Dental supplies 7,672
Utilities and telephone 3,360
Wages 30,000
Payroll taxes 2,400
In June, Paul decided to refurbish his office. This project was completed and the assets placed in service on July 1. Paul’s expenditures included $8,000 for new office furniture, $6,000 for new dental equipment (seven-year recovery period), and $2,000 for a new computer. Paul elected to compute his cost recovery allowance using MACRS. He did not elect to use 179 immediate expensing, and he chose to not claim any bonus depreciation.
5. Judy’s mother, Sarah, died on July 2, 2007, leaving Judy her entire estate. Included in the estate was Sarah’s residence (325 Oak Street, Cincinnati, OH 45211). Sarah’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2007, was $155,000. The property was distributed to Judy on January 1, 2008. The Vances have held the property as rental property and have managed it themselves. From 2008 until June 30, 2012, they rented the house to the same tenant. The tenant was transferred to a branch office in California and moved out at the end of June. Since they did not want to bother finding a new tenant, Paul and Judy sold the house on June 30, 2012. They received $140,000 for the house and land ($15,000 for the land and $125,000 for the house), less a 6 percent commission charged by the broker. They had depreciated the house using the MACRS rules and conventions applicable to residential real estate. To compute depreciation on the house, the Vances had allocated $15,000 of the property’s basis to the land on which the house is located. The Vances collected rent of $1,000 a month during the six months the house was occupied during the year. They incurred the following related expenses during this period:
Property insurance
$500
Property taxes
800
Maintenance
465
Depreciation (to be computed)
?
6. The Vances sold 200 shares of Capp Corporation stock on September 3, 2012, for $42 a share (minus a $50 commission). The Vances received the stock from Paul’s father on June 25, 1980, as a wedding present. Paul’s father originally purchased the stock for $10 per share in 1967. The stock was valued at $14.50 per share on the date of the gift. No gift tax was paid on the gift.
7. Judy is required by Xavier University to visit several high schools in the Cincinnati area to evaluate Xavier University students who are doing their practice teaching. However, she is not reimbursed for the expenses she incurs in doing this. During the spring semester (January through April 2012), she drove her personal automobile 6,800 miles in fulfilling this obligation. Judy drove an additional 6,700 personal miles during 2012. She has been using the car since June 30, 2011. Judy uses the standard mileage method to calculate her car expenses.
8. Paul and Judy have given you a file containing the following receipts for expenditures during the year:
Prescription medicine and drugs (net of insurance reimbursement)
$ 376
Doctor and hospital bills (net of insurance reimbursement)
2,468
Penalty for underpayment of last year’s state income tax
15
Real estate taxes on personal residence
4,762
Interest on home mortgage (paid to Home State Savings & Loan)
8,250
Interest on credit cards (consumer purchases)
595
Cash contribution to St. Matthew’s church
3,080
Payroll deductions for Judy’s contributions to the United Way
150
Professional dues (Judy)
325
Professional subscriptions (Judy)
245
Fee for preparation of 2011 tax return paid April 12, 2012
500
9. The Vances filed their 2011 federal, state, and local returns on April 12, 2012. They paid the following additional 2011 taxes with their returns: federal income taxes of $630, state income taxes of $250, and city income taxes of $75.
10. The Vances made timely estimated federal income tax payments of $1,500 each quarter during 2012. They also made estimated state income tax payments of $300 each quarter and estimated city income tax payments of $160 each quarter. The Vances made all fourth-quarter payments on December 31, 2012. They would like to receive a refund for any overpayments.
Use the following information to complete Paul and Judy Vance’s 2012 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
You may need the following forms and schedules to complete the project: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562 (for the rental property), Form 4797, and Form 8863. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.
Aug 29, 2021 | Uncategorized
1. Jim is retaking statistics as part of his doctoral program. On his final in his MA program, he received a 225. The class mean of 230 and standard deviation of 12 were published. Jim just received his current stats final grade of 260, where the class mean is 245 and standard deviation is 17. How do Jim s scores compare? Which was better? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
2. Are the Mini Mental Status scores for the elders in Unit 2 significantly lower than the minimum normal score of 25 points. Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
3. Do 2nd graders who use computer games to study spelling words perform better on their spelling tests than those who do not use computer games? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
4. Did the June marketing campaign for Happiness products increase their sales from rates in May versus sale rates in July? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
5. Is there a difference in computer proficiency skills for employees who are under 35, between 35-49 and 50 and over? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
6. What are the effects of daily amount of TV viewing (2 hours) on reading comprehension scores for elementary school children (first, second and third grade)? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
7. Is there a significant difference in the acceptance rate to the Psychology graduate program for participants with and without experience working with mentally ill patients when controlling for age? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
8. Is there a difference in the amount of Barry Motter movie tickets sold to people who are: under the age of 18 years, between 19-24 years or 25-30 years? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
9. What are the effects of degree (BA, MBA, DBA) and years of experience at 1, 5 and 10 years on salary? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
10. After controlling for years of depression, is there a difference in depression scores for patients who have completed 3 months of behavior therapy, cognitive therapy or drug therapy? Provide the IV, DV, Covariate, and best method of analysis. (Points : 6)
Aug 29, 2021 | Uncategorized
Stay Fresh Company is a merchandising company that sells plastic food containers. The president and chief financial officer of the company want to approach Stay Fresh s bank about short-term financing for the coming year, 2014. The bank stated that loans are given only after reviewing proper cash budgeting information. The loan officer is requesting a detailed cash budget that shows the quarters in which financing will be needed, as well as the amounts that will be needed and the quarters in which repayments can be made.
The following information has been assembled to assist in preparing the cash budget for 2010:
a. Budgeted sales and merchandise purchases for 2014, as well as actual sales and purchases for the last quarter of 2013 are as follows:
Merchandise
Sales Purchases
2013:
Fourth quarter actual $ 600,000 $360,000
2014:
First quarter estimated $ 800,000 $520,000
Second quarter estimated $1,000,000 $620,000
Third quarter estimated $1,200,000 $740,000
Fourth quarter estimated $ 960,000 $480,000
b. The company generally collects 40% of a quarter s sales before the quarter ends and the
remaining 60% in the following quarter.
c. 30% of a quarter s merchandise purchases are paid for within the quarter. The remainder is paid in the following quarter.
d. Operating expenses for 2014 are budgeted at $200,000 per quarter plus 10% of sales. Of the fixed amount, $20,000 each quarter is depreciation.
e. The company will pay $10,000 in cash dividends each quarter.
f. Equipment purchases will be made as follows: $100,000 in the second quarter and $135,000 in the third quarter.
g. The cash balance on December 31, 2013 is $40,000. The company must maintain a minimum cash balance of at least $36,000.
h. The company has an agreement with a local bank that allows the company to borrow in increments of $10,000 at the beginning of each quarter, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as able, repay the loan plus accumulated interest at the end of the year.
i. At present, the company has no loans outstanding.
Instructions
1. Prepare the following, by quarter and in total, for 2014:
a. A schedule of expected cash collections on sales.
b. A schedule of expected cash disbursements for merchandise purchases;
2. Compute the expected cash disbursements for operating expenses, by quarter and in total, for
2014.
3. Prepare a cash budget by quarter and in total for 2014.
Aug 29, 2021 | Uncategorized
The StayaNight discount motel chain is considering a proposal to build a new motel that would have 150 rooms. Revenues: Once the motel is operational, it will generate revenue of $100 per night per room that is occupied. This price is expected to hold constant over the lifespan of the project. Operational Costs: Daily operational including labour and materials; costs are $5,000 + $20 per occupied room in year 1, and both will increase 3% annually. Accounts Receivable, Accounts Payable and Inventory can be ignored. Administrative Expense: Administrative expense is estimated at $350,000 annually with no annual change. Annual Replacement Expense (furniture etc.) is $50,000 in year one and will grow10% per year after that. Marketing is planned at $60,000 annually. Investment: The motel will cost $1,000,000 to build. Simplify depreciation to be calculated as straight line over 30 years. It will be financed with a 30 year loan at 8% interest compounded annually with annual payments. It will be sold at the end of year 15 for $300,000, at which time the remaining balance on the load will be paid. The land lease cost is $100,000 annually. The corporate minimally attractive rate of return is 15%. Tax rate is 35%.
Prepare an income statement and cash flow statement.
Aug 29, 2021 | Uncategorized
Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year. Program Area Costs Administration Salaries: Administrator $60,000 Assistant $35,000 Two Secretaries $42,000 Supplies $35,000 Advertising and promotion $9,000 Professional meetings/dues $14,000 Purchased Services: Accounting and billing $15,000 Custodial $13,000 Security $12,000 Consulting $10,000 Community Mental Health Services Salaries (two social workers) $46,000 Transportation $10,000 Outpatient mental health treatment Salaries: Psychiatrist $86,000 Two Social Workers $70,000 1. Provide a dollar range of costs to reduce budgets (worst and best case analysis). 2. She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization. In the Excel spreadsheet you are to prepare 3 different budgets for 3 different budget reductions. One will be a worst case analysis, one will be a best case analysis, and the other will be a reduction of $94,000. 2. In the Word document you are to explain your budgets and answer the other questions in the assignment. a. The Budgets – Explain the division of costs between committed and discretionary. – Explain each budget. 1. How did you decide on your budget reductions? 2. How will operations be affected
Aug 29, 2021 | Uncategorized
Stephen Anest started a new business called “Repairs R Us, Inc.” at the beginning of the year. Unfortunately, Stephen has not maintained any accounting records, except for keeping track of all cash receipts and cash disbursements which are presented below. In addition, all unpaid invoices are kept in a file until they are paid.
Cash Receipts:
Investment by Owner ———– $45,000
Cash collected from customers – $72,000
Total Cash Received————- – $117,000
Cash Disbursements:
Show equipment ———– $25,000
Repair supplies ———– $15,000
Rent ———————– $7,000
Insurance Premiums —- $1,500
Advertising ————— $1,000
Utilities – —————-$1,500
Employee’ Wages —— $18,500
Dividends to owner Stephen Anest —— $10,000
Total Cash Disbursed ——– $79,500
Cash Balance as of December 31, 2011—– $37,500
Anest has asked you to prepare an accrual basis income statement for the year. The following information should help in the preparation of the income statement:
1. The equipment has a useful life of ten years.
2. Supplies on hand at the end of the period have a cost of $3,000.
3. The shop rent is $500 per month, but the lease requires two months in advance.
4. The insurance was paid at the beginning of the year and represents a two-year policy.
5. Customers owe the shop $3,200 for services already performed.
6. The workers were hired this year and are owed $550 at the end of the year for work in December.
Aug 29, 2021 | Uncategorized
1. The Sterling Company uses a standard cost system in which manufacturing overhead costs are applied to the units of the company s single product on the basis of direct labor-hours (DLHs). The standard cost card for the product follows:
Standard Cost Card-per unit of product:
Direct materials, 4 yards at $3.50 per yard $14
Direct labor, 1.5 DLHs at $8 per DLH 12
Variable overhead, 1.5 DLHs at $2 per DLH 3
Fixed overhead, 1.5 DLHs at $6 per DLH 9
The following data pertain to last year s activities:
– The company manufactured 18,000 units of product during the year.
– A total of 70,200 yards of material was purchased during the year at a cost of $3.75 per yard. All of this material was used to manufacture the 18,000 units.
– The company worked 29,250 direct labor hours during the year at a cost of $7.80 per hour.
– The denominator activity level was 22,500 direct labor hours.
– Budgeted fixed manufacturing overhead costs were $135,000 while actual manufacturing overhead costs were $133,200.
– Actual variable manufacturing overhead costs were $61,425.
Required (15 points):
a. Compute the direct materials price and quantity variances for the year.
b. Compute the direct labor rate and efficiency variances for the year.
c. Compute the variable overhead spending and efficiency variances for the year.
d. Compute the fixed overhead budget and volume variances for the year.
e. Discuss some possible reasons for the direct labor variances that you computed.
Aug 29, 2021 | Uncategorized
Steve and Linda Hom live in Bartlesville, Oklahoma. Two years ago, they visited Thailand. Linda, a professional chef, was impressed with the cooking methods and the spices used in the Thai food. Bartlesville does not have a Thai restaurant, and the Homs are contemplating opening one. Linda would supervise the cooking, and Steve would leave his current job to be the maite d’. The restauant would serve dinner Tuesday through Saturday.
Steve has noticed a restaurant for lease. The restaurant has seven table, each of which can seat four. Tables can be moved together for a large party. Linda is planning two seatings per evening, and the restaurant will be open 50 weeks per year. The Homs have drawn up the following estimates:
Average revenue, including beverages and dessert $45 per meal.
Average cost of food $15 per meal.
Chef’s and dishwashers salaries $61,200 per year.
Rent (premises, equipment) $4,000 per month.
Cleaning (linen and premises) $800 per month
Replacement of dishes cutlery and glasses $300 per month.
Utilities advertising telephone $2,300 per month.
Requirements:
1. Compute the annual breakeven number of meals and sales revenue for the restaurant.
2. Also compute the number of meals and the amount of sales revenue needed to earn operating income of $75,600 for the year.
3. How many meals must the Homs serve each night to earn their target income of $75,600?
4. Should the couple open the restaurant?
Aug 29, 2021 | Uncategorized
|
Steve has just returned from salmon fishing. He was lucky on this trip and brought home two salmon. Steve s wife, Wendy, disapproves of fishing, and to discourage Steve from further fishing trips, she has presented him with the following cost data. The cost per fishing trip is based on an average of 10 fishing trips per year.
|
|
Cost per fishing trip:
|
|
Depreciation on fishing boat* (annual depreciation of $2,000 10 trips)
|
$
|
200
|
|
Boat storage fees (annual rental of $1,600 10 trips)
|
160
|
|
Expenditures on fishing gear, except for snagged lures
(annual expenditures of $270 10 trips)
|
27
|
|
Snagged fishing lures
|
7
|
|
Fishing license (yearly license of $40 10 trips)
|
4
|
|
Fuel and upkeep on boat per trip
|
20
|
|
Junk food consumed during trip
|
7
|
|
Total cost per fishing trip
|
$
|
425
|
|
Cost per salmon ($425 2 salmon)
|
$
|
212.50
|
|
*The original cost of the boat was $20,000. It has an estimated useful life of 10 years, after which it will have no resale value. The boat does not wear out through use, but it does become less desirable for resale as it becomes older. (Leave no cells blank – be certain to enter “0” wherever required.)
|
|
Assuming that the salmon fishing trip Steve has just completed is typical, what costs are relevant to a decision as to whether he should go on another trip this year?
|
|
Suppose that on Steve s next fishing trip he gets lucky and catches three salmon in the amount of time it took him to catch two salmon on his last trip. How much would the third salmon have cost him to catch?
|
|
Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate-Control for $35 per unit. To evaluate this offer, Climate-Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally:
|
|
Per Unit
|
14,100
Units per year
|
|
Direct materials
|
$
|
9
|
$
|
126,900
|
|
Direct labor
|
11
|
155,100
|
|
Variable manufacturing overhead
|
2
|
28,200
|
|
Fixed manufacturing overhead, traceable
|
10*
|
141,000
|
|
Fixed manufacturing overhead, common, but allocated
|
13
|
183,300
|
|
Total cost
|
$
|
45
|
$
|
634,500
|
|
*40% supervisory salaries; 60% depreciation of special equipment (no resale value).
|
|
Assuming that the company has no alternative use for the facilities now being used to produce the thermostat, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.)
|
|
Make
|
Buy
|
|
Total relevant cost (14,100 units)
|
$
|
$
|
|
Should the outside supplier’s offer be accepted?
|
|
|
|
Suppose that if the thermostats were purchased, Climate-Control, Inc., could use the freed capacity to launch a new product. The segment margin of the new product would be $133,900 per year. Compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to nearest dollar amount.)
|
|
Make
|
Buy
|
|
Total relevant cost (14,100 units)
|
$
|
$
|
|
Should Climate-Control, Inc., accept the offer to buy the thermostats from the outside supplier for $35 each?
|
|
|
|
Miyamoto Jewelers is considering a special order for 13 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $406 and its unit product cost is $263 as shown below:
|
|
Direct materials
|
$
|
143
|
|
Direct labor
|
83
|
|
Manufacturing overhead
|
37
|
|
Unit product cost
|
$
|
263
|
|
Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $10 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional materials costing $9 per bracelet and would also require acquisition of a special tool costing $455 that would have no other use once the special order is completed. This order would have no effect on the company s regular sales and the order could be fulfilled using the company s existing capacity without affecting any other order.
|
|
What effect would accepting this order have on the company’s net operating income if a special price of $366 is offered per bracelet for this order (Input the amount as a positive value.)
|
|
Net operating income (Click to select)increasesdecreases by
|
$
|
|
Should the special order be accepted at this price?
|
|
|
|
Banner Company produces three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:
|
|
Product
|
|
A
|
B
|
C
|
|
Selling price
|
$
|
90
|
$
|
190
|
$
|
110
|
|
Variable costs:
|
|
Direct materials
|
40.50
|
150.70
|
62.60
|
|
Direct labor
|
15.00
|
9.00
|
12.00
|
|
Variable manufacturing overhead
|
3.00
|
1.80
|
2.40
|
|
Total variable cost
|
58.50
|
161.50
|
77.00
|
|
Contribution margin
|
$
|
31.50
|
$
|
28.50
|
$
|
33.00
|
|
Contribution margin ratio
|
35
|
%
|
15
|
%
|
30
|
%
|
|
Due to a strike in the plant of one of its competitors, demand for the company s products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labor rate is $6 per hour, and only 3,040 hours of labor time are available each week.
|
|
Compute the amount of contribution margin that will be obtained per hour of labor time spent on each product. (Round your intermediate calculations and final answers to 2 decimal places.)
|
|
A
|
B
|
C
|
|
Contribution margin per labor hour
|
$
|
$
|
$
|
|
Which orders would you recommend that the company work on next week the orders for product A, product B, or product C?
|
|
Product B
|
|
Product A
|
|
Product C
|
|
|
By paying overtime wages, more than 3,040 hours of direct labor time can be made available next week. Up to how much should the company be willing to pay per hour in overtime wages as long as there is unfilled demand for the three products (Round your intermediate calculations and final answers to 2 decimal places.)
|
|
Maximum amount
|
$ per hour
|
Aug 29, 2021 | Uncategorized
Stillman Company is considering purchasing EKC Company. EKC’s balance sheet at December 31, 2013, is as follows:
Cash $51,000 Current liabilities $55,000
Accounts receivable 71,000 Bonds payable 158,000
Inventory 120,000 Common stock 225,000
Property, plant, and equipment (net) 640,000 Retained earnings 444,000
$882,000 $882,000
At December 31, 2013, Stillman discovered the following about EKC:
No allowance for uncollectible accounts has been established. An allowance of $5,200 is considered appropriate.
The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Stillman. The FIFO inventory valuation of the December 31, 2013, ending inventory would be $188,000.
The fair value of the property, plant, and equipment (net) is $760,000.
The company has an unrecorded patent that is worth $100,000.
The book values of the current liabilities and bonds payable are the same as their market values.
Required:
1. Compute the value of the goodwill if Stillman pays $1,361,800 for EKC.
Accounting
Aug 29, 2021 | Uncategorized
The Stine Company uses a job order cost system. On May 1, the company has a balance in work in process inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following.
Materials Labor
Job NumberRequestition Slips Time Tickets
429 $2,500 $1,900
430 $3,500 $3,000
431 $4,400 $10,400 $7,600 $12,500
general use 800 1,200
$11,200 $13,700
Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.
(A) Prepare summary journal entries to record (i) the requisition slips, (ii) the time tickets, iii) the assignment of manufacturing overhead to jobs,and (iv) the completion of Job No. 429.
(B) Post entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-Account)
Aug 29, 2021 | Uncategorized
Storm Occurrence Services (SOS) offers services to secure houses and properties when major storms are forecast for an area. They do such things as fasten plywood over windows, install pumps and generators, trim and brace trees, etc. They keep an inventory of trailers, tools and supplies year round which incur annual maintenance and repair costs. Additional fuel and supplies are purchased locally at the time of the storm preparation. Staff are “on-call” when the storms are forecasted. Financial data is shown below.
Revenue (Price) per storm $500,000 for all customers
Maintenance and storage $440,000 Annual
Supplies per storm $200,000 for all customers
Labor costs per storm $250,000 for all customers
a. What would be the annual profit if there are 6 major storms in a year?
b. How many storm per year are needed to break even (include all costs)?
c. What would the revenue per storm have to be (instead of what is shown above) to attain a profit of
$1,000,000 if there are 10 storms in a year .
Aug 29, 2021 | Uncategorized
STR 581 FINAL EXAMS 100% CORRECT ANSWERS BUY THIS ONE NOW USE AS A GUIDE ONLY
1) ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
A. A promotional campaign
B. A marketing research system
C. A marketing information system
D. A marketing intelligence system
E. A marketing database
2) 3M, Hewlett-Packard, Lego, and other companies use the ________ to manage the innovation process.
A. venture team
B. joint- venture system
C. stage-gate system
D. new product team
E. skunk works
3) ________ is the difference between the prospective customer s evaluation of all the benefits and all the costs of an offering and the perceived alternatives.
A. Customer perceived value
B. Failure avoidance rate
C. Perceived usefulness
D. Report rating
E. Competitors market share rate
4) A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence.
A. advisory panels
B. intermediaries
C. sales force surrogates
D. external networks
E. customer feedback systems
5) A ________ is a set of procedures and sources managers use to obtain everydayinformation about developments in the marketing environment.
A. marketing intelligence system
B. marketing information system
C. marketing research system
D. product management system
E. vertical system
6) A(n) ________ is any good, service, or idea that is perceived by someone as new.
A. new idea
B. product
C. innovation
D. creative product
7) Total customer satisfaction is the general feeling of pleasure or disappointment that results from comparing perceived performance to expectations. To achieve total customer satisfaction, organizations need to_____________.
A. Lower expectations
B. Spend more money
C. Develop marketing campaigns
D. Manage customer experiences
E. Lower prices
8) Particularly when shopping for ego-sensitive products such as perfumes and expensive cars, many consumers use price as an indicator of ________.
A. capability
B. size
C. ability
D. quality
E. status
9) A ________ consists of a group of customers who share a similar set of needs and wants.
A. market segment
B. market level
C. market slice
D. market group
E. market target
10) A firm has to consider many factors in setting its pricing policy. We list these as a six-step process. Which of the following is NOT one of these steps?
A. Selecting the final price.
B. Selecting a pricing method.
C. Researching reference prices in the target market.
D. Selecting the pricing objective.
E. Determining demand.
11) A marketing manager needs to know the cost of the research project before approving it. During which step in the marketing research process would such a consideration most likely take place?
A. Step 2 develop the research plan.
B. Step 3 information collection
C. Step 1 drafting the research objectives.
D. Step 1 creating decision alternatives.
E. Step 1 defining the problem.
12) Which of the following types of marketing research firms would best be described as one that gathers consumer and trade information which they sell for a fee (e.g., Nielsen Media Research)?
A. General-line marketing research firms
B. Non-profit marketing research firms
C. Specialty-line marketing research firms
D. Syndicated-service research firms
E. Custom marketing research firms
13) Companies normally budget marketing research at ________ percent of company sales.
A. 6.5
B. 10 to 12
C. 4
D. 2 to 3
E. 1 to 2
14) The marketing communications mix consists of six major modes of communications. Which of the following is NOT one of these modes?
A. Packaging
B. Advertising
C. Sales promotions
D. Direct marketing
E. Personal selling
15) The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is ________.
A. competitors can easily copy any new product introductions
B. e-commerce becomes difficult for the company
C. the product may be supplanted by an entirely new technology
D. logistics can become a nightmare
E. no synergy exists
16) New-to-the- world products are ________.
A. new products that provide improved performance or greater perceived value and replace existing products
B. existing products that are targeted to new markets or market segments
C. new products that supplement established product lines (package sizes, flavors, and so on)
D. new products that allow a company to enter an established market for the first time
E. new products that create an entirely new market
17) Major retailer types include the following EXCEPT ________.
A. the Internet
B. superstore
C. catalog showroom
D. discount store
E. specialty store
18) Marketing communications can contribute to brand equity by establishing the brand in memory and to________ (in)a brand image.
A. create demand
B. communicate
C. craft
D. create interest
19) Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products.
A. similar
B. over the Internet
C. commodity-type
D. identical
20) ________ communicates a company s intended value positioning of its product or brand to the market.
A. Promotion
Aug 29, 2021 | Uncategorized
strategic management
Which of the following does NOT usually function as an entry barrier?
Economies of scale
High strategic stakes
Product differentiation
Switching costs
A challenge in conducting an external analysis is that:
brand loyalty is low.
markets may be concentrated.
markets may be fragmented.
forecasts aren’t facts.
A long-term contract is usually an agreement between:
two organizations in the same industry.
an organization and its suppliers.
two organizations in unrelated industries.
a domestic and international organization.
The product-market evolution matrix is based on the:
industry analysis.
product life cycle.
internal strengths and weaknesses.
opportunities and threats.
An organization’s __________ are its goal-directed plans and actions in which its capabilities and resources are matched with the opportunities and threats in its environment.
mission statements
vision statements
strategies
objectives
Ethics can be defined as:
the obligation of organizational decision makers to make decisions and act in ways that recognize the interrelatedness of business and society.
the intentional and ongoing actions of an organization to continuously transform itself by acquiring information and knowledge.
the rules and principles that define right and wrong decisions and behavior.
making decisions and implementing strategies that allow an organization to develop and maintain a competitive advantage.
Characteristics of dynamic capabilities include all of the following EXCEPT:
timely responsiveness.
reactive responsiveness.
rapid and flexible product innovation.
coordinating and deploying organizational resources and capabilities.
The role of top-level decision makers in the strategic management process is to:
develop the overall goal that the organization hopes to achieve.
establish the overall operational goals.
establish functional strategies.
supervise line managers.
Which of the following are strategic factors often used in depicting strategic groups?
Image and quality
Quality and price
Distribution access and image
Market share and image
__________ is an arrangement in which a foreign firm buys the rights to manufacture and market a company’s product in that country for a negotiated fee.
Direct investment
Joint venture
Franchising
Licensing
Aug 29, 2021 | Uncategorized
Q1. (15 marks) On March 31, Streuling Enterprises, a merchandising firm, had an inventory of 38,000 units, and it had accounts receivable totalling $85,000. Sales, in units, have been budgeted as follows for the next four months:
|
April
|
60,000
|
|
May
|
75,000
|
|
June
|
90,000
|
|
July
|
81,000
|
Streuling’s board of directors has established a policy to commence in April that the inventory at the end of each month should contain 40% of the units required for the following month’s budgeted sales.
The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the sale; the balance is collected in the following month.
Required:
a) Prepare a merchandise purchases budget showing how many units should be purchased for each of the months April, May, and June. Remember there is a difference between units and $of the units – use the right figures in the right spots
b) Prepare a schedule of expected cash collections for each of the months April, May, and June. Remember the existing A/R balance
Aug 29, 2021 | Uncategorized
DataCheck is considering 2 capital structures.
The key informationis shown in the following table. Assume 40% tax rate.
Source of capital Structure A Structure B. Long-term debt $100,000 at 16% coupon rate $200,000 at 17% coupon rate. Common Stock 4,000 shares 2,000 shares
a. Calculate 2 EBIT-EPS coordinates foreach of the structures by using $50,000 and $60,000 EBIT and finding their associated EPS values. Calculate the Financial Break Even point for each of the structures.
b. Plot the two capital structures on a set of EBIT-EPS axes.
c. Indicate over what EBIT range, if any, each structure is preferred.
d. Discuss the leverage and risk aspects of each structure.
e. If the firm is fairly certain that its EBIT will exceed $75,000, which structure would you recommend? Why?
Aug 29, 2021 | Uncategorized
Defined Pension Benefit Plans
1) On 1/1/2012, Stuart Company has the following defined pension plan balances.
Projected benefits Obligation $5,600,000
Fair Value of Plan Assets $6,400,000
The interest (Settlement) rate applicable to the plan is 9%. On 1/1/2013, the company amends its pension agreement so that service costs of $620,000 are created. Other data related to the pension plan are as follows:
2012 2013
Service Costs $180,000 $195,000
Prior Service Costs Amortization 0 $97,000
Contributions (funding) to the plan $255,000 $305,000
Benefits Paid $225,000 $300,000
Actual Return on Plan Assets $320,000 $515,000
Expected Rate of Return on Assets 5% 8%
Instructions:
a) Prepare a pension worksheet for the pension plan for 2012 and 2013.
Harrington Company
Pension Worksheet 2012 and 2013
General Journal Entries Memo Record
Items Annual Pension Cash OCI-Prior OCI-Pension Projected Benefit Plan
Expense Service Cost Gain/Loss Asset/Liability Obligation Assets
Balance 1/1/2012
a) Service Cost
b) Interest Cost
c) Actual Return
d) Contributions
e) Benefits
Journal entry, 12/31/12
Accum. OCI 12/31/11
Balance, 12/31/2012
f) Additional PSC
1/1/2013
g) Service Cost
h) Interest Cost
i) Actual Return
j) Unexpected loss
k) Amortization of PSC
l) Contributions
m) Benefits
Journal Entry, 12/31/13
Accum. OCI, 12/31/12
Balance, 12/31/2013
b) For 2013, prepare the journal entry to record pension-related amounts
2) Jones Co. has the following post-retirement benefit plan balances on 1/1/2012
Accumulated Postretirement benefit obligation $2,535,000
Fair Value of Plan Assets $2,535,000
The Interest (settlement) rate applicable to the plan is 8%. On 1/1/2013, the company amends the plan so that prior service costs of $185,000 were created. Other data related to the pension plan are as follows:
2012 2013
Service Costs $80,000 $87,000
Prior Service Costs Amortization $0 $13,000
Contributions (funding) to the plan $47,000 $38,000
Benefits Paid $41,000 $43,000
Actual Return on Plan Assets $200,000 $155,000
Expected Rate of Return on Assets 9% 7%
Instructions:
Prepare a worksheet for the postretirement plan for 2012 & 2013
Jones Co.
Pension Worksheet 2012 & 2013
General Journal Entries Memo Record
Items Annual DR/ Cash DR/ OCI- Prior DR/ OCI- DR/ Pension DR/ Accum DR/ Plan DR/
Expense CR CR Service Cost CR Gain/Loss CR Asset/ CR Projected CR Assets CR
Liability Benefit
Obligation
Balance, 1/1/2012
Service Cost
Interest Cost
Actual Return
Unexpected Loss
Contributions
Benefits
Journal Entry, 12/31/12
Accum OCI, 12/31/11
Balance 12/31/2012
Additional PSC, 1/1/2013
Balance 1/1/2013
Service Cost
Interest Cost
Actual Return
Unexpected loss
Amortization of PSC
Contributions
Benefits
Journal Entry, 12/31/13
Accum OCI, 12/31/12
Balance, 12/31/2013
b) Prepare any journal entries related to the postretirement plan that would be needed at 12/31/2012
c) Prepare any journal entries related to the postretirement
Aug 29, 2021 | Uncategorized
Defined Pension Benefit Plans
1) On 1/1/2012, Stuart Company has the following defined pension plan balances.
Projected benefits Obligation $5,600,000
Fair Value of Plan Assets $6,400,000
The interest (Settlement) rate applicable to the plan is 9%. On 1/1/2013, the company amends its pension agreement so that service costs of $620,000 are created. Other data related to the pension plan are as follows:
2012 2013
Service Costs $180,000 $195,000
Prior Service Costs Amortization 0 $97,000
Contributions (funding) to the plan $255,000 $305,000
Benefits Paid $225,000 $300,000
Actual Return on Plan Assets $320,000 $515,000
Expected Rate of Return on Assets 5% 8%
Instructions:
a) Prepare a pension worksheet for the pension plan for 2012 and 2013.
Harrington Company
Pension Worksheet 2012 and 2013
General Journal Entries Memo Record
Items Annual Pension Cash OCI-Prior OCI-Pension Projected Benefit Plan
Expense Service Cost Gain/Loss Asset/Liability Obligation Assets
Balance 1/1/2012
a) Service Cost
b) Interest Cost
c) Actual Return
d) Contributions
e) Benefits
Journal entry, 12/31/12
Accum. OCI 12/31/11
Balance, 12/31/2012
f) Additional PSC
1/1/2013
g) Service Cost
h) Interest Cost
i) Actual Return
j) Unexpected loss
k) Amortization of PSC
l) Contributions
m) Benefits
Journal Entry, 12/31/13
Accum. OCI, 12/31/12
Balance, 12/31/2013
b) For 2013, prepare the journal entry to record pension-related amounts
2) Jones Co. has the following post-retirement benefit plan balances on 1/1/2012
Accumulated Postretirement benefit obligation $2,535,000
Fair Value of Plan Assets $2,535,000
The Interest (settlement) rate applicable to the plan is 8%. On 1/1/2013, the company amends the plan so that prior service costs of $185,000 were created. Other data related to the pension plan are as follows:
2012 2013
Service Costs $80,000 $87,000
Prior Service Costs Amortization $0 $13,000
Contributions (funding) to the plan $47,000 $38,000
Benefits Paid $41,000 $43,000
Actual Return on Plan Assets $200,000 $155,000
Expected Rate of Return on Assets 9% 7%
Instructions:
Prepare a worksheet for the postretirement plan for 2012 & 2013
Jones Co.
Pension Worksheet 2012 & 2013
General Journal Entries Memo Record
Items Annual DR/ Cash DR/ OCI- Prior DR/ OCI- DR/ Pension DR/ Accum DR/ Plan DR/
Expense CR CR Service Cost CR Gain/Loss CR Asset/ CR Projected CR Assets CR
Liability Benefit
Obligation
Balance, 1/1/2012
Service Cost
Interest Cost
Actual Return
Unexpected Loss
Contributions
Benefits
Journal Entry, 12/31/12
Accum OCI, 12/31/11
Balance 12/31/2012
Additional PSC, 1/1/2013
Balance 1/1/2013
Service Cost
Interest Cost
Actual Return
Unexpected loss
Amortization of PSC
Contributions
Benefits
Journal Entry, 12/31/13
Accum OCI, 12/31/12
Balance, 12/31/2013
b) Prepare any journal entries related to the postretirement plan that would be needed at 12/31/2012
c) Prepare any journal entries related to the postretirement
Aug 29, 2021 | Uncategorized
Week 5 Assignment Alex Siminov
Case Study – A Day in the Life of Alex Siminov
Directions:
- Read the following case study: A Day in the Life of Alex Siminov.pdf .
- Think about the facts of the case and answer the following questions:
- How has Alex demonstrated each of the path-goal theory leadership behaviors- INSTRUMENTAL BEHAVIOR, SUPPORTIVE BEHAVIOR, PARTICIPATE BEHAVIOR, and ACHIEVEMENT-ORIENTED BEHAVIOR
- Where would you place Alex on Blake and Mouton s Leadership Grid?
- How would you describe Alex s leadership or managerial philosophy? Theory X, Y or Z or something else or a combination?
- Use a Word document to formulate your answers. Submit your document as an rtf file using the Assignment link.
Aug 29, 2021 | Uncategorized
Discussion – Ford Motor Company
We are all unfortunately aware of the difficulties and challenges faced by the American automobile industry. From a position of national and international leadership, our Big Three (General Motors, Ford and Chrysler) of the American auto industry has lost its competitive edge to auto companies in Japan, Korea, and Germany. This did not happen overnight. Gradually our auto companies became very bureaucratic, staid in their approach to product development and quality, and these factors finally impacted their ability to compete with companies that stressed innovation, quality and service.
When the financial crisis of 2008 precipitated the recession, many American companies were looking to the U.S. Government for assistance. General Motors is now owned by the government and the American public (hopefully only on a temporary basis) and Chrysler is still struggling to survive. Ford is the exception as they did not ask for nor did they receive financial aid from the government. Some say they actually saw the trouble coming and refinanced well ahead and avoided the problems encountered by both General Motors and Chrysler.
- Using the resources found under the Research Toolbox button, research the history and details that lead Ford to foresee the coming financial crisis. Analyze the management style and decisions as well as the leadership traits displayed by Ford management that allowed them to avoid the fate of General Motors and Chrysler. As you conduct your analysis, consider the following:
- Look at the options available to Ford and the reasons behind the decisions they made based on the leadership guidance from management.
- Analyze why they decided they did not need or did not want government assistance.
I realize that you will not be able to assemble a complete picture of the details during the time of challenge and crisis at Ford. However, from the information you have uncovered, you should be able to develop your own theory on how the discussions at Ford proceeded, and the reasons behind their decisions.
Aug 29, 2021 | Uncategorized
3. Refer to the readings in week 1 concerning the qualities of a critical thinker.
What is weak vs. strong critical thinking?
In what elements of critical thinking do you find you have strengths?
What elements of critical thinking do you think you can improve upon?
Provide an example for each.
4. Take the Egocentricity Quiz:
http://home.earthlink.net/~bmgei/educate/docs/aperson/thinking/ego-quiz.htm
If you scored more than nine, read If you are egocentric, what can you do at this website:
http://home.earthlink.net/~bmgei/educate/docs/aperson/thinking/kill-ego.htm
Pick one characteristic from the left column (Non-Egocentric) of the Egocentricity Quiz that describes you somewhat. Describe a time when this trait helped you.
Pick one characteristic from the right column (Egocentric) of the Egocentricity Quiz that describes you somewhat. Describe a time when has this trait hurt you.
5. Take the How Good Are Your Problem-Solving Skills survey:
http://www.mindtools.com/pages/article/newTMC_72.htm
What was your score?
Scroll down until you see the stages of problem solving (below Figure 1: The Simplex Process)
For which strategy did you have one or two stars?
Describe something you can do to improve that problem-solving skill.
For which step(s) did you have four or five stars?
Describe a time when this problem-solving skill came in handy.
6. Find a newspaper editorial that uses poor reasoning. Describe the reasoning, and identify the type of poor reasoning used.
Do you think you made the right decision? Why?
8. In the Strategic thinking article, the author gives multiple examples of strategic thinking. Describe an incident in your life when you used strategic thinking. Did it work?
**********************************
1
ASSIGNMENT
Definition of Critical Thinking
The first reading contained the following definition of critical thinking:
According to Critical Thinking as Defined by the National Council for Excellence in Critical Thinking, 1987 located at http://www.criticalthinking.org/pages/defining-critical-thinking/766
Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning or communication, as a guide to belief and action.
This definition uses words with which you may be unfamiliar.
First, write the definitions for the following words:
Conceptualizing
Analyzing
Synthesizing
Second, re-write the definition of critical thinking in your own words. If you like, use more than one sentence.
Be sure to include citations as needed and write in first person
2 Eight Elements of Thought and Reasoning
The Eight Elements of Thought and the Eight Elements of reasoning both have eight parts, but there are only four real distinct categories. For example, Point of View and Assumptions are two aspects of the same thing.
Re-organize the eight elements of thought and reasoning into four categories. Briefly describe each category. Include the characteristics of the original eight elements in your descriptions.
4 Intellectual Standards
From the article on Universal Intellectual Standards, select one standard. Describes how using that standard has helped you in your:
1. Work life
2. School life
3. Personal life
Write three paragraphs, one each for your work life, school life and personal life. Each paragraph should contain at least one example.
6Using the 8 elements of reasoning that were outlined in week 2 (Purpose, problem, information, concepts, assumptions, inferences, points of view, implications or consequences) choose a news article and break it down according to those elements. You will also describe how each of the 8 intellectual standards (clarity, accuracy, precision, relevance, depth, breadth, logic, and fairness) were used or not used in the article, supported by an example. The conclusion of your paper will then need to describe how you feel the article is biased. Please be sure to include the URL for the article that you have chosen. Your response should be at least 500 words.
7 Moral Reasoning
The following is a true story and it made national headlines several years ago. A Houston Texans football player and his wife got the call from a hospital in Dallas that his wife s mother (the football player s mother in law) was dying and only had a few minutes left to live. They hopped in the car and sped toward the hospital around midnight. Not many cars were on the road. As they were approaching the hospital, they ran a couple of red lights to get them there faster. A police officer saw this, and pulled them over as they were pulling into the hospital. The couple seeing the lights called ahead to the hospital to have a nurse meet them to substantiate their story that their mother was dying and only had a few minutes left.
When the couple jumped out of their car, the police officer drew his gun and told them to get back into the car. He walked over to them and they explained the situation. The police officer said he did not care, and they drove wrecklessly and broke the law. The nurse substantiated the claim, and the doctor came out as well and substantiated the claim. The police officer called for back-up and told everyone to stay in their car. He gave the football player a ticket. After the process, they ran inside but it was too late and the mother had died.
From your lectures and readings this week, what type of moral reasoning was the police officer using? What type of moral reasoning was the football player using? What would you have done in this situation? Was the police officer in the right to hold them and do his job as a police officer to enforce the laws, despite a mitigating circumstance? Discuss the moral and ethical ramifications of the decisions and what you think you would have done as not only the police officer but the driver. All Grantham assignments must be formatted in APA format. This assignment should be at least 500 words long and directly integrate the readings and vocabulary from the readings at least once in your assignment
8 Situational Reactions
Read the following three situations. Describe what you would do in the situation. Integrate the elements of reasoning and/or intellectual standards in your writing to show a textbook understanding of the material behind your personal example. Your work should be at least 500 words and integrate specifics into either the elements of reasoning, the intellectual standards or both. Do not worry about your answers being right or wrong you are going to be graded on your connection to the material not the behavior you would engage in if it happened to you.
Choose 2 elements of thought and 2 intellectual standards and describe for each scenario.
Scenario A: You are deployed in a country. A raid went wrong, and your squad opened fire on several innocent people. Your commander asks you and the rest of the squad to make it look like they opened fire up on you first. How would you respond?
Scenario B: As a police officer, you pull someone over. After searching their vehicle, you confiscate several ounces of marijuana. The computer system is down so you cannot chronicle this bust. Your partner tells you that his wife is sick and he could really use that marijuana at home for medicinal purposes to help her with her pain. How would you respond to your partner?
Scenario C: As a parent, your child has a first year teacher who gives ridiculously hard assignments. Your kid has a four year scholarship waiting for him if he can pass this last course even with a C. The last assignment is an assignment that you did your graduate work on so you know there s no way a high schooler should be expected to do this assignment but if your child fails this assignment, they would lose a four year scholarship. Do you actively help them complete the assignment or let them do it themselves knowing they can t do the assignment themselves and the assignment is likely to be poor because it was an inappropriately assigned paper.
Aug 29, 2021 | Uncategorized
The Sparkly Corporation has the following budget and actual result
|
Budgeted data
|
|
|
Unit sales
|
30,000
|
|
Unit production
|
30,000
|
|
Fixed overhead
|
|
|
Supervision
|
$54,000
|
|
Depreciation
|
$60,000
|
|
Rent
|
$30,000
|
|
Variable costs per unit
|
|
|
Direct materials
|
$18.00
|
|
Direct labor
|
$25.00
|
|
Supplies
|
$0.25
|
|
Indirect labor
|
$1.20
|
|
Electricity
|
$0.15
|
|
Actual results
|
|
|
Unit sales
|
33,000
|
|
Unit production
|
36,000
|
|
Fixed overhead
|
|
|
Supervision
|
$53,550
|
|
Depreciation
|
$60,000
|
|
Rent
|
$30,000
|
|
Variable costs
|
|
|
Direct materials
|
$642,000
|
|
Direct labor
|
$960,000
|
|
Supplies
|
$7,500
|
|
Indirect labor
|
$30,000
|
|
Electricity
|
$4,500
|
Required:
- Prepare a performance report for all costs, showing static budget variances (indicate F or U).
- Prepare a performance report for all costs, showing flexible budget variances (indicate F or U).
Aug 29, 2021 | Uncategorized
The Specific Electric Company (SE) is finishing its first year of existence and is applying for an additional loan in anticipation of expansion in 2013. The bank has asked for an Income statement and Cash Flow statement for OSE’s first year. A temporary worker was hired to go through all invoices and checks and gathered the following data.
Items 2012
Accounts Payable $0
Accounts Receivable $0
Capital Equipment (depreciable)$630,000
Equipment rent/lease payments$28,000
Hourly wages $980,000
Interest paid $40,000
Loan Received in 2012$500,000
Marketing Web site $170,000
Miscellaneous expenses$624,000
Permanent Staff Salaries$1,800,000
Rent $137,000
Sales $4,000,000
a. Prepare a 2012 income statement that includes totals for COGS, SG&A, EBIT, Pre-tax Income and Net Income. Use a tax rate of 20% and compute depreciation using straight line over three years.
b. Prepare a 2012 cash flow statement
Aug 29, 2021 | Uncategorized
|
A company had the following purchases during the current year:
|
|
January:
|
18 units at $128
|
|
February:
|
28 units at $138
|
|
May:
|
23 units at $148
|
|
September:
|
20 units at $158
|
|
November:
|
18 units at $168
|
|
On December 31, there were 58 units remaining in ending inventory. These 58 units consisted of 10 from January, 12 from February, 14 from May, 12 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?
|
|
|
$= 6,928.
|
|
|
$7,004.
|
|
|
$8,584.
|
|
|
$8,752.
|
|
|
$8,416.
|
Aug 29, 2021 | Uncategorized
2. Spielberg takes $100 out of his piggy bank and deposits it in his Hollywood Bank checking account. By how much does the total amount of deposits in the banking system increase:
(i) if this $100 stays in the banking system as reserves, and
(ii) if banks hold reserves equal to 10 percent of deposits?
By how much does the money supply increase in each case? Note that money supply consists of currency and demand deposits.
3. Use AD-AS diagrams to explain the short-run and long-run effects of each of the following events on output and the price level. Assume that policymakers take no action.
a) A severe earthquake damages factories along the west coast
b) Stock market crash
Aug 29, 2021 | Uncategorized
Splitsville Company has two departments. Factory overhead costs are applied based on direct labor cost in Department A and machine hours in Department B. The following information is available:
Budgeted Items Dept. A Dept. B
Direct labor cost 280,000 $145,000
Machine hours 31,000 50,000
Factory overhead cost $185,000 $160,000
Actual data for Job #10 are as follows:
Actual Items Dept. A Dept. B
Direct materials requisitioned $10,000 $16,000
Direct labor cost $11,000 $14,000
Machine hours 5,000 3,000
Required:
A) Compute the budgeted factory overhead rate for Department A.
B) Compute the budgeted factory overhead rate for Department B.
C) What is the total overhead cost for Job #10?
D) If Job #10 consists of 80 units of product, what is the unit cost of this job?
Aug 29, 2021 | Uncategorized
SPREADSHEET ASSIGNMENT. Please present your work and answers to Questions 1 to 5 on a spreadsheet. Please attach your spreadsheet carefully and correctly numbered . Your work must be neat and clear in order to earn full credit.
Your firm presents you with the following cash flows for mutually exclusive projects A and B. The cost of capital for the two projects is 8%.
Year Project A Project B
0 -440 -200
1 241 131
2 293 172
1. Calculate (a) NPV, (b) IRR, (c) MIRR, and (d) PI
2. Which project should be selected, and why?
3. Construct the NPV profile of the two mutually projects. Label your graph completely making sure that you identify the crossover rate as well as the IRR of the two projects
4. Show the calculation of the crossover rate. What is the significance of this rate?
5. Now consider the following project cash flows:
Year Cash Flow
0 -5
1 30
2 -30
Show the NPV profile and state your capital budgeting decision. Cost of capital is 10%.
WORKING PROBLEMS
Answer the following set of questions in the space provided.
For the next 4 questions: Consider the following project cash flows. Cost of capital is 10%
Year Cash Flow
0 -30
1 15
2 -25
3 50
6. What is the IRR of this project? Should the project be accepted? Why?
7. Calculate the NPV of the project. Should the project be accepted? Why?
8. Calculate the project s Profitability index (PI).
9. Calculate the project s MIRR
10. Two mutually exclusive projects, A and B, have NPV of $2.5m and $2.9m respectively. However, Project A s IRR is greater than Project B s IRR. The cross-over rate for the projects NPV profiles is 12%. Which of the following statements is true?
a. The projects cost of capital is greater than 12%
b. The projects cost of capital is less than 12%
c. The projects cost of capital is equal to 12%
d. Insufficient information to make any determination
For the next 2 problems (Investment Timing Option): Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial cash outlay of $20 million. Kim expects that the hotel will produce positive cash flows of $3 million a year at the end of the next 20 years. The project s cost of capital is 13%.
11. What is the project s net present value?
12. [4 Points]. While Kim expects the cash flows to be $3 million a year, it recognizes that the cash flows could, in fact, be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50 percent chance that the tax will be imposed, in which case the yearly cash flows will be only $2.2 million. At the same time, there is a 50 percent chance that the tax will not be imposed, in which case the yearly cash flows will be $3.8 million. Kim is deciding whether to proceed with the hotel project today or wait one year to find out whether the tax will be imposed.
If Kim waits a year, the initial investment will remain at $20 million. Assume that all cash flows are discounted at 13%. Should Kim proceed with the project TODAY or wait a year before deciding?
Aug 29, 2021 | Uncategorized
Case Study 2
Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:
Number of seats per passenger train car 90
Average load factor (percentage of seats filled) 70%
Average full passenger fare $ 160
Average variable cost per passenger $ 70
Fixed operating cost per month $3,150,000
Formula :
Revenue = Units Sold * Unit price
Contribution Margin = Revenue All Variable Cost
Contribution Margin Ratio = Contribution Margin/Selling Price
Break Even Points in Units = (Total Fixed Costs + Target Profit )/Contribution Margin
Break Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution Margin Ratio
Margin of Safety = Revenue – Break Even Points in Sales
Degree of Operating Leverage = Contribution Margin/Net Income
Net Income = Revenue Total Variable Cost Total Fixed Cost
Unit Product Cost using Absorption Cost = (Total Variable Cost + Total Fixed Cost)/# of units
a. Contribution margin per passenger =?
Contribution margin ratio =?
Break-even point in passengers = Fixed costs/Contribution Margin =
Passengers =?
Break-even point in dollars = Fixed Costs/Contribution Margin Ratio =
$ ?
b. Compute # of seats per train car (remember load factor?)
If you know # of BE passengers for one train car and the grand total of passengers, you can compute # of train cars (rounded) =?
c. Contribution margin =?
Break-even point in passengers = fixed costs/ contribution margin
Passengers =?
train cars (rounded) =?
d. Contribution margin =?
Break-even point in passengers = fixed costs/contribution margin
Passengers =?
train cars ( rounded) = ?
e. Before tax profit less the tax rate times the before tax profit = after-tax income = $ ?
Then, proceed to compute # of passengers -=?
f. # of discounted seats = ?
Contribution margin for discounted fares X # discounted seats = $ each train X$ ? train cars per day X ? days per month= $? minus $ additional fixed costs = $? pretax income.
g. 1.
Compute Contribution margin
Then,
# seats X $ X # train cars = $ ?
Increased fixed cost ( ?)
Pretax gain (loss) on new route $
2 and 3. Compute # of passengers and train cars using computation approaches employed in some of the above problems.
4. Springfield should consider such things as (Think of qualitative factors that are important. In other words, not the numbers but other things that have to be considered, e.g., risks)
Aug 29, 2021 | Uncategorized
Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:
Number of seats per passenger train car 90
Average load factor (percentage of seats filled) 70%
Average full passenger fare $ 160
Average variable cost per passenger $ 70
Fixed operating cost per month $3,150,000
a. What is the break-even point in passengers and revenues per month?
b. What is the break-even point in number of passenger train cars per month?
c. If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?
d. (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars?
e. Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000?
f. (Use original data). Springfield Express is considering offering a discounted fare of $ 120, which the company believes would increase the load factor to 80 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 180,000. How much pre-tax income would the discounted fare provide Springfield Express if the company has 50 passenger train cars per day, 30 days per month?
g. Springfield Express has an opportunity to obtain a new route that would be traveled 20 times per month. The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70.
1. Should the company obtain the route?
2. How many passenger train cars must Springfield Express operate to earn pre-tax income of $ 120,000 per month on this route?
3. If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route?
4. What qualitative factors should be considered by Springfield Express in making its decision about acquiring this route?
Aug 29, 2021 | Uncategorized
Stacey Small has a small salon that she has run for a few years as a sole proprietorship. The proprietorship uses the cash method of accounting and the calendar year as its tax year. Stacey needs additional capital for expansion and knows two people who might be interested in investing. One would like to practice hairdressing in the salon. The other would only invest. Stacey wants to know the tax consequences of incorporating the business. Her business assets include a building, equipment, accounts receivable and cash. Liabilities include a mortgage on the building and a few accounts payable, which are deductible when paid.
Write a memo to Stacey explaining the tax consequences of the incorporation. As part of your memo examine the possibility of having the corporation issue common and preferred stock and debt for the shareholders property and money.
Aug 29, 2021 | Uncategorized
Stacy Lynn, Inc. (SLI) is a manufacturer of rice cookers. The rice cookers sell for $45 per unit; the sales were 3,600 units in the current year, 2009. SLI has 400 units available for sale at the end of 2009 and is projecting sales of 4,400 units in 2010. SLI is planning the same production level for 2010 as in 2009, 4,000 units. The variable manufacturing costs for SLI are $16 and the variable selling costs are only $.50 per unit. The fixed manufacturing costs are $100,000 per year and the fixed selling costs are only $500 per year. Assume that beginning inventory was -0- for 2009. Stacy Ann Lynn, the great grand-daughter of the company’s founder is the current CEO/President of the company, which is still a family owned business. The previous several years have been especially difficult due to price-pressure from Chinese imports. At the moment, all that Stacy believes she can do is to try to keep the company running until the economy improves. But, the company needs an immediate infusion of cash. So, she has decided to ask her bank for a large line of credit to maintain operating viability for the foreseeable future. Additional Financial Information for SLI, 2009 and 2010: Based on the information provided in the narrative and the financial statement above, please post a substantive response to the following parts of this Unit 6 Discussion: If Patty wants to show the bank the maximum profit over the previous 2-year period, which costing method should she present? But, the bank requires that all financial statements conform to Generally Accepted Accounting Principles (GAAP). Based on that requirement, which costing method should she present? The bank has delivered a memo in preparation for the meeting to negotiate the Credit Line; the memo states that they will expect a significant Net Income. Based on your responses to parts A and B, what are the legal and ethical issues facing Stacy Lynn?
Aug 29, 2021 | Uncategorized
ACC202 Week 5 E16-1 E16-2 E16-3 E16-5 P16-16 P16-17 P16-18
Exercise 16-1 : Identifying cash inflows and outflows
Required
Indicate which of the following items will result in cash inflows and which will result in cash outflows. The first one is show as an example.
Cont…
Exercise 16-2 : Determining the present value of a lump-sum future cash receipt
Stan Sweeney turned 20 years old today. His grandfather established a trust fund that will pay Mr. Sweeney $80,000 on his next birthday. However, Stan needs money today to start his college education. His father is willing to help and has agreed to give Stan the present value of the future cash inflow, assuming a 10 percent rate of return.
Cont…
Exercise 16-3 : Determining the present value of a lump-sum future cash receipt
Marsha Bittner expects to receive a $600,000 cash benefit when she retires five years from today. Ms. Bittner’s employer has offered an early retirement incentive by agreeing to pay her $360,000 today if she agrees to retire immediately. Ms. Bittner desires to earn a rate of return of 12 percent.
Cont…
Exercise 16-5 : Determining net present value
Metro Shuttle Inc. is considering investing in two new vans that are expected to generate combined cash inflows of $28,000 per year. The vans’ combined purchase price is $91,000. The expected life and salvage value of each are four years and $21,000, respectively. Metro Shuttle has an average cost of capital of 14 percent.
Cont…
Problem 16-16 : Using present value techniques to evaluate alternative investment opportunities.
Fast Delivery is a small company that transports business packages between New York and Chicago. It operates a fleet of small vans that moves packages to and from a central depot within each city and uses a common carrier to deliver the packages between the depots in the two cities. Fast recently acquired approximately $6 million of cash capital from its owners, and its president. Don Keenon, is trying to identify the most profitable way to invest these funds.
Cont…
Problem 16-17: Using the payback period and unadjusted rate of return to evaluate alternative investment opportunities.
Louis Gallo owns a small retail ice cream parlor. He is considering expanding the business and has identified two attractive alternatives. One involved purchasing a machine that would enable Mr. Gallo to offer frozen yogurt to customers. The machine would cost $8,100 and has an expected useful life of three years with no salvage value. Additional annual cash revenues and cash operating expenses associated with selling yogurt are expected to be $5.940 and $900, respectively.
Cont…
Problem 16-18: Using net present value and internal rate of return to evaluate investment opportunities.
Veronica Tanner, the present of Tanner Enterprises, is considering two investment opportunities. Because of limited resources, she will be able to invest in only one of them. Project A is to purchase a machine that will enable factory automation; the machine is expected to have a useful life of four years and no salvage value. Project B supports a training program that will improve the skills of employees operating the current equipment. Initial cash expenditures for Project A are $100,000 and for Project B are $40,000. The annual expected cash inflows are $31,487 for Project A and $13,169 for Project B. Both investments are expected to provide cash flow benefits for the next four years. Tanner Enterprise’s cost of capital is 8 percent.
Cont…
Aug 29, 2021 | Uncategorized
1. The standard cost is how much a product should cost to manufacture.
TRUE
FALSE
2. Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.
TRUE
FALSE
3. An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.
TRUE
FALSE
4. A centralized business organization is one in which all major planning and operating decisions are made by top management.
TRUE
FALSE
5. The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.
TRUE
FALSE
6. Property tax expense for a department store’s store equipment is an example of a direct expense.
TRUE
FALSE
7. Differential revenue is the amount of increase or decrease in revenue expected from a particular course of action as compared with an alternative.
TRUE
FALSE
8. The product cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.
TRUE
FALSE
9. When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.
TRUE
FALSE
10. Care must be taken involving capital investment decisions, since normally a long-term commitment of funds is involved and operations could be affected for many years.
TRUE
FALSE
11. Average rate of return equals average investment divided by estimated average annual income.
TRUE
FALSE
12. Managers depend on product costing to make decisions regarding continuing operations, advertising, and product mix.
TRUE
FALSE
13. The single plantwide overhead rate method is very expensive to apply.
TRUE
FALSE
14. In the just-in-time (JIT) philosophy, unexpected downtime is the result of unreliable processes.
TRUE
FALSE
15. In a just-in-time (JIT) system, the work in process account will show more transactions than in a traditional cost system.
TRUE
FALSE
Aug 29, 2021 | Uncategorized
Chapter Two and Three Problems
1. Issuance of stock
Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases:
- Jackson Corporation has common stock with a par value of $1 per share.
- Royal Corporation has no-par common with a stated value of $5 per share.
- French Corporation has no-par common; no stated value has been assigned
2. Analysis of stockholders’ equity
Star Corporation issued both common and preferred stock during 20X6. The stockholders’ equity sections of the company’s balance sheets at the end of 20X6 and 20X5 follow.
|
20X6
|
20X5
|
|
Preferred stock, $100 par value, 10%
|
$580,000
|
$500,000
|
|
Common stock, $10 par value
|
2,350,000
|
1,750,000
|
|
|
|
|
Paid-in capital in excess of par value
|
|
|
|
Preferred
|
24,000
|
|
|
Common
|
4,620,000
|
3,600,000
|
|
Retained earnings
|
8,470,000
|
6,920,000
|
|
Total stockholders’ equity
|
$16,044,000
|
$12,770,000
|
- Compute the number of preferred shares that were issued during 20X6.
- Calculate the average issue price of the common stock sold in 20X6.
- By what amount did the company’s paid-in capital increase during 20X6?
- Did Star’s total legal capital increase or decrease during 20X6? By what amount?
3.Bond computations: Straight-line amortization
Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow.
- Case A The bonds are issued at 100.
- Case B The bonds are issued at 96.
- Case C The bonds are issued at 105.
Southlake uses the straight-line method of amortization.
Instructions:
|
Complete the following table:
|
|
|
|
|
Case A
|
Case B
|
Case C
|
- Cash inflow on the issuance date
|
_______
|
_______
|
_______
|
- Total cash outflow through maturity
|
_______
|
_______
|
_______
|
- Total borrowing cost over the life of the bond issue
|
_______
|
_______
|
_______
|
- Interest expense for the year ended December 31, 20X1
|
_______
|
_______
|
_______
|
- Amortization for the year ended December 31, 20X1
|
_______
|
_______
|
_______
|
- Unamortized premium as of December 31, 20X1
|
_______
|
_______
|
_______
|
- Unamortized discount as of December 31, 20X1
|
_______
|
_______
|
_______
|
- Bond carrying value as of December 31, 20X1
|
_______
|
_______
|
_______
|
4.Product costs and period costs
The costs that follow were extracted from the accounting records of several different manufacturers:
- Weekly wages of an equipment maintenance worker
- Marketing costs of a soft drink bottler
- Cost of sheet metal in a Honda automobile
- Cost of president’s subscription to Fortune magazine
- Monthly operating costs of pollution control equipment used in a steel mill
- Weekly wages of a seamstress employed by a jeans maker
- Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams
- Determine which of these costs are product costs and which are period costs.
- For the product costs only, determine those that are easily traced to the finished product and those that are not.
5. Definitions of manufacturing concepts
Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:
Materials and supplies used
Brass $75,000
Repair parts 16,000
Machine lubricants 9,000
Wages and salaries Machine operators 128,000
Production supervisors 64,000
Maintenance personnel 41,000
Other factory overhead Variable 35,000
Fixed 46,000
Sales commissions 20,000
Compute:
- Total direct materials consumed
- Total direct labor
- Total prime cost
- Total conversion cost
6. Scheduleof cost of goods manufactured, income statement
The following information was taken from the ledger of Jefferson Industries, Inc.:
|
Direct labor
|
$85,000
|
|
Administrative expenses
|
$59,000
|
|
Selling expenses
|
34,000
|
|
Work in. process
|
|
|
Sales
|
300,000
|
|
Jan. 1
|
29,000
|
|
Finished goods
|
|
|
Dec. 31
|
21,000
|
|
Jan. 1
|
115,000
|
|
Direct material purchases
|
88,000
|
|
Dec. 31
|
131,000
|
|
Depreciation: factory
|
18,000
|
|
Raw (direct) materials on hand
|
Indirect materials used
|
10,000
|
|
Jan. 1
|
31,000
|
|
Indirect labor
|
24,000
|
|
Dec. 31
|
40,000
|
|
Factory taxes
|
8,000
|
|
|
|
Factory utilities
|
11,000
|
Prepare the following:
- A schedule of cost of goods manufactured for the year ended December 31.
- An income statement for the year ended December 31.
7. Manufacturing statements and cost behavior
Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-gauge aluminum, which the company sells for $36 per roll. Cost information for the year just ended follows.
|
Per Unit
|
Variable Cost
|
Fixed Cost
|
|
Direct materials
|
$4.50
|
$
|
|
Direct labor
|
6.5
|
|
|
Factory overhead
|
9
|
50,000
|
|
Selling
|
|
70,000
|
|
Administrative
|
|
135,000
|
Production and sales totaled 20,000 rolls and 17,000 rolls, respectively There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production.
Instructions:
- Determine the cost of the finished goods inventory of light-gauge aluminum.
- Prepare an income statement for the current year ended December 31
- On the basis of the information presented:
- Does it appear that the company pays commissions to its sales staff? Explain.
- What is the likely effect on the $4.50 unit cost of direct materials if next year’s production increases? Why?
Aug 29, 2021 | Uncategorized
Develop a report about Starbucks Americas region that include the following;
Company Research and analysis
- environmental factors
- market size
- competitive analysis
- target market segmemntation
Financial Statements
- Pro Forma Income statement- bymonth for Y1- reflect seasonality sales, by years for Y2,Y3 – indicate growth
- Cash Flow Forecast- note debt payment/ additional capital expenditure/possible dividend payments,etc.; by Month for Year1, by Years for Years 2-3
- Discussion of Financial Statements- should include longer term (Years 2-5) revenue growth rates, gross profits,debt payments,capital expenditures,etc.
Internal Processes and Personnel
- Operational Issues such as staff work schedule/labour costs/facilities/raw materials/processing requirements/training.
Balanced Scorecard
- Flows logically from the above analysis.
Aug 29, 2021 | Uncategorized
A state department of tourism and recreation collects data on the number of cars with out-of-state license plates in a state park. (The group’s position is that more out-of-state plates means the state’s advertising programs are working.) The sample size is fixed at n=90 each day. Data from the previous 20 days indicate the following number of out-of-state license plates:
Day Out-of-state Plates 1 24 2 33 3 18 4 21 5 26 6 31 7 15 8 18 9 23 10 13 11 22 12 15 13 25 14 33 15 16 16 22 17 34 18 10 19 23 20 13
a. Calculate the overall proportion of “tourists” (cars with out-of-state plates). b. Calculate the LCL and UCL for these data. c. Plot the control chart. Are all points within the control limits? d. What action do you suggest for improving this process?
Aug 29, 2021 | Uncategorized
Problem:
|
Financial data of Fancy Footwork Company for 2013 and 2012 are presented below.
|
|
|
|
|
|
|
FANCY FOOTWORK COMPANY
|
|
|
COMPARATIVE BALANCE SHEET
|
|
|
AS OF DECEMBER 31, 2013 AND 2012
|
|
|
|
2013
|
2012
|
|
|
Cash
|
$ 260,000
|
$ 230,000
|
|
|
Receivables
|
$ 156,000
|
$ 120,000
|
|
|
Inventory
|
$ 180,000
|
$ 220,000
|
|
|
Plant assets
|
$ 160,000
|
$ 135,000
|
|
|
Accumulated depreciation
|
$ (80,000)
|
$ (76,000)
|
|
|
Long-term investments (held-to-maturity)
|
$ 80,000
|
$ 93,000
|
|
|
|
$ 756,000
|
$ 722,000
|
|
|
|
|
|
|
|
Accounts payable
|
$ 135,000
|
$ 122,000
|
|
|
Accrued liabilities
|
$ 30,000
|
$ 33,100
|
|
|
Bonds payable
|
$ 135,000
|
$ 166,000
|
|
|
Common stock
|
$ 180,000
|
$ 165,000
|
|
|
Retained earnings
|
$ 276,000
|
$ 235,900
|
|
|
|
$ 756,000
|
$ 722,000
|
|
|
|
|
|
|
|
|
|
|
|
|
FANCY FOOTWORK COMPANY
|
|
|
INCOME STATEMENT
|
|
|
For the year ended Dec 31, 2013
|
|
|
Sales
|
|
750000
|
|
|
Cost of Goods Sold
|
|
530000
|
|
|
Gross Margin
|
|
220000
|
|
|
Selling and administrative expenses
|
|
106000
|
|
|
Income from Operations
|
|
114000
|
|
|
Other revenues and gains
|
|
|
|
|
Gain on sale of investments
|
|
7000
|
|
|
Income before tax
|
|
121000
|
|
|
Income tax expense
|
|
48400
|
|
|
Net Income
|
|
72600
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional information:
|
|
|
|
|
During the year, $9000 of common stock was issued in exchange for plant assets. No plant assets were sold in 2012. Cash dividends were $32500.
|
|
|
|
|
|
|
|
Required:
|
|
|
|
|
A) Prepare a statement of cash flows using the indirect method
|
|
|
B) Prepare a statement of cash flows using the direct method. (Do not prepare a reconciliation schedule.)
|
|
Aug 29, 2021 | Uncategorized
| Instructions: With the following information, create a Cash Flow Statement |
|
|
|
|
|
|
|
|
| COMPA A XZ, SA de CV |
|
| Balance Sheet (amounts in thousands of pesos) |
|
|
2011 |
2012 |
|
| Assets |
|
|
|
| Cash |
170 |
157 |
|
| Investments |
2,615 |
1,247 |
|
| Customers |
8,955 |
6,763 |
|
| Net Inventory |
4,370 |
2,815 |
|
|
|
|
|
| Total Current Assets |
16,110 |
10,982 |
|
|
|
|
|
| Building |
5,000 |
5,000 |
|
| Equipment |
8,900 |
8,000 |
|
| Depreciation |
2,198 |
1,400 |
|
| Total Fixed Assets |
11,702 |
11,600 |
|
|
|
|
|
| Installation costs |
3,000 |
3,000 |
|
| Amortization |
450 |
300 |
|
| Total deferred assets |
2,550 |
2,700 |
|
|
|
|
|
| TOTAL ASSETS |
$ 30,362 |
$ 25,282 |
|
|
|
|
|
| LIABILITIES |
|
|
|
| Suppliers |
4,675 |
4,200 |
|
| Creditors |
384 |
400 |
|
| Taxes payable |
275 |
150 |
|
|
|
|
|
| TOTAL LIABILITIES |
$ 5,334 |
$ 4,750 |
|
|
|
|
|
| SHAREHOLDER S EQUITY |
|
|
|
| Social Capital |
10,000 |
10,000 |
|
| Retained earnings |
15,832 |
11,798 |
|
| Net income |
4,496 |
4,034 |
|
| Dividends |
5,300 |
5,300 |
|
|
|
|
|
| TOTAL CAPITAL |
25,028 |
20,532 |
|
|
|
|
|
| TOTAL LIABILITIES AND SHAREHOLDER S EQUITY |
30,362 |
25,282 |
|
|
|
|
|
| COMPA A XZ, SA de CV |
| Income statement (amounts in thousands of pesos) |
|
|
|
|
|
2012 |
|
2011 |
| Sales |
54,947 |
|
42,624 |
| Sales costs |
31,427 |
|
20,150 |
|
|
|
|
| Gross income |
23,520 |
|
22,474 |
|
|
|
|
| Administrative expenses |
3,600 |
|
3,100 |
| Sales expenses |
3,100 |
|
2,500 |
| Distribution costs |
3,900 |
|
2,700 |
| Productions costs |
2,285 |
|
1,897 |
| Total Operating Costs |
12,885 |
|
10,197 |
|
|
|
|
| Operating income |
10,635 |
|
12,277 |
|
|
|
|
| Financial expenses |
2,947 |
|
4,814 |
| Utilidad/perdida cambiaria |
195 |
|
386 |
|
|
|
|
| Pretax profit |
7,493 |
|
7,077 |
|
|
|
|
| Income Tax |
2,248 |
|
2,335 |
| Share of profits between the workers |
749 |
|
708 |
|
|
|
|
| Net income |
4,496 |
|
4,034 |
|
|
|
|
| According with this information and after creating the cash flow statement answer the following questions |
|
|
| What is the net income of the company? |
| How much did the company generate or apply in operation? |
| How much did the company generate or apply in funding and investment? |
| Which is the most representative entry of each of these groups? |
Week 6
Homework
According the financial statements from week 5 of XZ, S.A. de C.V. (Cash Flow Statement), you have to calculate and interpret the following financial ratios.
1. Liquidity
2. Profitability
3. Leverage
4. Capital structure
Aug 29, 2021 | Uncategorized
Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.
2012
2011
Cash $209,909 $104,286
Accounts receivable 240,660 247,345
Investments 69,524 98,938
Equipment 398,426 320,880
Less: Accumulated depreciation equipment (141,722 ) (118,993 )
Current liabilities 179,158 201,887
Capital stock 213,920 213,920
Retained earnings 383,719 236,649
Additional information:
Investments were sold at a loss (not extraordinary) of $9,359; no equipment was sold; cash dividends paid were $66,850; and net income was $213,920.
(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Aug 29, 2021 | Uncategorized
1.) Prepare a statement of cash flows using the indirect method for the year ending December 31, 2011.
Balance Sheet
|
|
2011
|
2010
|
|
|
|
|
Cash
|
$ 18,000
|
$25,000
|
|
Supplies
|
10,000
|
12,000
|
|
Accounts receivable (net)
|
31,000
|
35,000
|
|
Inventory
|
51,000
|
52,000
|
|
Prepaid expenses
|
9,000
|
3,000
|
|
Buildings, and equipment
|
400,000
|
360,000
|
|
Less: accumulated depreciation
|
(100,000)
|
(75,000)
|
|
Total assets
|
$419,000
|
$412,000
|
|
|
|
|
|
Accounts payable
|
$18,000
|
$13,000
|
|
Accrued expenses
|
10,000
|
8,500
|
|
Note payable, Short Term
|
20,000
|
60,000
|
|
Note payable, Long Term
|
20,000
|
15,500
|
|
Capital stock
|
296,000
|
280,000
|
|
Retained earnings
|
55,000
|
35,000
|
|
Total liabilities and equities
|
$419,000
|
$412,000
|
Additional data:
One piece of equipment was purchased during the year.
Short term debt was repaid while long term debt was issued.
Dividends were paid during the year.
A condensed income statement for the year is as follows:
|
Sales
|
470,000
|
|
Cost of goods sold
|
220,000
|
|
Gross profit
|
250,000
|
|
Depreciation expense
|
25,000
|
|
Operating expenses, other
|
138,000
|
|
Operating income
|
87,000
|
|
Interest Expense
|
(2,000)
|
|
Net income
|
85,000
|
Aug 29, 2021 | Uncategorized
For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method.
A. Added to net income
B. Deducted from net income
C. Cash outflow investing activity
D. Cash inflow investing activity
E. Cash outflow financing activity
F. Cash inflow financing activity
G. Significant noncash investing and financing activity
- Decrease in accounts payable during a period. _____
- Declaration and payment of a cash dividend. ______
- Loss on a sale of Land. _____
- Decrease in accounts receivable during a period. ______
- Redemption of bonds for cash. _____
- Proceeds from sale of equipment at book value. ______
- Issuance of common stock for cash. _____
- Purchase of a building for cash _____
- Acquisition of land in exchange for common stock. ______
- Increase in merchandise inventory during a period. ______
Aug 29, 2021 | Uncategorized
SIEVERT CORPORATION
Balance Sheets
December 31
Assets 2012 2011
Cash $ 28,000 $ 20,000
Receivables (net) 70,000 62,000
Other current assets 90,000 73,000
Long-term investments 62,000 60,000
Plant and equipment (net) 510,000 470,000
Total assets $760,000 $685,000
Liabilities and Stockholders Equity
Current liabilities $ 75,000 $ 70,000
Long-term debt 80,000 90,000
Common stock 330,000 300,000
Retained earnings 275,000 225,000
Total liabilities and stockholders equity $760,000 $685,000
SIEVERT CORPORATION
Income Statements
For the Years Ended December 31
2010 2011
Sales $750,000 $680,000
Cost of goods sold 440,000 400,000
Operating expenses (including income taxes) 240,000 220,000
Net income $ 70,000 $ 60,000
Additional information:
Cash from operating activities $82,000 $56,000
Cash used for capital expenditures $45,000 $38,000
Dividends paid $20,000 $15,000
Average number of shares outstanding 33,000 30,000
Instructions
Compute these values and ratios for 2011 and 2012.
(a) Earnings per share.
(b) Working capital.
(c) Current ratio.
(d) Debt to total assets ratio.
(e) Free cash flow.
(f ) Based on the ratios calculated, discuss briefly the improvement or lack thereof in
financial position and operating results from 2011 to 2012 of Sievert Corporation
Aug 29, 2021 | Uncategorized
P2-6A
Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page.
SIEVERT CORPORATIONBalance SheetsDecember 31
Assets
(2012 year)
2011
Cash
$ 28,000 (2012 year)
$ 20,000 (2011 year)
Receivables (net)
70,000 (2012 year)
62,000 (2011 year)
Other current assets
90,000 (2012 year)
73,000 (2011 year)
Long-term investments
62,000 (2012 year)
60,000 (2011 year)
Plant and equipment (net)
510,000 (2012 year)
470,000 (2011 year)
Total assets
$760,000 (2012 year)
$685,000 (2011 year)
Liabilities and Stockholders Equity
Current liabilities
$ 75,000 (2012 year)
$ 70,000 (2011 year)
Long-term debt
80,000 (2012 year)
90,000 (2011 year)
Common stock
330,000 (2012 year)
300,000 (2011 year)
Retained earnings
275,000 (2012 year)
225,000 (2011 year)
Total liabilities and stockholders equity
$760,000 (2012 year)
$685,000 (2011 year)
SIEVERT CORPORATIONIncome StatementsFor the Years Ended December 31
2012
2011
Sales
$750,000 (2012 year)
$680,000 (2011 year)
Cost of goods sold
440,000 (2012 year)
400,000 (2011 year)
Operating expenses (including income taxes)
240,000 (2012 year)
220,000 (2011 year)
Net income
$ 70,000 (2012 year)
$ 60,000 (2011 year)
Additional information:
Cash from operating activities
$82,000 (2012 year)
$56,000 (2011 year)
Cash used for capital expenditures
$45,000 (2012 year)
$38,000 (2011 year)
Dividends paid
$20,000 (2012 year)
$15,000 (2011 year)
Average number of shares outstanding
33,000 (2012 year)
30,000 (2011 year)
Compute and interpret liquidity, solvency, and profitability ratios.
(SO 2, 4, 5), AP
Instructions
Compute these values and ratios for 2011 and 2012.
A. Earnings per share.
B. Working capital.
C. Current ratio.
D. Debt to total assets ratio.
E. Free cash flow.
F. Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2011 to 2012 of Sievert Corporation.
Aug 29, 2021 | Uncategorized
PROBLEM # 1
Silmon Corporation makes a product with the following standard costs:
In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580 direct labor-hours.
During the month the company purchased 24,100 grams of the direct material at a price of $6.80 per gram. The actual
direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price
variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
PROBLEM # 2
Walkenhorst Corporation’s manufacturing overhead includes $7.80 per machine-hour for supplies; $7.30 per machinehour
for indirect labor; $21,210 per period for salaries; and $19,950 per period for depreciation.
Required: Determine the predetermined overhead rate if the denominator level of activity is 1,500 machine-hours.
Aug 29, 2021 | Uncategorized
Silmon Corporation makes a product with the following standard costs:
In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580 direct labor-hours.
During the month the company purchased 24,100 grams of the direct material at a price of $6.80 per gram. The actual
direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The materials price
variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
Aug 29, 2021 | Uncategorized
Kelly Steinman is the manager of a medium-size company. A few years ago, Steinman persuaded Gordon Gekko, the owner to base a part of her compensation on the net income the company earns each year. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is to ask you the controller to reduce the estimate of doubtful accounts.
You are having lunch with the owner and you tell him about the request she made. He asks you to prepare a memo answering the following questions:
1. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet?
2. Do you believe Steinman s recommendation to adjust the allowance for doubtful accounts is within her right as manager, or do you believe this action is an ethics violation? Justify your response.
3. What type of internal control(s) might be useful in overseeing the manager s recommendations for accounting changes?
Required
Using Microsoft Word prepare a business memo responding to the owner’s questions.
PLEASE NOTE: The memo only has to be less than a page long, and it is better to keep it simple.
Aug 29, 2021 | Uncategorized
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Aug 29, 2021 | Uncategorized
Sir I have the follwong tables, and need to show the Standard Deviation, the formula is also enclosed.
The tables are correct but I am having trouble figuring out the formula, please see below-
3. A company had 80 employees whose salaries are summarized in the frequency distribution below. Find the standard deviation. Find the standard deviation of the data summarized in the given frequency distribution.
Salary Number of Employees
5,001 -10,000 11
10,001 – 15,000 13
15,001 – 20,000 20
20,001 – 25,000 17
25,001 – 30,000 13
salaries frequencies class midpoint X f*x f*x^2
5001-10000 11 7500.5 82505.5 XXXXXXXXX 8
10001-15000 13 12500.5 162506.5 XXXXXXXXXX
15001-20000 20 17500.5 350010 XXXXXXXXXX
20001-25000 17 22500.5 382508.5 XXXXXXXXXX
25001-30000 13 27500.5 357506.5 XXXXXXXXXX
totals 74 (NNN) NNN-NNNNXXXXXXXXXXX
Variance 2 =
x2 f/n – ( xf/n) 2
4. The heights of a group of professional basketball players are summarized in the frequency distribution below. Find the standard deviation.
Height (in.) Frequency
70-71 4
72-73 9
74-75 18
76-77 11
78-79 9
80-81 4
82-83 1
heights frequency class midpoint x f*x f*x^2
70-71 4 70.5 282 19881
72-73 9 72.5 652.5 47306.25
74-75 18 74.5 1341 99904.5
76-77 11 76.5 841.5 64374.75
78-79 9 78.5 706.5 55460.25
80-81 4 80.5 322 25921
82-83 1 82.5 82.5 6806.25
totals 56 4228 319654
Variance 2 =
x2 f/n – ( xf/n) 2
Aug 29, 2021 | Uncategorized
Excel spreadsheet and 1-2 pages
Details: Consider the following scenario:
The Ski Pro Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The company is considering the production of cross-country skis.
After considerable research, a cross-country ski line has been developed. Because of the conservative nature of the company management, however, Ski Pro ‘s president has decided to introduce only one type of the new ski for this coming winter. If the product is a success, further expansion in future years will be initiated.
The ski selected is a mass-market ski with a special binding. It will be sold to wholesalers for $80 per pair. Because of availability capacity, no additional fixed charges will be incurred to produce the skis. A $100,000 fixed charge will be absorbed by the skis, however, to allocate a fair share of the company’s present fixed costs to the new product.
Using the estimated sales and production of 10,000 pairs of skis as the expected volume, the accounting department has developed the following cost per pair of skis and bindings:
Direct Labor: $35
Direct Material: $30
Total Overhead: $15
Total: $80
Ski Pro has approached a subcontractor to discuss the possibility of purchasing the bindings. The purchase price of the bindings from the subcontractor would be $5.25 per binding, or $10.50 per pair. If the Ski Pro Corporation accepts the purchase proposal, it is predicted that direct-labor and variable-overhead costs would be reduced by 10% and direct-material costs would be reduced by 20%.
Write a 1-2 page paper, and create a spreadsheet that answers the following questions:
1.Should the Ski Pro Corporation make or buy the bindings? Show calculations to support your answer.
2.What would be the maximum purchase price acceptable to the Ski Pro Corporation for the bindings? Support your answer with an appropriate explanation.
3.Instead of sales of 10,000 pairs of skis, revised estimates show sales volume at 12,500 pairs. At this new volume, additional equipment, at an annual rental of $10,000 must be acquired to manufacture the bindings. This incremental cost would be the only additional fixed cost required even if sales increased to 30,000 pairs. (This 30,000 level is the goal for the third year of production.) Under these circumstances, should the Ski Pro Corporation make or buy the bindings? Show calculations to support your answer.
4.What qualitative factors (that is, issues with vendors, customers, or within the product itself) should the Ski Pro Corporation consider in determining whether they should make or buy the bindings
Aug 29, 2021 | Uncategorized
The Ski Pro Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The company is considering the production of cross-country skis.
After considerable research, a cross-country ski line has been developed. Because of the conservative nature of the company management, however, Minnetonka s president has decided to introduce only one type of the new ski for this coming winter. If the product is a success, further expansion in future years will be initiated.
The ski selected is a mass-market ski with a special binding. It will be sold to wholesalers for $80 per pair. Because of availability capacity, no additional fixed charges will be incurred to produce the skis. A $100,000 fixed charge will be absorbed by the skis, however, to allocate a fair share of the company s present fixed costs to the new product.
Using the estimated sales and production of 10,000 pairs of skis as the expected volume, the accounting department has developed the following cost per pair of skis and bindings:
Direct Labor: $35
Direct Material: $30
Total Overhead: $15
Total: $80
Ski Pro has approached a subcontractor to discuss the possibility of purchasing the bindings. The purchase price of the bindings from the subcontractor would be $5.25 per binding, or $10.50 per pair. If the Ski Pro Corporation accepts the purchase proposal, it is predicted that direct-labor and variable-overhead costs would be reduced by 10% and direct-material costs would be reduced by 20%.
Write a 1 2 page paper, and create a spreadsheet that answers the following questions:
1.Should the Ski Pro Corporation make or buy the bindings? Show calculations to support your answer.
2.What would be the maximum purchase price acceptable to the Ski Pro Corporation for the bindings? Support your answer with an appropriate explanation.
3.Instead of sales of 10,000 pairs of skis, revised estimates show sales volume at 12,500 pairs. At this new volume, additional equipment, at an annual rental of $10,000 must be acquired to manufacture the bindings. This incremental cost would be the only additional fixed cost required even if sales increased to 30,000 pairs. (This 30,000 level is the goal for the third year of production.) Under these circumstances, should the Ski Pro Corporation make or buy the bindings? Show calculations to support your answer.
4.What qualitative factors (that is, issues with vendors, customers, or within the product itself) should the Ski Pro Corporation consider in determining whether they should make or buy the bindings?
Aug 29, 2021 | Uncategorized
Skinny Dippers, Inc. produces nonfat frozen yogurt. The product is sold in five-gallon containers, which have the following price and variable costs.
Sales price ……………………….. $15
Direct material …………………….. 5
Direct labor ………………………… 2
Variable overhead ………………… 3
Budgeted fixed overhead in 20×1, the company s first year of operations, was $300,000. Planned and actual production was 150,000 five-gallon containers, of which 125,000 were sold. Skinny Dippers, Inc. incurred the following selling and administrative expenses.
Fixed ……………………. $50,000 for the year
Variable ……………… $1 per container sold
Required
1. Compute the product cost per container of frozen yogurt under (a) variable costing and (b) absorption costing.
2. Prepare income statements for 20×1 using (a) absorption costing and (b) variable costing.
3. Reconcile the income reported under the two methods by listing the two key places where the income statements differ.
4. Reconcile the income reported under the two methods using the shortcut method.
Aug 29, 2021 | Uncategorized
Complete the following assignment and submit to the Dropbox by the scheduled due date. Following the methodology given in the case below complete Steps 1 through 4 and then the follow-up questions. Be sure to include a discussion of the stock price of your chosen company and include the stock prices.
The information you need to complete this assignment can easily be found on the Internet at various financial and trading websites.
IMPORTANT: In addition to Steps 1 through 4, please consider this assignment in light of the very fluctuating market we are currently experiencing and the wild fluctuations of the market. Please comment on this in your paper.
Market Ups and Downs:
Goal:
To encourage you to understand the forces that affect fluctuations in stock prices.
Background Information:
Investing in stocks requires an understanding of the various factors that affect stock prices. These factors may be intrinsic to the company itself or part of the external environment.
- Internal factors relate to the company itself, such as an announcement of poor or favorable earnings, earnings that are more or less than expected, major layoffs, labor problems, new products, management issues, and mergers.
- External factors relate to world or national events, such as the war in Iraq, the Asian currency crisis, weather conditions that affect sales, the Fed’s adjustments of interest rates, and employment figures that were higher or lower than expected.
By analyzing these factors, you will often learn a lot about why a stock did well or why it did poorly. Being aware of these influences will help you anticipate future stock movements.
Method:
- Step 1 – Choose a common stock that has experienced considerable price fluctuations in the past few years. Here are several examples (but there are many others): IBM, J.P. Morgan Chase, AT&T, Amazon.com, Oxford Health Care, and Apple Computer. Find the symbol for the stock (for example, J.P. Morgan Chase is JPM) and the exchange on which it is traded (JPM is traded on the NYSE).
- Step 2 – Find the historical ups and down of your chosen stock going back no more than ten years. You can find this information at a number of well known sites on the web. Do a little research to find these site.
- Step 3 – Find a period of several months or even a year when there have been major price fluctuations in the stock. Research what happened during that time period that might have contributed to the fluctuation. A place to begin is with the Wall Street Journal or on the business pages of a national newspaper, such as the New York Times or the Washington Post. Perhaps a “this day in history” web page woud provide some information.
- Step 4 – Write a short analysis that links changes in stock price to internal and external factors. As you analyze the data, be aware that it is sometimes difficult to know why a stock price fluctuates. Give me you best analysis.
Follow-Up Questions (please respond to these as well):
- Do you see any similarities in the movement of the various stocks during the same period? For example, did the stocks move up or down at about the same time? If so, do you think the stocks were affected by the same factors? Explain your thinking.
- Based on your analysis, did internal or external factors have the greater impact on stock price? Which factors had the more long-lasting effect? Which factors had the shorter effect?
- Why do you think it is so hard to predict changes in stock price on a day-to-day basis?
NOTE: DUE 12/13/13 BY 10:00 MST
Aug 29, 2021 | Uncategorized
A major producer of plastics in the United States is about to expand its business. As part of this expansion, it will begin to sell its products in Europe and Asia. In addition, it plans to open a plant in Asia. Jerry, the President and CEO, is concerned; he has heard many stories of companies that have tried to expand globally but operations either failed miserably or did not live up to expectations due to the cultural differences between workers and customers in each country.
Jerry has asked your group to research problems other companies have had with this issue and develop ways in which the errors and missteps those companies made can be avoided by his company.
As a group you should select a multinational corporation or international nonprofit agency that has encountered these problems (this can be a previous or current employer of yours). Using the Internet and the library, each individual in the group will research the organization to discover any cultural barriers that organization encountered and what its managers did to try to overcome those barriers.
Please note that this assignment has both a group component and an individual assignment.
Group Component:
- As a group generate and evaluate reasons why people may not appreciate the cultural point of view of others. Each individual in the group should at least 5 resources or materials (citations) (three of the five citations may come from the textbook)
- As a group discuss how appreciating cultural diversity affects peoples’ ability to communicate effectively in the context of a multinational corporation or an international nonprofit agency. Feel free to add your own experiences as well as quoting others. Please share the resources, materials and citations that you find and collect on the small group discussion board.
Individual Assignment:
Each individual in the group should create and submit their own 2 3 page paper.
Each individual paper should summarize the group discussions and provide suggestions regarding the steps that the company can take and policies that can be put in place to help ensure the company’s expansion is successful. Eah individual can draw from the resources and materials shared on the small group discussion board in the processof developing their individual paper. Each individual paper should contain at least 5 references, with at least 3 sociological references which may include the course textbook materials.
This assignment will be assessed using the rubric providedhere.
Please add your file.
The following rubrics will be used for grading:
|
IP Grading Rubric
|
| Evidnced participation in the small group |
20%
|
|
IP assignment response
|
30%
|
|
Evidenced critical thinking and connection to real-world and assignment scenario applicability
|
20%
|
|
Justified ideas and responses by using appropriate examples and references from texts, Web sites, and other references or personal experience
|
20%
|
|
Adherence to assignment deadlines, length requirement, correct spelling/proper grammar, and properly formatted per APA style
|
10%
|
Please add your file.
Aug 29, 2021 | Uncategorized
Problem 1
Required: Use the following information to complete the below schedule of cost of goods manufactured.
(25 points)
Purchases of raw materials $120,000.00
Raw materials available for use $148,000.00
Cost of direct raw materials used $124,000.00
Manufacturing overhead $24,000.00
Total manufacturing costs $310,000.00
Ending work-in-process inventory $(46,000.00)
Cost of goods manufactured $306,000.00
Schedule of Cost of Goods Manufactured
Beginning inventory, raw materials
Plus: Purchases of raw materials
Raw materials available for use $-
Less: Ending raw materials inventory
Cost of direct raw materials used $-
Direct labor
Manufacturing overhead
Total manufacturing costs $-
Plus: Beginning work-in-process inventory
Total work in process $-
Less: Ending work-in-process inventory
Cost of goods manufactured $-
Problem 2
Required: JZ is a musician who is considering whether to independently produce and sell a CD. JZ estimates fixed costs of $10,000 and variable costs of $4.00 per unit. The expected selling price is $12 per CD. What is JZ’s break-even point in units and dollars?
Break-even point in units Fixed Costs
Contribution margin per unit
Break-even point in dollars Break-even point in units * selling price
Aug 29, 2021 | Uncategorized
Solutions to Homework 1, Chapters 1, 2 & 3
1 The division of profits and losses among the members of a partnership is formalized in the:
A. indemnity clause.
B. indenture contract.
C. statement of purpose.
D. partnership agreement.
E. group charter.
2. Agency costs refer to:
A. corporate income subject to double taxation.
B. the costs of any conflicts of interest between stockholders and management.
C. the total dividends paid to stockholders over the lifetime of a firm.
D. the costs that result from default and bankruptcy of a firm.
E. the total interest paid to creditors over the lifetime of the firm.
3. Working capital management includes decisions concerning which of the following?
I. accounts payable
II. accounts receivable
III. long-term debt
IV. inventory
A. I and II only
B. I and III only
C. II and IV only
D. I, II, and IV only
E. I, III, and IV only
4. Working capital management:
A. ensures that sufficient equipment is available to produce the amount of product desired on a daily basis.
B. ensures that long-term debt is acquired at the lowest possible cost.
C. ensures that dividends are paid to all stockholders on an annual basis.
D. balances the amount of company debt to the amount of available equity.
E. is concerned with managing day to day cash flow.
5. Which one of the following best describes the primary advantage of being a limited partner rather than a general partner?
A. No potential financial loss
B. Liability for firm debts limited to the capital invested
C. Entitlement to a larger portion of the partnership’s income
D. Greater management responsibility
E. Ability to manage the day-to-day affairs of the business
6. A general partner:
A. cannot lose more than the amount of his/her equity investment.
B. has less legal liability than a limited partner.
C. faces double taxation whereas a limited partner does not.
D. has more management responsibility than a limited partner.
E. is the term applied only to corporations which invest in partnerships.
7. A partnership:
A. has less of an ability to raise capital than a proprietorship.
B. agreement defines whether the business income will be taxed like a partnership or a corporation.
C. allows for easy transfer of interest from one general partner to another.
D. is taxed the same as a corporation.
E. terminates at the death of any general partner.
8. Which of the following are disadvantages of a partnership?
I. limited life of the firm
II. personal liability for firm debt
III. greater ability to raise capital than a sole proprietorship
IV. lack of ability to transfer partnership interest
A. I and II only
B. III and IV only
C. II and III only
D. I, II, and IV only
E. I, III, and IV only
9. Which of the following are advantages of the corporate form of business ownership?
I. limited liability for firm debt
II. double taxation
III. ability to raise capital
IV. unlimited firm life
A. I and II only
B. III and IV only
C. I, II, and III only
D. II, III, and IV only
E. I, III, and IV only
10. Which one of the following statements is correct?
A. All types of business formations have limited lives.
B. Partnerships are the most complicated type of business to form.
C. Both sole proprietorships and partnerships are taxed in a similar fashion.
D. Both partnerships and corporations have limited liability for general partners and shareholders.
E. Both partnerships and corporations incur double taxation.
11. The owners of a limited liability company prefer:
A. being taxed like a corporation.
B. having liability exposure similar to that of a sole proprietor.
C. being taxed personally on all business income.
D. having liability exposure similar to that of a general partner.
E. being taxed like a corporation with liability like a partnership.
12. Which type of business organization has all the respective rights and privileges of a legal person?
A. Sole proprietorship
B. Corporation
C. General partnership
D. Limited partnership
E. Limited liability company
13. Which one of the following actions by a financial manager creates an agency problem?
A. Increasing current costs in order to increase the market value of the stockholders’ equity
B. Agreeing to expand the company at the expense of stockholders’ value
C. Refusing to lower selling prices if doing so will reduce the net profits
D. Agreeing to pay bonuses based on the book value of the company stock
E. Refusing to borrow money when doing so will create losses for the firm
14. Which of the following help convince managers to work in the best interest of the stockholders?
I. compensation based on the value of the stock
II. stock option plans
III. threat of a proxy fight
IV. threat of conversion to a partnership
A. I and II only
B. II and III only
C. I, II and III only
D. I and III only
E. I, II, III, and IV
15. A proxy fight occurs when
A. the board solicits renewal of current members
B. a group solicits proxies to replace the board of directors
C. a competitor offers to sell their ownership in the firm
D. the firm files for bankruptcy
E. the firm is declared insolvent
16. Which of the following are key requirements of the Sarbanes-Oxley Act?
I. Officers of the corporation must review and sign annual reports.
II. Officers of the corporation must now own more than 5% of the firm’s stock.
III. Annual reports must list deficiencies in internal controls.
IV. Annual reports must be filed with the SEC within 30 days of year end.
A. I only
B. II only
C. I and III only
D. II and III only
E. II and IV only
17. Insider trading is:
A. legal.
B. impossible to have in our efficient market.
C. illegal.
D. discouraged, but legal.
E. list only the securities of the largest firms.
18. The Securities Exchange Act of 1934 focuses on:
A. insider trading.
B. issuance of new securities.
C. sales of existing securities.
D. all stock transactions.
E. Federal Deposit Insurance Corporation (FDIC) insurance.
19. The basic regulatory framework in the United States was provided by:
A. the Securities Act of 1933.
B. the monetary system.
C. the Securities Exchange Act of 1934.
D. A and C.
E. All of the above.
20. Accounting profits and cash flows are:
A. generally not the same since GAAP allows for revenue recognition separate from the receipt of cash flows.
B. generally the same since accounting profits reflect when the cash flows are received.
C. generally the same since they reflect current laws and accounting standards.
D. generally not the same because cash inflows occur before revenue recognition.
E. Both c and d.
21. Martha’s Enterprises spent $2,400 to purchase equipment three years ago. This equipment is currently valued at $2,000 on today’s balance sheet but could actually be sold for $2,000. Net working capital is $300 and long-term debt is $900. Assuming the equipment is the firm’s only fixed asset, what is the book value of shareholders’ equity?
A. $200
B. $800
C. $1,200
D. $1,400
E. The answer cannot be determined from the information provided.
Book value of shareholders’ equity = $2,000 + $300 – $900 = $1,400
22. Art’s Boutique has sales of $640,000 and costs of $480,000. Interest expense is $40,000 and depreciation is $60,000. The tax rate is 34%. What is the net income?
A. $20,400
B. $39,600
C. $50,400
D. $79,600
E. $99,600
Taxable income = $640,000 – $480,000 – $40,000 – $60,000 = $60,000; Tax = .34($60,000) = $20,400; Net income = $60,000 – $20,400 = $39,600
23. Given the tax rates as shown, what is the average tax rate for a firm with taxable income of $126,500?
A. 21.38%
B. 23.88%
C. 25.76%
D. 34.64%
E. 39.00%
Tax = .15($50,000) + .25($25,000) + .34($25,000) +.39($126,500 – $100,000) = $32,585; Average tax rate = $32,585 $126,500 = .2576 = 25.76 percent
24. The tax rates are as shown. Your firm currently has taxable income of $74,000. How much additional tax will you owe if you increase your taxable income by $20,000?
A. $6,460
B. $6,710
C. $6,940
D. $7,160
E. $7,174
25. Teddy’s Pillows has beginning net fixed assets of $600 and ending net fixed assets of $730. Assets valued at $400 were sold during the year. Depreciation was $50. What is the amount of net capital spending?
A. $130
B. $150
C. $165
D. $180
E. $330
26. At the beginning of the year, long-term debt of a firm is $270 and total debt is $340. At the end of the year, long-term debt is $290 and total debt is $390. The interest paid is $40. What is the amount of the cash flow to creditors?
A. -$50
B. -$20
C. $20
D. $50
E. $60
27. Peggy Grey’s Cookies has net income of $360. The firm pays out 40 percent of the net income to its shareholders as dividends. During the year, the company sold $80 worth of common stock. What is the cash flow to stockholders?
A. $64
B. $136
C. $144
D. $224
E. $296
28. What is the change in the net working capital from 2009 to 2010?
A. $1,235
B. $1,035
C. $1,335
D. $3,405
E. $4,740
Change in net working capital = ($7,310 – $2,570) – ($6,225 – $2,820) = $1,335
29. What is the amount of the non-cash expenses for 2010?
A. $570
B. $630
C. $845
D. $1,370
E. $2,000
30. What is the amount of the net capital spending for 2010?
A. -$290
B. $795
C. $1,080
D. $1,660
E. $2,165
31. What is the operating cash flow for 2010?
A. $845
B. $1,930
C. $2,215
D. $2,845
E. $3,060
32. What is the cash flow of the firm for 2010?
A. $405
B. $430
C. $1,340
D. $2,590
E. $3,100
33. What is the amount of net new borrowing for 2010?
A. -$225
B. -$25
C. $0
D. $25
E. $225
34. What is the cash flow to creditors for 2010?
A. -$405
B. -$225
C. $225
D. $385
E. $405
Topic: Cash Flow To Stockholders
35. What is the taxable income for 2010?
A. $360
B. $520
C. $640
D. $780
E. $800
36. What is the operating cash flow for 2010?
A. $520
B. $800
C. $1,015
D. $1,110
E. $1,390
37. What are the sales for 2010?
A. $4,225
B. $4,385
C. $4,600
D. $4,815
E. $5,000
38. Calculate net income based on the following information: sales are $300; cost of goods sold is $190, depreciation expense is $45, interest paid is $20, and the tax rate is 34%.
A. $11.90
B. $15.30
C. $29.70
D. $36.30
E. $45.00
39. What is the operating cash flow for 2010?
A. $940.52
B. $985.71
C. $1,075.50
D. $1,230.00
E. $1,354.55
40. What are the sales for 2010?
A. $4,000.00
B. $4,385.50
C. $5,435.71
D. $5,525.50
E. $5,680.00
41. The only difference between Joe’s and Moe’s is that Joe’s has old, fully depreciated equipment. Moe’s just purchased all new equipment which will be depreciated over eight years. Assuming all else equal:
A. Joe’s will have a lower profit margin.
B. Joe’s will have a lower return on equity.
C. Moe’s will have a higher net income.
D. Moe’s will have a lower profit margin.
E. Moe’s will have a higher return on assets.
42. The three parts of the Du Pont identity can be generally described as:
I. operating efficiency, asset use efficiency and firm profitability.
II. financial leverage, operating efficiency and asset use efficiency.
III. the debt-equity ratio, the capital intensity ratio and the profit margin.
IV. the equity multiplier, the profit margin and the total asset turnover.
A. I and II only
B. II and III only
C. I and IV only
D. II and IV only
E. III and IV only
43. A firm has sales of $3,600, costs of $2,800, interest paid of $100, and depreciation of $400. The tax rate is 34%. What is the value of the cash coverage ratio?
A. 2
B. 4
C. 6
D. 8
E. 10
44. Mario’s Home Systems has sales of $2,800, cost of goods sold of $2,100, inventory of $500, and accounts receivable of $400. How many days, on average, does it take Mario’s to sell its inventory?
A. 65.2 days
B. 85.2 days
C. 86.9 days
D. 96.9 days
E. 117.3 days
45. Syed’s Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed’s to both sell its inventory and then collect the payment on the sale?
A. 128 days
B. 146 days
C. 163 days
D. 190 days
E. 211 days
46. A firm has net working capital of $400, net fixed assets of $2,400, sales of $6,000, and current liabilities of $800. How many dollars worth of sales are generated from every $1 in total assets?
A. $1.33
B. $1.67
C. $1.88
D. $2.33
E. $2.50
47. Rosita’s Restaurant has sales of $4,500, total debt of $1,300, total equity of $2,400, and a profit margin of 5%. What is the return on assets?
A. 5.00%
B. 6.08%
C. 7.39%
D. 9.38%
E. 17.31%
48. Lee Sun’s has sales of $3,000, total assets of $2,500, and a profit margin of 5%. The firm has a total debt ratio of 40%. What is the return on equity?
A. 6%
B. 8%
C. 10%
D. 12%
E. 15%
49. Patti’s has net income of $2400, a price-earnings ratio of 16, and earnings per share of $1.60. How many shares of stock are outstanding?
A. 1,200
B. 1,400
C. 1,500
D. 1,600
E. 1,800
50. A firm has 6,000 shares of stock outstanding, sales of $7,000, net income of $900, a price-earnings ratio of 12, and a book value per share of $.60. What is the market-to-book ratio?
A. 1.6
B. 2.4
C. 3.0
D. 3.2
E. 3.6
51. A firm has 5,000 shares of stock outstanding, sales of $6,000, an enterprise value of $5 million and an EBITDA of 1 million. What is the enterprise value multiple?
A. 2.2
B. 2.4
C. 3.0
D. 4.0
E. 5.0
52. A firm has a market capitalization of $3 million, market value of interest bearing debt of $1.5 million, book value of interest bearing debt of $500,000 and cash of $200,000. What is the enterprise value?
A. $3.5 million
B. $3.9 million
C. $4.0 million
D. $4.3 million
E. $4.7 million
53. Frederico’s has a profit margin of 5%, a return on assets of 9%, and an equity multiplier of 1.5. What is the return on equity?
A. 6.7%
B. 8.4%
C. 11.2%
D. 13.5%
E. 19.6%
54. Samuelson’s has a debt-equity ratio of 50%, sales of $8,000, net income of $700, and total debt of $2,500. What is the return on equity?
A. 8.25%
B. 9.50%
C. 10.75%
D. 12.00%
E. 14.00%
55. A firm has a return on equity of 15%. The debt-equity ratio is 50%. The total asset turnover is 1.25 and the profit margin is 8%. The total equity is $3,200. What is the amount of the net income?
A. $480
B. $500
C. $540
D. $600
E. $620
56. What is the days’ sales in receivables in 2010?
A. 31.8 days
B. 32.5 days
C. 33.7 days
D. 41.9 days
E. 47.4 days
57. What is the equity multiplier for 2010?
A. 1.6
B. 1.8
C. 2.0
D. 2.3
E. 2.5
58. What is the cash coverage ratio for 2010?
A. 11.6
B. 12.8
C. 13.7
D. 17.3
E. 18.8
59. What is the return on equity for 2010?
A. 10.7%
B. 13.0%
C. 14.0%
D. 15.3%
E. 16.0%
60. Windswept, Inc. has 90 million shares of stock outstanding. Its price-earnings ratio for 2010 is 12. What is the market price per share of stock?
A. $57.12
B. $59.94
C. $64.13
D. $66.13
E. $67.03
Aug 29, 2021 | Uncategorized
Writea paper of no more than 750 words in which you respond to the Broadening Your Perspective 17-2 activity titled “Managerial Perspective” in Ch. 17 of Accounting.
| BYP17-2 |
MANAGERIAL ANALYSISIdeal Manufacturing Company of Sycamore, Illinois, has supported a research and development (R&D) department that has for many years been the sole contributor to the company’s new farm machinery products. The R&D activity is an overhead cost center that provides services only to in-house manufacturing departments (four different product lines), all of which produce agricultural/farm/ranch related machinery products.The department has never sold its services outside, but because of its long history of success, larger manufacturers of agricultural products have approached Ideal to hire its R&D department for special projects. Because the costs of operating the R&D department have been spiraling uncontrollably, Ideal’s management is considering entertaining these outside approaches to absorb the increasing costs. But, (1) management doesn’t have any cost basis for charging R&D services to outsiders, and (2) it needs to gain control of its R&D costs. Management decides to implement an activity-based costing system in order to determine the charges for both outsiders and the in-house users of the department’s services.R&D activities fall into four pools with the following annual costs.
| Market analysis |
$1,050,000 |
| Product design |
2,350,000 |
| Product development |
3,600,000 |
| Prototype testing |
1,400,000 |
|
|
Activity analysis determines that the appropriate cost drivers and their usage for the four activities are:
| Activities |
Cost Drivers |
Total Estimated Drivers |
| Market analysis |
Hours of analysis |
15,000 |
hours |
| Product design |
Number of designs |
2,500 |
designs |
| Product development |
Number of products |
90 |
products |
| Prototype testing |
Number of tests |
500 |
tests |
|
|
Instructions
| (a) |
Compute the activity-based overhead rate for each activity cost pool. |
| (b) |
How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and requested 92 engineering tests? |
| (c) |
How much cost would serve as the basis for pricing an R&D bid with an outside company on a contract that would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests? |
| (d) |
What is the benefit to Ideal Manufacturing of applying activity-based costing to its R&D activity for both in-house and outside charging purposes? |
|
Aug 29, 2021 | Uncategorized
Some studies indicate the best approach for transformational change may have the chief executive officer create an atmosphere for change and establish a reward system but let others decide how to initiate change but carefully set limits for the program and begin establishing a vision
Which of the following statements is true with regard to the effectiveness of tactics?
The combination of a soft tactic with reasonable persuasion is more effective than a combination of two hard tactics.
Soft tactics are less effective than hard tactics when used individually
Individuals from collectivist cultures are typically more likely to use soft tactics that reflect personal power.
All tactics are equally effective with regard to upward influence.
Sam Meyers manages a telemarketing call center. He has 20 employees working for him who are displeased with the way he yells and threatens to terminate them for what they see as small issues. Which kind of power is Sam using to get the job done?
Reward power
Legitimate power
Coercive power
Referent power
Training that results in ______ is costly because of the cost of training (which proved to be useless) and the cost of hampered performance.
reinforcement of training
applicability of training
negative transfer of training
simulation of training
Deming s PDCA (plan, do, check, and act) cycle underlies what inherent Six Sigma principle?
Continuous improvement
Standard deviation
Project management
Control charting
Which of the following is an element that addresses elimination of waste under lean production?
Minimized run times
Production ahead of demand
Group plant loading technology
Kanban production control system
Conflicts can be resolved by withdrawing from them or suppressing them. This conflict-management technique is known as ________.
forcing
compromising
avoiding
accommodating
Which of the following is a desirable strategy for managers aiming to reduce the negative consequences of rumors?
Refusing to comment on issues that appear to be controversial and unfair
Creating a more informal communication environment at the workplace
Initiating disciplinary action against the employee who started the rumor
Encouraging employees to communicate their concerns and suggestions
A project can be segmented into which of the following
Events
Success markers
Sub-jobs
Work packages
Because practical considerations make job tryouts for all candidates infeasible, it is necessary to __________ the relative level of job performance for each candidate on the basis of available information.
abandon
predict
accept
assign
Which of the following is one of Dr. Eli Goldratt’s rules of production scheduling for optimized production technology
Do not allow bottlenecks to govern the flow of the line.
An hour saved at a bottleneck operation does not increase the process flow.
If you lose an hour at a bottleneck it is better than making scrap.
Utilization and activation of a resource are not the same
When an employee volunteers to run a canned food drive, this is an example of
job satisfaction
organizational citizenship behavior
employee happiness
employee productivity
In order to make their firm a learning organization, managers should
reinforce interdependence and reduce boundaries
avoid the use of cross-functional teams
increase the degree of departmentalization
penalize mistakes
The concept that some leadership attributes will work in some situations but not in others can be described by the
behavioral theory
contingency theory
tactical theory
leadership effectiveness theory
In _____, workers have been fired for refusing to quit smoking, for living with someone without being married, drinking a competitor s product, motorcycling, and other legal activities outside of work.
lifestyle discrimination
defamation
invasion of privacy
constructive discharge
According to the job characteristics model, autonomy is defined as the degree to which
a job provides the worker freedom, independence, and discretion
a job has an impact on the lives or work of other people
a job generates direct and clear information about performance
a job requires completion of a whole and identifiable piece of work
In performing a SWOT analysis, which of the following would be considered as a threat?
Increased product demand
Recognized brand
Competitors
Lack of a strategic plan
As a university student, your institution s social principles and practices reflect on you, as a stakeholder, in the organization. Therefore, it is your right to question how these practices should be evaluated in relation to the social issues that the school is addressing. If your university provides job-share programs, builds a day-care facility, and only uses recycled paper, it could be said to be ________.
socially image conscious
fulfilling its social obligation
socially aware
socially responsive
Which of the following is ISO 14000 primarily concerned with?
Continuous improvement management
Time management
Quality management
Environmental management
During the implementation of a project, which of the following should be the primary focus of a consulting firm?
The correct project software
People management skills
Tools and materials availability
Application of the learning curve theory
What can affirmative action assist organizations in achieving that diversity initiatives cannot?
Correcting specific problems of the past
Increased productivity
Maximizing creativity
Maximizing workforce commitment
The Civil Rights Act of 1991 offered what for victims of unintentional discrimination?
affirmative action
adverse impact
race norming
monetary damages and jury trials
Adoration of a charismatic leader by followers can lead to
greater understanding of the company mission
difficulty in developing a successor
a competitive work environment
limiting suggestions of fixes and improvements
An example of control criteria that can be used in any situation is ________.
number of calls taken per day
client requests completed per hour
employee satisfaction
average time to process paperwork.
Mary arrives at her new job. Before she can begin actually doing the work, she must complete a series of activities including role playing and virtual reality interactions. What type of training method does Mary s new employer use?
Information presentation
On-the-job training
Simulation
Organizational development
Aug 29, 2021 | Uncategorized
Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.
2012
2011
Cash $209,909 $104,286
Accounts receivable 240,660 247,345
Investments 69,524 98,938
Equipment 398,426 320,880
Less: Accumulated depreciation equipment (141,722 ) (118,993 )
Current liabilities 179,158 201,887
Capital stock 213,920 213,920
Retained earnings 383,719 236,649
Additional information:
Investments were sold at a loss (not extraordinary) of $9,359; no equipment was sold; cash dividends paid were $66,850; and net income was $213,920.
(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Aug 29, 2021 | Uncategorized
Sonne Company produces a perfume called Whim. The direct materials and direct labor standards for one bottle of Whim are given below:
During the most recent month, the following activity was recorded:
- Twenty thousand ounces of material were purchased at a cost of $2.40 per ounce.
- All of the material was used to produce 2,500 bottles of Whim.
- Nine hundred hours of direct labor time were recorded at a total labor cost of $10,800.
Answer the following:
- Compute the direct materials quantity and price variances for the month.
- Compute the direct labor efficiency and rate variances for the month.
Part 2:
Refer to the information above. Assume that instead of producing 2,500 bottles of Whim during the month, the company produced only 2,000 bottles using 16,000 ounces of material. (The rest of the material purchased remained in raw materials inventory.)
Compute the direct materials quantity and price variances for the month.
Aug 29, 2021 | Uncategorized
Sorce Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
|
Activity
|
Cost Driver
|
Total Cost
|
|
1. Materials handling
|
Number of requisitions
|
$35,000
|
|
|
2. Machine setups
|
Number of setups
|
27,500
|
|
|
3. Quality inspections
|
Number of inspections
|
27,000
|
|
|
|
|
$89,500
|
|
The cost driver volume for each product was as follows.
|
Cost Driver
|
Instruments
|
Gauges
|
Total
|
|
Number of requisitions
|
400
|
|
600
|
|
1,000
|
|
|
Number of setups
|
200
|
|
300
|
|
500
|
|
|
Number of inspections |
200
|
|
400
|
|
600
|
|
Aug 29, 2021 | Uncategorized
1. Sparingly Manufacturing has developed the following standards for one of its products. STANDARD VARIABLE COST CARD for One Unit of Product Materials: 5 yards @ $6 per yard = $30.00 Direct labor: 2 hours @ $8 per hour = $16.00 Variable manufacturing overhead: 2 hours @ $5 per hour = $10.00 Total standard variable cost per unit $56.00 The company records materials price variances at the time of purchase. The following activity occurred during the month of December: Materials purchased: 5,200 yards costing $29,900 Materials used: 4,750 yards Units produced: 1,000 units Direct labor: 2,100 hours costing $17,850
Required:
a. Calculate the direct materials price variance.
b. Calculate the direct materials usage variance.
c. Calculate the direct labor rate variance.
d. Calculate the direct labor efficiency variance.
2. The variable costing income statement for Vamonos Company for 2014 is as follows:
Sales (5,000 units) $100,000
Variable expenses:
Cost of goods sold $30,000
Selling (10% of sales) 10,000 40,000
Contribution margin $ 60,000
Fixed expenses:
Manufacturing overhead $24,000
Administrative 14,400 38,400
Operating income $ 21,600
Selected data for 2014 concerning the operations of the company are as follows:
Beginning inventory -0- units
Units produced 8,000 units
Manufacturing costs:
Direct labor $3.00 per unit
Direct materials 1.60 per unit
Variable overhead 1.40 per unit
Required: Prepare an absorption costing income statement for 2014.
Aug 29, 2021 | Uncategorized
Question 1
The Computer Fraud and Abuse Act of 1986 prohibits ________.
Answer threatening to damage computer systems in order to extort money or other valuables
the use of encoded chips to provide access to companies’ confidential information
accessing company e-mail or other such confidential information from public computers
contracting with consultants outside the United States to process key information
gaining access to voice-related communications for investigation or any other purpose
.2 points
Question 2
A mass cyber attack occurred in a country when it took severe actions against a group of citizens who protested the country’s policies. The attack involved a denial-of-service in which selected sites were bombarded with traffic to force them offline. This is an example of ________.
Answer hot backing up
cyberbullying
logic bombing
cybersquatting
cyberterrorism
.2 points
Question 3
Robert receives a mail which says he has won an online lottery worth $50 Billion. Robert was wondering how he could win it without even buying the lottery. It was a spam mail intended to obtain the bank account details and the credit card number of Robert. Such attempts to trick financial account and credit card holders are called ________.
Answer phishing
spim hacking
tunneling
logic bombing
cyberterrorism
.2 points
Question 4
Which of the following acts have made it a crime to break into any electronic communications service, including telephone services?
Answer the USA Patriot Act
the Family Educational Rights and Privacy Act
the Computer Fraud and Abuse Act
the Electronic Communications Privacy Act
the Foreign Intelligence Surveillance Act
.2 points
Question 5
Organizations periodically have an external entity review the controls so as to uncover any potential problems in the controls. This process is called ________.
Answer information modification
a recovery point objective analysis
a recovery time objective analysis
an information systems audit
risk analysis
.2 points
Question 6
An organization does not implement countermeasures against information threats; instead it simply absorbs the damages that occur. This approach is called ________.
Answer risk acceptance
risk rescheduling
risk reduction
risk mitigation
risk transference
.2 points
Question 7
Albitrex Systems is an Asian software consulting firm which develops solutions for companies in the United States and Europe. The company is heavily dependent on Internet for transporting data. The company wants to ensure that only authorized users access the data and that the data cannot be intercepted and compromised. Which of the following would be most helpful to the company in achieving this goal?
Answer disaster recovery planning
hot backing up
spam filtering
open transmitting
tunneling
.2 points
Question 8
An organized attempt by a country’s military to disrupt or destroy the information and communication systems of another country.Which of the following terms best represents such attacks by a country?
Answer logic bomb
cyberwar
Web vandalism
Internet hoaxing
cyber terrorism
.2 points
Question 9
________ are false messages often circulated online about new viruses, earthquakes ; kids in trouble; cancer causes; or any other topic of public interest.
Answer Internet hoaxes
Logic bombs
Cookies
Malware
Honeypots
.2 points
Question 10
Which of the following refers to the practice of deliberately causing emotional distress in the victim?
Answer cyberboating
cyberstalking
cybersquatting
cyberbullying
bot herdering
Aug 29, 2021 | Uncategorized
There are a number of individual decisions covered in this week’s material. One is incremental analysis. The problem below is an example of this. The only things that are different in the various scenarios are sales dollars and variable costs. Since fixed costs are fixed, they have no impact on the decision. So, as long as the additional units can be sold at a price higher than the variable cost, the order will increase net income.
|
Your company produces 10,000 units which is 80% of capacity and its normal
|
|
selling price is $25/unit.
|
|
|
|
|
|
The following cost data are provided at 10,000 units:
|
|
|
|
|
Variable cost per unit
|
$16
|
|
|
|
|
Fixed cost per unit
|
4
|
|
|
|
|
|
|
|
|
|
|
a) Should you accept a special order from a foreign company for an additional
|
|
2,000 units at a special price of $22/unit?
|
|
|
|
|
|
|
|
|
|
|
|
b) Should you accept the order at $19/unit?
|
|
|
|
|
|
|
|
|
|
|
|
c) Should you accept the order at $15/unit?
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
Special
|
With Special Order
|
|
|
|
Order
|
$22
|
$19
|
$15
|
|
|
Sales
|
250,000
|
294,000
|
288,000
|
280,000
|
|
|
Variable Cost
|
(160,000)
|
(192,000)
|
(192,000)
|
(192,000)
|
|
|
Fixed Cost
|
(40,000)
|
(40,000)
|
(40,000)
|
(40,000)
|
|
|
Net Income
|
50,000
|
62,000
|
56,000
|
48,000
|
|
|
|
|
|
|
|
|
|
Change in Revenue
|
|
44,000
|
38,000
|
30,000
|
|
|
Change in Expense
|
|
32,000
|
32,000
|
32,000
|
|
|
Change in Net Income
|
|
12,000
|
6,000
|
(2,000)
|
Aug 29, 2021 | Uncategorized
Segmented Income Statements, Product-Line Analysis
Bismarck Company produces blenders and coffeemakers. During the past year, the company produced and sold 80,000 blenders and 75,000 coffeemakers. Fixed costs for Bismarck totaled $327,000, of which $92,400 can be avoided if the blenders are not produced and $145,000 can be avoided if the coffee makers are not produced. Revenue and variable cost information follow:
Blenders Coffee Makers
Variable expenses per appliance $20 $27
Selling price per appliance 24 29
Hide FeedbackShow All Feedback
Check My Work Feedback Post Submission Feedback Solution
2a.What would the effect be on Bismarck’s profit if the coffeemaker line is dropped?
The profits will
SelectIncreaseDecreaseCorrect 1 of Item 2
by $
2b.What would the effect be on Bismarck’s profit if the blender line is dropped?
The profits will
SelectIncreaseDecreaseCorrect 3 of Item 2
by $
3.What would the effect be on firm profits if an additional 10,000 blenders could be produced (using existing capacity) and sold for $21.50 on a special-order basis? Existing sales would be unaffected by the special order.
The profits will
SelectIncreaseDecreaseCorrect 5 of Item 2
by $
Aug 29, 2021 | Uncategorized
Select the assumption, principle, or constraint that most appropriately justifies these procedures and practices. (Do not use qualitative characteristics.)
(a) Fair value changes are not recognized in the accounting records.
(b) Lower of cost or market is used to value inventories.
(c) Financial information is presented so that investors will not be misled.
(d) Intangible assets are capitalized and amortized over periods benefited.
(e) Repair tools are expensed when purchased.
(f) Agricultural companies use fair value for purposes of valuing crops.
(g) Each enterprise is kept as a unit distinct from its owner or owners.
(h) All significant post-balance sheet events are reported.
(i) Revenue is recorded at point of sale.
(j) All important aspects of bond liabilities are presented in financial statements.
(k) Rationale for (example of) accrual accounting.
(l) The use of consolidated statements is justified.
(m) Reporting must be done at defined time intervals.
(n) An allowance for doubtful accounts is established.
(o) All payments out of petty cash are charged to Miscellaneous Expense. (Do not use conservatism.)
(p) Goodwill is recorded only at time of purchase of substantially another company.
(q) No profits are anticipated and all possible losses are recognized.
(r) A company charges its sales commission costs to expense.
Aug 29, 2021 | Uncategorized
In this assignment, you will use the Internet and other sources to gather and interpret information related to service and manufacturing organizations.
Select either a service or a manufacturing organization of interest to you. Research the organization using the Argosy University online library and the Internet. Based on your research, do the following:
- Identify and classify the types of expenses associated with the operation of the selected organization.
- Review the income statement and balance sheet of the selected organization. What is your overall initial impression of the company based on the financial data you reviewed?
Write a 2- to 3-page report detailing your findings in MS Word format. Apply current APA standards for writing style to your work.
| Assignment 4 Grading Criteria |
Maximum Points |
| Identified and classified types of expenses in either a service or a manufacturing organization. |
20 |
| Reviewed the income statements and balance sheets of the chosen organization and gave an overall impression based on the financial data reviewed. |
20 |
| Applied current APA standards for editorial style, expression of ideas, and format of text, citations, and references. |
10 |
| Total: |
50 |
Aug 29, 2021 | Uncategorized
In this module, you were introduced to the income statement and profitability ratios. In this assignment, you will use this information to create an income statement and then analyze it for profitability. Selected accounts for Jackson, Inc. are listed below along with their balances before closing the year of 12/31/12. Jackson, Inc. is a firm that manufactures wireless mouse systems for laptops. Use this information to complete the required elements below.
| Interest expense |
$ 2,000 |
| Sales revenue |
297,000 |
| Selling expenses |
38,200 |
|
|
| Administrative expenses |
16,700 |
| Cost of goods sold |
162,300 |
| Dividends1 |
12,200 |
|
|
| Gain on sale of equipment |
3,600 |
| Loss from fire |
7,500 |
| Retained Earnings (1/1/12 balance) |
335,000 |
| Tax expense |
22,800 |
1Dividends were declared and paid to Jackson, Inc. stockholders
Required:
- On a spreadsheet, prepare a multistep Income Statement for the year ending 12/31/12 with proper heading. See link below for sample income statement. Near the bottom of your income statement should have a subtotal for Income before taxes and then subtract taxes to compute Net income. Net income should have a double underline.
- On the same spreadsheet, prepare a Statement of Retained Earnings for the year ending 12/31/12 with proper heading. See link below for sample statement of retained earnings. There are no adjustments to retained earnings and ending retained earnings should have a double underline.
- On the same spreadsheet, compute the gross profit margin, operating income margin, and net profit margin for 2012, showing the numerator and denominator for all ratios. Take ratios out to the nearest hundredth of a percentage (e.g., 33.33%).
- On the same spreadsheet, write a paragraph analyzing each of the profitability ratios for Jackson, Inc. given the following information from previous years and competitors.
|
Gross profit margin |
Operating income margin |
Net profit margin |
| Jackson, 2011 |
47.22% |
26.52% |
17.75% |
| Jackson, 2010 |
48.87% |
25.43% |
17.03% |
| Competitor, 2012 |
43.22% |
31.20% |
21.14% |
Aug 29, 2021 | Uncategorized
Selected amounts at December 31, 2003 from the Hay and Barnabas Company’s information system appear as follows:
Cash Paid employees for salaries and wages$ 300,000
Cash collected from sales customers $1,850,000
Bonds payable $ 500,000
Cash $ 150,000
Common Stock $ 60,000
Equipment $ 840,000
Prepaid Insurance $ 30,000
Inventory $ 250,000
Prepaid rent $ 140,000
Retained earnings $ 130,000
Salaries and wages expense $ 328,000
Sales $2,000,000
1. There are five adjustments that need to be made before the financial statements can be prepared at year end. Show the effect of each of the following (a-e) on the accounting equation.
a. The equipment (purchased on January 1, 2003) has a useful life of 12 years with no salvage value (straight-line method is used).
b. Interest accrued on the bonds payable is $20,000 as of December 31, 2003.
c. Unexpired insurance at December 31, 2003 is $7,000.
d. The rent payment of $140,000 covered the four months from December 1, 2003 through March 31, 2004.
e. Salaries and wages of $28,000 were earned but unpaid at December 31, 2003.
2. Indicate the proper balance sheet classification of each of the preceding 12 financial statement items on the December 31, 2003 balance sheet. If the title would not appear on the balance sheet, indicate the financial statement on which it would be found.
a. Current assets
b. Property, plant and equipment
c. Current liabilities
d. Long-term liabilities
e. Stockholders’ equity
Aug 29, 2021 | Uncategorized
Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows:
a. Issued 12, 500 shares of $25 par common stock at $32, receiving cash.
b. issued 2,000 shares of $100 par preferred 5% stock at $105, receiving cash.
c. Issued $400,000 of 10-year, 6% bonds at 105, with interest payable semiannually.
d. Declared a quarterly dividend of $0.45 per share on common stock and $1.25 per share on preferred stock. On the data of record, 85,000 shares of common stock were outstanding, no treasury share were held, and 17,000 shares of preferred stock were outstanding.
e. Paid the cash dividends declared in (d).
f. Purchased 5,500 shares of kress Corp. at $22 per share, plus a $275 brokerage commission. The investment is classified as an available-for-sale investment.
g. Purchased 6,500 shares of treasury common stock at $35 per share.
h. Purchased 36,000 shares of Lifecare Co. stock directly from the founders for $18 per share. Lifecare has 112,500 shares issued and outstanding. Everyday products Inc. treated the investment as an equity method investment.
i. Declared a 2% stock dividend on common stock and a $1.25 quarterly cash dividend per share on preferred stock. On the date of declaration, the market value of the common stock was $40 per share. On the date of record, 85,000 shares of common stock had been issued, 6,500 shares of treasury common stock were held, and 17,000 shares of preferred
stock had been issued.
j. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders.
k. Received $24,500 dividend from Lifecare Co, investment in (h)
l. Purchased $62,000 of Nordic Wear Inc. 10-year, 6% bonds, directly from the issuing company at par value, plus accrued interest of $550. The bonds are classified as a held-to-maturity long-term investment.
m. sold, at $42 per share, 2,600 shares of treasury common stock purchased in (g).
n. Received a dividend of $0.65 per share from the Kress Corp. investment in (f).
o. Sold 500 shares of Kress corp. at $26.50, including commission.
p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization was determined using the straight-line method.
q. Accrued interest for three months on the Nordic Wear Inc. bonds purchased in (1).
r. Lifecare Co. recorded total earnings of $205,000. Everyday products recorded equity earnings for its share of Lifecare co. net income.
s. The fair value for Kress Corp. stock was $18.50 per share on December 31, 2012. The investment is adjusted to fair value using a valuation allowance account. Assume Valuation Allowance for Available-for-sale Investments had a beginning balance of zero.
Instructions
1. Journalize the selected transactions.
2. After all of the transactions for the year ended December 31, 2012, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data on the following page were taken from the records of Everyday Products Inc.
a. Prepare a multiple-step income statement for the year ended December 31, 2012, concluding with earnings per share. In computing earnings per share, assume that the average number of common shares outstanding was 84,000 and preferred dividends were $85,000. (Round earnings per share to the nearest cent.)
b. Prepare a retained earnings statement for the year ended December 31, 2012.
c. Prepare a balance sheet in report form as of December 31, 2012.
Aug 29, 2021 | Uncategorized
Selected transactions completed by Gampfer Company during its first fiscal year ending December 31 were as follows:
Jan. 2. Issued a check to establish a petty cash fund of $3,200.
Mar. 14. Replenished the petty cash fund, based on the following summary of petty cash receipts: office supplies, $1,200; miscellaneous selling expense, $410; miscellaneous administrative expense, $620.
Apr. 21. Purchased $22,400 of merchandise on account, terms 1/10, n/30. The perpetual inventory system is used to account for inventory.
May 20. Paid the invoice of April 21 after the discount period had passed.
23. Received cash from daily cash sales for $15,120. The amount indicated by the cash register was $15,152.
June 15. Received a 60-day, 10% note for $127,500 on the Cady account.
Aug. 14. Received amount owed on June 15 note, plus interest at the maturity date.
18. Received $5,440 on the Yoder account and wrote off the remainder owed on a $6,400 accounts receivable balance.
Sept. 9. Reinstated the Yoder account written off on August 18 and received $960 cash in full payment.
15. Purchased land by issuing a $480,000, 90-day note to Ace Development Co., which discounted it at 8%.
Oct. 17. Sold office equipment in exchange for $96,000 cash plus receipt of a $64,000, 90-day, 6% note. The equipment had a cost of $224,000 and accumulated depreciation of $44,800 as of October 17.
Nov. 30. Journalized the monthly payroll for November, based on the following data:
30. Journalized the employer s payroll taxes on the payroll.
Dec. 14. Journalized the payment of the September 15 note at maturity.
31. The pension cost for the year was $136,000, of which $99,840 was paid to the pension plan trustee.
Instructions
1. Journalize the selected transactions.
2. Based on the following data, prepare a bank reconciliation for December of the current year:
a. Balance according to the bank statement at December 31, $202,240.
b. Balance according to the ledger at December 31, $175,440.
c. Checks outstanding at December 31, $48,960.
d. Deposit in transit, not recorded by bank, $21,120.
e. Bank debit memo for service charges, $540.
f. A check for $11,520 in payment of an invoice was incorrectly recorded in the accounts as $11,020.
3. Based on the bank reconciliation prepared in (2), journalize the entry or entries to be made by Gampfer Company.
4. Based on the following selected data, journalize the adjusting entries as of December 31 of the current year:
a. Estimated uncollectible accounts at December 31, $11,520, based on an aging of accounts receivable. The balance of Allowance for Doubtful Accounts at December 31 was $1,200 (debit).
b. The physical inventory on December 31 indicated an inventory shrinkage of $2,360.
c. Prepaid insurance expired during the year, $16,300.
d. Office supplies used during the year, $2,800.
e. Depreciation is computed as follows:
f. A patent costing $36,000 when acquired on January 2 has a remaining legal life of eight years and is expected to have value for six years.
g. The cost of mineral rights was $390,000. Of the estimated deposit of 650,000 tons of ore, 38,400 tons were mined and sold during the year.
h. Vacation pay expense for December, $7,500.
i. A product warranty was granted beginning December 1 and covering a one-year period. The estimated cost is 3% of sales, which totaled $1,350,000 in December.
j. Interest was accrued on the note receivable received on October 17.
5. Based on the following information and the post-closing trial balance shown below, prepare a balance sheet in report form at December 31 of the current year.
The merchandise inventory is stated at cost by the LIFO method.
The product warranty payable is a current liability.
Vacation pay payable:
Current liability . $5,100
Long-term liability .. 2,400
The unfunded pension liability is a long-term liability.
Notes payable:
Current liability . $ 50,000
Long-term liability .450,000
Aug 29, 2021 | Uncategorized
The following investment opportunities are available to an investment center manager:
Project A: initial investment of $800,000 with Annual Earnings of $90,000
Project B: initial investment of $100,000 with Annual Earnings of $20,000
Project C: initial investment of $300,000 with Annual Earnings of $25,000
Project A: initial investment of $400,000 with Annual Earnings of $60,000
a) If the investment manager is currently making a return on investment of 16 percent, which project(s) would the manager want to pursue?
b) If the cost of capital is 10 percent and the annual earnings approximate cash flows excluding finance charges, which project(s) should be chosen?
c) Suppose only one project can be chosen and the annual earnings approximate cash flows excluding finance charges, which project should be chosen
Aug 29, 2021 | Uncategorized
Selig Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the world. As a result, a European sports retailing consortium entered in to an agreement with Selig s Roundball Division to purchase basketballs and other accessories on an increasing basis over the next 5 years.
To be able to meet the quantity commitments of this agreement, Selig had to obtain additional manufacturing capacity. A real estate firm located an available factory in close proximity to Selig s Roundball manufacturing facility, and Selig agreed to purchase the factory and used machinery from Starks Athletic Equipment Company on October 1, 2005. Renovations were necessary to convert the factory for Selig s manufacturing use.
The terms of the agreement required Selig to pay $50,000 when renovations started on January 1, 2006, with the balance to be paid as renovations were completed. The overall purchase price for the factory and machinery was $ 400,000. The building renovations were contracted to Malone Construction at $100,000. The Payments made, as renovations progressed during 2006, are shown below. The factory was placed in service on January 1, 2007.
1/1 4/1 10/1 12/31 Starks 50,000 100,000 100,000 150,000 Malone 30,000 30,000 40,000
On January 1, 2006, Selig secured a $500,000 line-of-credit with a 12% interest rate to finance the purchase cost of the factory and machinery, and the renovation costs. Selig drew down on the line-of-credit to meet the payment schedule shown above; this was Selig s only outstanding loan during 2006.
Rob Stewart, Selig s Controller, will capitalize the maximum allowable interest costs for this project. Selig s policy regarding purchases of this nature is to use the appraisal value of the land for book purposes and prorate the balance of this purchase price over the remaining items. The building had originally cost Starks $300,000 and had a net book value of $ 50,000, while the machinery originally cost $125,000 and had a net book value $40,000 on the date of sale. The land was recorded on Starks books at $40,000. An appraisal, conducted by independent appraisers at the time of acquisition, valued the land at $280,000, the building at $105,000, and machinery at $45,000.
Linda Safford, Chief Engineer, estimated that the renovated plant would be used for 15 years, with an estimated salvage value of $30,000. Safford estimated that the productive machinery would have a remaining useful life of 5 years and a salvage value of $3,000. Selig s depreciation policy specifies the 200% declining balance method for machinery and 150% declining-balance method for the plant. One half years depreciation is taken in the year the plant is placed in service and one half year is allowed when the property is disposed of or retired. Selig uses 360-day year for calculating interest costs.
Instructions;
(a) Determine the amounts to be recorded on the books of Selig Sporting Goods Inc. as of December 31, 2006, for each of the following properties acquired from Starks Athletic Equipment Company. (1) Land. (2) Buildings. (3) Machinery. (b) Calculate Selig Sporting Goods Inc. s 2007 depreciation expense, for book purposes, for each of the properties acquired from Starks Athletic Equipment Company.
Aug 29, 2021 | Uncategorized
Selig Sporting Goods Inc. has been experiencing growth in the demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the world. As a result, a European sports retailing consortium entered in to an agreement with Selig s Roundball Division to purchase basketballs and other accessories on an increasing basis over the next 5 years.
To be able to meet the quantity commitments of this agreement, Selig had to obtain additional manufacturing capacity. A real estate firm located an available factory in close proximity to Selig s Roundball manufacturing facility, and Selig agreed to purchase the factory and used machinery from Starks Athletic Equipment Company on October 1, 2005. Renovations were necessary to convert the factory for Selig s manufacturing use.
The terms of the agreement required Selig to pay $50,000 when renovations started on January 1, 2006, with the balance to be paid as renovations were completed. The overall purchase price for the factory and machinery was $ 400,000. The building renovations were contracted to Malone Construction at $100,000. The Payments made, as renovations progressed during 2006, are shown below. The factory was placed in service on January 1, 2007.
1/1 4/1 10/1 12/31 Starks 50,000 100,000 100,000 150,000 Malone 30,000 30,000 40,000
On January 1, 2006, Selig secured a $500,000 line-of-credit with a 12% interest rate to finance the purchase cost of the factory and machinery, and the renovation costs. Selig drew down on the line-of-credit to meet the payment schedule shown above; this was Selig s only outstanding loan during 2006.
Rob Stewart, Selig s Controller, will capitalize the maximum allowable interest costs for this project. Selig s policy regarding purchases of this nature is to use the appraisal value of the land for book purposes and prorate the balance of this purchase price over the remaining items. The building had originally cost Starks $300,000 and had a net book value of $ 50,000, while the machinery originally cost $125,000 and had a net book value $40,000 on the date of sale. The land was recorded on Starks books at $40,000. An appraisal, conducted by independent appraisers at the time of acquisition, valued the land at $280,000, the building at $105,000, and machinery at $45,000.
Linda Safford, Chief Engineer, estimated that the renovated plant would be used for 15 years, with an estimated salvage value of $30,000. Safford estimated that the productive machinery would have a remaining useful life of 5 years and a salvage value of $3,000. Selig s depreciation policy specifies the 200% declining balance method for machinery and 150% declining-balance method for the plant. One half years depreciation is taken in the year the plant is placed in service and one half year is allowed when the property is disposed of or retired. Selig uses 360-day year for calculating interest costs.
Instructions;
(a) Determine the amounts to be recorded on the books of Selig Sporting Goods Inc. as of December 31, 2006, for each of the following properties acquired from Starks Athletic Equipment Company. (1) Land. (2) Buildings. (3) Machinery. (b) Calculate Selig Sporting Goods Inc. s 2007 depreciation expense, for book purposes, for each of the properties acquired from Starks Athletic Equipment Company.
Aug 29, 2021 | Uncategorized
You will prepare three years of financial statements for the XXX Company, to include:
- Two-Statement Format of Comprehensive Income; See Illustration 4-19 in the textbook
- Balance Sheet
- Statement of Owners’ Equity
You will do this twice, each time using a different set of accounting rules. Recall that items of Other Comprehensive Income are reported net of taxes, in the same manner as Extraordinary Items are reported; See Illustration 4-17 in the textbook for how Extraordinary Items are reported. Do not call the company XXX, but instead give it your name (e.g. Lisa Smith Company, Dalai Lama Company, Jorge Martinez Company).
Problem Data: Deferred Revenue Recognition on a Rental Agreement
On September 30 20×1, XXX Company rented to a tenant a small office space in its Dilapitated Visions Complex.
The tenant is not obligated to continue the lease beyond Summer 20×2, but pays $25,000 cash upfront towards the $1,000 monthly rent (25 months’ rent received in advance).
This is not a capital lease.
Excluding income taxes and the income effects of this rental, XXX Company has (GAAP and Tax) income of $111,111 in 20×1, $222,222 in 20×2, and $333,333 in 20×3.
The IRS requires rent to be included in taxable income in the year received
The income tax rate is a flat 10% for all relevant years.
At January 1, 20×1, the balance sheet showed Common Stock of $444,444, Retained Earnings of $555,555, and zero Accumulated OCI.
The only change to Common Stock during these three years was an issuance of $88,888 of stock at par value in 20×2.
Report Using Current US-GAAP
Under current US-GAAP, the cash receipt is recorded as a liability (e.g. Unearned Revenue) and amortized to income at a rate of $1,000 per month. Prepare the statements, clearly labeling them as current GAAP.
Reporting Using “FASB Fantasy GAAP”
Suppose the FASB changed the appropriate accounting for the prepayment. The new rule says to recognize the cash receipt immediately in comprehensive income, and include it in Net Income only as earned (again, at $1,000 per month). Prepare the statements, clearly labeling them as FASB Fantasy GAAP.
Due Date
Aug 29, 2021 | Uncategorized
Complete Section 1 of the Service Request SR-rm-022 paper. Using the Service Request SR-rm-022, analyze the HR system.
Prepare a 4- to 6-page paper that accomplishes the following:
What key stakeholders in Riordan Manufacturing would you gather requirements from?
Describe the information-gathering techniques and systems analysis tools you would propose for the project.
Identify the key factors that help ensure the information required for the project is gathered successfully.
Explain what project scope is and why it is important. Describe the areas of project feasibility that are examined in the analysis phase of the SCLC.
Cite and discuss 2 to 3 references, in addition to the required readings, that are relevant to the assignment. Include citations and references formatted consistent with APA guidelines.
Complete Section 2 of the Service Request SR-rm-022 paper. This week s assignment incorporates the transition from analysis to design. Consider revising Section 1 based on faculty feedback.
Prepare a 4- to 6-page paper that includes the following:
Describe the application architecture and process design. Include a high-level description of the security controls you recommend for the design of this HR system.
Apply the tools of systems analysis to describe the information system s architecture in terms of data, processes, interfaces, and network. You can use a Microsoft Visio diagram to draw examples of flow charts, data flow diagrams, and any other design tools.
Cite and discuss 2 to 3 references, in addition to the required readings, that are relevant to the assignment. Include citations and references formatted consistent with APA guidelines.
Submit Section 2 of the paper.
Complete Section 3 of the Service Request SR-rm-022 paper. This section incorporates the transition from design to implementation. Consider revising Sections 1 and 2 based on faculty feedback.
Prepare a 4- to 6-page paper that accomplishes the following:
Describe the implementation stage for this project.
Include a discussion of the six major activities for the implementation stage as described in the text:
o Coding
o Testing
o Installation
o Documentation
o Training
o Support
Describe in the discussion of these six activities how each activity would be specifically planned for the individual project situation.
Discuss the benefits of using defined and repeatable processes for accomplishing these activities for the implementation stage.
Cite and discuss 2 to 3 references, in addition to the required readings, that are relevant to the assignment. Include citations and references formatted consistent with APA Guidelines.
Aug 29, 2021 | Uncategorized
Problem Set 3
1. Louise McIntyre s monthly gross income is $2,000. Her employer withholds $400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for VISA, MasterCard, and Discover card are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise s debt payments-to-income ratio? Is Louise living within her means?
2. Calculating Debt Payments to – Income Ratio. Suppose that your monthly net income is $2,400. Your monthly debt payments include your student loan payment, a gas credit card and they total $360. What is your debt payments to income ratio?
3. Dave borrowed $500 for one year and paid $50 in interest. The bank charged him a $5 service charge.
A- What is the finance charge on this loan?
B- Dave borrowed $500 on January 1, 2006, and paid it all back at once on December 31, 2006. What was the APR?
C- If Dave paid the $500 in 12 equal monthly payments, what is the APR?
4. Calculating Simple Interest on a Loan. Damon convinced his aunt to lend him $2,000 to purchase a plasma digital TV. She has agreed to charge only 6 % simple interest, and he has agreed to repay the loan at the end of one year. How much interest will he pay for the year?
5. After visiting several automobile dealerships, Richard Welch selects the car he wants. He likes its $10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so he needs an $8,000 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $8,000 for a period of four years at an add-on interest rate of 11 percent.
Questions
a. What is the total interest on Richard s loan?
b. What is the total cost of the car?
c. What is the monthly payment?
d. What is the annual percentage rate (APR)?
Aug 29, 2021 | Uncategorized
On January 5, 2012, Phelps Corporation received a charter granting the right to issue 5,400 shares of $103 par value, 6% cumulative and nonparticipating preferred stock, and 52,700 shares of $10 par value common stock. It then completed these transactions.
|
Jan. 11
|
|
Issued 21,720 shares of common stock at $18 per share.
|
|
Feb. 1
|
|
Issued to Sanchez Corp. 4,500 shares of preferred stock for the following assets: equipment with a fair value of $59,390; a factory building with a fair value of $172,900; and land with an appraised value of $326,300.
|
|
July 29
|
|
Purchased 1,850 shares of common stock at $19 per share. (Use cost method.)
|
|
Aug. 10
|
|
Sold the 1,850 treasury shares at $14 per share.
|
|
Dec. 31
|
|
Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend.
|
|
Dec. 31
|
|
Closed the Income Summary account. There was a $183,440 net income.
|
(a)
Record the journal entries for the transactions listed above.
(b)
Prepare the stockholders equity section of Phelps Corporation s balance sheet as of December 31, 2012.
Aug 29, 2021 | Uncategorized
1. The following balance sheet information (in $ millions) comes
from the Annual Report to Shareholders of Marriott
International Inc. for the 2008 fiscal year. (Certain amounts have been replaced with question marks to test your understanding of balance sheets.) In addition, you re provided with the following information from an analysis of Marriott s financial position at the same date:
Current ratio = 1.3296486
Acid-test ratio = 0.407422
Debt-to-equity ratio = 5.4514493
Compute the missing amounts (rounded to the nearest $ in millions) in the Marriott balance sheet.
Assets
Current assets
Cash and equivalents $134
Accounts and notes receivable ?
Inventory ?
Other 355
Total current assets ?
Property and equipment, net $1,443)
Intangible assets, net ?)
Investments 346)
Notes and other receivables, net 988)
Other 1,173)
Total non-current asssets ?
Total assets ?
Liabilities and Shareholders Equity
Current liabilities
Accounts payable $704
Accrued payroll and benefits 633
Other payables and accruals 1,196
Total current liabilities 2,533
Long-term debt ?)
Other long-term liabilities 2,015)
Total long-term liabilities ?
Total liabilities ?
Shareholders equity
Class A common stock 5)
Additional paid-in capital 3,590)
Retained earnings 3,565)
Treasury stock and other (5,780)
Total shareholders equity 1,380
Total liabilities and shareholders equity $8,903
2. The following information is provided in the 2011 annual report to shareholders of
paris-perfume.com:
December 31, 2011 December 31, 2010
Accounts receivable $100 million
Inventory $70 million $30 million
Other assets $170 million
Total assets $300 million
Total liabilities $100 million
Total stockholders equity $200 million
For the year ended Dec. 31, 2011
Net sales
Cost of goods sold
Net income $40 million
Return on assets 10%
Receivables turnover 8.0
Inventory turnover 12.0
Asset turnover 2.5
Return on stockholders equity 20%
Profit margin on sales 4%
Required:Compute the missing amount in the paris-perfume.com financial statement
information, indicated by in the table above.
3. Shown below is activity for one of the products of Denver Office Equipment:
January 1 balance, 500 units @ $55 $27,500
Purchases
January 10 500 units @ $60
January 20 1,000 units @ $63
Sales:
January 12 800 units
January 28 750 units
a. Compute the ending inventory and cost of goods sold assuming Denver uses FIFO.
b. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO
and a perpetual inventory system.
c. Compute the ending inventory and cost of goods sold assuming Denver uses
average cost and a periodic inventory system.
d. Compute the ending inventory and cost of goods sold assuming Denver uses
average cost and a perpetual inventory system.
e. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO
and a periodic inventory system.
Part B: Ten questions worth 4 points each. Show all work.
1. The following information ($ in millions) comes from a recent annual report of
Amazon.com, Inc.:
Net sales $10,711)
Total assets 4,363)
End of year balance in cash 1,022)
Total stockholders equity 431)
Gross profit (Sales Cost of Sales) 2,456)
Net increase in cash for the year 9)
Operating expenses 2,067)
Net operating cash flow 702)
Other income (expense), net (12)
a. Compute Amazon s balance in cash at the beginning of the year.
b. Compute Amazon s total liabilities at the end of the year.
c. Compute cost of goods sold for the year.
d. Compute the income before income tax for Amazon.
2. The current asset section of Seifert & Seifert, CPA s balance sheet consists of cash,
accounts receivable, investments, and prepaid expenses. The 2011 balance sheet
reported the following: cash, $110,000; investments, $22,000; prepaid expenses,
$18,000; noncurrent assets, $422,000; and shareholders equity, $350,000. The current
ratio at the end of the year was 1.6 and the debt to equity ratio was .8.
Required:Determine the following 2011 amounts and ratios:
a. Current liabilities.
b. Long-term liabilities.
c. Accounts receivable.
d. The acid-test ratio.
3. Canton Corporation reported the following items in its adjusted trial balance for the
year ended December 31, 2011:
Income from continuing operations before income taxes $110,000)
Extraordinary gain on property condemnsation 28,000)
Extraordinary loss on natural disaster (50,000)
Canton is subject to a 30% tax rate.
Required:Prepare the December 31, 2011, income statement for Canton Corporation,
starting with income from continuing operations before income taxes.
4. In 2011, KP Building Inc. began work on a four-year construction project (called Cincy
One ). The contract price is $300 million. KP uses the percentage-of-completion
method of accounting. At the end of 2011, the following financial statement information
indicates the results to date for Cincy One:
INCOME STATEMENT
Gross Profit (before-taxes) recognized in 2011 $22 million
BALANCE SHEET
Accounts Receivable from construction billings $10 million
Construction in progress $66 million
Less: Billings on construction ($75 million)
Net billings in excess of construction in progress $9 million
Required:Compute the following, placing your answer in the spaces provided and
showing supporting computations:
Items to compute:
Cash collected by KP on Cincy One during 2011
Actual costs incurred by KP on Cincy One during 2011
At 12/31/2011, the estimated remaining costs to complete Cincy One
The percentage of Cincy One that was completed during 2011
5. On June 30, 2011, Gunderson Electronics issued 8% stated rate bonds with a face
amount of $300 million. The bonds mature on June 30, 2031 (20 years). The market
rate of interest for similar bond issues was 10% (5% semiannual rate). Interest is paid
semiannually (4%) on June 30 and December 31, beginning on December 31, 2011.
Required:
a. Determine the price of the bonds on June 30, 2011.
b. Calculate the interest expense Gunderson reports in 2011 for these bonds.
6. During Burns Company s first year of operations, credit sales totaled $140,000 and collections
on credit sales totaled $105,000. Burns estimates that bad debt losses will be
1.5% of credit sales. By year-end, Burns had written off $300 of specific accounts as
uncollectible.
Required:
a. Prepare all appropriate journal entries relative to uncollectible accounts and bad
debt expense.
b. Show the year-end balance sheet presentation for accounts receivable.
7. Appleton Inc. adopted dollar-value LIFO on January 1, 2011, when the inventory value
was $1,200,000. The December 31, 2011, ending inventory at year-end costs was
$1,430,000 and the cost index for the year is 1.1.
Required:Compute the dollar-value LIFO inventory valuation for the December 31,
2011, inventory.
8. DK Super Stores Inc. uses the average cost retail method to estimate its ending
inventory. Information at June 30, 2011, is as follows:
Cost Retail
Beginning inventory $105,000
Net purchases 375,000
Net sales 380,000
Ending inventory 64,000
Required:Compute the cost-to-retail percentage used by DK.
9. Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and
development costs totaled $8.2 million. Extraction activities began on July 1, 2011.
After the copper is extracted in approximately six years, Schefter is obligated to
restore the land to its original condition, including constructing a park. The company s
controller has provided the following three cash flow possibilities for the restoration
costs:
Cash Flow Probability
1. $700,000 30%
2. $ 800,000 25%
3. $ 900,000 45%
The company s credit-adjusted, risk-free rate of interest is 5%, and its fiscal year ends
on December 31.
Required:
a. What is the initial cost of the copper mine? (Round computations to nearest whole
dollar.)
b. How much accretion expense will Schefter report in its 2011 income statement?
c. What is the carrying value (book value) of the asset retirement obligation that
Schefter will report in its 2011 balance sheet?
d. Assume that actual restoration costs incurred in 2017 totaled $860,000. What
amount of gain or loss will Schefter recognize on retirement of the liability?
10. On March 30, 2011, Calvin Exploration purchased a drilling machine for $840,000. The
estimated useful life of the machine is 10 years, and no residual value is anticipated.
An important component of the machine is the drill housing component that will need
to be replaced in five years. The $200,000 cost of the drill housing component is
included in the $840,000 cost of the machine. Calvin uses the straight-line depreciation
method for all machinery. The company s fiscal year ends on December 31.
Required:
a. Calculate depreciation on the drilling machine for 2011 and 2012 applying the
typical U.S. GAAP treatment.
b. Repeat requirement 1 applying IFRS.
Aug 29, 2021 | Uncategorized
Sherper s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Sherper s purchases of Xpert snowboards during September is shown below. During the same month, 259 Xpert snowboards were sold. Sherper s uses a periodic inventory system.
|
Date
|
|
Explanation
|
|
Units
|
|
Unit Cost
|
|
Total Cost
|
|
Sept. 1
|
|
Inventory
|
|
49
|
|
$97
|
|
$4,753.00
|
|
Sept. 12
|
|
Purchases
|
|
96
|
|
103
|
|
9,888
|
|
Sept. 19
|
|
Purchases
|
|
43
|
|
109
|
|
4,687
|
|
Sept. 26
|
|
Purchases
|
|
94
|
|
112
|
|
10,528
|
|
|
|
Totals
|
|
282
|
|
|
|
$29,856
|
(a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.
|
|
|
FIFO
|
|
LIFO
|
|
The ending inventory at September 30
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
|
(b) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold.
|
|
|
FIFO
|
|
LIFO
|
|
The sum of ending inventory and cost of goods sold
|
|
|
|
|
Aug 29, 2021 | Uncategorized
Shirts Unlimited operates a chain of shirt stores that carry many styles of shirts that are all sold at the same price. To encourage sales personnel to be aggressive in their sales efforts, the company pays a substantial sales commission on each shirt sold. Sales personnel also receive a small basic salary. The following worksheet contains cost and revenue data for Store 36. These data are typical of the company’s many outlets: Per Shirt Selling price $ 40.00 Variable expenses: Invoice cost $ 18.00 Sales commission 7.00 Total variable expenses $ 25.00 Annual Fixed expenses: Rent $ 80,000 Advertising 150,000 Salaries 70,000 Total fixed expenses $ 300,000 The company has asked you, as a member of its planning group, to assist in some basic analysis of its stores and company policies.
Required:
1. Calculate the annual break-even point in dollar sales and in unit sales for Store 36. (Omit the “$” sign in your response.)
3. If 19,000 shirts are sold in a year, what would be Store 36’s net operating income or loss? (Input the amount as a positive value. Omit the “$” sign in your response.) $
4. The company is considering paying the store manager of Store 36 an incentive commission of $3 per shirt (in addition to the salespersons’ commissions). If this change is made, what will be the new break-even point in dollar sales and in unit sales? (Omit the “$” sign in your response.)
5. Refer to the original data. As an alternative to (4) above, the company is considering paying the store manager a $3 commission on each shirt sold in excess of the break-even point. If this change is made, what will be the store s net operating income or loss if 23,500 shirts are sold in a year? (Input the amount as a positive value. Omit the “$” sign in your response.) $
6. Refer to the original data. The company is considering eliminating sales commissions entirely in its stores and increasing fixed salaries by $107,000 annually. If this change is made, what will be the new break-even point in dollar sales and in unit sales in Store 36? (Omit the “$” sign in your response.)
Aug 29, 2021 | Uncategorized
SHOW ALL WORK
Mary Kay Cosmetics
Selected data and additional information from the companys records are presented below:
Balance Sheet Data 20X1 20XX
Cash $235,000 246,000
Accounts receivable $120,000 $150,000
Inventories 56,000 50,000
Accounts payable 38,000 70,000
Salaries payable 10,000 5,000
Equipment 110,000 70,000
Accumulated depreciation 28,000 32,000
Bonds payable 100,000 200,000
Common stock 300,000 200,000
Retained earnings 76,000 40,000
Income Statement Data 20X1
Net sales $920,000
Cost of goods sold 700,000
Operating expenses (excluding depreciation expense) 160,000
Net income (Includes depreciation expense and gain) 56,000
Gain on sale of equipment 4,000
Additional information:
Equipment with a cost of $30,000 and a book value of $18,000 was sold for $22,000 during 20X1.
Common stock was issued to retire bonds payable during 20X1.
The only items affecting retained earnings in 20X1 were net income and dividends declared and paid.
1. Prepare the companys statement of cash flows for the year ended December 31, 20X1. Use the indirect method of determining net cash flows from operating activities.
Aug 29, 2021 | Uncategorized
Farina Bay s computer system generated the following trial balance on December 31, 2013. The company s manager knows something is wrong with the trial balance because it does not show any balance for Goods in Process Inventory but does show balances for the Factory Payroll and Factory Overhead accounts.
|
|
Debit |
|
|
Credit |
|
| Cash |
$ |
45,000 |
|
|
|
|
| Accounts receivable |
|
39,000 |
|
|
|
|
| Raw materials inventory |
|
24,500 |
|
|
|
|
| Goods in process inventory |
|
0 |
|
|
|
|
| Finished goods inventory |
|
9,000 |
|
|
|
|
| Prepaid rent |
|
3,000 |
|
|
|
|
| Accounts payable |
|
|
|
$ |
11,100 |
|
| Notes payable |
|
|
|
|
14,100 |
|
| Common stock |
|
|
|
|
30,000 |
|
| Retained earnings |
|
|
|
|
93,000 |
|
| Sales |
|
|
|
|
162,300 |
|
| Cost of goods sold |
|
106,000 |
|
|
|
|
| Factory payroll |
|
18,000 |
|
|
|
|
| Factory overhead |
|
28,000 |
|
|
|
|
| Operating expenses |
|
38,000 |
|
|
|
|
|
|
|
|
|
|
|
| Totals |
$ |
310,500 |
|
$ |
310,500 |
|
|
|
|
|
|
|
|
|
|
After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.
|
|
| Materials requisition 21-3010: |
|
$ |
4,300 |
direct materials to Job 402 |
| Materials requisition 21-3011: |
|
$ |
7,600 |
direct materials to Job 404 |
| Materials requisition 21-3012: |
|
$ |
1,700 |
indirect materials |
| Labor time ticket 6052: |
|
$ |
3,000 |
direct labor to Job 402 |
| Labor time ticket 6053: |
|
$ |
12,000 |
direct labor to Job 404 |
| Labor time ticket 6054: |
|
$ |
3,000 |
indirect labor |
|
|
Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.
|
8.value:
1.50 points
| a. |
Direct materials costs to Goods in Process Inventory. |
| b. |
Direct labor costs to Goods in Process Inventory. |
| c. |
Overhead costs to Goods in Process Inventory. |
| d. |
Indirect materials costs to the Factory Overhead account. |
| e. |
Indirect labor costs to the Factory Overhead account. |
| Required: |
| 1. |
Prepare journal entries to assign the above costs.
- Record direct materials costs for Jobs 402 and 404.
- 2.Record direct labor costs for Jobs 402 and 404.
- 3.Record the entry to allocate overheads to Jobs 402 and 404 at 200% of direct labor costs assigned.
- 4.Record entry to assign cost of indirect materials.
- 5.Record entry to assign cost of indirect labor
|
|
|
Aug 29, 2021 | Uncategorized
learning team written assignment grading rubric week 4
Riordan Centralized/Distributed Server Model Comparison Paper
Content/Development
|
Subject Matter
Key elements of assignments covered
500-600 words in length
Compares and contrasts the centralized versus distributed server model as an in-house implementation by describing the technical, operational, and strategic benefits/strengths and risks/weaknesses of each
From each of the business support tool perspectives (ERP, SCM, CRM, etc.), describe the pros and cons of both server models as they pertain specifically to Riordan s needs
Determines and compares the overall viability of each model from distinct business support tool perspectives as they apply to Riordan by discussing how each addresses specifically the operational and strategic issues and concerns cited in the case by Riordan executives to understand keeping IS/IT functions in-house
Content is comprehensive/accurate/persuasive
Displays an understanding of relevant theory
Major points supported by specific details/examples
Research is adequate/timely
Writer has gone beyond textbook for resources
|
3 Points
|
|
Higher-Order Thinking
Writer compares/contrasts/integrates theory/subject matter with work environment/experience
At an appropriate level, the writer analyzes and synthesizes theory/practice to develop new ideas and ways of conceptualizing and performing
|
|
Organization
|
Organization
The introduction provides a sufficient background on the topic and previews major points
Central theme/purpose is immediately clear
Structure is clear, logical, and easy to follow
Subsequent sections develop/support the central theme
Conclusion/recommendations follow logically from the body of the paper
|
.5 Points
|
Style/Mechanics
|
Format
Citations/reference page follow guidelines
Properly cites ideas/info from other sources
Paper is laid out effectively–uses, heading and other reader-friendly tools
Paper is neat/shows attention to detail
Grammar/Punctuation/Spelling
Rules of grammar, usage, punctuation are followed
Spelling is correct
Readability/Style
Sentences are complete, clear, and concise
Sentences are well-constructed with consistently strong, varied structure
Transitions between sentences/paragraphs/sections help maintain the flow of thought
Words used are precise and unambiguous
The tone is appropriate to the audience, content, and assignment
|
.5 Points
|
|
Possible Late Penalty
|
10% / day
|
|
Possible Points Earned
|
4
|
Aug 29, 2021 | Uncategorized
The RNW Company owns and operates an amusement park. The following are selected accounts from the RNW Company s trial balance as of December 31:
Debit Credit
Equipment $1,068,100
Accumulated Depreciation Equipment $333,800
Notes Payables 500,700
Admissions Revenue 2,113,900
Advertising Expense 76,100
Salaries Expense 320,400
Interest Expense 7,800
The following information is also available:
1. The equipment is depreciated using the straight-line method over its estimated life of 16 years. The equipment has an estimated salvage value of $222,500
2. The note payable carries a 10% interest rate. It was given to the First National Bank on October 17 and is due to be repaid in 240 days after that date. (Note: Assume a 365 day year in any computations.)
3. During the Christmas holiday season, RNW Company ran a promotion for park admission tickets valid during the next year. In total, they sold 2,600 tickets at a price of $33 each. The sales amount was credited to Admissions Revenue.
4. Included in the Advertising Expense account balance is a $6,120 prepayment of advertising that will be aired on local radio stations during the first quarter of the next year.
5. As of December 31, there was $26,150 in salaries that had been earned but not recorded.
6. RNW Company ends its accounting year on December 31.
Instructions:
1. Prepare the annual adjusting journal entries necessary as of December 31.
2. Compute the amount of the following account balances that should be shown on the income statement for the year:
a. Interest Expense
b. Admissions Revenue
c. Advertising Expense
d. Salaries Expense
Aug 29, 2021 | Uncategorized
Roche and Young, CPAs, are preparing their service revenue (sales) budget for the coming year (2012). The practice is divided into three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.
Department Quarter 1 Quarter 2 Quarter 3 Quarter 4
Auditing 2,200 1,600 2,000 2,400
Tax 3,000 2,400 2,000 2,500
Consulting 1,500 1,500 1,500 1,500
Average hourly billing rates are: auditing $80, tax $90, and consulting $100.
Complete the service revenue (sales) budget for 2012 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.
ROCHE AND YOUNG, CPA’s
Sales Revenue Budget
For the Year Ending December 31, 2012
Quarter 1
Dept Billable Hours Billable Rate Total Rev.
Auditing $ $
Tax
Consulting
Totals $
Quarter 2
Auditing $ $
Tax
Consulting
Totals$
Quarter 3
Auditing $ $
Tax
Consulting
Totals$
Quarter 4
Auditing $ $
Tax
Consulting
Totals$
Totals
Auditing $ $
Tax
Consulting
Totals$
Aug 29, 2021 | Uncategorized
Rocky Mountain Manufacturing produces a single product. The original budget for November was based on expected production of 16,400 units; actual production for November was 14,596 units. The original budget and actual costs incurred for the manufacturing department follow: Original Budget Actual Costs Direct materials $ 246,000 $ 228,906 Direct labor 180,400 164,640 Variable overhead 116,440 99,297 Fixed overhead 84,300 85,512 Total $ 627,140 $ 578,355
Required: Prepare an appropriate performance report for the manufacturing department. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations and round final answers to nearest whole dollar amount. Omit the “$” sign in your response.) Item Original Budget (16,400 units) Flexed Budget (14,596 units) Actual Cost Variance Direct Materials $ $ $ $ Direct Labor Variable Overhead Fixed Overhead Total $ $ $ $
Aug 29, 2021 | Uncategorized
1) Rowe Pottery designs and makes specialized gift quality pottery. Rowe is considering manufacturing its own clay. Currently, the cost to buy clay is $2.65 per pound. If Rowe were to make the clay, three raw materials would have to be purchased. The raw materials are used in equal quantities (Mat 1 cost $.25/lb, Mat 2 cost $.43/lb and Mat 3 cost $.70/lb) and three pounds of raw materials makes three pounds of clay. The clay would be mixed in a large vat for proper curing and consistency. Three employees ($15/hour labor and benefits) would be needed to monitor each batch of clay which takes 10 hour and yields 500 pounds of clay. Variable overhead would consist of additional maintenance on the required equipment and storage of the unfinished clay and would total $620 per batch of clay. The clay could be produced in the current facility but would result in approximately $90,000 of additional inventory on hand at any given time. Currently, Rowe buys 250,000 pounds of clay each year. What is the return on investment if Rowe decides to make its own clay? Should they make the clay? Explain.
2) Pottery throwers are paid $30 per hour and can throw approximately 6 pieces per hour. Using the costs above for clay, the average pot requires 6 lbs of clay each (use the cost of clay determined above) All pottery must be fired in a kiln to harden. Every firing takes 10 hours of set up and 3 hours of take down ($15/hr) and yeilds 38 pieces of pottery. The kiln in 2011 used 235,000 therms of gas at $.22 per therm and was fired 930 times (which is the projection also for 2012). The kiln cost $150,000 in 2007 and is being depreciated over 10 years with no salvage value using the straight line method. Each piece of pottery is also decorated at a rate of 4 pots per hour with decorators costing $22 per hour. Shipping and handling usually cost $6 per piece. The production manager’s salary is $91,000 per year and selling costs are fixed around $126,000 per year. Rowe receives a special order for 5,000 Christmas pots that will be picked up at the factory cutting shipping and handling costs in half. Also, the decorating needs on these pots will take half as long as usual. The customer is offering $37 per pot (regular price is $58). Should Rowe take the order? Show your computations. Explain your conclusion.
3) Wilson Athletic has developed a new golf ball that consistently flies 20% further than their old balls. With the worldwide market for golf balls at 3 million dozen, Wilson believes their new ball is revolutionary enough to capture 8% of that market in the first year and 16% in the second through fifth year of production. Wilson plans on selling this ball at premium to the price of other balls at $31 per dozen. However, variable costs per dozen are also relatively high due to the specialized nature of the manufacturing-$21. To reach their sales goals, Wilson plans to pay $1.5 million in advertising and $2.2 million in player endorsement contracts each year that Wilson makes the ball. Wilson will also have to add on to its existing factory and add new equipment that will (in total) cost $2.2 million. This facility will require $250,000 in utilities and maintenance per year of manufacturing. This building and equipment will have a five year life and can be sold for $50,000 at the end of five years. Wilson’s tax rate is 40% and discount rate/cost of capital is 12%. What is the NPV and IRR for the new golf ball project? Should Wilson proceed with the project?
Aug 29, 2021 | Uncategorized
RPM Music Center had the following petty cash transactions in March of the current year:
March 5 Wrote a $200 check, cashed it, and gave the proceeds and the petty cashbox to Liz Buck, the petty cashier.
6 Paid $14.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. RPM uses the perpetual system to account for merchandise inventory.
11 Paid $8.75 delivery charges on merchandise sold to a customer, terms FOB destination.
12 Purchased file folders for $12.13 that are immediately used.
14 Reimbursed Will Nelson, the manager, $9.65 for office supplies purchased and used.
18 Purchased printer paper for $22.54 that is immediately used.
27 Paid $47.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
28 Paid postage expenses of $16.
30 Reimbursed Nelson $58.80 for business car mileage.
31 Cash of $11.53 remained in the fund. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures. The fund amount is also increased to $250.
Required
1. Prepare the journal entry to establish the petty cash fund.
2. Prepare a petty cash payments report for March with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenses in each category.
3. Prepare the journal entries for part 2 to both (a) reimburse and (b) increase the fund amount.
Aug 29, 2021 | Uncategorized
Rupert Co. sells fireworks. The company s marketing director developed the following cost of goods sold budget for April, May and June:
|
|
April
|
May
|
June
|
July
|
|
Budgeted COGS
|
$40,000
|
$50,000
|
$80,000
|
$86,000
|
Rupert had a beginning inventory balance of $3,600 on April 1 and a beginning balance in accounts payable of $14,800. The company wants to maintain an ending inventory balance equal to 10 percent of the next period s cost of goods sold. Rupert makes all purchases on account. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the month following purchase.
Required:
1) Prepare an inventory purchases budget for April, May and June.
2) Prepare a schedule of cash payments for inventory for April, May and June.
3) Determine the amount of ending inventory and the accounts payable balance that will appear on the end of quarter pro forma balance sheet.
Aug 29, 2021 | Uncategorized
SafeRide, Inc. produces air bag systems that it sells to North American automobile manufacturers. Although the company has a capacity of 300,000 units per year, it is currently producing at an annual rate of 180,000 units. SafeRide, Inc. has received an order from a German manufacturer to purchase 60,000 units at $9.00 each. Budgeted costs for 180,000 and 240,000 units are as follows:
|
|
180,000 Units
|
240,000 Units
|
|
Manufacturing costs
|
|
|
|
Direct materials
|
$ 450,000
|
$ 600,000
|
|
Direct labor
|
315,000
|
420,000
|
|
Factory overhead
|
1,215,000
|
1,260,000
|
|
Total
|
1,980,000
|
2,280,000
|
|
Selling and administrative
|
765,000
|
780,000
|
|
Total
|
$ 2,745,000
|
$ 3,060,000
|
|
|
|
|
|
Costs per unit
|
|
|
|
Manufacturing
|
$ 11.00
|
$ 9.50
|
|
Selling and administrative
|
4.25
|
3.25
|
|
Total
|
$ 15.25
|
$ 12.75
|
Sales to North American manufacturers are priced at $20 per unit, but the sales manager believes the company should aggressively seek the German business even if it results in a loss of $3.75 per unit. She believes obtaining this order would open up several new markets for the company’s product. The general manager commented that the company cannot tighten its belt to absorb the $225,000 loss ($3.75 60,000) it would incur if the order is accepted.
(a) Calculate the net benefit (cost) of accepting the order from the German business.
(b) Calculate the net benefit (cost) of accepting the order from the German business, assuming the company is operating at full capacity.
Aug 29, 2021 | Uncategorized
| 1.Gypsy Joe’s operates a chain of coffee shops. The company pays rent of $10,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis. The costs of supplies relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost, respectively? (Points : 2) |
Variable cost / fixed cost
Fixed cost / fixed cost
Variable cost / fixed cost
Variable cost / variable cost |
| 2.Tri-State Food Service operates six fast food restaurants in the New England area. The company pays rent of $10,000 per year for each shop. The managers of each shop are paid a salary of $3,200 per month and all other employees are paid on an hourly basis. Relative to the number of hours worked, total compensation cost for a particular shop is which kind of cost? (Points : 2) |
Variable cost
Fixed cost
Mixed cost
None of the above |
| 3.Larry’s Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost: (Points : 2) |
varies inversely with the number of hours the lawn equipment is operated.
increases in direct proportion to the number of hours the lawn equipment is operated.
is not affected by the number of hours the lawn equipment is operated.
Both A or B. |
4.Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold.
For Hico Bottling Company, the salespersons commissions are an example of: (Points : 2) |
a variable cost.
a fixed cost.
a mixed cost.
none of the above. |
| 5.Felix Company produces a product that has a selling price of $12.00 and a variable cost of $9.00 per unit. The company’s fixed costs are $60,000. What is the breakeven point measured in sales dollars? (Points : 2) |
$240,000
$120,000
$80,000
$100,000 |
| 6.Barker Company’s break-even point is 10,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company’s total fixed cost amount? (Points : 2) |
$250,000
$100,000
$150,000
Fixed costs cannot be computed with the information provided
|
| 7.Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company s volume doubles, the company s total cost will: (Points : 2) |
stay the same.
double as well.
increase but will not double.
decrease. |
8.For the last two years, Barton Company had net income as follows:
|
2009 |
2010 |
| Net income |
$80,000 |
$100,000 |
What was the percentage change in income from 2009 to 2010? (Points : 2) |
20% increase
20% decrease
25% decrease
25% increase |
| 9.Ajani Company has variable costs equal to 40% of sales. The company is considering a proposal that will increase sales by $10,000 and total fixed costs by $6,000. By what amount will net income increase? (Points : 2) |
$6,000
$4,000
$2,000
$0 |
| 10.Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company s volume doubles, the cost per unit will: (Points : 2) |
stay the same.
double as well.
increase but will not double.
decrease. |
| 11.Which of the following equations can be used to compute a firm’s magnitude of operating leverage? (Points : 2) |
Net income/sales
Fixed costs/contribution margin
Net income/gross margin
Contribution margin/net income |
| 12.Humboldt Corporation manufactures electronic products, including calculators and printers.
Cost items of the company include:
- Labor on assembling a printer
- Salary of an employee who supervises calculator manufacturing
- Materials used in making a printer
- Company president s salary
- Salary of the manager of the Calculator Division
- Depreciation on corporate headquarters building
- Ink cartridges installed in printer during manufacture
- Depreciation on equipment used in making calculators
- Supplies used in corporate offices
Which of the costs listed above is a direct cost assuming the cost object is an individual printer? (Points : 2) |
Numbers 1 and 3
Numbers 1, 3, and 7
Number 3 only
None of the costs is direct to an individual printer
|
| 13.Hamlin Company expects to incur overhead costs of $100,000 per year and direct production costs (materials and labor) of $125 per unit. The estimated production activity for the upcoming year is 10,000 units. If the company desires to earn a gross profit of $50 per unit, what would be the sales price per unit? (Points : 2) |
$185
$175
$160
$205 |
| 14.Overhead costs: (Points : 2) |
can be traced to cost objects in a cost-effective manner.
cannot be traced to cost objects cost effectively but can be allocated to cost objects.
primarily are variable costs.
are not incurred by most companies. |
| 15.Cost accumulation is used to: (Points : 2) |
identify fixed and variable costs.
identify and estimate opportunity costs.
determine the cost of a particular cost object.
set the selling price for a service. |
16.Parker & Co. expects overhead costs of $400,000 per year and direct production costs of $12 per unit. The estimated production activity for the 2010 accounting period is as follows:
|
1st Quarter |
2nd Quarter |
3rd Quarter |
4th Quarter |
| Units produced |
11,500 |
9,000 |
8,250 |
11,250 |
The predetermined overhead rate based on units produced is (rounded to the nearest penny) is: (Points : 2) |
$0.75 per unit.
$9.00 per unit.
$34.80 per unit.
$10.00 per unit. |
| 17.Which of the following statements is true? (Points : 2) |
Direct costs can easily be traced to a cost object; indirect costs cannot be.
Both direct and indirect costs can easily be traced to a cost object.
Neither direct nor indirect costs are easily traced to a cost object.
Indirect costs can be traced easily to a cost object, but direct costs cannot be.
|
| 18.A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true? (Points : 2) |
The cost of wood is a direct and variable cost.
The cost of wood is a fixed and indirect cost.
The cost of wood is indirect and variable.
The cost of wood is a fixed and direct cost.
|
| 19.Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because: (Points : 2) |
such practice results in a more accurate accumulated cost for the object.
such costs cannot be traced to objects in a cost-effective manner.
generally accepted accounting principles require some costs to be treated as indirect.
all of the above. |
| 20.Humboldt Corporation manufactures electronic products, including calculators and printers.
Cost items of the company include:
- Labor on assembling a printer
- Salary of an employee who supervises calculator manufacturing
- Materials used in making a printer
- Company president s salary
- Salary of the manager of the Calculator Division
- Depreciation on corporate headquarters building
- Ink cartridges installed in printer during manufacture
- Depreciation on equipment used in making calculators
- Supplies used in corporate offices
Which of the costs listed above is a direct cost assuming the cost object is the company as a whole? (Points : 2) |
All of the costs listed
All of the costs except number 4
All of the costs except numbers 4 and 6
None of the above |
Aug 29, 2021 | Uncategorized
Problem 9-23Ratio analysis
Required
Use the financial statements for Bernard Company from Problem 9-22 to calculate the following for 2012 and 2011.
a. Working capital
b. Current ratio
c. Quick ratio
d. Accounts receivable turnover (beginning receivables at January 1, 2011, were $47,000)
e. Average number of days to collect accounts receivable
f. Inventory turnover (beginning inventory at January 1, 2011, was $140,000) (Edmonds. Survey of Accounting. 2012)
g. Average number of days to sell inventory
h. Debt to assets ratio
i. Debt to equity ratio
j. Times interest earned
k. Plant assets to long-term debt
l. Net margin
m. Asset turnover
n. Return on investment
o. Return on equity
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share: 2011, $11.75; 2012, $12.50)
s. Dividend yield on common stock
Problem 10-23Service versus manufacturing companies
Goree Company began operations on January 1, 2011, by issuing common stock for $30,000 cash. During 2011, Goree received $40,000 cash from revenue and incurred costs that required $60,000 of cash payments.
Required
Prepare an income statement, balance sheet, and statement of cash flows for Goree Company for 2011, under each of the following independent scenarios. (Edmonds. Survey of Accounting. 2012)
a. Goree is a promoter of rock concerts. The $60,000 was paid to provide a rock concert that produced the revenue.
a.
a.b. Goree is in the car rental business. The $60,000 was paid to purchase automobiles. The automobiles were purchased on January 1, 2011, had four-year useful lives and no expected salvage value. Goree uses straight-line depreciation. The revenue was generated by leasing the automobiles.
a.
a.c. Goree is a manufacturing company. The $60,000 was paid to purchase the following items.
a.
a.(1 Paid $8,000 cash to purchase materials that were used to make products during the year.
a.
a.(2 Paid $20,000 cash for wages of factory workers who made products during the year.
a.
a.(3 Paid $2,000 cash for salaries of sales and administrative employees.
a.
a.(4 Paid $30,000 cash to purchase manufacturing equipment. The equipment was used solely to make products. It had a three-year life and a $6,000 salvage value. The company uses straight-line depreciation.
a.
a.(5 During 2011, Goree started and completed 2,000 units of product. The revenue was earned when Goree sold 1,500 units of product to its customers.
a.
a.d. Refer to Requirementc. Could Goree determine the actual cost of making the 90th unit of product? How likely is it that the actual cost of the 90th unit of product was exactly the same as the cost of producing the 408th unit of product? Explain why management may be more interested in average cost than in actual cost. (Edmonds. Survey of Accounting. 2012)
Aug 29, 2021 | Uncategorized
|
Question 1.1.Select the correct statement regarding fixed costs. (Points : 2)
|
They do not change, because fixed costs should be ignored in decision making.
The fixed cost per unit increases when volume increases.
The fixed cost per unit decreases when volume increases.
The fixed cost per unit does not change when volume decreases.
|
|
Question 2.2.Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold.
For Hico Bottling Company, the production manager s salary is an example of: (Points : 2)
|
a variable cost.
a fixed cost.
a mixed cost.
none of the above.
|
|
Question 3.3.Select the correct statement regarding fixed costs. (Points : 2)
|
There is a contradiction between the term “”fixed cost per unit”” and the behavior pattern implied by the term.
Fixed cost per unit is not fixed.
Total fixed cost remains constant when volume changes.
All of the above are correct statements.
|
|
Question 4.4.Java Joe’s operates a chain of coffee shops. The company pays rent of $12,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The manager of each shop is paid a salary of $2,000 per month, and all other employees are paid on an hourly basis. Relative to the number of customers for a shop, the cost of rent is which kind of cost? (Points : 2)
|
Fixed cost
Variable cost
Mixed cost
Relevant cost
|
|
Question 5.5.Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company s volume doubles, the company s total cost will: (Points : 2)
|
stay the same.
double as well.
increase but will not double.
decrease.
|
|
Question 6.6.Select the incorrect statement regarding the contribution margin income statement. (Points : 2)
|
The contribution margin approach for the income statement is acceptable for external reporting.
Contribution margin represents the amount available to cover fixed expenses and thereafter to provide profit.
The contribution margin approach to preparing an income statement requires that all costs be classified as fixed or variable.
Assuming no change in fixed costs, a $1 increase in contribution margin will result in a $1 increase in profit.
|
|
Question 7.7.Once sales reach the breakeven point, each additional unit sold will: (Points : 2)
|
increase fixed cost by a proportionate amount.
reduce the margin of safety.
increase profit by an amount equal to the per unit contribution margin.
increase the company’s operating leverage.
|
|
Question 8.8.The following income statement is provided for Flint, Inc.
|
Sales revenue (2,500 @ $20 a unit)
|
|
$50,000
|
|
|
Variable costs (2,500 x $11)
|
|
27,500
|
|
|
Fixed costs
|
|
17,000
|
|
|
Net income
|
|
$ 5,500
|
|
|
|
|
|
What is this company’s magnitude of operating leverage? (Points : 2)
|
9.1
5.00
4.1
1.8
|
|
Question 9.9.At its $25 selling price, Paciolli Company has sales of $10,000, variable manufacturing costs of $4,000, fixed manufacturing costs of $1,000, variable selling and administrative costs of $2,000 and fixed selling and administrative costs of $1,000. What is the company’s contribution margin per unit? (Points : 2)
|
$15
$10
$0.60
$0.40
|
|
Question 10.10.Operating leverage exists when: (Points : 2)
|
small percentage changes in revenue produce large percentage changes in profit.
management buys enough of the company’s shares of stock to take control of the corporation.
the organization makes purchases on credit instead of paying cash.
the organization avoids all fixed costs in its operations.
|
|
Question 11.11.Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company s volume increases to 1,500 units, the company s total costs will be: (Points : 2)
|
$80,000
$105,000
$87,500
$90,000
|
|
Question 12.12.Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store? (Points : 2)
|
The cost of heating and air conditioning the department
The cost of supplies
The cost of commissions paid to the sales staff
All of the above
|
|
Question 13.13.Milton Company has three departments occupying the following amount of floor space:
|
Department 1
|
15,000 sq. ft.
|
|
Department 2
|
10,000 sq. ft.
|
|
Department 3
|
25,000 sq. ft.
|
How much store rent should be allocated to Department 2 if total rent is equal to $100,000? (Points : 2)
|
$25,000
$50,000
$20,000
None of the above
|
|
Question 14.14.Cost allocation involves: (Points : 2)
|
identifying a cost driver for each cost to be allocated.
calculating an allocation rate for each cost to be allocated.
multiplying the allocation rate by the weight of the cost driver.
all of the above.
|
|
Question 15.15.Allocation of costs to various cost objects: (Points : 2)
|
may affect managers performance evaluation.
may affect resource allocations within a company.
may affect the apparent profitability of the various products a company makes.
all of the above.
|
|
Question 16.16.Parker & Co. expects overhead costs of $400,000 per year and direct production costs of $12 per unit. The estimated production activity for the 2010 accounting period is as follows:
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|
Units produced
|
11,500
|
9,000
|
8,250
|
11,250
|
The predetermined overhead rate based on units produced is (rounded to the nearest penny) is: (Points : 2)
|
$0.75 per unit.
$9.00 per unit.
$34.80 per unit.
$10.00 per unit.
|
|
Question 17.17.Select the incorrectstatement from the following. (Points : 2)
|
The cost object determines whether a cost is classified as direct or indirect.
The same cost cannot be classified as both direct and indirect.
Relevant costs can include direct and indirect costs.
Direct costs can display a fixed or variable behavior pat.
|
|
Question 18.18.Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant? (Points : 2)
|
The salary is a fixed cost that is directly traceable to the cost of making hamburgers.
The salary is a fixed cost that is directly traceable to the cost of operating a specific restaurant.
The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant.
None of the above.
|
|
Question 19.19.Humboldt Corporation manufactures electronic products, including calculators and printers.
Cost items of the company include:
1. Labor on assembling a printer
2. Salary of an employee who supervises calculator manufacturing
3. Materials used in making a printer
4. Company president s salary
5. Salary of the manager of the Calculator Division
6. Depreciation on corporate headquarters building
7. Ink cartridges installed in printer during manufacture
8. Depreciation on equipment used in making calculators
9. Supplies used in corporate offices
Which of the costs listed above is a direct cost assuming the cost object is the Calculator Division? (Points : 2)
|
Numbers 2, 5, and 6
Numbers 2, 5, and 8
Number 2 only
None of the costs is direct to the Calculator Division
|
|
Question 20.20.A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true? (Points : 2)
|
The cost of wood is a direct and variable cost.
The cost of wood is a fixed and indirect cost.
The cost of wood is indirect and variable.
The cost of wood is a fixed and direct cost.
|
Aug 29, 2021 | Uncategorized
|
1.Relevant costs are often referred to as: (Points : 2)
|
unavoidable costs.
avoidable costs.
sunk costs.
reversible costs.
|
|
Question 2. 2.Centennial Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below:
|
|
Tour A
|
Tour B
|
|
Projected revenue
|
$7,000
|
$11,000
|
|
Variable costs
|
1,000
|
6,000
|
|
Fixed costs
|
3,000
|
3,000
|
|
Profit
|
$3,000
|
$1,000
|
What are the incremental (differential) costs of Tour B? (Points : 2)
|
$2,000
$3,000
$4,000
$5,000
|
|
Question 3. 3.Emily paid $2 for a bottle of ThirstAid. Later while on a hiking trip, she was offered $10 for the ThirstAid. Select the correct statement from the following. (Points : 2)
|
The $2 original purchase price is a sunk cost.
If Emily drinks the ThirstAid, no opportunity cost is associated with her decision.
The $10 offer is not relevant if Emily refuses to sell the ThirstAid.
All of the above are correct.
|
|
Question 4. 4.For purposes of decision making, avoidable costs are costs that: (Points : 2)
|
were incurred in the past.
will be incurred in the future and differ between the alternatives.
do not differ between alternatives.
are not relevant in decision making.
|
|
Question 5. 5.Dalton Company is trying to decide between the following two alternatives:
|
|
Alternative A
|
Alternative B
|
|
Projected revenue
|
$50,000
|
$60,000
|
|
Direct material
|
6,000
|
12,000
|
|
Assembly labor
|
9,000
|
9,000
|
|
Production supervisor’s salary
|
10,000
|
10,000
|
|
Facility-related costs
|
10,000
|
15,000
|
|
Profit
|
$15,000
|
$14,000
|
Which of the following conclusions can be drawn from this example? (Points : 2)
|
Variable costs are always relevant for decision making.
Fixed costs are sunk and thus are never relevant for decision making.
Relevant costs may include variable costs and fixed costs.
The amount of revenue is not relevant to this decision.
|
|
Question 6. 6.Alicia brought her lunch today but now a coworker has asked her to go to the deli across the street. Select the correct statement from the following. (Points : 2)
|
The cost of the lunch Alicia already has is relevant to Alicia’s decision to have lunch with her friend.
The cost of the lunch Alicia already has represents the opportunity cost of dining with her friend.
The cost to buy lunch at the deli is not relevant because it has not yet been incurred.
The cost of the lunch that Alicia brought has nothing to do with her current decision because it is a sunk cost.
|
|
Question 7. 7.Select the correct statement regarding relevant costs and revenues. (Points : 2)
|
Relevant costs are also known as avoidable costs.
Relevant costs are future-oriented.
Relevant revenues must differ between the alternatives.
All of the above are correct.
|
|
Question 8. 8.Frank is trying to decide which one of two job offers he will accept. Several items are presented below:
|
Job Criterion
|
Job Offer A
|
Job Offer B
|
|
(1) Base salary
|
$40,000
|
$40,000
|
|
(2) Overtime compensation
|
Comp. time
|
Hourly rate
|
|
(3) Moving allowance
|
$ 2,000
|
$ 2,000
|
|
(4) Signing bonus
|
$ 1,000
|
$ 0
|
|
(5) Job search costs
|
$ 500
|
$ 500
|
Which of the above job criterion would be considered sunk costs? (Points : 2)
|
(1), (3), (5)
(2), (4)
(5)
None of the above
|
|
Question 9. 9.Which of the following costs generally is an example of a product-level cost? (Points : 2)
|
Inventory holding costs
Machine setup costs
Materials and labor costs
Shipping and handling costs
|
|
Question 10. 10.The cost that is avoided when a company eliminates a single item of a product or service is a: (Points : 2)
|
batch-level cost.
facility-level cost.
product-level cost.
unit-level cost.
|
|
Question 11. 11.Select the incorrectstatement about the planning process. (Points : 2)
|
The longer the time period, the less specific the plans.
Planning decisions can often be sub-divided into three distinct planning phases, short-term, intermediate-term, and long-term.
The nature of planning changes with the length of the time period being considered.
The shorter the time period, the more general the plans.
|
|
Question 12. 12.Expressing plans for a business in financial terms is commonly called: (Points : 2)
|
master planning.
strategic planning.
budgeting.
operational planning.
|
|
Question 13. 13.Which of the following budgets or schedules uses data contained in the selling and administrative expense budget? (Points : 2)
|
Cash payments schedule
Cash receipts schedule
Inventory purchases budget
Sales budget
|
|
Question 14. 14.Maddon Company estimated that its inventory purchases for January and February 2010 would be $300,000 and $370,000, respectively. The company generally pays for 60% of its inventory purchases in the month of purchase because it receives a 2% discount for timely payment. The remaining 40% of purchases are paid for in the following month, and there is no discount for these payments. What will be the amount of cash payments for inventory in February 2010? (Points : 2)
|
$324,400
$337,560
$328,340
$335,160
|
|
Question 15. 15.McDavid Company has completed its sales budget for the first quarter of 2010. Projected credit sales for the first four months of the year are shown below:
|
January
|
$30,000
|
|
February
|
$36,000
|
|
March
|
$45,000
|
|
April
|
$48,000
|
The company’s past records show collection of credit sales as follows: 30% in the month of sale and the balance in the following month. The total cash collection from receivables in February is expected to be: (Points : 2)
|
$38,700
$45,000
$42,300
$31,800
|
|
Question 16. 16.Select the correct equation format for the purchases budget. (Points : 2)
|
Beginning inventory + expected sales = required purchases.
Expected sales + desired ending inventory beginning inventory = required purchases.
Beginning inventory + expected sales desired ending inventory = required purchases.
Expected sales + Desired ending inventory = required purchases.
|
|
Question 17. 17.With regards to financial statements, pro forma means: (Points : 2)
|
budgeted.
prepared in advance.
financial condition or position that can be expected if planning assumptions prove correct.
all of the above.
|
|
Question 18. 18.Which of the following is nota benefit of budgeting? (Points : 2)
|
Sets realistic standards that serve as benchmarks for evaluating performance
Coordinates the activities of the company by integrating the plans of all departments
Requires managers to plan ahead and to formalize their objectives
Provides assurance that accounting records are in accordance with generally accepted accounting principles
|
|
Question 19. 19.When Northern Company district managers submitted their preliminary budget proposals, top management discovered that the southern district manager had requested a new project management information system. Unfortunately, the system is incompatible with the system used at headquarters. Which of the following advantages of budgeting reduces the likelihood that the company will end up with two incompatible systems? (Points : 2)
|
Planning
Corrective action
Performance measurement
Coordination
|
|
Question 20. 20.Select the incorrect statement about budgeting and human behavior. (Points : 2)
|
People are often uncomfortable with budgets.
Budgets are constraining.
Budgets limit individual freedom in favor of an established plan.
Few people find evaluation based on budget expectations stressful.
|
Aug 29, 2021 | Uncategorized
Salter Mining Company purchased the Northern Tier Mine for $68,000,000 cash. The mine was estimated to contain 7,500,000 tons of ore and to have a residual value of $7,700,000.
During the first year of mining operations at the Northern Tier Mine, 335,000 tons of ore were mined, of which 40,000 tons were sold.
a.
Prepare a journal entry to record depletion during the year. (Round your per tone value to 2 decimal places and final answer to nearest whole number. Omit the “$” sign in your response.)
b.
Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company’s balancesheet after the first year of operations. (Round your per tone value to 2 decimal places and final answer to nearest whole number. Input all amounts as positive values. Omit the “$” sign in your response.)
Aug 29, 2021 | Uncategorized
The Sanchez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows:
Capital-Intensive
Direct Materials 5$ per unit
Direct Labor 6$ per unit
Variable Overhead $3 per unit
Fixed Manufacturing Costs $2,508,000
Labor Intensive
Direct Materials 5.5$ per unit
Direct Labor 8$ per unit
Variable Overhead $4.5 per unit
Fixed Manufacturing Costs $1,538,000
The Martinez Company s market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.
Required:
a) Calculate the estimated break-even point in annual unit sales of the new product if the Sanchez Company uses the:
Capital intensive method
Labor Intensive method
b) Determine annual unit sales volume at which the Sanchez Company would be indifferent between the two manufacturing methods
c) Explain the circumstance under which the Sanchez Company should employ each of the two manufacturing methods
Aug 29, 2021 | Uncategorized
Sarah Perreault Corp. sold 6,400 units of its product at $45 per unit in year 2013 and incurred operating expenses of $6 per unit in selling them. It began the year with 600 units in inventory and the following transactions took place during the fiscal year:
DATE ACTIVITY UNITS PRICE
Jan 1 Beginning inventory 600 $18 per unit
Feb 20 Purchase 1,500 $19 per unit
May 16 Purchase 700 $20 per unit
Oct 3 Purchase 400 $21 per unit
Dec 11 Purchase 3,300 $22 per unit
Feb 22 Sale 750 $45 per unit
May 15 Sale 890 $45 per unit
Sep 11 Sale 775 $45 per unit
Dec 28 Sale 3,985 $45 per unit
Problem #1
Prepare comparative income statements similar to the ones found in your text at Exhibit 6.8 for the three inventory cost flow methods of FIFO, LIFO and weighted average. The company uses a perpetual inventory system and its income tax rate is 30%.
In calculating cost of sales, be sure to demonstrate the flow of inventory during the year and prove your ending inventory amount by using the inventory cost formula (BI + Purchases = GA EI = CGS).
Problem #2
Discuss in 500 words or less how the financial results from using the three alternative methods would change if Sarah Perreault had been experiencing declining costs in its purchases of inventory?
Problem #3
What advantages and disadvantages are offered by using LIFO and FIFO? Assume the continuing trend of increasing costs.
Aug 29, 2021 | Uncategorized
Sarah Perreault Corp. sold 6,400 units of its product at $45 per unit in year 2013 and incurred operating expenses of $6 per unit in selling them. It began the year with 600 units in inventory and the following transactions took place during the fiscal year:
DATE ACTIVITY UNITS PRICE
Jan 1 Beginning inventory 600 $18 per unit
Feb 20 Purchase 1,500 $19 per unit
May 16 Purchase 700 $20 per unit
Oct 3 Purchase 400 $21 per unit
Dec 11 Purchase 3,300 $22 per unit
Feb 22 Sale 750 $45 per unit
May 15 Sale 890 $45 per unit
Sep 11 Sale 775 $45 per unit
Dec 28 Sale 3,985 $45 per unit
Problem #1
Prepare comparative income statements similar to the ones found in your text at Exhibit 6.8 for the three inventory cost flow methods of FIFO, LIFO and weighted average. The company uses a perpetual inventory system and its income tax rate is 30%.
In calculating cost of sales, be sure to demonstrate the flow of inventory during the year and prove your ending inventory amount by using the inventory cost formula (BI + Purchases = GA EI = CGS).
Problem #2
Discuss in 500 words or less how the financial results from using the three alternative methods would change if Sarah Perreault had been experiencing declining costs in its purchases of inventory?
Problem #3
What advantages and disadvantages are offered by using LIFO and FIFO? Assume the continuing trend of increasing costs.
Aug 29, 2021 | Uncategorized
Scanlon Technologies, Inc.*
Anne Scanlon founded Scanlon Technologies, Inc., in 1993. The company designed and manufactured high-tech products that were used in various industries ranging from semiconductor to aviation. Over the years, Scanlon Technologies reported a compound annual growth rate in revenues of over 20% due to high demand for the company s products and Anne s superior management skills. By the end of 1996, it was clear that any further growth would have to come from international expansion. However, establishing manufacturing operations and opening up sales and marketing offices abroad required a significant amount of capital. Anne considered investing more of her own money into the business; however, given that she already had most of her wealth tied up in the company, she decided against the idea. Moreover, she believed that the amount of funds Scanlon Technologies needed to raise for expansion was in the tens of millions. In her mind, there was only one clear solution go public.
In September 1996, Anne hired J.P. Suisse, a top tier investment bank, to take Scanlon Technologies public. On January 1, 1997, the company, which was authorized by the State of Delaware to sell 20 million common stock and 10 million preferred stock, issued one million shares of common stock in an Initial Public Offering (IPO) and began trading on the New York Stock Exchange under the ticker symbol STI. The stock, which had a par value of $1, was sold for $20 per share and climbed to $26 a share by the end of its first trading day.
As expected, the funds raised in the IPO were used to open offices all over the world as well as build a second manufacturing plant in Toronto, Canada. Over the next couple of years, business was good and the company was able to generate enough cash to maintain its level of operations.
In October 1999, Anne learned that Kadehjian Solutions Coporation, a competitor, was considering the option of being acquired. Anne believed that such an acquisition would position Scanlon Technologies as the industry leader. One of Kadehjian s requirements for such an acquisition was that it be an all-cash transaction. Anne knew that this would require Scanlon Technologies to raise approximately $7 million.
Ann contracted J.P. Suisse to discuss raising these funds through the capital markets. The managing directors at J.P. Suisse recommended that Scanlon Technologies employ a combination of debt and equity securities. Anne agreed and on January 1, 2000, the company issued an additional one hundred thousand shares of its $1 par value common stock at $40 per share. On the same day, the company issued $2 million in bonds at 95.8, due in 5 years with 5% interest payable annually (at year end). The market interest rate at the time was 6% per year. Also on January 1, 2000, Scanlon Technologies issued $1.3 million in zero-coupon (i.e. no interest) convertible bonds, also due in 5 years. Each $1,000 bond converted into 20 shares of its common stock at any time during the five-year period. The convertible bonds were sold for a total of $1,100,000.
*(Copyright by the President and Fellows of Harvard College. Harvard Business School case 190-017)
2
On March 2, 2000, Scanlon Technologies acquired Kadehjian Solutions Corporation in an all-cash transaction. Following the acquisition, the company s revenues increased significantly and the company s profit margins reached a new high of 30%. In addition to its outstanding income statement performance, the company was generating a significant amount of cash from its operating activities. As a result, On June 30, 2000, Scanlon Technologies Board of Directors declared and paid a dividend of $0.10 per share.
On December 31, 2000, the company made the first interest payment on the $2 million in bonds. At that time the effective interest rate had risen to 7% due to market conditions.
In January of 2001, the high-tech industry suddenly entered a slump and the stock of Scanlon Technologies plummeted along with the entire industry. Anne believed that the sell off was overdone and, on February 1, 2001, decided to repurchase 10, 000 shares of common stock for $20 per share.
By June 30, 2001, there were strong indicators that the economic slowdown was coming to an end, as evidenced by the fact that related industries were starting to show signs of recovery. At the time, the Board was in the midst of deciding whether to declare and pay a dividend similarly to the one paid in the previous year. Eventually, after strong arguments by various directors, the Board decided to declare a stock dividend. Thus, on June 30, 2001, Scanlon Technologies Board declared and issued a dividend of one new share for every ten existing shares. At the time, the market price of STI stock was trading at $29 per share.
By December 2001, STI stock was back at its all-time high level and management decided to resell the shares it had previously repurchased for the current market price of $50 per share. Moreover, given that Scanlon Technologies had a significant amount of cash on its balance sheet, Anne decided on January 15, 2002, to retire all of its outstanding (non- convertible) debt for a payment of only $1, 865,000.
By September 2002, the stock of Scanlon Technologies reached an all-time high of $68 per share and management was contemplating a 2 for 1 stock split.
Required question
Prepare the accounting journal entries needed to record the actual and contemplated capital financing transactions described above.
Aug 29, 2021 | Uncategorized
| Preview |
| 1.SCI 162 Final.docx |
| 2.SCI 162 Wk 1 Assignment ; Healthy People 2010 Scavenger Hunt (AppendiX B).docx |
| 3.SCI 162 Wk 2 Assignment; How Much Am I Actually Eating (AppendiX C).docx |
| 4.SCI 162 Wk 3 Assignment; How Fit Are You (AppendiX D).docx |
| 5.SCI 162 Wk 5 Assignment; Create – a – Diet (AppendiX E).docx |
| 6.SCI 162 Wk 6 Assignment; Healthy Interpersonal Relationships Worksheet (AppendiX F).docx |
| 7.SCI 162 Wk 7 Case Study; Gayle and Patrick (AppendiX G).docx |
| 8.SCI 162 Wk 8 Assignment Family Medical Tree (AppendiX H).docx |
|
Aug 29, 2021 | Uncategorized
Scully Corporation s comparative balance sheets are presented below.
|
SCULLY CORPORATION
|
|
Balance Sheets
|
|
December 31
|
|
|
2011
|
2010
|
|
|
|
|
|
Cash
|
$ 4,300
|
$ 3,700
|
|
Accounts receivable
|
21,200
|
23,400
|
|
Inventory
|
10,000
|
7,000
|
|
Land
|
20,000
|
26,000
|
|
Building
|
70,000
|
70,000
|
|
Accumulated depreciation
|
(15,000)
|
(10,000)
|
|
Total
|
$110,500.00
|
$120,100.00
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$ 12,370
|
$31,100
|
|
Common stock
|
75,000
|
69,000
|
|
Retained earnings
|
23,130
|
20,000
|
|
Total
|
$110,500.00
|
$120,100.00
|
Scully s 2011 income statement included net sales of $100,000, cost of goods sold $60,000, and net income of $15,000.
Compute the following ratios for 2011:
(a) Current ratio
(b) Acid-test ratio
(c) Receivables turnover
(d) Inventory turnover
(e) Profit margin
(f) Asset turnover
(g) Return on assets
(h) Return on common stockholders equity
(i) Debt to total assets ratio
Aug 29, 2021 | Uncategorized
Resource:Ch. 5 7 of Financial Accounting
Complete Exercises BE5 1, BE5 2, BE6-5, BE6-7, BE7-4, BE7-5, & BE7-6.
Submit as either a Microsoft Excel or a Microsoft Word document
BE5-1Presented here are the components in Korinek Company s income statement.
Determine the missing amounts.
Sales Cost of Gross Operating Net
Revenue Goods Sold Profit Expenses Income
$ 71,200 (b) $ 30,000 (d) $12,100
$108,000 $70,000 (c) (e) $29,500
(a) $71,900 $109,600 $46,200 (f )
BE5-2Pocras Company buys merchandise on account from Wedell Company. The
selling price of the goods is $900 and the cost of the goods sold is $590. Both companies
use perpetual inventory systems. Journalize the transactions on the books of both
companies.
BE6-5In its first month of operation, Moraine Company purchased 100 units of inventory
for $6, then 200 units for $7, and finally 140 units for $8. At the end of the month,
180 units remained. Compute the amount of phantom profit that would result if the company
used FIFO rather than LIFO. Explain why this amount is referred to as phantom
profit. The company uses the periodic method.
BE6-7Olsson Video Center accumulates the following cost and market data at
December 31.
Inventory Cost Market
Categories Data Data
Cameras $12,500 $13,400
Camcorders 9,000 9,500
DVDs 13,000 12,200
Compute the lower-of-cost-or-market valuation for Olsson inventory.
BE7-4Aldstadt Company has the following internal control procedures over cash receipts.
Identify the internal control principle that is applicable to each procedure.
(a) All over-the-counter receipts are registered on cash registers.
(b) All cashiers are bonded.
(c) Daily cash counts are made by cashier department supervisors.
(d) The duties of receiving cash, recording cash, and having custody of cash are assigned
to different individuals.
(e) Only cashiers may operate cash registers.
BE7-5While examining cash receipts information, the accounting department determined
the following information: opening cash balance $150, cash on hand $1,125.74,
and cash sales per register tape $988.62. Prepare the required journal entry based upon
the cash count sheet.
BE7-6Ndon Company has the following internal control procedures over cash disbursements.
Identify the internal control principle that is applicable to each procedure.
(a) Company checks are prenumbered.
(b) The bank statement is reconciled monthly by an internal auditor.
Aug 29, 2021 | Uncategorized
Week Two Exercise Assignment
Revenue and Expenses
1. Recognition of concepts. Jim Armstrong operates a small company that books enter tainers for theaters, parties, conventions, and so forth. The company s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a Interest owed on the company’s bank loan, to be paid in early July
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client’s point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm’s copy machine, incurred and paid in June
2. Understanding the closing process. Examine the following list of accounts:
|
Note Payable
|
Accumulated Depreciation: Building
|
|
Alex Kenzy, Drawing
|
Accounts Payable
|
|
Product Revenue
|
Cash
|
|
Accounts Receivable
|
Supplies Expense
|
|
Utility Expense
|
Which of the preceding accounts
a. appear on a post-closing trial balance?
b. are commonly known as temporary, or nominal, accounts?
c. generate a debit to Income Summary in the closing process?
d. are closed to the capital account in the closing process?
3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
Salaries owed to employees at year-end amounted to $1,000.
The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period.
The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months rent of Sally Corporation s headquarters, beginning on November 1.
Sally Corporation s accounting year ends on December 31.
Instructions
Analyze the five preceding cases individually and determine the following:
a. The typeof adjusting entry needed at year-end (Use the following codes: A, adjust ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
b. The year-end journal entry to adjust the accounts
c. The income statement impact of each adjustment (e.g., increases total revenues by $500)
4. Adjusting entries. You have been retained to examine the records of Mary s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
Unrecorded interest owed to the center totaled $275 as of December 31.
All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
Depreciation on the school s van was $3,000 for the year.
On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Pre paid Rent, a new account.
Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
Mary s Day Care paid insurance premiums as follows, each time debiting Pre paid Insurance:
|
Date Paid
|
Policy No.
|
Length of Policy
|
Amount
|
|
Feb. 1, 20X2
|
1033MCM19
|
1 year
|
$540
|
|
Jan. 1, 20X3
|
7952789HP
|
1 year
|
912
|
|
Aug. 1, 20X3
|
XQ943675ST
|
2 years
|
840
|
Instructions
The center s accounts were last adjusted on December 31, 20X2. Prepare the adjusting entries necessary under the accrual basis of accounting.
5. Bank reconciliation and entries. The following information was taken from the accounting records of Palmetto Company for the month of January:
|
Balance per bank
|
$6,150
|
|
Balance per company records
|
3,580
|
|
Bank service charge for January
|
20
|
|
Deposits in transit
|
940
|
|
Interest on note collected by bank
|
100
|
|
Note collected by bank
|
1,000
|
|
NSF check returned by the bank with the bank statement
|
650
|
|
Outstanding checks
|
3,080
|
Instructions:
a. Prepare Palmetto s January bank reconciliation.
b. Prepare any necessary journal entries for Palmetto.
6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.
a. Prepare the journal entry needed to write off Mattingly s account.
b. Comment on the ability of the direct write-off method to value receivables on the year-end balance sheet.
7. Allowance method: analysis of receivables. At a January 20X2 meeting, the presi dent of Sonic Sound directed the sales staff to move some product this year. The president noted that the credit evaluation department was being disbanded be cause it had restricted the company s growth. Credit decisions would now be made by the sales staff.
By the end of the year, Sonic had generated significant gains in sales, and the president was very pleased. The following data were provided by the accounting department:
|
20X2
|
20X1
|
|
Sales
|
$23,987,000
|
$8,423,000
|
|
|
Accounts Receivable, 12/31
|
12,444,000
|
1,056,000
|
|
|
Allowance for Uncollectible Accounts, 12/31
|
?
|
23,000 cr.
|
|
|
|
|
|
|
The $12,444,000 receivables balance was aged as follows:
|
Age of Receivable
|
Amount
|
Percentage of Accounts Expected to Be Collected
|
|
Under 31 days
|
$4,321,000
|
99%
|
|
31260 days
|
4,890,000
|
90
|
|
61290 days
|
1,067,000
|
80
|
|
Over 90 days
|
2,166,000
|
60
|
Assume that no accounts were written off during 20X2.
Instructions
a. Estimate the amount of Uncollectible Accounts as of December 31, 20X2.
b. What is the company s Uncollectible Accounts expense for 20X2?
c. Compute the net realizable value of Accounts Receivable at the end of 20X1 and 20X2.
d. Compute the net realizable value at the end of 20X1 and 20X2 as a percentage of respective year-end receivables balances. Analyze your findings and comment on the president s decision to close the credit evaluation department.
Aug 29, 2021 | Uncategorized
Many organizations have been in the news over the past few years due to accounting ethical breaches that have affected their customers, employees, or the general public. Search the Internet or the Strayer Library to locate a story in the news that depicts an accounting ethical breach. You may select from any type of organization about which you have information or a curiosity.
Write a four to five (4-5) page paper in which you:
- Given the corporate ethical breaches in recent times, assess whether or not you believe that the current business and regulatory environment is more conducive to ethical behavior. Provide support for your answer.
- Based on your research, describe the organization, the accounting ethical breach and the impact to the organization related to ethical breach.
- Determine how the organizational ethical issue was detected and how management failed to create an ethical environment.
- Analyze the accounts impacted and / or accounting guidelines violated and the resulting impact to the business operation.
- As a CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in the future.
- Use at least four (4) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Aug 29, 2021 | Uncategorized
Aug 29, 2021 | Uncategorized
Current liabilities: entries and disclosure. A review of selected financial activities of Visconti s during 20XX disclosed the following:
1-Dec: Borrowed $30,000 from the First City Bank by signing a 3-month, 15% note payable.
Interest and principal are due at maturity.
10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
total 1,000 units during the month. Past experience with similar products indicates
that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
22-Dec: Purchased $20,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
26-Dec: Borrowed $7,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
31-Dec: Repaired six XY-80s during the month at a total cost of $162
31-Dec: Accrued three days of salaries at a total cost of $1,400.
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.
Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
2-Aug: Borrowed $60,000 from the Bank of Kingsville by signing a 90-day, 12% note.
20-Aug: Issued a $55,000 note to Harris Motors for the purchase of a $55,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
a 30-day, 12% note in settlement of the balance owed.
11-Sep: Issued a $55,000 note to Datatex Equipment in settlement of an overdue account
payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
10-Oct: The note to Pans Enterprises was paid in full.
11-Oct: The note to Datatex Equipment was paid in full.
30-Oct: Paid note to Bank of Kingsville.
Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
Aug 29, 2021 | Uncategorized
Assignment 3: LASA 1: Whole Foods Market, Inc. and MyAccountingLab
Review Whole Foods Market, Inc s 2010 Annual report, company information and investor information(see the link: Whole Foods Market, Inc. Investor Relationsin the webilography) and write a 5-7 page paper following APA guidelines which addresses the following:
- Summarize the company s financial performance for 2010. Do you think they satisfied stockholder expectations? Why or why not?
- Explain three business risks or threats that might threaten Whole Foods ability to accomplish their financial goals for the next 3 years. Use examples and references to support your response.
- Describe three examples of control activities Whole Foods Market, Inc. could use to minimize these risks.
- What is your overall impression of Whole Foods Market, Inc. s annual report? Is it a financial accounting document or a managerial accounting document? Who is the target audience? Did the annual report present a positive or negative image of the company? Provide support for your responses.
http://www.wholefoodsmarket.com/company-info/investor-relations
| Assignment 3 Grading Criteria |
Maximum Points |
| Part I |
| Summarized the company s financial performance in 2010 and explained if they met stockholder expectations. |
16 |
| Explained three business risks/threats which might threaten the company s ability to accomplish their financial goals over the next three years. |
16 |
| Described three examples of control activities Whole Foods Market, Inc. could use to minimize these risks. |
16 |
| Described their overall impression of Whole Foods Market, Inc. s annual report. |
12 |
|
Style (8 points): Tone, audience, and word choice
Organization (16 points): Introduction, transitions, and conclusion
Usage and Mechanics (16 points): Grammar, spelling, and sentence structure
APA Elements (24 points): In text citations and references, paraphrasing, and appropriate use of quotations and other elements of style
|
44 |
Aug 29, 2021 | Uncategorized
read the scenarios below and respond in the form of an essay, which should consist of several paragraphs and appropriate priority or task lists. Responses should be supported fully and completely. A well-thought-out response can be accomplished in 300-500 words (one or two pages, double spaced). Any published material used to support a response should be cited per the APA style guidelines.
Unit III Case Study
The Scenario:
You are an EH&S professional returning home from your plant on a summer Friday afternoon at about 4 p.m. You have just picked up some materials from a nearby building supply store for a weekend backyard project (cement, sand, wood, concrete blocks, lumber, etc.). You are about one mile outside of the main population zone of your small town, and you come upon an accident scene in which a placarded tanker truck is turned on its side in a ditch about 20-25 feet off the two-lane road. There is no sign of fire and no sign of the driver from your vantage point inside your truck. The only sign you can see from your vantage point is a Dangerous When Wet placard with a Class 8 label code and a UN 1836 on an orange panel. What might this chemical be? You think you can make out an NFPA diamond with a 0 at 12 o’clock; a 2 at 3 o’clock; a 4 at 9 o’clock; and a slashed W at 6 o’clock. You take out the small binoculars from your truck and scan the scene. There seems to be a thin, small volume of dripping liquid (red to yellow color) coming from a valve on the tanker.There is an agricultural field directly next to the incident site. A large irrigation unit is spraying the fields, but the extent of the spray seems to end 20-25 yards away from the overturned truck. Slight, but steady winds are blowing about 5-8 mph across the scene towards town.
Your small community has a fire department, but it does not have a hazardous material squad attached to it. Your chemical plant (3 shift operation, bleach, pool chemicals, and household products, 15 miles away) does have a hazardous material team that you trained and is under your direction. You do have your cell phone and an emergency response guidebook.
Questions:
1. How should you proceed? Discuss the actions you should take.
2. What, if any, restraints should you exercise?
3. What advice would you give to any other individuals or drivers coming upon the scene?
4. What would you say to the next responders coming on the scene?
Aug 29, 2021 | Uncategorized
Ready-Set-Go Co. distributes suitcases to retail stores and extends credit terms of 2/10, n/30 to all of its customers. At the end of June, Ready-Set-Go s inventory consisted of suitcases costing $2,400. During the month of July, the following merchandising transactions occurred.
July 1 Purchased suitcases on account for $3,400 from Trunk Manufacturers, FOB destination, terms 3/10, n/30. The appropriate party also made a cash payment of $180 for freight on this date.
3 Sold suitcases on account to Satchel World for $3,600. The cost of suitcases sold is $2,160.
9 Paid Trunk Manufacturers in full.
12 Received payment in full from Satchel World.
17 Sold suitcases on account to Lady GoGo for $1,900. The cost of the suitcases sold was $1,140.
18 Purchased suitcases on account for $1,820 from Holiday Manufacturers, FOB shipping point, terms 2/10, n/30. The appropriate party also made a cash payment of $170 for freight on this date.
20 Received $360 credit (including freight) for suitcases returned to Holiday Manufacturers.
21 Received payment in full from Lady GoGo.
22 Sold suitcases on account to Vagabond for $3,000. The cost of suitcases sold was $1,800.
30 Paid Holiday Manufacturers in full.
31 Granted Vagabond $270 credit for suitcases returned costing $162.
Ready-Set-Go s chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 201 Accounts Payable, No. 401 Sales Revenue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold.
Journalize the transactions for the month of July for Ready-Set-Go using a perpetual inventory system. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Aug 29, 2021 | Uncategorized
| Condensed financial data of Arma Inc. follow. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ARMA INC. |
|
|
|
|
|
|
|
| Comparative Balance Sheets |
|
|
|
|
|
|
|
| Dec-31 |
|
|
|
|
|
|
|
| Assets |
2011 |
|
2010 |
|
|
|
|
| Cash |
$90,800 |
|
$48,400 |
|
|
|
|
| Accounts receivable |
92,800 |
|
33,000 |
|
|
|
|
| Inventories |
112,500 |
|
102,850 |
|
|
|
|
| Prepaid expenses |
28,400 |
|
26,000 |
|
|
|
|
| Investments |
138,000 |
|
114,000 |
|
|
|
|
| Plant assets |
270,000 |
|
242,500 |
|
|
|
|
| Accumulated depreciation |
-50,000 |
|
-52,000 |
|
|
|
|
| Total |
$682,500 |
|
$514,750 |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
| Accounts payable |
$112,000 |
|
$67,300 |
|
|
|
|
| Accrued expenses payable |
16,500 |
|
17,000 |
|
|
|
|
| Bonds payable |
1,10,000 |
|
1,50,000 |
|
|
|
|
| Common stock |
2,20,000 |
|
1,75,000 |
|
|
|
|
| Retained earnings |
2,24,000 |
|
1,05,450 |
|
|
|
|
| Total |
$682,500 |
|
$514,750 |
|
|
|
|
|
|
|
|
|
|
|
|
| ARMA INC. |
|
|
|
|
|
|
|
| Income Statement |
|
|
|
|
|
|
|
| For the Year Ended December 31, 2011 |
|
|
|
|
|
|
|
| Sales |
|
|
$392,780 |
|
|
|
|
| Less: |
|
|
|
|
|
|
|
| Cost of goods sold |
$135,460 |
|
|
|
|
|
|
| Operating expenses, excluding depreciation |
12,410 |
|
|
|
|
|
|
| Depreciation expense |
46,500 |
|
|
|
|
|
|
| Income taxes |
27,280 |
|
|
|
|
|
|
| Interest expense |
4,730 |
|
|
|
|
|
|
| Loss on sale of plant assets |
7,500 |
|
2,33,880 |
|
|
|
|
| Net income |
|
|
$158,900 |
|
|
|
|
|
|
|
|
|
|
|
|
| Additional information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1. New plant assets costing $85,000 were purchased for cash during the year. |
| 2. Old plant assets having an original cost of $57,500 were sold for $1,500 cash. |
| 3. Bonds matured and were paid off at face value for cash. |
|
|
| 4. A cash dividend of $40,350 was declared and paid during the year. |
|
|
|
|
|
|
|
|
|
| Complete the statement of cash flows using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) |
Aug 29, 2021 | Uncategorized
Refer to the information given in the preceding case for Lehighton Chalk Company. Required:
1.Reconcile Lehightons income reported under absorption and variable costing, during each year, by comparing the following two amounts on each income statement:
- Cost of goods sold
- Fixed cost (expensed as a period expense)
2.What was Lehightons total income across both years under absorption costing and under variable costing? 3.What was the total sales revenue across both years under absorption costing and under variable costing?
4.What was the total of all costs expensed on the income statements across both years under absorption costing and under variable costing?
5.Subtract the total costs expensed across both years [requirement (4)] from the total sales revenue across both years [requirement (3)]: (a) under absorption costing and (b) under variable costing.
6. Comment-on the results obtained in requirements (1), (2), (3), and (4) in light of the following assertion: Timing is the key in distinguishing between absorption and variable costing.
Aug 29, 2021 | Uncategorized
Recording and Posting Accrual Basis Journal Entries
Ricky s Piano Rebuilding Company has been operating for one year (2012). At the start of 2013, its income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $ 6,000 Accounts Payable $ 8,000
Accounts Receivable 25,000 Unearned Revenue (deposits) 3,200
Supplies 1,200 Notes Payable 40,000
Equipment 8,000 Contributed Capital 8,000
Land 6,000 Retained Earnings 9,000
Building 22,000
Required:
1. Create T-accounts for the balance sheet accounts and for these additional accounts: Piano
Rebuilding Revenue, Rent Revenue, Wages Expense, and Utilities Expense. Enter the beginning balances.
2. Prepare journal entries for the following January 2010 transactions, using the letter of each transaction as a reference:
a. Received a $500 deposit from a customer who wanted her piano rebuilt in February.
b. Rented a part of the building to a bicycle repair shop; $300 rent received for January.
c. Delivered five rebuilt pianos to customers who paid $14,500 in cash.
d. Delivered two rebuilt pianos to customers for $7,000 charged on account.
e. Received $6,000 from customers as payment on their accounts.
f. Received an electric and gas utility bill for $350 for January services to be paid in February.
g. Ordered $800 in supplies.
h. Paid $1,700 on account in January.
i. Paid $10,000 in wages to employees in January for work done this month.
j. Received and paid cash for the supplies in (g).
3. Post the journal entries to the T-accounts. Show the unadjusted ending balances in the T-accounts
Aug 29, 2021 | Uncategorized
Recording and Posting Accrual Basis Journal Entries
Ricky s Piano Rebuilding Company has been operating for one year (2012). At the start of 2013, its income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $ 6,000 Accounts Payable $ 8,000
Accounts Receivable 25,000 Unearned Revenue (deposits) 3,200
Supplies 1,200 Notes Payable 40,000
Equipment 8,000 Contributed Capital 8,000
Land 6,000 Retained Earnings 9,000
Building 22,000
Required:
1. Create T-accounts for the balance sheet accounts and for these additional accounts: Piano
Rebuilding Revenue, Rent Revenue, Wages Expense, and Utilities Expense. Enter the beginning balances.
2. Prepare journal entries for the following January 2010 transactions, using the letter of each transaction as a reference:
a. Received a $500 deposit from a customer who wanted her piano rebuilt in February.
b. Rented a part of the building to a bicycle repair shop; $300 rent received for January.
c. Delivered five rebuilt pianos to customers who paid $14,500 in cash.
d. Delivered two rebuilt pianos to customers for $7,000 charged on account.
e. Received $6,000 from customers as payment on their accounts.
f. Received an electric and gas utility bill for $350 for January services to be paid in February.
g. Ordered $800 in supplies.
h. Paid $1,700 on account in January.
i. Paid $10,000 in wages to employees in January for work done this month.
j. Received and paid cash for the supplies in (g).
3. Post the journal entries to the T-accounts. Show the unadjusted ending balances in the T-accounts
Aug 29, 2021 | Uncategorized
Redding Company has budgeted sales revenues as follows:
June July August
Credit sales 135,000 145,000 90,000
Cash sales 90,000 255,000 195,000
Total sales 225,000 400,000 285,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:
June 300,000
July 250,000
August 105,000
Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash. The company wishes to maintain a minimum cash balance of $50,000 at the end of each month.
Instructions:
Prepare a cash budget for the months of July and August.
Aug 29, 2021 | Uncategorized
2. ReddingCompanyhasbudgetedsalesrevenuesasfollows:
|
|
June
|
July
|
August
|
|
Creditsales
|
135,000
|
145,000
|
90,000
|
|
Cashsales
|
90,000
|
255,000
|
195,000
|
|
Totalsales
|
225,000
|
400,000
|
285,000
|
Pastexperienceindicatesthat60%ofthecreditsaleswillbecollectedinthemonthofsaleandthe remaining40%willbecollectedinthe followingmonth.Purchasesofinventoryarealloncreditand50% ispaidinthemonthofpurchaseand50%inthemonthfollowingpurchase.Budgetedinventory purchasesare:
|
June
|
300,000
|
|
July
|
250,000
|
|
August
|
105,000
|
Othercashdisbursementsbudgeted:(a)sellingand administrativeexpensesof$48,000 eachmonth,(b)
dividendsof$105,000 willbepaidinJuly,and(c) purchaseofequipmentinAugustfor$30,000 cash. Thecompanywishestomaintainaminimumcashbalanceof$50,000 attheendofeachmonth.
Instructions
PrepareacashbudgetforthemonthsofJulyandAugust.
Aug 29, 2021 | Uncategorized
Redster Company is a manufacturing firm. Presented below is information
concerning one of its products, Ander:
| Date |
Transaction |
Quantity |
Price/Cost |
| 1/1 |
Beginning inventory |
2,900 |
$10 |
| 2/12 |
Purchase |
3,300 |
$15 |
| 3/2 |
Sale |
2,400 |
$28 |
| 4/18 |
Purchase |
4,500 |
$18 |
| 5/31 |
Sale |
3,800 |
$30 |
Compute the cost of goods sold under the following situations:
1. Periodic system, FIFO cost flow
2. Perpetual system, FIFO cost flow
3. Periodic system, LIFO cost flow
4. Perpetual system, LIFO cost flow
5. Periodic system, weighted-average cost flow
6. Perpetual system, moving-average cost flow
Aug 29, 2021 | Uncategorized
1)First run a regression analysis using the BENEFITS column of all data points in the AIU data set as the independent variable and the INTRINSIC job satisfaction column of all data points in the AIU data set as the dependent variable. 2)Run a regression analysis using the BENEFITS column of all data points in the AIU data set as the independent variable and the EXTRINSIC job satisfaction column of all data points in the AIU data set as the dependent variable. 3)Run a regression analysis using the BENEFITS column of all data points in the AIU data set as the independent variable and the OVERALL job satisfaction column of all data points in the AIU data set as the dependent variable. 4)Create a graph with the trendline displayed for each of the three different regressions. What are the least squares regression line equations for each of the three different regressions? What are the slopes and the y-intercepts? What are the R-squared values for the three different regressions? Finally, make very specific comments and give reasons regarding any similarities or differences in the output results. Which regression produces the strongest correlation coefficient result? Why?
Aug 29, 2021 | Uncategorized
. Reiley Co. purchased land as a factory site for $1,000,000. Reiley paid $40,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance cost $2,400. Architect’s fees were $41,200. Excavation cost $10,040. The contractor was paid $2,400,000. Interest costs during construction were $170,000.
The cost of the building that should be recorded by Reiley Co. is (Points : 4)
$2,611,200
$2,615,840
$2,621,240
$2,661,240
Question 2.2. On October 1, Carr Co. began construction of a small building. Payments of $150,000 were made monthly for three months beginning October 1. The building was completed and ready for occupancy on December 31. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are (Points : 4)
$37,500
$150,000
$75,000
450,000
Question 3.3. During 2012, Foster Co. incurred average accumulated expenditures of $500,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2012 was a $600,000, 10%, 5-year note payable dated January 1, 2010. What is the amount of interest that should be capitalized by Foster during 2012? (Points : 4)
$0
$10,000
$50,000
$60,000
Question 4.4. On August 1, 2012, Kegan Corporation purchased a new machine on a deferred payment basis. A down payment of $3,000 was made and 4 monthly installments of $4,000 each are to be made beginning on September 1, 2012. The cash equivalent price of the machine was $16,200. Kegan incurred and paid installation costs amounting to $500. The amount to be capitalized as the cost of the machine is (Points : 4)
$16,500.
$16,200
$19,000
$16,700
Question 5.5. On December 1, Young Corporation exchanged 5,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Young at a cost of $40 per share, and on the exchange date the common shares of Young had a fair market value of $50 per share. Young received $9,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at (Points : 4)
$191,000.
$200,000
$241,000
$250,000
Question 6.6. Equipment that cost $55,000 and has accumulated depreciation of $25,000 is exchanged for similar equipment with a fair value of $40,000 and $10,000 cash is received (assume commercial substance).
The gain to be recognized from the exchange is (Points : 4)
$4,000 gain
$5,000 gain
$15,000 gain
$20,000 gain
Question 7.7. On March 6, 2013, Calle Corporation purchased machinery for $25,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. Calle uses straight-line depreciation and follows the half-year convention. What amount of depreciation expense should be recorded for 2013? (Points : 4)
$1,000
$1,250
$2,000
$2,500
Question 8.8. Witten Co. purchased machinery that was installed and ready for use on January 3, 2011, at a total cost of $230,000. Salvage value was estimated at $30,000. The machinery will be depreciated over five years using the double-declining-balance method. For the year 2012, Witten should record depreciation expense on this machinery of (Points : 4)
$48,000
$55,200
$60,000
$92,000
Question 9.9. On January 1, 2012, Reiley Co. purchased new machinery for $540,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years’-digits method. The accumulated depreciation on this machinery at December 31, 2013, should be (Points : 4)
$360,000
$324,000
$216,000
$180,000
Question 10.10. In January 2012, Kohl Mining Corporation purchased a mineral mine for $6,300,000 with removable ore estimated by geological surveys at 3,000,000 tons. The property has an estimated value of $600,000 after the ore has been extracted. Kohl incurred $1,740,000 of development costs preparing the property for the extraction of ore. During 2012, 300,000 tons were removed and sold. For the year ended December 31, 2012, Kohl should include what amount of depletion in its cost of goods sold? (Points : 4)
$646,000
$570,000
$744,000
$767,250
Question 11.11. The general ledger of Younger Corporation as of December 31, 2011, includes the following accounts:
Copyrights $20,000
Deposits with advertising agency $13,500
Discount on bonds payable $33,750
Goodwill $245,000
Trademarks $45,000
In the preparation of Younger’s balance sheet as of December 31, 2011, what should be reported as total intangible assets? (Points : 4)
$357,250.
$323,500.
$310,000.
$290,000.
Question 12.12. The following information is available for Barkley Company s patents:
Cost $860,000
Carrying amount $430,000
Expected future net cash flows $400,000
Fair value $320,000
Barkley would record a loss on impairment of (Points : 4)
$540,000
$110,000
$80,000
$30,000
Question 13.13. On January 1, 2010, equipment was purchased that cost $50,000, has a useful life of 10 years, and no residual value. At the beginning of 2014, it was decided that there were only four years remaining in the asset’s useful life, instead of six. Assuming the company uses the straight-line method, depreciation expense for 2014 should be (Points : 4)
$5,000
$6,250
$7,500
$8,750
Question 14.14.
The interest cost to be capitalized as part of the cost of an asset should be
(Points : 4)
the total interest cost actually incurred.
the cost of capital charge for stockholders’ equity.
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made.
that portion of average accumulated expenditures on which no interest cost was incurred.
Question 15.15. If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will (Points : 4)
be constant.
vary with unit sales.
vary with sales revenue.
vary with production.
Question 16.16. White Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should (Points : 4)
recognize an extraordinary loss for the period.
include a credit to the equipment accumulated depreciation account.
include a credit to the equipment account.
not be made if the equipment is still being used.
Question 17.17. Which of the following is true of depreciation accounting? (Points : 4)
Depreciation is not a matter of valuation.
Depreciation is an attempt to match revenues and expenses.
Depreciation is a process of cost allocation.
All of the above are true about depreciation.
Question 18.18. A loss on impairment of a limited-life intangible asset is the difference between the asset s (Points : 4)
carrying amount and the expected future net cash flows.
carrying amount and its fair value.
fair value and the expected future net cash flows.
cost and its fair value.
Question 19.19. Purchased goodwill should (Points : 4)
be written off as soon as possible against retained earnings.
be written off as soon as possible as an extraordinary item.
be written off by systematic charges as a regular operating expense over the period benefited.
not be amortized.
Question 20.20. Assets that qualify for interest cost capitalization include (Points : 4)
assets under construction for a company’s own use.
assets that are ready for their intended use in the earnings of the company.
assets that are not currently being used because of excess capacity.
All of these assets qualify for interest cost capitalization.
Aug 29, 2021 | Uncategorized
. Reiley Co. purchased land as a factory site for $1,000,000. Reiley paid $40,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance cost $2,400. Architect’s fees were $41,200. Excavation cost $10,040. The contractor was paid $2,400,000. Interest costs during construction were $170,000.
The cost of the building that should be recorded by Reiley Co. is (Points : 4)
$2,611,200
$2,615,840
$2,621,240
$2,661,240
Question 2.2. On October 1, Carr Co. began construction of a small building. Payments of $150,000 were made monthly for three months beginning October 1. The building was completed and ready for occupancy on December 31. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are (Points : 4)
$37,500
$150,000
$75,000
450,000
Question 3.3. During 2012, Foster Co. incurred average accumulated expenditures of $500,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2012 was a $600,000, 10%, 5-year note payable dated January 1, 2010. What is the amount of interest that should be capitalized by Foster during 2012? (Points : 4)
$0
$10,000
$50,000
$60,000
Question 4.4. On August 1, 2012, Kegan Corporation purchased a new machine on a deferred payment basis. A down payment of $3,000 was made and 4 monthly installments of $4,000 each are to be made beginning on September 1, 2012. The cash equivalent price of the machine was $16,200. Kegan incurred and paid installation costs amounting to $500. The amount to be capitalized as the cost of the machine is (Points : 4)
$16,500.
$16,200
$19,000
$16,700
Question 5.5. On December 1, Young Corporation exchanged 5,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Young at a cost of $40 per share, and on the exchange date the common shares of Young had a fair market value of $50 per share. Young received $9,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at (Points : 4)
$191,000.
$200,000
$241,000
$250,000
Question 6.6. Equipment that cost $55,000 and has accumulated depreciation of $25,000 is exchanged for similar equipment with a fair value of $40,000 and $10,000 cash is received (assume commercial substance).
The gain to be recognized from the exchange is (Points : 4)
$4,000 gain
$5,000 gain
$15,000 gain
$20,000 gain
Question 7.7. On March 6, 2013, Calle Corporation purchased machinery for $25,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. Calle uses straight-line depreciation and follows the half-year convention. What amount of depreciation expense should be recorded for 2013? (Points : 4)
$1,000
$1,250
$2,000
$2,500
Question 8.8. Witten Co. purchased machinery that was installed and ready for use on January 3, 2011, at a total cost of $230,000. Salvage value was estimated at $30,000. The machinery will be depreciated over five years using the double-declining-balance method. For the year 2012, Witten should record depreciation expense on this machinery of (Points : 4)
$48,000
$55,200
$60,000
$92,000
Question 9.9. On January 1, 2012, Reiley Co. purchased new machinery for $540,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years’-digits method. The accumulated depreciation on this machinery at December 31, 2013, should be (Points : 4)
$360,000
$324,000
$216,000
$180,000
Question 10.10. In January 2012, Kohl Mining Corporation purchased a mineral mine for $6,300,000 with removable ore estimated by geological surveys at 3,000,000 tons. The property has an estimated value of $600,000 after the ore has been extracted. Kohl incurred $1,740,000 of development costs preparing the property for the extraction of ore. During 2012, 300,000 tons were removed and sold. For the year ended December 31, 2012, Kohl should include what amount of depletion in its cost of goods sold? (Points : 4)
$646,000
$570,000
$744,000
$767,250
Question 11.11. The general ledger of Younger Corporation as of December 31, 2011, includes the following accounts:
Copyrights $20,000
Deposits with advertising agency $13,500
Discount on bonds payable $33,750
Goodwill $245,000
Trademarks $45,000
In the preparation of Younger’s balance sheet as of December 31, 2011, what should be reported as total intangible assets? (Points : 4)
$357,250.
$323,500.
$310,000.
$290,000.
Question 12.12. The following information is available for Barkley Company s patents:
Cost $860,000
Carrying amount $430,000
Expected future net cash flows $400,000
Fair value $320,000
Barkley would record a loss on impairment of (Points : 4)
$540,000
$110,000
$80,000
$30,000
Question 13.13. On January 1, 2010, equipment was purchased that cost $50,000, has a useful life of 10 years, and no residual value. At the beginning of 2014, it was decided that there were only four years remaining in the asset’s useful life, instead of six. Assuming the company uses the straight-line method, depreciation expense for 2014 should be (Points : 4)
$5,000
$6,250
$7,500
$8,750
Question 14.14.
The interest cost to be capitalized as part of the cost of an asset should be
(Points : 4)
the total interest cost actually incurred.
the cost of capital charge for stockholders’ equity.
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made.
that portion of average accumulated expenditures on which no interest cost was incurred.
Question 15.15. If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will (Points : 4)
be constant.
vary with unit sales.
vary with sales revenue.
vary with production.
Question 16.16. White Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should (Points : 4)
recognize an extraordinary loss for the period.
include a credit to the equipment accumulated depreciation account.
include a credit to the equipment account.
not be made if the equipment is still being used.
Question 17.17. Which of the following is true of depreciation accounting? (Points : 4)
Depreciation is not a matter of valuation.
Depreciation is an attempt to match revenues and expenses.
Depreciation is a process of cost allocation.
All of the above are true about depreciation.
Question 18.18. A loss on impairment of a limited-life intangible asset is the difference between the asset s (Points : 4)
carrying amount and the expected future net cash flows.
carrying amount and its fair value.
fair value and the expected future net cash flows.
cost and its fair value.
Question 19.19. Purchased goodwill should (Points : 4)
be written off as soon as possible against retained earnings.
be written off as soon as possible as an extraordinary item.
be written off by systematic charges as a regular operating expense over the period benefited.
not be amortized.
Question 20.20. Assets that qualify for interest cost capitalization include (Points : 4)
assets under construction for a company’s own use.
assets that are ready for their intended use in the earnings of the company.
assets that are not currently being used because of excess capacity.
All of these assets qualify for interest cost capitalization.
Aug 29, 2021 | Uncategorized
1) Unstructured interviews are best used for
A. measuring worker productivity
B. solving manufacturing defect problems
C. assessing management effectiveness
D. asking individualized questions with no specific order
2) A recent study of breast cancer revealed that 13% of the women in the sample used antibiotics more than 500 days in their lifetime. Further, 79% of these heavy antibiotics users developed breast cancer. According to the American Cancer Society, one in twelve women will develop breast cancer at some time in her life. Of the numbers mentioned, which are parameters?
A. 13% and 79%
B. 13% and one in twelve
C. 79% and 500 days
D. 79% and one in twelve
3) Basic business research methods would be used to
A. identify factors that affect worker absenteeism
B. evaluate a retail store s inventory tracking system
C. assess consumer acceptance of a redesigned computer keyboard
D. determine the effect of a 10% price increase on the sale of school supplies
4) The collection and summarization of the socioeconomic and physical characteristics of the employees of a particular firm is an example of
A. inferential statistics
B. descriptive statistics
C. a parameter
D. an estimation
5) Which of the following is an example of statistical inference?
A. Counting the number of patients who file malpractice suits after being discharged from hospitals in New York
B. Calculating the mean number of fruit trees damaged by Mediterranean fruit flies in California last year
C. Calculating the mean age of patients discharged from hospitals in New York in 1997
D. Calculating the amount of fly spray needed for your orchard next season
6) A logically conjectured statement that describes the relationship between two or more variables and is formulated for empirical testing is a
A. hypothesis
B. theory
C. construct
D. thesis statement
7) The variable that causes a measurable effect or change on the dependent variable is
A independent B. dependent
C. intervening
D. moderating
8) Survey questionnaires may be effectively used for research to determine
A. defect rates in automobile parts coming off a production line
B. the effect of price changes on sales volume
C. the attitudes of prospective voters
D. how temperature and humidity affect concrete cure time
9) A company is designing a survey to obtain information on the reliability of a product it sells. To obtain the most valid research information, who should the company send this type of survey to?
A. A random sample of its customers
B. Vendors
C. Customers who have bought the product
D. Employees
10) The following practice is considered ethical when conducting business research:
A. Disclosing some, but not all, financial interests that may affect research
B. Allowing participants to withdraw from a business research project whenever they ask to do so
C. Keeping minimal records of research activities and research design
D. Revealing only a small part of the purpose of the business research project
11) If a population distribution is skewed to the right, then given a random sample from that population, one would expect that the
A. median is greater than the mean
B. mode is equal to the mean
C. median is less than the mean
D. median is equal to the mean
12)
Textbook Price Number of Textbooks
$25 to $35 2
$35 to $45 16
$45 to $55 5
$55 to $65 7
$65 to $75 20
Estimate the standard deviation of the price of a textbook.
A. 14.03
B. 33.85
C. 196.78
D. 729.00
13)
Textbook Price Number of Textbooks
$25 to $34.99 2
$35 to $44.99 16
$45 to $54.99 5
$55 to $64.99 7
$65 to $74.99 20
Estimate the mean price of a textbook.
A. $554.00
B. $11.08
C. $60.00
D. $55.40
14) A supermarket has determined that daily demand for eggs has a bell-shaped distribution, with a mean of 55 cartons and a standard deviation of six cartons. If the supermarket begins each morning with a stock of 61 cartons of eggs, approximately what percentage of days will there be a surplus of eggs?
A. 16%
B. 18%
C. 68%
D. 84%
15) Which of these measurement scales has a rank order associated with its use?
A. Ratio
B. Ordinal
C. Nominal
D. Likert
16) Identify the scale that has no meaningful zero.
A. Nominal
B. Ordinal
C. Interval
D. Ratio
17) __________ is a measure of the chance that an uncertain event will occur.
A. Random experiment
B. Sample space
C. Probability
D. A complement
18) The Information Commons in the main library has 150 personal computers. The probability that any of them will require repair on a given day is 0.02. To find the probability that 25 of the computers will require repair, one would use what type of probability distribution?
A. Binomial B. Poisson
C. Normal
D. Hypergeometric
19) A multiple-choice test has 20 questions. There are four choices for each question. A student comes to class with four different colored balls of identical shape and size in her pocket. She has decided to draw one ball from her pocket per question and allow the color of the ball to select the answer for each question. What type of probability distribution can be used to figure out her chance of getting 10 questions right?
A. Hypergeometric
B. Poisson
C. Normal
D. Binomial
20) Which of the following cannot generate a Poisson distribution?
A. The number of people at a movie theatre on Friday evening
B. The number of customers arriving at an automatic teller machine (ATM) in a minute
C. The number of defects in a new automobile
D. The number of goals in the World Cup soccer game
21) Which of the following is a characteristic of every binomial distribution?
A. Each outcome is dependent on the previous outcome.
B. The probability of success increases from trial to trial.
C. Each outcome is mutually exclusive.
D. The outcome of the trial depends on the number of trials.
22) The average qualifying speed for a championship NASCAR race is 145.65 mph and the standard deviation is 9.45 mph. Only drivers who obtain z-scores greater than 1.2 will qualify for the race. If the speeds are normally distributed, what minimum speed must be clocked to compete for the trophy?
A. 146.9 mph
B. 155.2 mph
C. 157.0 mph
D. 174.8 mph
23) Trudy Jones recently completed her certification examination and learned that her z-score was -2.5. The examining board also informed her that a failure to pass would equal all scores that were one or more standard deviations below the mean and that those with scores higher than two standard deviations above the mean would receive a special commendation award. Trudy can conclude that she
A. failed the exam
B. needs more data to determine if she passed the exam
C. passed the exam and will receive a special commendation award
D. passed the exam, but no commendation award is forthcoming
24) The use of the student s distribution requires which of the following assumptions?
A. The sample size is greater than 30.
B. The population variance is known.
C. The population is normal.
D. The sample is drawn from a positively skewed distribution.
25) The standard error of the sample mean is equal to 5 when n=25. If the sample size increases by a factor of four, how will the standard error change?
A. It will be double.
B. It will be cut in half.
C. It will be cut to 1/4 of 5.
D. It will quadruple.
26) For a sample size of 1, the sampling distribution of the mean will be normally distributed
A. regardless of the shape of the population
B. only if the shape of the population is positively skewed
C. only if the population values are larger than 30
D. only if the population is normally distributed
27) A 95% confidence interval for the population mean indicates that
A. with an infinite number of samples, there s a 5% chance that the population mean will be outside the interval
B. more sampling is required to increase the confidence interval to 100%
C. the sampling process is biased
D. 95% of the observations from any sample will fall within the interval
28) A random sample of 16 ATM transactions at the First National Bank of Flintrock revealed a mean transaction time of 2.8 minutes with a standard deviation of 1.2 minutes. The width, in minutes, of the 95% confidence interval for the true mean transaction time is
A. 0.639
B. 0.588
C. 0.300
D. 2.131
29) All other things being equal, which is narrower, a 95% confidence interval with n=100 or a 99% confidence interval with n=30?
A. The 95% confidence interval
B. The 99% confidence interval
C. The same width
D. Need the margin of error to tell
30) When the only sources of variation in a production process are caused by chance, the process is said to be
A. out of balance but under control
B. out of control but in balance C. under control
D. out of control
Topic:
Define business research and its purpose. Question: Basic business research methods would be used to
Topic:
Develop a questionnaire for survey research. Question: A company is designing a survey to obtain information on the reliability of a product it sells. To obtain the most valid research information, who should the company send this type of survey to?
Aug 29, 2021 | Uncategorized
1) What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?
A. 1.96
B. 2.33
C. 2.58
D. 1.65
2) In classical hypothesis testing, the test statistic is to the critical value what the __________.
A. p-value is to alpha
B. critical value is to alpha
C. test statistic is to the p-value
D. level of significance is to the test statistic
3) For a hypothesis test of a single population mean at 95% confidence level, a calculated Z score of 1.7 supports the conclusion that
A. the population mean is greater than the hypothesized value
B. the null hypothesis cannot be rejected
C. the sample is biased
D. the population mean is less than expected
4) If the paired differences are normal in a test of mean differences, then the distribution used for testing is the
A. normal distribution
B. chi-square
C. student distribution
D. F distribution
5) One hundred women were polled and 60 reported successfully communicating an automobile problem to an auto repairman. A sample of 150 men had 95 reporting the same success. The value of the test statistic for a test of the equality of proportions is
A. -0.5319
B. 0.7293
C. -0.419
D. 0.2702
6) Weekly sales of iPods at 20 Best Buy stores are compared before and after installing a new eye-catching display. To determine if the display is effective in increasing sales, what type of statistical test would you perform?
A. Comparison of means using independent samples using a t-test
B. Comparison of proportions using independent samples using a z-test
C. Comparison of means using a paired z-test
D. Comparison of means using a paired t-test
7) When is it appropriate to use the paired difference t-test?
A. Four samples are compared at once.
B. Any two samples are compared.
C. Two independent samples are compared.
D. Two dependent samples are compared.
8) A survey of hotels found that the average hotel room rate in New Orleans is $88.42 and the average room rate in Phoenix is $80.61. The survey sampled 50 hotels in each city. The standard deviations were $5.62 and $4.83, respectively. At alpha=.05, it can be concluded that there is a significant different in the rates?
A. 7.45
B. -1.96
C. 1.96
D. -7.45
9) If the paired differences are normal in a test of mean differences, the distribution used for testing is the
A. normal distribution
B. chi-square
C. student t distribution
D. F distribution
10) The accountant for Thomas s Furniture Store is concerned regarding the outstanding receivable owed the company. There has been a cash flow problem and it is believed that the slow collection of accounts receivable is partially the blame. The accountant believes that 40% of the present accounts are more than 4 months behind in making payments. To be able to make a decision regarding this belief, a random sample of 100 accounts was taken. It was found that 37 accounts were more than 4 months late. Did the sample data confirm the accountant s belief? Use the .05 significant level for the statistical test.
A. There is not enough evidence to confirm or deny the belief.
B. The accountant’s belief is not confirmed.
C. The accountant’s belief is confirmed.
D. The accountant needed to take a larger sample.
11) New college business graduates are finding it difficult to get a job. A business journal has reported that only one in five graduates is able to find a job within 6 months of their graduation. A report by University of Phoenix indicated that out of a survey of 300 recent business graduates, 75 had jobs. You are a business major at University of Phoenix and have a concern about getting a job. Based on this data, will a graduate of University of Phoenix have a better chance of getting a job in the first 6 months after graduation? Use the .05 significant level for the test.
A. No, there is not a significant difference.
B. It cannot be predicted based on this data.
C. Yes, there is a significant difference.
D. The business journal information is incorrect.
12) Analysis of variance (ANOVA) is used to
A. compare nominal data
B. compute t- test
C. compare population proportion
D. simultaneously compare several population means
13) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be
A. a paired t- test
B. two different t tests
C. an ANOVA test
D. a two sample test
14) Sound engineers studied factors that might affect the output, in decibels, of a rock concert s speaker system. The desired level of significance was a = .05. The results of their ANOVA tests are shown:
Source of Variation SS df MS F P-value
Amplifier 99.02344 99.02344 0.005718
Position 93.98698 31.32899 3.215807 0.051003
Interaction 10.15365 3 3.384549 0.347412 0.791505
Error 155.875 16 9.742188
Total 359.0391 23
The interaction between the Position and Amplifier treatments was
A. very significant
B. slightly significant
C. insignificant
D. highly correlated
15) Totto, an automobile manufacturer, has designed a radically new engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, below regular, premium, and super premium. The test car made three trial runs on the test track using each of the grades and the miles per gallon were recorded. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?
A. 1.96
B. 4.07
C. 2.33
D. 12.00
16) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?
A. Too many degrees of freedom
B. A difference between at least one pair of population means
C. No difference between the population means
D. The variances are the same
17) Nonparametric statistics are used when
A. you have qualitative data, with your variables being measured at the nominal or interval level
B. you have qualitative data, with your variables being measured at the ordinal or ratio level
C. you have qualitative data, with your variables being measured at the nominal or ordinal level
D. you have qualitative data, with your variables being measured at the ordinal or interval level
18) The nonparametric test most commonly used for testing the statistical independence between two variables is
A. the Kruskal- Wallis test
B. the Chi- Square test
C. the Mann Whitney test
D. the Sign test
19) What nonparametric test is used when the assumptions for the parametric ANOVA cannot be met? Its purpose is to test whether three or more populations are equal. The data must be at least ordinal scaled.
A. Students t
B. Kruskal- Wallis
C. Mann-Whitney
D. ANOVA
20) Rachael Smith is the personnel manager at Johnson and Johnston, an accounting firm. She is concerned about absenteeism, which seems to be an increasing problem, especially after days off work. She decided to sample the records to determine if absenteeism was distributed evenly throughout the 6-day work week. The null hypothesis to be tested was: Absenteeism is distributed evenly throughout the week. The sample results were:
Day of Week Number Absent
Monday 12
Tuesday 9
Wednesday 11
Thursday 10
Friday 9
Saturday 9
What is the critical value of chi-square with a significant level of = 0.05?
A. 11.070
B. 12.592
C. 13.388
D. 15.033
21) A public opinion poll surveyed a simple random sample of voters. Respondents were classified by gender and by voting preference Republican, Democrat, or Independent. The results follow.
Voting Preferences Republican Democrat Independent Row total
Male 200 150 50 400
Female 250 300 50 600
Column total 450 450 100 1000
If you conduct a chi-square test of independence, what is the expected frequency count of male Independents?
A. 50
B. 60
C. 40
D. 30
22) What parametric test is equivalent to the nonparametric Spearman’s rank test?
A. T-test of correlation coefficient
B. T-test of two sample means
C. T-test of one sample mean.
D. T-test of two sample proportions
23) What is the variable used to predict another variable called?
A. Independent variable
B. Dependent variable
C. Moderating variable
D. Intervening variable
24) Michelle used a sample of 50 U.S. cities to estimate the relationship between crime, or annual property crimes per 100,000 persons, and income, or median income per capita. Her estimated regression equation was crime = 428 – .01 income. Assuming her model is statistically significant, if income decreases by $1,000, we would predict that crime will
A. decrease by 1
B. increase by 10
C. decrease by 10
D. increase by 100
25) In the least squares equation, Y’ = 12 + 25X the value of 25 indicates
A. the y- intercept
B. for each unit increase in ‘x’, y’ increases by 25
C. for each unit increase in ‘y’, ‘x’ increases by 25
D. the residual of ‘x’ factor
26) A test is conducted in eight cities to see if giving away free transit system maps will increase bus ridership. In a regression analysis, the dependent variable is the increase in bus ridership in thousands of persons from the start of the test until its conclusion. The independent variables are X1 = the number in thousands of free maps distributed and X2 = a binary equal to 1, if the city has free downtown parking and 0 otherwise. The estimated regression equation is Y = 1.32+.0345X1-1.45X2. If the Y value for city 3 is 7.3, X1 = 140, and X2 = 0 the residual for city 3 in thousands is:
A. 6.34
B. 1.15
C. .57
D. 2.01
27) The following linear trend equation was developed for the annual sales of the Tractor Manufacturing Company. Y’ = 355 + 50t in thousands of dollars. How much are sales increasing by?
A. $50,000 per year
B. $5,00 per month
C. $500,000 per year
D. $6,000 per year
28) The time series component that reflects variability over short, repetitive time periods that last less than one year is called
A. long-term trend
B. cyclical variation
C. seasonal variation
D. irregular variation
29) A research company has been hired by a realty company to do an analysis of heating cost of homes in the region. The realty company wanted to be able to predict the heating cost of a typical single-family home. The realty company was constantly being asked questions regarding heating costs by potential home buyers. It was believed that these variables would impact heating costs (Y’): mean daily outdoor temperature (X1), the number of inches of insulation (X2), and the age in years of the furnace (X3). The multiple regression analysis produced the following regression equation: Y’ = 427.2 4.58X1 14.83X2 + 6.10X3. Which statement is correct based on this analysis?
A. The age of the furnace has an indirect relationship with heating costs.
B. There is an inverse relationship between outdoor temperature and heating costs.
C. There is no real clear relationship between these variables.
D. There exists a direct relationship between inches of insulation and heating costs.
30) If we fit a linear trend to data that are growing exponentially,
A. the fitted trend will be too high at the end
B. the forecasts, if extrapolated, will be too low
C. the forecasts, if extrapolated, will be too high
D. the fitted trend will be too low in the middle
Aug 29, 2021 | Uncategorized
Question 1
- A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = ?5%). If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT?
|
|
The constant growth model cannot be used because the growth rate is negative.
|
|
|
The company’s dividend yield 5 years from now is expected to be 10%.
|
|
|
The company’s expected stock price at the beginning of next year is $9.50.
|
|
|
The company’s expected capital gains yield is 5%.
|
|
|
The company’s current stock price is $20.
|
1 points
Question 2
- Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
|
|
Beta; beta.
|
|
|
Variance; correlation coefficient.
|
|
|
Beta; variance.
|
|
|
Coefficient of variation; beta.
|
|
|
Standard deviation; correlation coefficient.
|
1 points
Question 3
- Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT?
|
|
A project’s NPV increases as the WACC declines.
|
|
|
A project’s discounted payback increases as the WACC declines.
|
|
|
A project’s MIRR is unaffected by changes in the WACC.
|
|
|
A project’s IRR increases as the WACC declines.
|
|
|
A project’s regular payback increases as the WACC declines.
|
1 points
Question 4
- Which of the following risk types can be diversified by adding stocks to a portfolio?
|
|
Systematic Risk.
|
|
|
Default risk.
|
|
|
Non diversifiable risks.
|
|
|
Unique risks.
|
|
|
Market Risk.
|
1 points
Question 5
- Firms that make investment decisions based upon the payback rule may be biased towards rejecting projects:
|
|
with early cash inflows.
|
|
|
With short lives.
|
|
|
With long lives.
|
|
|
Those with negative NPVs.
|
|
|
None of above.
|
1 points
Question 6
- When a project’s internal rate of return equals its opportunity cost of capital, then:
|
|
The net present value will be negative.
|
|
|
The net present value is a linear combination of MIRR and IRR.
|
|
|
The net present value will be positive.
|
|
|
The project has no cash inflows.
|
|
|
The net present value will be zero.
|
1 points
Question 7
- When hard rationing exists, projects may be evaluated by the use of ?
|
|
Payback period.
|
|
|
borrowing rather than lending projects.
|
|
|
Modified payback period.
|
|
|
A profitability index.
|
|
|
MIRR.
|
1 points
Question 8
- Because of its age, your car costs $3000 annually in maintenence expense. You could replace it with a newer vehicle costing $6000. Both vehicles would be expected to last 4 more years. If your opportunity cost is 10% what should be the maximum annual maintenance expense be on the newer vehicle to justify the purchase ? (Hint : EAC on the new vehicle should not exceed $3000)
|
|
$1250.34.
|
|
|
$1107.18.
|
|
|
$1893.88.
|
|
|
$3000.00.
|
|
|
$1415.51.
|
1 points
Question 9
- Taggart Inc.’s stock has a 50% chance of producing a 39% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm’s expected rate of return?
|
|
16.90%
|
|
|
15.55%
|
|
|
16.22%
|
|
|
16.06%
|
|
|
18.42%
|
1 points
Question 10
- Tom O’Brien has a 2-stock portfolio with a total value of $100,000. $55,000 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolio’s beta?
1 points
Question 11
- Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 22.5% and a beta of 1.80. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock?
|
|
14.82% and 1.25
|
|
|
12.15% and 1.26
|
|
|
13.49% and 1.11
|
|
|
11.18% and 1.06
|
|
|
10.69% and 1.03
|
1 points
Question 12
- Cooley Company’s stock has a beta of 1.60, the risk-free rate is 2.25%, and the market risk premium is 5.50%. What is the firm’s required rate of return?
|
|
9.83%
|
|
|
10.39%
|
|
|
11.05%
|
|
|
9.28%
|
|
|
13.81%
|
1 points
Question 13
- Roenfeld Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company’s stock?
|
State of the Economy
|
Probability of State Occurring
|
Stock’s Expected Return
|
|
Boom
|
0.11
|
25%
|
|
Normal
|
0.50
|
15%
|
|
Recession
|
0.39
|
5%
|
|
|
0.6121
|
|
|
0.3992
|
|
|
0.6653
|
|
|
0.5322x
|
|
|
0.6387
|
1 points
Question 14
- You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each. The portfolio’s beta is 1.12. You plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.25. What will the portfolio’s new beta be?
|
|
0.978
|
|
|
1.160
|
|
|
1.172
|
|
|
1.138
|
|
|
1.194
|
1 points
Question 15
- Returns for the Dayton Company over the last 3 years are shown below. What’s the standard deviation of the firm’s returns? (Hint: This is a sample, not a complete population, so the sample standard deviation formula should be used.)
|
Year
|
Return
|
|
2011
|
21.00%
|
|
2010
|
-12.50%
|
|
2009
|
15.00%
|
|
|
14.47%
|
|
|
15.54%
|
|
|
17.15%
|
|
|
20.36%
|
|
|
17.86%
|
1 points
Question 16
- A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is r = 10.5%, and the expected constant growth rate is g = 2.8%. What is the stock’s current price?
|
|
$11.20
|
|
|
$11.88
|
|
|
$11.10
|
|
|
$12.08
|
|
|
$9.74
|
1 points
Question 17
- If D = $2.25, g (which is constant) = 3.5%, and P = $40, what is the stock’s expected dividend yield for the coming year?
|
|
6.81%
|
|
|
5.82%
|
|
|
5.53%
|
|
|
5.47%
|
|
|
5.59%
|
1 points
Question 18
- Bay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D = $1.25). The stock sells for $34.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
|
|
5.78%
|
|
|
8.39%
|
|
|
7.08%
|
|
|
6.88%
|
|
|
8.46%
|
1 points
Question 19
- Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $8.00 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell?
|
|
$123.08
|
|
|
$99.69
|
|
|
$121.85
|
|
|
$148.92
|
|
|
$100.92
|
1 points
Question 20
- The Francis Company is expected to pay a dividend of D = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company’s beta is 1.35, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company’s current stock price?
|
|
$18.20
|
|
|
$28.80
|
|
|
$19.82
|
|
|
$20.97
|
|
|
$23.04
|
1 points
Question 21
- Nachman Industries just paid a dividend of D0 = $2.75. Analysts expect the company’s dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?
|
|
$93.47
|
|
|
$78.52
|
|
|
$108.43
|
|
|
$111.23
|
|
|
$97.21
|
1 points
Question 22
- A company’s perpetual preferred stock currently sells for $125.00 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm’s cost of preferred stock?
|
|
5.12%
|
|
|
5.46%
|
|
|
7.28%
|
|
|
6.74%
|
|
|
7.61%
|
1 points
Question 23
- You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 16.50%. The firm will not be issuing any new stock. What is its WACC?
|
|
8.87%
|
|
|
12.15%
|
|
|
13.25%
|
|
|
8.32%
|
|
|
10.95%
|
1 points
Question 24
- Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project’s NPV? Note that if a project’s projected NPV is negative, it should be rejected.
|
WACC:
|
11.75%
|
|
|
|
|
Year
|
0
|
1
|
2
|
3
|
|
Cash flows
|
-$1,000
|
$500
|
$500
|
$500
|
|
|
$206.09
|
|
|
$216.40
|
|
|
$179.30
|
|
|
$199.91
|
|
|
$204.03
|
1 points
Question 25
- Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,125.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC?
|
|
9.60%
|
|
|
10.21%
|
|
|
7.35%
|
|
|
8.65%
|
|
|
8.30%
|
1 points
Question 26
- Warr Company is considering a project that has the following cash flow data. What is the project’s IRR? Note that a project’s projected IRR can be less than the WACC or negative, in both cases it will be rejected.
|
Year
|
0
|
1
|
2
|
3
|
4
|
|
Cash flows
|
-$825
|
$400
|
$400
|
$400
|
$400
|
|
|
35.95%
|
|
|
32.98%
|
|
|
39.91%
|
|
|
24.74%
|
|
|
28.69%
|
1 points
Question 27
- Taggart Inc. is considering a project that has the following cash flow data. What is the project’s payback?
|
Year
|
0
|
1
|
2
|
3
|
|
Cash flows
|
-$1,300
|
$500
|
$500
|
$500
|
|
|
2.60 years
|
|
|
1.98 years
|
|
|
2.76 years
|
|
|
3.09 years
|
|
|
2.73years
|
1 points
Question 28
- Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.
|
WACC:
|
13.50%
|
|
|
|
|
Year
|
0
|
1
|
2
|
3
|
|
Cash flows
|
-$1,000
|
$450
|
$450
|
$450
|
|
|
15.65%
|
|
|
12.08%
|
|
|
17.35%
|
|
|
16.89%
|
|
|
15.49%
|
1 points
Question 29
- Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback?
|
WACC:
|
10.00%
|
|
|
|
|
Year
|
0
|
1
|
2
|
3
|
|
Cash flows
|
-$625
|
$500
|
$500
|
$500
|
|
|
1.30years
|
|
|
1.41 years
|
|
|
1.58years
|
|
|
1.09years
|
|
|
1.07years
|
1 points
Question 30
- Francis Inc.’s stock has a required rate of return of 10.25%, and it sells for $70.00 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D ?
|
|
$3.12
|
|
|
$2.98
|
|
|
$2.23
|
|
|
$3.42
|
|
|
$2.83
|
Aug 29, 2021 | Uncategorized
Question 1.1 Equipment costing $40,000 with a salvage value of $8,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for year 3 would be (Points : 2)
$4,800.
$10,667.
$8,000.
$6,400.
Question 2. 2. Farr Company purchased a new van for floral deliveries on January 1, 2012. The van cost $48,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2013? (Points : 2)
$7,680
$23,040
$30,720
$11,520
Question 3. 3. Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be (Points : 2)
$35,400.
$29,400.
$24,600.
$24,000.
Question 4. 4. A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its 4-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is (Points : 2)
20%.
25%.
50%.
5%.
Question 5. 5. Depreciation is the process of allocating the cost of a plant asset over its service life in (Points : 2)
an equal and equitable manner.
an accelerated and accurate manner.
a systematic and rational manner.
a conservative market-based manner.
Question 6. 6. If a plant asset is retired before it is fully depreciated, and no salvage or scrap value is received, (Points : 2)
a gain on disposal will be recorded.
phantom depreciation must be taken as though the asset were still on the books.
a loss on disposal will be recorded.
no gain or loss on disposal will be recorded.
Question 7. 7. On January 1, a machine with a useful life of five years and a residual value of $25,000 was purchased for $75,000. What is the depreciation expense for year 2 under the double-declining-balance method of depreciation? (Points : 2)
$18,000
$30,000
$24,000
$14,400
Question 8. 8. Mattox Company is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true? (Points : 2)
Excavation fees are capitalized but building permit fees are not.
Architect fees are capitalized but building permit fees are not.
Interest is capitalized during the construction as part of the cost of the building.
The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds.
Question 9. 9. A plant asset was purchased on January 1 for $50,000 with an estimated salvage value of $10,000 at the end of its useful life. The current year’s Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is (Points : 2)
10 years.
8 years.
5 years.
3 years.
Question 10. 10. On October 1, 2012, Holt Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life and $20,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2012, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation? (Points : 2)
$52,000
$60,000
$72,000
$76,000
Aug 29, 2021 | Uncategorized
Question 1.1. Miracle Company purchased treasury stock with a cost of $15,000 during 2012. During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $866,000. Cash flows from financing activities for 2012 total
$846,000 net cash inflow.
$861,000 net cash inflow.
$866,000 net cash outflow.
$831,000 net cash inflow.
Question 2. 2. The statement of cash flows reports each of the following except
cash receipts from operating activities.
cash payments from investing activities.
the net change in cash.
cash sales.
Question 3. 3. The statement of cash flows
must be prepared on a daily basis.
summarizes the operating, financing, and investing activities of an entity.
is another name for the income statement.
is a special section of the income statement.
Question 4. 4. Each of the following are particularly interested in the statement of cash flows except
creditors.
employees.
shareholders.
government agencies.
Question 5. 5. Each of the following is an example of a significant noncash activity except
conversion of bonds into common stock.
exchanges of plant assets.
issuance of debt to purchase assets.
stock dividends.
Question 6. 6. In Garland Company, land decreased $140,000 because of a cash sale for $140,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value. The net cash provided by investing activities is
$140,000.
$230,000.
$100,000.
$110,000.
Question 7. 7. Indicate where the event purchased land and a building with a mortgage would appear, if at all, on the indirect statement of cash flows.
Operating activities section
Investing activities section
Financing activities section
Does not represent a cash flow
Question 8. 8. The statement of cash flows should help investors and creditors assess each of the following except the
entity’s ability to generate future income.
entity’s ability to pay dividends.
reasons for the difference between net income and net cash provided by operating activities.
cash investing and financing transactions during the period.
Question 9. 9. Generally, the most important category on the statement of cash flows is cash flows from
operating activities.
investing activities.
financing activities.
significant noncash activities.
Question 10. 10. The category that is generally considered to be the best measure of a company’s ability to continue as a going concern is
cash flows from operating activities.
cash flows from investing activities.
cash flows from financing activities.
usually different from year to year.
Aug 29, 2021 | Uncategorized
Question 1.1. (TCO A) A corporation has which of the following sets of characteristics? (Points : 5)
Shared control, tax advantages, increased skills, and resources
Simple to set up and maintains control with the founder
Easier to transfer ownership and raise funds, no personal liability for stockholders
Harder to raise funds and gives owner control
Question 2.2. (TCO A) The Dividends account _____. (Points : 5)
appears on the income statement along with the expenses of the business
must show transactions every accounting period
is increased with debits and decreased with credits
is considered a long-term asset of the firm
Question 3.3. (TCOs A, B) Below is a partial list of account balances for Denton Company:
Cash $7,000
Prepaid insurance 700
Accounts receivable 3,500
Accounts payable 2,800
Notes payable 4,200
Common stock 1,400
Dividends 700
Revenues 21,000
Expenses 17,500
What did Denton Company show as total credits? (Points : 5)
$30,100
$29,400
$28,700
$30,800
Question 4.4. (TCOs B, E) Under the accrual basis of accounting, _____. (Points : 5)
cash must be received before revenue is recognized
net income is calculated by matching cash outflows against cash inflows
events that change a company’s financial statements are recognized in the period they occur rather than in the period in which cash is paid or received
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles
Question 5.5. (TCO D) Three companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____.(Points : 5)
LIFO will have the highest ending inventory
FIFO will have the highest cost of goods sold
All three companies will have the same value for ending inventory.
average cost will have an ending inventory value that falls between FIFO and LIFO
Question 6.6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? (Points : 5)
$48,000
$52,500
$49,500
$43,500
Question 7.7. (TCOs D, G) Mendez Corporation issues 2,000 ten-year, 8%, $1,000 bonds dated January 1, 2007, at 103. The journal entry to record the issuance will show a _____. (Points : 5)
debit to Cash of $2,000,000
debit to Premium on Bonds Payable for $60,000
credit to Bonds Payable for $2,000,000
credit to Cash for $2,060,000
Question 8.8. (TCO C) Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $240,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _____. (Points : 5)
$240,000
$250,000
$310,000
$230,000
Question 9.9. (TCO F) One variation of the horizontal analysis is known as _____.(Points : 5)
nonlinear analysis
vertical analysis
trend analysis
common-size analysis
Question 10.10. (TCO F) In a common-size balance sheet, the 100% figure is _____.(Points : 5)
total current assets
total property, plant, and equipment
total liabilities
total assets
Question 11.11. (TCO F) In vertical analysis, the base amount for studying salary and wages expense is generally _____. (Points : 5)
net sales
salary and wages expense in a previous year
gross profit
net income
Question 12.12. (TCO F) Short-term creditors are usually most interested in assessing _____. (Points : 5)
solvency
liquidity
marketability
profitability
Question 13.13. (TCO F) Return on common stockholder’s equity ratio is affected by _____. (Points : 5)
net income
dividend paid to preferred stock, if any
leverage (debt-to-assets ratio)
All of the above
Question 14.14. (TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____. (Points : 5)
compounding
extrapolation
discounting
None of the above
Aug 29, 2021 | Uncategorized
Question 1.1 Xeris, Inc. has 1,000 shares of 5%, $10 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2012. What is the annual dividend on the preferred stock? $5 per share
$500 in total
$5,000 in total
$.05 per share
Question 2. 2. Which one of the following is not necessary in order for a corporation to pay a cash dividend?
Adequate cash
Approval of stockholders
Declaration of dividends by the board of directors
Retained earnings
Question 3. 3. Dividends Payable is classified as a
long-term liability.
contra stockholders’ equity account to Retained Earnings.
current liability.
stockholders’ equity account.
Question 4. 4. The per share amount normally assigned by the board of directors to a small stock dividend is
the market value of the stock on the date of declaration.
the average price paid by stockholders on outstanding shares.
the par or stated value of the stock.
zero.
Question 5. 5. Each of the following decreases retained earnings except a
cash dividend.
liquidating dividend.
stock dividend.
All of these decrease retained earnings.
Question 6. 6. A corporation is not committed to a legal obligation when it declares
a cash dividend.
either a cash dividend or a stock dividend.
a stock dividend.
a distribution date.
Question 7. 7. Dividends are predominantly paid in
earnings.
property.
cash.
stock.
Question 8. 8. A stockholder who receives a stock dividend would
expect the market price per share to increase.
own more shares of stock.
expect retained earnings to increase.
expect the par value of the stock to change.
Question 9. 9. Which of the following is not a significant date with respect to dividends
The declaration date
The incorporation date
The record date
The payment date
Question 10. 10. The per share amount normally assigned by the board of directors to a large stock dividend is
the market value of the stock on the date of declaration.
the average price paid by stockholders on outstanding shares.
the par or stated value of the stock.
zero.
Aug 29, 2021 | Uncategorized
The Dean Company produces and sells a single product. The following data refer to the year just completed:
|
Selling price
|
|
$450
|
|
|
|
|
Units in beginning Inventory
|
|
0
|
|
Units produced
|
|
25,000
|
|
Units sold
|
|
22,000
|
|
|
|
|
|
|
|
Variable costs per unit:
|
|
|
|
Direct materials
|
|
$ 200
|
|
Direct labor
|
|
$ 50
|
|
Variable manufacturing overhead
|
|
$ 30
|
|
Variable selling and admin
|
|
$ 15
|
|
|
|
|
Fixed Costs:
|
|
|
|
Fixed manufacturing overhead
|
|
$ 275,000
|
|
Fixed selling and admin
|
|
$ 230,000
|
Assume that direct labor is a variable cost.
Required:
a. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
Aug 29, 2021 | Uncategorized
** PLEASE READ BELOW AND ANSWER THE QUESTION ACCORDING TO THIS INFORMATION. (ORIGINAL WORK ONLY PLEASE) The following two items appeared on the Internet concerning the GAAP requirement to expense stock options. WASHINGTON, D.C. February 17, 2005 Congressman David Dreier (R CA), Chairman of the House Rules Committee, and Congresswoman Anna Eshoo (D CA) reintroduced legislation today that will preserve broad-based employee stock option plans and give investors critical information they need to understand how employee stock options impact the value of their shares. Last year, the U.S. House of Representatives overwhelmingly voted for legislation that would have ensured the continued ability of innovative companies to offer stock options to rank-and-file employees, Dreier stated. Both the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) continue to ignore our calls to address legitimate concerns about the impact of FASB’s new standard on workers’ ability to have an ownership stake in the New Economy, and its failure to address the real need of shareholders: accurate and meaningful information about a company’s use of stock options. In December 2004, FASB issued a stock option expensing standard that will render a huge blow to the 21st century economy, Dreier said. Their action and the SEC’s apparent lack of concern for protecting shareholders, requires us to once again take a firm stand on the side of investors and economic growth. Giving investors the ability to understand how stock options impact the value of their shares is critical. And equally important is preserving the ability of companies to use this innovative tool to attract talented employees. Here We Go Again! by Jack Ciesielski (2/21/2005, http://www.accountingobserver.com/blog/2005/02/here-we-go-again) On February 17, Congressman David Dreier (R CA), and Congresswoman Anna Eshoo (D CA), officially entered Silicon Valley’s bid to gum up the launch of honest reporting of stock option compensation: They co-sponsored a bill to preserve broad-based employee stock option plans and give investors critical information they need to understand how employee stock options impact the value of their shares. You know what critical information they mean: stuff like the stock compensation for the top five officers in a company, with a rigged value set as close to zero as possible. Investors crave this kind of information. Other ways the good Congresspersons want to help investors: The bill also requires the SEC to study the effectiveness of those disclosures over three years, during which time, no new accounting standard related to the treatment of stock options could be recognized. Finally, the bill requires the Secretary of Commerce to conduct a study and report to Congress on the impact of broad-based employee stock option plans on expanding employee corporate ownership, skilled worker recruitment and retention, research and innovation, economic growth, and international competitiveness. It’s the old four corners basketball strategy: stall, stall, stall. In the meantime, hope for regime change at your opponent, the FASB. Instructions
| (a) |
What are the major recommendations of the stock-based compensation pronouncement? (answer in 200-300 word count) |
Aug 29, 2021 | Uncategorized
6.
|
The management of Rodarmel Corporation is considering dropping product G91Q. Data from the company’s accounting system appear below:
|
|
| Sales |
|
$ |
370,000 |
|
| Variable expenses |
|
$ |
170,000 |
|
| Fixed manufacturing expenses |
|
$ |
118,000 |
|
| Fixed selling and administrative expenses |
|
$ |
89,000 |
|
|
|
All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $57,000 of the fixed manufacturing expenses and $40,000 of the fixed selling and administrative expenses are avoidable if product G91Q is discontinued.
|
| a. |
What is the net operating income(loss) earned by product G91Q according to the company’s accounting system (Input the amount as a positive value.)
|
| (Click to select)Net operating incomeNet operating loss |
$ |
| b1. |
What would be the effect on the company’s overall net operating income of dropping product G91Q?(Input the amount as a positive value.)
|
Net operating income
(Click to select)decreasedincreased
by
|
$ |
| b2. |
Should the product be dropped? |
|
|
|
|
Yes |
|
No
Problem 2
Rothery Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has
the capacity to produce 18,000 medals each month; current monthly production is 17,100 medals. The company
normally charges $88 per medal. Cost data for the current level of production are shown below:
The company has just received a special one-time order for 600 medals at $73 each. For this particular order, no
variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.
Required: Should the company accept this special order? Why?
|
|
Aug 29, 2021 | Uncategorized
1.) Lawrence is a U.S. citizen who has worked in his employer’s Paris office for the past five years. Compute Lawrence’s 2012 AGI if his only item of income was his $130,000 salary
2.) Lansing Corporation, a publicly held company with a 35% marginal tax rate, paid its CEO an annual salary of $1 million plus a bonus of $1.3 million. The bonus was based a targeted amount of annual gross revenue. Ignoring payroll taxes, calculate the after-tax cost of this payment
3.) Julie, an unmarried individual, lives in a home with her 13-year-old dependent son, Oscar. This year, Julie had the following tax information.
salary 95000
interest and dividend 12,800
capital gain 11,0000
above the line deduction 800
itemized deduction 6900
Compute Julie’s adjusted gross income (AGI) and taxable income
4.) Mr. and Mrs. Daniels had the following income items in 2012:
salary from employer 122,500
interest income 6,300
dividend income eligibale for 15 % 4,000
capital gain eligibile for 15 % 1,900
Mr. and Mrs. Daniels have no dependents and claim the standard deduction. Compute their income tax liability on a joint return.
can u do them
Aug 29, 2021 | Uncategorized
Problem 8 Question: Assume Fisher Food Products is thinking about three different size offerings for the issuance of additional shares.
Size of Order Public Price Net to Corporation
a. $ 1.6 million . $40 $36.70
b. $ 6.0 million $40 $37.28
c. $25.0 million .. $40 $38.12
What is the percentage underwriting spread for each size offer What principle does this demonstrate
Problem 14 Question: Winston Sporting Goods is considering a public offering of common stock. Its investment banker has informed the company that the retail price will be $18per share for 600,000 shares. The company will receive $16.50 per share and will incur $150,000 in regristration
a. What is the spread on this issue in percentage terms What are the total expenses of the issue as a percentage of total value (at retail)
b. If the firm wanted to net $18 million from this issue, how many shares must be sold
Question: The management of Mitchell Labs decided to go private in 2002 by buying in all 3 million of its outstanding shares at $19.50 per share. By 2006, management had restructured the company by selling of the petroleum research division for $13 million, the fiber technology division for $9.5 million, and the synthetic products division for $21 million Because these divisions had been only marginally profitable, Mitchell Labs is a stronger company after the restructuring. Mitchell is now able to concentrate exclusively on contract research and will generate earnings per share of $1.25 this year. Investment bankers have contracted the firm and indicated that if it reentered the public market , the 3 million shares it purchased to go private could now be reissuedto the public at a P/E ratio of 16 times earnings per share.
a. What was the initial cost of Mitchell Labs to go private?
b. What is the total value of the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3 million shares(based on current earningsand a
c. What is the percentage return to the management of Mitchell Labs from the restructuring Use answers from parts a and b to determine this value.
Aug 29, 2021 | Uncategorized
(TCO D) Anthony Gray has been interested in music since he was old enough to sit at the piano. He grew up with music and used his talent to earn his way through college. Anthony has now grown tired of his job at a large music house in Houston and is seriously considering moving back to his hometown in Massachusetts to open a small music shop. In researching this venture, Anthony notices that he must include a projected income statement in his loan application.
Using Anthony’s target income of $23,000 and the following statistics from Robert Morris Associates’ Annual Statement Studies, construct a pro forma income statement for Anthony’s proposed music shop.
Net sales 100.0%
Cost of sales 59.9%
Gross profit 40.1%
Operating expenses 31.2%
Net profit (before taxes) 8.9%
Aug 29, 2021 | Uncategorized
QUESTION
The local authority of a small town maintains a theatre and arts centre for the use of a local repertory company , other visiting groups and exhibitions .Management decisions are taken by a committee that meets regularly to review the financial statements and to plan the use of the facilities.
The theatre employs a full time non performing staff and a number of artistes at total costs of 9600 pounds and 35200 pounds a month respectively. The theatre mounts a new production every month for 20 performances .other monthly costs of the theatre are as follows:
Pounds
Costumes 5600
Scenery 3300
Heat and light 10300
A share of the administration costs
of local authority 16000
casual staff 3500
refreshments 2360
on average the theatre is half full for the performances of the repertory company. The capacity and seat prices in the theatre are:
200 seats at 24 pounds each
500 seats at 16 pounds each
300 seats at 12 pounds each
In addition the theatre sells refreshments during the performances for 7760 pounds a month programme sales cover their costs and advertising in the programme generates 6720 pounds a monthy.
The management committee has been approached by a popular touring group which would like to take over the theatre for one month (25 performances). The group is prepared to pay the local authority half of its ticket income as a fee for the use of the theatre.The group expects to fill the theatre for 10 nights and achieve two thirds capacity on the remaining 15 nights. The prices charged are2 pounds less than normally applies in the theatre.
The local authority will as normal pay for the heat and light costs and will still honour the contracts of all artistes and pay the non performing employees who will sell refreshments , programmes and so on. The committee does not expect any change in the level of refreshments or programme sales if they agree to this booking.
Note: The committee includes the share of the local authority administration costs when making profit calculations. It assumes occupancy applies equally across all seat prices.
REQUIRED
(a.) On financial grounds should the management committee agree to the approach from the touring group? Support your answer with appropriate workings.
(b.)what other factors may have a bearing on the decision by the committee
Aug 29, 2021 | Uncategorized
Question One: You are the newly appointed CFO of a publically traded, multinational company. Your career has been spent mostly in finance and you have a limited tax background. The CEO of the company advises that one of your tax goals will be to manage (and hopefully lower) the company s effective tax rate. You meet with several members of your tax organization. They advise that they have been working on several tax savings/deferral strategies. Those strategies are as follows: 1- Certain capital investment expenditures will be depreciated over a life of 5 years for tax purposes instead of 15 years as done in the past. The staff thinks a good argument can be made that these expenditures qualify for a 5 year depreciable life although the matter is not entirely free from doubt. The staff believes the NPV tax savings will be around $10 million. 2- The company will begin to use foreign incorporated subsidiaries to conduct its international operations. Under U.S tax laws, the dividends of those subsidiaries will not be taxed unless/until a dividend is declared and paid. Answer the following questions based on the above: 1- Explain the meaning of an effective tax rate. How is it calculated? How do external investors use the effective tax rate to measure a company s financial performance? 2- Which, if any (or both), of the two tax planning ideas will impact the effective tax rate? Explain. 3- If the company were to implement the first planning idea, what FIN 48 issues would you need to address? 4- If the second planning idea were to be implemented, what questions would you need to address based on your understating of APB Opinion 23.
Question Two: One of your firm s clients, Brand Names, Inc., holds two businesses. Business one is a sporting goods store operating in Canton, Ohio. Business two is a large restaurant/sports bar located in downtown Cleveland. Both businesses doing exceptionally well since started up in 2001. The shareholders in Brand Names are Smith and Jones with each owning 50% of the stock. Smith is of the view that Brand Names needs to secure capital to open another sporting goods store in the growing Westlake/Rocky River area, but Jones is adamant that another sports bar will do exceptionally well in that area. He believes Dick s sporting Goods already is saturating the sporting goods store market in the area. Because of these and other disagreements they are having over the management of Brand Names, they ask whether there is any tax efficient manner is which Smith may take over and own the sporting goods store outright and jones the restaurant so that each can build their own growth around those activities. Please describe the tax efficient structure you will advice to them and describe the requirements that will need to be satisfied in order to implement it. Question Three: Anaconda Corporation decides to acquire Monroe Corporation. Monroe is approximately half the size of Anaconda based on market valuations of the two firms. Upon the advice of lawyers, the acquisition will be made as a statutory merger where Anaconda will acquire shares of Monroe for a combination of cash and Anaconda common stock. The aggregate purchase price will be $14 billion. You are the lead accountant for Anaconda responsible for properly accounting for this transaction. You are advised of the following matters by your due diligence team: The fair market value of Monroe s assets is $13 billion (cash, receivables, inventory, PP&E, and land) Monroe has liabilities on its balance sheet of $3 billion (accounts payable, and bonds payable) The tax basis of Monroe s assets is $2 billion. You also learn that Monroe has $1 billion of net operating losses. Tax rate %5 Please provide your analysis for the following: 1- if the transaction were to be structured as a statutory merger and qualify as a reorganization for US tax purposes, how may the mix of merger consideration between cash and Anaconda common stock be structured (i.e., what are the parameters of the permitted mix of the $14 billion of consideration)? 2- Assume that Anaconda will pay the entire $14 billion of merger consideration in the form of Anaconda common stock. Based on the due diligence information, what will be the initial accounting entry to record the acquisition of Monroe on Anaconda s accounting records?
Question Four: Describe the three primary methods used for preparing a valuation. In addition, please provide advice in the following situation: Vincenzo owns %15 of the common stock of a small corporation. The remaining %85 of the stock is held by various unrelated to Vincenzo and none of the other shareholders own more than %15 of the stock (the ownerships range from %5 to %15). The business is a successful venture that grows trees and shrubbery. Vincenzo believes the business is worth about $5 million so his shares might be worth %15 of that amount. An unrelated party offered Vincenzo $800,000 for his shares. How would you approach the valuation so as to advice Vincenzo as to the value of his shares?
Question Five: You are a lead accountant for Xero Corporation. Xero owns %100 of the stock of a subsidiary, Minus, that Xero would like to sell. The potential buyer for the Minus stock advices that it will offer $10 million for all Minus stock only if the transaction can be structured as a 338(h)(10) transaction. Your manager asks you to explain what a 338(h)(10) election is to her. She also asks you to explain what information is relevant for purposes of deciding whether Xero will be willing to make the 338(h)(10) election?
Aug 29, 2021 | Uncategorized
Multiple Choice Question 152
If a plant asset is retired before it is fully depreciated, and the salvage value received is less than the asset’s book value,
there is no gain or loss on disposal.
additional depreciation expense must be recorded.
a gain on disposal occurs.
a loss on disposal occurs.
Multiple Choice Question 66
Gagner Clinic purchases land for $150,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as the cost for the land?
$154,700
$132,500
$132,200
$150,000
Multiple Choice Question 74
All of the following factors in computing depreciation are estimates except
cost.
residual value.
salvage value.
useful life.
Multiple Choice Question 85
Depreciation is the process of allocating the cost of a plant asset over its service life in
an equal and equitable manner.
a conservative market-based manner.
an accelerated and accurate manner.
a systematic and rational manner.
Multiple Choice Question 207
Rooney Company incurred $420,000 of research and development cost in its laboratory to develop a patent granted on January 1, 2013. On July 31, 2013, Rooney paid $63,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2013, should be:
$483,000.
$63,000.
$357,000.
$420,000.
Multiple Choice Question 115
A plant asset was purchased on January 1 for $50,000 with an estimated salvage value of $10,000 at the end of its useful life. The current year’s Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is
3 years.
5 years.
10 years.
8 years.
Multiple Choice Question 226
Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
capital expenditures.
expense expenditures.
improvements.
revenue expenditures.
Multiple Choice Question 95
A company receives $348, of which $28 is for sales tax. The journal entry to record the sale would include a
debit to Cash for $348.
debit to Sales Revenue for $348.
debit to Sales Tax Expense for $28.
debit to Sales Taxes Payable for $28.
Multiple Choice Question 177
If bonds can be converted into common stock,
they will be converted only if the issuer calls them in for conversion.
they will sell at a lower price than comparable bonds without a conversion feature.
they will carry a higher interest rate than comparable bonds without the conversion feature.
the bondholder may benefit if the market price of the common stock increases substantially.
Multiple Choice Question 60
The relationship between current liabilities and current assets is
useful in determining the amount of a company’s long-term debt.
useful in evaluating a company’s liquidity.
called the matching principle.
useful in determining income.
Multiple Choice Question 122
Employee payroll deductions include each of the following except
federal income taxes.
insurance and pensions.
federal unemployment taxes.
FICA taxes.
Multiple Choice Question 170
Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
$5,600 gain
$5,600 loss
$16,000 gain
$16,000 loss
Multiple Choice Question 90
On October 1, 2013, Pennington Company issued an $80,000, 10%, nine-month interest-bearing note. If the Pennington Company is preparing financial statements at December 31, 2013, the adjusting entry for accrued interest will include a:
credit to Interest Payable of $4,000.
debit to Interest Expense of $2,000.
debit to Interest Expense of $3,000.
credit to Notes Payable of $2,000.
Multiple Choice Question 109
Julie’s Boutique has total receipts for the month of $30,660 including sales taxes. If the sales tax rate is 5%, what are Julie’s sales for the month?
$29,200
$32,193
It cannot be determined.
$29,127
Multiple Choice Question 245
Aire Corporation retires its bonds at 106 on January 1, following the payment of semi-annual interest. The face value of the bonds is $600,000. The carrying value of the bonds at the redemption date is $631,500. The entry to record the redemption will include a
debit of $31,500 to Premium on Bonds Payable.
credit of $31,500 to Loss on Bond Redemption.
debit of $36,000 to Premium on Bonds Payable.
credit of $5,250 to Gain on Bond Redemption.
Aug 29, 2021 | Uncategorized
1.On the trial balance, which of the following should have the balances listed in the debit column?
A.Assets, dividends, and expenses
B.Liabilities, revenues, and common stock
C.Liabilities, revenues, and dividends
D.Assets, revenues, and dividends
2.The unadjusted trial balance for depreciation expense shows a $780 balance. The expense was adjusted
by $235. The adjusted trial balance figure for depreciation expense is now a
A.$545 debit.
B.$1,015 debit.
C.$1,015 credit.
D.$545 credit.
3.The balance sheet is used to report
A.the financial position on a specific date.
B.results of operations for a specific period.
C.results of operations for a specific date.
D.the financial position for a specific period.
4.Which business form is similar to a corporation in regard to owner liability?
A.Sole proprietorship
B.Limited liability company
C.Partnership
D.Limited liability corporation
5.A T-account has a $509 debit balance. This account is most likely not
A.advertising expense.
B.land.
C.common stock.
D.dividends.
6.A T-account has which major parts?
A.A title, a debit side, and a credit side
B.A debit side, a credit side, and a balance
C.A debit side, a credit side, and a total column
D.A title, a current date, and a balance
7.By definition, which type of organization has stockholders?
A.Sole proprietorships
B.Corporations
C.Limited liability companies
D.Partnerships
8.Supplies on hand were $900 at the start of the year. At the end of the year, it was determined that $350 of supplies had been used. What is the adjusting entry for supplies?
A.Debit supplies, $350; credit supplies expense, $350.
B.Debit supplies expense, $550; credit supplies, $550.
C.Debit supplies, $550; credit supplies expense, $550.
D.Debit supplies expense, $350; credit supplies, $350.
9.Beginning retained earnings are $31,000; sales are $46,800; expenses are $43,500; and dividends paid are $2,800. How much is the net income or loss for the company?
A.($3,300)
B.$3,300
C.$500
D.$34,300
10.The closing entries show a debit to retained earnings of $350 and a credit to retained earnings of $750. There was also a credit to dividends payable of $100. This company had a
A.net income of $400.
B.net loss of $400.
C.net income of $500.
D.net loss of $500
11.The account “Cash” had the following changes: increase of $250, decrease of $75, increase of $113,
and decrease of $35. The final balance is a
A.debit balance of $363.
B.debit balance of $253.
C.credit balance of $110.
D.credit balance of $253.
12.The matching principle in accounting requires the matching of revenue earned with the
A.expenses incurred to produce the revenue.
B.liabilities used to produce the revenue.
C.assets used less the liabilities incurred.
D.assets used to produce the revenue.
13.Which financial statement illustrates the accounting equation?
A.Statement of cash flows
B.Balance sheet
C.Income statement
D.Statement of retained earnings
14.Beginning retained earnings are $65,000; sales are $29,500; expenses are $33,000; and dividends paid are $3,500. How much is the net income or loss for the company?
A.($3,500)
B.($7,000)
C.$26,000
D.$0
15.Rick owns a sporting goods store. In his initial accounting records, he included his personal computer and all of his personal sporting gear. Rick is violating which principle of accounting?
A.Reliability
B.Entity
C.Going concern
D.Cost
16.Which of the following is a disadvantage of the corporate form of business?
A.Ease of raising capital
B.Double taxation
C.Limited liability
D.Limited resources
17.Dividends are paid with cash to shareholders. Dividends are in which category of the chart of accounts?
A.Liabilities
B.Stockholders’ equity
C.Assets
D.Revenue
18.Collecting rent from a client three months in advance would be an example of a/an
A.accrued revenue.
B.accrued expense.
C.deferred expense.
D.deferred revenue.
19.The income statement is used to report
A.the financial position on a specific date.
B.results of operations for a specific period.
C.results of operations for a specific date.
D.the financial position for a specific period.
20.Office equipment was purchased for $2,400 on account to Business Furniture Company. The journal entry would include a
A.debit to Office Equipment and a credit to Accounts Payable.
B.credit to Cash and a debit to Office Equipment Expense.
C.debit to Office Equipment and a credit to Cash.
D.debit to Accounts Payable and a credit to Cash.
Aug 29, 2021 | Uncategorized
Raccoon Leasing Company (RLC) enters into a non-cancellable lease agreement on 1st January, 2012 to lease electronic equipment to Electronics Company Limited (SCL). This lease agreement bears the following terms built therein:
a) Lease payments are required at the beginning of each year over the 5 year. b) Economic life of the leased equipment is estimated at 8 years. c) Fair value of the equipment determined on 1st January,2012 at Rs.81,000 and lessor s cost Rs. 65,000 d) Both the lessor s implicit rate and the lessee s incremental borrowing rate are 10%. e) The lessor has bargain-purchase option price of Rs. 4,000 at end of lease term. f) The equipment will revert to RLC at the end of the lease term.
The collectability of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee uses straight-line depreciation method is used for all of his fixed assets. The lease is to be accounted for properly as a capital lease by the lessee and as a direct-financing lease by the lessor.
Requirement
a) Calculate the amount of annual lease rentals. (3 Marks) Fair Value = 81000 Installments = 05 years IRR = 10% b) Prepare an amortization schedule separating the above computed rental into interest and principle retired. (8 Marks) c) Prepare extracts as per IAS 17 to be disclosed by the lessee for its balance sheet and income statement for a period of 2013 & 2014. (13 Marks) d) Prepare extracts as per IAS 17 to be disclosed by the lessor for its balance sheet and income statement for the period of 2013 as to Gross Investment on Lease, Net Investment in Lease and unearned finance income. (6 Marks)
Aug 29, 2021 | Uncategorized
On the first day of its fiscal year, Ramsey Company issued $35,000,000 of 10-year, 9% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Ramsey Company receiving cash of $30, 817,399. The company uses the interest method.
a. Journalize the entries to record the following:
1. Sale of the bonds.
2. Prepare an amortization table through December 31, 2014(4 interest periods for this bond issue
3. First semiannual interest payment, including amortization of discount. Round to the nearest dollar.
4. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar.
5. compute the amount of the bond interest expense for the first year.
(B) Yates Corporation has the following stockholders’ equity accounts on Jan 1, 2012:
Common Stock, $10 par value: $1,500,000
Paid-in Capital in Excess of Par: 200,000
Retained Earnings: 500,000
Total Stockholders’ Equity: $2,200,000
The company uses the cost method to account for treasury stock transactions. During 2012, the following treasury stock transactions occurred:
April 1 Purchased 10,000 shares at $18 per share.
August 1 Sold 4,000 shares at $22 per share.
October 1 Sold 4,000 shares at $15 per share
Instructions:
(A) Journalize the treasury stock transactions for 2012.
(B) Prepare the Stockholders’ Equity section of the balance sheet for Yates Corporation at December 31, 2012. Assume net income was $110,000 for 2012.
C. KT Corporation wholesales auto parts to auto manufacturers. On march 1, 2012, Kt corporation issued $17,500,000 of five year, 12% bonds at market (effective) interest rate of 10%, receiving cash of $18,851,252. interest is payable semiannually. KT corporation’s fiscal years begins on March 1. The company uses the interest method.
a.Journalize the entries to record the following:
1. sale of the bonds.
2.prepare an amortization table through 3 interest periods for this bond issue.
3. First semiannual interest payment, including amortization of discount. Round to nearest dollar.
4.Second semiannual interest payment, including amortization of discount. Round to nearest dollar.
5.Compute the amount of the bond interest expense for the first year.
Aug 29, 2021 | Uncategorized
1. Ramsey Corporation reported the following accounts and balances in its financial statements:
Cash $35,000
Inventory $10,200
Equipment $19,500
Accounts Payable $16,350
Contributed Capital $30,000
Retained Earnings $18,350
Arrange the accounts and balances into the accounting equating using the following equation and then answer the following questions.
Assets=liabilities + owner s equity
- What is the total amount of assets
- What is the total amount of liabilities?
- What is the total amount of owner s equity?
2. After six months of operations, Right Way Lumber had the following revenues and expense balances:
Supplies expense 11,000
Service revenue 62,090
Utilities expense 6,200
Rent expense 14,700
Wages expense 13, 330.
Prepare an income statement in its proper format ending on june 30, 2009.
3. Jim Smith had trouble finding a job, so he decided to start his own sole proprietyship by the name of Designers Inc. Jim is a web site designer, and here are the results as of the end of the first year of his businesss
Accounty payabe $12,100
Cash 19,150
Service revenue 20,000
Contributed capital 21,000
Wage expense 4,100
Inventory 4,445
Rent expense 5,000
Equipment 16,325
Supplies 4,080
Retained earnings 6,820
4. Utopia Dance Clubs, Inc., rented an old warehouse for its newest club on October 1, 2010. To receive a discount, Utopia paid $ 11,700 for 18 months of rent in advance. Assume no additional rent is paid in 2011 and 2012 and answer the following questions:
a. How much rent expense will be recognized for the year ended December 31, 2010
b. What will be the balance in the prepaid rent account at December 31, 2010?
c. How much rent expense will be recognized for the year ended December 31, 2011?
d. What will be the balance in the prepaid rent account of December 31, 2011?
e. How much rent expense will be recognized for the year ended December 31, 2012?
f. What will be the balance in the prepaid rent account at December 31,2012?
Aug 29, 2021 | Uncategorized
Foundations of Accounting I
Accounting Project
Written by: Karen Pitsch
Special thanks to Donna Larner
Randiddle Co. is a merchandising business. Their account balances as of November 30, 2012 (unless otherwise indicated), are as follows:
110 Cash $ 74,370
112 Accounts Receivable 6,178
113 Allowance for Doubtful Accounts 650
115 Merchandise Inventory 2,346
116 Prepaid Insurance 5,750
117 Store Supplies 2,850
123 Store Equipment 100,800
124 Accumulated Depreciation-Store Equipment 31,060
210 Accounts Payable 3,286
211 Salaries Payable 0
218 Interest Payable 0
220 Note Payable (Due 2017) 30,000
($6,000 to be paid in 2013)
310 Randiddle, Capital (January 1, 2012) 46,288
311 Randiddle, Withdrawals 60,000
312 Income Summary 0
410 Sales 296,130
411 Sales Returns and Allowances 10,020
412 Sales Discounts 7,200
510 Cost of Goods Sold 30,250
520 Sales Salaries Expense 34,400
521 Advertising Expense 18,000
522 Depreciation Expense 0
523 Store Supplies Expense 0
529 Miscellaneous Selling Expense 2,800
530 Office Salaries Expense 25,500
531 Rent Expense 24,200
532 Insurance Expense 0
533 Bad Debt Expense 0
539 Miscellaneous Administrative Expense 1,650
550 Interest Expense 1,100
Randiddle Co. uses the perpetual inventory system and the Last-in, First-out costing method. Transportation-in and purchase discounts should be added to the Inventory Control Sheet, but since this will complicate the computation of the Last-in, First-out costing method, please ignore this step in the process. They also use the Allowance Method for bad debt.
The Accounts Receivable and Accounts Payable Subsidiary Ledgers along with the Inventory Control Sheet should be updated as each transaction affects them (daily).
Randiddle Co. sells three types of microwave ovens.
The sale prices of each are:
900 watt microwave: $199
1000 watt microwave: $299
1200 watt microwave: $499
During December, the last month of the accounting year, the following transactions were completed:
Dec. 1. Issued check number 2632 for the December rent, $2,200.
2. Sold two 1200 watt microwaves for cash.
4. Purchased four 1000 watt microwaves on account from Matt Co., terms 2/10,
n/30, FOB shipping point, $596.
5. Issued check number 2633 to pay the transportation charges on purchase of
December 4, $89. (NOTE: Debit Merchandise Inventory. Do not include shipping and purchase discounts to the Inventory Control sheet for this project.)
6. Sold six 1000 watt microwaves and four 1200 watt microwaves on account to Briana Co., invoice 891, terms 2/10, n/30, FOB shipping point.
8. Issued check number 2634 for refund of cash on sales made for cash, $150.
(Customer was going to return goods until an allowance was arranged.)
10. Purchased store supplies on account from Prince Co., terms n/30, $310.
10. Issued check to Matt Co. number 2635 for the full amount due, less discount
allowed. (Round discount to nearest dollar.)
11. Paid Prince Co. full amount due, check number 2636.
12. Issued credit memo for one 1000 watt microwave returned on sale of
December 6. (NOTE: Assume the returned microwave was from the 11/30 inventory)
13. Issued check number 2637 for advertising expense for last half of December, $3,000.
14. Received cash from Briana Co. for the full amount due (less return of December 12 and discount; round to nearest dollar).
19. Issued check number 2638 to buy five 900 watt microwaves, $495.
19. Issued check number 2639 for $596 to Joseph Co. on account.
20. Sold seven 900 watt microwaves on account to Cameron Co., invoice number 892, terms 1/10, n/30, FOB shipping point.
20. To expedite sale on Dec. 20, issued check number 2640 for shipping charges on sale to Cameron on December 20, $120 (NOTE: Cameron Co. will be reimbursing us for this shipping cost).
21. Received $1,396 cash from McKenzie Co. on account, no discount.
21. Purchased three 1200 watt microwaves on account from Elisha Co., terms 1/10, n/30, FOB shipping point, $747, shipping $78 (NOTE: Debit Merchandise Inventory $825, but only put $747 in the Inventory Control Sheet).
24. Received notification that Marie Co. has been granted bankruptcy with no
amount of recovery. We are to write-off her amount due. (Note: See page
365 for entry required.)
26. Issued a debit memo for return of$249 because of damage to one 1200 watt
microwave purchased on December 21, receiving credit from the seller.
27. Issued check number 2641 for sales salaries of $2,050 and office
salaries of $1,400.
28. Purchased store equipment on account from Joseph Co., terms n/30, FOB
destination, $1,200.
29. Issued check number 2642 for store supplies, $70.
29. Purchased seven 1000 watt microwave from Prince Co, terms 1/10, n/30,
FOB shipping point, for $1,113 on account, shipping $107.
30. Sold eight 1000 watt microwaves on account to Briana Co., invoice number
893, terms 2/10, n/30, FOB shipping point.
30. Received cash from sale of December 20, less discount, plus transportation
paid on December 20. (Round calculations to the nearest dollar.)
31. Issued check number 2643 for purchase of December 21, less return
of December 25 and discount. (Round discount to the nearest dollar.)
31. Issued a debit memo for $200 of the purchase returned from
December 28.
Instructions:
1. Enter the balances of each of the accounts in the appropriate balance column of the General Ledger (B-S and I-S Ledger). Write Balance in the item section, and place a (x) in the Post Reference column.
2. Journalize the transactions in a sales journal, purchases journal, cash receipts journal, cash payments journal, or general journal as illustrated in chapter 7. Also post to the Accounts Receivable and Accounts Payable Subsidiary ledgers and Inventory Control Sheet as needed.
3. Total each column on the special journals and prove the journals.
4. Post the totals of the account named columns and individually post the Other Accounts columns as well to the General Ledger.
5. Prepare the Schedule of Accounts Receivable and the Schedule of Accounts Payable (their total amount must equal the amount in their controlling general ledger account).
6. Prepare the unadjusted trial balance on the worksheet.
7. Complete the worksheet for the year ended December 31, 2012, using the following adjustment data:
a. Merchandise inventory on December 31 $1,090
b. Insurance expired during the year 2,250
c. Store supplies on hand on December 31 850
d. Depreciation for the current year needs to be calculated. The business uses
the Straight-line method, the store equipment has a useful life of 10 years
with no salvage value. (NOTE: the purchase and return will not be included
as the dates of the transactions were after the 15th of the month).
e. Accrued salaries on December 31:
Sales salaries $1,075
Office salaries 540 $1,615
f. The note payable terms are at 8%, payment is not being made until Jan. 3, 2013. Interest must be recognized for one month.
g. Calculate the Bad Debt adjustment amount; net realizable value of Accounts Receivable is determined to be $6,313.
8. Prepare a multiple-step income statement, a statement of owner s equity, and a
classified balance sheet in good form. (Recommend review of Current Liabilities on page 149.)
9. Journalize and post the adjusting entries.
10. Journalize and post the closing entries. Indicate closed accounts by inserting a zero
in both balance columns opposite the closing entry.
11. Prepare a post-closing trial balance.
Aug 29, 2021 | Uncategorized
Resources: Virtual Organizations
Click the Virtual Organization link on the student website to access the Virtual Organizations.
Select one of the Virtual Organizations as the basis for this assignment.
Ensure the organization you choose has the financial reports you will need. They can normally be found on the Intranet tab of their web page. Intranet not Internet.
Access the information contained in your selected organization s balance sheet and income statement to calculate the following:
Liquidity ratios
Current ratio
Acid-test, or quick, ratio
Receivables turnover
Inventory turnover
Profitability ratios
Assets turnover
Profit margin
Return on assets
Return on common stockholders’ equity
Solvency ratios
Debt to total assets
Times interest earned
Show your calculations for each ratio.
Create a horizontal and vertical analysis for the balance sheet and the income statement.
Write a 400- to 750 word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
Which users may be interested in each type of ratio?
What does the collected data reveal about the performance and position of the company?
Include your calculations and horizontal and vertical analysis at some point in your paper.
Submit everything as one Word document
Formatyour memo consistent with APA guidelines.
Aug 29, 2021 | Uncategorized
Problem 1-1A
Transactions
Mandy Deal established a business on Sept 1 of this year to manage rental property. She completed the following transactions during September:
- Opened a business bank account with a deposit of $40,000 in exchange for capital stock.
- Purchased supplies (pens, file folders, and copy paper) on account, $2,200.
- Received cash from fees earned for managing rental property, $6,000.
- Paid rent on office and equipment for the month, $2,700.
- Paid creditors on account, $1,000.
- Billed customers for fees earned for managing rental property, $5,000.
- Paid automobile expenses (including rental charges) for month, $600, and miscellaneous expenses, $300.
- Paid office salaries, $1,900.
- Determined that the cost of supplies on hand was $1,300; therefore, the cost of supplies used was $900.
- Paid dividends, $1,800.
1. Indicate the effect of each transaction and the balances after each transaction:
For those boxes in which no entry is required, leave the box blank.
For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)
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2. Briefly explain why the stockholders’ investment and revenues increased stockholders’ equity, while dividends and expenses decreased stockholders’ equity.
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
blank Item 229
3. Determine the net income for September.
$
4. How much did September’s transactions increase or decrease retained earnings?
SelectIncreaseDecreaseItem 231
by $
Aug 29, 2021 | Uncategorized
Question 1 of 20 5.0 Points The company that put the “stealth” in the stealth bomber was: A. Lockheed Martin. B. Grumman. C. Northrup. D. Boeing. Reset Selection Mark for Review What’s This? Question 2 of 20 5.0 Points An institution which controls the shape, price, use, and availability of a technology is called a: A. sponsor. B. Dominant Regulator. C. Monopolistic Maker. D. distributer. Reset Selection Mark for Review What’s This? Question 3 of 20 5.0 Points If a company produces something and is able to dominate the market as a result, that company would be called: A. a sponsor. B. a Dominant Client. C. a Monopolistic Maker. D. a manufacturer. Reset Selection Mark for Review What’s This? Question 4 of 20 5.0 Points When was the tank first used in combat? A. World War II B. World War I C. Korea D. Vietnam Reset Selection Mark for Review What’s This? Question 5 of 20 5.0 Points The name of the first tank was the: A. Mark I (or M-1). B. T-72. C. M-60. D. Nautilus. Reset Selection Mark for Review What’s This? Question 6 of 20 5.0 Points The M1A1 Abrams tank was used with great success in: A. World War II. B. Vietnam. C. The Cold War. D. The Gulf War. Reset Selection Mark for Review What’s This? Question 7 of 20 5.0 Points The next generation of armored vehicles will be called: A. IEDs. B. CIDs. C. IAVs. D. ADCs. Reset Selection Mark for Review What’s This? Question 8 of 20 5.0 Points The next generation of stealth aircraft is the: A. X-15. B. A-10. C. F-22. D. B-52. Reset Selection Mark for Review What’s This? Question 9 of 20 5.0 Points The project designed to clothe soldiers in order to fight the wars of tomorrow is called: A. Future Soldier 2025. B. Situational Awareness. C. Star Wars. D. Land Warrior. Reset Selection Mark for Review What’s This? Question 10 of 20 5.0 Points __________ was a herbicide used by the United States during the Vietnam War to deprive Viet Cong and North Vietnamese troops of food, shelter, and camoflage. A. DDT B. Mustard gas C. Agent Orange D. Anthrax Reset Selection Mark for Review What’s This? Question 11 of 20 5.0 Points According to the FDA antibiotic resistance occurs because: A. antibiotics are administered to patients in smaller doses than recommended by healthcare and federal organizations. B. patients do not finish the entire bottle of medication prescribed to them and the bacterial strain becomes stronger and more resistant to antibiotics. C. antibiotics are administered for bacterial infections, which do not respond to antibiotics. D. the drug companies are not making the drugs strong enough due to previous lawsuits. Reset Selection Mark for Review What’s This? Question 12 of 20 5.0 Points Some turkey and chicken products contain __________ which increases the risk of human infection from bacteria that medications on the market will not easily kill. It is the most common bacterial cause of diarrhea illness in the United States. A. campylobacter B. monobacter C. cylobacter D. bactercilo Reset Selection Mark for Review What’s This? Question 13 of 20 5.0 Points The FDA states that about __________ percent of the bacteria that cause infections in hospitals are resistant to at least one of the drugs most commonly used to treat infections. A. 50% B. 60% C. 70% D. 80% Reset Selection Mark for Review What’s This? Question 14 of 20 5.0 Points Bayer was an early proponent of amphetamines and brought the world two blockbuster commercial winners: aspirin and: A. morphine. B. heroin. C. cocaine. D. diabetic drugs. Reset Selection Mark for Review What’s This? Question 15 of 20 5.0 Points In the mid-1970s, pharmaceutical companies saw that the solution to the uncertainty of an ill clientele was to: XXXXX XXXXX drugs for well people, who not only remain employed but never get “better.” B. develop stronger drugs for sick people because the market is sympathetic towards sick people. C. create safer drugs because too many people were suing the pharmaceutical companies. D. develop weaker drugs so that people would remain ill and continue to take the drugs. Reset Selection Mark for Review What’s This? Question 16 of 20 5.0 Points Originally __________ were defined as drugs advertised only to doctors and pharmacists, but not to potential patients. A. all drugs B. amphetamines C. “ethical drugs” D. barbiturates Reset Selection Mark for Review What’s This? Question 17 of 20 5.0 Points Drugs that treat diseases such as Alzheimer’s, depression, schizophrenia, and aging were tested by Cold Spring Harbor Laboratories on: A. fruit flies. B. guinia pigs. C. rabbits. D. monkies. Reset Selection Mark for Review What’s This? Question 18 of 20 5.0 Points The asymptomatic period of HIV may last __________ years or longer in a country like the United States, though the infection can progress to AIDS in as little as __________ years in a country like Zimbabwe or India, where the percentage of people who can get full treatment and care is much smaller. A. 10; 2 to 3 B. 7; 1 to 2 C. 9; 3 to 4 D. 8; 3 to 5 Reset Selection Mark for Review What’s This? Question 19 of 20 5.0 Points About __________ of HIV transmission worldwide is through unprotected sex. A. 56% B. 64% C. 75% D. 33% Reset Selection Mark for Review What’s This? Question 20 of 20 5.0 Points The recent upsurge in medical costs, combined with advances in technology, is now making __________ a reality. A. neural “hardwiring” B. telemedicine C. gene therapy D. genetic testing
Aug 29, 2021 | Uncategorized
Question 1 of 35 Managerial accounting uses which of the following types of information?
Forecasts of future earnings
Financial information
Nonfinancial information
All of the above
Question 2 of 35
The primary goal of financial accounting is to provide information for
governmental regulators.
creditors.
potential investors.
all of the above.
Question 3 of 35
Which of following statements is true?
Managerial accounting focuses on historical transactions.
Financial accounting focuses on future data.
Management accounting focuses on relevant data.
Managerial accounting uses the cash basis for recording transactions.
Question 4 of 35
Which statement is true?
Management uses financial information to analyze costs.
Management uses financial information to plan internal operations.
Management uses reports created for internal parties.
All of the above are true.
Question 5 of 35 Which of the following statements is false?
Financial accounting helps investors make decisions.
Financial accounting provides sufficient information for managers to effectively plan and control operations.
Financial accounting reports help creditors make decisions.
Financial accounting provides external reports.
Question 6 of 35 Which of the following statements is correct concerning product costs?
Product costs are expensed in the period the related product is sold.
Product costs are expensed in the period incurred.
Product costs are shown with operating expenses on the income statement.
Product costs are shown with current liabilities on the balance sheet.
Question 7 of 35
Which of the following costs include all costs associated with production of a product?
Inventoriable
Direct
Mixed
Overhead
Question 8 of 35
Manufacturing overhead costs for a product include
direct material.
operating expenses.
indirect manufacturing costs.
prime costs.
Question 9 of 35
Indirect materials and indirect labor are ________ for a manufactured product.
overhead and period costs
operating and period costs
overhead and product costs
operating and product costs
Question 10 of 35
Which of the following is an example of an inventoriable cost when manufacturing products?
Depreciation on office equipment
Depreciation on store building
Sales salaries expenses
Depreciation on factory equipment
Question 11 of 35
A ________ is used to accumulate the costs of a job.
labor time record
materials inventory requisition form
bill of materials
job cost record
Question 12 of 35
Which of these documents informs the storeroom to send specific materials to the factory floor?
Receiving report
Bill of materials
Purchase order
Materials requisition
Question 13 of 35
When direct materials are requisitioned, they flow directly into
cost of goods sold.
finished goods inventory.
work in process inventory.
manufacturing overhead.
Question 14 of 35
In the flow of costs, which of the following comes third?
Finished goods inventory
Cost of goods sold
Raw materials inventory
Work in process inventory
Question 15 of 35
A ________ is a document which is prepared by manufacturing personnel to request materials for the production process.
cost ticket
job cost record
materials requisition
manufacturing ticket
Question 16 of 35
Which of the following is the last step of the five-step process costing procedure?
Summarize total costs to account for
Assign total costs to units completed and to units in ending WIP inventory
Compute the cost per equivalent unit
Summarize the flow of physical units
Question 17 of 35
In Step 1 of the process costing procedure, the “total units accounted for” is the sum of
the units completed and transferred out plus the units in ending WIP.
the units in ending WIP plus the units started in production during the month.
the units in beginning WIP plus the units in ending WIP.
the units in beginning WIP plus the units completed and transferred out.
Question 18 of 35
Which item would appear last on a production cost report?
Cost of goods finished for the month
Total costs accounted for
Beginning WIP inventory, if any
Ending WIP inventory, if any
Question 19 of 35
On a production cost report, which of the following cost(s) appear?
A. Beginning work in process
B. Costs added during the period
C. Total operating costs during the period
D. Both A and B are included on a production cost report.
Question 20 of 35
Which costs comprise WIP inventory on a production cost report?
Direct materials and direct labor
Direct materials and manufacturing overhead
Direct materials, direct labor, and manufacturing overhead
Direct labor and manufacturing overhead
Question 21 of 35
When a company has established separate manufacturing overhead rates for each department, it is using
departmental overhead rates.
cost distortion.
a plantwide overhead rate.
none of the above.
Question 22 of 35
Which of the following condition(s) favors using departmental overhead rates in place of a plantwide overhead rate?
A. Different departments incur different amounts and types of manufacturing overhead.
B. Different jobs or products use the departments to a different extent.
C. Both A and B.
D. Neither A or B.
Question 23 of 35
In using an ABC system, all of the following steps are performed before the company’s year begins except:
identify the primary activities and estimate a total cost pool for each.
select an allocation base for each activity.
allocate the costs to the cost object using the activity cost allocation rates.
calculate an activity cost allocation rate for each activity.
Question 24 of 35
Research and development would most likely be classified as a ________ cost.
unit-level
batch-level
facility-level
product-level
Question 25 of 35
Using factory utilities would most likely be classified as a ________ cost.
unit-level
batch-level
facility-level
product-level
Question 26 of 35
With respect to variable costs per unit, which of the following statements is true?
They will decrease as production increases within the relevant range.
They will increase as production decreases within the relevant range.
They will decrease as production decreases within the relevant range.
They will remain the same as production levels change within the relevant range.
Question 27 of 35
With respect to total variable costs, which of the following statements is true?
They will remain the same as production levels change within the relevant range.
They will decrease as production decreases within the relevant range.
They will decrease as production increases within the relevant range.
They will increase as production decreases within the relevant range.
Question 28 of 35
Total fixed costs for Taylor Incorporated are $240,000. Total costs, including both fixed and variable, are $500,000 if 125,000 units are produced. The variable cost per unit is
$5.92/unit.
$2.08/unit.
$4.00/unit.
$1.92/unit.
Question 29 of 35
Total fixed costs for Diamond Enterprises are $800,000. Total costs, including both fixed and variable, are $890,000 if 120,000 units are produced. The fixed cost per unit at 200,000 units would be
$4.00/unit
$7.42/unit.
$4.45/unit.
$0.45/unit.
Question 30 of 35
Total fixed costs for Randolph Manufacturing are $752,450. Total costs, including both fixed and variable, are $1,000,000 if 150,000 units are produced. The fixed cost per unit at 186,250 units would be closest to
$1.31/unit.
$5.31/unit.
$4.00/unit.
$5.03/unit.
Question 31 of 35
The unit contribution margin is computed by
subtracting the variable cost per unit from the sales price per unit.
dividing the sales revenue by variable cost per unit.
dividing the variable cost per unit by the sales revenue.
subtracting the sales price per unit from the variable cost per unit.
Question 32 of 35
The contribution margin ratio explains the percentage of each sales dollar that
contributes towards variable costs.
contributes towards sales revenue.
contributes towards period expenses.
contributes towards fixed costs and generating a profit.
Question 33 of 35
________ should be subtracted from the sales price per unit to compute the unit contribution margin.
All variable costs
Only variable inventoriable product costs
Only variable period costs
All fixed costs
Question 34 of 35
By multiplying ________ and then subtracting fixed costs, managers can quickly forecast the operating income.
projected sales units by the contribution margin ratio
projected sales revenue by the contribution margin ratio
projected sales revenue by the unit contribution margin
projected sales units by the variable cost ratio
Question 35 of 35
Electric Jet Skis operates a Jet Ski rental business. Assume the jet skis rent for $55 for 6 hours. The variable costs are $33 per six-hour rental, and its fixed costs are $80,000 each month. What is the contribution margin per six-hour jet ski rental?
$33.00
$0.40
$22.00
$2.50
Aug 29, 2021 | Uncategorized
Question 1 of 37
On August 1, 2011, Xcel Auto Repair paid $6,000 for six months rent. After adjusting entries are made, what will be the balance of Prepaid Rent on December 31, 2011?
$4,000
$6,000
$2,000
$1,000
Question 2 of 37
The adjusting entry to record unearned revenue that has now been earned accomplishes which of the following?
Increases an asset and increases an expense
Decreases a liability and increases an expense
Decreases an asset and increases an expense
Decreases a liability and increases a revenue
Question 3 of 37
A business pays salaries of $140,000 on the first and fifteenth days of every month. Which of the following is the adjusting entry required on December 31, 2008?
Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Payable
Debit $140,000 to Salaries Receivable, credit $140,000 to Salaries Payable
Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Receivable
No adjusting entry required
Question 4 of 37
A business pays salaries of $140,000 on the fifteenth and last days of every month. Which of the following is the adjusting entry required on December 31, 2008?
Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Receivable
Debit $140,000 to Salaries Expense, credit $140,000 to Salaries Payable
Debit $140,000 to Salaries Receivable, credit $140,000 to Salaries Payable
No adjusting entry required
Question 5 of 37
What type of account is Accumulated Depreciation and what is its normal balance?
Expense, debit
Revenue, debit
Contra asset, credit
Liability, credit
Question 6 of 37
Which of the following reports a company’s financial position?
Balance sheet
Income statement
Statement of owner’s equity
Adjusted trial balance
Question 7 of 37
How do the adjusting entries differ from other journal entries?
Adjusting entries never affect cash.
Adjusting entries are made only at the end of the period.
Adjusting entries debit or credit at least one income statement account and at least one balance sheet account.
All of the above
Question 8 of 37
Which of the following is (are) inventory costing methods allowed by GAAP?
Last in first out
Average cost
Specific unit cost
All of the above
Question 9 of 37
Under which of the following inventory costing methods is the cost of goods sold based on the cost of the oldest purchases?
Specific unit cost
Average cost
Last in first out
First in first out
Question 10 of 37
Under which of the following inventory costing methods is the cost of goods sold based on the average cost of the purchases during the period?
Specific unit cost
Average cost
Last in first out
First in first out
Question 11 of 37
Under which of the following inventory costing methods is ending inventory based on the cost of the most recent purchases?
Specific unit cost
Average cost
Last in first out
First in first out
Question 12 of 37
A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the FIFO inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?
$1,500
$1,000
$1,250
$2,250
Question 13 of 37
A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the average cost inventory costing method, which of the following amounts will be the amount of inventory on the December 31 balance sheet?
$2,250
$1,250
$1,500
$1,000
Question 14 of 37
A company purchased 100 units for $20 each on January 31. It purchased 100 units for $30 on February 28. It sold 150 units for $45 each from March 1 through December 31. If the company uses the FIFO inventory costing method, which of the following amounts will be the amount of cost of goods sold on the December 31 income statement?
$6,750
$4,000
$3,750
$3,500
Question 15 of 37
Which of the following inventory costing methods yields the highest ending inventory when prices increase during the accounting period?
Specific unit cost
Average cost
Last in first out
First in first out
Question 16 of 37
Which of the following inventory costing methods is often adopted when a company sells relatively few costly items?
Specific unit cost
Average cost
Last in first out
First in first out
Question 17 of 37
Which of the following assets is generally reported at the lower of cost or market?
Inventory
Cash
Accounts receivable
Prepaid insurance
Question 18 of 37
On December 31 of the current year, the trial balance for a company reports the following amounts:
Cost of goods available for sale $1,074,450
Ending inventory (FIFO) 85,430
Replacement cost of ending inventory 91,730
What amount must be reported for cost of goods sold on the income statement?
$897,290
$1,074,450
$982,720
$989,020
Question 19 of 37
Which of the following statements is a TRUE statement concerning the worksheet?
The worksheet helps accountants close the accounts.
The worksheet helps accountants make the adjusting entries.
The worksheet helps accountants prepare the financial statements.
The worksheet helps accountants do all of the above.
Question 20 of 37
Which of the following is the correct order of the steps for preparing the worksheet
I. Compute each account’s adjusted balance by combining the trial balance and adjustment figures. Enter each account’s adjusted amount in the Adjusted Trail Balance columns.
II. Enter the account titles and their unadjusted balances in the Trial Balance columns of the worksheet and total the columns.
III. Extend (copy) the asset, liability, and owner’s equity amounts from the Adjusted Trial Balance to the Balance Sheet columns. Copy the revenue and expense amounts to the Income Statement columns. Total the statement columns.
IV. Enter the adjusting entries in the Adjustments columns and total the amounts.
V. On the income statement column, compute net income. Enter net income as the balancing amount on the income statement and balance sheet columns. Total the income statement and balance sheet columns.
II, IV, I, III, V
IV, I, III, V, II
III, V, IV, I, II
I, II, III, IV, V
Question 21 of 37
Which of the following statements is a TRUE statement about the worksheet?
Net income appears in the Income Statement debit column.
Net income appears in the Adjusted Trial Balance debit column.
Net income appears in the Income Statement credit column.
Net income appears in the Balance Sheet debit column.
Question 22 of 37
Which of the following columns are generally found on a worksheet?
Pre-adjusted trial balance
Adjusted balance sheet
Post-closing trial balance
Adjustments
Question 23 of 37
Where does net income appear on a worksheet?
Net income appears only in the Balance Sheet credit column.
Net income appears in the Income Statement credit column and in the Balance Sheet debit column.
Net income appears only in the Income Statement debit column.
Net income appears in the Balance Sheet credit column and in the Income Statement debit column.
Question 24 of 37
Totals of various columns from the worksheet are shown below. What is net income or loss
Income Statement Balance Sheet
Debit
$6,800 Credit
$9,500 Debit
$7,400 Credit
$4,700
Net loss of $6,800
Net loss of $2,700
Net income of $4,700
Net income of $2,700
Question 25 of 37
In which of the columns of the worksheet would the owner’s capital account be found?
In the Trial Balance debit column, the Adjusted Trial Balance debit column and the Balance Sheet debit column
In the Trial Balance credit column, the Adjusted Trial Balance credit column and the Balance Sheet credit column
In the Balance Sheet debit column and the Income Statement credit column
In the Balance Sheet credit column and the Income Statement debit column
Question 26 of 37
Which of the following accounts will be closed by debiting the Income Summary?
Accounts Payable
Accumulated Depreciation
Service Revenue
Depreciation Expense
Question 27 of 37
To what account is the balance in the Income Summary closed?
The Income Summary is closed to the owner’s withdrawals account.
The Income Summary is closed to the owner’s capital or Retained Earnings account.
The Income Summary is closed to the net income account.
None of the above.
Question 28 of 37
Net income for the year is $25,000. The owner withdrew $3,000 per month for personal living expenses. Which of the following occurs?
The Owner’s Capital account increases by $22,000.
The Owner’s Capital account increases by $11,000.
The Owner’s Capital account decreases by $11,000.
The Owner’s Capital account decreases by $22,000.
Question 29 of 37
A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10 net/30. Which of the following entries would be made to record the payment for the inventory if the payment is made within 10 days?
The accounting entry would be a $1,000 debit to Accounts Payable and a $1,000 credit to Cash.
The accounting entry would be a $1,000 debit to Accounts Payable, a $20 credit to Inventory and a $980 credit to Cash.
The accounting entry would be a $980 debit to Accounts Payable, a $20 debit to Inventory and a $1,000 credit to Cash.
The accounting entry would be a $20 debit to Inventory, a $1,000 debit to Accounts Payable and a $1,020 credit to Cash.
Question 30 of 37
Table 5.1
Sales revenue $460,000
Costs of goods sold 300,000
Operating expenses 85,000
Sales discounts 20,000
Sales returns and allowances 15,000
Interest Revenue 5,000
Refer to Table 5.1. What is gross profit?
$160,000
$140,000
$90,000
$125,000
Question 31 of 37
Which of the following is subtracted from gross profit to arrive at operating income?
Operating expenses
Cost of goods sold
Sales discounts and sales returns and allowances
Cost of goods available for sale
Question 32 of 37
A company’s cost of goods sold is $1,000,000. Its average inventory is $100,000. Which of the following is its rate of inventory turnover?
100
10
.1
.01
Question 33 of 37
Which of the following is represented by the inventory account on the balance sheet?
Ending inventory
Cost of merchandise available for sale
Cost of goods sold
Beginning inventory
Question 34 of 37
A business receives cash in payment of accounts receivable. Which of the following occurs?
An asset is debited and a liability is credited.
A liability is debited and a liability is credited.
An asset is credited and a liability is debited.
An asset is debited and an asset is credited.
Question 35 of 37
An owner withdraws cash from his business. The cash will be used for personal purposes. Which of the following occurs?
An asset is debited and an owner’s equity account is credited.
An asset is credited and an owner’s equity account is debited.
An asset is debited and a liability is credited.
An asset is credited and a liability is debited.
Question 36 of 37
Which of the following journal entries would be recorded if a business purchased equipment for $2, 500 cash and supplies for $450 cash?
Cash 2,500
Equipment 450
Accounts Receivable 2,950
Equipment 2,950
Cash 2,500
Supplies 450
Cash 2,950
Equipment 2,500
Supplies 450
Equipment 2,500
Supplies 450
Cash 2,950
Question 37 of 37
Which of the following journal entries would be recorded if a business performed services for $400 cash and $1,000 on account?
Service Revenue 1,000
Cash 400
Accounts Receivable 1,400
Cash 400
Accounts Receivable 1,000
Service Revenue 1,400
Cash 1,400
Accounts Receivable 1,000
Service Revenue 400
Service revenue 1,400
Cash 1,000
Accounts Payable 400
Aug 29, 2021 | Uncategorized
Question 1 of 38
Which of the following transactions is entered in the sales journal?
A sale of merchandise for cash
The return of merchandise purchased on account
A sale of merchandise on account
The return of merchandise purchased for cash
Question 2 of 38
Which of the following is NOT true of an effective accounting system?
The system must accommodate changes in the business over time.
The system must provide minimal benefits at whatever cost is necessary.
The system must work smoothly with your personnel and organizational structure.
The system has internal controls to help the owner(s) control the business.
Question 3 of 38
Which of the following accounts is debited for the total of the Cash column in the Cash Receipts Journal?
The sales revenue account
The cash account
The inventory account
The accounts receivable control account
Question 4 of 38
A check was written by a business for $329, but recorded in the cash payments journal as $239. How would this error be included on the bank reconciliation?
A deduction on the book side
An addition on the book side
An addition on the bank side
A deduction on the bank side
Question 5 of 38
Which of the following describes the internal control procedure “separation of duties?”
Cashiers must not have access to accounting records.
The information system is critical.
External auditors will monitor internal controls.
Pre-number invoices and other documents.
Question 6 of 38
Table 9.1
The following information is from the 2008 records of Armadillo Camera Shop:
Accounts Receivable, December 31, 2008 $20,000 (debit)
Allowance for uncollectible accounts, December 31, 2008, prior to adjustment 600 (debit)
Net credit sales for 2008 95,000
Accounts written off as uncollectible during 2008 7,000
Cash sales during 2008 27,000
Refer to Table 9.1. Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net accounts receivable after adjustment?
$17,150
$16,550
$17,750
$13,000
Question 7 of 38
Table 9.1
The following information is from the 2008 records of Armadillo Camera Shop:
Accounts Receivable, December 31, 2008 $20,000 (debit)
Allowance for uncollectible accounts, December 31, 2008, prior to adjustment 600 (debit)
Net credit sales for 2008 95,000
Accounts written off as uncollectible during 2008 7,000
Cash sales during 2008 27,000
Refer to Table 9.1. Uncollectible accounts expense is estimated by the aging-of-accounts-receivable method. Management estimates that $2,850 of accounts receivable will be uncollectible. Which of the following will be the amount of Allowance for Uncollectible Accounts after adjustment?
$3,450
$2,850
$7,000
$2,250
Question 8 of 38
A note receivable was NOT paid at maturity. Which of the following will be included in the journal entry to record this event?
A debit to uncollectible-account expense
A debit to interest expense
A debit to cash
A credit to interest revenue
Question 9 of 38
Which of the following are acceptable methods of computing depreciation?
Declining-balance
Straight-line
Units-of-production
All of the above
Question 10 of 38
Goodwill of $20,000 was recorded upon the purchase of Smith Repair Parts. The company has been very successful and has increased in value during its first year of operation under its new management. How much amortization should be recorded for the first year?
$-0-
$2,000
$4,000
$1,000
Question 11 of 38
Which of the following is the proper accounting treatment for research and development costs?
Research and development costs must be expensed.
Research and development costs must be capitalized and expensed each year to the extent that their value has declined.
Research and development costs must be capitalized and amortized over 70 years or less.
Research and development costs must be capitalized and amortized over 20 years or less.
Question 12 of 38
In which of the following periods should the expense for warranty costs be recorded?
The period when the product is repaired or replaced
The period when cash is collected for the sale of the product
The period when cash is paid to repair or replace the product
The period when the product is sold
Question 13 of 38
How much cash will be received if a corporation issues $6,000,000 of 10% bonds at 102?
$6,012,000
$6,000,000
$6,120,000
$5,880,000
Question 14 of 38
Which of the following is TRUE of the statement of cash flows?
The statement of cash flows shows where cash came from and how cash was spent.
The statement of cash flows covers a span of time and is dated “Year Ended Month Day, Year”.
The statement of cash flows reports why cash increased or decreased during the period.
All of the above are true of the statement of cash flows.
Question 15 of 38
Which of the following statements about the information included on a statement of cash flows is TRUE?
The statement of cash flows contains information about the business’s percentage change in each item of revenue and expense.
The statement of cash flows contains information about the differences between net income and additions to retained earnings.
The statement of cash flows contains information about stock splits and stock dividends distributed by the company.
The statement of cash flows contains information about the business’s ability to generate positive cash flows in future periods.
Question 16 of 38
A company sold equipment with a book value of $9,000 at a gain of $2,500. How much will be reported in the investing activities section of the statement of cash flows as cash received upon the sale of the equipment?
The cash received upon the sale of the equipment was $13,000.
The cash received upon the sale of the equipment was $2,500.
The cash received upon the sale of the equipment was $11,500.
The cash received upon the sale of the equipment was $6,500.
Question 17 of 38
A company purchases land using its common stock. Where would this transaction appear if the company prepares the statement of cash flows using the indirect method or the direct method?
The purchase of land would be presented in the financing activities section as a cash payment under both methods.
The purchase of land would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.
The purchase of land would be presented in the investing activities section as a cash payment under both methods.
The purchase of land would be presented in the non-cash investing and financing activities section under both methods.
Question 18 of 38
Which of the following is generally the base amount when performing vertical analysis of a balance sheet?
A net asset is generally the base amount when performing vertical analysis of a balance sheet.
Stockholders’ equity is generally the base amount when performing vertical analysis of a balance sheet.
Total liabilities is generally the base amount when performing vertical analysis of a balance sheet.
Total assets is generally the base amount when performing vertical analysis of a balance sheet.
Question 19 of 38
Which of the following ratios is a measure of a company’s ability to pay liabilities with current assets?
The day’s sales in receivables is a measure of a company’s ability to pay liabilities with current assets.
The inventory turnover ratio is a measure of a company’s ability to pay liabilities with current assets.
The current ratio is a measure of a company’s ability to pay liabilities with current assets.
The acid-test ratio is a measure of a company’s ability to pay liabilities with current assets.
Question 20 of 38
A company received a bank statement with a balance of $5,350. Reconciling items included a bookkeeper error of $200 (a $300 check recorded as $500), two outstanding checks totaling $720, a service charge of $15, a deposit in transit of $180, and interest revenue of $21. What is the adjusted balance?
$5,016
$4,610
$4,810
$4,636
Question 21 of 38
Table 9.2
The following information is from the 2009 records of Rawhide Leather Products.
Accounts Receivable, December 31, 2009 $330,000 (debit)
Allowance for uncollectible accounts, December 31, 2009, prior to adjustment 4,500 (credit)
Net credit sales for 2009 1,500,000
Accounts written off as uncollectible during 2009 25,500
Cash sales during 2009 270,000
Refer to Table 9.2. Uncollectible accounts expense is determined by the direct write-off method. Which of the following will be the amount of uncollectible accounts expense?
$25,500
$34,500
$30,000
$30,500
Question 22 of 38
What is the principal amount of a 60-day, 12% note for $11,000?
$10,780
$ 220
$11,220
$11,000
Question 23 of 38
Which of the following depreciation methods is used by MOST companies for their tax returns?
Units-of-production
Straight-line
Declining-balance
All of the above methods are used about equally.
Question 24 of 38
Which of the following is the type of account that represents taxes withheld from employees’ gross pay?
Asset
Expense
Contra asset
Liability
Question 25 of 38
Which of the following is the correct order of the sections on a statement of cash flows?
The correct order is operating, financing, investing.
The correct order is investing, operating, financing.
The correct order is operating, investing, financing.
The correct order is financing, investing, operating.
Question 26 of 38
In which journal would a return of merchandise purchased on account be recorded?
The sales journal
The cash payments journal
The cash receipts journal
The purchases journal
The general journal
Question 27 of 38
Which of the following would be a legal consequence of violating the Sarbanes-Oxley Act?
An executive of the company that is convicted of making false sworn statements could be sentenced to 20 years in prison.
Internal control staff convicted of lack of independence could be sentenced to 25 years in prison.
A company’s internal control system could be dismantled and replaced by the Public Company Oversight Board.
The Public Company Oversight Board could require that the external auditor replace the internal control staff of a company for 3 to 5 years.
Question 28 of 38
Case 16.1
A company uses the indirect method to prepare the statement of cash flows. It presents the following amounts on its December 31, 2007, financial statements.
December 31, 2006 December 31, 2007
Accounts receivable $100,000 $110,000
Cost of goods sold 560,000
Sales revenue 830,000
Accounts payable* 67,000 75,000
Inventory 105,000 86,000
Salary payable 10,000 13,000
Salary expense 45,000 49,000
*Relates solely to the acquisition of inventory
Refer to Case 16.1. What will appear in the operating activities section related to accounts payable?
The increase of $8,000 will be added to net income.
The increase of $8,000 will be subtracted from cost of goods sold.
The increase of $8,000 will be added to cost of goods sold.
The increase of $8,000 will be subtracted from net income.
Question 29 of 38
Current liabilities are obligations due within:
one month or within the company’s normal operating cycle, if it is shorter than one month.
one month or within the company’s normal operating cycle, if it is longer than one month.
one year or within the company’s normal operating cycle, if it is shorter than one year.
one year or within the company’s normal operating cycle, if it is longer than one year.
Question 30 of 38
Failure to record an accrued liability causes a company to:
understate owners’ equity.
understate liabilities.
overstate expenses.
overstate assets.
Question 31 of 38
Warranty expense should be recorded in the period:
the product is sold.
the product is paid for by the customer.
immediately following the period in which the product is sold.
the product sold is repaired or replaced.
Question 32 of 38
Potential liabilities that depend on future events arising out of past events are called:
estimated liabilities.
contingent liabilities.
actual liabilities.
long-term liabilities.
Question 33 of 38
Which is the preferred method to use when amortizing a bond discount or premium?
Both straight-line and market-interest rate methods of amortization are equally preferable.
Straight-line method of amortization
Market-interest rate method of amortization
Effective interest method of amortization
Question 34 of 38
Bonds with a 6% interest rate were issued when the market rate of interest was 7%. This bond was issued at:
face value.
a premium.
a discount.
par value.
Question 35 of 38
Bonds with an 8% interest rate were issued when the market rate of interest was 9%. The quoted bond price will be:
greater than 100.
less than 100.
100.
The price cannot be determined.
Question 36 of 38
The carrying value of a bond immediately after the bond was issued was $121,250. The bond price was 97. The face value of the bond was:
$123,750.
$125,000.
$121,250.
$121,250.
Question 37 of 38
Which of the following is not an advantage of forming a corporation, as opposed to organizing as a partnership or proprietorship?
A corporation is a separate legal entity distinct from its owners.
Ease of transferring ownership
Limited liability of stockholders
Limited taxation
Question 38 of 38
Double taxation means that the:
corporation pays income tax and unemployment taxes.
corporation pays tax on its earnings and the shareholders pay tax on dividends.
earnings of a corporation are subject to state and federal income taxes.
shareholders’ tax rate is twice the amount of the corporate tax rate.
Aug 29, 2021 | Uncategorized
Question 1 of 50
Case 10.7
The bi-weekly payroll for Gilkey contruction was as follows:
Gross pay for Wages $15,000
Employee payroll deductions:
Employee income tax $3,400
FICA(8%) $1,200
401 K Retirement plan contributions $1,500
Refer to Case 10.7. The journal entry to record the payroll for Gilkey would include:
a debit to Wage expense for $8,900.
a credit to FICA payable for $1,200.
a debit to Cash for $15,000.
a credit to Employee income taxes payable for $1,500.
Question 2 of 50
Case 9.2
Axel Logistics purchased the following long term assets with market values:
Asset Market Value
Equipment $200,000
Land $250,000
Furniture $150,000
Building $400,000
Refer to Case 9.2. If Axel pays $800,000 for all of the long term assets in a basket purchase, what amount would be the recorded as the cost of the furniture?
$60,000
$100,000
$48,000
$120,000
Question 3 of 50
Case 10.4
Lisa Lay manages the women’s clothing department of Fashion Department Store. She earns a base monthly salary of $1,000 plus a 6% commission on her personal sales. Through payroll deductions, Lay donates $35 per month to a charitable organization, and she authorizes Fashion to deduct $40 monthly for her health insurance. Tax rates on Lay’s earnings are 10% for income tax and 8% of the first $90,000 for FICA. During the first 11 months of the year, she earned $81,000.
Refer to Case 10.4. Compute Lay’s net pay for December assuming $80,000 in sales for December.
$4,681
$1,000
$4,500
$3,615
Question 4 of 50
Case 9.2
Axel Logistics purchased the following long term assets with market values:
Asset Market Value
Equipment $200,000
Land $250,000
Furniture $150,000
Building $400,000
Refer to Case 9.2. If Axel pays $800,000 for all of the long term assets in a basket purchase, what amount would be the recorded as the cost of the equipment?
$100,000
$200,000
$150,000
$160,000
Question 5 of 50
The journal entry to increase an imprest petty cash fund from $300 to $400 would be:
A) Miscellaneous Expense 100
Cash in bank 100
B) Petty Cash 100
Cash in bank 100
C) Accounts Receivable 100
Cash in bank 100
D) Cash in bank 100
Petty Cash 100
A)
B)
C)
D)
Question 6 of 50
Case 9.7
Suppose General Electric Company (GE) pays $400,000 to acquire a patent on January 1, 2008. GE believes this patent’s useful life is five years.
Refer to Case 9.7. What is the journal on January 1 to acquire the patent?
A) Amortization Expense 400,000
Patent 400,000
B) Amortization Expense 80,000
Accumulated Amortization 80,000
C) Patent 80,000
Cash 80,000
D) Patent 400,000
Cash 400,000
A)
B)
C)
D)
Question 7 of 50
In accounting, how is goodwill defined?
The excess of the cost to purchase another company over the market value of its net liabilities
The excess of the cost to purchase another company over the book value of its net assets
The excess of the cost to purchase another company over the market value of its net assets
The excess of the cost to purchase another company over the market value of its cash accounts
Question 8 of 50
Letting no single employee be responsible for authorizing transactions, handling assets, and keeping accounting records are called:
control environment.
segregation of duties
risk assessment.
control activities.
Question 9 of 50
Separation of duties is important for internal control of:
cash receipts.
cash payments.
neither of the above.
both of the above.
Question 10 of 50
An example of an optional deduction from pay for an employee would be:
FICA.
state income taxes.
charitable contributions.
federal income taxes.
Question 11 of 50
The allocation of the cost of a natural resource to expense over its useful life is called:
amortization.
depletion.
depreciation.
production.
Question 12 of 50
The amount that should be recorded as the cost of a long term asset is:
A) the cost to get the asset ready for its intended use.
B) the cost to purchase the asset.
C) both A and B.
D) none of the above.
Question 13 of 50
Gilkey Enterprises wrote a check for $540 to a supplier. The check was incorrectly recorded for $450 by the bank. The adjustment on the bank reconciliation should be:
$90 added to the bank balance of a bank reconciliation.
$90 subtracted from the book balance of a bank reconciliation.
$90 subtracted from the bank balance of a bank reconciliation.
$90 added to the book balance of a bank reconciliation.
Question 14 of 50
Case 10.8
The bi-weekly payroll for Oddessy Consulting was:
Gross pay for Wages $25,000
Employee payroll deductions:
Employee income tax $7,400
FICA(8%) $2,000
401 K Retirement plan contributions $2,500
Refer to Case 10.8. The journal entry to record the payroll for Oddessy would include a:
debit to Cash for $25,000.
credit to Employee income taxes payable for $7,400.
debit to Wage expense for $13,100.
credit to Wages payable for $13,100.
Question 15 of 50
The source document behind a notes receivable is called a(n):
account.
promissory note.
journal entry.
subsidiary ledger.
Question 16 of 50
Natural resources are reported on the balance sheet as which of the following?
Cost minus book value
Cost minus liabilities
Cost minus accumulated deprecation
Cost minus accumulated depletion
Question 17 of 50
Case 8.2
Emerson Electronics had the following information related to its September inventory.
Number of Units Cost
Sept. 1 Beginning Inventory 200 Units $10
6 Purchase 200 Units $12
16 Sold 250 Units
27 Purchase 200 Units $14
30 Sold 300 Units
Sales were made at $15 per unit and Emerson uses the perpetual inventory system.
Refer to Case 8.2. The average cost per unit after the September 27 purchase would be:
$11.
$12.50.
$13.31.
$12.71.
Question 18 of 50
When a maker of a note does not pay at maturity it is called:
A) defaulting on a note.
B) dishonoring a note.
C) both A and B.
D) neither A or B.
Question 19 of 50
Which of the following would be considered a capital expenditure?
Putting a new heating a cooling system on a building
Cleaning the carpet on a weekly basis
Regular maintenance of a building
Painting the restrooms of a building
Question 20 of 50
Ordinary repairs are recorded by:
debiting an expense account.
crediting an asset account.
crediting an expense account.
debiting an asset account.
Question 21 of 50
Under the allowance method of accounting for bad debts, the journal entry for writing off a customers accounts is:
A) Allowance for doubtful accounts XXXX
Bad Debts Expense XXXX
B) Bad Debts Expense XXXX
Allowance for doubtful accounts XXXX
C) Allowance for doubtful accounts XXXX
Cash XXXX
D) Accounts Receivable XXXX
Allowance for doubtful accounts XXXX
A)
B)
C)
D)
Question 22 of 50
A sprinkler system would be recorded in which account?
Land
Machinery
Equipment
Land improvements
Question 23 of 50
For good internal controls over payroll, which functions should be separated?
Passing out paychecks or pay stubs
Hiring and firing of employees
Payroll accounting
All of the functions above should be separated
Question 24 of 50
Case 9.6
TD Industries has a piece of equipment that has a cost of $400,000. The equipment has accumulated depreciation of $305,000.
Refer to Case 9.6. If the equipment is sold for $120,000, TD will:
credit a gain for $25,000.
credit cash for $120,000.
debit a loss for $25,000.
debit equipment for $200,000.
Question 25 of 50
Of the following assets which one would be listed first on the balance sheet?
Prepaid Expenses
Land
Cash
Accounts Receivable
Question 26 of 50
Case 10.2
Whirlpool sells $2,120,000 of products in January 2009 on credit. It is estimated that 3% of the products will be returned for warranty work. At the end of January, $30,300 of warranty work has been done.
A) Warranty Expense 30,300
Estimated Warranty Payable 30,300
B) Estimated Warranty Payable 63,600
Cash 63,600
C) Warranty Expense 63,600
Estimated Warranty Payable 63,600
D) Estimated Warranty Payable 30,300
Cash 30,300
Refer to Case 10.2. The journal entry for the warranty work would be:
A)
B)
C)
D)
Question 27 of 50
A signature card is used by banks to help protect against:
inappropriate deposits.
check forgery.
petty cash being stolen.
errors in a bank reconciliation.
Question 28 of 50
Notes receivable that are for longer than one year are considered:
revenues.
current assets.
long term assets.
expenses.
Question 29 of 50
Which inventory costing method would use the actual cost of each individual unit or product?
FIFO
LIFO
Weighted average
Specific Identification
Question 30 of 50
In a company with good internal controls, which department should be responsible for preparing employee earnings records?
Payroll
Accounting
Human resources
Finance
Question 31 of 50
Case 9.4
J + J construction has trucks with a cost of $300,000. The trucks have an estimated useful life of 5 years, and an estimated salvage value of $20,000. The trucks are estimated to run 200,000 miles during their estimated life.
Refer to Case 9.4. The amount of depreciation expense in the first year under double declining balance depreciation would be:
$112,000.
$200,000.
$190,000.
$120,000.
Question 32 of 50
Case 9.4
J + J construction has trucks with a cost of $300,000. The trucks have an estimated useful life of 5 years, and an estimated salvage value of $20,000. The trucks are estimated to run 200,000 miles during their estimated life.
Refer to Case 9.4. If 50,000 miles are driven in year 1, the amount of deprecation expense in the first year under unit of production depreciation would be:
$65,000.
$75,000.
$70,000.
$80,000.
Question 33 of 50
Case 9.2
Axel Logistics purchased the following long term assets with market values:
Asset Market Value
Equipment $200,000
Land $250,000
Furniture $150,000
Building $400,000
Refer to Case 9.2. If Axel pays $800,000 for all of the long term assets in a basket purchase, what amount would be the recorded as the cost of the land?
$180,000
$200,000
$250,000
$100,000
Question 34 of 50
Case 10.5
Chip King works as a cook for Damon’s Grill. His straight-time pay is $10 per hour, with time and a half for hours in excess of 40 per week. King’s payroll deductions include withheld income tax of 7% of total earnings, FICA tax of 8% of total earnings, and a weekly deduction of $10 for a charitable contribution to United Fund.
Refer Case 10.5. Assuming King worked 50 hours during the week, compute his gross pay for the week.
$600
$550
$400
$500
Question 35 of 50
Patriot Bank loans P+P Company $200,000 on a 1 year promissory note on December 1, 2009. The interest rate of this loan is 8.5%. The principle and interest are due in one year. The journal entry to accrue one months worth of interest earned on 12-31-09 is:
A) Interest Receivable 1,417
Interest Revenue 1,417
B) Cash 17,000
Interest revenue 17,000
C) Cash 1,417
Interest revenue 1,417
D) Interest Receivable 17,000
Interest Revenue 17,000
A)
B)
C)
D)
Question 36 of 50
Case 7.10
Jade Co Killian Co
Cash $10,000 $25,000
Short-term investments 5,000 15,000
Net Receivables 45,000 55,000
Current liabilities $45,000 $100,000
Refer to Case 7.10. Calculate the Quick ratio for Jade Company.
1.5
1.25
1.0
1.33
Question 37 of 50
Case 8.2
Emerson Electronics had the following information related to its September inventory.
Number of Units Cost
Sept. 1 Beginning Inventory 200 Units $10
6 Purchase 200 Units $12
16 Sold 250 Units
27 Purchase 200 Units $14
30 Sold 300 Units
Sales were made at $15 per unit and Emerson uses the perpetual inventory system.
Refer to Case 8.2. The value of cost of goods sold under FIFO would be:
$6,500.
$7,000.
$6,300.
$6,700.
Question 38 of 50
Suppose King Manufacturing signs a $600,000 note payable to purchase land. King also pays $40,000 in back property taxes, $10,000 in transfer taxes, $25,000 to remove an old building, and a $3,000 survey fee. In addition, King had a ground breaking ceremony to start construction of a new building that costs $1,200. What is the cost of the land?
$678,000
$679,200
$650,000
$600,000
Question 39 of 50
Lanny Company’s cash account shows an ending balance of $770. The bank statement shows a $20 service charge and an NSF check for $100. A $250 deposit is in transit, and outstanding checks total $400. What is Navarro’s adjusted cash balance?
$1,050
$650
$680
$530
Question 40 of 50
The allocation of the cost of a plant asset to expense over its useful life is called:
production.
depreciation.
amortization.
depletion.
Question 41 of 50
Case 6.1
Horner Consulting has the following related to its cash account:
Cash account balance $3,100
Bank statement balance $3,200
Deposits in transit $250
Outstanding Checks:
#1001 $50
#1003 $340
#1006 $225
Bank Service charge $25
NSF check – Customer Gilkey $240
Refer to Case 6.1. What is the journal entry for the NSF check?
A) Miscellaneous Expense 240
Cash 240
B) Cash 240
Accounts Receivable – Gilkey 240
C) Accounts Receivable – Gilkey 240
Cash 240
D) Cash 240
Miscellaneous Expense 240
A)
B)
C)
D)
Question 42 of 50
Case 9.4
J + J construction has trucks with a cost of $300,000. The trucks have an estimated useful life of 5 years, and an estimated salvage value of $20,000. The trucks are estimated to run 200,000 miles during their estimated life.
Refer to Case 9.4. The amount of depreciation expense in the second year under double declining balance depreciation would be:
$75,200.
$66,000.
$65,000.
$72,000.
Question 43 of 50
Case 9.3
Leah, Inc. has machinery with a cost of $100,000. The machinery has an estimated useful life of 10 years, and an estimated salvage value of $10,000. The machinery is expected to be able to produce a total of 1,000,000 units during its estimated life.
Refer to Case 9.3. The amount of depreciation expense in the third year under double declining balance depreciation would be:
$15,000.
$12,400.
$20,000.
$18,000.
Question 44 of 50
Case 10.1
Maytag sells $1,120,000 of products in January 2009 on credit. It is estimated that 2% of the products will be returned for warranty work. At the end of January, $10,500 of warranty work has been done.
A) Warranty Expense 10,500
Estimated Warranty Payable 10,500
B) Estimated Warranty Payable 10,500
Cash 10,500
C) Estimated Warranty Payable 22.400
Cash 22.400
D) Warranty Expense 22,400
Estimated Warranty Payable 22,400
Refer to Case 10.1. The journal entry for the warranty work would be:
A)
B)
C)
D)
Question 45 of 50
An oil well that cost $10,000,000 has an estimated 50,000,000 barrels of oil. If in 2008, 200,000 barrels of oil were extracted, then what is depletion expense for the year?
$40,000
$30,000
$20,000
$80,000
Question 46 of 50
Maggie Moo’s Ice Cream Shop had a gross pay of $19,000 and a net pay of $13,200 for the latest payroll. The journal entry to pay the payroll would be:
A) Salaries Expense 13,200
Cash 13,200
B) Salaries Payable 19,000
Cash 19,000
C) Salaries Expense 13,200
Salaries Payable 13,200
D) Salaries Payable 13,200
Cash 13,200
A)
B)
C)
D)
Question 47 of 50
Desks and chairs are recorded in which account?
Furniture and fixtures
Machinery
Land
Land improvements
Question 48 of 50
The percentage of sales method of estimating bad debts is considered to be a(n):
retained earnings statement approach.
balance sheet approach.
cash flows statement approach.
income statement approach.
Question 49 of 50
Reducing expense to increase operating profit is representative of:
safeguarding assets
following company policies
promoting operational efficiency
ensuring accurate, reliable accounting records
Question 50 of 50
Case 9.3
Leah, Inc. has machinery with a cost of $100,000. The machinery has an estimated useful life of 10 years, and an estimated salvage value of $10,000. The machinery is expected to be able to produce a total of 1,000,000 units during its estimated life.
Refer to Case 9.3. The book value of the machinery at the end of the second year under straight line depreciation would be:
$82,000.
$100,000.
$18,000.
$91,000.
Aug 29, 2021 | Uncategorized
Question 1 of 50
Case 3.10
Business Week magazine receives $240,000 in advance for 2 years of magazine subscriptions on 1-1-08. Business Week prepares annual financial statements on 12-31-08.
Referring to Case 3.10, if Business Week prepares monthly financial statements, how much subscription revenue should be recognized each month?
$16,000
$10,000
$12,000
$24,000
Question 2 of 50
Case 3.2
Oddessy Consulting pays $90,000 for three years of rent in advance on September 1, 2008. Oddessy prepares yearly financial statements on December 31, 2008.
Referring to Case 3.2, how much Prepaid Rent remains after the 12-31-09 adjusting entry?
$70,000
$60,000
$10,000
$50,000
Question 3 of 50
Accounting information should be able to be confirmed by an independent observer. For instance, a sale of a product should have documentation such as a sales order and sales invoice. This makes the information:
observable.
accessible.
verifiable.
none of the above.
Question 4 of 50
Which columns of the worksheet show the accounts after adjustments?
A) Income Statement
B) Adjusted Trial Balance
C) Balance Sheet
D) Both B and C
Question 5 of 50
Which of the following is a long term asset that is NOT depreciated?
Building
Machinery
Equipment
Land
Question 6 of 50
Which of the following is an example of a prepaid expense?
Insurance
Rent
Supplies
All of the above
Question 7 of 50
Which of the following concepts assumes the entity will remain in operation for the foreseeable future?
Reliable
Going concern
Cost
Entity
Question 8 of 50
Case 3.4
Lisa and Mel, Attorneys at Law, purchased $20,000 of supplies on 3-1-08. Lisa and Mel prepare financial statements on 12-31-08. $300 of supplies is left on 12-31-08.
Referring to Case 3.4, how much Supplies Expense should be recorded at 12-31-08?
$19,700
$20,000
$10,000
$300
Question 9 of 50
A business owes $20,000 for a utilities bill. How does this impact the accounting equation?
AssetsLiabilitiesOwner’s Equity
A)IncreaseNo effectIncrease
B)No effectIncreaseDecrease
C)IncreaseIncreaseIncrease
D)IncreaseDecreaseNo effect
A
B
C
D
Question 10 of 50
AccountsDrCr
A)Accounts Payable$25,000
Salaries Expense$25,000
B)Owner, Withdrawals$25,000
Cash$25,000
C)Owner Expense$25,000
Cash$25,000
D)Cash$25,000
Owner, Withdrawals$25,000
Which of the following is the correct journal entry for an owner withdrawal of $25,000 in cash?
A)
B)
C)
D)
Question 11 of 50
Which of the following can be errors that occur in an accounting system?
Addition or subtraction error
Recording the wrong amount in the journal
Account balance calculated incorrectly
All of the above
Question 12 of 50
Which of the following is the purpose of financial accounting information?
Help investors, creditors, and others make decisions.
Comply with SEC and IRS rules.
To provide biased information to the markets for trading.
Help managers plan and control business operations.
Question 13 of 50
AccountsDrCr
A)Accounts Receivable$50,000
Equipment$50,000
B)Equipment$50,000
Owner’s Capital$50,000
C)Equipment$50,000
Cash$50,000
D)Cash$50,000
Equipment$50,000
Which of the following is the correct journal entry for a purchase of equipment for $50,000 cash?
A)
B)
C)
D)
Question 14 of 50
Generally accepted accounting principles (GAAP) are created by the:
American Institute of Certified Public Accountants (AICPA).
Financial Accounting Standards Board (FASB).
Institute of Management Accountants (IMA).
Securities and Exchange Commission (SEC).
Question 15 of 50
Which of the following is a liability account?
Equipment
Cash
Accounts Payable
All of the above
Question 16 of 50
Case 3.7
Patrick Industries purchases new computer equipment for $60,000 on July 1, 2008. Patrick uses straight line depreciation, and the machinery is estimated to have a 3 year useful life and a zero salvage value. Patrick prepares financial statements on 12-31-08.
Referring to Case 3.7, what is the book value of the computer equipment at 12-31-08?
$50,000
$55,000
$40,000
$60,000
Question 17 of 50
Case 3.7
Patrick Industries purchases new computer equipment for $60,000 on July 1, 2008. Patrick uses straight line depreciation, and the machinery is estimated to have a 3 year useful life and a zero salvage value. Patrick prepares financial statements on 12-31-08.
Referring to Case 3.7, how much depreciation expense should Patrick recognize at 12-31-08?
$10,000
$20,000
$60,000
$5,000
Question 18 of 50
What part of the accounting system would indicate the profit or loss of a business?
The ledger
The income statement
The journal
The trial balance
Question 19 of 50
Case 3.1
Matta Industries pays $40,000 for two years of rent in advance on July 1, 2008. Matta prepares yearly financial statements on December 31, 2008.
Referring to Case 3.1, what is the adjusting journal entry on 12-31-08?
A)Prepaid Rent$40,000
Cash$40,000
B)Rent Expense$10,000
Prepaid Rent$10,000
C)Rent Expense$40,000
Prepaid Rent$40,000
D)Cash$40,000
Prepaid Rent$40,000
A)
B)
C)
D)
Question 20 of 50
Which of the following accounts is NOT a current asset?
Equipment
Accounts receivable
Inventory
Prepaid Insurance
Question 21 of 50
AccountsDrCr
A)Cash$5,000
Supplies$5,000
B)Supplies$5,000
Cash$5,000
C)Supplies$5,000
Accounts Payable$5,000
D)Accounts Payable$5,000
Supplies$5,000
Which of the following is the correct journal entry for purchasing $5,000 worth of supplies on credit?
A)
B)
C)
D)
Question 22 of 50
Revenues would have which of the following effects on the accounting equation?
Increase owner’s equity
Increase assets
Decrease owner’s equity
Increase liabilities
Question 23 of 50
Which of the following financial statements show the accounting equation?
Cash flows statement
Income statement
Balance sheet
Statement of owner’s equity
Question 24 of 50
Recording a sale when a product or service has been provided is an example of which principle?
Going Concern
Time Period
Revenue recognition
Matching
Question 25 of 50
Which type of account would be increased by a credit?
Owner’s Equity
Revenues
Liabilities
All of the above
Question 26 of 50
A net loss for a period will have which of the following effects?
Will decrease assets
Will increase owner’s equity
Will increase assets
Will decrease owner’s equity
Question 27 of 50
The post-closing trial balance:
will list permanent accounts with balances of zero.
lists the accounts and their adjusted balances after closing.
lists the accounts and their balances before closing.
does not do any of the above.
Question 28 of 50
Which of the following accounts is a long-term liability?
Salaries payable
Accrued liabilities
10 year notes payable
Accounts payable
Question 29 of 50
Which of the following is a written promise to pay?
Salaries payable
Accounts receivable
Accounts payable
Notes payable
Question 30 of 50
According to the book. The second step in the closing process is which of the following?
Close revenues to income summary.
Close income summary to owner’s capital.
Close expenses to income summary.
Close owner’s withdrawals to owner’s capital.
Question 31 of 50
Case 3.9
Borrow Company has a $10,000 weekly payroll for wages based on a five day work week. Wages are paid every Friday.
Referring to Case 3.9, how much should be recorded as wage expense if the end of the accounting period is on Wednesday?
$4,000
$6,000
$2,000
$8,000
Question 32 of 50
Case 1.1
Imus Company has the following balances at year end (12-31-08):
Cash$55,000
Accounts Receivable$70,000
Supplies$3,000
Accounts Payable$4,000
Owner’s Capital, 1/1$114,000
Revenues$200,000
Expenses$190,000
Referring to Case 1.1, Imus has a net income of:
$20,000.
$10,000.
$128,000.
$50,000.
Question 33 of 50
Which type of account would be increased by a debit?
Revenues
Owner’s Equity
Liabilities
Assets
Question 34 of 50
A journal is which of the following?
A detailed record of the changes in a particular asset, liability, or owner’s equity account
A chronological record of transactions
A list of all the accounts with their balances
A record of all the accounts
Question 35 of 50
What part of the accounting system would indicate the balance of any account at a point in time?
The ledger
The journal
The income statement
The trial balance
Question 36 of 50
Which of the following is an example of unearned revenue?
Supplies paid for with cash
For the student, paying tuition in advance
For a publishing company, magazine subscriptions that are prepaid
None of the above
Question 37 of 50
Which of the following accounts is an asset?
Utility expense
Prepaid insurance
Accounts payable
Owner’s withdrawa
l
Question 38 of 50
Case 4.6
JJ Industries had the following accounts at year end:
Sales revenue$1,300,000Land and buildings$300,000
Prepaid insurance26,000Accounts payable17,000
Accounts Receivable38,000Total expenses1,033,000
Interest expense5,000Accumulated depreciation50,000
Equipment250,000Accrued liabilities (such as Salary payable)
Mortgage Payable220,00044,000
Refer to Case 4.6. JJ has current liabilities of:
$61,000.
$17,000.
$44,000.
$76,000.
Question 39 of 50
__________ adjustments are made because the cash transaction occurs before an expense or revenue is recorded.
Closing
Cash
Accruals
Prepaid
Question 40 of 50
Which of the following is the accounting equation?
Assets – liabilities = owner’s equity
Assets + liabilities = owner’s equity
Assets + liabilities = net income
Assest=liabilities + owner’s equity
Question 41 of 50
Case 1.2
Patrick Company has the following balances at year end (12-31-09):
Cash$15,000
Inventory$70,000
Supplies$13,000
Accounts Payable$14,000
Note Payable$50,000
Owner’s Capital, 1/1$14,000
Revenues$200,000
Expenses$180,000
Referring to Case 1.2, Patrick’s ending (12-31-09):owner’s capital is:
$34,000.
$20,000.
$128,000.
$10,000.
Question 42 of 50
The book value of a long term asset is calculated as which of the following?
Cost – Accumulated depreciation
Market value – Deprecation expense
Market value – Accumulated depreciation
Cost – Depreciation expense
Question 43 of 50
Which account would be increased by a credit?
Insurance Expense
Accrued Liabilities
Accounts Receivable
Cash
Question 44 of 50
If the assets of a business are $210,000 and the liabilities are $60,000, how much is the owner’s equity?
$150,000
$160,000
$180,000
$170,00
Question 45 of 50
Case 4.1
Tyco had the following at year end:
Cash$34,000
Accounts receivable$50,000
Inventory$75,000
Accounts Payable$20,000
Owners’ Capital$140,000
Owner’s Withdrawal$10,000
Sales Revenue$220,000
Expenses$180,000
Refer to Case 4.1. What is the journal entry to close Sales Revenue?
A)Sales Revenue$220,000
Income Summary$220,000
B)Income Summary$220,000
Sales Revenue$220,000
C)Sales Revenue$220,000
Unearned Revenue$220,000
D)Expenses$220,000
Income Summary$220,000
A)
B)
C)
D)
Question 46 of 50
The payment and recognition of salaries expense will have which of the following effects?
Increase cash
Decrease cash
Increase owner’s equity
Increase liabilities
Question 47 of 50
Case 3.5
Brenning CPA firm purchased $12,000 of supplies on 10-1-08. Brenning prepares monthly financial statements. $5,000 of supplies is left on 10-31-08.
Referring to Case 3.5, what is the adjusting entry for supplies at 10-31-08?
AccountsDrCr
A)Supplies Expense$7,000
Cash$7,000
B)Supplies Expense$5,000
Supplies$5,000
C)Supplies$12,000
Cash$12,000
D)Supplies Expense$7,000
Supplies$7,000
A)
B)
C)
D)
Question 48 of 50
What is the adjusting journal entry to record accrued wages?
Wages Payable Wage Expense
Wages Expense Cash
Cash Wages Payable
Wage Expense Wages Payable
Question 49 of 50
Which of the following financial statements show cash receipts and cash payments?
Balance sheet
Income statement
Statement of owner’s equity
Cash flows statement
Question 50 of 50
Case 1.1
Imus Company has the following balances at year end (12-31-08):
Cash$55,000
Accounts Receivable$70,000
Supplies$3,000
Accounts Payable$4,000
Owner’s Capital, 1/1$114,000
Revenues$200,000
Expenses$190,000
Referring to Case 1.1, Imus has total assets of:
$10,000.
$50,000.
$20,000.
$128,000.
Aug 29, 2021 | Uncategorized
Question # 1: Charles Giles worked 46 hours during this pay week. He is paid time and a half for hours over 40 and his pay rate is $17.90/hour. What was his overtime premium pay for this workweek?
Use the following information to answer Questions 2, 3 & 4:
The totals from the first payroll of the year are shown below.
Total Pay = $36, 195.10
FICA/OASDI = $ 2,244.10
FICA/HI = $ 524.83
FIT W/H = $ 6,515.00
State Tax W/H = $ 361.95
Union Dues = $ 500.00
Net Pay = $ 26,049.22
Question # 2: Journalize the entry to record the payroll.
Question # 3: Journalize the entry to record the employer s payroll taxes (assume a SUTA rate of 3.7%).
Question # 4: Journalize the entry to deposit the FICA and FIT taxes.
Aug 29, 2021 | Uncategorized
Question 1
Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom’s entry to record the transaction should include a:
Debit to Notes Receivable for $75,000.
Debit to Accounts Receivable for $75,000.
Credit to Notes Receivable for $75,000.
Debit Notes Payable for $75,000.
Credit to Sales for $75,000.
Question 2
A company purchased a cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?
$ 500.
$ 800.
$ 864.
$1,000.
$1,080.
Question 3
The formula for computing annual straight-line depreciation is:
Depreciable cost divided by useful life in units.
Cost plus salvage value divided by the useful life in years.
Cost less salvage value divided by the useful life in years.
Cost divided by useful life in years.
Cost divided by useful life in units.
Question 4
A bank statement includes:
A list of outstanding checks.
A list of petty cash amounts.
The beginning and the ending balance of the depositor’s checking account.
A listing of deposits in transit.
All of the above.
Question 5
Outstanding checks refer to checks that have been:
Written, recorded, sent to payees, and received and paid by the bank.
Written and not yet recorded in the company books.
Held as blank checks.
Written, then recorded on the company books and sent to the customer, but have not yet been paid by the bank.
Issued by the bank.
Question 6
A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?
$395.
$410.
$450.
$510.
$520.
Question 7
The entry necessary to establish a petty cash fund should include:
A debit to Cash and a credit to Petty Cash.
A debit to Cash and a credit to Cash Over and Short.
A debit to Petty Cash and a credit to Cash.
A debit to Petty Cash and a credit to Accounts Receivable.
A debit to Cash and a credit to Petty Cash Over and Short.
Question 8
On October 1, Robinson Company sold merchandise in the amount of $5,800 to Rosser, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Robinson uses the perpetual inventory system. The journal entry or entries that Robinson will make on October 1 is:
A. sALES 5800
Accounts Receivable 5800
B. Sales 5800
Accounts Receivable 5800
Cost of Goods Sold 4000
Merchandise Inventory 4000
C. Accounts Receivable 5800
Sales 5800
D. Accounts Receivable 5800
Sales 5800
Cost of Goods Sold 4000
Merchandise Inventory 4000
E. Accounts Receivable 4000
Sales 4000
A Above
B Above
C Above
D Above
E Above
Question 9
In the process of reconciling Marks Enterprises’ bank statement for September, Mr. Marks compiles the following information:
The adjusted cash balance per the books on September 30 is:
$ 6,900
$ 8,160
$ 4,600
$ 6,520
$ 5,840
Question 10
Beginning inventory plus net cost of purchases is:
Cost of goods sold.
Merchandise available for sale.
Ending inventory.
Sales.
Shown on the balance sheet.
Question 11
A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company’s unadjusted trial balance reported the following selected amounts:
Accounts Receivable 355,000 debit
allowance for uncollectible accounts 500 credit
Net Sales 800,000 credit
All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?
$1,275
$1,775
$4,500
$4,800
$5,500
Question 12
A company uses the periodic inventory system and had the following activity during the current monthly period.
November 1 Beginning inventory 100 units @ $20
November 5 Purchased 100 units @ $22
November 8 Purchased 50 units @ $23
November 16 Sold 200 units @ $45
Nomber 29 Purchased 50 units @ $25
Using the weighted-average inventory method, the company’s ending inventory would be reported at:
$2,000.
$2,200.
$2,250.
$2,400.
$4,400.
Question 13
A company had the following purchases during the current year:
January 10 units @ $120
February 20 units @ $130
May 15 units @ $140
September 12 units @ $150
November 10 units @ $160
On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?
$3,500.
$3,800.
$3,960.
$3,280.
$3,640.
Question 14
A company purchased $1,800 of merchandise on December 5. On December 7, it returned $200 worth of merchandise. On December 8, it paid the balance in full, taking a 2% discount. The amount of the cash paid on December 8 equals:
$ 200.
$1,564.
$1,568.
$1,600.
$1,800.
Question 15
On October 1, Mutch Company sold merchandise in the amount of $5,800 to Carr Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Mutch uses the perpetual inventory system. On October 4, Carr returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. The entry or entries that Mutch must make on October 4 is:
A Above
B Above
C Above
D Above
E Above
Question 16
Newton Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Newton Company wrote off the $3,000 uncollectible account of its customer, P. Best. On July 10, Newton received a check for the full amount of $3,000 from Best. On July 10, the entry or entries Newton makes to record the recovery of the bad debt is:
A Above.
B Above.
C Above.
D Above.
E Above.
Question 17
A company purchased a rope braiding machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year?
$25,200.
$26,160.
$26,660.
$27,613.
$53,160.
Question 18
A method that charges the same amount of expense over each period of the asset’s useful life is called:
Accelerated depreciation.
Declining-balance depreciation.
Straight-line depreciation.
Units-of-production depreciation.
Modified accelerated cost recovery system (MACRS) depreciation.
Question 19
A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold
$120.
$124.
$128.
$130.
$140.
Question 20
If a check correctly written and paid by the bank for $794 is incorrectly recorded on the company’s books for $749, how should this error be treated on the bank reconciliation?
Subtract $45 from the bank’s balance.
Add $45 to the bank’s balance.
Subtract $45 from the book balance.
Add $45 to the book balance.
Subtract $45 from the bank’s balance and add $45 to the book’s balance.
Question 21
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is:
Specific identification method.
Average cost method.
Weighted-average method.
FIFO method.
LIFO method.
Question 22
On December 31 of the current year, a company’s unadjusted trial balance included the following: Accounts Receivable, debit balance of $97,250; Allowance for Doubtful Accounts, credit balance of $951. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year will be uncollectible?
$ 951.
$3,992.
$4,884.
$5,835.
$6,786.
Question 23
A company receives a 10%, 90-day note for $1,500. The total interest due on the maturity date is:
$ 50.00
$150.00.
$ 75.00.
$ 37.50.
$ 87.50.
Question 24
A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, 2007. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, 2007?
$1,000.
$1,333.
$1,533.
$4,000.
$4,600.
Question 25
A company uses the perpetual inventory system and recorded the following entry:
Accounts Payable ——– 2500
Merchandise Inventory ————————————- 50
Cash —————————————2450
This entry reflects a:
Purchase.
Return.
Sale.
Payment of the account payable and recognition of a cash discount taken.
Purchase and recognition of a cash discount taken.
Aug 29, 2021 | Uncategorized
Question 1 If the profit margin for a division is 8% and the investment turnover is 1.20, the rate of return on investment is 9.6%.
True
False
Question 2 Activity cost pools are assigned to products, using factory overhead rates for each activity.
True
False
Question 3 A responsibility center in which the department manager has responsibility for and authority over costs, revenues, and assets invested in the department is termed a cost center.
True
False
Question 4 In net present value analysis for a proposed capital investment, the expected future net cash flows are averaged and then reduced to their present values.
True
False
Question 5 variable cost system is an accounting system where standards are set for each manufacturing cost element.
True
False
Question 6 Volume variance measures fixed factory overhead.
True
False
Question 7 Multiple production department factory overhead rates are most useful when production departments are very similar in their manufacturing processes.
True
False
Question 8 The primary disadvantage of decentralized operations is that decisions made by one manager may affect other managers in such a way that the profitability of the entire company may suffer.
True
False
Question 9 Currently attainable standards do not allow for reasonable production difficulties.
True
False
Question 10 A favorable cost variance means that actual cost is more than standard cost.
True
False
Question 11 The profit center income statement should include only revenues and expenses that are controlled by the manager.
True
False
Question 12 The methods of evaluating capital investment proposals can be grouped into two general categories that can be referred to as (1) average rate of return and (2) cash payback methods.
True
False
Question 13 The expected period of time that will elapse between the date of a capital investment and the complete recovery in cash of the amount invested is called the discount period.
True
False
Question 14
If in evaluating a proposal by use of the net present value method there is a deficiency of the present value of future cash inflows over the amount to be invested, the proposal should be accepted.
True
False
Question 15
If the activities causing overhead costs are different across different departments and products, use of a plant-wide factory overhead rate will cause distorted product costs.
True
False
Question 16 Under the negotiated price approach, the transfer price is the price at which the product or service transferred could be sold to outside buyers.
True
False
Question 17 A plant-wide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plant-wide allocation base.
True
False
Question 18 Activity based costing can only be used to allocate manufacturing factory overhead.
True
False
Question 19 The method of analyzing capital investment proposals in which the estimated average annual income is divided by the average investment is the average rate of return method.
True
False
Question 20 Standard costs should always be revised when they differ from actual costs.
True
False
Question 21 The standard price and quantity of direct materials are separated because:
GAAP reporting requires this separation
direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department
standard quantities are more difficult to estimate than standard prices
standard prices change more frequently than standard quantities
Question 22 Which of the following are present value methods of analyzing capital investment proposals?
Internal rate of return and average rate of return
Average rate of return and net present value
Net present value and internal rate of return
Net present value and payback
Question 23 Variances from standard costs are usually reported to:
suppliers
stockholders
management
creditors
Question 24 If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed:
variable variance
rate variance
quantity variance
volume variance
Question 25 A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):
profit center
investment center
volume center
cost center
Question 26
Which of the following is not a cost pool used with the activity-based costing method?
Materials handling
Production Setups
Engineering
All are used.
Question 27
A factor in determining the rate of return on investment–the ratio of income from operations to sales–is called:
profit margin
indirect expenses
investment turnover
cost
Question 28 The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is:
cash payback method
net present value method
internal rate of return method
average rate of return method
Question 29 The transfer price that must be less than the market price but greater than the supplying division s variable costs per unit is called
the cost price approach
the negotiated cost approach
the standard cost approach
the market price approach
Question 30 In evaluating the profit center manager, the income from operations should be compared:
across profit centers
to the budget
to the competition’s net income
to the total company earnings per share
Question 31 The investment turnover is the:
ratio of income from operations to sales
ratio of income from operations to invested assets
ratio of assets to liabilities
ratio of sales to invested assets
Question 32 Which method of evaluating capital investment proposals uses present value concepts to compute the rate of return from the net cash flows expected from capital investment proposals
Internal rate of return
Cash payback
Net present value
Average rate of return
Question 33 Which of the following is an advantage of the cash payback method?
It is easy to use.
It takes into consideration the time value of money.
It includes the cash flow over the entire life of the proposal.
It emphasizes accounting income.
Question 34 Calico Company produces a bench that requires 5 yards of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured using 40,000 yards at a cost of $7.50. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
Question 35 Better Homes Company produces a product that requires two standard hours per unit at a standard hourly rate of $18 per hour. If 2,500 units required 5,500 hours at an hourly rate of $19 per hour, what is the direct labor (a) rate variance, (b) time variance, (c) cost variance.
Question 36 Stouffers Processing Company has $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $242,000, and a desired minimum rate of return of 15%.
(a)Calculate the profit margin.
(b)Calculate the investment turnover
(c)Calculate the return on investment
(d)Calculate the residual income
Question 37 A project has estimated annual net cash flows of $90,000. It is estimated to cost $405,000. Determine the cash payback period.
Question 38 A $550,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows:
YearNet Cash Flow
1$300,000
2280,000
3208,000
4180,000
The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is .893, .797, .712, and .636, respectively. Determine the net present value. Would the proposal be accepted? Why?
Question 39 Doomsday Clock, Inc. manufactures two products, alarm clocks and wall clocks. There are two production departments, assembly and finishing. The budgeted overhead costs for next year are:
Assembly, $310,000
Finishing, $245,000
The machine hours expected to be used are:
Assembly Dept.Finishing Dept.
Alarm clocks15,100 mh9,000 mh
Wall clocks4,900 mh11,000 mh
Total20,000 mh20,000 mh
(a) Compute the factory overhead rates for each department.
(b) Compute the total factory overhead allocated to alarm clocks. Assuming that 10,000 alarm clocks are budgeted to be produced, how much factory overhead will be allocated to each unit.
(c) Compute the total factory overhead allocated to wall clocks. Assuming that 20,000 wall clocks are budgeted to be produced, how much factory overhead will be allocated to each unit.
Aug 29, 2021 | Uncategorized
Question 1 The Information for Preparing the Trial Balance on a Worksheet is obtained from:
Answer
A.General Ledger Accounts.
B.Owner’s Equity Statement.
C.Financial Statements.
D.Income Statement.
Question 2 Which of the following is NOT one of the Sets of Debit & Credit Columns on a Worksheet?
Answer
A.Adjusted Trial Balance.
B.Income Statement.
C.Owner’s Equity Statement.
D.Balance Sheet.
Question 3 Expenses which have Been Incurred (Used or Consumed) But Not Yet Paid in Cash or Recorded as Payable are Referred to as:
Answer
A.Prepaid Expenses.
B.Deferred Expenses.
C.None of the Above.
D.Accrued Expenses.
Question 4 Expenses like Insurance & Rent which have been Paid For in Advance of their Use are Referred to as:
Answer
A.Deferred Expenses.
B.None of the Above.
C.Accrued Expenses.
D.Future Expenses.
Question 5 Every Adjusting Entry Transaction Affects:
Answer
A.Two Income Statement Accounts.
B.Any two accounts.
C.A Balance Sheet Account & an Income Statement Account.
D.Two Balance Sheet Accounts.
Question 6 The Accrual Basis of Accounting Recognizies (Records) Revenue When It is _ _ _ & Recognizes (Records) Expenses When They are _ _ _.
Answer
A.Received ….. Paid.
B.Earned …….. Paid.
C.Received ….. Incurred
D.Earned …….. Incurred.
Question 7 If the Adjusting Entry for Suppliles Used Up (Consumed) was NOT Recorded Before the Company’s Financial Statements were Prepared, then:
Answer
A.Assets would be Overstated & Expenses would be Understated.
B.Liabilities would be Understated & Expenses would be Overstated.
C.Liabilities would be Understated & Expenses would be Overstated.
D.Liabilities would be Overstated & Expenses would be Understated.
Question 8 The Purpose of Making Closing Entries is to:
Answer
A.Close All lthe Permanent (Real) Accounts & Set Them to Zero (0) Balances.
B.Close All lthe Temporary (Nominal) Accounts & Set Them to Zero (0) Balances.
C.Update the General Ledger Accounts Before Preparing Financial Statements.
D.Close All lthe Ledger Accounts & Set Them to Zero (0) Balances.
Question 9 A Company’s Net Income is Recorded on the Worksheet in the Income Statement _ _ _ Column & the Balance Sheet _ _ _ Column.
Answer
A.Debit ….. Credit.
B.Credit …. Credit.
C.Debit ….. Debit.
D.Credit …. Debit.
Question 10 The Correct Sequence of Recording the Closing Entries is:
Answer
A.1st Expenses, 2nd Revenues, 3rd Income Summary, 4th Owner’s Drawing.
B.1st Revenues, 2nd Expenses, 3rd Income Summary, 4th Owner’s Drawing.
C.1st Income Summary, 2nd Owner’s Drawing, 3rd Expenses, 4th Revenues.
D.1st Income Summary, 2nd Owner’s Drawing, 3rd Revenues, 4th Expenses.
Question 11 A Post Closing Trial Balance includes Only Accounts for:
Answer
A.Assets, Liabilities, & Owner’s Capital.
B.Assets, Liabilities, & Owner’s Drawing.
C.Revenues & Expenses.
D.Revenues, Expenses, & Owner’s Capital.
Question 12 Which of the following is NOT a Current Asset Account?
Answer
A.Cash.
B.Accounts Receivable.
C.Prepaid Insurance.
D.Office Equipment.
Question 13 Employees Earning $250 a Day Worked Monday (the 30th) & Tuesday (the 31st) of the Current Month, but they were Not Due to be Paid Until Friday (the 3rd) of the Coming Month. The Correct General Journal to Record the Accrued Salaries on the 31st of the Current Month is:
Answer
A.Salaries Expense ………. 750
Salaries Payable ……………. 750
B.Salaries Payable. ………. 750
Salaries Expense ……………. 750
C.Salaries Expense ………. 500
Salaries Payable ……………. 500
D.Salaries Payable. ………. 750
Salaries Expense ……………. 750
Question 14 $400 of Fees Previously Received in Advance were Earned During the Current Month. The Correct Journal Entry to Record this Transaction is
Answer
A.Fees Earned ………… 400
Unearned Fees ……….. 400
B.Unearned Fees ……… 400
Fees Earned ……………. 400
C.Cash ……………………. 400
Fees Earned ……………. 400
D.Accounts Receivable .. 400
Fees Earned …………….. 400
Question 15 Al Green’s Emporium had a Net Income of $6,000 for it’s Fiscal Year. The Correct General Journal Entry for the 3rd Closing Entry to Close the Income Summary Account is:
Answer
A.Income Summary ………. 6,000
Green, Capital ………………….. 6,000
B.Green, Capital ………….. 6,000
Income Summary ………………. 6,000
C.Green, Drawing …………. 6,000
Green, Capital ………………….. 6,000
D.None of the above.
Question 16 $200 in Cash was Collected From a Customer on their Charge Account, but it was Erroneously Recorded as Service Revenue. the General Journal to Correct this Error is:
Answer
A.Accounts Receivable ……. 200
Cash ……………………………… 200
B.Cash ………………………….. 200
Accounts Receivable ………… 200
C.Service Revenue …………. 200
Accounts Receivable ………… 200
D.Accounts Receivable ……. 200
Service Revenue …………… 200
Question 17
A form used to summarize the adjusting entries & their effects on account balances and to facilitate the preparation of financial statements. It has five (5) sets of Debit & Credit columns including: Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, & Balance Sheet.
Includes long term assets such as patents on inventions, trademarks on symbols, & copyrights on printed works. While they have no physical substance, they do have monetary value based on the rights of ownership and can be bought & sold.
Internal transactions made at the end of the fiscal period to set all revenue & expense accounts to a zero (0) balance and to transfer the company s net income or loss into the owner s capital account.
An accounting system which recognizes (records) revenues when they are earned & expenses when they are incurred (regardless of whether cash has been received or paid out). It is preferred by accountants since its net income is a truer measure of a firm s financial performance.
Revenue that has been both earned & not yet recorded or received in cash or receivables. An adjusting entry is made at the end of the accounting period to get the unrecorded revenue on the books.
The systematic allocation of the cost of a long term fixed asset (like equipment or a truck) over its useful life. This allocated cost represents the expense of using the asset in each accounting period. This decline in the value of an asset is due to physical wear & technological tear and obsolesce.
Occasional journal entries made rectify mistakes in recording previous transactions. The amount of the error is transferred out of the wrong account & into the right account so both accounts will have their correct balances.
Internal transactions which reflect events that have occured but which have not yet been recorded. They are made at the fiscal year to bring all account balances up to date before financial statements are prepared.
An accounting system which recognizes (records) revenue when cash is received & expenses when cash is paid out. It is frowned upon by accountants since it does not measure a firm s True Net Income & can be easily manipulated to increase net income.
Assets including cash, accounts receivable, supplies, & merchandise inventory. They are expected to be converted in cash, sold, or consumed within one year or the firm s normal operating cycle, whichever is longer.
Any twelve (12) month period used to measure a company s annual profitability. It need not correspond the calendar year (Jan. 1 Dec. 31) & often ends during a firm s slow or off season.
Money which has been received from clients/customers in advance of earning it is initially recorded as a liability (Unearned Fees). An adjusting entry is made at the end of the accounting period to record that portion advance funds that has been earned and is now correctly classified as revenue.
Answer
A.Adjusting Entries
B.Deferred Revenue
C.Cash Basis Accounting
D.Current Assets
E.Fiscal Year
F.Depreciation
G.Intangible Asset
H.Accrued Revenues
I.Closing Entries
J.Worksheet
K.Accrual Basis Accounting
L.Correcting Entries
Question 18 Jefferson Company s Classified Balance Sheet contained the following Asset Accounts.
$2,000 Supplies
$5,000 Short Term Investments
$9,000 Equipment
($1,000) Accumulated Depreciation Equipment
$3,000 Accounts Receivable
$4,000 Prepaid Insurance
$8,000 Land
$6,000 Inventory
$7,000 Copyrights
What was the Total of the Current Assets of Jefferson Company?_ _ _ ($ Amount)
Question 19 What is the Total of the Plant, Property, & Equipment Assets in the Previous Question? _ _ _ ($ Amount)
Question 20 Xavier Inc. Worksheet Totals appeared as below:
Income Statement….Balance Sheet
..Debit…..Credit………Debit….Credit
58,000…..50,000…….34,000…42,000
Did Xavier Inc. have a Profit or Loss for the year? _ _ _
Question 21 How Many Closing Entries are made in the General Journal at the end of the fiscal year? _ _ _ (Number)
Question 22 The Office Supplies Account had a Balance of $850 at the Beginning of the Month. A Physical Count of Office Supplies at the End of the Month Revealed that there was only $325 Left. What is the $ Amount of the Adjusting Entry for the Office Supplies Used During the Month
Question 23 One Month of 8 Month s Worth of Prepaid Insurance Costing $1,200 Expired. What would be the Adjusting Entry for the Prepaid Insurance Used Up During the Month? _ _ _ ($ Amount)
Aug 29, 2021 | Uncategorized
The management of Sharrar Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company s controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 45,000 machine hours. In addition, capacity is 52,000 machine-hours and the actual activity for the year is 47,100 machine-hours. All of the manufacturing overhead is fixed and is $1,029,600 per year. For simplicity, it s assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead capacity and the actual amount of manufacturing overhead for the year. Required: A. Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. B. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. C. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. D. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.
Aug 29, 2021 | Uncategorized
Question 1 On a multiple-step income statement, Income from Operations is computed as follows:
net sales less cost of goods sold.
cost of goods sold less total assets.
operating expenses plus total assets.
gross profit less total operating expenses.
Question 2 The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a:
balance sheet.
statement of cash flows.
statement of shareholders equity.
single-step income statement.
Question 3 The following information was taken from Smith Corporation s accounting records:
Operating Expenses$45,000
Sales Returns and Allowances13,000
Sales Discount6,000
Sales150,000
Costs of Goods Sold77,000
What is Smith Corporation s gross profit?
$61,000.
$54,000.
$76,000.
$73,000.
Question 4 Merchandising companies that sell to retailers are known as:
brokers.
corporations.
wholesalers.
service firms.
Question 5 Assume a company uses the periodic inventory system and has a beginning merchandise inventory balance of $5,000, inventory purchases for the year of $75,000, and sales for the year of $125,000. What is the amount of the company s Cost of Goods Available for Sale for the year?
$80,000.
$125,000.
$5,000.
none of the above.
Question 6 Which of the following items does not affect the merchandise inventory account under a perpetual system?
A purchase of merchandise inventory.
A return of merchandise inventory to the supplier
Payment of freight costs for merchandise inventory shipped to a customer
Payment of freight costs for merchandise inventory received from a supplier
Question 7 Which of the following inventory costing methods depends upon an inventory count to determine cost of goods sold?
Lower of Cost or Market
Obsolescence
Perpetual
Periodic
Question 8 The accountant at Kramer Company is figuring out the difference in income taxes the company will pay depending on the choice of either FIFO or LIFO as an inventory costing method. The tax rate is 30% and the FIFO method will result in income before taxes of $4,370. The LIFO method will result in income before taxes of $3,950. What is the difference in tax that would be paid between the two methods?
$420
$294
$126
Cannot be determined from the information provided.
Question 9 The lower of cost or market basis of valuing inventories is an example of:
voodoo economics.
the cost principle.
conservatism.
all of the above.
Question 10 The use of the LIFO inventory costing method every year complies with the accounting principle of:
conservatism.
consistency.
profits.
efficiency.
Question 11 Which of the following statements is correct with respect to inventories?
The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
It is generally good business management to sell the most recently acquired goods first.
Under FIFO, the ending inventory is based on the latest units purchased.
Under FIFO, the ending inventory is based on the oldest units purchased.
Question 12 If goods in transit are shipped FOB destination:
the seller has legal title to the goods until they are delivered.
the buyer has legal title to the goods until they are delivered.
the transportation company has legal title to the goods while the goods are in transit.
no one has legal title to the goods until they are delivered.
Question 13 Which inventory method usually gives higher net income when prices are rising?
LIFO.
Specific ID.
Average Cost.
FIFO.
Question 14 Cost of goods sold is not known until after the taking of a physical count of the inventory at the end of the year under which of the following inventory methods?
Periodic
Perpetual
NIFO
None of the above
Question 15 Which one of the following is not an objective of a system of internal controls?
Safeguard company assets
Enhance the accuracy and reliability of accounting records
Increase total sales
Reduce the risks of errors
Question 16 At Harley Davidson, the motorcycles on the assembly line are classified as
Work in Progress
Finished Goods
Raw Materials
Completed sales
Question 17 Which of the following promotes good internal control?
increased sales commissions
pay shareholders a larger dividend
undertake a new advertising campaign
one employee is assigned to handle the accounting for an asset and another employee has physical control over the asset.
Question 18 For which of the following errors should the appropriate amount be added to the balance per books on a bank reconciliation?
Check for $43 was incorrectly recorded on the books as $34
Deposit of $500 was incorrectly recorded by the bank as $50
A $200 check was incorrectly recorded by the bank as $20
Check for $35 was incorrectly recorded on the books as $53
Question 19 With respect to a bank reconciliation, a journal entry is required for which of the following
Deposits in Transit
Outstanding Checks
NSF Checks
All of the above
Question 20 The maturity value of a $2,000, 6%, 60-day note receivable dated February 10th is
$2,020.
$2,010.
$2,000.
$2,120.
Question 21 When an account is written off using the allowance method, accounts receivable:
is unchanged and the allowance account increases.
increases and the allowance account increases.
decreases and the allowance account decreases.
decreases and the allowance account increases.
Question 22 The gross profit rate is computed by dividing:
net sales by net income.
net sales by total assets.
gross profit by net sales.
net sales by gross profit.
Question 23 Using the allowance method, the uncollectible accounts for the year is estimated to be $28,000. If the balance for the Allowance for Doubtful Accounts is a $7,000 credit before adjustment, what is the amount of bad debt expense for the period?
$7,000
$21,000
$28,000
$35,000
Question 24 The Allowance for Doubtful Accounts account is:
an expense account.
a contra equity account.
a contra asset account
none of the above
Question 25 Matrix Company makes an 8% loan on November 1, 2008. The loan is due in 90 days. What is the due date of this loan?
January 30, 2009
February 1, 2009
January 1, 2009
March 1, 2009
Aug 29, 2021 | Uncategorized
Question 1
Post Company issues 10,000 shares of $5 par value common stock for $20 a share. The accounting entry for this transaction would be:
Debit cash -$200,000 and credit Common Stock – $200,000.
Debit cash -$50,000 and credit Common Stock – $50,000.
Debit cash -$200,000, debit Additional Paid in Capital – $50,000 and credit Common Stock – $200,000,
Debit cash -$200,000 and credit Common Stock – $50,000, credit Additional Paid in Capital – $150,000.
Question 2
Dividends become a liability of the corporation:
On the date the board of directors declares the dividend.
On the date of record.
On the date payment is made.
When preferred dividends have not been paid.
Question 3
XYZ Company has 100,000 shares of stock outstanding. On January 1, 200X XYZ Company declared a cash dividend of .50 per share to be paid on January 31. On January 1 XYZ Company will make the following journal entry:
Debit cash $50,000 and credit dividends payable $50,000.
Debit dividends declared $50,000 and credit dividends payable $50,000.
Credit cash $50,000and debit dividends declared $50,000.
No entry is made until January 31.
Question 4
Which of the following will result when a dividend is paid?
A credit to dividends payable.
A debit to dividends payable.
A debit to capital.
A credit to capital.
Question 5
In its most basic form, the Earnings per Share (EPS) ratio is calculated as:
Dividends paid on common stock divided by the average number of shares outstanding of common stock.
Net income divided by the average number of shares outstanding of common stock.
Net income divided by average stockholder s equity.
Sales divided by average stockholder s equity
Aug 29, 2021 | Uncategorized
Question 1:
Tamworth Truck manufactures part YYY used in several of its truck models. 10,000 units are produced each year with production costs as follows:
Direct materials $ 45,000
Direct manufacturing labour 15,000
Variable support costs 35,000
Fixed support costs 25,000
Total costs $120,000
Tamworth Truck has the option of purchasing part YYY from an outside supplier at $11.20 per unit. If part YYY is outsourced, 40% of the fixed costs cannot be immediately converted to other uses (i.e. cannot be avoided).
a. Describe avoidable costs. What amount of the YYY production costs is avoidable?
b. Should Tamworth Truck outsource YYY? Why or why not?
c. What other items should Tamworth Truck consider before outsourcing any of the parts it currently manufactures?
Question 2:
Tamworth Pet Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled:
Product Number of Setups Number of Components Direct Labour Hours
Standard 3 30 650
Deluxe 7 50 150
Overhead Costs $20,000 $60,000
Required:
Assume a traditional costing system applies the $80,000 of overhead costs based on direct labour hours.
a. What is the total amount of overhead costs assigned to the standard model?
b. What is the total amount of overhead costs assigned to the deluxe model?
AND,
Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.
c. What is the total amount of overhead costs assigned to the standard model?
d. What is the total amount of overhead costs assigned to the deluxe model?
e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?
Question 3:
Tamworth Company has the following information:
Month Budgeted Sales
March $50,000
April 53,000
May 51,000
June 54,500
July 52,500
In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month’s cost of sales.
Required:
Prepare a purchases budget for April through June (one column for each month), giving total figures for the quarter in the forth column.
Question 4:
Tamworth Cabinets is approached by Ms. Jenny Zhang, a new customer, to fulfil a large one-time-only special order for a product similar to one offered to regular customers. The following per unit data apply for sales to regular customers:
Direct materials $100
Direct labour 125
Variable manufacturing support 60
Fixed manufacturing support 75
Total manufacturing costs 360
mark-up (60%) 216
Targeted selling price $576
Tamworth Cabinets has excess capacity. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $30 per unit.
Required:
a. For Tamworth Cabinets, what is the minimum acceptable price of this one-time-only special order?
b. Other than price, what other items should Tamworth Cabinets consider before accepting this one-time-only special order?
c. How would the analysis differ if there was limited capacity?
Aug 29, 2021 | Uncategorized
QUESTION #1
Using the following selected items from the comparative balance sheet of Anders Company, illustrate horizontal and vertical analysis.
December 31, 2009 December 31, 2008
Accounts Receivable $ 900,000 $ 600,000
Inventory 975,000 750,000
Total Assets 4,000,000 2,500,000
QUESTION #2
The financial statements of Dobson Company appear below:
DOBSON COMPANY
Comparative Balance Sheet
December 31,
Assets 2009 2008
Cash……………………………………………………………………………………… $ 35,000 $ 40,000
Short-term investments…………………………………………………………… 15,000 60,000
Accounts receivable (net)………………………………………………………… 50,000 30,000
Inventory……………………………………………………………………………….. 50,000 70,000
Property, plant and equipment (net)………………………………………….. 250,000 300,000
Total assets ……………………………………………………………………… $400,000 $500,000
Liabilities and stockholders’ equity
Accounts payable…………………………………………………………………… $ 10,000 $ 30,000
Short-term notes payable………………………………………………………… 40,000 90,000
Bonds payable……………………………………………………………………….. 88,000 160,000
Common stock………………………………………………………………………. 160,000 145,000
Retained earnings…………………………………………………………………… 102,000 75,000
Total liabilities and stockholders’ equity………………………………… $400,000 $500,000
DOBSON COMPANY
Income Statement
For the Year Ended December 31, 2009
Net sales……………………………………………………………………………….. $360,000
Cost of goods sold………………………………………………………………….. 198,000
Gross profit……………………………………………………………………………. 162,000
Expenses
Interest expense……………………………………………………………….. $12,000
Selling expenses……………………………………………………………….. 40,000
Administrative expenses…………………………………………………….. 59,000
Total expenses…………………………………………………………….. 111,000
Income before income taxes……………………………………………………. 51,000
Income tax expense……………………………………………………………….. 15,000
Net income……………………………………………………………………………. $ 36,000
Additional information:
a. Cash dividends of $9,000 were declared and paid in 2009.
b. Weighted-average number of shares of common stock outstanding during 2009 was 30,000 shares.
c. Market value of common stock on December 31, 2009, was $21 per share.
Instructions
Using the financial statements and additional information, compute the following ratios for Coulter Company for 2009. Show all computations.
Computations
1. Current ratio _________.
2. Return on common stockholders’ equity _________.
3. Price-earnings ratio _________.
4. Acid-test ratio _________.
5. Receivables turnover _________.
6. Times interest earned _________.
7. Profit margin _________.
8. Days in inventory _________.
9. Payout ratio _________.
10. Return on assets _________.
QUESTION #3
Gumble Corporation had income from continuing operations of $300,000 for the year ended December 31, 2008. It also had the following items (before income taxes):
1. Extraordinary flood loss of $150,000.
2. Loss of $60,000 on discontinuance of a division.
All items are subject to income taxes at a 30% tax rate.
Instructions
Prepare a partial income statement, beginning with income from continuing operations.
QUESTION #4
Presented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.
____ 1. Property taxes on the factory land
____ 2. Nails and glue used in production
____ 3. Cabinet maker’s wages
____ 4. Factory supervisors salaries
____ 5. Metal used in manufacturing
____ 6. Depreciation on factory machines
____ 7. Factory utilities
____ 8. Carpeting for the recreational vehicles
____ 9. Property taxes on the factory building
____ 10. Insurance on factory equipment
Instructions
Classify the above items into the following categories:
DM Direct Materials
DL Direct Labor
MO Manufacturing Overhead
QUESTION #5
For each item, identify all applicable cost labels. Use the following code in your answer:
1 Product Cost
2 Period Cost
a. Advertising _________
b. Direct materials used _________
c. Sales salaries _________
d. Indirect factory labor _________
e. Repairs to office equipment _________
f. Factory manager’s salary _________
g. Direct labor used _________
h. Indirect materials _________
QUESTION #6
Among the items that Gentry Print Shop accounts for are the following:
1. Direct labor _________
2. Office supplies used _________
3. Depreciation on printing machines _________
4. Finished goods inventory, 12/31 _________
5. Raw materials inventory, 1/1 _________
6. Cost of goods manufactured _________
7. Work in process, 1/1 _________
8. Office supplies inventory, 12/31 _________
9. Indirect labor _________
10. Heat and electricity for the print shop _________
Gentry Print Shop prepares the following schedule and financial statements on a yearly basis:
(a) Cost of goods manufactured schedule.
(b) Income statement.
(c) Balance sheet.
Instructions
For each item, indicate by using the appropriate letter(s) the schedule and/or financial statements in which the item will appear.
QUESTION #7
From the account balances listed below, prepare a schedule of cost of goods manufactured for Timmons Manufacturing Company for the month ended December 31, 2008.
Account Balances
Finished Goods Inventory, December 31 $ 42,000
Factory Supervisory Salaries 12,000
Income Tax Expense 18,000
Raw Materials Inventory, December 1 12,000
Work In Process Inventory, December 31 25,000
Sales Salaries Expense 14,000
Factory Depreciation Expense 8,000
Finished Goods Inventory, December 1 35,000
Raw Materials Purchases 95,000
Work In Process Inventory, December 1 30,000
Factory Utilities Expense 4,000
Direct Labor 70,000
Raw Materials Inventory, December 31 19,000
Sales Returns and Allowances 5,000
Indirect Labor 21,000
QUESTION #8
Listed below are selected items for Klugman Company at December 31, 2008.
Finished goods inventory $35,000 Short-term investments $28,000
Cash 20,000 Raw materials inventory 12,000
Prepaid expenses 2,000 Work in process inventory 18,000
Accounts receivable 4,000 Supplies 500
Instructions
Prepare the current assets section of the balance sheet. (Include a complete heading.)
QUESTION #9
Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. Prepare journal entries to record the following transactions during the month of June.
June 1 Purchased raw materials for $20,000 on account.
8 Raw materials requisitioned by production:
Direct materials $8,000
Indirect materials 1,000
15 Paid factory utilities, $2,100 and repairs for factory equipment, $3,000.
25 Incurred $84,000 of factory labor.
25 Time tickets indicated the following:
Direct Labor (5,000 hrs $12 per hr) = $60,000
Indirect Labor (3,000 hrs $8 per hr) = 24,000
$84,000
QUESTION #10
Martin Co. applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year are as follows:
Actual manufacturing overhead $118,000
Estimated manufacturing overhead $110,000
Direct labor hours incurred 4,800
Direct labor hours estimated 5,000
Compute the predetermined overhead rate AND the amount of applied manufacturing overhead.
Aug 29, 2021 | Uncategorized
Question 1
When a business is likely to begin selling new products or expand to other markets, which of the following characteristics of an effective accounting system would be most significant?
A) Control
B) Flexibility
C) Compatibility
D) Both B and C
Question 2
In which journal would a return of merchandise purchased on account be recorded?
The purchases journal
The sales journal
The cash receipts journal
The general journal
The cash payments journal
Question 3
Case 5.7
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB destination. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.7. Sam will debit inventory for which of the following amounts?
$20,000
$20,070
$18,000
$19,600
Question 4
Case 4.1
Tyco had the following at year end:
Cash$34,000
Accounts receivable$50,000
Inventory$75,000
Accounts Payable$20,000
Owners’ Capital$140,000
Owner’s Withdrawal $10,000
Sales Revenue$220,000
Expenses$180,000
Refer to Case 4.1. What is the journal entry to close Owner’s Withdrawals?
A)Owner’s Withdrawal$10,000
Owner’s Capital$10,000
B)Owner’s Capital$10,000
Owner’s Withdrawal$10,000
C)Expenses$10,000
Owner’s Withdrawal$10,000
D)Owner’s Capital$10,000
Income Summary$10,000
A)
B)
C)
D)
Question 5
According to the book. The first step in the closing process is which of the following?
Close owner’s withdrawals to owner’s capital.
Close revenues to income summary.
Close expenses to income summary.
Close income summary to owner’s capital.
Question 6
In which journal would a return of merchandise sold on account be recorded?
The cash payments journal
The general journal
The cash receipts journal
The purchases journal
The sales journal
Question 7
Case 5.3
Sam’s Sports Store purchases $10,000 worth of shoes from Nike on February 1. The terms of the purchase is 2/10, Net 30.
Refer to Case 5.3. Sam’s pays for the purchase on February 7. How much does Sam pay?
$10,000
$9,500
$9,800
$9,000
Question 8
Which of the following is TRUE of an effective accounting information system?
An effective accounting information system must be compatible with the accounting systems of other companies in the same industry.
An effective accounting information system must be flexible to accommodate changes in the business over time.
Internal control is a set of accounting procedures to help a company recover in the event of a natural disaster.
None of the above is true of an effective accounting information system.
Question 9
Case 5.8
Revenues:
Net sales (net of sales discounts, $1,400, and returns and allowances, $2,000) $167,900
Expenses:
Cost of goods sold90,900
Wage expense10,200
Rent expense8,400
Advertising expense1,200
Insurance expense1,000
Depreciation expense 600
Supplies expenses550
Total expenses112,850
Net Income$55,050
Refer to Case 5.8. Bob’s gross profit is:
$90,000.
$167,900.
$55,050.
$77,000.
Question 10
Which of the following is the correct journal entry for paying $5,000 for an amount owed to a supplier?
A)Accounts Payable$5,000
Supplies$5,000
B)Cash$5,000
Accounts Payable$5,000
C)Supplies$5,000
Accounts Payable$5,000
D)Accounts Payable$5,000
Cash$5,000
A)
B)
C)
D)
Question 11
Which financial statement is prepared third?
Statement of Owner’s Equity
Income Statement
Balance Sheet
Cash Flows Statement
Question 12
Which statement best describes an organization’s accountability?
Legal liability to creditors
Ethical responsibility to the public, employees and other stakeholders
Fiduciary responsibility to manage the resources of an organization
Obligation to pay local, state and federal taxes
Question 13
In which journal would the receipts of the proceeds from a note receivable (including accrued interest) be recorded?
The sales journal
The general journal
The cash receipts journal
The cash payments journal
The purchases journal
Question 14
Case 5.7
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB destination. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.7. When will Sam have legal title to the goods?
September 3
September 2
September 5
September 1
Question 15
Which of the following are important design features of an effective accounting system?
Compatibility
Flexibility
Control
All of the above
Question 16
When should the individual amounts in the Accounts Receivable column in the Cash Receipts journal be posted to the Accounts Receivable Ledger?
Annually
Daily
Monthly
Weekly
Question 17
Gross profit percentage is a measure of which of the following?
A retailer’s profitability
A retailer’s liquidity
A retailer’s leverage
A retailer’s currency
Question 18
Which of the following are typical functions within a spreadsheet?
Subtraction
Summation of a range of cells
Addition
All of the above
Question 19
In which journal would the sale of merchandise on account be recorded?
The general journal
The sales journal
The purchases journal
The cash payments journal
The cash receipts journal
Question 20
Which of the following is the correct order in preparing the financial statements?
Income Statement, Statement of Owner’s Equity, Balance Sheet
Statement of Owner’s Equity, Income Statement, Balance Sheet
Income Statement, Balance Sheet, Statement of Owner’s Equity
Balance Sheet, Income Statement, Statement of Owner’s Equity
Question 21
The formula for gross profit percentage is which of the following?
Gross profit divided by Net sales revenue
Net sales revenue minus Cost of goods sold
Cost of goods sold divided by Net sales revenue
Net sales revenue divided by Cost of goods sold
Question 22
According to the book. The fourth and last step in the closing process is which of the following?
Close expenses to income summary.
Close owner’s withdrawals to owner’s capital.
Close revenues to income summary.
Close income summary to owner’s capital.
Question 23
When a customer returns goods, the effect on the business is which of the following?
Decrease sales
Increase inventory
Decrease cost of goods sold
All of the above
Question 24
Case 5.6
Sam’s purchases $20,000 worth of goods on September 2. Terms of the purchase are 2/10 net 30 and FOB shipping point. The goods are shipped on September 3. The goods arrive at Sam’s store on September 5. Shipping costs are $70. Sam pays for the goods on September 25.
Refer to Case 5.6. Sam will debit inventory for which of the following amounts?
$18,000
$20,070
$20,000
$19,600
Question 25
Which of the following accounts would be closed?
Salaries payable
Inventory
Unearned revenue
Interest expense
Aug 29, 2021 | Uncategorized
Question 1
Which of the following is not capitalized when a piece of production equipment is acquired for a factory?
Sales taxes.
Installation costs.
Transportation costs.
Ordinary repairs.
Question 2
On January 1, 200X Post Company purchased a machine for $80,000. The machine had a salvage value of $8,000 and a useful life of 10 years. Using straight line depreciation, the accounting entry for recording depreciation expense for the second year of operation would be:
Debit depreciation expense – $7,200, credit accumulated depreciation – $7,200.
Debit depreciation expense – $8,000, credit accumulated depreciation – $8,000.
Debit depreciation expense – $8,000, credit machine – $8,000.
Debit depreciation expense – $4,000, credit machine – $4,000.
Question 3
Post Company uses straight- line depreciation for all of its depreciable assets. Post sold a piece of machinery on December 31, 2009, that it purchased on January 1, 2009 for $ 2,000. The asset had a five- year life and zero residual value. Accumulated depreciation was $400. If the sales price of the used machine was $ 1,200, the resulting gain or loss on disposal was which of the following amounts?
Loss of $ 400.
Loss of $800
Gain of $400
Gain of $ 1,200.
Question 4
Post Company purchased a patent on January 1, 200X for $50,000. The patent has a useful life of 10 years. The accounting entry to record the patent amortization expense for the first year would be:
Debit patent amortization expense $50,000; credit patent $50,000.
Debit patent amortization expense $5,000; credit patent $5,000.
Debit patent $50,000; credit accounts payable $50,000.
Debit patent $5,000; credit accounts payable $5,000.
Aug 29, 2021 | Uncategorized
Question 1
Which of the following is NOT a part of the Accounting Process?
Answer
A.Searching for low priced resources & inputs to save on costs.
B.Recording financial transactions in the company’s accounting records.
C.Summarizing by calculating account balances & category totals.
D.Reporting by presenting summarized accounting information in financial statements.
Question 2
Which of the following is NOT One of the Questions Used in Analyzing a Transaction
Answer
A.What is the classification (types) of the accounts affected?
B.What is the effect on the balance of the affected accounts?
C.Why did the transaction take place?
D.Which accounts are affected
Question 3
Which of the following is a User of Accounting Information
Answer
A.Investors deciding whether to buy a company’s stock based on its profitability, growth, & risk.
B.Suppliers deciding if a company can pay its bills on time before extending credit.
C.Banks deciding to make a loan to a firm based on its credit worthiness.
D.All of the above are users of accounting information.
Question 4
The Basic Equation of Accounting is expressed as:
A.Assets = Liabilities – Owner’s Equity.
B.Assets = Liabilities + Owner’s Equity.
C.Assets = Liabilities + Expenses.
D.Assets = Revenues – Expenses.
Question 5
The Common Characteristic possessed by All Assets is:
Answer
A.They have a very long life.
B.They have great monetary value.
C.They provide future economic benefits to operating the business.
D.They have a tangible (physical) nature.
Question 6
Revenues would result from all of the following EXCEPT:
Answer
A.The sale of merchandise to a customer.
B.The initial investment of the owner.
C.The performance of services for a client.
D.Rent received from property owned by the business.
Question 7
Mark Green’s firm Purchased a $2,000 Copier & Fax Machine from a Vendor on Account & Agreed to Pay for it in the Future. Which of the following Represents the Effects of Recording this Transaction
Answer
A.Increase in Asset – Office Equipment & Increase in Owner’s Equity – Green, Capital.
B.Increase in Asset – Office Supplies & Increase in Liability – Accounts Payable.
C.Increase in Asset – Office Equipment & Decrease in Liability -Accounts Payable.
D.Increase in Asset – Office Equipment & Increase in Liability – Accounts Payable.
Question 8
The Correct Sequence in Recording a Transactions is:
A.1st Analyze the Transaction, 2nd Record in Journal, 3rd Post to Ledger.
B.1st Analyze the Transaction, 2nd Post to Ledger, 3rd Record in Journal.
C.1st Record in Journal, 2nd Post to Ledger, 3rd Analyze the Transaction.
D.1st Post to Ledger, 2nd Record in Journal, 3rd Analyze the Transaction.
Question 9
Funds Taken From a Business by the Owner for their Own Personal Use are Recorded as:
Answer
A.Salaries Expense.
B.Miscellaneous Expense.
C.Slush Fund Expense.
D.Withdrawals.
Question 10
When a Dollar Amount is Placed on the Left Side of a T-Account, it is said to be:
A.Increased.
B.Decreased.
C.Debited.
D.Credited.
Question 11
The Right Side of any T-Account is called the:
A.Debit side.
B.Credit side.
C.Footing.
D.Ending Balance.
Question 12
Asset & Expense Accounts Normally have _ _ _ Balances while Liability, the Owner’s Capital Account, & Revenue Account Normally have _ _ _ Balances.
A.Debit …… Credit.
B.Credit ….. Debit.
C.Debit …… Debit.
D.Credit ….. Credit.
Question 13
Ajax Trucking Company prepared its Financial Statements for the Month Ended May 31. The Date on the Income Statement will be _ _ _ while the Date on the Balance Sheet will be _ _ _:
Answer
A.For the Month Ended May 31……..For the Month Ended May 31.
B.May 31…………………………………….For the Month Ended May 31.
C.For the Month Ended May 31……..May 31.
D.May 31…………………………………….May 31.
Question 14
Grayson Collected $300 from a Charge Customer on their Account. The Correct General Journal Entry to Record this Transaction is:
A.Accounts Payable …… 300
Cash ………………………….300
B.Accounts Payable …… 300
Fees Earned……………….300
C.Cash …………………….. 300
Fees Earned………………..300
D.Cash ……………………… 300
Accounts Receivable ….. 300
Question 15
Davis Took $900 Out of his Law Firm, Davis Law & Litigation LTD., to Make the Payment on the Family Car & to Buy Groceries. The Correct Journal Entry to Record this Transaction is:
Answer
A.Davis, Capital ………. 900
Cash ……………………….. 900
B.Davis, Drawing …….. 900
Cash ……………………….. 900
C.Salaries Expense ….. 900
Cash ……………………….. 900
D.None of the above.
Question 16
Ace Inc. Purchased $200 of Copier Paper, Envelopes, & Pens by Writing Out a Check to Staples. The Correct Journal Entry to Record this Transaction is:
A.Office Supplies ……………. 200
Accounts Payable ………………. 200
B.Office Equipment ……….. 200
Cash ……………………………….. 200
C.Office Suppliles ………… 200
Cash …………………………………. 200
D.Cash ………………………… 200
Office Supplies …………………… 200
Question 17
The left side of a T-account. It is used when recording increases in asset & expense accounts and decreases in liability, owner’s equity & revenue accounts.
A report showing the financial position of a business as of a particular date such as the end of the month or quarter. It lists & totals assets owned by the business which is equal to the list & total of the liabilities owed to the creditors and the residual equity of the owner.
The process of transferring figures in the General Journal to the General Ledger accounts to update their corresponding balances.
The accounting mistake where a decimal point is misplaced in the digits in a number. For example, $74.00 is written as $7.40 or $740.
The concept that each business should be treated as being separate & distinct from its owner for accouting purposes. The personal wealth of the invididual may not be used to shade or distort the financial position of a business.
The right side of a T-account. It is used when recording increases in liability, owner;s equity, & revenue accounts and decreases in assets & expense accounts.
The book of original entry when a transaction is first recorded in terms of debits & credits in chronological order to their occurence.
A list of all accounts in their account number sequence used by a company. A block code is used to give then their numbers: 100’s for assets, 200’s for liabilities.
The accounting mistake where two digits are switched or reversed. For example $74 is written as $47.
An account that is contrary to or a deduction from another related account. For example, the account Jones, Drawing (which has a debit balance) is a deduction from the related owner’s capital equity account, Jones, Capital. (which has a credit balance).
The concept that all accounting data must be expressed in the common denominator of money. In order to express the value & cost of many different items, they are stated in dollars & cents rather than physical units.
A financial report showing the profitability of a business for a specific period of time such as a month or a year. It lists & totals a firm’s revenues and then subtracts a list & total of the firm’s expenses.
Choose Answer
A.Monetary Unit Assumption
B.Income Statement
C.General Journal
D.Contra Account
E.Debit
F.Transposition Error
G.Credit
H.Slide Error
I.Economic Entity Assumption
J.Posting
K.Chart of Accounts
L.Balance Sheet
Question 18
Compute the Answers to this Question (18) and the Next Two Questions (19-20) on the basis of the following information. Jerry’s Car Repair Service started the Year with Total Assets of $90,000 and Total Liabililties of $60,000. During the Year, the business recorded $150,000 in car repair Revenues, $95,000 in Expenses, and Jerry Withdrew $15,000. What was Jerry’s Capital Balance at the Beginning of the Year
Question 19
What was the Net Income of Jerry’s Car Repair Shop for the Year
Question 20
What was Jerry’s Capital account balance at the end of the year
Question 21
Sam Smith’s Superior Service Company’s Trial Balance contained the Accounts listed below. All of the Accounts had Normal Debit and Credit Balances & Total Debits were Equal to Total Credits. What was the Total of the Debits
$500 Cash
$900 Equipment
$100 Accounts Payable
$800 Sam, Smith, Capital
$700 Service Revenue
$200 Salaries Expense
Question 22
A company’s Accounts Receivable account has a Balance of $15,000 at the Beginning of the Month. The firm had Credit Sales on Account of $40,000 During the Month & Collections on Account of $30,000 During the Month. What was the Ending Balance in the Firm’s Accounts Receivable Account
Question 23
A company’s Accounts Payable account has a Balance of $20,000 at the Beginning of the Month. The firm had Credit Purchases on Account of $12,000 During the Month & Payments on Account of $15,000 During the Month. What was the Ending Balance in the Firm’s Accounts Payable Account?
Aug 29, 2021 | Uncategorized
Determine whether the following items included in yang Companys bank reconciliation will require adjustments or corrections on Yangs books.
A. An $877 deposit was recorded by the bank as $778.
B. Four checks totaling $450 written during the month of January were not included the January with bank statement.
C. A $54 check written to Office Max for office supplies was recorded in the general journal as $45.
D. The bank statement indicated that the bank had collected a $330 note for yang.
E. Yang recorded $500 of receipts on January 31, which were deposited in the night depository of the bank. These desposits were not included in the bank statement.
F. Service charges of $22 for the month of January were listed on the bank statement.
G. The bank charged a $297 check drawn on cave Restaurant to yangs account. The check was included in ?yangs bank statement.
H. A check of $31 was returned by the bank because of insufficient funds and was noted on the bank statement. Yang received the check from a customer and thought that it was good when it was deposited into the account.
Aug 29, 2021 | Uncategorized
For this Discussion Board assignment, consider the following statement:
- Drug use is information that is rightfully private and only in exceptional cases can an employer claim a right to know about such use.
Post a response to the Discussion Board that either defends or opposes this statement.
Discussion Board Assignment Guidelines:
Determine your stance on the issue of drug testing and employee drug use, and in 3 5 paragraphs, write how you feel about the issue.
You may use the following questions to help outline your response:
- Do employers always have a right to know about employee drug use?
- What if the drug use has no effect on employee performance?
- What if the drug use constitutes a serious health risk?
- How would you (as a manager) address the issue of employee drug use?
Aug 29, 2021 | Uncategorized
You are an accountant for The Flower Shoppe. Your supervisor has asked you to help her prepare the year-end financial statements. Before you do, she wants to ensure that you understand some main points.
- Explain the following:
- The elements of the balance sheet, their purposes, and how to measure them
- The elements and purpose of the statement of changes in stockholder’s equity
- Based on the adjusted trial balance and additional information, prepare the following in an Excel file to give to the controller for review:
- Balance sheet
- Income statement
- Statement of retained earnings
- Statement of cash flows
The following is additional information about the Flower Shoppe that is needed for financial-statement preparation:
- Net income for the year ended December 31, 2008 was $10,845.
- Changes from the prior year’s balances included the following:
- a decrease in accounts receivable of $300.
- a decrease in inventory of $450.
- an increase in accounts payable of $250.
- an decrease in accrued expenses of $100.
- Land was purchased in April for $3,500.
- Cash as of January 1, 2008 was $10,105.
|
The Flower Shoppe
|
|
Adjusted Trial Balance
|
|
December 31, 2008
|
|
Debit
|
Credit
|
| Cash |
$22,750
|
|
| Accounts Receivable |
3,200
|
|
| Inventory |
8,000
|
|
| Land |
27,000
|
|
| Building |
56,000
|
|
| Accumulated Depreciation |
|
16,800
|
| Accounts Payable |
|
4,600
|
| Accrued Expenses |
|
2,500
|
| Common Stock |
|
20,000
|
| Additional Paid-in Capital |
|
10,000
|
| Dividends |
1,200
|
|
| Retained Earnings |
|
53,405
|
| Sales |
|
112,020
|
| Returns |
1,300
|
|
| Purchases |
47,000
|
|
| Salaries |
38,000
|
|
| Supplies |
870
|
|
| Utilities |
5,225
|
|
| Telephone |
2,850
|
|
| Bank Charges |
330
|
|
| Depreciation Expense |
5,600
|
|
|
$219,325
|
$219,325
|
Aug 29, 2021 | Uncategorized
Consider the following scenario:
Lucy Shafer wants to borrow $100,000 to expand her dog-breeding business. She is preparing a set of financial statements to take to the local bank with her loan application. She currently has an outstanding loan from her uncle for $50,000. Lucy s uncle is allowing her to borrow the money at a very low interest rate, and she does not have to make any principal payments for 5 years. Due to the favorable terms of her loan from her uncle, Lucy has decided that it is not significant enough to disclose on her financial statements. Instead, Lucy has classified the $50,000 as contributed capital (equity), and the interest payments are included in miscellaneous expenses on the company s income statement.
Respond to the following questions:
- What are the effects of Lucy s classification on the financial statements? (1 paragraph)
- Are there any ratios that might be of concern to the local bank that will be misstated by Lucy s actions? (1 paragraph)
- Do you think Lucy s actions are unethical? Suppose Lucy s uncle agrees to be a partner in the company and Lucy can afford to buy his share by repaying the $50,000 with interest. Does that change your opinion? (2 to 3 paragraphs)
Aug 29, 2021 | Uncategorized
It is the end of a reporting period. Because there are more people than usual retiring this year, your manager has asked your accounting department to create 2 things:
- A process documentation detailing the different methods of preparing income statements, specific sections of the income statement, and how to handle the special types of income statement items
- Basic financial statements for your company
Individual Portion:
- Visit the SEC’s Web site (http://idea.sec.gov/idea/searchidea/companysearch_idea.html).
- Select a company filing of your choice that contains a multiple-step income statement.
- Communicate your selection with your group (each of you should submit a different company).
- Submit the link to this filing as proof of your research.
- Prepare a process documentation that
- is prepared in a professional manner because it will be the desktop guide used by others in the event of your absence to prepare the financial statements for Music Warehouse.
- is in the form of a memorandum or as a numbered listing of items, depending on your individual preference.
- includes the following elements:
- a definition and description of the specific sections of the income statement
- a description of the different methods of preparing income statements
- an explanation of the conceptual guidelines for reporting income
- how to handle the special types of income statement items
Please add your file.
Group Portion:
Using the information below, do the following:
- Prepare a multiple-step income statement for Music Warehouse.
- Prepare a statement of changes in stockholder’s equity for Music Warehouse.
You may work together, or you may assign each group member a different financial statement or part of the assignment to work on.
|
Music Warehouse
|
|
Adjusted Trial Balance
|
|
December 31, 2008
|
|
|
Debit
|
Credit
|
| Cash |
$24,675
|
|
| Accounts Receivable |
5,625
|
|
| Inventory |
65,980
|
|
| Land |
93,000
|
|
| Building |
289,000
|
|
| Accumulated Depreciation |
|
75,000
|
| Notes Payable |
|
85,000
|
| Accounts Payable |
|
53,600
|
| Interest Payable |
|
4,750
|
| Common Stock |
|
10,000
|
| Additional Paid-in Capital |
|
120,000
|
| Dividends |
10,000
|
|
| Retained Earnings |
|
59,980
|
| Sales |
|
937,500
|
| Sales Discounts |
22,675
|
|
| Cost of Goods Sold |
723,000
|
|
| Salaries |
81,000
|
|
| Utilities |
8,900
|
|
| Repairs & Maintenance |
5,225
|
|
| Telephone |
2,850
|
|
| Interest Expense |
4,400
|
|
| Depreciation Expense |
9,500
|
|
|
|
|
|
$1,345,830
|
$1,345,830
|
The following is additional information needed for financial-statement preparation:
- Loss as a result of hurricane damage on the building: $17,000 (assume that the building is not located in an area that sustains frequent hurricane damage.)
- Loss because of the discontinuation of the cassette tape music segment: $26,875
- Beginning of the year balance of common stock: $8,000 (assume that changes are related to issuance of common stock.)
- Beginning of the year balance of additional paid-in capital: $102,000
- Effective income tax rate: 35%
Aug 29, 2021 | Uncategorized
The Fish Corporation has purchased two different types of securities for its portfolio.
- The first is a stock investment in Carroll Corporation. The Fish Corporation has the intent of holding this investment for many years.
- The other investment is a debt security investment. This purchase was made because the company s analyst believes there will be changes in market interest rate and this will cause these securities to increase in value in a short period of time.
The Fish Corporation has every intention of selling the securities as soon as they have increased in value.
Write a memo to the chief financial officer explaining:
- how to account for each of these investments.
- how the reported income from these two investments is to be accounted for.
- Include additional cited research
|
Grading Criteria
|
|
25%
|
how to account for each of these investments
|
|
25%
|
how the reported income from these two investments is to be accounted for
|
|
30%
|
Additional research supporting the initial answer to the IP by using references which are cited in the IP
|
|
20%
|
Justified ideas and responses by using appropriate examples or personal experience.
|
Aug 29, 2021 | Uncategorized
You have been tasked to brief the firm’s finance team on an aspect of international finance and then to lead a discussion with the team.
This briefing is particularly important because of the global financial crisis that began in 2007.
The briefing is needed to provide more foundation for the finance team because they are not well versed in the international aspects of finance.
Provide a briefing that addresses the following:
- Describe when and why central banks buy either their own currency or the currency of another nation in an effort to control exchange rates.
- What did the central banks do to stabilize the financial systems in 2007 2009?
- In an effort to stabilize the financial system how much money, in U.S. dollar equivalent and as a percentage of the country’s GDP, did the European Central Bank, Bank of England, Bank of China, and the Federal Reserve put into the economy in 2008 and 2009?
- How well did each country’s efforts work at stabilizing the economy?
- What appears to be the major constraint that the central banks used to determine the limits of the monetary injections into the economy? Did the United States use the same or different criteria?
- To what extent to do you agree/disagree with the actions of the central banks during this time?
Aug 29, 2021 | Uncategorized
The Chief Operating Officer where you work does not understand why the company should waste their time in preparing the statement of cash flows. He wants to have a better understanding of this financial statement and asks you to do the following:
- Select two companies in the same industry, and use the Internet to find their current statement of cash flows; provide citations for both.
- For each company, answer the following questions:
- Which method do they each use when calculating the net cash provided by operating activities?
- What was the most significant item reported by each company in their investing section and in their financing section?
- What were the companies trends in net cash provided by operating activities during this period of time?
|
Grading Criteria
|
|
15%
|
Select two companies in the same industry, and use the Internet to find their current statement of cash flows; provide citations for both.
|
|
15%
|
Which method does each company use when calculating the net cash provided by operating activities?
|
|
15%
|
What was the most significant item reported by each company in their investing section and in their financing section?
|
|
15%
|
What were each companies trends in net cash provided by operating activities during this period of time?
|
|
20%
|
Additional research supporting the initial answer to the IP by using references which are cited in the IP
|
|
20%
|
Justified ideas and responses by using appropriate examples or personal experience.
|
Aug 29, 2021 | Uncategorized
Purchasing manager of an electronics manufacturer decided that the company will be ordering 4,000 units of a specific component from their supplier, for one of their best selling products for the coming year. The component costs $200 per unit. Annual inventory holding rate is assumed to be 30%.
a. What is the inventory turnover rate and days of supply if there are equal quarterly deliveries? b. What is the inventory turnover rate and days of supply, if there are equal bimonthly deliveries? c. Which delivery schedule should the manufacturer prefer and why? What will be the resulting savings from using the preferred delivery schedule? d. What assumption about demand that the manufacturer is facing did you make in your answer to parts (a) to (c) above?
Aug 29, 2021 | Uncategorized
Sales related and purchase related transactions. I need June 3,6,11, 13,21,30 recorded into an General Ledger for accounting. please fill in description line if needed on ledger for each transaction. Thank you.
The following transactions were completed by Purple Paint Co. In June of the current year:
June:
3. Purchased merchandise on account from Sun Co, list price 85,000, trade discount 25%, terms FOB destination, 2/10, n/30
6. Returned 13,500 (18,000 list price less trade discount of 25%) of merchandise purchased on June 3 from Sun Co
11. Sold merchandise on account to Pete Co, list price 24,000, trade discount 35%, terms 1/10, n/30. The cost of the merchandise sold was 9,400
13. Paid Sun Co on account for purchase of jun 3, less return of June 6 discount
21. Received cash on account from sale of June 11 to Pete Co, less discount
24. Sold Merchandise on account to Rat Co., 56,900, terms 1/10, n/30. The cost of Merchandise sold was 34,000
30. Received merchandise returned by Rat Co. from sale on June 24, 8,400. The cost of the returned merchandise was 5,000
Aug 29, 2021 | Uncategorized
Sales related and purchase related transactions. I need June 3,6,11, 13,21,30 recorded into an General Ledger for accounting. please fill in description line if needed on ledger for each transaction.
The following transactions were completed by Purple Paint Co. In June of the current year:
June:
3. Purchased merchandise on account from Sun Co, list price 85,000, trade discount 25%, terms FOB destination, 2/10, n/30
6. Returned 13,500 (18,000 list price less trade discount of 25%) of merchandise purchased on June 3 from Sun Co
11. Sold merchandise on account to Pete Co, list price 24,000, trade discount 35%, terms 1/10, n/30. The cost of the merchandise sold was 9,400
13. Paid Sun Co on account for purchase of jun 3, less return of June 6 discount
21. Received cash on account from sale of June 11 to Pete Co, less discount
24. Sold Merchandise on account to Rat Co., 56,900, terms 1/10, n/30. The cost of Merchandise sold was 34,000
30. Received merchandise returned by Rat Co. from sale on June 24, 8,400. The cost of the returned merchandise was 5,000
Aug 29, 2021 | Uncategorized
I have to put the remaining items in order. Not only from the patient point of view but from the insurance and billing as well. I have the first five. Any help would be grateful. Thanks.
Put the following steps in the order of a routine patient care flow, from the beginning through to the end of the patient encounter flow. •New patient paperwork is signed and returned to front desk with insurance information for verification of benefits
•Patient pays standard co-pay if applicable
•Hard copy record is pulled, or made if new patient
•Patient called to back office
•Height, weight, and blood pressure taken by CNA or CMA
•CMS 1500 form is coded and sent to insurance for reimbursement
•Signs in at reception desk
•Patient released from exam room
•Call in to schedule appointment
•Doctor, NP, or Physician’s Assistant examines patient
•Shown to patient care room
•Reason for visit reviewed with patient by CNA, CMA, or NP
•Any refunds due to patient or insurance sent out
•Collections efforts initiated if patients charges not paid, and any insurance appeals are processed
•Patient checks out and pays any deductible verified
•Explanation of benefits returns with breakdown of payments
•Practice manager applies payments, writes off amounts required by contract with insurance companies, adjusts patient’s account records, and initiates billing to patient that indicates insurance has processed charges
Update: I have the patient information but I am not sure how the billing and insurance process is filed and processed.
Aug 29, 2021 | Uncategorized
1. Suppose a corporation s bonds have 8 years remaining to maturity. In addition, suppose the bonds have a $1000 face value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 10%. Compute the market price of the bonds if interest is paid annually.
2. Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
3. Consider some bonds with one annual coupon payment of 7.25%. The bonds have a par value of $1,000, a current price of $1,125, and they will mature in 13 years. What is the yield to maturity on these bonds?
4. What is the yield to maturity for a zero coupon bond that matures in 14 years if the bond is selling for $530.00? Assume the maturity value of the bond to be $1,000.
5. A bond carries a 9 percent coupon, pays interest semiannually, and has 10 years to maturity. What is the bond’s yield to maturity if the bond is selling for $937.75 (rounded to the nearest whole percent)?
Aug 29, 2021 | Uncategorized
P1. PXE Company presented the following comparative balance sheets at December 31, 2005 and 2006, and the income statement for the year ended December 31, 2006:
PXE Company
Balance Sheets
December 31, 2006 and 2005
December 31, 2006 December 31, 2005
Assets
Cash $ 12,200 $ 28,200
Accounts receivable 16,000 18,000
Inventory 19,500 22,000
Prepaid rent 200 300
Total current assets $ 47,900 $ 68,500
Land 58,000 30,000
Equipment 65,000 60,000
Accumulated depreciation (11,000) (4,000)
Total assets $159,900 $154,500
Liabilities and stockholders equity
Accounts payable $ 13,000 $ 25,000
Salaries payable 2,000 2,500
Interest payable 2,500 4,000
Income tax payable 6,500 3,000
Dividends payable 4,000 0
Total current liabilities $ 28,000 $ 34,500
Long-term notes payable 10,000 40,000
Common stock, $1 par 30,000 28,000
Preferred stock, $4 par 24,000 10,000
Additional paid-in capital 45,000 30,000
Retained earnings 22,900 12,000
Total liabilities and stockholders equity $159,900 $154,500
PXE Company
Income Statement
For the Year Ended December 31, 2006
Sales $ 400,000
Cost of goods sold (250,000)
Gross profit $ 150,000
General and administrative expenses $80,000
Salaries expense 31,000
Rent expense 3,600
Depreciation expense 7,000
Total operating expenses (121,600)
Other revenue and expenses:
Gain on sale of land $ 3,000
Interest revenue 300
Interest expense (2,800) 500
Income before income taxes $ 28,900
Income tax expense (8,000)
Net income $ 20,900
Additional information:
a. The company declared dividends in the amount of $10,000 during the year.
b. Additional land and equipment were purchased for cash.
c. Land that had originally cost $9,000 was sold for $12,000 cash.
d. All accounts payable are related to merchandise purchases.
e. The company uses a perpetual LIFO inventory system and uses straight-line depreciation for all depreciable assets.
Required:
1. Prepare the operating activities section of the statement of cash flows using the indirect method.
P2. Salary expense on the books was $43000. Salary payable at the beginning of the year was $11000 and at the end of the year was $12500. How much cash was paid out for salaries?
P3. Rent expense on the books was $15000. Prepaid rent at the beginning of the year was $3000 and at the end of the year was $1250. How much cash was paid out for rent?
P4. Sales revenue on the books was $118000. Accounts receivable at the end of the year was $14000 and accounts receivable at the beginning of the year was $16000. How much cash was received for sales?
P5. Sales revenue on the books was $175000. Unearned revenue at the end of the year was $12000 and unearned revenue at the beginning of the year was $4500. How much cash was received from revenue?
P6. Harp s Business Machines Inc. reported the following items from its comparative balance sheet for the calendar year 2008:
2008 2007
Inventory $125,000 $100,000
Land 100,000 200,000
Building 570,000 500,000
Equipment 45,000 30,000
Accumulated depreciation (105,000) (50,000)
Notes payable 100,000 150,000
Common stock 300,000 200,000
Additional information for 2008:
1. A piece of land was sold for $65,000, resulting in a $5,000 gain.
2. A smaller section of land was sold for $26,000, resulting in a $14,000 loss.
3. A building was started and completed costing $70,000. All costs were paid in cash.
4. Depreciation expense totaled $55,000 for the year.
Required:
Determine the cash flows from investing activities for Harp s Business Machines Inc. for 2008.
P7. Checker s Games Co. reported the following items on its comparative balance sheet for 2008:
2008 2007
Accounts payable $200,000 $175,000
Dividends payable 10,000 0
Notes payable 280,000 240,000
Common stock 315,000 290,000
Additional paid-in capital 120,000 100,000
Land 175,000 150,000
Goodwill 45,000 75,000
Additional information for 2008:
1. A $70,000 note payable was issued for cash.
2. Interest expense totaled $15,000 for the year of which $13,500 was paid in cash.
3. Stock was issued for cash (the transaction involved common stock).
4. A note payable for $30,000 was repaid.
5. Dividends of $50,000 were declared of which $40,000 have been paid.
Required: Prepare the financing section of the cash flow statement in good form for Checker s Games Co.
P8. On January 1, 2006, ABC Company bought equipment for $12,000 with an estimated useful life of 5 years and no salvage value. ABC uses straight-line depreciation. On January 1, 2008, it was decided that the sum-of-the-years-digits was more appropriate.
What journal entry do you make on January 1, 2008?
Aug 29, 2021 | Uncategorized
Q.42). P13-36B Prepare statements of cash flows (indirect and direct method) (Learning Objectives 1, 2 & 3):PAGE-770
Barton Publication Company, Inc., has the following comparative balance sheet as of March 31, 2010.
|
Barton Publication Company, Inc.
Balance Sheet
As of March 31, 2010 and 2009
|
|
|
2010
|
2009
|
Increase (Decrease)
|
|
Current assets :
|
|
|
|
|
Cash
|
$ 55,600
|
$14.700
|
$40,900
|
|
Accounts receivable
|
51,400
|
53,300
|
(1,900)
|
|
Inventories
|
65,400
|
59,700
|
5,700
|
|
Prepaid expenses
|
3,700
|
5,100
|
(1,400)
|
|
Long-term investment
|
10,000
|
6,800
|
3,200
|
|
Equipment, net
|
71,700
|
70,200
|
1,500
|
|
Land
|
35,500
|
97,000
|
(61,500)
|
|
Total assets
|
293,300
|
$306,800
|
(61,500)
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Note payable, short-term
|
$43,200
|
$48,900
|
$(5,700)
|
|
Account payable
|
4,300
|
3,500
|
800
|
|
Income tax payable
|
13,700
|
15,500
|
(1,800)
|
|
Salary payable
|
9,200
|
12,400
|
(3,200)
|
|
Interest payable
|
8,200
|
7,400
|
800
|
|
Accrued liabilities
|
2,900
|
3,400
|
(500)
|
|
Long-term note payable
|
48,900
|
93,100
|
(44,200)
|
|
Common stock
|
69,600
|
61,700
|
7,900
|
|
Retained earnings
|
93,300
|
60,900
|
32,400
|
|
Total liabilities and equity
|
$293,300
|
$306,800
|
$(13,500)
|
Selected transaction data for the year ended March 31, 2010, include the following :
- Net income, $77,000
- Paid long-term note payable with cash, $59,600
- Cash payments to employees, $43,000
- Loss on sale of land, $9,600
- Acquired equipment by issuing long-term note payable, $15,400
- Cash payments to suppliers, $147,100
- Cash paid for interest, $4,100
- Depreciation expense on equipment, $13,900
- Paid short-term note payable by issuing common stock, $5,700
- Paid cash dividends, $44,600
- Received cash for issuance of common stock, $2,200
- Cash received form customer, $299,400
- Cash paid for income taxes, $12,000
- Sold land for cash, $51,900
- Interest received (in cash), $1,000
- Purchased long-term investment for cash, $3,200
Requirements
- Prepare the statement of cash flows for Barton Publication Company, Inc., for the year ended March 31, 2010, using the indirect method for operating cash flows. Include a schedule of noncash investing and financing activities. All of the current accounts except short-term notes payable result from operating transactions.
- Also prepare a supplementary schedule of cash flows from operations using the direct method.
Aug 29, 2021 | Uncategorized
SUBDOMAIN 309.3 – QUANTITATIVE ANALYSIS
Competency 309.3.3: Expected Value Decision Analysis –The graduate uses expected value concepts as decision-making tools.
Objective 309.3.3-04: Determine for a given decision tree which decision branch has the most favorable total expected value.
Introduction:
A company is considering alternatives for improving profits: develop new products or consolidate existing products. If the company decides to develop new products, it can either develop several products rapidly or take time to develop a few products more thoroughly. If the company chooses to consolidate existing products, it can either strengthen the products to improve profits or simply reap whatever gains are attainable without investing more time and money in the products.
Given:
The Decision Tree Chart attachment shows the predicted gains from each decision alternative described above. Gains depend on how the market reacts to the action taken by the company. The probability of each market reaction is shown on the decision tree.
Task:
Develop a response to the attached decision tree chart in which you do the following:
A. Calculate the expected value for each of the fourdecision branches, showing all work or reasoning.
B. Determine the decision alternative that has the most favorable total expected value.
1. Explain how you reached your determination in part B, comparing the results from the 4 decisions branches from part A.
C. When you use sources, include all in-text citations and references in APA format.
Note: To reduce unnecessary matches select ignore small matches
Note: For definitions of terms commonly used in the rubric, see the attached Rubric Terms.
Aug 29, 2021 | Uncategorized
Utilize your week four reflection for specific information regarding the analysis you are required to perform for your data set.
Use the statistical tables given in the appendices as before
Use the numerical data calculated from earlier weeks provide all data in Excel tables and graphs.
Develop one research question and formulate a hypothesis which may be tested using a step process.
Prepare a 1,050- to 1,750-word paper describing the results of the analysis and hypothesis test on your collected data.
Include the following in your paper:
Formulate a hypothesis statement regarding your research issue.
Explain which hypothesis test you used to analyze your data and why you chose that test.
Interpret the results of your test, and explain your decision.
Format your paper consistent with APA guidelines.
Aug 29, 2021 | Uncategorized
Utilize your week four reflection for specific information regarding the analysis you are required to perform for your data set.
Use the statistical tables given in the appendices as before
Use the numerical data calculated from earlier weeks provide all data in Excel tables and graphs.
Develop one research question and formulate a hypothesis which may be tested using a step process.
Prepare a 1,050- to 1,750-word paper describing the results of the analysis and hypothesis test on your collected data.
Include the following in your paper:
Formulate a hypothesis statement regarding your research issue.
Explain which hypothesis test you used to analyze your data and why you chose that test.
Interpret the results of your test, and explain your decision.
Format your paper consistent with APA guidelines.
Aug 29, 2021 | Uncategorized
DQ1: What are some examples of operational definitions in research design within your profession For example, in the education field, graduation rate and retention rate are important operational definitions to measure progress of students. Likewise other professions have common metrics and definitions. Identify some metrics and operational definitions from your own career or a profession that you know well. Tell us why you think it is important!
DQ2: What is the purpose of sampling? What are some concerns and dangers of sampling? How important is the sample design to data validity? Explain. Provide an example where a sample might misrepresent data validity. For example, reflect on the current political campaign and the pollsters!
Learning Team Assignment: Business Research Method, Part 1
Practice Problems: Chapter 4 & 5 Problems
Aug 29, 2021 | Uncategorized
Usethe data from University of Phoenix Material:Ballard Integrated Managed Services, Inc., Part 1.
Resources: University of Phoenix Material:Ballard Integrated Managed Services, Inc., Part 1
ReviewtheBallard Integrated Managed Services, Inc. (BIMS), Part 1 case study overview.
Prepare a 700- to 1,050-word written report along with a 5- to 7-slide Microsoft PowerPoint presentation for the senior management team to present your findings (see Exhibit D for the data set of the second survey).
Address the following:
Present the BIMS situation as an overview problem, purpose, research questions, and hypotheses.
Describe the instrument used for data collection.
Identify types of data collected quantitative, qualitative, or both and how the data is collected.
Identify the level of measurement for each of the variables involved in the study.
Code the data if you have not done so. Describe how the data is coded and evaluate the procedure used.
Clean the data by eliminating the data input errors made.
Draw conclusions about appropriateness of the data to meet the purpose of the study.
As consultants to BIMS, your Learning Team is expected to prepare and deliver a professional product addressing the client’s needs.
QNT 351 Week 2 Learning Team Data Collection
QNT351 Week 2 Learning Team Data Collection
Paper + Presentation in APA format
Aug 29, 2021 | Uncategorized
Using theBallard Integrated Managed Services, Inc. (BIMS) case study overview:
Resource:University of Phoenix Material: Ballard Integrated Managed Services, Inc., Part 2.
Read the University of Phoenix Material: Ballard Integrated Managed Services, Inc., Part 2. Your team acts as a consultant group that analyzes and interprets this second set of data. The intent is to increase senior management s understanding of the sources of employee dissatisfaction and to create a model that predicts employee resignation.
Combine your Week Two Learning Team assignment and Week Three findings with Week Five findings and make a recommendation to BIMS.
Use the statistical tables given in the appendices of the textbook and a statistical analysis application: a Microsoft Excel spreadsheet, Minitab statistical software, or SPSS software.
Prepare a 1,050- to 1,750-word written report along with a 7- to 9-slide Microsoft PowerPoint presentation for the senior management team to present your findings (see Exhibit D for the data set of the second survey).
Note. As consultants to BIMS, your Learning Team is expected to prepare and deliver a professional product addressing the client s needs.
QNT351 Week 5 Learning Team Analyzing and Interpreting Data
QNT/351 Week 5 Learning Team Analyzing and Interpreting Data
University of Phoenix
Paper + Presentation
References in APA format
Aug 29, 2021 | Uncategorized
What are the Cost Savings when a company outsources?
(Due Week 7)
Background:
In this case study, please choose from one of the areas in an organization that may be outsourced and prepare a cost savings report.
- Finance and Accounting
- Investment and Asset Management
- Human Resources
- Procurement
- Logistics
- Real estate management
- Miscellaneous (energy services, customer service, mailroom, food processing)
Your Assignment:
Prepare an executive summary document that focuses on the cost savings of the outsourcing / contracting process for the business process that you decide to outsource. Your analysis must include the steps below.
- You need to JUSTIFY your decision for the business process outsourced (e.g., accounting, editorial, photography, publishing, distribution, printing, layout, advertising, editing, articles, etc.); and
- For the service that you intend to outsource:
- Establish the preliminary performance targets / level of service that will be required from the selected vendors;
- Establish the type of contract that you will use for each contract (i.e., fixed, cost-plus, reimbursable, unit);
- Determine the evaluation criteria you will use to select the preferred vendor(s) (e.g., low price, best value, etc.). [Are there different evaluation criteria for different business units? Why?];
- Identify the number of vendors that you will select to provide the services to be outsourced (i.e., one vendor for all services versus individual vendors with specific expertise in each of the services to be outsourced); and
- Construct a timeline that summarizes the bid activities and time duration for each contracting process (i.e., plan purchases and acquisition through select sellers).
ALL FROM A FINANCIAL PERSPECTIVE!
Grading Rubric:
|
Points
|
Criteria
|
|
5
|
Correlation of the assessment with the TCOs outlined above and material covered through Week 6.
|
|
5
|
Compliance with format requirements outlined above.
|
|
25
|
Assessment of which business processes you would outsource. Determine whether it would be cost effective to outsource the business unit, and also, whether or not it might be helpful or detrimental to your core business.
|
|
5
|
Assessment of the preliminary performance targets/level of service you require from each vendor. Point out anything unique about your performance targets/level of service that may preclude some vendors from bidding.
|
|
5
|
Assessment of the type of contract chosen for each business unit outsourced. Provide a rationale for your choice.
|
|
5
|
Assessment of the evaluation criteria used to rank the proposals. Again, a rationale for your choice needs to be included.
|
|
5
|
Strength of argument on the number of vendors selected to provide the services.
|
|
15
|
Assessment of timeline for bid activities and time duration for each contracting process.
|
|
Total: 70
|
Aug 29, 2021 | Uncategorized
Assignment – Risk Paper #1
Write a 2-4 page paper regarding a project, either real or fictitious, where one is able to discuss how risks were identified, ranked, and monitored. The student is also welcome to write about a major purchase or major decision in one’s life, such as buying a new car, buying a new home, or even the decision to return to school to earn a degree. All of these are considered projects or procurements that required some form of formal or informal risk review.
Remember to cite and reference any sources that were used in the project or in the decision making process. At a minimum, students should connect this assignment back to the text and support their decision making process with key concepts from the text. One of the elements of this assignment is to connect the material from the course to actual risk decisions. You are also welcome to use any of the checklists from the text to support the decision making process. See Doc Sharing for the grading rubric.
Aug 29, 2021 | Uncategorized
Course Project: Comprehensive Problem 5
Now that you have had the chance to practice your Excel skills with some preprogrammed and model-building activities, it is time apply those skills and test the accounting concepts you have learned during the course.
The title of this course is “Advanced Automated Accounting” because you now have the opportunity to create automated accounting software using Excel. Exciting, I know. The project is to design a excel workbook around the Comprehensive Problem 5 in Accounting textbook (pg 1096 – 1097). The workbook should include three spreadsheets for parts A, B and C of the comprehensive problem 5. An outline for the workbook is as follows:
Spreadsheet One: Break-Even Analysis
- Determine a fixed and variable portion of a utility cost using the high-low method.
- Determine a contribution margin
- Determine a fix cost
- Determine a break-even number
Spreadsheet Two: Budgets
- Include a production budget
- Include a direct materials purchase budget
- Include a direct labor budget
- Include a factory overhead budget
- Include a budgeted income statement
Spreadsheet Three: Variance Analysis
- Determine a direct material price and quantity variances
- Determine a direct labor rate and time variances
- Determine a factory overhead controllable variance
- Determine a factory overhead volume variance
This is a rough outline of what the software should be able to do. The rest is up to you. Be creative, have fun and WOW me. Use what you know about Excel and pretend you are creating software for a company to use frequently for break-even analysis, budgeting and variance analysis. The software (excel workbook) should be attractive and user friendly.
Aug 29, 2021 | Uncategorized
A proposed engineering control is expected to cut the accident rate by 40 percent for a given process that was recently cited as being out of compliance by an OSHA inspector. Auditors have estimated cost data for accidents with this process as follows (average cost per accident):
Direct Cost Hidden Cost Freq/Yr
First aid cases 1000 4000 6
Med. treatment cases 6000 9000 1.5
Lost time cases 3000 50000 0.5
No-injury cases none 2000 5.0
a. Calculate the total benefit expected for this proposed engineering control. Show your calculations.
b. If the proposed engineering control will cost $40,000, does the cost-benefit analysis support funding it? Why or why not?
c. What other reasons might support funding the project?
Aug 29, 2021 | Uncategorized
In 750 words or less, discuss the pros and cons of top down-budgeting vs. bottom-up budgeting
1. Introduction
2. What is Bottom-up budgeting
3. Advantages and Disadvantages of bottom-up budgeting
4. What is Top-down budgeting
5. Advantages and Disadvantages of Top-down budgeting
6. Conclusion
Need information for
1. Introduction
2. What is Bottom-up budgeting
and
6. Conclusion
Aug 29, 2021 | Uncategorized
| Preview |
| 1.psy 490 complete/~$ 2 Psychological Issue Summary Team paper Operant conditioning .doc |
| 2.psy 490 complete/~$ 3 Ethics Awareness Inventory.doc |
| 3.psy 490 complete/Thumbs.db |
| 4.psy 490 complete/Wk 1 Diverse Nature of Psychology.doc |
| 5.psy 490 complete/Wk 1 DQ 1.doc |
| 6.psy 490 complete/Wk 1 DQ 2.doc |
| 7.psy 490 complete/Wk 2 DQ 1.doc |
| 8.psy 490 complete/Wk 2 DQ 2.doc |
| 9.psy 490 complete/Wk 2 Portfolio Presentation.ppt |
| 10.psy 490 complete/Wk 2 Psychological Issue Summary Team paper Operant conditioning .doc |
| 11.psy 490 complete/Wk 2 Psychological Issue Team Paper on Behavioral Theory.doc |
| 12.psy 490 complete/Wk 2 Psychological Issue Team Paper stages of development .doc |
| 13.psy 490 complete/Wk 2 Psychological Issues Summary Team Paper Therapeutic strategies .doc |
| 14.psy 490 complete/Wk 3 DQ 1.doc |
| 15.psy 490 complete/Wk 3 DQ 2.doc |
| 16.psy 490 complete/Wk 3 DSM Case Study Vignette Team.doc |
| 17.psy 490 complete/Wk 3 Ethics Awareness Inventory.doc |
| 18.psy 490 complete/Wk 4 DQ 1.doc |
| 19.psy 490 complete/Wk 4 DQ 2.doc |
| 20.psy 490 complete/Wk 4 DSM Case Study Vignette Francis Team.doc |
| 21.psy 490 complete/Wk 4 Pay it Forward.doc |
| 22.psy 490 complete/wK 5 Psychology Recap Presentation exter 2.ppt |
| 23.psy 490 complete/wK 5 Psychology Recap Presentation exter 3.ppt |
| 24.psy 490 complete/wK 5 Psychology Recap Presentation exter.ppt |
| 25.psy 490 complete/wK 5 Psychology Recap Presentation.pptx |
|
Aug 29, 2021 | Uncategorized
The CEO attended a workshop on natural resources and intangible assets. He was confused on the difference between these two types of assets and how to write-off the cost of these assets.
He has asked you to make a presentation at the next Board of Directors meeting including the following:
- Explain the meaning of these two assets.
- How these two types of assets are expensed.
- How natural resources and intangible assets are reported for financial accounting purposes.
- Explain the basic issues related to accounting for intangible assets.
- Show and cite examples of financial statements with either intangible assets or natural resources.
- Choose two companies in the same industry and find their current annual reports
- Cite both reports.
- Determine and explain how either their natural resources or intangible are written-off.
- Discuss the implication this has for comparing the results of these two companies.
- Include at least two additional research references.
|
Grading Criteria
|
|
15%
|
explaining the meaning of these two assets
|
|
15%
|
how these two types of assets are expensed.
|
|
10%
|
how natural resources and intangible assets are reported for financial accounting purposes.
|
|
10%
|
Explain the basic issues related to accounting for intangible assets
|
|
10%
|
Show and cite examples of financial statements with either intangible assets or natural resources.
|
|
20%
|
Choose two companies in the same industry and find their current annual reports.
- Cite both reports.
- Determine and explain how either their natural resources or intangible are written-off.
- Discuss the implication this has for comparing the results of these two companies.
|
|
20%
|
Additional research supporting the initial answer to the IP (at least two references)
|
Aug 29, 2021 | Uncategorized
Your friend, Tom Smith is the owner-president of a consulting company. He recently completed his third year of business and received the annual financial statements from his accountants. He finds the income statement and balance sheet informative, but does not understand the statement of cash flows. He said the section of operating activities is really confusing. He says this first section consists of a lot of additions and subtractions which did not make any sense.
Write memo to Tom including the following:
- Explaining the purpose of the statement of cash flows.
- Explaining the form and content of the statement of cash flows.
- The advantages and disadvantages of the direct and indirect methods of preparing this financial statement.
- Which method is preferred by the FASB?
- Which method is more popular to use?
Aug 29, 2021 | Uncategorized
You are the manager of an accounting department and would like to hire another managerial accountant to focus on internal accounting. The CEO is not convinced that a managing accountant position is needed. Prepare a 1 2 page memo for the CEO on the following:
- Explain the objectives and characteristics of an internal accounting system.
- Include an explanation of the importance of this information to the company.
- Include an explanation of ethics in business and the managerial accountant s role in upholding the code of ethics.
|
Grading Criteria
|
Percentage
|
|
Objectives and characteristics of an internal accounting system
|
35%
|
|
Importance of internal accounting information to the company
|
35%
|
|
Ethics in business and the managing accountant s role
|
30%
|
Aug 29, 2021 | Uncategorized
Consider the following scenario:
Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.
|
Program Area
|
Costs
|
|
Administration
|
|
|
Salaries:
|
|
|
Administrator
|
$60,000
|
|
Assistant
|
$35,000
|
|
Two Secretaries
|
$42,000
|
|
Supplies
|
$35,000
|
|
Advertising and promotion
|
$9,000
|
|
Professional meetings/dues
|
$14,000
|
|
Purchased Services:
|
|
|
Accounting and billing
|
$15,000
|
|
Custodial
|
$13,000
|
|
Security
|
$12,000
|
|
Consulting
|
$10,000
|
|
Community Mental Health Services
|
|
|
Salaries (two social workers)
|
$46,000
|
|
Transportation
|
$10,000
|
|
Outpatient mental health treatment
|
|
|
Salaries:
|
|
|
Psychiatrist
|
$86,000
|
|
Two Social Workers
|
$70,000
|
In an Excel spreadsheet:
- Provide a dollar range of costs to reduce budgets (worst and best case analysis).
- She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
For more information on creating Excel Spreadsheets, please visit the Excel Lab.
In addition to the Excel spreadsheet required to support your responses, you must prepare an APA formatted paper that will address the following:
- Describe how managerial accounting is different from cost accounting.
- Describe the lean production philosophy.
- Compare and contrast accounting principles in lean production to those of typical production.
- Describe how you would advise Dr. White to prepare for reduced budgets.
Submitting your assignment in APA format means, at a minimum, you will need the following:
- TITLE PAGE. Remember the Running head: AND TITLE IN ALL CAPITALS
- ABSTRACT.A summary of your paper not an introduction. Begin writing in third person voice.
- BODY.The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA level headings and references. The deliverable length of the body of your paper for this assignment is 4-5 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
- REFERENCE PAGE.References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper and lower case usage as appropriate for the type of resource used. Remember, the Reference Page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.
Aug 29, 2021 | Uncategorized
- Select a movie or TV show that effectively communicates the cultural, values and norms of a society that is different from your own culture. Ideally, this movie or TV show would be a foreign film with subtitles. The movie or TV show you select should provide you with a glimpse of what life is like in another culture. The process of watching this movie or TV show should provide you with a unique, cultural experience.
- Watch the movie/TV show that you selected, and use your reactions as part of your response to the following topic: Define ethnocentrism and how it affects individuals, societies, and multinational corporations.
Your paper should provide a comprehensive overview of the concept of ethnocentrism. You should use your cultural experience of watching the selected movie or TV show to discuss the effect of ethnocentrism on individuals, societies, and multinational corporations. Please feel free to use any personal experiences you may have had visiting different countries around the world as part of this paper; however, do not let your personal experiences with other cultures be the focal point of this paper. The focal point of the paper is your cultural experience watching the selected movie or TV show and your comprehensive overview of the concept of ethnocentrism. Please note that this paper is not intended to be a summary of the movie or TV show. Your paper should focus on the cultural observations that you are able to make based on this experience. Your response should be 2 3 pages.
Please submit your assignment.
The following rubric will be used for grading:
|
Grading Rubric
|
|
IP assignment response
|
30%
|
|
Evidenced critical thinking and connection to real-world and assignment scenario applicability
|
40%
|
|
Justified ideas and responses by using appropriate examples and references from texts, Web sites, and other references or personal experience
|
20%
|
|
Adherence to assignment deadlines, length requirement, correct spelling/proper grammar, and properly formatted per APA style
|
10%
|
Aug 29, 2021 | Uncategorized
- Explain how an individual’s ascribed social class position at birth may affect what Max Weber called life chances, or the ability of an individual to attain the following “good things” that a society values:
- good health care
- longevity
- a good job
- security
- status
- wealth
- power
- prestige
- Describe how life chances may affect an individual’s life goals (positive or negative).
- In what ways may life chances be irrelevant?
- Give examples of how the concept of life chances operates in the following systems:
- a caste system
- a class system
- a one-party, Communist system (such as China)
Aug 29, 2021 | Uncategorized
In the textbook, there are two circular flow diagrams: One that represents the flows in the macro-economy as a closed system and one that represents the flows as an open system. Review the diagrams and write a three to five page length paper that:
- Defines and explains a closed system and provides an example.
- Defines and explains an open system and provides an example.
- Explains the inner and outer flows of a closed system.
- Explains the inner and outer flows of an open system.
- Defines and explains leakages in an open system.
- Defines and explains injections in an open system.
- Provides a personal example of a leakage, describes it and explains it.
- Provides a personal example of an injection, describes it and explains it.
Aug 29, 2021 | Uncategorized
You are to select one business that does not already have a website and develop an Internet strategy for it. Most large corporations already have websites so you may have to think of something on a smaller scale, for example a local bike store by your house. Sole proprietorship businesses that provide services like car repair, house cleaning, tax preparation, and use the Internet and similar services are also good options. You will also consider and describe how the business you select can use social media to achieve its objectives. Use the Internet and the library to research and analyze markets and competitors. After selecting a business, you will need to answer the following questions:
- What Internet business model would be appropriate for the company to follow in creating a Web site and why?
- In what ways can the business benefit from a Web site? What functions should it perform for the company (i.e., marketing, sales, customer support, internal communications, etc.)?
- In what other ways might the company use the Internet for its own benefit?
- Prepare functional specifications for the company’s use of the Web and the Internet. Include links to and from other sites in your design.
- Prepare a list of technological specifications for implementation (i.e., what hardware and software are necessary to support your design)
Please submit your assignment.
- Discuss how the business can leverage social media to enhance its business success.
Aug 29, 2021 | Uncategorized
- Managers should base pricing decisions on both cost and market factors. In addition, they must also consider legal issues. Describe the influence that the law has on pricing decisions.
- “It is impossible to use Discounted Cash Flow methods for evaluating investments in research and development. There are no cost savings to measure, and we don t even know what products might come out of our R&D activities.” This is a quote from an R&D manager who was asked to justify investment in a major research project based on its expected net present value. How would you respond to this statement? Do you agree or disagree? Explain.
Recommendations for Responding to Peer Posts
- Compare the points made about the influence of the law on pricing decisions to your own. How were they similar or different?
- Review a peer s post that was different from your own regarding the use of Discounted Cash Flow methods. Did any of the points he or she made make you reconsider your position as to which costing method would be best
- If so, what points made you change your mind?
- If not, what additional arguments can you make that would directly refute the points that he or she made.
|
Grading Criteria
|
Percentage
|
|
Describe the influence that the law has on pricing decisions.
|
20%
|
|
How would you respond to the R&D manager s statement about Discounted Cash Flow methods? Do you agree or disagree? Explain.
|
20%
|
|
Supporting research/arguments made
|
40%
|
|
Response to peer posts
|
20%
|
Aug 29, 2021 | Uncategorized
For this assignment, there are 2 deliverables. The first is the group deliverable of a PowerPoint presentation, and the second is the individual deliverable of a Microsoft Access database.
Group Assignment Details (100 points):
In collaboration with your team, develop a PowerPoint presentation of 6-8 slides that explains how a specific small, powerful, portable computer that you can find available for purchase on the Internet can be fully leveraged by a corporate Sales and Marketing Team in pursuit of its business objectives.
In your presentation, address the following:
What specific computer, by manufacturer and model, did you select for this assignment?
What are some of the specific functionalities this computer offers to users?
What are some of the logical objectives of a typical Corporate Sales and Marketing team?
How can some of the specific functionalities provided by the computer you selected help a Corporate Sales and Marketing team achieve its objectives?
Demonstrate your ability to use the PowerPoint Speaker Notes function and graphics in your presentation. Ensure your presentation includes Agenda and Summary slides. Submit a single file for the team to Group Submissions within the Unit 2 Group Project Submissions area.
Human Resource Databases
Database Scenario:
The Environmental Expert is a locally owned business that provides training to small businesses regarding environmental regulations that may affect them It has a staff of 8 people. Up until this point, it has been using paper-based records to keep track of customers who come in to sell used music; realizing this system is very outdated and problematic, the store has called you and asked you to create a simple Microsoft Excel workbook so it can keep track of both customers selling music and its employees.
Individual Assignment Details (100 points):
Each individual should create an create an Excel workbook that includes 2 different tables: an employee table and a customer table. Each table must appear on a different tab in the Excel workbook.
Field titles for the employee table should be as follows: Employee ID numberFirst nameLast nameAddressDate of hireDate of birthSocial security numberHourly wage Field titles for the customer table should be the following: Customer ID numberFirst nameLast nameAddressPhone numberNumber of items sold to store For the employee table, enter 8 hypothetical employees into the tableFor the customer table, enter 10 hypothetical customers into the tableAppropriately title each submit a single Excel file to the Individual Submissions within the Unit 2 Group Project Submissions area.
Aug 29, 2021 | Uncategorized
Read the following scenario about Mary. Based upon the information in the text and your own online research, discuss Mary s ethical options. What do you think that she should do?
Mary recently graduated from college and landed her first corporate job. She works as an administrative assistant for an international corporation that manufactures home decorations in the USA and Europe. On many occasions she had had to travel to Europe to assist company executives conduct business in a wide variety of countries. She had a primary boss in the USA and many secondary bosses in a variety of European countries. On the job only four months, Mary feels that she is already starting to loose her idealism about business. She has heard of and observed employees coming to work intoxicated even sneaking drinks at work. She has seen employees routinely arrive late for work and leave early. Fifteen minute breaks and thirty minute lunches often last twice as long.
Employees routinely use their computers for sending and receiving personal emails, shopping online, checking horoscopes, and the weather, even gambling. And all of that happened in just her department in the USA and Europe. The department manager is very laid back. Mary has tried to talk with him about these problems, but he seems unable or unwilling to confront the problems. It appears to Mary that he wants the employees to like him, and the employees are taking advantage of that. Mary is growing more and more frustrated. She prides herself as a hard worker and assumed the other employees would be too. Mary is tempted to give up and join the other employees, getting paid for doing as little as possible. But she knows that she would not be able to respect herself. She is tempted to go over her managers head to his supervisor and complain about the problems. But that would alienate her direct supervisors and the other employees. She has not been at the company long enough to request a transfer, and quitting her job after four months does not seem like a good career move. She is sitting at her desk wondering what she should do.
In response to this scenario, answer the following questions:
- Using the internet, the library, and your textbook, compare and contrast the rights of employees and the responsibilities of employers in the United States and Europe. Are the laws, customs, and cultures different?
- If Mary chooses to file a formal complaint with a government agency, what challenges will she face?
- What kind of reaction will Mary get from her supervisors in the United States and Europe?
- Finally, advise Mary on what course of action she should take.
Aug 29, 2021 | Uncategorized
For this assignment, there are 2 deliverables. The first is the group deliverable of a PowerPoint presentation, and the second is the individual deliverable of a Microsoft Access database.
Group Assignment Details (100 points):
In collaboration with your team, develop a PowerPoint presentation of 6-8 slides that explains how a specific small, powerful, portable computer that you can find available for purchase on the Internet can be fully leveraged by a corporate Sales and Marketing Team in pursuit of its business objectives.
In your presentation, address the following:
What specific computer, by manufacturer and model, did you select for this assignment?
What are some of the specific functionalities this computer offers to users?
What are some of the logical objectives of a typical Corporate Sales and Marketing team?
How can some of the specific functionalities provided by the computer you selected help a Corporate Sales and Marketing team achieve its objectives?
Demonstrate your ability to use the PowerPoint Speaker Notes function and graphics in your presentation. Ensure your presentation includes Agenda and Summary slides.
Submit a single file for the team to Group Submissions within the Unit 2 Group Project Submissions area.
Human Resource Databases
Database Scenario:
The Environmental Expert is a locally owned business that provides training to small businesses regarding environmental regulations that may affect them It has a staff of 8 people. Up until this point, it has been using paper-based records to keep track of customers who come in to sell used music; realizing this system is very outdated and problematic, the store has called you and asked you to create a simple Microsoft Excel workbook so it can keep track of both customers selling music and its employees.
Individual Assignment Details (100 points):
Each individual should create an create an Excel workbook that includes 2 different tables: an employee table and a customer table. Each table must appear on a different tab in the Excel workbook.
Field titles for the employee table should be as follows: Employee ID numberFirst nameLast nameAddressDate of hireDate of birthSocial security numberHourly wage Field titles for the customer table should be the following: Customer ID numberFirst nameLast nameAddressPhone numberNumber of items sold to store For the employee table, enter 8 hypothetical employees into the tableFor the customer table, enter 10 hypothetical customers into the tableAppropriately title each submit a single Excel file to the Individual Submissions within the Unit 2 Group Project Submissions area.
Aug 29, 2021 | Uncategorized
Read the following scenario about Mary. Based upon the information in the text and your own online research, discuss Mary s ethical options. What do you think that she should do?
Mary recently graduated from college and landed her first corporate job. She works as an administrative assistant for an international corporation that manufactures home decorations in the USA and Europe. On many occasions she had had to travel to Europe to assist company executives conduct business in a wide variety of countries. She had a primary boss in the USA and many secondary bosses in a variety of European countries. On the job only four months, Mary feels that she is already starting to loose her idealism about business. She has heard of and observed employees coming to work intoxicated even sneaking drinks at work. She has seen employees routinely arrive late for work and leave early. Fifteen minute breaks and thirty minute lunches often last twice as long.
Employees routinely use their computers for sending and receiving personal emails, shopping online, checking horoscopes, and the weather, even gambling. And all of that happened in just her department in the USA and Europe. The department manager is very laid back. Mary has tried to talk with him about these problems, but he seems unable or unwilling to confront the problems. It appears to Mary that he wants the employees to like him, and the employees are taking advantage of that. Mary is growing more and more frustrated. She prides herself as a hard worker and assumed the other employees would be too. Mary is tempted to give up and join the other employees, getting paid for doing as little as possible. But she knows that she would not be able to respect herself. She is tempted to go over her managers head to his supervisor and complain about the problems. But that would alienate her direct supervisors and the other employees. She has not been at the company long enough to request a transfer, and quitting her job after four months does not seem like a good career move. She is sitting at her desk wondering what she should do.
In response to this scenario, answer the following questions:
- Using the internet, the library, and your textbook, compare and contrast the rights of employees and the responsibilities of employers in the United States and Europe. Are the laws, customs, and cultures different?
- If Mary chooses to file a formal complaint with a government agency, what challenges will she face?
- What kind of reaction will Mary get from her supervisors in the United States and Europe?
- Finally, advise Mary on what course of action she should take.
Aug 29, 2021 | Uncategorized
In 1999, a Seattle man took a popular soft-drink company seriously when one of its commercials made an offer of a Harrier jet, the famous high-tech jump jet used by the U.S. Marines. In a TV commercial that aired in 1995, the company jokingly included the Harrier as one of the prizes that could be received with a mere 7 million company points. Although that sounds like a lot of points to get from drinking the soft drink company’s products (roughly 190 drinks a day for 100 years), the company also allowed customers to purchase points for 10 cents each.
The man did the math and discovered that the cost of the 7 million points needed for the jet was $700,000. He then put together a business plan, raised the $700,000 from friends and family, and submitted 15 points, the check, and an official order form along with a demand for the Harrier jet.
The company wrote back, stating that the Harrier jet in the commercial was simply used to create a humorous and entertaining advertisement. They apologized for any misunderstanding or confusion people may have experienced and enclosed some free product coupons.
The free coupons did not satisfy the man, who then took the soft drink company to court. Finally, a federal judge for the Southern District of New York held that the company was only joking when it implied in its ad that it was giving away fighter jets. The judge noted that because the jets sell for approximately $23 million, no one could have concluded that the commercial actually offered consumers a Harrier jet. Instead, this was a classic example of a deal that was too good to be true.
Write a 3 5-page paper that answers the following questions:
- What are the four elements of a valid contract?
- What is the objective theory of contracts?
- How does the objective theory of contracts apply to this case?
- In your own words, why do you think the court held that there was not a valid agreement here?
- Are advertisements generally considered offers? Explain.
- How does this case differ from a reward situation in which a unilateral contract is formed upon completion of the requested act?
Aug 29, 2021 | Uncategorized
Problem 7-7 Workpaper, Cost Method, Comprehensive Problem
Parsons Company acquired 90% of the outstanding common stock of Shea Company on June 30, 2011, for $426,000. On that date, Shea Company had retained earnings in the amount of $60,000, and the fair value of its recorded assets and liabilities was equal to their book value. The excess of implied over the fair value of the recorded net assets was attributed to an unrecorded manufacturing formula held by Shea Company, which had an expected remaining useful life of five years from June 30, 2011.
Financial data for 2013 are presented here:
Parsons Company Shea Company
Sales $2,555,500 $1,120,000
Dividend Income 54,000 -0-
Total Revenue 2,609,500 1,120,000
Cost of Goods Sold 1,730,000 690,500
Expenses 654,500 251,000
Total Cost and Expenses 2,384,500 941,500
Net Income $ 225,000 $ 178,500
1/1 Retained Earnings $ 595,000 $ 139,500
Net Income 225,000 178,500
Dividends Declared (100,000) (60,000)
12/31 Retained Earnings $ 720,000 $ 258,000
Cash $ 119,500 $ 132,500
Inventory 362,000 201,000
Other Current Assets 40,500 13,000
Land 150,000 -0-
Investment in Shea Company 426,000 -0-
Property and Equipment 825,000 241,000
Accumulated Depreciation (207,000) (53,500)
Total Assets $2,058,000 $ 659,000
Accounts Payable $ 295,000 $ 32,000
Other Liabilities 43,000 19,000
Capital Stock 1,000,000 300,000
Additional Paid-in Capital -0- 50,000
Retained Earnings 720,000 258,000
Total Liabilities and Equity $2,058,000 $ 659,000
On December 31, 2011, Parsons Company sold equipment (with an original cost of $100,000 and accumulated depreciation of $50,000) to Shea Company for $97,500. This equipment has since been depreciated at an annual rate of 20% of the purchase price. During, 2012 Shea Company sold land to Parsons Company at a profit of $15,000.
The inventory of Persons Company on December 31, 2012, included goods purchased from Shea Company on which Shea Company recognized a profit of $7,500. During 2013, Shea sold goods to Parsons Company for $375,000, of which $60,000 was unpaid on December 31, 2013. The December 31, 2013, inventory of Persons Company included goods acquired from Shea Company on which Shea Company recognized a profit of $10,500.
Required:
A. Prepare a consolidated financial statement workpaper for the year ended December 31, 2013.
B. Prepare a schedule to calculate consolidated retained earnings on December 31, 2013, using an analytical or t-account approach. (Hint: Due to rounding, you may be out of balance by $1. To avoid this, you should carry decimal until the final calculation.)
Aug 29, 2021 | Uncategorized
Problem 73
73.During the current year, the Harlow Corporation, which specializes in commercial construction had the following property transactions. Determine the realized and recognized gain or loss on each of Harlow s property transactions and the basis of any property acquired in each transaction.
a.In April, a tornado damages a crane and a dump truck at one of its construction sites. The crane was acquired in 2009 for $120,000 and has an adjusted basis $39,650. The dump truck was acquired in 2007 for $70,000 and has an adjusted basis of $33,880. The insurance company reimburses Harlow $35,000 for the crane and $42,000 for the dump truck. The company decides not to replace the dump truck and uses the insurance proceeds to purchase a new crane for $110,000.
b.The company trades a road grader with a fair market value of $72,000 for a bulldozer worth $60,000. Harlow receives $12,000 in the exchange. The road grader originally cost $90,000 and has an adjusted basis of $50,000. The bulldozer cost $85,000, and its adjusted basis is $37,000.
c.A fire destroys the company s supply warehouse. The warehouse originally cost $300,000 and has an adjusted basis of $200,000. Its fair market value before the fire is $250,000. The insurance company pays Harlow $230,000, which it uses to acquire a warehouse costing $280,000.
d.The city of PeaceDale condemns land that Harlow had acquired in 1978 for $22,000 and held as an investment. The city pays Harlow the $195,000 fair market value of the land. Harlow uses the proceeds to acquire a commercial office park for $350,000.
e.Harlow sells an automobile used by its president for business purposes for $10,000 to a local car dealership. The car originally cost $32,000, and its adjusted basis is $15,000. The company had an agreement to replace the automobile with a customized four-wheel-drive vehicle from a company that specializes in custom cars. However, the day the company sells the automobile, it is informed that the custom car company will not be able to deliver the vehicle for at least 10 weeks. Harlow terminates its contract with the custom car company and buys a new automobile from the local car dealership for $55,000.
85.Calculate Carmin s adjusted gross income on her 2012 tax return. Then do one (or both) of the following, according to your professor s instructions:
a.Include a brief explanation of how you determined each item that affected adjusted gross income and any items you excluded from gross income. Your solution to the problem should contain a list of each item included in gross income and its amount, with the explanations attached.
b.Write a letter to Carmin explaining how you determined each item that affected adjusted gross income and any items you excluded from gross income. You should include a list of each item included in gross income and its amount.
Aug 29, 2021 | Uncategorized
Problem 8-2A Part 1
| Required: |
| 1-a. |
Prepare the journal entries on October 1, 2012, to record the notes payable for Precision Castparts.(Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
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| Date |
General Journal |
Debit |
Credit |
| Oct. 1 |
(Click to select)Notes receivableInterest revenueAccounts receivableNotes payableAccounts payableInterest receivableCashInterest payable |
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(Click to select)Interest revenueNotes payableCashInterest payableInterest receivableAccounts payableAccounts receivableNotes receivable |
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| 1-b. |
Prepare the journal entries on October 1, 2012, to record the notes receivable for Midwest Bank. (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Oct. 1 |
(Click to select)Accounts receivableNotes receivableCashAccounts payableNotes payableInterest payableInterest receivableInterest revenue |
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(Click to select)Notes payableInterest receivableInterest payableAccounts receivableNotes receivableInterest revenueAccounts payableCash |
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ask your instructor a questioncheck my workeBook Linkreferences
2.value:
9.09 points
Problem 8-2A Part 2
| 2-a. |
Record the adjustments on December 31, 2012, for Precision Castparts. (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Dec. 31 |
(Click to select)Interest expenseCashInterest payableAccounts payableNotes payableInterest revenueAccounts receivableNotes receivable |
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(Click to select)Interest expenseNotes payableInterest payableAccounts payableAccounts receivableNotes receivableCashInterest revenue |
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| 2-b. |
Record the adjustments on December 31, 2012, for Midwest Bank. (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Dec. 31 |
(Click to select)CashNotes receivableInterest expenseInterest revenueAccounts receivableInterest receivableAccounts payableNotes payable |
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(Click to select)Interest receivableCashAccounts receivableInterest revenueNotes receivableAccounts payableNotes payableInterest expense |
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ask your instructor a questioncheck my workeBook Linkreferences
3.value:
9.09 points
Problem 8-2A Part 3
| 3-a. |
Prepare the journal entries on September 30, 2013, to record payment of the notes payable for Precision Castparts. (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
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| Date |
General Journal |
Debit |
Credit |
| Sep. 30 |
(Click to select)Accounts receivableInterest receivableBonds payableNotes payableInterest expenseInterest payableCashAccounts payable |
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(Click to select)Interest payableCashAccounts payableInterest expenseNotes payableAccounts receivableBonds payableInterest receivable |
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(Click to select)Interest receivableBonds payableAccounts payableNotes payableInterest expenseAccounts receivableCashInterest payable |
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(Click to select)Interest receivableNotes payableInterest expenseNotes receivableAccounts payableAccounts receivableInterest payableCash |
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| 3-b. |
Prepare the journal entries on September 30, 2013, to record payment of the notes receivable for Midwest Bank. (Enter your answers in dollars not in millions. Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Sep. 30 |
(Click to select)Notes payableInterest expenseInterest receivableInterest payableAccounts payableCashNotes receivableAccounts receivable |
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(Click to select)CashAccounts receivableInterest revenueInterest payableInterest receivableAccounts payableInterest expenseNotes receivable |
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(Click to select)Accounts payableAccounts receivableInterest revenueInterest expenseNotes receivableInterest receivableCashInterest payable |
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(Click to select)Accounts payableInterest expenseAccounts receivableNotes receivableInterest payableCashInterest receivableInterest revenue |
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Aug 29, 2021 | Uncategorized
Use the financial statements for Bernard Company from Problem 9-22 to calculate the following for 2012 and 2011.
a. Working capital
b. Current Ratio
c. Quick Ratio
d. Accounts receivable turnover (beginning receivables at 01/01/2011, was $47,000)
e. Average number of days to collect accounts receivable
f. Inventory turnover (beginning inventory at 01/01/2011, was $140,000)
g. Average number of days to sell inventory
h. Debt to asset ratio
i. Debt to equity ratio
j. Times interest earned
k. Plant assets to long-term debt
l. Net margin
m. Asset turnover
n. Return on investment (ROI)
o. Return on Equity (ROE)
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share, 2011, $11.75; 2012, $12.50)
s. Dividend yield on common stock
Bernard Company Balance Sheets
Assets 2012 2011
current Assets
Cash $16,000 $12,000
marketable Secr. 20,000 6,000
acct. rec. (net) 54,000 46,000
inventories 135,000 143,000
prepaid items 25,000 10,000
Total current Assets 250,000 217,000
investments 27,000 20,000
plant (net) 270,000 255,000
land 29,000 24,000
Total assets $576,000 $516,000
liabilities
current liabilities
notes payable $17,000 $6,000
accounts Payable 113,800 100,000
salarys 21,000 15,000
total liabilities 151,800 121,000
noncurrent liab.
bonds payable 100,000 100,000
other 32,000 27,000
total noncurrent 132,000 127,000
total liabilities 283,800 248,000
stockholders equity
preferred stock, par value 80,000 80,000
$10, 4% cumulative, non-
participating 8,000 shares authorized:
10,000 shares issued 80,000 80,000
retained earnings 132,200 108,000
total stockholders eq 292,200 268,000
total liabilities and
stockholders equity $576,000 $516,000
Bernards Company statements of income and retained earnings for the years ended December 31:
Revenues 2012 2011
sales (net) $230,000 $210,000
other revenues 8,000 5,000
total revenues $238,000 215,000
Expenses
cost of goods sold 120,000 103,000
selling, general, and 55,000 50,000
administrative expenses
interest expenses 8,000 7,200
income tax expense 23,000 22,000
total expenses 206,000 182,000
net earnings (net income) 32,000 32,800
retained earnings Jan 1 108,000 83,000
less preferred stock dividends 2,800 2,800
common stock dividends 5,000 5,000
Retained earnings, Dec 31 132,200 108,000
Aug 29, 2021 | Uncategorized
1#
Canton, Inc. has stock outstanding as follows: 25,000 shares of $2.00 cumulative,
nonparticipating preferred stock of $50 par, and 100,000 shares of $25 par common. During
its first five years of operations, the following amounts were distributed as dividends: first
year, none; second year, $20,000; third year, $90,000; fourth year, $180,000; fifth year,
$250,000.
1) Calculate the dividends per share on each class of stock for each of the five years.
2) Redo #1, assuming the preferred stock is noncumulative
2#
The following selected accounts appear in the ledger of Cyma Environmental Corporation on
January 1, 2003.
Preferred 4% Stock, $100 par (10,000 shares authorized,
8,000 shares issued) …………………………………………… $800,000
PIC-excess of par-PF ………………………………………………….80,000
Common Stock, $20 par (60,000 shares authorized,
30,000 shares issued) …………………………………………… 600,000
PIC-excess of par-CS ……………………………………………….. 900,000
Retained Earnings ………………………………………………… 1,277,000
Journalize the entries to record the following transactions.
a. Issued 20,000 shares of common stock at $32 receiving cash.
b. Sold 1,000 shares of preferred 4% stock at $120.
c. Purchased 5,000 shares of treasury common for $220,000
d. Sold 2,000 shares of treasury common for $84,000
e. Sold 1,500 shares of treasury common for $68,500
f. Issued 10,000 shares of common stock in exchange for Land costing $385,000
3#
Selected transactions completed by Zebra Company appear below. Journalize the
transactions.
Jan. 5 Split the common stock 4 for 1 and reduced the par from $100 to $25 per share.
After the split, there were 100,000 common shares outstanding.
Feb. 20 Purchased 10,000 shares of treasury stock for $300,000.
Mar. 12 Declared the semiannual dividends of $4 on 20,000 shares of preferred stock and
$.50 on the outstanding common stock.
April 12 Paid the cash dividends.
June 5 Sold 5,000 shares of treasury stock at $33, receiving cash.
Sept. 2 Declared semiannual dividends of $4 on preferred stock, and $.50 on common
stock (before the stock dividend). In addition, a 4% common stock dividend was
declared on the common stock outstanding, to be capitalized at fair market value
of the common stock, which is estimated at $40.
Oct. 5 Paid the cash dividends and issued the certificates for the common stock dividend.
Aug 29, 2021 | Uncategorized
1. The following information was made available from the
income statement and balance sheet of Lauren Company.
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders Equity 484 366
Total Liabilities and
Stockholders Equity $1,120 $788
1. Record the following transactions using the accounting equation.
Example: Assets = Liabilities + Equity XXXX(cash) XXXX(accounts payable)
A. Amanda invests $17,000 cash into her merchandising business.
B. She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
C. Additional purchases were supplies for $35,000 on account from various suppliers.
2. Journalize the following transactions and omit the explanations.
A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on April 8.
B. The corporation paid $60,000 for a two-year lease on April 19.
C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.
D. The corporation borrowed $25,000 by signing a note payable on April 22.
E. The corporation paid $1,250 on one of its accounts payable on April 26.
3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012.
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
4. Compute the missing information from this post-closing trial balance.
Cash $34,689
Accounts Receivable 9,467
Prepaid Rent 5,000
Prepaid Insurance (A)
Supplies 944
Accounts Payable $5,389
Wages Payable (B)
Common Stock 37,049
Retained Earnings 8,234
_______ _______
Total $52,356 $52,356
5. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
6. Given the following information, prepare a balance sheet for Isaiah s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
Aug 29, 2021 | Uncategorized
The current sections of Bellinham Inc.’s balance sheets at December 31, 2009 and 2010, are presented here.
Bellinham’s net income for 2010 was $153,000. Depreciation expense was $24,000.
2010 2009
Current assets
Cash $105,000 $99,000
Accounts receivable 110,000 89,000
Inventory 158,000 172,000
Prepaid expenses 27,000
22,000
Total current assets $400,000
$382,000
Current liabilities
Accrued expenses payable $15,000 $5,000
Accounts payable 85,000
92,000
Total current liabilities $100,000
$97,000
Instructions
Prepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2010, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Aug 29, 2021 | Uncategorized
The ABC Publishing Company s 2010 balance sheet and income statement are as follows (in millions of dollars): USE ATTACHED DATA** ABC and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the $6 preferred will be exchanged for one share of $2.40 preferred with a par value of $37.50 plus one 8% subordinated income debenture with a par value of $75. The $10.50 preferred issue will be retired with cash. a. Construct the projected balance sheet while assuming that reorganization takes place. Show the new preferred stock at its par value. b. Construct the projected income statement. What is the income available to common shareholders in the proposed recapitalization? c. Required earnings is defined as the amount that is just enough to meet fixed charges (debenture interest and/or preferred dividends). What are the required pre-tax earnings before and after the recapitalization? d. How is the debt ratio affected by the reorganization? If you were a holder of ABC s common stock, would you vote in favor of the reorganization?
Aug 29, 2021 | Uncategorized
1. Calculating Net Asset Value. Given the information below, calculate the net asset value for the Boston Equity mutual fund.
|
Total assets
|
$225,000,000
|
|
Total liabilities
|
5,000,000
|
|
Total number of shares
|
4,400,000
|
2. Calculating the Rate of Return of Investment Using Financial Leverage. Suppose Shaan invested just $10,000 of his own money and had a $90,000 mortgage with an interest rate of 8.5 percent. If after three years he sold the property for $120,000.
a. What is his gross profit?
b. What is his net profit/loss
c. What is the rate of return on investment
3. Shelly s assets include money in the checking and savings accounts, investments in stocks and mutual funds, personal property, such as furniture, appliances, an automobile, coin collection and jewelry. Shelly calculates that her total assets are $108,800. Her current unpaid bills, including an auto loan, credit card balances, and taxes total $16,300. Calculate Shelly s net worth.
4. Barry and his wife Mary have accumulated over $4 million during their 45 years of marriage. They have three children and five grandchildren.
A- How much money can Barry and Mary gift to their children in 2008 without any gift tax liability?
B- How much money can Barry and Mary gift to their grandchildren?
C- What is the total amount of estate removed from Barry and Mary s estate?
5. Dave bought a rental property for $200,000 cash. One year later, he sold it for $240,000.
A- What was the return on his $200,000 investment?
B- Suppose Dave invested only $20,000 of his own money and borrowed $180,000 (interest free from his rich father). What was his return on investment?
Aug 29, 2021 | Uncategorized
The Willow Run Outlet Mall has two Haggar Outlet Stores, one located on Peach Street and the other on Plum Street. The two stores are laid out differently, but both store managers claim their layout maximizes the amounts customers will purchase on impulse. A sample of 10 customers at the Peach Street store revealed they spent the following amounts more than planned: $17.58, $19.73, $12.61, $17.79, $16.22, $15.82, $15.40, $15.86, $11.82, and $15.85. A sample of 14 customers at the Plum Street store revealed they spent the following amounts more than they planned: $18.19, $20.22, $17.38, $17.96, $23.92, $15.87,$16.47, $15.96, $16.79, $16.74, $21.40, $20.57, $19.79, and $14.83. At the .01 significance level, is there a difference in the mean amounts purchased on impulse at the two stores?
Aug 29, 2021 | Uncategorized
PROBLEM 20-3A Crystal Company produces large quantities of a standardized product. The following information is available for its production activities for March: Raw materials Beginning inventory $ 26,000 Raw materials purchased (on credit) 255,000 Direct materials used (172,000) Indirect materials used (81,000) Ending inventory $27,000 Factory payroll Direct labor used $207,720 Indirect labor used 50,000 Total payroll cost (paid in cash) $257,720 Factory overhead incurred Indirect materials used $ 81,500 Indirect labor used 50,000 Other overhead costs 159,308 Total factory overhead incurred $290,808 Factory overhead applied (140% of direct labor cost) Total factory overhead applied $290,808 Additional information about units and costs of production activities follows. Units Beginning in process inventory 2,200 Started 30,000 Ending in process inventory 5,900 Status of ending goods in process inventory Materials – percent complete 50% Labor and overhead -percent complete 65% Costs Beginning in process inventory Direct materials $ 3,500 Direct labor 3,225 Factory overhead 4,515 $11,240 Direct materials added 172,000 Direct labor added 207,720 Overhead applied (140% of direct labor) 290,808 Total costs $681,768 Ending in process inventory $82,128 During March, 25,000 units of finished goods are sold for $85 cash each. Cost information regarding finished goods follows. Beginning finished goods inventory $155,000 Cost transferred in 599,640 Cost of goods sold (612,500) Ending finished goods inventory $142,140 Required 1. Prepare journal entries dated March 31 to record the following March activities: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) factory payroll costs, (e) direct labor costs used in production, (f) indirect labor costs, (g) other overhead costs credit Other accounts, (h) overhead applied, (i) goods transferred to finished goods, (j) sale of finished goods. 2. Prepare a process cost summary report for this company, showing costs charged to production, units cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation. Analysis Component 3. The company provides incentives to its department managers by paying monthly bonuses based on their success in controlling costs per equivalent unit of production. Assume that the production department underestimates the percentage of completion for units in ending inventory with the result that its equivalent units of production in ending inventory for March are understated. What impact does this error have on the March bonuses paid to the production managers? What impact, if any, does this error have on April bonuses? Book check: 2. Cost per equivalent unit: materials $6.00; labor $7.00; overhead $9.80.
PROBLEM 22-4A
Teller Co. sold 20,000 units of its only product and incurred a $70,000 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2010 s activities, the production manager notes that variable costs can be reduced 50% by installing a new machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $210,000. The maximum output capacity of the company is 40,000 units per year.
tELLER COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2009
Sales $1,000,000
Variable costs 800,000
Contribution margin $ 200,000
Fixed costs 270,000
Net loss $ (70,000)
Required
1. Compute the break-even point in dollar sales for year 2009.
2. Compute the break-even point in dollar sales for year 2010 assuming the machine is installed and there is no change in unit sales price.
3. Prepare a forecasted contribution margin income statement for 2010 that shows the expected results with the machine installed. Assume that the unit sales price and the number of units sold will not change and no income taxes.
4. Compute the sales level required in both dollars and units to earn $210,000 of after-tax income in 2010 with the machine installed and no change in unit sales price. The income tax rate is 30%. (Hint: Use procedures in Exhibits 22.18 and 22.20.)
5. Prepare a forecasted contribution margin income statement that shows the results at the sales level computed in part (4). Assume an income tax rate of 30%.
Exhibits 22.18: Income relations in CVP Analysis
Sales
– Variable costs
Contribution margin
– Fixed costs
Income (pretax)
Book checks:
3. Net income, $120,000
4. Required sales, $1,300,000 or 26,000 units
5. Net income: $210,000
Aug 29, 2021 | Uncategorized
At the end of each module, you will apply the module s concepts by completing comprehensive assignments from the textbook.
Complete problems P21-20A (p. 1121), P21-21A (p. 1122), and P21-22A (p.1123) in your textbook.
Present your analysis of the assigned problems in Excel format. Enter non-numerical responses in the same worksheet using textboxes.
Assignment 3: Excel Problems
At the end of each module, you will apply the module s concepts by completing comprehensive assignments from the textbook.
Complete problems P21-20A (p. 1121), P21-21A (p. 1122), and P21-22A (p.1123) in your textbook.
Present your analysis of the assigned problems in Excel format. Enter non-numerical responses in the same worksheet using textboxes.
Assignment 3 Grading Criteria
Maximum Points
P20-21A:
Prepared report for July 2011 which shows the performance of the Dayton store, the Ohio region and the company
10
Explained and justified if would investigate the Dayton store on the basis of the report
5
Explained if Doggy World should prepare a master budget and discussed the benefits of budgeting
5
P21-21A:
Prepared Clipboard Office Supply s budgeted income statement for May and June
10
P21-22A:
Prepared schedules of budgeted cash collections, budgeted cash payments for purchases and budgeted cash payments for operating expenses
10
Prepared a cash budget and identified the cash balance as of June 30, 2011
10
Total:
50
Aug 29, 2021 | Uncategorized
Problem A1: Bond Valuation A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond’s coupon rate is 7.4%. What is the fair value of this bond? p. 115. Problem A10: Dividend Discount Model Assume RHM is expected to pay a total cash dividend of $5.60 next year and its dividends are expected to grow at a rate of 6% per year forever. Assuming annual dividend payments, what is the current market value of a share of RHM stock if the required return on RHM common stock is 10%? p. 126. Problem A12: Required Return For A Preferred Stock James River $3.38 preferred is selling for $45.25. The preferred dividend is nongrowing. What is the required return on James River preferred stock? p. 127. Problem A14: Stock valuation Suppose Toyota has nonmaturing (perpetual) preferred stock outstanding that pays a $1.00 quarterly dividend and has a required return of 12% APR (3% per quarter). What is the stock worth? p. 128. Problem B16: Interest-rate risk Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose Phil El s bonds have identical coupon rates of 9.125% but that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday. p. 116 b. Suppose that the yield to maturity for all of these bonds changed instantaneously to 7%. What is the fair price of each bond now? p.116. c. Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond? p.116. d. Based on the fair prices at the various yields to maturity, is interest-rate risk the same, higher, or lower for longer- versus shorter-maturity bonds? Problem B18: Default Risk You buy a very risky bond that promises a 9.5% coupon and return of the $1,000 principal in 10 years. You pay only $500 for the bond. Problem B20: Constant Growth Model Medtrans is a profitable firm that is not paying a dividend on its common stock. James Weber, an analyst for A. G. Edwards, believes that Medtrans will begin paying a $1.00 per share dividend in two years and that the dividend will increase 6% annually thereafter. Bret Kimes, one of James colleagues at the same firm, is less optimistic. Bret thinks that Medtrans will begin paying a dividend in four years, that the dividend will be $1.00, and that it will grow at 4% annually. James and Bret agree that the required return for Medtrans is 13%. p.125,126,128. Problem C1: Bond Valuation Between Coupon Payments Gehr s Gears, Inc., has bonds outstanding that mature in 14 years and 3 months from today. The bonds have an annual coupon rate of 15% and pay interest every six months. The bonds are currently selling for $1,100. a. Assuming a coupon payment was made yesterday and there are 29 more coupon payments remaining to be paid in the life of the bond, what is the YTM on this bond? What is the APY for this bond under these assumptions? b. Assuming a coupon payment was made yesterday and there are 28 more coupon payments remaining to be paid in the life of the bond, what is the YTM on this bond? What is the APY for this bond under these assumptions? c. See the end-of-chapter minicase about partial coupon periods. Assuming a coupon payment was made, as it actually was, three months ago and there are 29 more coupon payments remaining to be paid in the life of the bond, what is the YTM on this bond? What is the APY for this bond under these assumptions?
Aug 29, 2021 | Uncategorized
Consider the following scenario:
Andre has asked you to evaluate his business, Andre s Hair Styling. Andre has
five barbers working for him. (Andre is not one of them.) Each barber is paid
$9.90 per hour and works a 40-hour week and a 50-week year, regardless of the
number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair
shampoo used on all clients is .40 per client. Assume that the only service
performed is the giving of haircuts (including shampoo), the unit price of which
is $12. Andre has asked you to find the following information.
- Find the contribution margin per haircut. Assume that the barbers’
compensation is a fixed cost. Show calculations to support your answer.
- Determine the annual break-even point, in number of haircuts. Support your
answer with an appropriate explanation. Show calculations to support your
answer.
- What will be the operating income if 20,000 haircuts are performed? Show
calculations to support your answer.
- Suppose Andre revises the compensation method. The barbers will receive $4
per hour plus $6 for each haircut. What is the new contribution margin per
haircut? What is the annual break-even point (in number of haircuts)? Show
calculations to support your answer.
|
Grading Criteria
|
Percentage
|
|
Find the contribution margin per haircut.
|
25%
|
|
Determine the annual break-even point, in number of haircuts.
|
25%
|
|
What will be the operating income if 20,000 haircuts are performed?
|
25%
|
|
Suppose Andre revises the compensation method. The barbers will receive $4
per hour plus $6 for each haircut. What is the new contribution margin per
haircut? What is the annual break-even point (in number of haircuts)?
|
Aug 29, 2021 | Uncategorized
The ledger of Custer Company has the following work in process account.
Work in Process Painting
|
Work in Process Painting
|
|
5/1
|
Balance
|
3,830
|
5/31
|
Transferred out
|
?
|
|
5/31
|
Materials
|
5,620
|
|
|
|
|
5/31
|
Labor
|
3,650
|
|
|
|
|
5/31
|
Overhead
|
1,350
|
|
|
|
|
5/31
|
Balance
|
?
|
|
|
|
Production records show that there were 410 units in the beginning inventory, 30% complete, 1,490 units started, and 1,470 units transferred out. The beginning work in process had materials cost of $2,140 and conversion costs of $1,690. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.
How many units are in process at May 31?
What is the unit materials cost for May?
The unit conversion cost for May
Aug 29, 2021 | Uncategorized
Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.
Current Product Expansion Product (estimate) Selling Price $14.50 ? Units produced and expected to be sold 80,000 5,000 Machine Hours 40,000 5,000 Direct Materials $1.30 per unit $5.60 per unit Direct labor dollars needed per product $2.80 per unit $4.00 per unit Variable Factory Overhead $1.00 per Machine Hour $1.00 per Machine Hour Variable Selling Expense $0.20 per unit $0.20 per unit Total Fixed Costs: Fixed Factory Overhead $ 198,000 Fixed Selling expenses $ 191,250
a. What is the product cost for the expansion product?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product?
d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?
Aug 29, 2021 | Uncategorized
Goss Inc. has the capability to manufacture five products, and has 1,500 labor hours available each week for production. Each unit manufactured requires a
stamp of approval by an inspector, who works 40 hours per week and can inspect a unit in about a minute. Per-unit information about the five products is as follows:
Selling Price DM Cost Production Time Demand
Product A Selling Price$50 DM Cost$10 Production Time 1 hour Demand 350
Product B Selling Price$35 DM Cost$15 Production Time 1/2 hour Demand 350
Product C Selling Price$70 DM Cost $20 Production Time 2 hours Demand 500
Product D Selling Price $100 DM Cost $30 Production Time 3 1/2 hours Demand 250
Product E Selling Price$20 DM Cost $5 Production Time 1/4 hour Demand 300
Currently, Goss only produces its two highest throughput margin products, manufacturing 312 units of Product C and 250 units of Product D each week. Goss cannot change its production capacity, but it could hire an additional inspector if needed for $500 per week.
Determine whether Goss is using its production capacity wisely, and if that capacity could or should be increased. Determine the optimum product mix given current production constraints, and given production constraints if changes are made.
USE EXCEL TO ANSWER THIS. SHOW YOUR WORK BY INSERTING THE FORMULAS IN THE EXCEL WORKSHEET TO PRODUCE THE ANSWER.
Aug 29, 2021 | Uncategorized
COMPREHENSIVE BUDGETING PROBLEM
Cindy Smith has been a successful marketing executive for various consumer products companies. Having recently cashed out her stock options, she is planning to quit her current position and realize her life-long dream of owning her own boutique, to be called The White Rabbit. She has done some market research, and is exploring arrangements with landlords, suppliers, etc. Her target date for opening is July 1, 2014, and she would operate on a June 30 fiscal year.
Even though she has personal funds available to invest, it will still be necessary to obtain a bank loan for initial financing, and she has had discussions with bank loan officers. Total financing needs are estimated to be $110,000. First National Bank has indicated that they would be willing to make a loan equal to 50% of the long-term financing of the company, with Cindy s owner s equity in the corporation (contributed capital) forming the other 50%. The note would be secured by the inventory and Cindy s personal guarantee. The loan will be taken out on June 1st. The company would be required to maintain a minimum cash balance of $5,000 in an account at First National Bank. No principal payments would be required for the first three years, but interest would be payable at .6% (six-tenths percent) per month. In order to qualify for the loan, Cindy must provide the bank with monthly cash budgets and forecast annual financial statements for the first two fiscal years of operation.
Cindy will operate the business as a sole proprietorship, which does not constitute a separate taxable entity. Therefore, income taxes can be disregarded.
Cindy expects to rent a storefront in a strip mall. Rent would be $5,700 per month, payable in advance the first day of each month. In addition, a $5,000 deposit would be required upon signing of the lease on June 1, 2014. Fixtures costing $24,000 would be installed in June, 2014 and paid for immediately. They would be depreciated on the straight-line method over 72 months, starting July 1, with no salvage value.
Cindy expects to keep two months worth of sales in inventory. In May, she will order the merchandise expected to be sold in July and August. This will be received and stocked in June. Then expected September sales will be ordered in June to be received and stocked in July, etc. According to her suppliers normal practices, purchases are paid for 50% in the month received, and 50% in the following month.
Other information about operating expenses:
Insurance:Cost is $3,800 per year, payable in advance (June).
Telephone:$200 deposit required in June, 2014. Monthly phone bill is expected
to be $290.
Payroll: Payroll costs are expected to be $5,600 per month, plus 10% in payroll
taxes. It is assumed that all payroll costs are paid in the month incurred.
Because of seasonality of the business, payroll costs are expected to be
40% higher than normal in November and December, and 20% higher in
January. One-time payroll costs of $4,000 for stocking and training will
be incurred in June, but not paid until July. These are to be treated as a
July expense.
Advertising:Advertising expense is expected to be $500/mo., with extra
promotional expenses of $500 in each of November, December, and
June. Cindy expects to spend $5,000 in June of 2014 promoting her
Grand Opening. These promotion costs will be paid in July, and are to
be treated as July expense.
Miscellaneous:Miscellaneous expenses are expected to be $250/month, starting
in July.
Sales are expected to be made as follows: 10% cash, 30% check, 60% credit cards. Credit card sales, net of an average fee of 2%, are received in the month of sale. Ten percent of the checks received are expected to be returned NSF. Of these, half will never be collected, and the other half will be collected on average in the third month following the sale (i.e., October for July sales). Fees charged to delinquent customers are expected to equal the costs of collection.
Gross margin is expected to be 50%, except that in January and June, it will be 40% because of markdowns.
Cindy expects the following monthly sales, in thousands of dollars:
2014 2015 2016
January 60 65
February 22 23
March 28 30
April 43 47
May 30 32
June 45 50
July 36 30 32
August 17 21 22
September 30 33 35
October 23 25 26
November 64 70 80
December 59 65 70
REQUIRED: Prepare the following (rounding all amounts to the nearest dollar):
1. Monthly cash budgets for the first two fiscal years of operation. Note that for the first year, it will be a 13-month budget, including June of 2014.
2. Forecast income statements for The White Rabbit, Inc. for the first two fiscal
years of operation. Expenses incurred in June, 2014 are to be added to
July s expenses for income statement purposes, rather than preparing a
separate income statement for June.
3. Forecast balance sheets as of June 30, 2015 and 2016.
Aug 29, 2021 | Uncategorized
Profit Margin
|
|
Year Ending December 2012
|
Year Ending December 2011
|
Year Ending December 2010
|
|
Revenues
|
40,000
|
35,000
|
33,000
|
|
Operating Expenses
|
|
|
|
|
Salaries
|
15,000
|
10,000
|
9,000
|
|
Maintenance and Repairs
|
6,000
|
9,000
|
10,000
|
|
Rental Expense
|
2,500
|
2,500
|
2,500
|
|
Depreciation
|
2,000
|
2,000
|
2,000
|
|
Fuel
|
4,000
|
3,500
|
2,500
|
|
Total Operating Expenses
|
29,500
|
27,000
|
26,000
|
|
Operating Income
|
10,500
|
8,000
|
7,000
|
|
Sales and Administrative Expenses
|
6,000
|
4,000
|
3,000
|
|
Interest Expense
|
2,500
|
2,000
|
1,000
|
|
Net Income
|
2,000
|
2,000
|
3,000
|
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.
Guided Response:
Let at least two of your peers posts know what you changes you would recommend to improve the net margin of the company.
Aug 29, 2021 | Uncategorized
Progressive Company produces a product in a process-costing system involving several departments. The company uses the weighted-average method of product costing. The first department’s data for the month of April follow:
Units in beginning work-in-process inventory 25,000
Units started during April1 210,000
Units completed during April 180,000
Units in ending work-in-process inventory 55,000
Direct materials added in current month $188,000
Conversion costs added in current month $124,000
Direct materials beginning work-in-process inventory $25,750
Conversion costs beginning work-in-process inventory $3,225
Stage of Completion:
Materials Conversion Costs
Beginning work-in-process inventory 100% 30%
Ending work-in-process inventory 100% 65%
Required:
A) Compute equivalent units for materials and conversion costs.
B) Compute the cost per unit for materials and conversion costs.
C) Compute the cost of the units transferred.
D) Compute the cost of the ending work-in-process inventory.
Aug 29, 2021 | Uncategorized
- Management believes it can sell a new product for $250. The fixed costs of production are estimated to be $50,000 and the variable costs are $215 a unit for the first scale of operations. The fixed costs of production are estimated to be at $150,000 and variable costs are $170 a unit for the second scale of operations.
- Prepare a table similar to the one below and complete with the given levels of output and the relationships between quantity and fixed cost, quantity and variable costs, and quantity and total costs.
First Scale of operations
|
Quantity
|
Total Revenue
|
Variable Costs
|
Fixed Costs
|
Total Costs
|
Profits
(Loss)
|
|
0
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
Second scale of operations
|
Quantity
|
Total Revenue
|
Variable Costs
|
Fixed Costs
|
Total Costs
|
Profits
(Loss)
|
|
0
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
1,500
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
|
2,500
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
-
- What is the exact break-even number of units sold for each scale of operations?
- Assume that of the fixed costs in each scale of operations is non-cash depreciation. What is the cash flow generated by each scale of operations if 1,000 of units are sold?
- You have been asked to advise the management of this company on which scale of production to use. Let us assume that the management is uncertain on how many units they can sell, but estimate it will be between 500 and 3,000 units during the first year and progressively more after that. Please advise management what you learned from the breakeven analysis and the tables that you devised that should help them make up their minds. Give them pros and cons for both alternatives.
- The management of a firm wants to introduce a new product. The product will sell for $15.00 a unit and can be produced by either of two scales of operation. Following are the total costs:
First scale of operation
TC = $20,000 + $10.00Q
Second scale of operation
TC = $40,000 + $5.00Q
Following are the anticipated levels of sales:
|
Year
|
Unit Sales
|
|
1
|
3,000
|
|
2
|
3,500
|
|
3
|
4,000
|
|
4
|
5,000
|
What can management expect for profits or losses in years 1 and 2 if it selects the scale of operations with lower fixed costs? On what grounds can management justify selecting this scale of operation? If sales reach 5,000 a year, which is the correct scale of operation?
- You have been asked to rank the payback periods of three investments for a business. They each cost $35,000.
|
Year
|
A
|
B
|
C
|
|
1
|
$10,000
|
$25,000
|
$12,500
|
|
2
|
$10,000
|
$10,000
|
$8,500
|
|
3
|
$10,000
|
$4,000
|
$6,000
|
|
4
|
$10,000
|
$500
|
$8,000
|
|
5
|
$10,000
|
0
|
$5,000
|
Rank the investments based on payback period. Would you rank them as investments in that order? Why or why not? See the table above for the cash flows of each.
- Given the following information answer the following questions:
TR = $3Q
TC = $1,500 + $2Q
- What is the break even level of output?
- If the firm sells 1,300 units, what are the firm’s earnings or losses?
- If sales rise to 2,000 units, what are the firms earnings or losses?
- What happens to the breakeven level of output units if the total cost equation were: TC = $2,000 + $1.80Q
Aug 29, 2021 | Uncategorized
Question 1 of 20 5.0 Points
Alpha Corporation’s has 1,500 shares of $40 par, 7% cumulative preferred stock and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders will receive:
A. $0.
B. $1,600.
C. $220.
D. $5,800.
Question 2 of 20 5.0 Points
Washington Corporation issued 4,000 shares of its $20 par value common stock for $23 per share. The entry to record the issuance would include a:
A. debit to Paid-in Capital in Excess of Par Value for $12,000.
B. credit to Common Stock for $12,000.
C. debit to Cash for $80,000.
D. credit to Common Stock for $80,000.
Question 3 of 20 5.0 Points
No entry was recorded for the exchange of stock for land. This error would cause:
A. the period end stockholders’ equity to be overstated.
B. the period end stockholders’ equity to be understated.
C. the period’s net income to be understated.
D. Both A and C are correct.
Question 4 of 20 5.0 Points
Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to:
A. Equipment for $12,500.
B. Credit to Common Stock for $13,500.
C. Credit to Paid-In Capital in Excess of Par-Common for $1,000.
D. Debit to Common Stock for $12,500.
Question 5 of 20 5.0 Points
Articles of incorporation contain all of the following except:
A. the location of the business.
B. the life expectancy (usually forever) of the business.
C. the names of the directors.
D. the nature of the business.
Question 6 of 20 5.0 Points
The articles of incorporation are:
A. submitted by the incorporators to the Governor of the State for approval.
B. submitted by the incorporators to the IRS for approval.
C. submitted by the incorporators to the Office of the Secretary of State for approval.
D. submitted by the incorporators to Securities and Exchange Commission for approval.
Question 7 of 20 5.0 Points
Which of the following is a characteristic of a corporation?
A. A corporation cannot own property in its name.
B. When stockholders sell their shares, the corporation is dissolved.
C. Cash dividends to the stockholders are non-taxable.
D. The stockholders have limited liability.
Question 8 of 20 5.0 Points
Dividends in arrears occur when the company does not pay dividends to:
A. cumulative preferred stockholders.
B. non-participating common stockholders.
C. participating preferred stockholders.
D. non-cumulative preferred stockholders.
Question 9 of 20 5.0 Points
Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and Common Stock Subscribed of $3,200 on its balance sheet. All the following are true except:
A. the original stock subscribed totaled $3,200.
B. the remaining amount to be collected from subscribers before the shares will be issued is $1,500.
C. Monarch previously issued $1,700 of the subscribed stock.
D. the amount previously collected on the stock subscriptions is $1,700.
Question 10 of 20 5.0 Points
Revenue earned by the business was recorded as additional paid-in capital. This error would cause:
A. the period end assets to be overstated.
B. the period’s net income to be understated.
C. the period’s net income to be overstated.
D. None of these are correct.
Question 11 of 20 5.0 Points
The Logan Company issued 140 shares of its $12 par value stock for $14 per
share. The entry to record the receipt of cash and issuance of the stock would include a:
A. credit to Common Stock for $1,960.
B. debit to Cash of $1,680; credit to Common Stock for $1,680.
C. debit to Cash for $1,960.
D. debit to Discount on Common Stock for $280
Question 12 of 20 5.0 Points
Officers of the corporation are:
A. appointed by the board of directors.
B. stockholders of the corporation.
C. appointed by the stockholders.
D. None of these answers are correct.
Question 13 of 20 5.0 Points
The Collins Corporation Stockholders’ Equity section includes the following:
Preferred Stock $ 12,000
Common Stock 15,000
Paid-in Capital in Excess of Par-Preferred 2,700
Paid-in Capital in Excess of Par-Common 4,100
Retained Earnings 8,200
What was the total amount preferred stock was sold for?
A. $16,100
B. $20,200
C. $14,700
D. $12,000
Question 14 of 20 5.0 Points
The major parts of the Stockholders’ Equity section of the balance sheet are:
A. Stock, Paid-in Capital, and Retained Earnings.
B. Paid-in Capital and Retained Earnings.
C. Stock and Retained Earnings.
D. Authorized Stock and Preferred Stock.
Question 15 of 20 5.0 Points
Which of the following is not a characteristic of a corporation?
A. No mutual agency
B. Limited liability
C. Unlimited life
D. Ease of formation
Question 16 of 20 5.0 Points
If preferred stock is cumulative, the preferred stockholders:
A. have a right to certain dividends every year.
B. will always receive a yearly dividend.
C. may receive a bonus.
D. All of these answers are correct.
Question 17 of 20 5.0 Points
Authorized capital stock is:
A. shares issued to the corporation’s officers.
B. shares that pay dividends.
C. shares sold and in stockholder possession.
D. shares listed in the charter.
Question 18 of 20 5.0 Points
Rhubarb Corporation’s outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received:
A. $0.
B. $500.
C. $1,100.
D. $2,500.
Question 19 of 20 5.0 Points
The TM Stockholders’ Equity section includes the following:
Preferred Stock $ 3,800
Common Stock 7,700
Paid-in Capital in Excess of Par-Preferred 400
Paid-in Capital in Excess of Par-Common 2,250
Retained Earnings 6,000
What was the total amount common stock was sold for?
A. $11,500
B. $7,700
C. $9,950
D. $13,700
Question 20 of 20 5.0 Points
Characteristics of a corporation include:
A. stockholders having limited liability.
B. choosing a board of directors.
C. stockholders having unlimited liability.
D. direct management by the stockholders.
Aug 29, 2021 | Uncategorized
1. Construct a pro forma income statement for the first year and second year for the following assumptions:
Units of Sales in Year 1: 110,000
Price per Unit: $11
Variable cost per unit: 30%
Fixed Costs: $125,000
Income taxes: 15%
Interest Expense: $200,000
In year 2, Price per unit increases to $11.50, and unit of sales increases by 5%, all other assumptions remain the same.
2. Calculate a table of interest rates for 5 years based on the following information:
The pure interest rate is 2%
Inflation expectations for year 1 = 3%, year 2 =4%, years 3-5 =5%
The default risk is .1% for year one and increases by .1% over each year
Liquidity premium is 0 for year 1 and increases by .2% each year
Maturity risk premium is 0 for years 1 and 2 and .3% for years 3-5
3. Calculate the sustainable growth based on the following information:
* earning after taxes = $35,000
* equity = $100,000
* d=22.4%
4. Future value of single sum problem
You put $2,000 in an investment account today which will earn 8% over the next 14 years, what is the future value?
5. Future value of annuity problem
You deposit $10,000 into a retirement account at the end of the next 10 years earning 9% interest, what is the future value of your retirement after 10 years?
Aug 29, 2021 | Uncategorized
Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2008, the company reported the following operating results while operating at 90% of plant capacity and producing 112,500 units.
Amount
Sales $4,500,000
Cost of goods sold 3,600,000
Selling and administrative expenses 450,000
Net income $ 450,000
Fixed costs for the period were: cost of goods sold $1,080,000, and selling and administrative expenses $225,000.
In July, normally a slack manufacturing month, Pro Sports receives a special order for 10,000 basketballs at $28 each from the Italian Basketball Association (IBA). Acceptance of the order would increase variable selling and administrative expenses $0.50 per unit because of shipping costs but would not increase fixed costs and expenses.
Instructions:
(a) Prepare an incremental analysis for the special order.
(b) Should Pro Sports Inc. accept the special order? Explain your answer.
(c) What is the minimum selling price on the special order to produce net income of $4.10 per ball?
(d) What nonfinancial factors should management consider in making its decision?
Make incremental analysis related to make or buy, consider opportunity cost, and identify nonfinancial factors.
Aug 29, 2021 | Uncategorized
Problem 1:JOURNAL ENTRIES
The ledger accounts given below, with an identification number for each, are used by Wynne Company.
Instructions: Indicate the appropriate entries for the month of June by placing the appropriate identification number(s) in the debit and credit columns provided.
Item 0 is given as an example. Write “none” if no entry is appropriate.
1. Cash
2. Accounts Receivable
3. Supplies
4. Prepaid Salaries
5. Prepaid Advertising
6. Equipment
7. Salaries Payable
8. Accounts Payable
9. Unearned Service Revenue
10. Notes Payable
11. H. Wynne, Capital
12. H. Wynne, Drawing
13. Service Revenue
14. Equipment Expense
15. Advertising Expense
16. Supplies Expense
17. Rent Expense
18. Salaries Expense
Entry No—————-Entry Info—————-Account(s) Debited——– Accounts Credited
0. June 1 H. Wynne invested $25,000 in the business. 1 11
1. June 4 Paid a supplier $2,000 cash on account.
2. June 5 Equipment was purchased at a cost of $5,000;
a three-month, 12% note payable was signed
for this amount.
3. June 8 Received $7,000 from customers for services rendered during the week.
4. June 10 Purchased supplies for $3,500 cash. The supplies are expected to last through August.
5. June 14 Paid $400 cash to the Daily News for advertisements run this past week.
6. June 16 Billed customers $6,000 for services rendered.
7. June 19 Paid $2,000 in cash to Santo Company for June rent.
8. June 25 Additional supplies were purchased on account at a cost of $1,000 from Supply Company. These supplies will be used during July.
9. June 26 Paid the Daily News $400 for an advertisement that will run the first week in July.
10. June 27 Received $9,000 from customers for services to be rendered early in July.
11. June 28 Received $3,000 on account.
12. June 30 Wynne withdrew $900 for personal use.
13. June 30 B. Kiner, H. Wynne s administrative assistant, was paid $2,000 cash for her salary.
———————————————————————–
Problem 2: Adjusting Entries
The ledger accounts given below, with an identification number for each, are used by Silas Company.
Instructions: Prepare appropriate adjusting entries for the year ended December 31, 2010, by replacing the appropriate identification number(s) in the debit and
credit columns provided and the dollar amount in the adjoining column. Item 0 is given as an example.
1. Notes receivable
2. Accounts Receivable
3. Interest receivable
4. Supplies
5. Prepaid Insurance
6. Equipment
7. Salaries Payable
8. Accounts Payable
9. Unearned Service Revenue
7. Accumulated Depreciation Equipment
8. Salaries Payable
9. Interest Payable
10. Unearned Service Revenue
11. Notes Payable
12. Interest Revenue
13. Service Revenue
14. Depreciation Expense Equipment
15. Salaries Expense
16. Interest Expense
17. Supplies Expense
18. Insurance Expense
Entry Information —Accounts Debited— Accounts Credited —Accounts Debited
0. Interest of $500 is accrued on a note 3 12 $500
receivable at December 31, 2010.
1. Silas has three employees who each earn $160 $
per day. At December 31, four days’ salaries
have been earned but not paid.
2. A customer paid Silas $18,000 on December 1, $
2010 for services to be rendered from December 1
through January 31, 2011. The receipt was credited
to a liability account.
3. Silas purchased equipment costing $48,000 on $
January 1, 2009. Monthly depreciation is $600.
4. Silas provided services to a customer in 2010 at a $
fee of $700. This fee has not yet been received or billed.
5. Silas started the year with no supplies on hand. $
They purchased $6,000 in supplies during the year
and have $2,000 on hand at December 31. Supplies
were debited to an asset account when purchased.
6. Silas paid $12,000 for a three-year insurance policy $
on July 1, 2010, debiting an asset account at that time.
7. Silas borrowed $20,000 by signing a three-month, $
9% interest, note payable on November 1, 2010.
8. Silas purchased short-term investments on November 1, $
2010. Interest of $300 per month has been earned but
not received prior to December 31.
Aug 29, 2021 | Uncategorized
Problem #1: Prepare an income statement, an owner’s equity statement, and a balance sheet for the accupuncture practice of Bi Loi, from the items listed below for the month of September.
Bi Loi, Capital, September 1 $42,000
Accounts payable 7,000
Equipment 30,000
Service revenue 25,000
Bi Loi, Drawings 6,000
Dental supplies expense 3,500
Cash 6,000
Utilities expense 700
Dental supplies 2,800
Salaries expense 9,000
Accounts receivable 14,000
Rent expense 2,000
Problem #2: Journalize the following business transactions in general journal form. Use the journal provided on the answer sheet. Identify each transaction by number. You may omit explanations of the transactions.
1. The owner, Athena Lu, invests $35,000 in cash in starting a real estate office operating as a sole proprietorship.
2. Purchased $400 of office supplies on credit.
3. Purchased office equipment for $8,000, paying $2,000 in cash and signed a 30-day, $6,000, note payable.
4. Real estate commissions billed to clients amount to $4,000.
5. Paid $700 in cash for the current month’s rent.
6. Paid $200 cash on account for office supplies purchased in transaction 2.
7. Received a bill for $600 for advertising for the current month.
8. Paid $2,200 cash for office salaries.
9. Lu withdrew $1,200 from the business for living expenses.
10. Received a check for $3,000 from a client in payment on account for commissions billed in transaction 4.
Aug 29, 2021 | Uncategorized
Problem 1 – Aunt Ethel’s Fancy Cookie Company manufactures and sells three flavors of cookies: macaroon, sugar, and buttercream. The batch size for the cookies is limited to 1,000 cookies based on the size of the ovens and cookie molds owned by the company. Based on budgetary projections, the information listed below is available:
Buttercream Macaroon Sugar
Projected sales in units 500,000 800,000 600,000
PER UNIT data:
Selling price $0.80 $0.75 $0.60
Direct materials $0.20 $0.15 $0.14
Direct labor $0.04 $0.02 $0.02
Hours per 1,000-unit batch:
Direct labor hours 2 1 1
Oven hours 1 1 1
Packaging hours 0.5 0.5 0.5
Total overhead costs and activity levels for the year are estimated as follows:
Activity Overhead costs Activity levels
Direct labor 2,400 hours
Oven $120,000 1,900 hours
Packaging $150,000 950 hours
Total $270,000
Questions:
- Determine the activity-cost-driver rate for packaging costs (three points).
- Using the ABC system, for the sugar cookie, compute the estimated overhead costs per 1,000 cookies (three points).
- Using the ABC system, for the sugar cookie, compute the estimated operating profit per 1,000 cookies (three points).
- Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per 1,000 cookies (three points).
- Using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per 1,000 cookies (3 points).
- Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why (three points).
Aug 29, 2021 | Uncategorized
Problem 1. The following information applies to Barnhart Company:
Assets
Cash 5,000
Accounts Receivable 12000
Inventory 15,000
Plant and equipment, net of depreciation 20,000
Land 18,000
Total Assets 70,000
Liabilities & Stockholders’ Equity
Accounts payable 4,000
Salaries payable 9,000
Bonds payable (due 2020) 11,000
Capital stock, 20 no par 22,000
Retained earnings 24,000
Total Liabilities & Stockholders’ Equity 70,000
Additional information:
Net Credit Sales = $220,000
Beginning Accounts Receivable = $10,000
Required:
1) Compute Barnhart’s:
a) Quick ratio
b) Current ratio
c) Working capital
d) Accounts receivable turnover
e) Average days to collect receivables
Problem 2. The Jiffy Manufacturing Company started operations in 2012 when it acquired $100,000 from its owners. During the year, the company incurred the following costs:
Raw materials used $ 40,000
Labor 50,000
Overhead 20,000
Selling & Administrative costs 30,000
The company placed 12,000 units into production, completed 10,000 units, and sold 8,000 units. The average selling price was $17 per unit.
Required:
1) Prepare a schedule of cost of goods manufactured and sold for the year ended December 31, 2012.
2) Prepare an income statement for the year ended December 31, 2012.
Aug 29, 2021 | Uncategorized
Problem 11.20- Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $11.80 million. This investment will consist of $2.90 million for land and $8.90 million for trucks and other equipment. The land, all trucks, and all other equipment is expected to be sold at the end of 10 years at a price of $5.00 million, $2.12 million above book value. The farm is expected to produce revenue of $2.05 million each year, and annual cash flow from operations equals $1.88 million. The marginal tax rate is 35 percent, and the appropriate discount rate is 10 percent. Calculate the NPV of this investment. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
Problem 11.24- Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain s opportunity cost of capital is 10.2 percent, and the costs and values of investments made at different times in the future are as follows:
Year Cost Value of Future Savings
(at time of purchase)
0 $5,000 $7,000
1 4,450 7,000
2 3,900 7,000
3 3,350 7,000
4 2,800 7,000
5 2,250 7,000
Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.)
Problem 12.24- Chip s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 90 percent as high if the price is raised 13 percent. Chip s variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm s FCF for the year? (Round answers to nearest whole dollar, e.g. 5,275.)
At $20 per bottle the Chip s FCF is? And at the new price Chip s FCF is?
Problem 13.11- nCapital Co. has a capital structure, based on current market values, that consists of 29 percent debt, 14 percent preferred stock, and 57 percent common stock. If the returns required by investors are 10 percent, 12 percent, and 18 percent for the debt, preferred stock, and common stock, respectively, what is Capital s after-tax WACC? Assume that the firm s marginal tax rate is 40 percent. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Aug 29, 2021 | Uncategorized
Problem 13-3A Coil Welding Corporation sells and services pipe welding equipment in California. The following selected accounts appear in the ledger of Coil Welding Corporation on February 1, 2010, the beginning of the current fiscal year:
Preferred 2% Stock, $25 par (50,000 shares authorized,
40,000 shares issued) . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000
Paid-In Capital in Excess of Par Preferred Stock . . . . . . . 240,000
Common Stock, $5 par (1,000,000 shares authorized,
750,000 shares issued) . . . . . . . . . . . . . . . . . . . . . . . . . 3,750,000
Paid-In Capital in Excess of Par Common Stock . . . . . . . 6,000,000
Retained Earnings . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 36,785,000
During the year, the corporation completed a number of transactions affecting the stockholders equity. They are summarized as follows:
a. Purchased 60,000 shares of treasury common for $540,000.
b. Sold 42,000 shares of treasury common for $462,000.
c. Issued 7,500 shares of preferred 2% stock at $38.
d. Issued 120,000 shares of common stock at $15, receiving cash.
e. Sold 13,000 shares of treasury common for $110,500.
f. Declared cash dividends of $0.50 per share on preferred stock and $0.42 per share on common stock.
g. Paid the cash dividends.
Instructions:
Journalize the entries to record the transactions. Identify each entry by letter.
Aug 29, 2021 | Uncategorized
Problem 13-5A Porto Bay Corporation manufactures and distributes leisure clothing. Selected transactions completed by Porto Bay during the current fiscal year are as follows:
Jan. 10. Split the common stock 4 for 1 and reduced the par from $100 to $25 per share. After the split, there were 500,000 common shares outstanding.
Mar. 1. Declared semiannual dividends of $1.20 on 80,000 shares of preferred stock and $0.24 on the 500,000 shares of $25 par common stock to stockholders of record on March 31, payable on April 30.
Apr. 30. Paid the cash dividends.
July 9. Purchased 75,000 shares of the corporation s own common stock at $26, recording the stock at cost.
Aug. 29. Sold 40,000 shares of treasury stock at $32, receiving cash.
Sept. 1. Declared semiannual dividends of $1.20 on the preferred stock and $0.15 on the common stock (before the stock dividend). In addition, a 1% common stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimated at $30.
Oct. 31. Paid the cash dividends and issued the certificates for the common stock dividend.
Instructions:
Journalize the transactions.
Aug 29, 2021 | Uncategorized
The following information was obtained from the records of Shae, Inc.:
Merchandise inventory 264,000
Notes payable (long term) 300,000
Sales 900,000
Buildings and equipment 504,000
Selling, general, and administrative expenses 72,000
Accounts receivable 120,000
Common stock (42,000 shares) 210,000
Income tax expense 84,000
Cash 192,000
Retained earnings, 1/1/10 129,000
Accrued liabilities 18,000
Cost of goods sold 540,000
Accumulated depreciation 216,000
Interest expense 48,000
Accounts payable 90,000
Dividends declared and paid during 2010 39,000
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2010, and that all income statement items reflect activities that occurred during the year ended December 31, 2010. There were no changes in paid-in-capital during the year.
Instructions:
a. Prepare an income statement and statement of changes in owners’ equity for the year ended December 31, 2010, and a balance sheet at December 31, 2010, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e below. Provide brief explanations for each of your
answers and state any assumptions you believe are necessary to ensure that your answers are correct.
b. What is the company’s average income tax rate?
c. What interest rate is charged on long-term debt?
d. What is the par value per share of common stock?
e. What is the company’s dividend policy (I.e., what proportion of the company’s earnings are used for dividends)?
Aug 29, 2021 | Uncategorized
On April 1, 2012, Kathleen Alvarez established an interior decorating business, Intrex Designs. During the month, Kathleen completed the following transactions related to the business:
Apr. 1. Kathleen transferred cash from a personal bank account to an account to be used for the business, $17,000.
2. Paid rent for period of April 2 to end of month, $3,400.
6. Purchased office equipment on account, $10,000.
8. Purchased a used truck for $21,000, paying $2,000 cash and giving a note payable for the remainder.
10. Purchased supplies for cash, $1,800.
12. Received cash for job completed, $13,000.
Apr. 15. Paid annual premiums on property and casualty insurance, $1,800.
23. Recorded jobs completed on account and sent invoices to customers, $9,000.
24. Received an invoice for truck expenses, to be paid in April, $1,000.
Enter the following transactions on Page 2 of the two-column journal.
29. Paid utilities expense, $1,500.
29. Paid miscellaneous expenses, $750.
30. Received cash from customers on account, $7,800.
30. Paid wages of employees, $4,000.
30. Paid creditor a portion of the amount owed for equipment purchased on April 6, $2,500.
30. Withdrew cash for personal use, $2,000.
Instructions:
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted.
11 Cash 31 Kathleen Alvarez, Capital
12 Accounts Receivable 32 Kathleen Alvarez, Drawing
13 Supplies 41 Fees Earned
14 Prepaid Insurance 51 Wages Expense
16 Equipment 53 Rent Expense
18 Truck 54 Utilities Expense
21 Notes Payable 55 Truck Expense
22 Accounts Payable 59 Miscellaneous Expense
2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted.
3. Prepare an unadjusted trial balance for Intrex Designs as of April 30, 2012.
4. Determine the excess of revenues over expenses for April.
5. Can you think of any reason why the amount determined in (4) might not be the net income for April?
Aug 29, 2021 | Uncategorized
Comparative financial statement data for Bedene Corporation and Groneman Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2010.
Bedene Corporation Groneman Corporation
2010 2010
Net sales $1,900,000 $620,000
Cost of goods sold 1,175,000 340,000
Operating expenses 303,000 98,000
Interest expense 9,000 3,800
Income tax expense 85,000 36,000
Current assets 407,200 190,336
Plant assets (net) 532,000 139,728
Current liabilities 66,325 40,348
Long-term liabilities 108,500 29,620
Cash from operating activities 138,000 36,000
Capital expenditures 90,000 20,000
Dividends paid 36,000 15,000
Average number of shares outstanding 100,000 50,000
Instructions
(a) Comment on the relative profitability of the companies by computing the net income and earnings per share for each company for 2010.
(b) Comment on the relative liquidity of the companies by computing working capital and the current ratios for each company for 2010.
(c) Comment on the relative solvency of the companies by computing the debt to total assets ratio and the free cash flow for each company for 2010.
Aug 29, 2021 | Uncategorized
Refer to the list of income statement items in Problem 2-6. Assume that Shaw Corporation classifies all operating expenses into two categories: (1) selling and (2) general and administrative.
Required
1. Prepare a multiple-step income statement for the year ended December 31, 2012.
2. What advantages do you see in this form for the income statement?
3. Compute Shaw s profit margin.
4. Comment on Shaw s profitability. What other factors need to be taken into account to assess shaw’s profitability?
Problem 2-6 Income Statement Data
The following income statement items, arranged in alphabetical order, are taken from the records
of Shaw Corporation for the year ended December 31, 2012:
Advertising expense $ 1,500 Interest expense $ 1,400
Commissions expense 2,415 Interest revenue 1,340
Cost of goods sold 29,200 Rent revenue 6,700
Depreciation expense office building 2,900 Salaries and wages expense office 12,560
Income tax expense 1,540 Sales revenue 48,300
Insurance expense salesperson s auto 2,250 Supplies expense office 890
Aug 29, 2021 | Uncategorized
On April 1 Flint Hills Travel Agency Inc. was established. These transactions were completed during the month.
1. Stockholders invested $25,000 cash in the company in exchange for common stock.
2. Paid $900 cash for April office rent.
3. Purchased office equipment for $2,800 cash.
4. Purchased $200 of advertising in the Chicago Tribune, on account.
5. Paid $500 cash for office supplies.
6. Earned $10,000 for services provided: Cash of $1,000 is received from customers, and the balance of $9,000 is billed to customers on account.
7. Paid $400 cash dividends.
8. Paid Chicago Tribune amount due in transaction (4).
9. Paid employees salaries $1,200.
10. Received $9,000 in cash from customers billed previously in transaction (6).
Instructions
(a)Prepare a tabular analysis of the transactions using these column headings: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, and Retained Earnings (with separate columns for Revenues, Expenses, and Dividends). Include margin explanations for any changes in Retained Earnings.
(b)From an analysis of the Retained Earnings columns, compute the net income or net loss for April.
Aug 29, 2021 | Uncategorized
| Segment interim reporting |
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| Problem 39 |
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Noventis Corporation prepared the following estimates for the four quarters of the current year: |
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First Qt |
Second QT |
Third qt |
Fourth QT |
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Sales |
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10,00,000.00 |
12,00,000.00 |
14,00,000.00 |
16,00,000.00 |
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COGS |
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4,00,000.00 |
4,80,000.00 |
5,50,000.00 |
6,00,000.00 |
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Admisnitrative costs |
2,50,000.00 |
1,55,000.00 |
1,60,000.00 |
1,70,000.00 |
|
Advertising cost |
|
– |
1,00,000.00 |
– |
– |
|
executive bonuses |
|
– |
|
– |
80,000.00 |
|
Provision for bad debts |
– |
|
– |
52,000.00 |
|
Annual maintenance costs |
60,000.00 |
|
– |
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Aditional information |
|
|
|
|
|
|
1) First quarter admisnitrative costs include 100,000 annual insurance premium |
|
2) Advertisement costs paid in the second quarter relate to television advertisements |
|
that will be broadcast throughout the entire year. |
|
|
|
3) No special items affect income during the year. |
|
|
|
4) Noventis estimates an effective income tax rate for the year of 40% |
|
|
|
|
|
|
|
|
|
|
a) Assuming that actual results do not vary from the estimates provided, determine |
|
the amount of income to be reported each quarter of the current year. |
|
|
|
|
|
|
|
|
|
|
b) Assume that actual results do not vary from the estimates provided except for that in the third |
|
quarter, the estimated annual effective income tax rate is revised downward to 38%. |
|
Determine the amount of income to be reported each quarter of the current year. |
Aug 29, 2021 | Uncategorized
PROBLEM 4 15
Brady Products manufactures a silicone paste wax that goes through three processing departments
Cracking, Blending, and Packing. All raw materials are introduced at the start of work in the Cracking
Department. The Work in Process T-account for the Cracking Department for a recent month is
given below:
Work in Process Cracking Department
Inventory, May 1 63,700 Completed and transferred
Materials 397,600 to the Blending Department ?
Conversion 187,600
Inventory, May 31 ?
The May 1 work in process inventory consisted of 35,000 pounds with $43,400 in materials cost
and $20,300 in conversion cost. The May 1 work in process inventory was 100% complete with
respect to materials and 80% complete with respect to conversion. During May, 280,000 pounds
were started into production. The May 31 inventory consisted of 45,000 pounds that were 100%
complete with respect to materials and 60% complete with respect to conversion. The company
uses the weighted-average method to account for units and costs
Required:
1. Determine the equivalent units of production for May.
2. Determine the costs per equivalent unit for May.
3. Determine the cost of the units completed and transferred to the Blending Department during
May.
PROBLEM 4 17
Bohemian Links Inc. produces sausages in three production departments Mixing, Casing and
Curing, and Packaging. In the Mixing Department, meats are prepared and ground and then mixed
with spices. The spiced meat mixture is then transferred to the Casing and Curing Department,
where the mixture is force-fed into casings and then hung and cured in climate-controlled smoking
chambers. In the Packaging Department, the cured sausages are sorted, packed, and labeled. The company uses the weighted-average method in its process costing system. Data for April for the
Casing and Curing Department follow:
Percent Completed
Units Mixing Materials Conversion
Work in process inventory, April 1 . . . . . . . . . 1 100% 60% 50%
Work in process inventory, April 30 . . . . . . . . 1 100% 20% 10%
Mixing Materials Conversion
Work in process inventory, April 1 . . . . . . . . . $1,640 $26 $105
Cost added during April . . . . . . . . . . . . . . . . $94,740 $8,402
Mixing cost represents the costs of the spiced meat mixture transferred in from the Mixing Department.
The spiced meat mixture is processed in the Casing and Curing Department in batches; each
unit in the above table is a batch, and one batch of spiced meat mixture produces a set amount of
sausages that are passed on to the Packaging Department. During April, 60 batches (i.e., units)
were completed and transferred to the Packaging Department.
Required:
1. Determine the equivalent units for April for mixing, materials, and conversion. Do not round
off your computations.
2. Compute the costs per equivalent unit for April for mixing, materials, and conversion.
3. Determine the total cost of ending work in process inventory and the total cost of units transferred
to the Packaging Department in April.
4, Prepare a cost reconciliation report for the Casing and Curing Department for April.
CASE 4 20
Durall Company manufactures a plastic gasket that is used in automobile engines. The gaskets go
through three processing departments: Mixing, Forming, and Stamping. The company s accountant
(who is very inexperienced) has prepared a summary of production and costs for the Forming
Department for October as follows:
Forming Department costs:
Work in process inventory, October 1, 8,000 units:
materials 100% complete; conversion 7 8 complete . . . . . . . . $ 22,420*
Costs transferred in from the Mixing Department . . . . . . . . . . . 81,480
Material added during October (added when processing
is 50% complete in the Forming Department) . . . . . . . . . . . . 27,600
Conversion costs added during October . . . . . . . . . . . . . . . . . . 96,900
Total departmental costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $228,400
Forming Department costs assigned to:
Units completed and transferred to the Stamping
Department, 100,000 units at $2.284 each . . . . . . . . . . . . . . $228,400
Work in process inventory, October 31, 5,000 units:
conversion 2 5 complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total departmental costs assigned . . . . . . . . . . . . . . . . . . . . . . . . $228,400
*Consists of cost transferred in, $8,820; materials cost, $3,400; and conversion costs,
$10,200.
After mulling over the data above, Durall s president commented, I can t understand what s
happening here. Despite a concentrated effort at cost reduction, our unit cost actually went up in
the Forming Department last month. With that kind of performance, year-end bonuses are out of
the question for the people in that department.
The company uses the weighted-average method in its process costing.
Required:
1. Prepare a report for the Forming Department for October showing how much cost should have
been assigned to the units completed and transferred to the Stamping Department and to the
ending work in process inventory.
2. Explain to the president why the unit cost appearing on the report prepared by the accountant
is so high.
Aug 29, 2021 | Uncategorized
On July 31, 2010, Fenton Company had a cash balance per books of $6,140. The statement from Jackson State Bank on that date showed a balance of $7,695.80. A comparison of the bank statement with the cash account revealed the following facts.
1. The bank service charge for July was $25.
2. The bank collected a note receivable of $1,500 for Fenton Company on July 15, plus $30 of interest. The bank made a $10 charge for the collection. Fenton has not accrued any interest on the note.
3. The July 31 receipts of $1,193.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to H. Coby, a creditor, for $384 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $348.
5. Checks outstanding on July 31 totaled $1,980.10.
6. On July 31 the bank statement showed an NSF charge of $690 for a check received by the company from P. Figura, a customer, on account.
Instructions:
(a) Prepare the bank reconciliation as of July 31.
(b) Prepare the necessary adjusting entries at July 31.
Aug 29, 2021 | Uncategorized
Condensed balance sheet and income statement data for Kersenbrock Corporation appears below: Kersenbrock CORPORATION Balance Sheet December 31 2011 2010 2009 Cash $25,000.00 $20,000.00 $18,000.00 Receivables (net) 50,000 45,000 48,000 Other current assets 90,000 95,000 64,000 Investments 75,000 70,000 45,000 Plant and equipment (net) 400,000 370,000 358,000 $640,000 $600,000 $533,000 Current liabilities $75,000 $80,000 $70,000 Long-term debt 80,000 85,000 50,000 Common stock, $10 par 340,000 310,000 300,000 Retained Earnings 145,000 125,000 113,000 $640,000 $600,000 $533,000 Kersenbrock CORPORATION Income Statement For the Year Ended December 31 2011 2010 Sales $740,000 $700,000 Less: Sales returns and allowances 40,000 50,000 Net sales 700,000 650,000 Cost of goods sold 420,000 400,000 Gross profit 280,000 250,000 Operating expenses (including income taxes) 232,000 218,000 Net income $48,000 $32,000 Additional information: 1. The market price of Legal’s common stock was: $4.00 for 2009 $5.00 for 2010 $8.00 for 2011 2. All dividends were paid in cash. Instructions: (a)(1) Compute the profit margin for 2010 and 2011. “2010 Profit margin” Title = Amount = Formula Title Amount “2011 Profit margin” Title = Amount = Formula Title Amount (a)(2) Compute the asset turnover for 2010 and 2011. “2010 Asset turnover” Title = Amount = Formula time Title Amount “2011 Asset turnover” Title = Amount = Formula time Title Amount (a)(3) Compute the earnings per share for 2010 and 2011. (Weighted average common shares in 2011 were 32,000 and in 2010 were 31,000 “2010 Earnings per share” Title = Amount = Formula per share Title Amount “2011 Earnings per share” Title = Amount = Formula per share Title Amount (a)(4) Compute the price-earnings ratio for 2010 and 2011. “2010 Price-earnings ratio” Title = Amount = Formula times Title Amount “2011 Price-earnings ratio” Title = Amount = Formula times Title Amount (a)(5) Compute the payout ratio for 2010 and 2011. “2010 Payout ratio” Title = Amount = Formula Title Amount “2011 Payout ratio” Title = Amount = Formula Title Amount (a)(6) Compute the debt to total assets for 2010 and 2011. “2010 Debt to total assets” Title Amount = Formula Title Amount “2011 Debt to total assets” Title Amount = Formula Title Amount (b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2010 to 2011 of Kersenbrock Corporation.
Aug 29, 2021 | Uncategorized
(Dollar-Value LIFO)
Presented below is information related to Martin Company.
|
Date
|
Ending Inventory
(End-of-Year Prices)
|
Price Index
|
|
December 31, 2007 |
$ 80,000 |
100 |
|
December 31, 2008 |
111,300 |
105 |
|
December 31, 2009 |
108,000 |
120 |
|
December 31, 2010 |
122,200 |
130 |
|
December 31, 2011 |
147,000 |
140 |
|
December 31, 2012 |
176,900 |
145 |
Compute the ending inventory for Martin Company for 2007 through 2012 using the dollar-value LIFO method.
| 2007 |
$ |
| 2008 |
$ |
| 2009 |
$ |
| 2010 |
$ |
| 2011 |
$ |
| 2012 |
$ |
Aug 29, 2021 | Uncategorized
Presented below is information related to Rembrandt Inc.’s inventory.
|
(per unit) |
Skis
|
Boots
|
Parkas
|
|
Historical cost |
$230.09 |
|
$128.37 |
|
$64.18 |
|
|
Selling price |
262.79 |
|
175.60 |
|
89.31 |
|
|
Cost to distribute |
23.01 |
|
9.69 |
|
3.03 |
|
|
Current replacement cost |
245.83 |
|
127.16 |
|
61.76 |
|
|
Normal profit margin |
38.75 |
|
35.12 |
|
25.73 |
|
Determine the following:
| (a) |
the two limits to market value (e.g., the ceiling and the floor) that should be used in the lower of cost or market computation for skis; (Round answers to 2 decimal places, e.g. 20.25.) |
| (b) |
the cost amount that should be used in the lower of cost or market comparison of boots; (Round answer to 2 decimal places, e.g. 20.25.) |
| (c) |
the market amount that should be used to value parkas on the basis of the lower of cost or market. (Round answer to 2 decimal places, e.g. 20.25.) |
Aug 29, 2021 | Uncategorized
5-53 Pricing and Confusing Variable and Fixed Costs
Goklwyn Electronics had a fixed factory overhead budget for 20X1 of $10 million. The company planned to make and sell 2 million units of a particular communications device. All variable manu facturing costs per unit were $10.The budgeted income statement contained the following:
Sales $40,000,000
Manufacturing cost of goods sold 30,000,000
Gross margin 10,000,000
Deduct selling and administrative expenses 4,000,000
Operating income $6,000,000
For simplicity, assume that the actual variable costs per unit and the total fixed costs were exactly as budgeted.
1.
Compute Goldwyn’s budgeted fixed factory overhead per unit.
2. Near the end of 20X1, a large computer manufacturer offered to buy 100,000 units for $1.2 million on a one-time special order. The president of Goldwyn stated, “The offer is a bad deal. It’s foolish to sell below full manufacturing costs per unit. I realize that this order will have only a modest effect on selling and administrative costs. They will increase by a $10,000 fee paid to our sales agent.” Compute the effect on operating income if the offer is accepted.
3.
What factors should the president of Goldwyn consider before finally deciding whether to accept the offer?
4.
Suppose the original budget for fixed manufacturing costs was $10 million, but budgeted units of product were 1 million. How would your answers to requirements 1 and 2 change? Be specific.
Aug 29, 2021 | Uncategorized
PRICING (QUICK EASY QUESTION)
1(a) Chester Corporation is launching a new product that is expected to cost $75 in direct materials, $50 in direct labor, and $100 in variable overhead per unit.
Fixed costs associated with the product are expected to be $500,000 each
year the product is sold, and development and setup costs are expected to be $3,000,000. Chester expects to sell an average of 15,ooo units a year over the product s seven-year life. Chester hopes to earn a profit of 10% of full costs.
What price should be set for the product?
1(b) Barry Manufacturing produces goods costing $25 per unit in variable costs and
$40 per unit in fixed costs that sell for $100 each. Silman Enterprises has
requested that Barry manufacture 5,000 units for them in a one-time-only special order. Barry has the manufacturing capacity to fill the special order without giving up any regular sales.
Calculate the minimum price per unit the company should accept.
1(c) Montevallo Manufacturing operates a division in Brazil that manufactures goods for $30 in variable costs per unit. All 20,000 units manufactured each year are transferred to the Chicago division, where they are packaged for an additional $10 per unit and sold on the market for $75 each. There is no market for the product when it is unpackaged. The fixed costs of the Brazil division are $200,000 per year, and the fixed costs of the Chicago division are $250,000 per year. The tax rate in Brazil is 20%, while in Chicago the company pays 30% in taxes.
Calculate the transfer price if it is based on:
a) Variable cost with a 10% markup
b) Full cost with a 10% markup
c) Which of the prices calculated above would the company as a whole most prefer?
d) Given that there is no intermediate market for the transferred product, what difficulties would arise if the two divisions were to attempt to negotiate a transfer price?
Aug 29, 2021 | Uncategorized
Princeton Fabrication, Inc., produced and sold 1,200 units of the company s only product in March. You have collected the following information from the accounting records:
Sales price (per unit) ——————. $ 896
Manufacturing costs:
Fixed overhead (for the month) ——————– 100,800
Direct labor (per unit)———- 70
Direct materials (per unit) —————- 224
Variable overhead (per unit) ————– 140
Marketing and administrative costs:
Fixed costs (for the month) ————- 134,400
Variable costs (per unit) ————– 28
Required
a.) Compute:
1. Variable manufacturing cost per unit.
2. Full cost per unit.
3. Variable cost per unit.
4. Full absorption cost per unit.
5. Prime cost per unit.
6. Conversion cost per unit.
7. Profit margin per unit.
8. Contribution margin per unit.
9. Gross margin per unit.
b) If the number of units decreases from 1,200 to 800, which is within the relevant range, will the fixed manufacturing cost per unit increase, decrease, or remain the same? Explain.
Aug 29, 2021 | Uncategorized
Include the following:
- Complete summary of the case study that identifies the key problems and issues, provides background information, relevant facts, the solution employed, and the results achieved.
- Identify and explain the accounting practices California Sutter Health used in defining and solving its collection problems.
- Develop an alternative solution based on your own research using 3 to 5 academic sources from journals, professional organizations, and websites.
-
State your informed opinion of the approach used by California Sutter Health, and provide support using concepts from your research and personal experience.
***** In Case it’s needed ****
– here is the text of the article for final paper
How should a hospital go about increasing its upfront collections from self- pay patients? California’s Sutter Health has found an effective way to accomplish this goal.
We all know the mantra, “no margin, no mission.” One increasingly important strategy for optimizing margins in this time of high- deductible health plans and higher copayments is to collect more cash from patients, including self- pay patients.
Much has been made of the fact that nearly 47 million Americans are uninsured, but it’s an erroneous assumption that none of these people can afford to pay for their health care. More than 80 percent of uninsured people come from working families, and many may have the resources to pay for some or all of their health care- if only someone would ask them to.
That “someone” is the patient financial services (PFS) staff member. To frame the question in a way that will elicit the most positive response, PFS staff need complete, accurate, and timely information and the appropriate skills- and the confidence to use them. These needs apply especially to registration staff because the best time to collect payment for services is before those services are provided.
Registration staff, however, typically are unaccustomed to asking for money. It is therefore important that the transfer of this responsibility from the back end- the central business office and collectors- to these front-end staff be managed thoughtfully and in a well-organized manner that takes into account the needs of all PFS staff.
The Sutter Health Approach
Sutter Health, one of Northern California’s largest providers, is committed to giving its PFS staff on both the front and back ends the tools they need to improve patient collections and thus the system’s bottom line. Having started in 2006 with the patient account representatives, collectors, and other members of the central business office of its Sacramento/Sierra region, the health system is working its way forward to the registration staff, ultimately aiming to transfer many of the back-end functions to the front end and make point-of-service collection the norm.
In the first three months of the project, Sutter reduced accounts receivable (A/R days) for the nine hospitals in the region from 65 to 59. Given that each one of those days equals $i3 million, that means the health system collected an additional $78 million.
Setting Benchmarks
In analyzing its revenue management cycle prior to implementing the new program, Sutter identified several problems.
First, PFS staff could not access real-time information on key financial and operational indicators such as A/R days and cash collections. As a result, managers and staff often had to wait until the end of the month to set benchmarks, track progress, or make important business decisions.
Second, the hospitals’ accounting system did not allow managers to isolate and analyze select data or generate reports on demand to the level of detail required. Instead, the region relied on a specially trained programmer to develop these reports, often leading to costly delays in identifying and correcting problems.
Third, the central business office (CBO) staff also suffered from the lack of real-time information. With access to only a list of the outstanding accounts assigned to them, account representatives could not prioritize effectively or monitor their progress.
In turning this situation around, Sutter decided to focus on a handful of primary benchmarks:
> Gross A/R days (less capitation and credit balance accounts)
* Gash collections
* Unbilled A/R days
* Billed A/R days
* Percentage of A/R over 90, 180, and 36o days
* Major payer A/R days
Empowering PFS Staff
Sutter’s strategy for increasing collections and reducing A/R days focused on empowering individual PFS staff members to assume responsibility for each account they deal with. In effect, each person in the CBO owns his or her own business, complete with a customized dashboard to track progress in meeting individual and team targets.
To help PFS staff manage their businesses effectively, Sutter has provided them with a set of tools that allows them to:
* Prioritize and automate account work lists
* Sort accounts in various ways, such as by dollar amounts, oldest previous work date, and payer
* See at a glance their ranking within their work group and officewide, based on their performance as a percentage of the target achieved
The tools tell staff members not only how they are doing, but also where and how they could improve, pointing out which accounts, if worked successfully, will have the greatest impact on their A/R days and cash collection goals.
Managers have their own receivables dashboard and tools, enabling them to:
* Query all aspects of receivables for trending purposes and identify problem areas
* Drill down to the patient account level
* Monitor revenue, payments, adjustments, receivables, and days for periods from the previous day and week to the previous 18 months
* Calculate average daily revenue by day and 3o-day period
* Assess their performance for the month to date, and estimate likely results at the month end
* View all receivables or select any segment for quick analysis
> Generate timely reports on demand, including aging analysis, A/R stratification, discharged not final billed (DNFB) analysis, credit balance analysis, and analysis of problem payers
A denials management component was implemented in late summer. When registration staff go online at the end of the year, the cycle will be complete, with all parts having access to all the data they need to produce clean claims.
Front-End Collecting
Half of the required billing elements on a UB93/04 originate at the point of access. As a result, this point in the revenue cycle presents the greatest opportunity to reduce claims denials. To help ensure optimum performance at this crucial juncture, Sutter’s new process requires that each registration be analyzed by a rules engine before the patient leaves the registration desk to identify potential problems.
Examples of problems or errors that can be identified at this stage include the following:
* Workers’ compensation or liability financial class lacks accident information.
* Workers’ compensation is filed with an occurrence code other than 04.
* The patient’s guarantor is under 18 years old.
* The patient’s marital status is widowed, but the relative is listed as husband, wife, or spouse.
* The patient type is not valid for hospital service.
* The patient is age 65 or older, but the Medicare insurance plan is missing.
* The patient had Medicare in any plan code, but the Medicare secondary payer questionnaire is missing.
* The health insurance claim number or policy ID number is missing.
* The patient address includes errors in format, punctuation, and/or abbreviations.
* The patient has duplicate medical record numbers.
This front-end claims editing enables PFS staff to quickly identify problem areas where corrective action and/or further training is needed.
In the same way, computer interfaces allow the system to flag accounts that require special handling. The admitting clerk receives an alert that may include a description of specific action he or she should take. Examples of such alerts include “Patient has other accounts with returned mail; please check for valid address,” and “Patient has other accounts in bad debt; please request payment.”
Experience has shown that a simple prompt to the registrar to collect the amount preregistration has established with the patient can make all the difference. Sutter will be testing a tool to track how much money each staff person collects up front, hoping eventually to link that tool to estimating and contract management systems so that registrars can be evaluated as well on percentages of contracted rates and established targets collected.
Comprehensive Training
Sutter’s system is designed to support the existing PFS and registration staff without the need to hire a more formally educated staff or to increase wages beyond the current average of $10 to $20 an hour. The system does, however, require that staff receive comprehensive training.
The focus of the training differs with different staff areas. For example, registration staff, who are not accustomed to asking people for money, receive training that focuses largely on effective patient communications and includes role playing and script rehearsal. By contrast, CBO staff are more used to asking people for money, but they are not used to taking stewardship of their assigned accounts. So in addition to time spent learning to use the tools and perform the functions, the first hour of the CBO staff’s three -hour group training session focuses on the concepts and principles of effective receivables management- e.g., how to take ownership of problems and make autonomous decisions about how to solve them, how to identify trends and use that information to boost performance, and how to use performance feedback-based results rather than just activity.
Following the initial educational sessions, Sutter’s staff use a technological alternative to personal tutors to practice in test system mode on their own for at least 3o minutes a day for a full week. The highly intuitive system allows them to work independently with minimal assistance. Each person must complete and pass the online competency test before receiving a production user ID. Staff also can refer to an online user manual at any time.
Where other health systems have used tangible rewards and formal recognition as incentives, Sutter has so far found that staff regard the boost in autonomy and effectiveness as reward enough to embrace the system wholeheartedly. In fact, every respondent in a recent survey of Sutter’s CBO staff commented positively about having gained a renewed sense of ownership and competitive spirit, and many staff members have sent unsolicited e-mails expressing their enthusiasm for the new system. And in 3006, the CBO received Sutter’s Business Processes Excellence Award for outstanding achievement.
Object: No More Denials
There are 600 valid reasons to deny a healthcare claim. But by integrating all data elements in revenue cycle management, making PFS staff accountable for their own results, and concentrating on obtaining accurate and complete information, as well as cash upfront, Sutter Health is whittling away at the list. Almost $80 million in additional collections in three months says they are on the right track.
Sidebar
AT A GLANCE
In its effort to increase point-of-service collections and improve the overall revenue cycle, Sutter Health took steps to:
* Measure performance using a handful of specific, primary benchmarks
* Empower PFS staff to assume responsibility for every individual account they handle
* Ensure each registration is analyzed using a rules engine to identify problems before patients leave the registration desk
* Ensure PFS staff receive appropriate comprehensive training to excel under the new system
This aged trial balance analysis, which shows aging and status of a patient representative’s personal assigned stewardship, is intended to assist the representative in his or her performance-improvement efforts.
ABOUT SUTTER HEALTH
Sutter Health is a leading not-for-profit network of community-based healthcare providers that deliver care in more than 100 Northern California communities. The network consists of more than two dozen acute care hospitals, as well as physician organizations, medical research facilities, home health services, hospice and occupational health networks, and long-term care centers.
GETTING PATIENTS ON BOARD
It’s easy for hospitals and health systems to see the benefits of point-of-service (POS) collection. But what about the patients? Many healthcare leaders worry about raising their ire just as competition makes patient satisfaction more important than ever. A recent report of the HFMA-led PATIENT FRIENDLY BILLING project, Consumerism in Health Care, suggests that, in combination with other patient-centric policies and practices such as pricing transparency, simplified charge structures, and quality information, POS collection actually will be accepted without problem by most consumers as part of an open and businesslike partnership with providers.
For one thing, patients with insurance coverage have become accustomed to paying copayments and deductibles up front at their physician’s and dentist’s offices before receiving services. It’s no longer a new idea. For another, POS collection eliminates the infamous sticker shock patients get when they open a hospital bill four months after discharge- and long after their gratitude for getting better has faded.
The simple fact is that consumers want to know from the start what their financial obligation will be- that is, how much in total they will owe out-of-pocket, including copayments, deductibles, and coinsurances. And the earlier the better; one reason so many hospitals are moving to preservice charge estimating is to help patients be prepared to pay when they arrive at the hospital.
“My mechanic can tell me in advance how much I’m going to owe- why can’t you?” had been a familiar refrain atMayo Clinic in Jacksonville, FIa., before it started POS collection, according to Kelly White, section manager, PFS. “And the patients were right- we should be able to give them at least a ballpark estimate. We’ve found that the more details we can provide about their bill, and the sooner we can provide it, the more successful we are in collecting.”Mayo Clinic is lucky, White acknowledges, in that the bulk of its admissions come from its clinic physicians and are scheduled well in advance, so that her staff can talk directly with patients, often more than once, before they arrive at the hospital.
But the principle is the same regardless of the organization. Accurate, timely information on the front and back end of the revenue cycle is essential to this process. Yet technology can go only so far in preparing patients and providers for the new age of consumerism in health care. There are three things hospitals must accomplish beyond implementing new technology:
* They must be able to justify charges in a way that ordinary people will accept as reasonable, which means, of course, that the charges themselves must be reasonable. And that means, among other things, the end of cost-shifting.
* They must offer on-the-spot, skilled, and comprehensive financial counseling, discounts, and flexible payment options to self-pay patients who are unable to pay their bills.
* They must educate patients thoroughly, in more than one way and at more than one time, about provider billing practices- including who, what, where, when, why, and how.
With effective programs in place and the technological tools and training to help PFS staff deliver top-notch customer service, healthcare organizations in the vanguard of POS collection are finding patients to be not resentful but grateful.
AuthorAffiliation
About the authors
Margie Souza is central business office director, Sutter Health Sacramento Sierra Region, Sacramento, Calif. (souzam1@sutterhealth.org).
Brent McCarty is president and COO, Accuro Healthcare Solutions, Dallas (bmccarty@accurohealth.com).
Copyright Healthcare Financial Management Association Sep 2007
Aug 29, 2021 | Uncategorized
Question 1 of 205.0 Points
Mount Company purchased a machine at an invoice cost of $21,000 subject to terms of 3/10, n/30. The discount was taken. Additional costs were installation, $1200; insurance on the machine after it was in operation, $370. The total cost to be added to the machinery account is:
A. $20,740.
B. $21,940.
C. $21,000.
D. $21,570.
Question 2 of 205.0 Points
In the last year of useful life, the salvage value was ignored using double-declining-balance depreciation. This error would cause:
A. the period end assets to be overstated.
B. the period’s depreciation expense to be understated.
C. the period’s depreciation expense to be overstated.
D. None of these are correct.
Question 3 of 205.0 Points
An example of an intangible asset is:
A. assembly cost.
B. a patent.
C. a building.
D. land.
Question 4 of 205.0 Points
Which of the following is a non-depreciable asset?
A. Computer
B. Desk chairs
C. Building
D. Land
Question 5 of 205.0 Points
The cost of an asset less its accumulated depreciation is called:
A. residual value.
B. book value.
C. salvage value.
D. market value.
Question 6 of 205.0 Points
Revenue expenditures include:
A. periodic normal maintenance costs.
B. additions to existing plant assets.
C. initial costs of acquiring plant assets.
D. All of these answers are correct.
Question 7 of 205.0 Points
The depreciation method which charges more expense in earlier years than in later years is the:
A. double declining-balance method.
B. units-of-production method.
C. straight-line method.
D. All of the above.
Question 8 of 205.0 Points
The amount to include in the entry to record the cost of a property, plant, and equipment asset would include:
A. acquisition cost.
B. installation.
C. freight.
D. All of these answers are correct.
Question 9 of 205.0 Points
Straight-line depreciation is used in the first year when double-declining-balance should be used. This error would cause:
A. the period’s net income to be understated.
B. the period end assets to be understated.
C. the period’s net income to be overstated.
D. None of these are correct.
Question 10 of 205.0 Points
Lacy purchased equipment for $77,000 on January 1. Its residual value is $5,000 with a useful life of 9 years. The amount of depreciation expense in the first year under the straight-line method is:
A. $8,000.
B. $15,840.
C. $16,940.
D. $8,556.
Question 11 of 205.0 Points
Jason Moore purchased computer equipment for $2,800 on January 1, 2012. It has a residual value of $400 with a useful life of 4 years. After the appropriate adjusting entries have been made, the balance in Accumulated Depreciation account for this asset on January 1, 2014, under the straight-line method, should be:
A. $1,400.
B. $1,200.
C. $700.
D. $600.
5.0 Points
Question 12 of 20
The cost of equipment is expensed:
A. in the period it is sold.
B. over the periods that benefit the company.
C. at the time it is paid.
D. in the period it is purchased.
Question 13 of 205.0 Points
Which of the following is an example of a land improvement?
A. Driveway
B. Shrubbery
C. Fences
D. All of these answers are correct.
Question 14 of 205.0 Points
The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated depreciation of $1,500 would be:
A. debit Depreciation Expense, $2,500; credit Equipment $2,500.
B. debit Cash $2,500; credit Equipment $2,500.
C. debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit Equipment $2,500.
D. debit Equipment $2,500; credit Accumulated Depreciation $2,500.
Question 15 of 205.0 Points
When selling a plant asset, the gain was not recorded, but pocketed. This error would cause:
A. the period’s net income to be overstated.
B. the period end assets to be overstated.
C. the period’s net income to be understated.
D. None of these are correct.
Question 16 of 205.0 Points
The entry to record the purchase of a machine on account that costs $20,000, set-up fees, $1,000, and freight, $500, would be:
A. debit Machinery $20,000, debit Expenses $1,500; and credit Accounts Payable $21,500.
B. debit Machinery $20,000; credit Accounts Payable $20,000.
C. debit Machinery $20,500; credit Accounts Payable $20,500.
D. debit Machinery $21,500; credit Accounts Payable $21,500.
Question 17 of 205.0 Points
Which depreciation method does not deduct residual value when computing depreciation expense?
A. Straight-line
B. Double-declining-balance
C. Units-of-production
D. Both A and B are correct.
Question 18 of 205.0 Points
A company purchases a patent for $50,000. The patent will be amortized over 5 years. The entry to record the amortization in the first year is:
A. debit Amortization of Patents $50,000; credit Patents $50,000.
B. debit Patents $50,000; credit Cash $50,000.
C. debit Patents $10,000; credit Amortization of Patents $10,000.
D. debit Amortization of Patents $10,000; credit Patents $10,000.
Question 19 of 205.0 Points
A loss on the sale of an asset would occur when:
A. the cash received is greater than the book value of the asset.
B. the cash received is less than the book value of the asset.
C. the cash received is equal to the book value of the asset.
D. None of these answers are correct.
Question 20 of 205.0 Points
Chocolate Supreme purchased new baking equipment for $15,000 subject to terms 4/10, n/45. The discount was taken. Additional costs included sales tax $900 and installation $300. The total cost to be added to the machinery account is:
A. $15,000.
B. $15,900.
C. $15,300.
D. $15,600.
Aug 29, 2021 | Uncategorized
Question 1 of 30 3.3334 Points
What financial statement shows the amount for Freight-In?
A. Income Statement
B. Statement of Owner’s Equity
C. Balance Sheet
D. Trial balance
Question 2 of 30 3.3334 Points
The second entry to adjust Merchandise Inventory includes:
A. a debit to Merchandise Inventory.
B. a debit to Income Summary.
C. a credit to Merchandise Inventory.
D. None of these are correct.
Question 3 of 30 3.3334 Points
The income statement columns on a worksheet have subtotals as follows: debit column, $10,500, and credit column, $9,000. This indicates that:
A. the company incurred a net loss of $1,500.
B. there was an error in the adjustments columns.
C. there was an error in the income statement columns.
D. the company earned a net income of $500.
Question 4 of 30 3.3334 Points
From the following items, which would most likely cause the recording of unearned revenue?
A. Potential sale of merchandise
B. Legal fees collected after work is performed
C. Purchase of merchandise on account
D. Subscriptions collected in advance for a magazine
Question 5 of 30 3.3334 Points
The normal balance for Unearned Rent is:
A. zero.
B. a credit.
C. a debit.
D. dependent on circumstances.
Question 6 of 30 3.3334 Points
The adjustment for supplies used would be to:
A. debit Supplies; credit Cash.
B. debit Supplies; credit Supplies Expense.
C. debit Supplies Expense; credit Supplies.
D. debit Supplies; credit Accounts Payable.
Question 7 of 30 3.3334 Points
When completing a worksheet:
A. the beginning inventory amount appears in the adjustment credit column.
B. the ending inventory amount appears in the unadjusted trial balance debit column of the worksheet.
C. the beginning inventory amount appears in the balance sheet debit column of the worksheet.
D. the ending inventory amount appears in the income statement debit column.
Question 8 of 30 3.3334 Points
The financial statement on which Rental Income would appear is the:
A. owner’s equity statement.
B. income statement.
C. balance sheet.
D. operations statement.
Question 9 of 30 3.3334 Points
As the Unearned Rent is earned:
A. the liability account is not affected but the revenue account is decreased.
B. the liability account is increased and the revenue account is decreased.
C. the liability account is decreased and the revenue account is not affected.
D. the liability account is decreased and the revenue account is increased.
Question 10 of 30 3.3334 Points
On the worksheet the ending Merchandise Inventory account appears in the:
A. adjustment, adjusted trial balance, and balance sheet column.
B. adjustment column.
C. adjustment, adjusted trial balance, and income statement columns.
D. adjusted trial balance and balance sheet columns.
Question 11 of 30 3.3334 Points
During the preparation of the worksheet, the $800 balance of the Dennis, Withdrawal account was extended as a debit to the income statement columns. This error will:
A. understate net income $800.
B. overstate net income $1,600.
C. understate net income $1,600.
D. overstate net income $800.
Question 12 of 30 3.3334 Points
As Unearned Rent is earned, it becomes:
A. an expense.
B. an asset.
C. a liability.
D. a revenue.
Question 13 of 30 3.3334 Points
What inventory method is used when the inventory balance is updated only at the end of the accounting period?
A. Periodic
B. Net Income
C. Cost of Goods Sold
D. Perpetual
Question 14 of 30 3.3334 Points
When the adjustment for Unearned Rent is made:
A. liabilities decrease.
B. revenue increases.
C. assets decrease.
D. Both A and B are correct.
Question 15 of 30 3.3334 Points
Ending inventory:
A. does not affect Cost of Goods Sold.
B. increases Cost of Goods Sold.
C. decreases Cost of Goods Sold.
D. increases liabilities.
Question 16 of 30 3.3334 Points
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer’s account as uncollectible?
A. Bad Debts Recovered
B. Accounts Receivable
C. Accounts Payable
D. Bad Debts Expense
Question 17 of 30 3.3334 Points
The adjustment for bad debts using the percentage of receivables ignored the credit balance in the Allowance account. This error would cause:
A. net income to be understated.
B. total liabilities to be understated.
C. total assets to be overstated.
D. None of these are correct.
Question 18 of 30 3.3334 Points
In the direct write-off method, writing off an account causes:
A. an increase in Accounts Receivable.
B. an increase in Liabilities.
C. an increase in expense.
D. a decrease in the Allowance account.
Question 19 of 30 3.3334 Points
Net Realizable Value can be defined as:
A. the Gross Accounts Receivable minus the Allowance for Doubtful Accounts.
B. the Current Bad Debts Expense.
C. the amount of Accounts Receivable you do not expect to collect.
D. the Gross Accounts Receivable.
Question 20 of 30 3.3334 Points
Before the accounts are adjusted and closed at the end of the year, Accounts Receivable has a normal balance of $200,000 and Allowance for Doubtful Accounts has a debit balance $20,000. What is the net realizable value of the accounts receivable?
A. $20,000
B. $220,000
C. $200,000
D. $180,000
Question 21 of 30 3.3334 Points
At December 31, 200x, Brooke’s Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the Accounts Receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for Bad Debts Expense:
A. includes a debit to the Allowance account for $822.
B. includes a debit to the Allowance account for $568.
C. includes a credit to the Allowance account for $1,432.
D. includes a credit to the Allowance account for $42.
Question 22 of 30 3.3334 Points
Indy Sport and Hobby’s Allowance for Doubtful Accounts had an unadjusted credit balance of $400. The manager estimates that $900 of the Accounts Receivable is uncollectible. Using the balance sheet approach, the year-end adjusting entry for Bad Debts Expense:
A. includes a debit to the Bad Debts Expense account for $500.
B. includes a credit to the Bad Debts Expense account for $1,300.
C. includes a debit to the Bad Debts Expense account for $900.
D. includes a credit to the Bad Debt Expense account for $500.
Question 23 of 30 3.3334 Points
Joe’s Auto Repair estimates that approximately 3% of net credit sales are uncollectible. Joe’s calculates Bad Debts Expense using the:
A. balance sheet method.
B. direct write-off method.
C. income statement method.
D. gross method.
Reset Selection
Question 24 of 30 3.3334 Points
The entry to adjust for bad debts was ignored. This error would cause:
A. total liabilities to be understated.
B. net income to be understated.
C. total assets to be overstated.
D. None of these are correct.
Reset Selection
Question 25 of 30 3.3334 Points
If the allowance method of accounting for uncollectible receivables is used, what general ledger account is debited to write off a customer’s account as uncollectible?
A. Bad Debt Expense
B. Bad Debts Recovered
C. Accounts Payable
D. Allowance for Doubtful Accounts
Question 26 of 30 3.3334 Points
Town and Country Saddle learns the account receivable for a customer is uncollectible. The journal entry under the allowance method to write-off an account is to:
A. debit Bad Debts Expense; credit Accounts Receivable.
B. debit Allowance for Doubtful Accounts; credit Accounts Receivable.
C. debit Sales; credit Allowance for Doubtful Accounts.
D. debit Allowance for Doubtful Accounts; credit Bad Debts Expense.
Question 27 of 30 3.3334 Points
The amount of Accounts Receivable a company estimates it will collect is the:
A. Gross Accounts Receivable.
B. Accounts Receivable Allowance.
C. Bad Debts Allowance.
D. Net Realizable Value.
Question 28 of 30 3.3334 Points
The Allowance for Doubtful Accounts is listed on the balance sheet under the caption:
A. fixed assets.
B. owner’s equity.
C. current liabilities.
D. current assets.
Question 29 of 30 3.3334 Points
What would be the basis for the following journal entry if it appears on Travis Company records? Travis uses the allowance method.
Allowance for Doubtful Accounts 150
Accounts Receivable-Tim Morgan 150
A. The firm is making a collection of a previously written-off account.
B. The firm is writing off a specific account.
C. The firm is estimating its uncollectible accounts.
D. It is a reversing entry.
Question 30 of 30 3.3334 Points
The adjustment for bad debts using the percentage of receivables ignored the debit balance in the Allowance account. This error would cause:
A. total liabilities to be understated.
B. total assets to be overstated.
C. net income to be understated.
D. None of these are correct.
Aug 29, 2021 | Uncategorized
principle_of_accounting_Question
Question Detail:
Question 1 of 20 5.0 Points
Mount Company purchased a machine at an invoice cost of $21,000 subject to terms of 3/10, n/30. The
discount was taken. Additional costs were installation, $1200; insurance on the machine after it was in
operation, $370. The total cost to be added to the machinery account is:
A. $20,740.
B. $21,940.
C. $21,000.
D. $21,570.
Question 2 of 20 5.0 Points
In the last year of useful life, the salvage value was ignored using double-declining-balance
depreciation. This error would cause:
A. the period end assets to be overstated.
B. the period’s depreciation expense to be understated.
C. the period’s depreciation expense to be overstated.
D. None of these are correct.
Question 3 of 20 5.0 Points
An example of an intangible asset is:
A. assembly cost.
B. a patent.
C. a building.
D. land.
Question 4 of 20 5.0 Points
Which of the following is a non-depreciable asset?
A. Computer
B. Desk chairs
C. Building
D. Land
Question 5 of 20 5.0 Points
The cost of an asset less its accumulated depreciation is called:
A. residual value.
B. book value.
C. salvage value.
D. market value.
Question 6 of 20 5.0 Points
Revenue expenditures include:
A. periodic normal maintenance costs.
B. additions to existing plant assets.
C. initial costs of acquiring plant assets.
D. All of these answers are correct.
Question 7 of 20 5.0 Points
The depreciation method which charges more expense in earlier years than in later years is the:
A. double declining-balance method.
B. units-of-production method.
C. straight-line method.
D. All of the above.
Question 8 of 20 5.0 Points
The amount to include in the entry to record the cost of a property, plant, and equipment asset
would include:
A. acquisition cost.
B. installation.
C. freight.
D. All of these answers are correct.
Question 9 of 20 5.0 Points
Straight-line depreciation is used in the first year when double-declining-balance should be used.
This error would cause:
A. the period’s net income to be understated.
B. the period end assets to be understated.
C. the period’s net income to be overstated.
D. None of these are correct.
Question 10 of 20 5.0 Points
Lacy purchased equipment for $77,000 on January 1. Its residual value is $5,000 with a useful life of
9 years. The amount of depreciation expense in the first year under the straight-line method is:
A. $8,000.
B. $15,840.
C. $16,940.
D. $8,556.
Question 11 of 20 5.0 Points
Jason Moore purchased computer equipment for $2,800 on January 1, 2012. It has a residual value
of $400 with a useful life of 4 years. After the appropriate adjusting entries have been made, the
balance in Accumulated Depreciation account for this asset on January 1, 2014, under the straightline
method, should be:
A. $1,400.
B. $1,200.
C. $700.
D. $600.
Question 12 of 20 5.0 Points
The cost of equipment is expensed:
A. in the period it is sold.
B. over the periods that benefit the company.
C. at the time it is paid.
D. in the period it is purchased.
Question 13 of 20 5.0 Points
Which of the following is an example of a land improvement?
A. Driveway
B. Shrubbery
C. Fences
D. All of these answers are correct.
Question 14 of 20 5.0 Points
The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated
depreciation of $1,500 would be:
A. debit Depreciation Expense, $2,500; credit Equipment $2,500.
B. debit Cash $2,500; credit Equipment $2,500.
C. debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit
Equipment $2,500.
D. debit Equipment $2,500; credit Accumulated Depreciation $2,500.
Question 15 of 20 5.0 Points
When selling a plant asset, the gain was not recorded, but pocketed. This error would cause:
A. the period’s net income to be overstated.
B. the period end assets to be overstated.
C. the period’s net income to be understated.
D. None of these are correct.
Question 16 of 20 5.0 Points
The entry to record the purchase of a machine on account that costs $20,000, set-up fees,
$1,000, and freight, $500, would be:
A. debit Machinery $20,000, debit Expenses $1,500; and credit Accounts Payable $21,500.
B. debit Machinery $20,000; credit Accounts Payable $20,000.
C. debit Machinery $20,500; credit Accounts Payable $20,500.
D. debit Machinery $21,500; credit Accounts Payable $21,500.
Question 17 of 20 5.0 Points
Which depreciation method does not deduct residual value when computing depreciation expense?
A. Straight-line
B. Double-declining-balance
C. Units-of-production
D. Both A and B are correct.
Question 18 of 20 5.0 Points
A company purchases a patent for $50,000. The patent will be amortized over 5 years. The entry to
record the amortization in the first year is:
A. debit Amortization of Patents $50,000; credit Patents $50,000.
B. debit Patents $50,000; credit Cash $50,000.
C. debit Patents $10,000; credit Amortization of Patents $10,000.
D. debit Amortization of Patents $10,000; credit Patents $10,000.
Question 19 of 20 5.0 Points
A loss on the sale of an asset would occur when:
A. the cash received is greater than the book value of the asset.
B. the cash received is less than the book value of the asset.
C. the cash received is equal to the book value of the asset.
D. None of these answers are correct.
Question 20 of 20 5.0 Points
Chocolate Supreme purchased new baking equipment for $15,000 subject to terms 4/10, n/45. The
discount was taken. Additional costs included sales tax $900 and installation $300. The total cost
to be added to the machinery account is:
A. $15,000.
B. $15,900.
C. $15,300.
D. $15,600.
Aug 29, 2021 | Uncategorized
Principles of Accounting 1
1) When calculating the employee s payroll the clerk forgot about the wage base limits. What impact could this error cause on the employee s check?
a. SUTA could be overstated
b. FICA-OASDI could be overstated
c. FUTA could be overstated
d. All of the above
2) The term used when the seller is responsible for the cost of freight is:
a. Purchases.
b. F.O.B. destination
c. F.O.B. shipping point.
d. Freight-in.
3) When the adjustment for depreciation is made:
a. Total liabilities increase.
b. Total expenses decrease.
c. Total assets decrease.
d. None of the above.
4) To records receipt of money after an account has been written off using the direct method, you would need to:
a. Record the receipt of cash.
b. Credit Bad debts recovered.
c. Reopen the customer s account receivable
d. All of the above
a. Credit interest expense and debit interest income.
5) An adjustment that must be made for the accrued interest on a note payable is to:
a. Debit interest expense and credit interest payable
b. Debit interest expense and credit interest income.
c. Debit interest expense and credit cash.
d. Credit interest expense and debit interest income.
6) If a company does not pay its note payable on the agreed upon date, the note:
a. Is discounted at a higher rate of interest
b. Is automatically placed in collection with an outside agency.
c. Is dishonored by the vendor.
d. Is renewed automatically for the same period of time.
7) Budgeting for items such as equipment and furniture would be considered:
a. General expenses.
b. Capital expenses.
c. Capital expenditures.
d. General expenditures.
8) The exclusive right to produce and sell a manuscript is called a:
a. Goodwill
b. Patent
c. Copyright
d. Franchise
9) Double-declining-balance method is used in the first year when straight-line should be used. The error would cause:
a. The period end assets to be overstated
b. The period s net income to be understated
c. The period s net income to be overstated.
d. None of the above.
Introduction to Accounting
1) Azucks is a socially responsible American company engaged in the manufacture of sports shoes. The CEO cautions that there is a disadvantage associated with the company planning increased globalization of production. Which of the following is the most likely disadvantage he is referring to?
a. Heavy job losses can ensue in the domestic market.
b. Greater disparities in living standards will emerge.
c. Trade barriers will be reduced between countries.
d. Substantial job losses will occur in developing markets.
2) Entrepreneurs often have more than one goal for starting a business and becoming self-employed. Which of the following reasons is the LEAST common goal of entrepreneurs?
a. Seek independence and be their own boss
b. Earn a comfortable living for a period of time
c. Grow and expand a current business
d. Meet community or social obligations
3) What is the most important source of money for new business start-ups?
a. Banks
b. The small business administration
c. Personal resources
d. Government grants
4) Why do attitudes about entrepreneurship vary internationally?
A. Decision making in big business can overlook local customs.
B. Attitudes towards risk-taking in business are culturally determined.
C. Consumer attitudes are influenced by economic cycles.
D. Foreign-owned companies can be unresponsive to local markets.
5) Which factor plays a key role in determining an organization s structure?
a. Competition and technology
b. Location and life-cycle stage
c. Profitability and leverage
d. Mission and strategy
6) Marketing managers often support the activities of political action committees (PACs). In doing this, which environment are they attempting to influence?
a. Competitive
b. Economic
c. Technological
d. Political-legal
Personal Finance
1) Which of the following items is not a liability?
a. The balance due on your credit card
b. The wages you give up to take a class
c. Your college loans
d. An IOU to your roommate.
2) Which of the following would increase your liquid assets?
a. Putting more of your salary in a 401(k)
b. Buying a new car
c. Buying rental property
d. Making regular deposits to a savings account at your bank
3) Yogi Berra Jr. has agreed to play for the New York Mets for $4 million per year for the next 10 years. What table would you use to calculate the value of this contract in today s dollars?
a. Present value of a single amount
b. Present value of an annuity
c. Future value of a single amount
d. Future value of an annuity
4) Which of the following is a disadvantage of using credit?
a. Shopping convenience
b. Capacity to access credit in the future
c. Ease of returning merchandise
d. Slowing of progress toward financial goals
5) Which of the following costs associated with home ownership is hardest to budget?
a. Mortgage payments
b. Repairs
c. Insurance
d. Taxes
6) Which risk management alternative is feasible when the likelihood of an event that could cause a financial loss is very low and the potential financial loss due to the event is small?
a. Avoid risk
b. Reduce risk
c. Accept risk
d. Insure against risk
7) The amount of damage you will be required to cover if your car is involved in an accident that is your fault is your:
a. Co-payment
b. Premium
c. Deductible
d. Fair share.
8) A company s earnings are $3.00 per share, its dividend is $2.00 per share, and its stock price is $30.00 per share. Its PE ratio is:
a. 33
b. 10
c. 15
d. 1.5
9) Investing in which of the following funds will typically give you the least diversification?
a. Capital appreciation funds
b. Equity income funds
c. Sector funds
d. Growth funds
10) In determining the amount of money you will need for retirement, you should consider all of the following except:
a. The expected cost of living due to inflation
b. Inheritance from you children
c. The number of years you will live while retired.
d. Your personal needs and who else you will be supporting.
Aug 29, 2021 | Uncategorized
Principles of Accounting 1
1) When calculating the employee s payroll the clerk forgot about the wage base limits. What impact could this error cause on the employee s check?
a. SUTA could be overstated
b. FICA-OASDI could be overstated
c. FUTA could be overstated
d. All of the above
2) The term used when the seller is responsible for the cost of freight is:
a. Purchases.
b. F.O.B. destination
c. F.O.B. shipping point.
d. Freight-in.
3) When the adjustment for depreciation is made:
a. Total liabilities increase.
b. Total expenses decrease.
c. Total assets decrease.
d. None of the above.
4) To records receipt of money after an account has been written off using the direct method, you would need to:
a. Record the receipt of cash.
b. Credit Bad debts recovered.
c. Reopen the customer s account receivable
d. All of the above
a. Credit interest expense and debit interest income.
5) An adjustment that must be made for the accrued interest on a note payable is to:
a. Debit interest expense and credit interest payable
b. Debit interest expense and credit interest income.
c. Debit interest expense and credit cash.
d. Credit interest expense and debit interest income.
6) If a company does not pay its note payable on the agreed upon date, the note:
a. Is discounted at a higher rate of interest
b. Is automatically placed in collection with an outside agency.
c. Is dishonored by the vendor.
d. Is renewed automatically for the same period of time.
7) Budgeting for items such as equipment and furniture would be considered:
a. General expenses.
b. Capital expenses.
c. Capital expenditures.
d. General expenditures.
8) The exclusive right to produce and sell a manuscript is called a:
a. Goodwill
b. Patent
c. Copyright
d. Franchise
9) Double-declining-balance method is used in the first year when straight-line should be used. The error would cause:
a. The period end assets to be overstated
b. The period s net income to be understated
c. The period s net income to be overstated.
d. None of the above.
Introduction to Accounting
1) Azucks is a socially responsible American company engaged in the manufacture of sports shoes. The CEO cautions that there is a disadvantage associated with the company planning increased globalization of production. Which of the following is the most likely disadvantage he is referring to?
a. Heavy job losses can ensue in the domestic market.
b. Greater disparities in living standards will emerge.
c. Trade barriers will be reduced between countries.
d. Substantial job losses will occur in developing markets.
2) Entrepreneurs often have more than one goal for starting a business and becoming self-employed. Which of the following reasons is the LEAST common goal of entrepreneurs?
a. Seek independence and be their own boss
b. Earn a comfortable living for a period of time
c. Grow and expand a current business
d. Meet community or social obligations
3) What is the most important source of money for new business start-ups?
a. Banks
b. The small business administration
c. Personal resources
d. Government grants
4) Why do attitudes about entrepreneurship vary internationally?
A. Decision making in big business can overlook local customs.
B. Attitudes towards risk-taking in business are culturally determined.
C. Consumer attitudes are influenced by economic cycles.
D. Foreign-owned companies can be unresponsive to local markets.
5) Which factor plays a key role in determining an organization s structure?
a. Competition and technology
b. Location and life-cycle stage
c. Profitability and leverage
d. Mission and strategy
6) Marketing managers often support the activities of political action committees (PACs). In doing this, which environment are they attempting to influence?
a. Competitive
b. Economic
c. Technological
d. Political-legal
Personal Finance
1) Which of the following items is not a liability?
a. The balance due on your credit card
b. The wages you give up to take a class
c. Your college loans
d. An IOU to your roommate.
2) Which of the following would increase your liquid assets?
a. Putting more of your salary in a 401(k)
b. Buying a new car
c. Buying rental property
d. Making regular deposits to a savings account at your bank
3) Yogi Berra Jr. has agreed to play for the New York Mets for $4 million per year for the next 10 years. What table would you use to calculate the value of this contract in today s dollars?
a. Present value of a single amount
b. Present value of an annuity
c. Future value of a single amount
d. Future value of an annuity
4) Which of the following is a disadvantage of using credit?
a. Shopping convenience
b. Capacity to access credit in the future
c. Ease of returning merchandise
d. Slowing of progress toward financial goals
5) Which of the following costs associated with home ownership is hardest to budget?
a. Mortgage payments
b. Repairs
c. Insurance
d. Taxes
6) Which risk management alternative is feasible when the likelihood of an event that could cause a financial loss is very low and the potential financial loss due to the event is small?
a. Avoid risk
b. Reduce risk
c. Accept risk
d. Insure against risk
7) The amount of damage you will be required to cover if your car is involved in an accident that is your fault is your:
a. Co-payment
b. Premium
c. Deductible
d. Fair share.
8) A company s earnings are $3.00 per share, its dividend is $2.00 per share, and its stock price is $30.00 per share. Its PE ratio is:
a. 33
b. 10
c. 15
d. 1.5
9) Investing in which of the following funds will typically give you the least diversification?
a. Capital appreciation funds
b. Equity income funds
c. Sector funds
d. Growth funds
10) In determining the amount of money you will need for retirement, you should consider all of the following except:
a. The expected cost of living due to inflation
b. Inheritance from you children
c. The number of years you will live while retired.
d. Your personal needs and who else you will be supporting.
Aug 29, 2021 | Uncategorized
Question 1 of 20 5.0 Points
Alpha Corporation’s has 1,500 shares of $40 par, 7% cumulative preferred stock and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends including one-year dividends in arrears to preferred stockholders. Common stockholders will receive:
A. $0.
B. $1,600.
C. $220.
D. $5,800.
Question 2 of 20 5.0 Points
Washington Corporation issued 4,000 shares of its $20 par value common stock for $23 per share. The entry to record the issuance would include a:
A. debit to Paid-in Capital in Excess of Par Value for $12,000.
B. credit to Common Stock for $12,000.
C. debit to Cash for $80,000.
D. credit to Common Stock for $80,000.
Question 3 of 20 5.0 Points
No entry was recorded for the exchange of stock for land. This error would cause:
A. the period end stockholders’ equity to be overstated.
B. the period end stockholders’ equity to be understated.
C. the period’s net income to be understated.
D. Both A and C are correct.
Question 4 of 20 5.0 Points
Five hundred shares of $25 par common stock was exchanged for a piece of equipment with a fair market value of $13,500. The journal entry to record the transaction would include a credit to:
A. Equipment for $12,500.
B. Credit to Common Stock for $13,500.
C. Credit to Paid-In Capital in Excess of Par-Common for $1,000.
D. Debit to Common Stock for $12,500.
Question 5 of 20 5.0 Points
Articles of incorporation contain all of the following except:
A. the location of the business.
B. the life expectancy (usually forever) of the business.
C. the names of the directors.
D. the nature of the business.
Question 6 of 20 5.0 Points
The articles of incorporation are:
A. submitted by the incorporators to the Governor of the State for approval.
B. submitted by the incorporators to the IRS for approval.
C. submitted by the incorporators to the Office of the Secretary of State for approval.
D. submitted by the incorporators to Securities and Exchange Commission for approval.
Question 7 of 20 5.0 Points
Which of the following is a characteristic of a corporation?
A. A corporation cannot own property in its name.
B. When stockholders sell their shares, the corporation is dissolved.
C. Cash dividends to the stockholders are non-taxable.
D. The stockholders have limited liability.
Question 8 of 20 5.0 Points
Dividends in arrears occur when the company does not pay dividends to:
A. cumulative preferred stockholders.
B. non-participating common stockholders.
C. participating preferred stockholders.
D. non-cumulative preferred stockholders.
Question 9 of 20 5.0 Points
Monarch Company reported Subscriptions Receivable-Common Stock of $1,500 and Common Stock Subscribed of $3,200 on its balance sheet. All the following are true except:
A. the original stock subscribed totaled $3,200.
B. the remaining amount to be collected from subscribers before the shares will be issued is $1,500.
C. Monarch previously issued $1,700 of the subscribed stock.
D. the amount previously collected on the stock subscriptions is $1,700.
Question 10 of 20 5.0 Points
Revenue earned by the business was recorded as additional paid-in capital. This error would cause:
A. the period end assets to be overstated.
B. the period’s net income to be understated.
C. the period’s net income to be overstated.
D. None of these are correct.
Question 11 of 20 5.0 Points
The Logan Company issued 140 shares of its $12 par value stock for $14 per
share. The entry to record the receipt of cash and issuance of the stock would include a:
A. credit to Common Stock for $1,960.
B. debit to Cash of $1,680; credit to Common Stock for $1,680.
C. debit to Cash for $1,960.
D. debit to Discount on Common Stock for $280
Question 12 of 20 5.0 Points
Officers of the corporation are:
A. appointed by the board of directors.
B. stockholders of the corporation.
C. appointed by the stockholders.
D. None of these answers are correct.
Question 13 of 20 5.0 Points
The Collins Corporation Stockholders’ Equity section includes the following:
Preferred Stock $ 12,000
Common Stock 15,000
Paid-in Capital in Excess of Par-Preferred 2,700
Paid-in Capital in Excess of Par-Common 4,100
Retained Earnings 8,200
What was the total amount preferred stock was sold for?
A. $16,100
B. $20,200
C. $14,700
D. $12,000
Question 14 of 20 5.0 Points
The major parts of the Stockholders’ Equity section of the balance sheet are:
A. Stock, Paid-in Capital, and Retained Earnings.
B. Paid-in Capital and Retained Earnings.
C. Stock and Retained Earnings.
D. Authorized Stock and Preferred Stock.
Question 15 of 20 5.0 Points
Which of the following is not a characteristic of a corporation?
A. No mutual agency
B. Limited liability
C. Unlimited life
D. Ease of formation
Question 16 of 20 5.0 Points
If preferred stock is cumulative, the preferred stockholders:
A. have a right to certain dividends every year.
B. will always receive a yearly dividend.
C. may receive a bonus.
D. All of these answers are correct.
Question 17 of 20 5.0 Points
Authorized capital stock is:
A. shares issued to the corporation’s officers.
B. shares that pay dividends.
C. shares sold and in stockholder possession.
D. shares listed in the charter.
Question 18 of 20 5.0 Points
Rhubarb Corporation’s outstanding stock is 100 shares of $100, 11% cumulative nonparticipating preferred stock and 2,000 shares of $12 par value common stock. Rhubarb paid $1,600 cash dividends during the year. Common stockholders received:
A. $0.
B. $500.
C. $1,100.
D. $2,500.
Question 19 of 20 5.0 Points
The TM Stockholders’ Equity section includes the following:
Preferred Stock $ 3,800
Common Stock 7,700
Paid-in Capital in Excess of Par-Preferred 400
Paid-in Capital in Excess of Par-Common 2,250
Retained Earnings 6,000
What was the total amount common stock was sold for?
A. $11,500
B. $7,700
C. $9,950
D. $13,700
Question 20 of 20 5.0 Points
Characteristics of a corporation include:
A. stockholders having limited liability.
B. choosing a board of directors.
C. stockholders having unlimited liability.
D. direct management by the stockholders.
Aug 29, 2021 | Uncategorized
Principles of Accounting 2
1) Issued stock is:
A) Authorized shares of stock that can be sold.
B) Stock only sold to another company
C) Shares sold and in stockholders possession
D) Stock sold to stockholders.
2) In the statement of cash flows, which event would cause net income to be increased?
A) A decrease in Inventory
B) An increase in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
3) Finished Goods Inventory appears on which of the following statements on the worksheet?
A) Statement of cost of goods manufactured and income statement
B) Statement of cost of goods manufactured and balance sheet
C) Income statement and balance sheet
D) Income statement and cost of goods sold statement
4) One reason a corporation might issue bonds rather than sell stock is that:
a. Bond interest is a tax-deductible expense
b. Interest rates are high
c. Dividends will lower the amount of tax due
d. Bondholders have claims at liquidation
5) For a corporation, bond interest:
a. Is treated the same as dividends for tax purposes.
b. Has no effect on earnings and therefore has no effect on income taxes
c. Reduces income tax by reducing earning
d. None of the above
6) Dividends paid to stockholders area:
a. Taxable to the recipient stockholder
b. Taxable to the corporation
c. Treated the same as bond interest
d. None of the above
7) If beginning and ending inventories are $20,000 and $30,000, respectively, and cost of goods sold is $400,000, what is the inventory turnover ratio?
a. 18
b. 16
c. 15.5
d. 15
8) Declaration of a cash dividend causes:
a. An increase in stockholders equity
b. An increase in cash
c. An increase in liabilities
d. None of the above
9) The current ratio is:
a) Quick assets divided by current liabilities.
b) Assets divided by liabilities
c) Current assets divided by current liabilities
d) Net sales divided by current liabilities.
10) When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:
a. A premium
b. Their face value
c. Their maturity rate
d. A discount
Principles of Finance
1) Of the following, which is NOT one of the four main areas of finance?
a. International finance
b. Corporate finance
c. Investments
d. All are considered main areas of finance.
2) ______________ is a major disadvantage of the corporate form of business.
a) Double taxation
b) Unlimited liability
c) Lack of ability to raise capital
d) Transfer of ownership
3) Everything else equal, an industry with more leverage will have a:
a. Higher return on assets
b. Higher return on equity
c. Lower return on equity
d. Both A & B
4) If you can earn 5.25% per year on your investments, how long will it take to double your money?
a. 6.31 years
b. 19.05 years
c. 13.55 years
d. There is not enough information to answer this question.
5) Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?
a. -$3.00, -9.52%
b. -$3.85, -12.22%
c. -$.85, -2.70%
d. -$3.85, -9.52%
6) If you were required to estimate the average return for one category of securities for the coming year, history tells us that you should have the greatest degree of confidence estimating which of the following?
a. Long-term government bonds
b. 3-month U.S. Treasury bills
c. Small-company stocks
d. Large-company stocks
7) Which of the following are not considered a part of the firm s capital structure?
a. Long-term debt
b. Retained earnings
c. Inventory
d. Preferred stock
8) Which of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?
a. 1) A collection agency, 2) court action, 3) a letter requesting overdue payment
b. 1) Court action, 2) a collection agency, 3) a letter requesting overdue payment
c. 1) A letter requesting overdue payment, 2) count action, 3) a collection agency
d. 1) A letter requesting overdue payment, 2) a collection agency, 3) court action
9) John is in a high income-tax bracket and wishes to minimize current taxes payable. He also has a sizeable current income and prefers high growth rates to significant annual cash flow from his equity investments. Which of the following dividend polices would John most likely prefer if we assume that the dividend policy has no impact on the value of the firm and that the gains tax rate is lower than the ordinary tax rate?
a. High-dividend-payout policy
b. No-dividend-payout policy
c. Low-dividend-payout policy
d. John would be indifferent to all of the dividend policies
10) Which of the following would NOT be considered a cost of debt financing?
a. The required return on a bank loan
b. The required return on preferred stock
c. The yield-to-maturity of a bond issue
d. The required return on money borrowed from a venture capitalist.
Aug 29, 2021 | Uncategorized
Principles of Accounting 2
1) Issued stock is:
A) Authorized shares of stock that can be sold.
B) Stock only sold to another company
C) Shares sold and in stockholders possession
D) Stock sold to stockholders.
2) In the statement of cash flows, which event would cause net income to be increased?
A) A decrease in Inventory
B) An increase in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
3) Finished Goods Inventory appears on which of the following statements on the worksheet?
A) Statement of cost of goods manufactured and income statement
B) Statement of cost of goods manufactured and balance sheet
C) Income statement and balance sheet
D) Income statement and cost of goods sold statement
4) One reason a corporation might issue bonds rather than sell stock is that:
a. Bond interest is a tax-deductible expense
b. Interest rates are high
c. Dividends will lower the amount of tax due
d. Bondholders have claims at liquidation
5) For a corporation, bond interest:
a. Is treated the same as dividends for tax purposes.
b. Has no effect on earnings and therefore has no effect on income taxes
c. Reduces income tax by reducing earning
d. None of the above
6) Dividends paid to stockholders area:
a. Taxable to the recipient stockholder
b. Taxable to the corporation
c. Treated the same as bond interest
d. None of the above
7) If beginning and ending inventories are $20,000 and $30,000, respectively, and cost of goods sold is $400,000, what is the inventory turnover ratio?
a. 18
b. 16
c. 15.5
d. 15
8) Declaration of a cash dividend causes:
a. An increase in stockholders equity
b. An increase in cash
c. An increase in liabilities
d. None of the above
9) The current ratio is:
a) Quick assets divided by current liabilities.
b) Assets divided by liabilities
c) Current assets divided by current liabilities
d) Net sales divided by current liabilities.
10)When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:
a. A premium
b. Their face value
c. Their maturity rate
d. A discount
Principles of Finance
1) Of the following, which is NOT one of the four main areas of finance?
a. International finance
b. Corporate finance
c. Investments
d. All are considered main areas of finance.
2) ______________ is a major disadvantage of the corporate form of business.
a) Double taxation
b) Unlimited liability
c) Lack of ability to raise capital
d) Transfer of ownership
3) Everything else equal, an industry with more leverage will have a:
a. Higher return on assets
b. Higher return on equity
c. Lower return on equity
d. Both A & B
4) If you can earn 5.25% per year on your investments, how long will it take to double your money?
a. 6.31 years
b. 19.05 years
c. 13.55 years
d. There is not enough information to answer this question.
5) Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?
a. -$3.00, -9.52%
b. -$3.85, -12.22%
c. -$.85, -2.70%
d. -$3.85, -9.52%
6) If you were required to estimate the average return for one category of securities for the coming year, history tells us that you should have the greatest degree of confidence estimating which of the following?
a. Long-term government bonds
b. 3-month U.S. Treasury bills
c. Small-company stocks
d. Large-company stocks
7) Which of the following are not considered a part of the firm s capital structure?
a. Long-term debt
b. Retained earnings
c. Inventory
d. Preferred stock
8) Which of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?
a. 1) A collection agency, 2) court action, 3) a letter requesting overdue payment
b. 1) Court action, 2) a collection agency, 3) a letter requesting overdue payment
c. 1) A letter requesting overdue payment, 2) count action, 3) a collection agency
d. 1) A letter requesting overdue payment, 2) a collection agency, 3) court action
9) John is in a high income-tax bracket and wishes to minimize current taxes payable. He also has a sizeable current income and prefers high growth rates to significant annual cash flow from his equity investments. Which of the following dividend polices would John most likely prefer if we assume that the dividend policy has no impact on the value of the firm and that the gains tax rate is lower than the ordinary tax rate?
a. High-dividend-payout policy
b. No-dividend-payout policy
c. Low-dividend-payout policy
d. John would be indifferent to all of the dividend policies
10) Which of the following would NOT be considered a cost of debt financing?
a. The required return on a bank loan
b. The required return on preferred stock
c. The yield-to-maturity of a bond issue
d. The required return on money borrowed from a venture capitalist.
Aug 29, 2021 | Uncategorized
Question
|
ix months ago, a company purchased an investment in stock for $72,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $76,200. The company should record a:
|
|
Debit to Investment Revenue for $4,200. |
|
Credit to Investment Revenue for $4,200. |
|
Credit to Unrealized Gain-Equity for $4,200. |
|
Credit to Market Adjustment – Available-for-Sale for $4,200. |
|
Debit to Unrealized Loss-Equity for $4,200.
|
On February 15, Seacroft buys 6,500 shares of Kebo common stock at $ 28.68 per share plus a brokerage fee of $400. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.20 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 25 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.45 per share less a brokerage fee of $250. The journal entry to record the dividend on April 25 is:
|
|
Debit Cash $7,800; credit Gain on Sale of Investments $7,800. |
|
Debit Cash $7,800; credit Interest Revenue $7,800. |
|
Debit Cash $7,800; credit Dividend Revenue $7,800. |
|
Debit Cash $6,911; credit Dividend Revenue $6,911. |
|
Debit Cash $6,911; credit Interest Revenue $6,911.
|
A company owns 9% bonds with a par value of $100,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company’s year-end) would be (Do not round your intermediate calculations):
|
|
$750. |
|
$2,250. |
|
$4,500. |
|
$9,000. |
|
$1,500.
|
On February 15, Seacroft buys 7,200 shares of Kebo common at $28.55 per share plus a brokerage fee of $410. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.17 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 25 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.32 per share less a brokerage fee of $260 . The fair value of the remaining shares is $29.52 per share. The amount that Seacroft should report in the equity section of its year-end December 31 balance sheet for its investment in Kebo is (Round your intermediate and final dollar values to the nearest dollar amount):
|
|
$3,287. |
|
$2,307. |
|
$6,574. |
|
$10,731. |
|
$8,424.
|
On February 15, Seacroft buys 6,000 shares of Kebo common at $28.73 per share plus a brokerage fee of $495. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.25 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 25 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.50 per share less a brokerage fee of $350. The fair value of the remaining shares if $29.70 per share. The amount that Seacroft should report in the asset section of its year-end December 31 balance sheet for its investment in Kebo is:
|
|
$1,712. |
|
$5,610. |
|
$89,100. |
|
$172,875. |
|
$2,662.
|
On February 15, Seacroft buys 6,400 shares of Kebo common stock at $28.69 per share plus a brokerage fee of $475. The stock is classified as available-for-sale securities. On March 15, Kebo declares a dividend of $1.21 per share payable to stockholders of record on April 15. Seacroft received the dividend on April 25 and ultimately sells half of the Kebo stock on November 17 of the current year for $29.46 per share less a brokerage fee of $330. The fair value of the remaining shares is $29.66 per share. The amount that Seacroft should report on its year-end December 31 income statement related to the investment in Kebo is (Round your intermediate and final dollar values to the nearest dollar amount):
|
|
$2,866. |
|
$9,640. |
|
$1,896. |
|
$5,610. |
|
$7,744. |
|
|
|
|
|
Aug 29, 2021 | Uncategorized
Q. No. 1
Bloom Company management predicts that it will incur fixed costs of $250,000 and earn pretax income of $350,000 in the next period. Its expected contribution margin ratio is 60%.
| 1. |
Compute the amount of total dollar sales. |
2. Compute the amount of total variable costs.
Q. No. 2
|
A jeans maker is designing a new line of jeans called the Slims. The jeans will sell for $370 per pair and cost $262.70 per pair in variable costs to make. (Round your answers to 2 decimal places.)
|
|
Q. No. 3
Blanchard Company manufactures a single product that sells for $250 per unit and whose total variable costs are $200 per unit. The company s annual fixed costs are $770,000.
| (1) |
Prepare a contribution margin income statement for Blanchard Company at the break-even point.Assume the company s fixed costs increase by $139,000. What amount of sales (in dollars) is needed to break even?
Q. No. 4
|
Blanchard Company manufactures a single product that sells for $180 per unit and whose total variable costs are $126 per unit. The company targets an annual after-tax income of $1,012,500. The company is subject to a 25% income tax rate. Assume that fixed costs remain at $842,400.
|
|
|
Q. No. 5
Nombre Company management predicts $410,000 of variable costs, $990,000 of fixed costs, and a pretax income of $259,500 in the next period. Management also predicts that the contribution margin per unit will be $51.
Aug 29, 2021 | Uncategorized
Question 1 of 30 3.3334 Points
Condi Corporation sells $100,000, 12%, 10-year bonds for 97 on January 1, 2009. Interest is paid on January 1 and July 1. Straight-line amortization is used. The amount of interest paid on July 1, 2009 is:
A. $6,000.
B. $5,850.
C. $12,000.
D. $6,150.
Question 2 of 30 3.3334 Points
A bond payable is similar to which of the following?
A. Accounts Payable
B. Notes Payable
C. Accounts Receivable
D. Cash
Question 3 of 30 3.3334 Points
For a corporation, a premium on bonds results when:
A. the contract rate is less than the market rate.
B. the contract rate is greater than the market rate.
C. the face value is greater than the effective rate.
D. None of these answers are correct.
Question 4 of 30 3.3334 Points
When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:
A. a premium.
B. their face value.
C. a discount.
D. their maturity value.
Question 5 of 30 3.3334 Points
Bailey Corporation has decided to issue bonds pledging specific assets. What type of bonds is it offering?
A. Secured bonds
B. Debenture bonds
C. Serial bonds
D. Convertible bonds
Question 6 of 30 3.3334 Points
Bond Interest Payable is reported as a:
A. contra-liability on the balance sheet.
B. current liability on the income statement.
C. contra-liability on the income statement.
D. current liability on the balance sheet.
Question 7 of 30 3.3334 Points
Carrying value is the same thing as:
A. fair market value.
B. discount value.
C. book value.
D. premium value.
Question 8 of 30 3.3334 Points
The contract rate for a bond is:
A. the annual interest rate based on face value.
B. the annual interest rate based on selling price.
C. the annual interest rate based on market value.
D. None of these answers are correct.
Question 9 of 30 3.3334 Points
Davis Corporation sells $100,000, 12%, 10-year bonds for 103 on January 1. Compute the semi-annual interest expense recorded on July 1 using the interest method. The market rate is 8%.
A. $12,000
B. $8,240
C. $6,000
D. $4,120
Question 10 of 30 3.3334 Points
When selling bonds at a premium, the premium received effectively:
A. reduces the cost of borrowing.
B. does not affect the cost of borrowing.
C. reduces the amount of cash received when bonds are sold.
D. increases the cost of borrowing.
Question 11 of 30 3.3334 Points
The entry to record the semiannual payment and amortization of the discount using the straight-line method on a 10%, $100,000, 5-year bond issued at 97 would be to:
A. debit Bond Interest Expense $10,000; credit Cash $10,000.
B. debit Bond Interest Expense $5,000; credit Cash $5,000.
C. debit Bond Interest Expense $13,000; credit Cash $10,000; credit Discount on Bonds Payable $3,000.
D. debit Bond Interest Expense $5,300; credit Cash $5,000; credit Discount on Bonds Payable $300.
Question 12 of 30 3.3334 Points
The interest rate specified in the bond indenture is called the:
A. market rate.
B. discount rate.
C. effective rate.
D. contract rate.
Question 13 of 30 3.3334 Points
Bond certificates state the:
A. market value and contract rate.
B. market value and current interest rate.
C. face value and contract rate.
D. face value and current interest rate.
Question 14 of 30 3.3334 Points
Dividends paid to stockholders are:
A. taxable to the corporation.
B. treated the same as bond interest.
C. taxable to the recipient stockholder.
D. None of these answers are correct.
Question 15 of 30 3.3334 Points
Bonds payable issued with collateral are called:
A. debenture bonds.
B. secured bonds.
C. callable bonds.
D. serial bonds.
Question 16 of 30 3.3334 Points
If Accounts Receivable decreases on a comparative balance sheet, this means:
A. collections were more than sales.
B. credit sales are increasing more than collections.
C. credit sales are decreasing.
D. None of these answers are correct.
Question 17 of 30 3.3334 Points
Of the following items, which is not classified as an investing activity on the statement of cash flows?
A. Selling goods and services
B. Sale of a plant asset for cash
C. Collecting loans
D. Purchasing land
Question 18 of 30 3.3334 Points
Collins Corporation reported net income of $35,000; depreciation expenses of $20,000; an increase in Accounts Payable of $2,000; and an increase in Accounts Receivable of $3,000. Net cash flow from operating activities using the indirect method is:
A. $56,000.
B. $55,000.
C. $54,000.
D. $50,000.
Question 19 of 30 3.3334 Points
If $12,000 was generated from operations, $6,000 was used for investing activities, and $4,000 was provided by financing activities, the cash balance would:
A. increase by $2,000.
B. increase by $14,000.
C. increase by $10,000.
D. decrease by $20,000.
Question 20 of 30 3.3334 Points
The accuracy of the statement of cash flows, regardless of method used, can be verified by computing the change in the balance of:
A. revenue.
B. equity.
C. liabilities.
D. cash.
Question 21 of 30 3.3334 Points
The statement of cash flows provides information about all of the following except:
A. operating activities.
B. financing activities.
C. investing activities.
D. organizing activities.
Question 22 of 30 3.3334 Points
Activities that pay and collect interest on loans are:
A. financing and investing activities.
B. operating and financing activities.
C. marketing activities.
D. operating and investing activities.
Question 23 of 30 3.3334 Points
Many accountants prefer which method of computing cash flow from operating activities?
A. Direct method
B. Indirect method
C. Combination method
D. Adjusting method
Question 24 of 30 3.3334 Points
The sale of plant and equipment for cash would result in:
A. a decrease subtracted from net income from operations.
B. a decrease in cash from investing activities.
C. an increase in cash from investing activities.
D. an increase added to net income from operations.
Question 25 of 30 3.3334 Points
Which of the following would be included in the net cash flows from operating activities section of a cash flow statement using the indirect method?
A. Sales of plant, property and equipment
B. Payment of interest and expenses
C. Making loans and paying out interest
D. Issuing bonds and notes
Question 26 of 30 3.3334 Points
When comparing net cash provided by operating activities using the indirect versus direct method:
A. there is no difference between the two methods
B. net cash is lower using indirect method
C. net cash is higher using the indirect method
D. depreciation expense is used in the direct method.
Question 27 of 30 3.3334 Points
The cash flow statement has all of the following sections except:
A. net cash flow from operating activities.
B. net cash flow from managing activities.
C. net cash flow from financing activities.
D. net cash flow from investing activities.
Question 28 of 30 3.3334 Points
Big Toy Corporation’s records show profit of $30,000; depreciation expense of $10,000; and cash dividends declared and paid of $5,000. The amount of cash used in operating activities using the indirect method is:
A. $10,000.
B. $40,000.
C. $20,000.
D. $30,000.
Question 29 of 30 3.3334 Points
Activities that increase and decrease as a result of selling a company’s stock are:
A. investing activities.
B. marketing activities.
C. operating activities.
D. financing activities.
Question 30 of 30 3.3334 Points
When preparing the statement of cash flows by the indirect method, if accumulated depreciation increases the difference is:
A. added to net income.
B. not considered in the statement of cash flows using the indirect method.
C. added to investments.
D. deducted from net income.
Aug 29, 2021 | Uncategorized
PRINCIPLES OF ACCOUNTING II
TEST ONE
CHAPTER 12,13,14
QUESTION #1
Samantha Adams and Greg Dwyer decide to form a partnership. Adams invests $15,000 cash and accounts receivable of $30,000 less allowance for doubtful accounts of $2,000. Dwyer contributes $20,000 cash and equipment having a $6,000 book value. It is agreed that the allowance account should be $3,000 and the fair market value of the equipment is $10,000.
Instructions
Prepare the necessary journal entry to record the formation of the partnership.
QUESTION #2
High & Low Co. reports net income of $34,000. The partnership agreement provides for annual salaries of $24,000 for High and $15,000 for Low and interest allowances of $4,000 to High and $6,000 to Low. Any remaining income or loss is to be shared 40% by Hifh and 60% by Low.
Instructions
Compute the amount of net income distributed to each partner.
QUESTION #3
The Henderson and Perry Partnership has partner capital account balances as follows:
Henderson, Capital $550,000
Perry, Capital 250,000
The partners share income and losses in the ratio of 60% to Henderson and 40% to Perry.
Instructions
Prepare the journal entry on the books of the partnership to record the admission of Tyler as a new partner under the following three independent circumstances.
1. Tyler pays $250,000 to Henderson and $150,000 to Perry for one-half of each of their ownership interest in a personal transaction.
2. Tyler invests $850,000 in the partnership for a one-third interest in partnership capital.
3. Tyler invests $175,000 in the partnership for a one-third interest in partnership capital
QUESTION #4
The XYZ Partnership is to be liquidated and you have been hired to prepare a Schedule of Cash Payments for the partnership. Partners X, Y, and Z share income and losses in the ratio of 4:3:3, respectively. Assume the following:
1. The noncash assets were sold for $75,000.
2. Liabilities were paid in full.
3. The remaining cash was distributed to the partners. (If any partner has a capital deficiency, assume that the partner is unable to make up the capital deficiency.)
Instructions
Using the above information, complete the Schedule of Cash Payments below:
ABC PARTNERSHIP
Schedule of Cash Payments
Noncash X Y Z
Item Cash + Assets = Liabilities + Capital +Capital+ Capital
Balances before
liquidation 25,000 + 150,000 = 50,000 + 25,000 +35,000+ 65,000
QUESTION #5
The corporate charter of Highpoint Corporation allows the issuance of a maximum of 2,500,000 shares of $1 par value common stock. During its first three years of operation, Highpoint issued 1,500,000 shares at $15 per share. It later acquired 30,000 of these shares as treasury stock for $25 per share.
Instructions
Based on the above information, answer the following questions:
(a) How many shares were authorized?
(b) How many shares were issued?
(c) How many shares are outstanding?
(d) What is the balance of the Common Stock account?
(e) What is the balance of the Treasury Stock account?
QUESTION #6
The following items were shown on the balance sheet of Henry Corporation on December 31, 2016:
Stockholders Equity
Paid-In Capital
Capital Stock
Common stock, $5 par value, 360,000 shares
authorized; ______ shares issued and ______ outstanding………………… $1,650,000
Additional paid-in capital
In excess of par value……………………………………………………………………. 165,000
Total paid-in capital………………………………………………………………….. 1,815,000
Retained Earnings……………………………………………………………………………………. 750,000
Total paid-in capital and retained earnings………………………………………… 2,565,000
Less: Treasury stock (15,000 shares)………………………………………………………… (180,000)
Total stockholders’ equity……………………………………………………………….. $2,385,000
Instructions
Complete the following statements and show your computations.
(a) The number of shares of common stock issued was _______________.
(b) The number of shares of common stock outstanding was ____________.
(c) The sales price of the common stock when issued was $____________.
(d) The cost per share of the treasury stock was $_______________.
(e) The average issue price of the common stock was $______________.
(f) Assuming that 25% of the treasury stock is sold at $20 per share, the balance in the Treasury Stock account would be $_______________.
QUESTION #7
Gypsy Corporation is authorized to issue 1,000,000 shares of $5 par value common stock. During 2016, its first year of operation, the company has the following stock transactions.
Jan. 1 Paid the state $4,000 for incorporation fees.
Jan. 15 Issued 500,000 shares of stock at $7 per share.
Jan. 30 Attorneys for the company accepted 500 shares of common stock as payment for legal services rendered in helping the company incorporate. The legal services are estimated to have a value of $7,000.
July 2 Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The stock is currently selling on a national exchange at $8 per share.
Sept. 5 Purchased 15,000 shares of common stock for the treasury at $10 per share.
Dec. 6 Sold 11,000 shares of the treasury stock at $11 per share.
Instructions
Journalize the transactions for Gypsy Corporation.
QUESTION #8
The stockholders’ equity section of Evergreen Corporation at December 31, 2017, included the following:
6% preferred stock, $100 par value, cumulative,
10,000 shares authorized, 8,000 shares issued and outstanding……… $ 800,000
Common stock, $10 par value, 250,000 shares authorized,
200,000 shares issued and outstanding ……………………………………….. $2,000,000
Dividends were not declared on the preferred stock in 2017 and are in arrears.
On September 15, 2018, the board of directors of Ellis Corporation declared dividends on the preferred stock for 2017 and 2018, to stockholders of record on October 1, 2018, payable on October 15, 2018.
On November 1, 2018, the board of directors declared a $.90 per share dividend on the common stock, payable November 30, 2018, to stockholders of record on November 15, 2018.
Instructions
Prepare the journal entries that should be made by Ellis Corporation on the dates indicated below:
September 15, 2018 November 1, 2018
October 1, 2018 November 15, 2018
October 15, 2018 November 30, 2018
QUESTION #9
Roland Corporation has 120,000 shares of $5 par value common stock outstanding. It declared a 15% stock dividend on June 1 when the market price per share was $12. The shares were issued on June 30.
Instructions
Prepare the necessary entries for the declaration and payment of the stock dividend.
QUESTION #10
The following information is available for Otto Corporation:
Retained Earnings, December 31, 2018 $1,500,000
Net Income for the year ended December 31, 2019 $ 250,000
The company accountant, in preparing financial statements for the year ending December 31, 2019, has discovered the following information:
The company’s previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2017 and 2018 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company’s policy. The cumulative effects of the error on prior years was $15,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2019.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2019.
Aug 29, 2021 | Uncategorized
Financial Ratios
- 1.Liquidity ratios.Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:
|
|
Edison
|
Stagg
|
Thornton
|
|
Cash
|
$6,000
|
$5,000
|
$4,000
|
|
|
Short-term investments
|
3,000
|
2,500
|
2,000
|
|
|
Accounts receivable
|
2,000
|
2,500
|
3,000
|
|
|
Inventory
|
1,000
|
2,500
|
4,000
|
|
|
Prepaid expenses
|
800
|
800
|
800
|
|
|
Accounts payable
|
200
|
200
|
200
|
|
|
Notes payable: short-term
|
3,100
|
3,100
|
3,100
|
|
|
Accrued payables
|
300
|
300
|
300
|
|
|
Long-term liabilities
|
3,800
|
3,800
|
3,800
|
|
|
|
|
|
|
|
|
- Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?
|
2.Computation and evaluation of activity ratios.The following data relate to Alaska Products, Inc:
|
|
|
|
|
|
|
|
20X5
|
20X4
|
|
Net credit sales
|
$832,000
|
$760,000
|
|
|
Cost of goods sold
|
530,000
|
400,000
|
|
|
Cash, Dec. 31
|
125,000
|
110,000
|
|
|
Average Accounts receivable
|
205,000
|
156,000
|
|
|
Average Inventory
|
70,000
|
50,000
|
|
|
Accounts payable, Dec. 31
|
115,000
|
108,000
|
|
|
Instructions
- Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.
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3. Profitability ratios, trading on the equity.Digital Relay has both preferred and common stock outstanding. The com pany reported the following information for 20X7:
|
|
|
|
Net sales
|
$1,750,000
|
|
Interest expense
|
120,000
|
|
Income tax expense
|
80,000
|
|
Preferred dividends
|
25,000
|
|
Net income
|
130,000
|
|
Average assets
|
1,200,000
|
|
Average common stockholders equity
|
500,000
|
|
|
|
|
|
|
- Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
- Does the firm have positive or negative financial leverage? Briefly ex plain.
|
4. Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
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|
|
|
|
|
20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
90,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
160,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
|
|
|
|
- Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.
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5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.
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20X2
|
20X1
|
|
Current Assets
|
$86,000
|
$80,000
|
|
Property, Plant, and Equipment (net)
|
99,000
|
80,000
|
|
Intangibles
|
25,000
|
50,000
|
|
Current Liabilities
|
40,800
|
48,000
|
|
Long-Term Liabilities
|
153,000
|
150,000
|
|
Stockholders Equity
|
16,200
|
12,000
|
|
Net Sales
|
500,000
|
500,000
|
|
Cost of Goods Sold
|
322,500
|
350,000
|
|
Operating Expenses
|
93,500
|
85,000
|
|
|
|
|
- Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.
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|
6. Ratio computation. The financial statements of the Lone Pine Company follow.
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LONE PINE COMPANY
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|
Comparative Balance Sheets
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|
|
December 31, 20X2 and 20X1 ($000 Omitted)
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|
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20X2
|
20X1
|
|
|
Assets
|
|
|
Current Assets
|
|
|
Cash and Short-Term Investments
|
$400
|
|
$600
|
|
|
Accounts Receivable (net)
|
3,000
|
|
2,400
|
|
|
Inventories
|
3,000
|
|
2,300
|
|
|
Total Current Assets
|
$6,400
|
|
$5,300
|
|
|
Property, Plant, and Equipment
|
|
|
Land
|
$1,700
|
|
$500
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|
|
Buildings and Equipment (net)
|
1,500
|
|
1,000
|
|
|
Total Property, Plant, and Equipment
|
$3,200
|
|
$1,500
|
|
|
Total Assets
|
$9,600
|
|
$6,800
|
|
|
Liabilities and Stockholders Equity
|
|
|
Current Liabilities
|
|
|
Accounts Payable
|
$2,800
|
|
$1,700
|
|
|
Notes Payable
|
1,100
|
|
1,900
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|
|
Total Current Liabilities
|
$3,900
|
|
$3,600
|
|
|
Long-Term Liabilities
|
|
|
Bonds Payable
|
4,100
|
|
2,100
|
|
|
Total Liabilities
|
$8,000
|
|
$5,700
|
|
|
Stockholders Equity
|
|
|
Common Stock
|
$200
|
|
$200
|
|
|
Retained Earnings
|
1,400
|
|
900
|
|
|
Total Stockholders Equity
|
$1,600
|
|
$1,100
|
|
Total Liabilities and Stockholders Equity
|
$9,600
|
|
$6,800
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|
|
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|
|
|
|
|
|
LONE PINE COMPANY
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|
|
Statement of Income and Retained Earnings
|
|
|
For the Year Ending December 31,20X2 ($000 Omitted)
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|
|
Net Sales*
|
|
$36,000
|
|
|
|
Less: Cost of Goods Sold
|
$20,000
|
|
|
|
|
Selling Expense
|
6,000
|
|
|
|
|
Administrative Expense
|
4,000
|
|
|
|
|
Interest Expense
|
400
|
|
|
|
|
Income Tax Expense
|
2,000
|
32,400
|
|
|
|
Net Income
|
|
$3,600
|
|
|
|
Retained Earnings, Jan. 1
|
|
900
|
|
|
|
Ending Retained Earnings
|
|
$4,500
|
|
|
|
Cash Dividends Declared and Paid
|
|
3,100
|
|
|
|
Retained Earnings, Dec. 31
|
|
$1,400
|
|
|
|
*All sales are on account.
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|
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|
|
|
|
|
Instructions
Compute the following items for Lone Pine Company for 20X2, rounding all calcu lations to two decimal places when necessary:
a. Quick ratio
b. Current ratio
c. Inventory-turnover ratio
d. Accounts-receivable-turnover ratio
e. Return-on-assets ratio
f. Net-profit-margin ratio
g. Return-on-common-stockholders equity
h. Debt-to-total assets
i. Number of times that interest is earned
Aug 29, 2021 | Uncategorized
- Given the following information:
Complete the following three problems.
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Total assets
|
$100,000
|
|
Debt (12% interest rate)
|
$80,000
|
|
Equity
|
$20,000
|
|
Variable costs of production
|
$14 per unit
|
|
Fixed cost of production
|
$27,000
|
|
Units Sold
|
12,300
|
|
Sales price
|
$19.75 per unit
|
What happens to operating income and net income if output is increased by 10 percent? Verify your answer.
- A firm needs $100 to start and has the following expectations:
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Sales
|
$200
|
|
Expenses
|
$185
|
|
Tax rate
|
33% of earnings
|
- What are earnings if the owners invest the $100?
- If the firm borrows $40 of the $100 at an interest rate of 10%, what are the firm’s net earnings?
- What is the return on the owners’ investment in each case? Why do the returns differ?
- If expenses rise to $194, what will be the returns in each case?
- In which case did the returns decline more?
- What generalization can you draw from the above?
- A firm with sales of $5,000 has the following balance sheet:
|
Assets, Liabilities and Equity as of xx/xx/xx
|
|
Assets
|
Liabilities and Equity
|
|
Accounts receivable
|
$1,300
|
Accounts payable
|
$1,200
|
|
Inventory
|
1,600
|
Long-term debt
|
2,500
|
|
Plant
|
1,700
|
Equity
|
900
|
|
Total
|
$4,600
|
Total
|
$4,600
|
The firm earns 20 percent on sales and expects those sales to rise to $5,500. The increased sales may require additional financing. Accounts receivable and inventory will increase, and trade accounts will also spontaneously increase with the increase in sales. Management expects to distribute 75% of earnings.
- Determine the new balance sheet entries for those assets and liabilities that spontaneously change with the level of sales using the percent of sales technique. (Accounts receivable, inventory, and accounts payable vary with sales; the other entries do not). Round off to nearest percentage point, such as 22% or .22.
- Will the firm need external financing to achieve sales of $5,500?
- Construct the pro forma balance sheet for sales of $5,500. Any new financing should be obtained by issuing new long term debt. Any excess funds should be held in cash.
Aug 29, 2021 | Uncategorized
IPO Presentation:
You work for a medium sized privately held electronics firm which is considering transitioning to a publically held organization. Your boss found out that you were taking business courses at a University and has asked you to prepare a presentation for upper level management to explain the process by which a privately held company would transition to publicly held company. He has asked you to describe the general accounting processes involved in establishing an initial public offering (IPO), including but not limited to accounting for all assets, liabilities and equities of the firm. Prepare a 15-20 slide professional MS PowerPoint presentation which covers the following:
- Identify and explain the top five reasons private companies go public.
- Explain information the firm is required to provide to the investor with complete transparency.
- Compare and contrast the differences in accounting processes and procedures that medium sized companies such as yours go through when going public.
- Discuss any concerns you believe the company should guard against while transitioning from privately held to publicly held (shareholder apprehension, fair market value, etc.) and provide solutions to each concern.
Aug 29, 2021 | Uncategorized
On January 1, 20×1, Powers Company acquired 80% of the common stock of Sculley Company for $195,000. On this date Sculley had total owners’ equity of $200,000 (common stock, other paid-in capital, and retained earnings of $10,000, $90,000 and $100,000 respectively).
Any excess of cost over book value is attributable to inventory (worth $6,250 more than cost), to equipment (worth $12,500 more than book value), and to patents. FIFO is used for inventories. The equipment has remaining life of five years and straight-line depreciation is used. The excess attributable to the patents is to be amortized over 20 years.
On July 1, 20×2 Sculley borrowed $100,000 from Powers with a 10% 1-year note; interest is due at maturity.
On January 1, 20×2, Powers held merchandise acquired from Sculley for $10,000. During 20×2, Sculley sold the merchandise to Powers for $50,000, $20,000 of which is still held by Powers on December 31, 20×2. Sculley’s usual gross profit on affiliated sales is 50%
On December 31, 20×1, Powers sold equipment to Sculley at a gain of $10,000. During 20×2, the equipment was used by Sculley. Depreciation is being computed using the straight-line method, a five-year life, and no salvage value.
Both companies have a calendar-year fiscal year. Assume that during 20×1 and 20×2, Powers has appropriately accounted for its investment in Sculley using the cost method
Required:
a. Using the information above and the worksheet below, prepare a determination and distribution of excess schedule, and related amortization of excesses.
b. Prepare journal entries for all related transactions.
c. Prepare and complete a worksheet for consolidated financial statements for the year ended December 31, 20×2.
d. Prepare, in good format, consolidated financial statements for the year including the income statement and balance sheet ended December 31, 20×2.
Aug 29, 2021 | Uncategorized
You have held conversations with Precision Part’s leaders and obtained the following information, which you want to use in the development of a 4-year strategic management plan. PPQ Parts employees now number 5,000, and all are currently employed in the United States. It plans to grow to 10,000 employees in 4 years. New facilities will be needed in international expansion, and PPQ Parts anticipates building most of those (80%) outside the United States. PPQ Parts holds 5% of the world market share on small SUVs, but its goal is 9% in 4 years. Current stock price is $10 per share. The goal is $22 a share. Profit margin 3-year average is 6%. Industry average during this time has also been 6%. The company goal is 13% in 4 years. PPQ Parts has averaged 28% employee turnover during the last 3 years. This is compared to an industry average of 25%. The company s goal is to increase employee retention by lowering annual turnover to 17%. PPQ Parts contributes to all the local communities in which it is doing business. This is one of its corporate values. Current charity is 0.5% of total profits, but the company would like to raise that to 5% in 4 years.
Assignment A strategic management plan is vital for the company business today.. Create a basic strategic management plan for PPQ Parts including quantifiable goals and measures. Include the following in your report: Provide environmental scanning of current conditions in the area of expansion including economy, competition, political stability, and so forth. Address internal resource analysis such as managerial and financial strengths and weaknesses. Please include short-term and long-term strategic goals. Location consideration for implementation is vital. Please explain the benefits and limitations for expansion in your chosen area.
-Reference all sources
Aug 29, 2021 | Uncategorized
The following information about the payroll for the week ended December 30 was obtained from the records of Arnsparger Equipment Co.:
Salaries: Deductions:
Sales Salaries $244,000 Income tax withheld $88,704
Warehouse Salaries $135,000 Social security tax withheld $27,216
Office Salaries $125,000 Medicare tax withheld $7,560
Total: $504,000 U.S. savings bonds $11,088
Group insurance $9,072
Total Deductions $143,640
Tax rates assumed:
Social security, 6% on first $100,000 of employee annual earnings
Medicare, 1.5%
State unemployment (employer only), 4.2%
Federal unemployment (employer only), 0.8%
Instructions:
1. Assuming that the payroll for the last week of the year is to be paid on December 31, journalize the following entries:
a. December 30, to record the payroll.
b. December 30, to record the employer s payroll taxes on the payroll to be paid on December 31. Of the total payroll for the last week of the year, $25,000 is subject to unemployment compensation taxes.
2. Assuming that the payroll for the last week of the year is to be paid on January 5 of the following fiscal year, journalize the following entries:
a. December 30, to record the payroll.
b. January 5, to record the employer s payroll taxes on the payroll to be paid on January 5.
Aug 29, 2021 | Uncategorized
PR 9-2A Wigs Plus Company supplies wigs and hair care products to beauty salons throughout California and the Pacific Northwest. The accounts receivable clerk for Wigs Plus prepared the following partially completed aging of receivables schedule as of the end of business on December 31, 2009:
Customer Balance Not Past Due 1-30 31-60 61-90 91-120 Over 120
Alpha Beauty 20,000 20,000
Blonde Wigs 11,000 11,000
Zahn s Beauty 2,900 2,900
Subtotals 900,000 498,600 217,250 98,750 33,300 29,950 22,150
The following accounts were unintentionally omitted from the aging schedule:
Customer Due Date Balance
Sun Coast Beauty May 30, 2009 $ 2850
Paradise Beauty Store Sept 15, 2009 6050
Helix Hair Products Oct 17, 2009 800
Hairy s Hair Care Oct 20, 2009 2000
Surf Images Nov 18, 2009 700
Oh The Hair Nov 29, 2009 3500
Mountain Coatings Dec 1, 2009 2250
Lasting Images Jan 9, 2010 7400
Wigs Plus has a past history of uncollectible accounts by age category, as follows:
Age Class Percent Uncollectible
Not Past Due 2%
1-30 Days past due 4
31-60 days past due 10
61-90 days past due 15
91-120 days past due 35
Over 120 days 80
Instructions:
1. Determine the number of days past due for each of the preceding accounts.
2. Complete the aging of receivables schedule
3. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule.
4. Assume that the allowance for doubtful accounts for Wigs Plus has a credit balance of $1,710 before adjustment on December 31, 2009. Journalize the adjustment for uncollectible account.
Aug 29, 2021 | Uncategorized
The following items were selected from among the transactions completed by Emerald Bay Stores Co. during the current year:
Jan. 15. Purchased merchandise on account from Hood Co., $220,000 terms n/30.
Feb. 14. Issued a 60-day, 6% note for $220,000 to Hood Co., on account.
Apr. 15. Paid Hood Co. the amount owed on the note of February 14.
June 2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia Supply Co., which discounted the note at the rate of 6%.
Aug. 1. Paid Acme Bank the interest due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% note for $187,500. (Journalize both the debit and credit to the notes payable account.)
Sept. 30. Paid Acme Bank the amount due on the note of August 1.
Oct. 8. Paid Columbia Supply Co. the amount due on the note of July 10.
Dec. 1. Purchased office equipment from Mountain Equipment Co. for $120,000, paying $20,000 and issuing a series of ten 6% notes for $10,000 each, coming due at 30-day intervals.
5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in a litigation claims payable account.
31. Paid the amount due Mountain Equipment Co. on the first note in the series issued on December 1.
Instructions:
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year.
(a) Product warranty cost, $16,400;
(b) interest on the nine remaining notes owed to Mountain Equipment Co.
Aug 29, 2021 | Uncategorized
Sheldon Optics produces medical lasers for use in hospitals. The accounts and their balances appear in the ledger of Sheldon optics on October 31 of the current year as follows:
Preferred 2% stock, $80 par (50000 shares authorized 25000 shares issued) $2,000,000
Paid in capital in excess of par-preferred stock $75,000
Common stock, $100 par (500,000 shares authorized, 50,000 shares issued) $5,000,000
Paid in Capital in excess of par common stock $600,000
Retained earnings $16,750,000
At the annual stockholders meeting on December 7, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approx $5,300,000. The plan provided
(a) that the corporation borrow $2,000,000,
(b) that 15,000 shares of the unissued preferred stock be issued through an underwriter, and
(c) that a building, valued at $ 1,850,000, and the land which it is located, valued at $162,500, be acquired in accordance with preliminary negotiations by the issuance of 17,500 shares of common stock.
The plan was approved by the stockholders and accomplished by the following transactions:
Jan 10. Borrowed $2,000,000 from Whitefish National Bank, giving a 7% mortgage note.
Jan 21. Issued 15,000 shares of preferred stock, receiving $84.50 per share in cash.
Jan 31. Issued 17,500 shares of common stock in exchange for land and a building, according to the plan.
No other transaction occurred in January.
Instructions: Journalize the entries to record the forgoing transactions.
Aug 29, 2021 | Uncategorized
Yin & Yang Video has the following unadjusted trial balance as of January 31, 2010:
Yin & Yang Video
Unadjusted Trial Balance
January 31, 2010
Debit Balances Credit Balances
Cash 19,000
Accounts Receivable 34,100
Supplies 4,464
Prepaid Insurance 4,800
Equipment 108,000
Notes Payable 45,000
Accounts Payable 9,650
Chea Wynn, Capital 69,400
Chea Wynn, Drawing 23,500
Fees Earned 356,000
Wages Expense 204,000
Rent Expense 41,700
Advertising Expense 19,800
Gas, Electricity, and Water Expense 11,340
$470,704 $480,050
The debits and credit totals are not equal as a result of the following errors:
a. The balance of cash was overstated by $10,000.
b. A cash receipt of $6,100 was posted as a debit to Cash of $1,600.
c. A debit of $3,500 to Accounts Receivable was not posted.
d. A return of $415 of defective supplies was erroneously posted as a $451 credit to Supplies.
e. An insurance policy acquired at a cost of $800 was posted as a credit to Prepaid Insurance.
f. The balance of Notes Payable was overstated by $9,000.
g. A credit of $1,450 in Accounts Payable was overlooked when the balance of the account was determined.
h. A debit of $2,500 for a withdrawal by the owner was posted as a debit to Chea Wynn, Capital.
i. The balance of $18,900 in Advertising Expense was entered as $19,800 in the trial balance.
j. Miscellaneous Expense, with a balance of $3,060, was omitted from the trial balance.
Instructions:
1. Prepare a corrected unadjusted trial balance as of January 31 of the current year.
2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts Explain.
Aug 29, 2021 | Uncategorized
The following selected accounts and their current balances appear in the ledger of Black Lab Co. for the fiscal year ended April 30, 2012:
Cash $ 42,000 Sales Returns and Allowances $ 40,000
Accounts Receivable 150,000 Sales Discounts 15,000
Merchandise Inventory 180,000 Cost of Merchandise Sold 1,855,000
Offi ce Supplies 5,000 Sales Salaries Expense 400,000
Prepaid Insurance 12,000 Advertising Expense 120,000
Offi ce Equipment 120,000 Depreciation Expense
Accumulated Depreciation Store Equipment 15,000
Offi ce Equipment 28,000 Miscellaneous Selling Expense 18,000
Store Equipment 500,000 Office Salaries Expense 240,000
Accumulated Depreciation Rent Expense 38,000
Store Equipment 87,500 Insurance Expense 24,000
Accounts Payable 48,500 Depreciation Expense
Salaries Payable 4,000 Offi ce Equipment 7,000
Note Payable Office Supplies Expense 4,000
(final payment due 2032) 140,000 Miscellaneous Administrative Exp. 6,000
Cindy Worley, Capital 386,000 Interest Expense 8,000
Cindy Worley, Drawing 45,000
Sales 3,150,000
Instructions
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner s equity.
3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $7,000.
4. Briefly explain (a) how multiple step and single-step income statement differs (b) how report form and account form balance sheet differs.
Aug 29, 2021 | Uncategorized
The following data relate to notes receivable and interest for Vidovich Co., a financial services company. (All notes are dated as of the day they are received.)
Mar. 3. Received a $72,000, 9%, 60-day note on account.
25. Received a $10,000, 8%, 90-day note on account.
May 2. Received $73,080 on note of March 3.
16. Received a $40,000, 7%, 90-day note on account.
31. Received a $25,000, 6%, 30-day note on account.
June 23. Received $10,200 on note of March 25.
30. Received $25,125 on note of May 31.
July 1. Received a $7,500, 12%, 30-day note on account.
31. Received $7,575 on note of July 1.
Aug.14. Received $40,700 on note of May 16.
Instruction:
Journalize the entries to record the transactions.
Aug 29, 2021 | Uncategorized
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
| Direct material: |
5.00 |
pounds |
$ 8.00 |
per pound |
$ 40.00 |
| Direct labor: |
2.00 |
hours |
$ 14.00 |
per hour |
$ 28.00 |
| Variable overhead: |
2.00 |
hours |
$ 5.00 |
per hour |
$ 10.00 |
| Total standard cost per unit |
|
|
|
$ 78.00 |
|
|
|
Fixed cost per month |
Variable cost per unit sold |
| Advertising |
|
|
$ 200,000 |
|
| Sales salaries and commissions |
|
$ 100,000 |
$ 12.00 |
| Shipping expenses |
|
|
|
$ 3.00 |
|
|
March |
|
|
|
|
|
| Budgeted |
Units |
25,000 |
|
|
|
March |
|
| Actual |
Units |
30,000 |
Advertising |
|
$210,000 |
|
|
|
|
Sales salaries and commissions |
$455,000 |
|
| Purchased Materials |
160,000 |
Shipping expenses |
|
$115,000 |
|
| Cost Materials per pound |
$ 7.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Direct labor-hours worked |
55,000 |
|
|
|
|
|
| Cost per hour |
$ 15.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Variable manufacturing |
$ 280,500 |
|
|
|
|
|
| overhead |
|
|
|
|
|
|
|
A. Purchased 160,000 pounds of raw materials at a cost of $7.50 per pound. All of this material was used in production.
B. Direct-laborers worked 55,000 hours at a rate of $15.00 per hour.
C. Total variable manufacturing overhead for the month was $280,500.
D. Total advertising, sales salaries and commissions, and shipping expenses were $210,000, $455,000, and $115,000 respectively.
REQUIRED:
1. What raw materials cost would be included in the company’s flexible budget for March?
2. What is the materials quantity variance for March?
3. What is the materials price variance for March?
4. If Preble had purchased 170,000 pounds of materials at $7.50 per pound and used 160,000 pounds in production, what would be the materials quantity variance for March?
5. If Preble had purchased 170,000 pounds of materials at $7.50 per pound and used 160,000 pounds in production, what would be the materials price variance for March?
6. What direct labor cost would be included in the company’s flexible budget for March?
7. What is the direct labor efficiency variance for March?
8. What is the direct labor rate variance for March?
9. What variable manufacturing overhead cost would be included in the company’s flexible budget for March?
10. What is the variable overhead efficiency variance for March?
11. What is the variable overhead rate variance for March?
12. What amounts of advertising, sales salaries and commissions, and shipping expenses would be included in the company’s flexible budget for March?
13. What is the spending variance related to advertising?
14. What is the spending variance related to sales salaries and commissions?
15. What is the spending variance related to shipping expenses?
Aug 29, 2021 | Uncategorized
Premier Bank and Trust is considering giving Alou Company a loan. Before doing so, management decides that further discussions with Alou s accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $322,120. Discussions with the accountant reveal the following.
1. Alou sold goods costing $37,760 to Comerico Company, FOB shipping point, on December 28. The goods are not expected to arrive at Comerico until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $91,930 that were shipped to Alou FOB destination on December 27 and were still in transit at year-end.
3. Alou received goods costing $23,290 on January 2. The goods were shipped FOB shipping point on December 26 by Grant Co. The goods were not included in the physical count.
4. Alou sold goods costing $37,410 to Emerick Co., FOB destination, on December 30. The goods were received at Emerick on January 8. They were not included in Alou’s physical inventory.
5. Alou received goods costing $43,580 on January 2 that were shipped FOB shipping point on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $322,120.
Determine the correct inventory amount on December 31.
The Correct Inventory amount is $___
Aug 29, 2021 | Uncategorized
INTRODUCTION
The information below will allow you to prepare the 2012 federal tax return for Bill and
Joyce Schnappauf. The information is provided in three phases, which correspond to the
three major components of computing income tax gross income, deductions and
losses, and property transactions. If your instructor assigns these problems, at the end of
each major segment (i.e., Chapter 4, Chapter 8, and Chapter 12), you should complete
the appropriate portions of the forms indicated. If you are not using a tax software package,
you should not complete the second page of Form 1040 until you have completed
Chapter 12.
Completing the tax return problem will help you understand the reporting procedures
for the information in each major segment of the text. In addition, it will aid you
in reviewing the major topics discussed in the book; it serves as an overview of the
course.
THE SCHNAPPAUF FAMILY
In 2012, Bill and Joyce Schnappauf live in Wakefield, R.I. Bill is 53, and Joyce is 51. Bill
is a district sales manager for USC Equipment Corporation, a Rhode Island firm that
manufactures and distributes gaming equipment. Joyce is a self-employed author of
children s books. The Schnappaufs have three children, Will, 21, Dan, 19, and Tom, 16.
In February 2013, the Schnappaufs provide the following basic information for preparing
their 2012 federal income tax return:
1. The Schnappaufs use the cash method of accounting and file their return on a calendar-year basis.
2. Unless otherwise stated, assume that the Schnappaufs want to minimize the current year s tax liability. That is, they would like to defer income when possible and take the largest deductions possible, a practice they have followed in the past.
3. Joyce s Social Security number is XXX-XX-XXXX
4. Bill s Social Security number is XXX-XX-XXXX
5. Will s Social Security number is XXX-XX-XXXX
6. Dan s Social Security number is XXX-XX-XXXX
7. Tom s Social Security number is XXX-XX-XXXX
8. The Schnappaufs do not have any foreign bank accounts or foreign trusts.
9. Their address is XX XXXXXXX XXXXXX, Wakefield, R.I. (02879).
10. The Schnappaufs do not wish to contribute to the presidential election campaign.
PHASE I CHAPTERS 1 4
The first phase of the tax return problem is designed to introduce you to some of the tax forms and the supporting documentation (Forms W-2, 1099-INT, etc.) needed to complete a basic tax return. The first four chapters focus on the income aspects of individual taxation. Accordingly, this phase of the tax return focuses on the basic income concepts.
1. Bill s W-2 is provided (Exhibit A-1). The 2012 W-2 includes his salary ($94,000), bonus ($47,000), and income from group-term life insurance coverage in excess of $50,000 ($121.44), and is reduced by his 7 percent contribution ($6,580) to USC s qualified pension plan. The company matches Bill s contribution to the plan.
2. The Schnappaufs receive two 1099-INTs for interest (Exhibits A-2 and A-3), two 1099-DIVs for dividends (Exhibits A-4 and A-5), and a combined interest and dividend statement (Exhibit A-6).
3. Joyce and her brother, Bob, are co-owners of, and active participants in, a furniture-restoration business. Joyce owns 30 percent, and Bob owns 70 percent of the business. The business was formed as an S corporation in 2004. During 2012, the company pays $5,000 in dividends. The basis of Joyce s stock is $27,000.
4. The Schnappaufs receive a 2011 federal income tax refund of $1,342 on May 12, 2012. On May 15, 2012, they receive their income tax refund from the state of Rhode Island. In January 2013, the state mails the Schnappaufs a Form 1099-G (Exhibit A-7). Their total itemized deductions in 2011 were $22,854.
5. During 2012, Joyce is the lucky ninety-third caller to a local radio station and wins $500 in cash and a stereo system. Despite repeated calls to the radio station, she has not received a Form 1099 MISC. In announcing the prize, the radio station host said that the manufacturer s suggested retail price for the stereo system is
$625. However, Joyce has a catalog from Supersonic Electronics that advertises the system for $520.
6. The Schnappaufs receive a Form W-2G (Exhibit A-8) for their winnings at the Yardley Casino in Connecticut.
7. On June 26, 2012, Bill receives a check for $17,400 from the United Insurance Corporation. Though he was unaware of it, he was the designated beneficiary of an insurance policy on the life of his uncle. The policy had a maturity value of $16,980, and the letter from the company stated that his uncle had paid premiums on the policy of $2,950 (Exhibit A-9).
8. Joyce is active in the school PTO. During the year, she receives an award for outstanding service to the organization. She receives a plaque and two $75 gift certificates that were donated to the PTO by local merchants.
9. To complete phase I, you will need Form 1040, Schedule B, and Schedule D.
INSTRUCTIONS: If you are using tax software to prepare the tax return or are not completing
phases II and III of the problem, ignore the instructions that follow. If you are preparing
the return manually, you cannot complete some of the forms used in phase I until
you receive additional information provided in phase II or phase III. Therefore, as a general
rule, you should only post the information to the appropriate form and not compute
totals for that form. The following specific instructions will assist you in preparing Part I
of the return.
a. The only form that can be totaled is Schedule B.
b. Only post the appropriate information to Schedule D. Do not total any columns.
More information is provided in phase III of the tax return problem.
c. Do not calculate total income or adjusted gross income on page 1 of Form 1040.
d. Post the appropriate information on page 2 of Form 1040, but do not total this
page, compute the federal tax liability, or determine the refund or balance due.
PREPARATION AID: Tax forms and instructions can be downloaded from the IRS s home
page (http://www.irs.treas.gov). You can also download IRS Publication 17, which is a
useful guide in preparing the tax return.
PHASE II CHAPTERS 5 8
This is the second phase of the tax return problem you began at the end of Chapter 4.This phase of the tax return incorporates the material from Chapters 5, 6, 7, and 8 by providing you with information concerning the Schnappaufs deductions for 2012. They provide you with the following information.
1. Joyce writes children s books for a variety of publishers. She has been selfemployed since 2004. As a freelance writer, Joyce incurs costs associated with preparing a manuscript for which she does not yet have a contract. During the year, Joyce makes 4 business trips, each 3 days long, to meet with various publishers. For shorter trips that are closer to home, she either drives or takes the train and
returns the same day. On December 10, 2012, Joyce receives an advance (see below) on her next book. Under the contract, Joyce is scheduled to begin work on the book on February 1, 2013, and must have it completed by November 30, 2013. The Schnappaufs home has 2 telephones. Joyce has a separate phone number for her business. The information on Joyce s business is listed below.
Royalties (Exhibits A-10 to A-12)
Publisher s advance $4,500
Office supplies 180
Train tickets 640
Airfare (4 trips) 1,800
Lodging (12 nights) 2,120
Meals (12 days) 510
Telephone ($28 monthly fee per phone line) 672
Internet provider 416
Cell phone, including business calls 876
Business-related postage 108
Printing/copying 217
Legal fees 1,100
Interest on auto 374
2. On January 2, 2012, Joyce purchases a new car to use in her business. The car, a Volster, costs $15,200. Joyce pays $2,200 in cash and finances the balance through the dealer. She uses the car 40 percent of the time for business and drives a total of 10,500 miles during 2012. The total expenses for the 10,500 miles driven are: repairs and maintenance, $320; insurance, $735; and gasoline,$1,845.
The correct depreciation expense for 2012 is $608 ($15,200 40% 10%).
3. Joyce s office is located in a separate room in the house and occupies 375 square feet. The total square footage of the house is 2,500. The Schnappaufs purchased the home on July 7, 1998, for $70,000. The local practice is to allocate 10 percent of the purchase price to land. The depreciation percentage for the office is 0.02564.
When Joyce started her business on January 1, 2004, the fair market value of the house was $108,000. The total household expenses for 2012 are as follows:
Heat $2,170
Insurance 1,425
Electricity 690
Repairs to kitchen 2,750
Cleaning 1,510
4. Bill began work on his MBA at Denville University. He enrolled in two courses,and paid $2,650 in tuition and $180 for books.
5. Bill and Joyce each contribute the maximum to their respective IRA accounts in 2012. The IRA account is Joyce s only retirement vehicle. Bill s basis in his IRA before the current year s contribution is $26,000, and Joyce s basis is $36,000. The fair market value of Bill s IRA on 12/31/12 is $41,720, and the fair market value of Joyce s IRA is $57,100. In addition, Bill and Joyce contributed $2,000 to a Coverdell Education Savings Account for Thomas.
6. On June 15, 2012, the Schnappaufs 2011 station wagon is totaled in Hurricane
Ann. The car was purchased for $28,700 in November 2010. The Schnappaufs
receive a check for $21,200 from Zippy Insurance Company that represents the
fair market value of the car minus a $750 deductible. On June 26, 2012, they
replace the car with a 2012 station wagon. The new car costs $31,400, and the
Schnappaufs receive a rebate check from the car s manufacturer for $2,500.
7. The hurricane also damages part of the Schnappaufs house. A tree falls and makes a hole in the roof above the kitchen. Water damages the kitchen, causing the new dishwasher to short out, and it has to be replaced. In addition, the linoleum
floor has to be replaced. The cost of fixing the hole in the roof is $1,000. The Schnappaufs receive $700 ($1,000 repair cost minus $300 deductible) to fix the roof. Information concerning the dishwasher and the floor is as follows:
Property Dishwasher Floor
Date 3/30/12 3/16/12
Acquired
Original
Cost $780 $1,500
FMV
Before $780 $1,350
FMV
After 0 0
Reimbursement $380 $850
8. The Schnappaufs incur the following medical expenses (before considering the
$700 reimbursement they receive from their health insurance policy):
Medical premiums $3,800
Doctors 1200
Chiropractor 650
Dentist 1,900
Vet fees (family dog Sandy) 350
Prescription drugs 340
Over-the-counter drugs (aspirin, cough syrup) 175
In addition, Bill purchases an Exsoaligner machine for $700. The machine was recommended by the chiropractor to help strengthen Bill s back muscles.
9. The Schnappaufs pay the following property taxes:
Wakefield house $7,700
Family car used by Bill (ad valorem) 480
Joyce s car (ad valorem) 510
10. The Schnappaufs receive two Form 1098s for the cost of interest on bank loans. They also pay interest on their personal credit cards.
Jefferson Trust 1098 (Exhibit A-13 Wakefield house)
Jefferson Trust 1098 (Exhibit A-14 Home equity)
Dempsey s Department Store revolving account $191
Brooks Bargain Basement revolving account 67
Jefferson Trust bank card 212
The proceeds from the home equity loan were used to renovate their kitchen and pay for Tom s tuition to private school. The interest on the portion of the loan used for private school tuition is $640.
11. Bill and Joyce make cash charitable contributions to the United Fund Campaign
($1,750), Adelade University ($300), Tremon University ($2,000), and Christ
the King Church in Kingston, R.I. ($2,600). The Schnappaufs have documentation
to verify their cash contributions. They also donate property to the Salvation
Army on July 15, 2012:
Property FMV Original Cost Date Acquired
Antique table $515 $225 1/4/01
Dishwasher 150 700 5/6/05
Sofa bed 160 800 13/14/07
Men s suits (2) 140 540 Various
The Salvation Army acknowledges that these amounts represent the fair market
value of the donated items.
12. The Schnappaufs incur the following expenses:
Type Amount
2010 tax preparation fee (paid in 2012) $ 900
Safety deposit box 35
Investment journals 405
Investment advice 875
Business publications (Bill) 550
Gambling losses 2640
13. Because Joyce is self-employed, they make federal estimated tax payments of
$225 per quarter on April 15, 2012, June 15, 2012, September 15, 2012, and January 15, 2013. They also make estimated payments of $140 per quarter to the state of Rhode Island on April 15, 2012, June 15, 2012, September 15, 2012, and December 31, 2012.
14. Bill and Joyce paid $6,150 in tuition, $625 for books, and $7,630 for room and board for Will, a junior, to attend Springbrook State University. They also paid $15,000 in tuition, $515 in books, and $8,130 in room and board for Dan, a freshman at Prescott College.
15. Other information:
a. Joyce s business is named Queensbridge Books, and her employer I.D. number is XX-XXXXXXX.
b. The Salvation Army s address is XX XXXX XXXXXX, Wakefield, R.I. 02879.
c. To complete phase II, you will need the following additional forms: Schedule A, Schedule C, Schedule SE, and Forms 4562, 4684, 8283, 8606, 8829, and 8863.
INSTRUCTIONS: If you are using tax software to prepare the tax return or are not completing
phase III of the problem, ignore the instructions that follow.
As in phase I, there are forms in phase II that cannot be completed without additional
information which is provided in phase III. Therefore, as a general rule, you
should only post the information to the appropriate form and not compute totals for that
form. The following specific instructions will assist you in preparing Part II of the return.
a. The only form that can be completed at the end of phase II is Form 8283.
b. Do not calculate total income or adjusted gross income on page 1 of Form
1040.
c. Post the appropriate information on page 2 of Form 1040, but do not total
this page, compute the federal tax liability, or determine the refund or balance
due.
d. Do not calculate the total itemized deductions on Schedule A.
e. Do not total Joyce s expenses on Schedule C.
f. Do not compute Joyce s self-employment tax on Schedule SE.
g. Do not complete the summary section of Form 4562.
h. Complete Form 4684 only to the point at which adjusted gross income is
requested.
i. On Form 8829, complete Part I, and only post the appropriate indirect
expenses. Do not calculate the allowable depreciation or the allowable home
office deduction.
PHASE III CHAPTERS 9 12
This is the third and final phase of the Schnappauf family s tax return. This phase incorporates
the material in Chapters 9, 10, 11, and 12 requires you to analyze the various types of property transactions discussed in those chapters.
1. On February 11, 2012, Bill inherits his father s summer home. The house, located in South Lake Tahoe, Nevada, has a fair market value of $496,000 at the date of his father s death. His parents had purchased the house in 1974 for $127,000 and
made $59,000 worth of capital improvements to it. Twenty percent of the total
value of the property is attributable to the land. Because Bill and Joyce ultimately
would like to use the property as a vacation home, they decide to rent it out. Bill
actively participates in the management of the property. The property is first advertised
for rent on March 1, 2012, but is not rented until April 15, 2012. Bill provides
the following income and expense information for the Lake Tahoe rental
property:
Rent $18,000
Repairs 4,720
Management fee 2,750
Property taxes 9,375
Insurance 1,900
In addition, Bill buys a new stove for $1,240 and a new refrigerator for $970 on
March 20, 2012.
2. The Schnappaufs receive Form 1099-B (Exhibit A-15) from Pebble Beach Investors
for the sale of several securities. Details on the securities sales are provided
below. The selling price listed is net of brokerage commissions and represents the
amount the Schnappaufs actually receive from the sale.
Stock DateAcquired DateSold SalePrice PurchasePrice 150 shares Pfizer Corp 5/12/89 8/15/12 $ 6,000 $ *
300 ” Texas Instruments 7/30/94 10/25/12 17,100 **
50 shares Alcoa 6/10/06 10/23/12 525 1,800
25 shares Luminent 4/28/12 9/4/12 900 2,700
60 ” Textron 9/11/12 10/27/12 10,410 9,100
300 shares Hasbro 1/7/01 12/20/12 6,125 3,150
*When Joyce graduated from college on May 12, 1989, her father gave her 150 shares of Pfizer Corporation stock
that he had acquired on October 27, 1981, for $1,300. At the date of the gift, the fair market value of the stock was $1,800. In January 1998, Pfizer Corporation stock split 2 for 1.
**The Schnappaufs acquired 500 shares of preferred stock in Texas Instruments for $7,810. Shortly after the purchase, they received a nontaxable 10% stock dividend.
3. On May 18, 2012, Joyce purchases a computer system for $2,560. She also buys a color printer/copier/fax machine for $560. All the equipment is used exclusively in her business.
4. On June 12, 2012, Joyce sells her old computer system for $355 and her printer for $110. She had acquired the computer system and printer on February 18, 2009, for $2,710 and $490, respectively. When the Schnappaufs prepared their 2009 tax
return, they elected to expense the computer and printer using Section 179. The
computer system and the printer were used exclusively in her business.
5. Joyce receives a Schedule K-1 (Exhibit A-16) for her interest in the furniture-restoration business.
6. Other information:
a. The rental property in Lake Tahoe is located at XXX XXXXXXX XXXXX, South Lake Tahoe (88197).
INSTRUCTIONS: To complete phase III, you need the following additional forms: Schedule
E and Forms 4562 and 8582. You now have all the information necessary to complete
the schedules that you did not finish in phases I and II.
Aug 29, 2021 | Uncategorized
Prepare the 2012 fiduciary income tax return (form 1041) for the Blue Trust. In addition, determine the amount and character of the income and expense items that each beneficiary must report for 2012, and prepare a schedule K-1 for Betty Blue. Omit all alternative minimum tax computations. The 2012 activities of the trust include the following
Dividend income, all U.S. stocks $50,000
Taxable interest income 30,000
Tax-exempt interest income 20,000
Fiduciary’s fees 4,000
The trust and Betty both use the calender tax year. Under the terms of the trust instrument, fiduciary’s fees are allocated to income. The trustee must distribute all of the entity’s accounting income to Betty Blue by February 15 of the following year. The trusteee followed this change and made no other distributions during the year. Fiduciary’s fees properly were assigned as an offset to taxable interest income. The trust was created on July 8, 1990. There are no tax credits for the year, and none of the entity’s income was derived from a personal services contract. The trust has no economic interest in any foreign trust. It’s Federal identification number is XXXXX The trustee, Hoover State Federal Bank, is located at 4959 Cold Harbor Boulevard, Mountain Brook, AL 35223. Its employer identification number is XXXXX XXXXX XXXXXves atXXXXX Birmingham, AL 35212. Her Social Security number is XXXXX
Aug 29, 2021 | Uncategorized
Prepare a cash budget for a merchandising firm.
Analyze several options to improve cash flow.
Compare cash flow and net income trends.
Modify the worksheet to include an additional time period.
Create a line chart comparing cash receipts and disbursements.
On January 1, Candy Cup, Inc. begins business. The company has $6,000 cash on hand and is
attempting to project cash receipts and disbursements through April 30. On May 1, a note
payable of $4,000 will be due. This amount was borrowed on January 1 to carry the company
through its first four months of operations. The unit purchase cost of the company’s single product, a Candy Cup, is $6. The unit sales price is $14.50. Projected purchases and sales in units for the first four months are:
Purchases Sales
January 1,200 600
February 1,300 1,200
March 1,400 1,400
April 1,700 1,500
Sales terms call for a 2% discount if paid within the same month that the sale occurred. It is expected that 50% of the billings will be collected within the discount period, 25% by the end of the month after purchase, 20% in the following month, and 5% will be uncollectible.
All purchases are payable within 15 days. Thus, approximately 50% of the purchases in a month are due and payable in the next month.
Total fixed marketing and administrative expenses for each month include cash expenses of $2,500 and depreciation on equipment of $1,000. Variable marketing and administrative expenses total $3 per unit sold. All marketing and administrative expenses are paid as incurred.
REQUIRED
1. You have been asked to prepare a cash budget for the next four months to see if the loan
can be repaid. Review the worksheet CASHBUD that follows these requirements. The
problem data have already been entered in the Data Section of the worksheet.
2. Start the spreadsheet program and open the file CASHBUD from the www.thomsonedu.com/accounting/smith website. Enter the eight formulas where indicated on the worksheet. Enter your name in cell A1. Save the file as CASHBUD2. worksheet when done. Also print your formulas. Check figure: Ending cash balance for
April (cell E54), $3,614.
3. Can the $4,000 note be repaid on May 1? Explain.
4. How do the other months look? Are any problems coming? Explain.
WHAT-IF ANALYSIS
The following four suggestions have been made to improve the company’s cash position. Evaluate the effect on cash flow for each of the four suggestions. After evaluating each suggestion, enter the projected cash balances in the spaces provided. Consider each suggestion separately. Reset cells to their initial values after each new suggestion.
a. Seek agreement with suppliers to extend the credit period from 15 to 30 days. This would mean that all current monthly purchases would be paid for in the following month.
b. Raise the unit price from $14.50 to $15.50. A price increase will reduce unit sales by 10% each month. Purchases will also be reduced by 10%.
c. Put the company s two salespeople on straight commission. This would reduce fixed marketing and administrative costs to $750 per month and raise variable marketing and administrative costs to $4 per unit.
d. Increase the cash discount from 2% to 4%. It is anticipated that this would increase the percentage of customers paying within the discount period to 85%, and those paying the month after the discount period would drop to 8%. Five percent would pay in the following month and 2% would still be uncollectible.
PROJECTED ENDING CASH BALANCES
January February March April
a. $ 5963 $ 3364 $ 4901 $ 8714
b. $ 2741 $ 546 $ 2405 $ 5969
c. $ 3513 $ 1164 $ 2751 $ 5914
d. $ 5347 $ 6642 $ 10233 $ 14175
Question:What are your recommendations for Candy Cup, Inc.? Consider potential impact on profits as well as cash balances.
Do:
Reset cells to their initial values. Candy Cup, Inc. is considering undertaking a $1,200 per month advertising campaign to promote the Candy Cup as an exclusive, high-fashion item for the home. What price (dollars and cents) would Candy have to charge for each cup to be able to pay for the campaign, pay back the $4,000 note, and have $5,000 left over at the end of April?
Sales Price
CHART ANALYSIS
Reset the Data Section to its initial values and click the Chart sheet tab. A chart appears that plots the relationship between monthly unit sales, unit purchases, and ending cash balance. What happens to ending cash balance if January purchases are reduced to 1,100 units? Enter 1,100 in cell F21 on the Chart sheet and then check the chart. What about 1,000 units? 900 units?800 units? Enter your observations below. Is this a possible solution to the company’s potential cash problem?
TICKLERS
Worksheet. Extend the CASHBUD2 worksheet to include the month of May. May sales are expected to be 1,500 units and purchases are to be 1,400 units. Also show the repayment of the loan on May 1. Set the print commands to have the worksheet print on a single page. Save the
completed worksheet as CASHBUDT. Print the new budget.
Chart. Use CASHBUD2 to create a line chart plotting total monthly receipts and monthly disbursements over the four-month period. Complete the Chart Tickler Table and use it as a basis for preparing the chart. Put your name somewhere on the chart. Save the file again as CASHBUD2. Print the chart.
Aug 29, 2021 | Uncategorized
Instructions: Prepare the journal entries for the following transactions.After completing the journal entries, post the transactions to the ledger (t-accounts) and create an adjusted trial balance.Create the income statement, statement of retained earnings, and balance sheet for the following company.This is the first year of operations for Fielder Corporation, a merchandise corporation that specializes in baseball apparel.
the book is just for how to do it (Financial Accounting, 1st Edition, Jeffrey Waybright, Robert Kemp, ISBN-10: 013606048X) there is nothing on the book.
1-2-12:Issued 1000 shares of common stock for $50 per share, the par value of the stock is $1.00 each.(chapter 10, page 491-492).
1-2-12:Purchased equipment costing 10,000, paying cash.The equipment will have a useful life of 4 years and no salvage value, the company uses the straight-line method of depreciation.(chapter 8, page 392)
1-3-12: Purchased 500 jerseys on account for $20 each.Fielder Corporation will resell these jerseys in the future and uses the FIFO method.(chapter 5, page 239).
1-3-12: Issued $25,000 of 4% bonds at par that mature on January 3, 2022.The bonds pay interest on July 1, and January 1 of every year.(chapter 9, page 451).
1-31-12: During the month of January sold 100 jerseys on account for $50 each and 300 jerseys for cash at $50 each. (chapter 4, page 182).
1-31-12: Fielder Corporation uses the percent of sales method to estimate uncollectible accounts.Fielder estimates that 5% of credit sales will be uncollectable.(chapter 7, page 335)
1-31-12:Fielder Corporation had sales returns of 5 jerseys.Fielder refunded the customer the cash paid.(chapter 4, page 183-184).
1-31-12: Paid cash salaries of 5,000 to employees for the month of January.In addition, paid $2,000 for utilities on 1-31-12 for the month of January.(chapter 2, page 65)
1-31-12: Record the depreciation for the equipment for the month of January.(chapter 8, page 395)
1-31-12: Record the interest expense for the note payable for the month of January. (chapter 9, page 451)
1-31-12: Declared and paid a cash dividend on 1-31-12 of $2.00 per share. (chapter
Aug 29, 2021 | Uncategorized
Door & Window Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows:
|
August
|
$120,000
|
|
September
|
200,000
|
|
October
|
230,000
|
The company expects to sell 40% of its merchandise for cash. Of the sales on account, 25% are expected to be collected in the month of the sale and the remainder in the following month.
Prepare a schedule indicating total cash collections for August, September, and October.
Aug 29, 2021 | Uncategorized
| Phase 1 Individual Project |
| Deliverable Length: |
2-page Word document |
| Details: |
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday, and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.
The fictional Be Good company recorded the following financial data for the year ended 20X2:
| Sales |
$1,000,000 |
| Cash |
$25,000 |
| Cost of goods sold |
$700,000 |
| Inventory |
$50,000 |
| Accounts receivable |
$75,000 |
| Operating expenses |
$200,000 |
| Fixed assets |
$400,000 |
| Interest expenses |
$20,000 |
| Accounts payable |
$15,000 |
| Taxes |
$ 30,000 |
| Long-term debt |
$300,000 |
| Owner s equity |
$225,000 |
| Accruals |
$10,000 |
Organize these data into a balance sheet and an income statement
|
Aug 29, 2021 | Uncategorized
Presented below are the trial balance and the other information related to Amy Boer, a consulting engineer.
AMY BOER, CONSULTING ENGINEER
TRIAL BALANCE
DECEMBER 31, 2014
Debit Credit
Cash $ 29,500
Accounts Receivable 49,600
Allowance for Doubtful Accounts $ 750
Engineering Supplies Inventory 1,960
Prepaid Insurance 1,100
Furniture and Equipment 25,000
Accumulated Depreciation Furniture and Equipment 6,250
Notes Payable 7,200
Amy Boer, Capital 35,010
Service Revenue 100,000
Rent Expense 9,750
Office Salaries Expense 30,500
Heat, Light, and Water Expense 1,080
Miscellaneous Office Expense 720
$149,210 $149,210
1. Fees received in advance from clients $6,000.
2. Services performed for clients that were not recorded by December 31, $4,900.
3. Bad debt expense for the year is $1,430.
4. Insurance expired during the year $480.
5. Furniture and equipment is being depreciated at 10% per year.
6. Amy Boer gave the bank a 90-day, 10% note for $7,200 on December 1, 2014.
7. Rent of the building is $750 per month. The rent for 2014 has been paid, as has that for January 2015.
8. Office salaries earned but unpaid December 31, 2014, $2,510.
Instructions:
(a) From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2014. (Omit explanations.)
(b) Prepare an income statement for 2014 and a classified balance sheet.
Aug 29, 2021 | Uncategorized
Presented below is a condensed version of the preparative balance sheets for Sondergaard Corporation for the last two years at:
December 31. 2010 . 2009
Cash $157,000 $ 78,000
Accounts receivable 180,000 185,000
Investments 52,000 74,000
Equipment 298,000 240,000
Less: Accumulated depreciation (106,000) (89,000)
Current liabilities 134,000 151,000
Capital stock 160,000 160,000
Retained earnings 287,000 177,000
Additional information:
Investments were sold at a loss (not extraordinary) of$7,000; no equipment was sold; cash dividends paid were $50,000; and net income was $160,000.
Instructions
(a) Prepare a statement of cash. Flows for 2010 for Sondergaard Corporation.
(b) Determine Sondergaard Corporation’s free cash flow.
Aug 29, 2021 | Uncategorized
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Aug 29, 2021 | Uncategorized
Picasso Restoration Company completed the following selected transactions during August 2012:
Aug. 1 Established a petty cash fund of $750
10. The Cash Sales for the day, according to the cash register records, totaled $9780. The actual cash received from cash sales was $9800.
31 Petty Cash on Hand was $240. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:
Aug. 3 Store Supplies, $251
Aug 7 Express charges on merchandise sold, $60 (delivery expense)
Aug 9 Office Supplies, $20
Aug. 13 Office Supplies, $30
Aug. 19 Postage Stamps, $11 (Office Supplies)
Aug. 21 Repair to office file cabinet lock, $40 (Misc. Administrative Expense)
Aug. 22 Postage due on special delivery letter, $18 (Misc. Admin. Expense)
Aug. 24 Express charges on merchandise sold, $50 (Delivery Expense)
Aug. 30 Office Supplies, $15
Aug. 31 The cash sales for the day, according to the cash register records, totaled $11,200. The actual cash received from cash sales was $11,130
Aug. 31 Decreased the petty cash fund by $100
Requirement: Journalize the transactions
Aug 29, 2021 | Uncategorized
This information relates to Pickert Real Estate Agency.
|
Oct. 1
|
Stockholders invested $30,000 in exchange for common stock of the corporation.
|
|
Oct. 2
|
Hires an administrative assistant at an annual salary of $42,000.
|
|
Oct. 3
|
Buys office furniture for $4,600, on account.
|
|
Oct. 6
|
Sells a house and lot for M.E. Petty; commissions due from Petty, $10,800 (not paid by Petty at this time).
|
|
Oct. 10
|
Receives cash of $140 as commission for acting as rental agent renting an apartment.
|
|
Oct. 27
|
Pays $700 on account for the office furniture purchased on October 3.
|
|
Oct. 30
|
Pays the administrative assistant $3,500 in salary for October.
|
Post the transactions to T-accounts and complete the following trial balance.(If answer is zero, please enter 0, do not leave any fields blank.)
Aug 29, 2021 | Uncategorized
E7-13
Pink Martini Corporation is projecting a cash balance of $31,000 in its December 31, 2007, balance sheet. Pink Martini s schedule of expected collections from customers for the first quarter of 2008 shows total collections of $180,000. The schedule of expected payments for direct materials for the first quarter of 2008 shows total payments of $41,000. Other information gathered for the first quarter of 2008 is: sale of equipment $3,500; direct labor $70,000, manufacturing overhead $35,000, selling and administrative expenses $45,000; and purchase of securities $12,000. Pink Martini wants to maintain a balance of at least $25,000 cash at the end of each quarter.
Instructions:
Prepare a cash budget for the first quarter.
Aug 29, 2021 | Uncategorized
In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp. 245 247). The purpose of Part II is to identify factors influencing risks and the relationship of risks to audit evidence. During the planning phase of the audit, you met with Pinnacle s management team and performed other planning activities. You encounter the following situations that you believe may be relevant to the audit: Type your homework question here, such as “Help me understand this 1. Your firm has an employee who reads and saves articles about issues that may affect key clients. You read an article in the file titled, EPA Regulations Encouraging Solar-Powered Engines Postponed After reading the article, you realize that the regulations management is relying upon to increase sales of this division might not go into effect for at least ten years. A second article is titled, Stick to Diesel Pinnacle! The article claims that although Pinnacle has proven itself within the diesel engine industry, they lack the knowledge and people necessary to perform well in the solar-powered engine industry. 2. You ask management for a tour of the Solar-Electro facilities. While touring the warehouse, you notice a section of solar-powered engines that do not look like the ones advertised on Pinnacle s Web site. You ask the warehouse manager when those items were first manufactured. He responds by telling you, I m not sure. I ve been here a year and they were here when I first arrived 3. You also observe that new computerized manufacturing equipment has been installed at Solar-Electro. The machines have been stamped with the words, Product of Welburn Manufacturing, Detroit, Michigan. 4. During a meeting with the facilities director, you learn that the board of directors has decided to raise a significant amount of debt to finance the construction of a new manufacturing plant for the Solar-Electro division. The company also plans to make a considerable investment in modifications to the property on which the plant will be built. 5. While standing in line at a vending machine, you see a Pinnacle vice president wearing a golf shirt with the words Todd-Machinery You are familiar with the company and noticed some of its repairmen working in the plant earlier. You tell the man you like the shirt and he responds by saying, Thank you. My wife and I own the company, but we hire people to manage it. 6. After inquiry of the internal audit team, you realize there is significant turnover in the internal audit department. You conclude the turnover is only present at the higher-level positions. chemistry problem…”
Aug 29, 2021 | Uncategorized
4-26
Piscataway Plastics Company manufactures a highly specialized plastic that is used extensively in the automobile industry. The following data have been compiled for the month of June. Conversion activity occurs uniformly throughout the production process.
Work in process, June 1 50,000 units:
Direct material: 100% complete cost of ………………………………………………………………. $120,000
Conversion: 40% complete, cost of ……………………………………………………………………….. 34,400
Balance in work in process, June 1 ……………………………………………………………………. $154,400
Units started during June …………………………………………………………………………………… 200,000
Units completed during June and transferred out to finished-goods inventory …………… 190,000
Work in process, June 30:
Direct material: 100% complete
Conversion: 60% complete
Costs incurred during June:
Direct material ………………………………………………………………………………………….. $492,500
Conversion costs:
Direct labor ……………………………………………………………………………………………….. $ 87,450
Applied manufacturing overhead …………………………………………………………………… 262,350
Total conversion costs ……………………………………………………………………………….. $349,800
Required:Prepare schedules to accomplish each of the following process-costing steps for the monthof June. Use the weighted-average method of process costing.
1.Analysis of physical flow of units.
2.Calculation of equivalent units.
3.Computation of unit costs.
4.Analysis of total costs.
Aug 29, 2021 | Uncategorized
Can you assist me with these 2 problems? Accountant (Bizhelp)
Problem #1:
Plastics, Inc. is a company that operates in 4 different divisions. The following information relating to each segment is available for 2013.
Sales Cost of Operating Total Operating Identifiable
Revenue Goods Sold Expenses Expenses Profit (Loss) Assets
Bottles $6,000 $26,000 $8,000 $34,000 $31,000 $66,000
Containers$95,000 $62,000 $48,000 $110,000 ($15,000) $80,000
Dollhouses$620,000 $353,000 $140,000 $493,000 $127,000 $640,000
Silverware$18,000 $8,000 $6,500 $14,500 $3,500 $36,000
Sales of Segments “Containers” & “Dollhouses” included intersegment sales of $30,000 and $150,000 respectively.
Required: Determine which of the segments are reportable based on the following:
Revenue test
Operating Profit (Loss) Test
Identifiable Assets Test
Problem 2:
The following information pertains to Walrus Inc.
Cash $60,000
Accounts receivable 170,000
Inventory 100,000
Plant assets (net) 582,000
Total assets $912,000
Accounts payable $110,000
Accrued taxes and expenses payable 42,000
Long-term debt 120,000
Common stock ($10 par) 260,000
Paid-in capital in excess of par 50,000
Retained earnings 330,000
Total equities $912,000
Net sales (all on credit) $2,000,000
Cost of goods sold 1,400,000
Net income 120,000
Required:
Compute the following:
(ignore Average for balance sheet accounts)
(a) Current ratio
(b) Inventory turnover
(c) Receivables turnover
(d) Book value per share
(e) Earnings per share
(f) Debt to total assets
(g) Profit margin on sales
(h) Return on common stock equity
Aug 29, 2021 | Uncategorized
|
Caribbean Tours’ total payroll for the month of January was $500,000. The following withholdings, fringe benefits, and payroll taxes apply:
|
|
|
| Federal and state income tax withheld |
$ 50,000 |
| Health insurance premiums (Blue Cross) paid by employer |
9,000 |
| Contribution to retirement plan (Fidelity) paid by employer |
20,000 |
| FICA tax rate (Social Security and Medicare) |
7.65 % |
| Federal and state unemployment tax rate |
6.20 % |
|
| Assume that none of the withholdings or payroll taxes has been paid by the end of January (record them as payables), and no employee’s cumulative wages exceed the relevant wage bases. |
references
4. value:
1.00 points
Problem 8-3A Part 1
| Required: |
| 1. |
Record the employee salary expense, withholdings, and salaries payable. (Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Jan. 31 |
(Click to select)CashSalaries expenseAccounts payableFICA tax payableSalaries payable (to balance)Income tax payableUnemployment taxes payableAccounts receivable |
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(Click to select)Salaries expenseCashFICA tax payableSalaries payable (to balance)Accounts payableAccounts receivableIncome tax payableUnemployment taxes payable |
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(Click to select)Income tax payableSalaries payable (to balance)Unemployment taxes payableFICA tax payableAccounts receivableCashAccounts payableSalaries expense |
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(Click to select)Salaries expenseFICA tax payableAccounts receivableUnemployment taxes payableIncome tax payableSalaries payable (to balance)Accounts payableCash |
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check my workeBook Linkreferences
5. value:
1.00 points
Problem 8-3A Part 2
| 2. |
Record the employer-provided fringe benefits. (Omit the “$” sign in your response.) |
| Date |
General Journal |
Debit |
Credit |
| Jan. 31 |
(Click to select)Accounts payable (to Blue Cross)Income tax payableFICA tax payableAccounts payable (to Fidelity)Salaries expense (fringe benefits)Salaries payableCashUnemployment tax payable |
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|
(Click to select)Income tax payableSalaries expense (fringe benefits)FICA tax payableUnemployment tax payableAccounts payable (to Fidelity)Salaries payableAccounts payable (to Blue Cross)Cash |
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(Click to select)Unemployment tax payableCashFICA tax payableAccounts payable (to Fidelity)Salaries payableIncome tax payableSalaries expense (fringe benefits)Accounts payable (to Blue Cross) |
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check my workeBook Linkreferences
6. value:
1.00 points
Problem 8-3A Part 3
| 3. |
Record the employer payroll taxes. (Omit the “$” sign in your response.) |
| Date |
General Journal |
Debit |
Credit |
| Jan. 31 |
(Click to select)Unemployment tax payableCashAccounts receivablePayroll tax expense (total)FICA tax payableSalaries expenseAccounts payableIncome tax payable |
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|
(Click to select)Salaries expenseFICA tax payableAccounts payableAccounts receivablePayroll tax expense (total)Unemployment tax payableIncome tax payableCash |
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(Click to select)FICA tax payableAccounts receivableCashPayroll tax expense (total)Accounts payableIncome tax payableUnemployment tax payableSalaries expense |
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Aug 29, 2021 | Uncategorized
|
The ink-jet printing division of Environmental Printing has grown tremendously in recent years. Assume the following transactions related to the ink-jet division occur during the year ended December 31, 2012.
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| Record any amounts as a result of each of these contingencies. |
references
10. value:
0.50 points
Problem 8-7A Part 1
| Required: |
| 1. |
Environmental Printing was sued for $10 million by Addamax. Plaintiff alleges that the defendants formed an unlawful joint venture and drove it out of business. The case is expected to go to trial later this year. The likelihood of payment is reasonably possible. (Leave no cells blank. If no entry is required, select “No journal entry required” in the account field and zero (0) in the amount field. Omit the “$” sign in your response.)
|
| General Journal |
Debit |
Credit |
| (Click to select)Accounts payableUnearned revenueNo journal entry requiredAccounts receivableContingent liabilityLossCashGain |
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| (Click to select)Accounts receivableContingent liabilityCashLossAccounts payableNo journal entry requiredUnearned revenueGain |
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check my workeBook Linkreferences
11. value:
0.50 points
Problem 8-7A Part 2
| 2. |
Environmental Printing is the plaintiff in an $8 million lawsuit filed against a competitor in the high-end color-printer market. Environmental Printing expects to win the case and be awarded between $5.5 and $8 million. (Leave no cells blank. If no entry is required, select “No journal entry required” in the account field and zero (0) in the amount field. Omit the “$” sign in your response.)
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| General Journal |
Debit |
Credit |
| (Click to select)Unearned revenueAccounts receivableGainContingent liabilityAccounts payableLossNo journal entry requiredCash |
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| (Click to select)CashAccounts receivableAccounts payableGainLossNo journal entry requiredUnearned revenueContingent liability |
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check my workeBook Linkreferences
12. value:
0.50 points
Problem 8-7A Part 3
| 3. |
Environmental Printing recently became aware of a design flaw in one of its ink-jet printers. A product recall appears probable. Such an action would likely cost the company between $400,000 and $800,000.(Leave no cells blank. If no entry is required, select “No journal entry required” in the account field and zero (0) in the amount field. Omit the “$” sign in your response.)
|
| General Journal |
Debit |
Credit |
| (Click to select)GainAccounts payableContingent liabilityUnearned revenueNo journal entry requiredAccounts receivableCashLoss |
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| (Click to select)Accounts payableLossContingent liabilityNo journal entry requiredGainCashAccounts receivableUnearned revenue |
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Aug 29, 2021 | Uncategorized
1. The value chain analysis used in connection with the make or buy decision often leads a firm to make use of: (Points : 2) Activity-based costing.
Cost-volume profit analysis.
Outsourcing activities.
Relevant cost-based pricing.
| 2. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is: (Points : 2) |
The variable manufacturing cost of the component.
The total manufacturing cost of the component.
The total variable cost of the component.
The fixed manufacturing cost of the component.
Zero.
|
| 3. The term “breakeven after-tax cash flow” represents: (Points : 2) |
A pessimistic estimate in a typical scenario analysis.
An optimistic estimate in a typical scenario analysis.
The amount of after-tax cash flow needed to generate a return equal to a project’s IRR.
The cash flow needed to generate an IRR of zero.
An estimate that can be arrived at using Goal Seek in Excel.
|
4. Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine will generate a constant after-tax income of $100,000 per year for 15 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value.
What is the payback period for the new machine, under the assumption that cash inflows occur evenly throughout the year? (Points : 2) |
4 years.
5 years.
6 years.
10 years.
15 years.
|
| 5. A truck, costing $25,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of for $5,000 cash and be replaced with a similar truck costing $27,000, or rebuilt for $20,000 and be brand new as far as operating characteristics and looks are concerned. The best choice provides a net savings of: (Points : 2) |
$2,000.
$5,000.
$7,000.
$12,000.
|
| 6. Special orders: (Points : 2) |
Are frequent.
Are infrequent.
Commonly represent a large part of a firm’s overall business.
Can never be profitable to a firm.
|
| 7. You just bought a new car for $125,000. Before you had time to get insurance, the car was wrecked. Weird Wally offers to take it off your hands for $10,000. You can then purchase a similar model for $128,000. A body-shop with an excellent reputation offers to rebuild it for $90,000 and loan you a similar model while the vehicle is being rebuilt. Once rebuilt, the body-shop claims, it will run like a new car and nobody will be able to tell the difference. What would you do from a financial point of view? (Points : 2) |
Rebuild to save $13,000.
Rebuild to save $28,000.
Rebuild to save $38,000.
Sell to Weird Wally and save $7,000.
|
| 8. Operating at or near full capacity will require a firm considering a special order to recognize potentially the: (Points : 2) |
Opportunity cost from lost sales.
Value of full employment.
Time value of money.
Need for good management.
Value of capacity resource management.
|
| 9. Which one of the following capital budgeting decision models consists of dividing the total initial investment outlay by annual after-tax cash inflows (when such inflows are assumed equal over time)? (Points : 2) |
Profitability index.
Payback period.
Book (accounting) rate of return.
Internal rate of return.
Adjusted payback period.
|
| 10. Which of the following is not a characteristic of the payback method for making capital budgeting decisions? (Points : 2) |
It is easy to calculate and comprehend.
It focuses primarily on liquidity, rather than profitability of an investment project.
It can be considered a rough measure of risk.
It considers returns over the entire life of the project.
It requires estimates of after-tax cash inflows and after-tax cash outflows.
|
| 11. Which one of the following is correct for determining relevant costs? (Points : 2) |
Differential.
Integrative.
Long-term focus.
Subjective.
Opportunistic.
|
| 12. Which one of the following is most descriptive of strategic analysis? (Points : 2) |
Quantitative.
Customer focus.
Short-term focus.
Individual product focus.
Not linked to the firm’s strategy.
|
| 13. Done on a regular basis, relevant cost pricing in special order decisions can erode normal pricing policies and lead to: (Points : 2) |
Overconfidence in decision-making.
A loss in the firm’s profitability.
Conflicting goals between management and sales personnel.
A cost leadership strategy.
Maximization of resources.
|
| 14. Which of the following is not one of the four general classes of real options? (Points : 2) |
Expansion option.
Exercise option.
Abandonment option.
Investment-timing option (e.g., delay)
|
| 15. An effective analysis of sales mix needs to include an analysis of: (Points : 2) |
Value chain analysis.
Production constraints.
Sales mix costing.
Revenue forecasting.
|
| 16. Which of the following statements about the standard variable factory overhead application rate is true? (Points : 2) |
The rate is a function of the denominator volume chosen.
The rate is used for cost-control, but not product-costing purposes.
The rate is used for product-costing, but not cost-control purposes.
The same rate is used for both product-costing and cost-control purposes.
Generally speaking, the rate will be independent of the allocation base chosen to apply overhead.
|
| 17. The sequence of phases in the product or service’s life in the market – from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the: (Points : 2) |
Sales life cycle.
Target life cycle.
Market life cycle.
Critical life cycle.
Cost life cycle.
|
| 18. _________________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product’s desired functionality. (Points : 2) |
Consumer analysis
Sales force analysis
Design analysis
R&D analysis
Market place analysis
|
| 19. During the sales life cycle, which is an example of what happens during the maturity phase? (Points : 2) |
Sales and price decline, as do the number of competitors.
Sales continue to increase but at a decreasing rate. The number of competitors and product variety decline.
Sales increase rapidly along with an increase in product variety.
Sales rise slowly as customers become aware of the new product or service. Product variety is limited.
|
20. Electronic Component Company is a producer of high-end video and music equipment. ECC currently sells its top of the line “ECC” DVD player for a price of $250. It costs ECC $210 to make the player. ECC’s main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year.
Irrespective of the competitor’s price, what is EEC’s required selling price if the target profit is 25% of sales and current costs cannot be reduced? (Points : 2) |
$280.00.
$292.50.
$299.00.
$308.50.
|
| 21. Using an activity-based costing system (ABC) enables a firm to calculate overhead variances for: (Points : 2) |
Sales volume and production volume.
Spending and selling price.
Each activity-based cost driver.
Semi-variable overhead costs.
Federal income tax purposes.
|
| 22. In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 is fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U. The total number of budgeted units reflected in the master budget for September was: (Points : 2) |
36,000 units.
40,000 units.
45,000 units.
48,000 units.
50,000 units.
|
| 23. Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are: (Points : 2) |
Substitutions for one another.
Complementary.
Auxiliary.
Responsive.
Parallel.
|
| 24. During the sales life cycle, which is an example of what happens during the introduction phase? (Points : 2) |
Sales and price decline, as do the number of competitors.
Sales continue to increase but at a decreasing rate. The number of competitors and product variety decline.
Sales increase rapidly along with an increase in product variety.
Sales rise slowly as customers become aware of the new product or service. Product variety is limited.
|
| 25. Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except: (Points : 2) |
Flexibility in refining its design.
Ability to quickly incorporate customer suggestions.
Cost savings because of time saved.
More detailed analysis of product functionality.
|
| 26. The difference between the actual fixed overhead cost incurred during a period and the budgeted fixed overhead cost for the period is the: (Points : 2) |
Fixed overhead efficiency variance.
Fixed overhead production-volume variance.
Fixed overhead spending variance.
Fixed overhead rate variance.
Fixed overhead sales-volume variance.
|
| 27. An organization planned to use $82 of material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for materials is: (Points : 2) |
$80,000.
$82,000.
$96,000.
$98,400.
|
| 28. If inventories in a business using a standard cost system are insignificant, the firm would be justified (in a practical sense) by disposing of variances each year: (Points : 2) |
As an adjustment to the finished goods inventory only.
As an adjustment to cost of goods sold only.
As adjustments to both inventory accounts and the cost of goods sold for the period.
As a special item (gain or loss) on the income statement for the period.
As an adjustment to the work-in-process (WIP) inventory only.
|
| 29. One important short-term goal for a company is to earn the projected operating income for the period. Attainment of this goal is measured by comparing the actual operating income to the: (Points : 2) |
Flexible-budget operating income.
Prior period’s operating income.
The income reflected in the company’s balanced scorecard.
Master budget operating income.
Industry average operating income.
|
| 30. Xero Company’s standard factory overhead rate is $3.75 per direct labor hour (DLH), calculated at 90% capacity = 900 standard DLHs. In December, the company operated at 80% of capacity, or 800 standard DLHs. Budgeted factory overhead at 80% of capacity is $3,150, of which $1,350 is fixed overhead. For December, the actual factory overhead cost was $3,800 for 840 actual DLHs, of which $1,300 was for fixed factory overhead. What was the fixed factory overhead spending variance for December? (Points : 2) |
$50 favorable.
$225 favorable.
$425 unfavorable.
$560 unfavorable.
$610 unfavorable.
|
| 31. The stock option form of bonus payments to managers usually: (Points : 2) |
Motivates well even in extended market downturns.
Can lose some motivation because of the delay in reward.
Focuses on the short-term.
Is not consistent with shareholder interests.
|
| 32. The value stream income statement can be compared to: (Points : 2) |
Value chain analysis.
The contribution income statement.
A streamlined production process.
A streamlined accounting system.
|
| 33. An employment contract is an agreement between the manager and top management designed to provide incentives for the manager to act: (Points : 2) |
Independently to achieve top management’s objectives.
Consistently with that of other managers.
Independently to achieve the manager’s objectives.
Independently to achieve the customer’s objectives.
|
| 34. Other things being equal, income computed by the variable costing method will exceed that computed by the full costing method if: (Points : 2) |
Units produced exceed units sold.
Units sold exceed units produced.
Fixed manufacturing costs increase.
Variable manufacturing costs increase.
|
| 35. Managers who are risk prone: (Points : 2) |
Seek risky projects that promise some chance of a low benefit.
Seek risky projects that promise some chance of a high benefit, although the projects may have a risk of low benefit.
Seek risky projects.
Seek high risk projects that promise some chance of a high benefit, although the projects may have a very significant risk of no benefit.
|
| 36. Risk aversion is by: (Points : 2) |
Lack of a strategic emphasis in decision making.
Use of non-strategic performance measurement systems.
Presence of uncertainty in a manager’s environment.
A manager’s inability to deal with stress.
|
| 37. The balanced scorecard measures the SBU’s performance in all of the following areas except: (Points : 2) |
Learning and growth.
Managerial performance.
Customer satisfaction.
Internal business processes.
Accounting and tax compliance.
|
| 38. In management compensation, the use of the balanced scorecard achieves: (Points : 2) |
Fairness.
Alignment of manager’s incentives and the organization’s strategy.
The desired ethical environment.
Revenue generation and cost control.
A specific non-financial measurement.
|
| 39. The balanced scorecard critical success factors (CSFs) provide strong motivation in bonus compensation plans if the non-controllable factors are: (Points : 2) |
Emphasized.
Separated.
Recognized.
Excluded.
Controlled.
|
| 40. Cost allocation of service department costs to production departments make the evaluation and control processes in the production departments: (Points : 2) |
Simpler.
More complex.
Forthright and fair.
Less efficient.
|
| 41. SBUs that generate revenues and incur the major portion of the cost for producing those revenues are: (Points : 2) |
Revenue centers.
Contribution centers.
Profit centers.
Cost centers.
|
| 42. If fairness only is considered, unit managers prefer: (Points : 2) |
Not to be evaluated.
A subjective measure.
A single, objective measure.
A firm-wide pool over a unit-based pool.
A unit-based pool over a firm-wide pool.
|
43. A strategic business unit (SBU) consists of a well-defined set of controllable operating activities
over/about which the SBU manager is: (Points : 2) |
Knowledgeable.
Responsible for strategy.
Responsible for strategy and execution.
Responsible for strategy, execution, and performance.
|
| 44. Which one of the following items is not a measure of a company’s liquidity? (Points : 2) |
Accounts receivable turnover.
Return on equity.
Quick ratio.
Cash flow ratio.
Day’s sales in inventory.
|
| 45. Performance evaluation in most firms is applied at: (Points : 2) |
Many different levels from top management down to individual production and sales employees.
All levels of production, but only top levels of sales.
Top and mid-management levels only.
Lower and mid-management levels only.
The mid-management level only.
|
| 46. Which one of the following develops the value of the firm as the discounted present value of the firm’s net free cash flows? (Points : 2) |
Discounted cash flow method.
Liquidity method.
Multiples-based method.
Profitability method.
|
| 47. For production and support departments, a method of implementing cost centers that is output-oriented is the: (Points : 2) |
Budget slack method.
Cost shifting approach.
Outsourcing approach.
Discretionary-cost method.
Engineered-cost approach.
|
| 48. In a formal management control system, top management sets expectations for desired manager performance. Which of the following is not one of the areas in which a formal individual management control system would be used? (Points : 2) |
Hiring practices.
Promotion policies.
Operations.
Sales.
Organizational culture.
|
| 49. Table Inc. planned and manufactured 250,000 units of its single product in 2010, its first year of operations. Variable manufacturing costs were $30 per unit of production. Planned and actual fixed manufacturing costs were $500,000. Marketing and administrative costs (all fixed) were $300,000 in 2010. Table Inc. sold 200,000 units of product in 2010 at $50 per unit. Variable costing operating income for 2010 is calculated to be: (Points : 2) |
$1,000,000.
$3,200,000.
$3,300,000.
$4,200,000.
|
| 50. Which one of the following computes value based on annual earnings? (Points : 2) |
Discounted cash flow method.
Liquidity method.
Multiples-based method.
Profitability method.
|
Aug 29, 2021 | Uncategorized
Please review the following real-world Hewlett Packard Statement of Cash flows and address the 2 questions below:
|
Cash flow from operating activities
|
In millions
|
In millions
|
|
|
For the year ended 2012
|
For the year ended 2011
|
|
Net (loss) earnings
|
$(12,650)
|
$7,074
|
|
Depreciation and amortization
|
5,095
|
4,984
|
|
Impairment of goodwill and purchased intangible assets
|
18,035
|
885
|
|
Stock-based compensation expense
|
635
|
685
|
|
Provision for doubtful accounts
|
142
|
81
|
|
Provision for inventory
|
277
|
217
|
|
Restructuring charges
|
2,266
|
645
|
|
Deferred taxes on earnings
|
(711)
|
166
|
|
Excess tax benefit from stock-based competition
|
(12)
|
(163)
|
|
Other, net
|
265
|
(46)
|
|
Accounts and financing receivables
|
1,269
|
(227)
|
|
Inventory
|
890
|
(1,252)
|
|
Accounts payable
|
(1,414)
|
275
|
|
Taxes on earnings
|
(320)
|
610
|
|
Restructuring
|
(840)
|
(1,002)
|
|
Other assets and liabilities
|
(2,356)
|
(293)
|
|
Net cash provided by operating activities
|
10,571
|
12,639
|
|
Cash flows from investing activities:
|
|
|
|
Investment in property, plant, and equipment
|
(3,706)
|
(4,539)
|
|
Proceeds from sale of property, plant, and equipment
|
617
|
999
|
|
Purchases of available-for-sale securities and other investments
|
(972)
|
(96)
|
|
Maturities and sales of available-for-sale securities and other investment
|
662
|
68
|
|
Payments in connection with business acquisitions, net of cash acquired
|
(141)
|
(10,480)
|
|
Proceeds from business divestiture, net
|
87
|
89
|
|
Net cash used in investing activities
|
(3,453)
|
(13,959)
|
|
Cash flow from financing activities:
|
|
|
|
(Payments) issuance of commercial paper and notes payable, net
|
(2,775)
|
(1,270)
|
|
Issuance of debt
|
5,154
|
11,942
|
|
Payment of debt
|
(4,333)
|
(2,336)
|
|
Issuance of common stock under employee stock plans
|
716
|
896
|
|
Repurchase of common stock
|
(1,619)
|
(10,117)
|
|
Excess tax benefit from stock-based compensation
|
12
|
163
|
|
Cash dividends paid
|
(1,015)
|
(844)
|
|
Net cash used in financing activities
|
(3,860)
|
(1,566)
|
|
Increase (decrease) in cash and cash equivalents
|
3,258
|
(2,886)
|
|
Cash and cash equivalents at beginning of period
|
8,043
|
10,929
|
|
Cash and cash equivalents at end of period
|
$11,301
|
$8,043
|
Required:
1) Please calculate the percentage increase or decrease in cash for the operating, investing, and financing sections and explain the major reasons for the increase or decrease for each of these sections.
2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
Aug 29, 2021 | Uncategorized
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit
Direct materials $8.10
Direct labor $2.65
Variable manufacturing overhead $6.21
Variable selling and administrative expenses $4.21
Fixed Costs per Year
Fixed manufacturing overhead $254,184
Fixed selling and administrative expenses $259,308
Polk Company sells the fishing lures for $27.00. During 2012, the company sold 80,300 lures and produced 95,200 lures.
Instructions
(a) Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012.
(b) Prepare a variable costing income statement for 2012.
(c) Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012.
(d) Prepare an absorption costing income statement for 2012.
Aug 29, 2021 | Uncategorized
The Polk Company builds custom fishing lures for sporting goods stores. In its 1st year of operations, 2012, the company incurred the following costs:
Variable Costs per Unit:
Direct Materials $7.50
Dirct Labor $2.45
Variable Manufacturing overhead %5.75
Variable Selling & Admn Expenses $3.90
Fixed Costs Per Year
Fixed Manufacturing Overhead $234,650
Fixed Selling & Admn Expenses $240,100
Polk Company sells the fishing lures for $25. During 2012, the company sold 80,000 lures and produced 95,000 lures.
a)Assuming the company uses variable costing, calculate Polk’s manufacturing cost per unit for 2012
b)Assuming the company uses absorption costing, calculate Polk’s manufacturing cost per unit for 2012
In this case, would it be better to use the variable or absorption costing method, and why?
What are the benefits of the two methods?
Which method would lead to the best decision when a competitor is submitting a lower bid for your product?
Aug 29, 2021 | Uncategorized
|
Polzin Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Polzin also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the LiteMist product. The LiteMist product already demands considerably more attention than the CoolDay line.
Greg Kagen, president and founder of Polzin, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line, and that it was always quite profitable. It wasn’t until the company started producing the more complicated LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-liter bottles, it requires considerably more time and effort, both to bottle and to label and box than does CoolDay. The company must bottle and handle 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters.
Greg has asked the Accounting department to prepare an analysis of the cost per liter using the traditional costing approach and using activity-based costing. The following information was collected.
|
|
CoolDay
|
LiteMist
|
|
Direct materials per liter
|
$0.40
|
|
$1.20
|
|
|
Direct labor cost per liter
|
$0.25
|
|
$0.50
|
|
|
Direct labor hours per liter
|
0.05
|
|
0.09
|
|
|
Total direct labor hours
|
150,000
|
|
27,000
|
|
|
Activity Cost Pool
|
Cost Driver
|
Estimated Overhead
|
Expected
Use of
Cost Drivers
|
Expected Use of
Cost Drivers per Product
|
|
CoolDay
|
LiteMist
|
|
Grape processing
|
|
Cart of grapes
|
$145,860
|
|
6,600
|
|
6,000
|
|
600
|
|
|
Aging
|
|
Total months
|
396,000
|
|
6,600,000
|
|
3,000,000
|
|
3,600,000
|
|
|
Bottling and corking
|
|
Number of bottles
|
270,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Labeling and boxing
|
|
Number of bottles
|
189,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Maintain and inspect equipment
|
|
Number of inspections
|
240,800
|
|
800
|
|
350
|
|
450
|
|
|
|
|
$1,241,660
|
|
|
|
|
|
|
|
|
|
|
|
|
Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products.(Round computations and final answers to 3 decimal places, e.g. 2.250.)
Aug 29, 2021 | Uncategorized
Polzin Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Polzin also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the LiteMist product. The LiteMist product already demands considerably more attention than the CoolDay line.
Greg Kagen, president and founder of Polzin, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line, and that it was always quite profitable. It wasn’t until the company started producing the more complicated LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-liter bottles, it requires considerably more time and effort, both to bottle and to label and box than does CoolDay. The company must bottle and handle 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters.
Greg has asked the Accounting department to prepare an analysis of the cost per liter using the traditional costing approach and using activity-based costing. The following information was collected.
|
|
CoolDay
|
LiteMist
|
|
Direct materials per liter
|
$0.40
|
|
$1.20
|
|
|
Direct labor cost per liter
|
$0.25
|
|
$0.50
|
|
|
Direct labor hours per liter
|
0.05
|
|
0.09
|
|
|
Total direct labor hours
|
150,000
|
|
27,000
|
|
|
Activity Cost Pool
|
Cost Driver
|
Estimated Overhead
|
Expected
Use of
Cost Drivers
|
Expected Use of
Cost Drivers per Product
|
|
CoolDay
|
LiteMist
|
|
Grape processing
|
|
Cart of grapes
|
$145,860
|
|
6,600
|
|
6,000
|
|
600
|
|
|
Aging
|
|
Total months
|
396,000
|
|
6,600,000
|
|
3,000,000
|
|
3,600,000
|
|
|
Bottling and corking
|
|
Number of bottles
|
270,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Labeling and boxing
|
|
Number of bottles
|
189,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Maintain and inspect equipment
|
|
Number of inspections
|
240,800
|
|
800
|
|
350
|
|
450
|
|
|
|
|
$1,241,660
|
|
|
|
|
|
|
|
|
Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products.(Round computations and final answers to 3 decimal places, e.g. 2.250.)
Under ABC, prepare a schedule showing the computation of the activity-based overhead rates (per cost driver).(Enter overhead rate to 2 decimal places, e.g. 10.50.)
Prepare a schedule assigning each activity’s overhead cost pool to each product, based on the use of cost drivers. What is the overhead cost per liter?(Enter overhead rate to 2 decimal places, e.g. 10.50 and round overhead cost per liter to 3 decimal places, e.g. 2.250.)
|
Aug 29, 2021 | Uncategorized
post this informationinto the following accounts cash receipt journal, sales journal, trail balance, accounts recievables and general ledger
| Wise Company completes these transactions during April of the current year (the terms of all its credit sales are 2/10, n/30). |
| Apr. 2 |
|
Purchased $15,000 of merchandise on credit from Negi Company, invoice dated April 2, terms 2/10, n/60.
|
| 3 |
|
Sold merchandise on credit to Brooke Sledd, Invoice No. 760, for $4,500 (cost is $2,800). |
| 3 |
|
Purchased $1,470 of office supplies on credit from Madison, Inc. Invoice dated April 2, terms n/10 EOM.
|
| 4 |
|
Issued Check No. 587 to U.S. View for advertising expense, $902. |
| 5 |
|
Sold merchandise on credit to Paul Kohr, Invoice No. 761, for $9,200 (cost is $6,600). |
| 6 |
|
Received an $75 credit memorandum from Madison, Inc., for the return of some of the office supplies received on April 3.
|
| 9 |
|
Purchased $10,235 of store equipment on credit from Ned’s Supply, invoice dated April 9, terms n/10 EOM.
|
| 11 |
|
Sold merchandise on credit to Amy Nilson, Invoice No. 762, for $10,100 (cost is $6,900). |
| 12 |
|
Issued Check No. 588 to Negi Company in payment of its April 2 invoice, less the discount. |
| 13 |
|
Received payment from Brooke Sledd for the April 3 sale, less the discount. |
| 13 |
|
Sold $11,700 of merchandise on credit to Brooke Sledd (cost is $5,100), Invoice No. 763. |
| 14 |
|
Received payment from Paul Kohr for the April 5 sale, less the discount. |
| 16 |
|
Issued Check No. 589, payable to Payroll, in payment of sales salaries expense for the first half of the month, $9,450. Cashed the check and paid employees.
|
| 16 |
|
Cash sales for the first half of the month are $52,430 (cost is $40,200). (Cash sales are recorded daily from cash register data but are recorded only twice in this problem to reduce repetitive entries.)
|
| 17 |
|
Purchased $13,200 of merchandise on credit from Price Company, invoice dated April 17, terms 2/10, n/30.
|
| 18 |
|
Borrowed $59,000 cash from First State Bank by signing a long-term note payable. |
| 20 |
|
Received payment from Amy Nilson for the April 11 sale, less the discount. |
| 20 |
|
Purchased $1,060 of store supplies on credit from Ned’s Supply, invoice dated April 19, terms n/10 EOM.
|
| 23 |
|
Received a $1,200 credit memorandum from Price Company for the return of defective merchandise received on April 17.
|
| 23 |
|
Received payment from Brooke Sledd for the April 13 sale, less the discount.
|
| 25 |
|
Purchased $11,130 of merchandise on credit from Negi Company, invoice dated April 24, terms 2/10, n/60.
|
| 26 |
|
Issued Check No. 590 to Price Company in payment of its April 17 invoice, less the return and the discount.
|
| 27 |
|
Sold $3,300 of merchandise on credit to Paul Kohr, Invoice No. 764 (cost is $2,740). |
| 27 |
|
Sold $8,100 of merchandise on credit to Amy Nilson, Invoice No. 765 (cost is $4,240). |
| 30 |
|
Issued Check No. 591, payable to Payroll, in payment of the sales salaries expense for the last half of the month, $9,450.
|
| 30 |
|
Cash sales for the last half of the month are $73,500 (cost is $59,400). |
| Assume that Wise Co. uses the perpetual inventory system. |
references
1.value:
1.00 points
Problem 7-1A Part 1
Aug 29, 2021 | Uncategorized
Complete the following assignment and submit it to the Posting Journal Entries to General Ledger Accounts Dropbox. This assignment is worth 12 points.
Journalize and post business transactions for the following account:
January 2005
|
Jan 1
|
Rex invested $5,000 in the business, Memorandum 10.
|
|
Jan 3
|
Rex transferred furniture valued at $2,000 to the business, Memorandum 11.
|
|
Jan 10
|
Issued check No. 501 for $400 for grooming supplies.
|
|
Jan 15
|
Bought grooming equipment on account for $2,000 from Pets Inc.; Invoice 201.
|
|
Jan 17
|
Paid Pets, Inc. $500; check No. 105.
|
|
Jan 20
|
Rex withdrew $1,000 cash from business; check No. 59.
|
|
Jan 29
|
Salary paid to employee: $300 via check No. 60.
|
|
Jan 30
|
Deposited $2,000 received from client for rendering service; Receipt Nos. 124-130.
|
Guidelines:
-
Record the January transactions on page 1 of the general journal (TRANSACTIONS ABOVE).
In the charts below, open an account in the general ledger for each of these accounts
General Ledger
101 Cash in Bank
102 Accounts Receivable
120 Grooming Supplies
130 Office Furniture
140 Grooming Equipment
205 Accounts Payable
301 Rex s Capital
305 Rex s Withdrawals
402 Boarding Revenue
410 Grooming Revenue
505 Salary Expenses
Post each journal entry to the appropriate account.
Aug 29, 2021 | Uncategorized
Exercise 10-9 Record common stock, treasury stock, and cash dividends [LO2, 4, 5]
|
Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2012. Power Drive has the following transactions affecting stockholders’ equity in 2012.
|
|
March
|
1
|
Issues 55,000 additional shares of $1 par value common stock for $52 per share.
|
|
May
|
10
|
Repurchases 5,000 shares of treasury stock for $55 per share.
|
|
June
|
1
|
Declares a cash dividend of $1.50 per share to all stockholders of record on June 15.
(Hint: Dividends are not paid on treasury stock.)
|
|
July
|
1
|
Pays the cash dividend declared on June 1.
|
|
October
|
21
|
Reissues 2,500 shares of treasury stock purchased on May 10 for $60 per share.
|
|
Required:
|
|
Record each of these transactions. (Omit the “$” sign in your response.)
|
Aug 29, 2021 | Uncategorized
In M6: Assignment 2, you analyzed Ferguson & Son Manufacturing Company’s budgetary control system, explained how the use of an activity-based costing system could change the results of the budget and improve ROI, and made recommendations for goal alignment. This assignment was also the LASA 2.
In this assignment, you will develop an executive summary of your findings in a Microsoft PowerPoint presentation format.
Include the following in your presentation:
- Include a statement of the problem or topic of LASA 2, a concise analysis of the findings, and a recapitulation of any main conclusions or recommendations.
- Be sure to incorporate specific details from LASA 2 to highlight or support the summary.
- Using your knowledge of capital budgeting techniques, explain how principles of capital budgeting, such as the payback method, IRR, and NPV, can be used to assess changes in performance and make decisions for the future based on decisions made within the organization.
Develop a 5-slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M7_A2.ppt.
By Saturday, December 7, 2013, deliver your assignment to the M7: Assignment 2 Dropbox.
| Assignment 2 Grading Criteria |
Maximum Points |
| Summarized the problem/topic, findings, and conclusions/recommendations from LASA 2. |
32 |
| Organized presentation to include a cohesive introduction, solid transitions, and conclusions. |
18 |
| Styled the presentation in a clear, appropriate, and balanced way between text and other visuals. |
18 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation. |
12 |
Aug 29, 2021 | Uncategorized
Step 1: Choose 2 3 tasks from the following list:
- Give a grammar refresher including use of tense, pronoun shifts, run on sentences, capitalization, and commonly confused words.
- Describe effective writing techniques, including addressing the appropriate audience and the writing process.
- Discuss commonly used terminology in the use of computers in the office and why it is important to know the parts and proper terminology.
- Discuss e-mail etiquette.
- Discuss appointment scheduling highlights.
- Explain why insurance verification is accomplished, and when.
- Explain what accounts payable are and give samples of items listed in an accounts payable record for the organization.
- Explain what accounts receivable are and give samples of incoming funding that might be listed in the accounts receivable records for the organization.
- Discuss medical terminology. What are prefixes, suffixes, and root words, and how are they used?
- List a set of brief descriptions of the body systems.
- Discuss abbreviations commonly used in the medical office.
- Discuss the importance of keeping all supplies stocked. This can include pencils and gloves and toner for the copier.
Step2:After choosing your topics, create a PowerPoint slide for each topic you chose that includes the following:
- PowerPoint slides should have no more than 4 6 bulleted points on each slide.
- Each slide should have speaker notes that describe in detail what the speaker would explain regarding each slide.
- Remember that the audience is composed of the staff at all levels of each of the locations.
- This should be a brief and engaging overview of each topic area.
Aug 29, 2021 | Uncategorized
Problem 1:
The Peace Company has the following functional (traditional) income statement for the priormonth.
|
Sales
|
($50 * 100,000 units)
|
|
$5,000,000
|
|
Cost of goods sold
|
|
|
|
Direct materials
|
$1,200,000
|
|
|
Direct labor
|
$950,000
|
|
|
Variable factory overhead
|
$600,000
|
|
|
Fixed factory overhead
|
$850,000
|
$3,600,000
|
|
Gross profit
|
|
|
$1,400,000
|
|
Selling and administrative expense
|
|
|
|
|
Variable
|
$250,000
|
|
|
Fixed
|
$120,000
|
$370,000
|
|
Operating income
|
|
|
$1,030,000
|
|
There were no beginning and ending inventories.
|
|
|
Required:
- Calculate the contribution margin per unit.
- Calculate the contribution margin ratio.
- What is the break-even point in units?
- What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?
Problem 2:
Suzy Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9 per unit. Fixed costs are $60,000 per month.
Required:
Determine each of the following values.
- Unit contribution margin
- Monthly break-even unit sales volume
- Before-tax monthly profit
- Monthly margin of safety in units
Aug 29, 2021 | Uncategorized
Problem 1:
The Peace Company has the following functional (traditional) income statement for the priormonth.
|
Sales
|
($50 * 100,000 units)
|
|
$5,000,000
|
|
Cost of goods sold
|
|
|
|
Direct materials
|
$1,200,000
|
|
|
Direct labor
|
$950,000
|
|
|
Variable factory overhead
|
$600,000
|
|
|
Fixed factory overhead
|
$850,000
|
$3,600,000
|
|
Gross profit
|
|
|
$1,400,000
|
|
Selling and administrative expense
|
|
|
|
|
Variable
|
$250,000
|
|
|
Fixed
|
$120,000
|
$370,000
|
|
Operating income
|
|
|
$1,030,000
|
|
There were no beginning and ending inventories.
|
|
|
Required:
- Calculate the contribution margin per unit.
- Calculate the contribution margin ratio.
- What is the break-even point in units?
- What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?
Problem 2:
Suzy Manufacturing has estimated monthly sales of 18,000 units for $48 per unit. Variable costs include manufacturing costs of $27 and distribution costs of $9 per unit. Fixed costs are $60,000 per month.
Required
Determine each of the following values.
- Unit contribution margin
- Monthly break-even unit sales volume
- Before-tax monthly profit
- Monthly margin of safety in units
Aug 29, 2021 | Uncategorized
Part A
1. The following balance sheet information (in $ millions) comes from the Annual Report to Shareholders of Marriott International Inc. for the 2008 fiscal year. (Certain amount have been replaced with question marks to test your understanding of balance sheets.) In addition, you re provided with The following information from an analysis of Marriott s financial position at the same date:
Current ratio = 1.3296486
Acid-test ratio = 0.407422
Debt-to-equity ratio = 5.4514493
Compute the missing amounts (rounded to the nearest $ in millions) in the Marriott balance sheet.
Assets
Current assets
Cash and equivalents $134
Accounts and notes receivable ?
Inventory ?
Other 355
Total current assets ?
Property and equipment, net $1,443)
Intangible assets, net ?)
Investments 346)
Notes and other receivables, net 988)
Other 1,173)
Total non-current assets ?
Total assets ?
Liabilities and Shareholders Equity
Current liabilities
Accounts payable $704
Accrued payroll and benefits 633
Other payables and accruals 1,196
Total current liabilities 2,533
Long-term debt ?)
Other long-term liabilities 2,015)
Total long-term liabilities ?
Total liabilities ?
Shareholders equity
Class A common stock 5)
Additional paid-in capital 3,590)
Retained earnings 3,565)
Treasury stock and other (5,780)
Total shareholders equity 1,380
Total liabilities and shareholders equity $8,903
2. The following information is provided in the 2011 annual report to shareholders of paris-perfume.com:
December 31, 2011 December 31, 2010
Accounts receivable $100 million
Inventory $70 million $30 million
Other assets $170 million
Total assets $300 million
Total liabilities $100 million
Total stockholders equity $200 million
For the year ended Dec. 31, 2011
Net sales
Cost of goods sold
Net income $40 million
Return on assets 10%
Receivables turnover 8.0
Inventory turnover 12.0
Asset turnover 2.5
Return on stockholders equity 20%
Profit margin on sales 4%
Required: Compute the missing amount in the paris-perfume.com financial statement information, indicated by in the table above.
3. Shown below is activity for one of the products of Denver Office Equipment:
January 1 balance, 500 units @ $55 $27,500
Purchases
January 10 500 units @ $60
January 20 1,000 units @ $63
Sales:
January 12 800 units
January 28 750 units
a. Compute the ending inventory and cost of goods sold assuming Denver uses FIFO.
b. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO and a perpetual inventory system.
c. Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a periodic inventory system.
d. Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.
e. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO and a periodic inventory system.
Part B
1. The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.:
Net sales $10,711
Total assets 4,363
End of year balance in cash 1,022
Total stockholders equity 431
Gross profit (Sales Cost of Sales) 2,456
Net increase in cash for the year 9
Operating expenses 2,067
Net operating cash flow 702
Other income (expense), net (12)
a. Compute Amazon s balance in cash at the beginning of the year.
b. Compute Amazon s total liabilities at the end of the year.
c. Compute cost of goods sold for the year.
d. Compute the income before income tax for Amazon.
2. The current asset section of Seifert & Seifert, CPA s balance sheet consists of cash, accounts receivable, investments, and prepaid expenses. The 2011 balance sheet reported the following: cash, $110,000; investments, $22,000; prepaid expenses, $18,000; noncurrent assets, $422,000; and shareholders equity, $350,000. The current ratio at the end of the year was 1.6 and the debt to equity ratio was .8.
Required: Determine the following 2011 amounts and ratios:
a. Current liabilities.
b. Long-term liabilities.
c. Accounts receivable.
d. The acid-test ratio.
3. Canton Corporation reported the following items in its adjusted trial balance for the year ended December 31, 2011:
Income from continuing operations before income taxes $110,000)
Extraordinary gain on property condemnsation 28,000)
Extraordinary loss on natural disaster (50,000)
Canton is subject to a 30% tax rate.
Required: Prepare the December 31, 2011, income statement for Canton Corporation, starting with income from continuing operations before income taxes.
4. In 2011, KP Building Inc. began work on a four-year construction project (called Cincy One ). The contract price is $300 million. KP uses the percentage-of-completion method of accounting. At the end of 2011, the following financial statement information indicates the results to date for Cincy One:
INCOME STATEMENT
Gross Profit (before-taxes) recognized in 2011 $22 million
BALANCE SHEET
Accounts Receivable from construction billings $10 million
Construction in progress $66 million
Less: Billings on construction ($75 million)
Net billings in excess of construction in progress $9 million
Required: Compute the following, placing your answer in the spaces provided and showing supporting computations:
Items to compute:
Cash collected by KP on Cincy One during 2011
Actual costs incurred by KP on Cincy One during 2011
At 12/31/2011, the estimated remaining costs to complete Cincy One
The percentage of Cincy One that was completed during 2011
5. On June 30, 2011, Gunderson Electronics issued 8% stated rate bonds with a face amount of $300 million. The bonds mature on June 30, 2031 (20 years). The market rate of interest for similar bond issues was 10% (5% semiannual rate). Interest is paid semiannually (4%) on June 30 and December 31, beginning on December 31, 2011.
Required:
a. Determine the price of the bonds on June 30, 2011.
b. Calculate the interest expense Gunderson reports in 2011 for these bonds.
6. During Burns Company s first year of operations, credit sales totaled $140,000 and collections on credit sales totaled $105,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By year-end, Burns had written off $300 of specific accounts as uncollectible.
Required:
a. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.
b. Show the year-end balance sheet presentation for accounts receivable.
7. Appleton Inc. adopted dollar-value LIFO on January 1, 2011, when the inventory value was $1,200,000. The December 31, 2011, ending inventory at year-end costs was $1,430,000 and the cost index for the year is 1.1.
Required: Compute the dollar-value LIFO inventory valuation for the December 31,
2011, inventory.
8. DK Super Stores Inc. uses the average cost retail method to estimate its ending inventory. Information at June 30, 2011, is as follows:
Cost Retail
Beginning inventory $105,000
Net purchases 375,000
Net sales 380,000
Ending inventory 64,000
Required: Compute the cost-to-retail percentage used by DK.
9. Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $8.2 million. Extraction activities began on July 1, 2011. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company s controller has provided the following three cash flow possibilities for the restoration costs:
Cash Flow Probability
1. $700,000 30%
2. $800,000 25%
3. $900,000 45%
The company s credit-adjusted, risk-free rate of interest is 5%, and its fiscal year ends on December 31.
Required:
a. What is the initial cost of the copper mine? (Round computations to nearest whole dollar.)
b. How much accretion expense will Schefter report in its 2011 income statement?
c. What is the carrying value (book value) of the asset retirement obligation that
Schefter will report in its 2011 balance sheet?
d. Assume that actual restoration costs incurred in 2017 totaled $860,000. What amount of gain or loss will Schefter recognize on retirement of the liability?
10. On March 30, 2011, Calvin Exploration purchased a drilling machine for $840,000. The estimated useful life of the machine is 10 years, and no residual value is anticipated. An important component of the machine is the drill housing component that will need to be replaced in five years. The $200,000 cost of the drill housing component is included in the $840,000 cost of the machine. Calvin uses the straight-line depreciation method for all machinery. The company s fiscal year ends on December 31.
Required:
a. Calculate depreciation on the drilling machine for 2011 and 2012 applying the typical U.S. GAAP treatment.
b. Repeat requirement 1 applying IFRS.
Aug 29, 2021 | Uncategorized
Mike Hanson recently left his job at a local pool company to open his own pool and spa maintenance business. Mike Hanson took all of the money he and his wife had in their personal savings account and used it to open Aqua Elite, Inc., on May 1, 20XX.
Assume that the following transactions for the first three months of operations for the Hanson s Aqua Elite, Inc., are true and accurate.
Because Aqua Elite, Inc. is a new startup business, the beginning balances in all the general ledger accounts are zero to start. The length of the accounting periods are three months using a fiscal calendar year. (A fiscal calendar is on a yearly basis other than a calendar year January 1st to December 31st. For example, a fiscal calendar year can be May 1, 2009, through April 30, 2010). Therefore, posting to the general ledger, adjustments and closing entries are made on a fiscal quarterly basis.
Accounts Receivable and Accounts Payable subsidiary ledgers aren t being used. Any references to invoicing, receipts, or payments on account assume changes to the running balance in the Accounts Receivable and Accounts Payable general ledger accounts.
Payroll calculations aren t necessary. Assume the salary is the gross pay with no deductions taken. Therefore, the net pay is the same as the gross pay, requiring a simplified journal entry to record the expense.
Requirements
1. Journalize the transactions. Omit explanations.
2. Post the transactions to the general ledger, creating new ledger accounts as necessary. Calculate the new general ledger account balances.
3. Prepare the unadjusted trial balance for Aqua Elite, Inc., at the end of July.
4. Journalize and post the adjusting entries for July based on the following adjustment information:
a. Record the expired rent.
b. Supplies on hand, $350.
c. Depreciation: $400 equipment, $210 furniture, $650 vehicles.
d. Services performed but unbilled, $1,900.
e. Accrued salaries, $675.
f. Unearned service revenue earned as of July 31, $800.
5. Prepare an adjusted trial balance for Aqua Elite, Inc., at the end of July.
6. Prepare the Income Statement, Statement of Retained Earnings, and Balance Sheet for the three-month period May through July 20XX.
7. Prepare, journalize, and post closing entries.
8. Prepare a Post-Closing Trial Balance for the end of the period.
May
1 Mike invested $15,000 cash and a used truck worth $13,500 in the business in exchange for company stock.
3 Paid $4,700 cash to purchase office equipment.
7 Purchased $860 of supplies on account.
12 Performed services for cash customers and received $850.
15 Paid salaries of $675 to the office receptionist.
16 Sold the company truck for $13,500.
18 Signed a note payable for $31,000 to purchase a new truck.
21 Performed $3,200 of services on account for a local hotel chain.
27 Paid $500 of the amount owed from the purchase of supplies on May 7.
30 Received $2,000 on account from credit customers.
31 Received the utility bill for the month of May, $480. The bill is not due until the 15th
of June.
31 Paid $1,000 dividends to the shareholder, Mike Hanson.
June
1 Paid receptionist s salary, $675.
2 Paid cash to acquire land for a future office site, $15,000.
3 Moved into a new location for the business and paid the first month s rent, $1,800.
4 Performed service for a customer and received cash, $1,700.
5 Received $500 on account.
8 Purchased $750 of supplies on account.
11 Billed customers for services performed, $3,800.
13 Sold an additional $10,000 of stock to Mike Hanson.
16 Paid receptionist s salary, $675.
17 Received $1,350 cash for services performed.
18 Received $1,500 from customers on account.
19 Paid $325 to be listed in the yellow pages telephone directory.
21 Paid $1,000 on account.
22 Purchased office furniture on account, $3,300.
24 Paid miscellaneous expenses, $275.
26 Billed customers for services provided, $1,000.
28 Received $300 from customers on account.
30 Paid utility bill, $745.
30 Paid receptionist s salary, $675.
30 Paid $1,800 of dividends.
July
1 Paid three months rent, $4,500.
4 Performed service for a customer and received cash, $2,100.
9 Received $3,600 from customers for services to be performed later.
12 Purchased $750 of supplies on account.
15 Billed customers for services performed, $2,800.
16 Paid receptionist s salary, $675.
22 Received $3,100 on account.
25 Paid $2,800 on account.
28 Received $1,200 cash for services performed.
30 Paid $600 of dividends.
Aug 29, 2021 | Uncategorized
1. The following information was made available from the income statement and balance sheet of Lauren Company.
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders Equity 484 366
Total Liabilities and
Stockholders Equity $1,120 $788
1. Record the following transactions using the accounting equation.
Example: Assets = Liabilities + Equity XXXX(cash) XXXX(accounts payable)
A. Amanda invests $17,000 cash into her merchandising business.
B. She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
C. Additional purchases were supplies for $35,000 on account from various suppliers.
2. Journalize the following transactions and omit the explanations.
A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on April 8.
B. The corporation paid $60,000 for a two-year lease on April 19.
C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.
D. The corporation borrowed $25,000 by signing a note payable on April 22.
E. The corporation paid $1,250 on one of its accounts payable on April 26.
3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012.
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
4. Compute the missing information from this post-closing trial balance.
Cash $34,689
Accounts Receivable 9,467
Prepaid Rent 5,000
Prepaid Insurance (A)
Supplies 944
Accounts Payable $5,389
Wages Payable (B)
Common Stock 37,049
Retained Earnings 8,234
_______ _______
Total $52,356 $52,356
5. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
6. Given the following information, prepare a balance sheet for Isaiah s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
7. Rick Company s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows:
(Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1 Beginning inventory 18 $24 $432
March 12 Sold 13
April 11 Purchase 45 $29 $1,305
June 20 Sold 33
Aug 16 Purchase 35 $27 $945
Sept 11 Sold 29
Total Cost of Inventory
Ending inventory is 23 units. $2,682
What is the cost of goods sold for Rick Company for 2012 using LIFO?
8. Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1and 2, fill in the items below, indicating which items will be
understated, overstated, or correctly stated for Years 1 and 2.
Item Year 1 Year 2
Ending inventory ____ _______ ________ _____
Beginning inventory ___ ________ _____ ________
Cost of goods sold ___ ________ _____ ________
9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.
A. Interest and dividend income are reported in the investing section of the cash flow statement.___ ______
B. Interest expense is reported in the financing section of the cash flow statement. _____ ______
C. The use of LIFO is prohibited. _______ ____
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank balance, July 31, 2011-$36,739,
checkbook balance, July 31, 2011- $36,444,
Bank collection of note receivable $1,200+165(interest), ..
11. Journalize the Following transaction for Tammy Company:
Sept. 1, Sold $3,500 of merchandise to Jim on account, .
Oct. 1, Exchanged Jim s account receivable for a four month, 8% note for $ 3,500,
Dec. 31, Recorded accrued interest on Jim s note,
Interest Receivable Dr. $70
Interest Income ..Cr. $70
Feb. 1, Jim paid off his note with interest (round to nearest dollar)
12. A truck was purchased on January 2 at a cost of $60,000. It s expected to be used for five years and have a residual value of $5,000 after 120,000 miles of service. the truck was driven for 23,000 miles the first year and 25,000 miles the second year. calculate the depreciation expense to the nearest dollar for the first and second years.
METHOD- straight-line Year 1 , Year 2 ,
Double- declining-balance, year 1 , year 2,
Units- of- production, Year 1 and year 2.
13. Prepare the general journal entries for the following transactions:
Jan. 2, 2011 Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 cash down and signed a mortgage payable for the balance.
Jan. 2, 2011
Land .. .Dr. $300,000
Building .Dr. $450,000
Cash .Cr.$150,000
Mortgage payable ..Cr. $600,000
(To Record purchase of Land and Building)
Dec. 31, 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75,000 and has an estimated life of 20 years.
14. Journalize the following treasury stock transactions:
June 3, Reacquired 350 shares of $12 par common stock at $10 per share.
Treasury Stock ..Dr. $4200
Cash ..Cr. $4200
June 7, Sold 180 shares of treasury stock for $16 per share.
..
15. Lowry Landscapes had net income of $50,000 for 2010. Land was sold for $40,000, of which $3,000 was a gain. The beginning cash balance was $53,000, and the ending cash balance was $151,000. Depreciation expenses were $11,000. Prepare a statement of cash flows for the year ended December 31, 2010, for Lowry Landscapes using the indirect method.
Aug 29, 2021 | Uncategorized
11. Paul enters into a contract with Harry. Paul agrees to put a new roof on Harry’s house,and Harry agrees to pay Paul $5,000. Paul is late on the payment to Sam’s Supply House and tells Sam’s Supply House that he will pay when he receives money from Harry. Sam’s supply house has heard this from Paul before and didn’t receive money. To ensure Paul pays his payment from the money Harry pays him, Sam’s supply house can
A.require an accord and satisfaction be entered into
B. have Harry bassign interests under the contract with Paul to Sam’s supply house
C. tell harry that paul is indebted to sam’s supply house, which automatically makes them a creditor beneficiary entitled to the payment
D. have Paul assign his interests under the contract with Harry to Sam’s Supply House.
12. Which of the following is an example of discharge by operation of law?
A. Xavier agrees to pain Rita’s house for $1,000. Xavier paints ,but before Rita pays him,she files bankruptcy. As a result,Xavier doesn’t get paid
B. Xavier agrees to paint Rita’shouse for $1,000 before Xavier can paint,Rita’s house burns down
C. Xavier agrees to paint Rita’s house for $1,000 Rita changes her mind and asks Xavier not to paint,Xavier agrees
D. Xavier agrees to paint Rita’;shouse for $1,000 Rita later tells Xavier that she won’t pay him. As a result Xavier decides not to paint
13. Denise orally authorizes Shaun to sell her house. Shaun enters into a written agreement with Eric to sell him the house for $140,000. Both Shaun and Eric sign the contract. Denise learns of the agreement after the fact and decides she doesn’t want to sell. If the contract is ruled unenforceable, the mostly likely reason is the ——- rule
A. parol evidence
B. fariness
C.equal dignities
D. best evidence
14. Jessica orally agrees that she will sell 400 pairs of flip-flops to a customer for $600. This agreement is
A.unenforceable because of the statue of frauds
B. unenforceable because of the parol evidence rule
C. enforceable because all necessary elements are met
D. unenforceable because all necessary elements aren’t met
15.Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers’ market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover
A.both compensatory and consequential damages
B.punitive damages only
C.both nominal and punitive damages
D. compensatory damages only
16. Under tenant Lester’s lease contract with landlord Mary,Lester must pay an extra $25 if his rent is more than five days late. This is an example of—– damages.
A. punitive
B.nominal
C.liquidated
D.consequential
17.Kevin, world-renowned violinist,agrees to play at the reception for Jay’s wedding. Something comes up at the last minute, and Kevin delegates his duty to perform to Susan,a mediocre but professional violinist. This delegation is
A. permissible
B. permissible if Susan performs well
C. permissible if Kevin also assigns to Susan the right to be paid for playing
D. impermissible
18.Elmer borrows money from Big Bank, who then assigns the promissory note and mortgage to Financial Institution for valuable consideration. Elmer isn’t given notice of the assignment and continues to pay Big Bank. Financial Institution files suit, claiming Elmer is in default because Elmer failed to pay monthly payments to Financial Institution. Which of the following statements is true?
A.financial institution was obligated to give notice to Elmer of the assignment
B.Big Bank must forgive Elmer’s loan because they failed to notify him
C. Financial institution must pay Big Bank for the payments Elmer made
D. Elmer is in default to financial institution because he didn’t pay them
19. Samantha is employed by Creative Card Company. After five years of terrific employee reviews. Samantha is terminated with no notice. She feels it’s because of her advancing age,as she just turned 50. Samantha sues Creative Card Company for wrongful termination. The lawsuit takes four years before it’s finally litigated. Di=urning this time,Samantha sits at home,turning down job offers from several employers. Samantha wins her lawsuit,but she receives substantially less in damages than she was seeking. What is the likely reason for this?
A. lack of punitive damages
B. the unavailability of equitable remedies
C. the establishment of a quasi contract
D. the failure to mitigate damages
20.Bella and Connie are struggling to find jobs. They decide they want to open a child daycare center together.They se a house in the perfect neighborhood with a “For Sale by Owner.”They talk to the owner,reach an agreement,and shake hands. Just before the closing on the house, the owner decides not to sell to Bella and Connie. They tell the owner they’re going to sue him for breach of contract. Bella and Connie most likely
A. won’t will because they can find another house that will work just as well
B. will win because the owner breached his agreement to sell them the house
C.won’t win because they shouldn’t have entered into an oral contract to buy the house
D. will win because the owner shouldn’t have entered into a contract with them if he wasn’t sure he wanted to sell the house
Aug 29, 2021 | Uncategorized
1. The following information was made available from the income statement and balance sheet of Lauren Company.
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders Equity 484 366
Total Liabilities and Stockholders Equity $1,120 $788
Part B: Answer each of the following questions. Each answer is worth 4 points.
1. Record the following transactions using the accounting equation.
Example:
Assets = Liabilities + Equity
XXXX(cash) XXXX(accounts payable)
A. Amanda invests $17,000 cash into her merchandising business.
B. She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
C. Additional purchases were supplies for $35,000 on account from various suppliers.
2. Journalize the following transactions and omit the explanations.
A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on
April 8.
B. The corporation paid $60,000 for a two-year lease on April 19.
C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.
D. The corporation borrowed $25,000 by signing a note payable on April 22.
E. The corporation paid $1,250 on one of its accounts payable on April 26.
3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012.
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
4. Compute the missing information from this post-closing trial balance.
Cash $34,689
Accounts Receivable 9,467
Prepaid Rent 5,000
Prepaid Insurance (A)
Supplies 944
Accounts Payable $5,389
Wages Payable (B)
Common Stock 37,049
Retained Earnings 8,234
______ _______
Total $52,356 $52,356
5. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.
6. Given the following information, prepare a balance sheet for Isaiah s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
7. Rick Company s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows:
(Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1 Beginning inventory 18 $24 $432
March 12 Sold 13
April 11 Purchase 45 $29 $1,305
June 20 Sold 33
Aug 16 Purchase 35 $27 $945
Sept 11 Sold 29
Total Cost of Inventory
Ending inventory is 23 units. $2,682
What is the cost of goods sold for Rick Company for 2012 using LIFO?
8. Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.
Item Year 1 Year 2
Ending inventory ___________ _____________
Beginning inventory ___________ _____________
Cost of goods sold ___________ _____________
9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.
A. Interest and dividend income are reported in the investing section of the cash flow statement.__________
B. Interest expense is reported in the financing section of the cash flow statement. ___________
C. The use of LIFO is prohibited. ___________
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610) gas expense
11. Journalize the following transactions for Tammy Company:
Sept. 1 Sold $3,500 of merchandise to Jim on account
Oct. 1 Exchanged Jim s account receivable for a fourmonth, 8% note for $3,500
Dec. 31 Recorded accrued interest on Jim s note
Feb. 1 Jim paid off his note with interest (round to nearest dollar)
12. A truck was purchased on January 2 at a cost of $60,000. It s expected to be used for five years and to have a residual value of $5,000 after 120,000 miles of service. The truck was driven for 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.
Method Year 1 Year 2
Straight-line ________ ________
Double-declining-balance ________ ________
Units-of-production ________ ________
13. Prepare the general journal entries for the following transactions:
Jan. 2, 2011 Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 cash down and signed a mortgage payable for the balance.
Dec. 31, 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75,000 and has an estimated life of 20 years.
July 1, 2012 The building and land are sold for $825,000 cash.
14. Journalize the following treasury stock transactions:
June 3 Reacquired 350 shares of $12 par common stock at $10 per share.
June 7 Sold 180 shares of treasury stock for $16 per share.
June 8 Sold 150 shares of treasury stock for $9 per share.
15. Lowry Landscapes had net income of $50,000 for 2010.
Land was sold for $40,000, of which $3,000 was a gain.
The beginning cash balance was $53,000, and the ending cash balance was $151,000. Depreciation expenses were
$11,000. Prepare a statement of cash flows for the year ended December 31, 2010, for Lowry Landscapes using the
indirect method.
Aug 29, 2021 | Uncategorized
Complete the following exam by answering the questions and compiling your answers into a word-processing document. When you re ready to submit your answers, refer to the instructions at the end of your exam booklet. Be certain to indicate the proper question number before each of your answers. Remember to show your work if an answer requires a mathematical solution.
Part A: Answer each of the following questions. Each answer is worth 20 points.
1. The following information was made available from the income statement and balance sheet of Lauren Company.
Item 12/31/10 12/31/09
Accounts Receivable $53,400 58,600
Accounts Payable 35,600 32,700
Merchandise Inventory 85,000 79,000
Sales (2010) 243,000
Interest Revenue (2010) 5,600
Dividend Revenue (2010) 1,200
Tax Expense (2010) 12,300
Salaries Expense (2010) 28,000
COGS (2010) 65,000
Interest Expense (2010) 3,600
Operating Expenses 28,500
Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
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2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands) 2011 2010 Difference Percentage
Assets
Current Assets
Cash and Equivalents $72 $94
Accounts Receivable, net 122 104
Inventory 288 232
Total Current Assets 482 430
Property, Plant and Equipment 638 358
Total Assets $1,120 $788
Liabilities
Current Liabilities
Accounts Payable $242 $148
Accrued Liabilities 48 66
Total Current Liabilities 290 214
Long-Term Liabilities 346 208
Total Liabilities 636 422
Stockholders Equity
Common Stock 70 60
Retained Earnings 414 306
Total Stockholders Equity 484 366
Total Liabilities and
Stockholders Equity
$1,120 $788
Part B: Answer each of the following questions. Each answer is worth 4 points.
1. Record the following transactions using the accounting equation.
Example:
Assets = Liabilities + Equity XXXX(cash) XXXX(accounts payable)
A. Amanda invests $17,000 cash into her merchandising business.
B. She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
C. Additional purchases were supplies for $35,000 on account from various suppliers.
2. Journalize the following transactions and omit the explanations.
A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on
April 8.
B. The corporation paid $60,000 for a two-year lease on
April 19.
C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.
D. The corporation borrowed $25,000 by signing a note payable on April 22.
E. The corporation paid $1,250 on one of its accounts payable on April 26.
3. Prepare a trial balance from the following information for
Learn a New Language, Inc. for December 31, 2012.
Accounts payable $5,012
Common stock $9,692
Cash $3,928
Notes payable $1,439
Wages expense $777
Marketing expense $493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
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4. Compute the missing information from this post-closing trial balance.
Cash $34,689
Accounts Receivable 9,467
Prepaid Rent 5,000
Prepaid Insurance (A)
Supplies 944
Accounts Payable $5,389
Wages Payable (B)
Common Stock 37,049
Retained Earnings 8,234
_______ _______
Total $52,356 $52,356
5. Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from
Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on accountfrom Luis Company with Terms of 3/15, n/45.
6. Given the following information, prepare a balance sheet for
Isaiah s Tool Shed for the year ending December 31, 2012.
Cash $65,750 Retained Earnings $179,319
Common Stock $35,000 Equipment $27,500
Accounts Receivable $11,478 Accounts Payable $29,450
Land $30,000 Inventory $78,311
Prepaid Supplies $7,357 Income Taxes Payable $4,209
Office Computers $11,345 Other PPE $31,446
Accum. Depr. (all) $23,459 Prepaid Insurance $8,250
7. Rick Company s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows:
(Note:The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1 Beginning inventory 18 $24 $432
March 12 Sold 13
April 11 Purchase 45 $29 $1,305
June 20 Sold 33
Aug 16 Purchase 35 $27 $945
Sept 11 Sold 29
Total Cost of Inventory
Ending inventory is 23 units. $2,682
What is the cost of goods sold for Rick Company for 2012 using LIFO?
8. Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.
Item Year 1 Year 2
Ending inventory ___________ _____________
Beginning inventory ___________ _____________
Cost of goods sold ___________ _____________
9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.
A. Interest and dividend income are reported in the investing section of the cash flow statement.__________
B. Interest expense is reported in the financing section of the cash flow statement. ___________
C. The use of LIFO is prohibited. ___________
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10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable
1,200 + 165interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610) gas expense
11. Journalize the following transactions for Tammy Company:
Sept. 1 Sold $3,500 of merchandise to Jim on account
Oct. 1 Exchanged Jim s account receivable for a fourmonth,
8% note for $3,500
Dec. 31 Recorded accrued interest on Jim s note
Feb. 1 Jim paid off his note with interest (round tonearest dollar)
12. A truck was purchased on January 2 at a cost of $60,000.
It s expected to be used for five years and to have a residual value of $5,000 after 120,000 miles of service. The truck was driven for 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.
Method Year 1 Year 2
Straight-line ________ ________
Double-declining-balance ________ ________
Units-of-production ________ ________
13. Prepare the general journal entries for the following transactions:
Jan. 2, 2011 Purchased land with a building on it for $750,000. The land is worth $300,000.
Paid $150,000 cash down and signed a mortgage payable for the balance.
Dec. 31, 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75,000 and has an estimated life of 20 years.
July 1, 2012 The building and land are sold for $825,000 cash.
14. Journalize the following treasury stock transactions:
June 3 Reacquired 350 shares of $12 par common stockat $10 per share.
June 7 Sold 180 shares of treasury stock for $16 per share.
June 8 Sold 150 shares of treasury stock for $9 per share.
15. Lowry Landscapes had net income of $50,000 for 2010.
Land was sold for $40,000, of which $3,000 was a gain.
The beginning cash balance was $53,000, and the ending cash balance was $151,000. Depreciation expenses were $11,000. Prepare a statement of cash flows for the year ended December 31, 2010, for Lowry Landscapes using the indirect method.
Aug 29, 2021 | Uncategorized
Problem 12-3 Statement of Cash Flows (Direct Method)
Peoria Corp. just completed another successful year, as indicated by the following income statement:
For the Year Ended
December 31, 2012
Sales revenue $1,250,000
Cost of goods sold 700,000
Gross profit $ 550,000
Operating expenses 150,000
Income before interest and taxes $ 400,000
Interest expense 25,000
Income before taxes $ 375,000
Income tax expense 150,000
Net income $ 225,000
Presented here are comparative balance sheets:
December 31
2012 2011
Cash $ 52,000 $ 90,000
Accounts receivable 180,000 130,000
Inventory 230,000 200,000
Prepayments 15,000 25,000
Total current assets $ 477,000 $ 445,000
Land $ 750,000 $ 600,000
Plant and equipment 700,000 500,000
Accumulated depreciation (250,000) (200,000)
Total long-term assets $1,200,000 $ 900,000
Total assets $1,677,000 $1,345,000
Accounts payable $ 130,000 $ 148,000
Other accrued liabilities 68,000 63,000
Income taxes payable 90,000 110,000
Total current liabilities $ 288,000 $ 321,000
Long-term bank loan payable $ 350,000 $ 300,000
Common stock $ 550,000 $ 400,000
Retained earnings 489,000 324,000
Total stockholders equity $1,039,000 $ 724,000
Total liabilities and stockholders equity $1,677,000 $1,345,000
Other information is as follows:
a. Dividends of $60,000 were declared and paid during the year.
b. Operating expenses include $50,000 of depreciation.
c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.
Required:
Prepare statement of cash flows for 2012 using direct method in the operating activities section
Problem 12-4 Statement of Cash Flows Indirect Method
Refer to all of the facts in Problem 12-3.
Required
Prepare a statement of cash flows for 2012 using the indirect method in the Operating Activities section.
NOTE: Tutorial answers for these 2 problems has NO MEMO, only statement of cash flows/solutions
Aug 29, 2021 | Uncategorized
On January 1, 20×1, Pep Company acquired 80% of the common stock of Sky Company for $195,000. On this date Sky had total owners’ equity of $200,000 (common stock, other paid-in capital, and retained earnings of $10,000, $90,000 and $100,000 respectively).
Any excess of cost over book value is attributable to inventory (worth $6,250 more than cost), to equipment (worth $12,500 more than book value), and to patents. FIFO is used for inventories. The equipment has remaining life of five years and straight-line depreciation is used. The excess attributable to the patents is to be amortized over 20 years.
During 20×1 and 20×2, Pep has appropriately accounted for its investment in Sky by using the simple equity method.
On January 1, 20×2, Pep held merchandise acquired from Sky for $10,000. During 20×2, Sky sold merchandise to Pep for $50,000, $20,000 of which is still held by Pep on December 31, 20×2. Sky’s usual gross profit on affiliated sales is 50%.
On December 31, 20×1, Pep sold equipment to Sky at a gain of $10,000. During 20×2, the equipment was used by Sky. Depreciation is being computed using the straight-line method, a five-year life, and no salvage value.
Required:
a. Using the information above and the worksheet below, prepare a determination and distribution of excess schedule, and related amortization of excesses.
b. Prepare journal entries for all related transactions.
c. Prepare and complete a worksheet for consolidated financial statements for the year ended December 31, 20×2.
d. Prepare, in good format, consolidated financial statements for the year including the income statement and balance sheet ended December 31, 20×2.
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1) Balance sheet accounts are considered to be __________. A. nominal accounts B. permanent accounts C. temporary stockholders accounts D. capital accounts
2) The major reporting standard for management accounts is __________. A. generally accepted accounting principles B. the Sarbanes-Oxley Act of 2002 C. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management D. relevance to decisions
3) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers? A. It should sell an equal quantity of both B. Wine C. Beer D. Selling either results in the same additional income for the company
4) What is the preparation of reports for each level of responsibility in the company s organization chart called? A. Master budgeting analysis B. Responsibility reporting C. Static reporting D. Exception reporting
5) These are selected account balances on December 31, 2008. Land (location of the corporation s office building) $100,000 Land (held for future use) 150,000 Corporate Office Building 600,000 Inventory 200,000 Equipment 450,000 Office Furniture 100,000 Accumulated Depreciation 300,000 What is the net amount of property, plant, and equipment that will appear on the balance sheet? A. $950,000 B. $1,100,000 C. $1,300,000 D. $1,600,000
6) Of the following companies, which one would not likely employ the specific identification method for inventory costing? A. Hardware store B. Farm implement dealership C. Music store specializing in organ sales D. Antique shop
7) The cost of an asset and its fair market value are __________. A. the same on the date of acquisition B. the same when the asset is sold C. never the same D. irrelevant when the asset is used by the business in its operations
8) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____. A. $50 B. $75 C. $65 D. $60
9) The primary purpose of the statement of cash flows is to __________. A. facilitate banking relationships B. prove that revenues exceed expenses if there is a net income C. provide information about the investing and financing activities during a period D. provide information about the cash receipts and cash payments during a period
10) Which list below best describes the major services performed by public accountants? A. Cost accounting, production scheduling, recruiting B. Employee training, auditing, bookkeeping C. Bookkeeping, mergers, budgets D. Auditing, taxation, management consulting
11) The standards and rules that are recognized as a general guide for financial reporting are called __________. A. standards of financial reporting B. generally accepted accounting principles C. generally accepted accounting standards D. operating guidelines
12) If a company reports a net loss, it __________. A. will not be able to make capital expenditures B. will not be able to pay cash dividends C. may still have a net increase in cash D. will not be able to get a loan
13) What exists when budgeted costs exceed actual results? A. An excess profit B. A favorable difference C. A budgeting error D. An unfavorable difference
14) One of Astro Company’s activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers? A. $90,000 B. $60,000 C. $150,000 D. $75,000
15) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________. A. plus the cost of tuition, equals the opportunity cost of going to college B. should be counted only to the extent that they are more expensive at college than elsewhere C. should be counted in full, regardless of the costs of eating and sleeping elsewhere D. usually exceed the opportunity cost of going to college
16) If a binding price ceiling were imposed in the computer market, __________. A. the quality of computers would increase B. the supply of computers would decrease C. the demand for computers would increase D. a shortage of computers would develop
SET 2
True & False
1. The statement of cash flows is a not a required statement, but may be prepared to supplement the
income statement, balance sheet, and retained earnings statement.
2. For external reporting, a company must prepare either an income statement or a statement of
cash flows, but not both.
3. A primary objective of the statement of cash flows is to show the income or loss on investing and
financing transactions.
4. A statement of cash flows indicates the sources and uses of cash during a period.
5. In preparing a statement of cash flows, cash equivalents are subtracted from cash in order to compute
the net change in cash during a period.
6. Cash equivalents are highly-liquid investments that have maturities of less than three months.
7. The use of cash to purchase highly liquid short-term investments (cash equivalents) would be reported
on the statement of cash flows as an investing activity.
8. In preparing a statement of cash flows, the issuance of debt as a cash inflow in the financing section.
9. Non-cash investing and financing activities must be reported in the body of a statement of cash flows.
10. The statement of cash flows classifies cash receipts and payments as operating, non-operating,
financial, and extraordinary activities.
11. The statement of cash flows
a. reports the changes in stockholders equity for the year.
b. reports the financial position of the company.
c. is another name for the income statement.
d. summarizes the operating, financing, and investing activities of an entity.
12. The primary purpose of the statement of cash flows is to
a. provide information about the investing and financing activities during a period.
b. prove that revenues exceed expenses if there is a net income.
c. provide information about the cash receipts and cash payments during a period.
d. facilitate banking relationships.
13. If a company reports a net loss, it
a. may still have a net increase in cash.
b. will not be able to pay cash dividends.
c. will not be able to get a loan.
d. will not be able to make capital expenditures.
14. The order of presentation of activities on the statement of cash flows is
a. operating, investing, and financing.
b. operating, financing, and investing.
c. financing, operating, and investing.
d. financing, investing, and operating.
15. Meyer Company reported net income of $30,000 for the year. During the year, accounts receivable
increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $5,000 was
recorded. Net cash provided by operating activities for the year is
a. $25,000.
b. $45,000.
c. $29,000.
d. $30,000.
16. Flynn Company reported a net loss of $10,000 for the year ended December 31, 2005. During the year,
accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable
increased by $10,000, and depreciation expense of $5,000 was recorded. During 2005, operating
activities
a. used net cash of $2,000.
b. used net cash of $8,000.
c. provided net cash of $2,000.
d. provided net cash of $8,000.
17. Which of the following would be subtracted from net income using the indirect method?
a. Depreciation expense
b. An increase in inventory
c. An increase in salaries payable
d. A decrease in supplies
18. Which of the following would be added to net income using the indirect method?
a. An increase in accounts receivable
b. An increase in prepaid expenses
c. Depreciation expense
d. A decrease in accounts payable
19. Stone Company had a cost of purchases of $250,000. The comparative balance sheet analysis revealed
a $10,000 decrease in inventory and a $20,000 increase in accounts payable. What were Stone’s cash
payments to suppliers?
a. $230,000.
b. $220,000.
c. $260,000.
d. $280,000.
20. The information in a statement of cash flows will not help investors to assess the entity’s ability to
a. generate future cash flows.
b. obtain favorable borrowing terms at a bank.
c. pay dividends.
d. pay its obligations when they become due.
Aug 29, 2021 | Uncategorized
E24-2 (Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose. ______ 1. Settlement of federal tax case at a cost considerably in excess of the amount expected at year-end. ______ 2. Introduction of a new product line. ______ 3. Loss of assembly plant due to fire. ______ 4. Sale of a significant portion of the company s assets. ______ 5. Retirement of the company president. ______ 6. Prolonged employee strike. ______ 7. Loss of a significant customer. ______ 8. Issuance of a significant number of shares of common stock. ______ 9. Material loss on a year-end receivable because of a customer s bankruptcy. ______ 10. Hiring of a new president. ______ 11. Settlement of prior year s litigation against the company. ______ 12. Merger with another company of comparable size.
E24-4 (Ratio Computation and Analysis; Liquidity) As loan analyst for Utrillo Bank, you have been presented the following information. Toulouse Co. Lautrec Co. Assets Cash $ 120,000 $320,000 Receivables 220,000 302,000 Inventories 570,000 518,000 Total current assets 910,000 1,140,000 Other assets 500,000 612,000 Total assets $1,410,000 $1,752,000 Liabilities and Stockholders Equity Current liabilities $ 305,000 $ 350,000 Long-term liabilities 400,000 500,000 Capital stock and retained earnings 705,000 902,000 Total liabilities and stockholders equity $1,410,000 $1,752,000 Annual sales $ 930,000 $1,500,000 Rate of gross profit on sales 30% 40% Each of these companies has requested a loan of $50,000 for 6 months with no collateral offered. In as much as your bank has reached its quota for loans of this type, only one of these requests is to be granted. Instructions Which of the two companies, as judged by the information given above, would you recommend as thebetter risk and why? Assume that the ending account balances are representative of the entire year.
CA24-2 (Disclosures Required in Various Situations) Rem Inc. produces electronic components for sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination of Rem s financial statements for the year ended December 31, 2007, Maggie Zeen, CPA, completed field work 2 weeks ago. Ms. Zeen now is evaluating the significance of the following items prior to preparing her auditor s report. Except as noted, none of these items have been disclosed in the financial statements or notes. Item 1 A 10-year loan agreement, which the company entered into 3 years ago, provides that dividend payments may not exceed net income earned after taxes subsequent to the date of the agreement. The balance of retained earnings at the date of the loan agreement was $420,000. From that date through December 31, 2007, net income after taxes has totaled $570,000 and cash dividends have totaled $320,000. On the basis of these data, the staff auditor assigned to this review concluded that there was no retained earnings restriction at December 31, 2007. Item 2 Recently Rem interrupted its policy of paying cash dividends quarterly to its stockholders. Dividends were paid regularly through 2006, discontinued for all of 2007 to finance purchase of equipment for the company s new plant, and resumed in the first quarter of 2008. In the annual report dividend policy is to be discussed in the president s letter to stockholders. Item 3 A major electronics firm has introduced a line of products that will compete directly with Rem s primary line, now being produced in the specially designed new plant. Because of manufacturing innovations, the competitor s line will be of comparable quality but priced 50% below Rem s line. The competitor announced its new line during the week following completion of field work. Ms. Zeen read the announcement in the newspaper and discussed the situation by telephone with Rem executives. Rem will meet the lower prices that are high enough to cover variable manufacturing and selling expenses but willpermit recovery of only a portion of fixed costs. Item 4 The company s new manufacturing plant building, which cost $2,400,000 and has an estimated life of 25 years, is leased from Ancient National Bank at an annual rental of $600,000. The company is obligated to pay property taxes, insurance, and maintenance. At the conclusion of its 10-year noncancellable lease, the company has the option of purchasing the property for $1. In Rem s income statement the rental payment is reported on a separate line. Instructions For each of the items above discuss any additional disclosures in the financial statements and notes that the auditor should recommend to her client.
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Examine the claim that moral reasons are different from personal reasons. Support your view with examples. (Please provide an actual scenario where a criminal justice professional (police officer, prosecutor, deputy etc.) is involved.)
Analyze this statement by Socrates: The unexamined life is not worth living and discuss its implication to a criminal justice professional. Support your view with an example. (Please provide an actual scenario where a criminal justice professional (police officer, prosecutor, deputy etc.) is involved.)
Assume you are a new police chief of a department with a history of bias against protected groups (e.g., minorities, gays, and women), addressing the entire police force. As the new chief you state: We cannot think critically if we use bias. Support this statement with reasons and at least two recommendations for improving decisions in the field.
Research at least two peer-reviewed articles about common errors of relevance in policing or trying / judging criminal cases in court. (Note: Do not use open source sites such as Ask.com, eHow.com, Answers.com, and Wikipedia.), examine two common errors of relevance. Discuss the damage the errors can cause and recommend at least two ways to avoid them
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1) Please discuss what the employment at will doctrine is, and two exceptions to that doctrine. Why do courts want to find exceptions?
2) Discrimination on the basis of disability is prohibited (ADA). What IS a disability? Please also discuss what the employer s duties are when faced with an otherwise qualified person who has a disability what is reasonable accommodation? What is not?
3) Describe the difference between disparate treatment and disparate impact and give an example of each. What employment law lessons should you learn and implement as a result of your new found knowledge regarding this subject?
4) Is there an underlying theory behind all of the anti-discrimination laws we have looked at? What is that? Why is that important? And have we made much headway in achieving the goal of the theory (in your own opinion)?
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How is the opportunity cost rate used in discounted cash flow analysis, and where is it shown on a time line? Is the opportunity rate a single number that is used to evaluate all potential investments?
If a firm’s earnings per share grew from $1 to $2 over a ten year period, would the total growth be 100% but the annual growth rate less than 10%? please explain.
Say my parents will retire in 18 years and they currently have $250,000 and they think they will need one million at retirement. What annual interest rate must they earn to reach their goal, assuming they don’t save any addition funds?
Would it be better to have a savings account that pays 5% interest compounded semi annually or one that pays 5% interest compounded daily?
Please explain
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Performance Drinks, LLC is owned by Dave N. Port. Performance Drinks produces a variety of sports centered drinks. They began operations in 1993 shortly after Mr. Port graduated with his M.B.A. from Davenport University. The company saw early success as sports and fitness nutritional products gained new popularity in the 1990 s. Financially the company is sound and has been wise in controlling their growth over the years. However, within the last 18 months Mr. Port has noticed a drop in overall company profitability. This is especially troubling considering that the company has continued to experience top-line growth. Mr. Port and his management team have been considering developing a new product line. However, those plans have been put on hold until they can figure out why their profits are shrinking.
Performance Drinks makes four different kinds of sports drinks. Those drinks are as follows:
Basic
Hydration
Intensity
Post-Workout
Each of these drinks contains a slightly different nutritional profile and is targeted for different users and uses. The Basic drink has the least nutritional benefit and is targeted for general consumption. The Hydration product targets endurance athletes and specializes in hydration replacement. The Intensity product was designed with energy enhancement in mind. It serves the needs of extreme athletes who need long durations of sustained energy. Lastly, the Post-Workout product is a nutritional replacement product that is generally used following exertion.
You are the Controller for Performance Drinks. You feel as though you have a good handle on the financial reporting and the overall company performance. However, admittedly, your accounting information system has been designed to serve the needs of external users from an aggregate perspective. To that end you utilize absorption costing exclusively within the organization. You recall studying the concept of Activity Based Management (ABM) and Activity Based Costing (ABC) while taking a managerial accounting course. You wonder if applying those ideas to your business would help to uncover the mystery of the disappearing profits.
You recall from your Management Accounting class that product costs are comprised of:
Direct Materials
Direct Labor
Manufacturing Overhead
You don t suspect that anything strange is going with your direct costs. You do wonder, however, if a more thorough understanding of your indirect costs may be in order. Over a series of weeks you talk with a variety of employees, representing a multitude of functional areas, from within the company. During those conversations you take careful note on what activities might be consuming resources and how those activities might be measured. You sharpen your pencil and begin to unpack what you ve learned. You start with reviewing last month s Product-Level Profit Report. That report is following:
Since your primary area of focus is on the indirect costs you compile the following report which further details your overhead charges:
Overhead Activities:
Using traditional costing methods, which support your absorption costing system, you base overhead allocation on direct labor cost. Furthermore, fringe benefits are a function of direct labor cost.
As a result of your many meetings to discuss company overhead you determine that the majority of your indirect costs are related to four primary activities. Those activities are equipment set-ups, production runs, production management and machine-hour capacity. Production Management refers to a number of items that are correlated to the number of products the company produces. Ultimately you determine that your key activities have the following usage patterns, as they pertain to the monthly overhead costs:
Upon reviewing budget data from the last budget cycle you discover that the monthly number of set-ups was estimated to be 85. The number of production runs was estimated to be 250. That monthly machine-hour capacity is presently at 20,000 machine-hours. Lastly, Performance Drinks produces a total of four products.
After talking with the Plant Manger you create the following usage data relative to products and activities:
Requirements:
1. Based on all of the date provided, compute the cost driver rates for each of the four activities.
2. Compute the per unit product costs for each of the four products. Compute this cost using ABC allocation for overhead. Show the computation for each per unit product cost in detail.
3. Prepare a Monthly Profit Report , like the one provided on page 4 of this packet. Create this report using the results of your ABC overhead allocation.
4. Prepare a written Management Report that explains to the management team what Activity Based Costing is, how it was used to generate the Monthly Profit Report (from requirement #3). Explain why the profit for each product is different when comparing the Traditional report with the ABC report. Explain what the company might consider doing, based on all of this information, to stop the erosion of company profits. Defend your recommendations with data.
Additional Consideration:
Mr. Port wonders what would happen to costs if plant capacity was shifted from 20,000 machine-hours a month to 40,000 machine-hours per month.
Requirements:
5. Compute the new cost per unit for each of the products considering the increase in capacity. Show the computation for each per unit product cost in detail.
6. What is the cost of the unused capacity if it is assumed that the company has 40,000 machine-hours of capacity but it using 20,000 machine-hours? Amend your Management Report to include a discussion on how to best use the additional capacity.
Clarification on format and data:
Clear communication and professionalismare important. Defending your answer with data is important.
An electronic copy of this Case (this document) is available within Blackboard. Additionally, an Excel file, containing the basic data for the case will be available within Blackboard.
You will create one professional report. In that report you should clearly label all of your answers. Make your answers easy to read and find. Imagine you were giving this report to your boss. Further imagine you have to lead your boss and the executive team through your findings.
As it pertains to requirement #4, include the Management Report inside your overall report. You will then have one Word document as your final product. You will also have one Excel file.
Grading is based on both accuracy (see rubric) and your ability to communicate your answers professionally and clearly.
Use the following naming structure for your files: last name_first initial_case2.docx. Of course your Excel file will have an .xls suffix.
Double space your report.
Put good thought into how you organize your Excel document. Part of your grade will be based upon the usability and layout of your Excel file. Imagine that have to give the electronic copy of your Excel file to your boss, or a peer, to work with. Imagine that you could not coach them at all on how to use your file. Is your file organized and labeled so clearly that anyone could use it, easily, without instructions from you? You want to strive for that kind of clarity in your work.
Your report should have a title page. Use APA 6th edition for guidance on title pages.
You will physically hand-in your report. You will also upload to Blackboard both your Word document and your Excel file.
Due date: Tuesday, October 8th at 6:00 PM EDT
Late submissions will result in the following: 10% reduction in score for each 24 hour period of being late (up to 3 days). After 3 days late zero credit will be earned.
As always please come to me with learning questions. This project is a learning experience.
Rubric:
This project is worth 20% (200 points) of your overall course grade. I will convert your scores to a 200 point scale.
Aug 29, 2021 | Uncategorized
1. (TCO 1) Performance reports often compare current period performance with (Points: 4) Performance in a prior period. Planned (budgeted) performance. Both A and B are correct. Neither A nor B is correct. 2. (TCO 1) Marco Diner produced and sold 2,000 bagels last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true? (Points: 4) Total fixed costs will increase. Total fixed costs will decrease. Fixed cost per unit will increase. Fixed cost per unit will decrease. 3. (TCO 2) Which of the following is a manufacturing cost? (Points: 4) Direct material Advertising expense Depreciation of the office equipment used by the sales staff Salary of the company president 4. (TCO 2) An allocation base is (Points: 4) a common characteristic that jobs share, which is used to spread the overhead costs among the various jobs. the minimum amount of overhead assigned to a job. used to determine how many labor hours were needed to complete a job. used to authorize the release of materials from the storeroom to the production area. 5. (TCO 3) Why do we compute equivalent units differently for raw materials and conversion costs? (Points: 4) Raw materials are more difficult to count Conversion costs are more difficult to count They are introduced into the process at different times None of the above 6. (TCO 3) The Nazareth Company s mixing department incurred conversions costs of $650,820 during January, after recording a beginning Work in Process inventory of $30,430 for conversion costs. Fifty-four thousand units were transferred out of the department and the ending inventory consisted of 2,500 units that are 20% complete with respect to conversion. What is the conversion cost per equivalent unit? (Points: 4) $12.50 $12.05 $12.17 $12.62 7. (TCO 4) Regression analysis (Points: 4) uses all the available data points to estimate a cost equation can be performed by many spreadsheet programs provides an equation that can be used to estimate total costs at different levels all of the above 8. (TCO 4) The number of units that must be sold to exactly cover its fixed and variable costs is the (Points: 4) contribution margin break-even point relevant range margin of safety 9. (TCO 5) Full costing (Points: 4) is the same as absorption costing. considers fixed manufacturing overhead as part of the cost of inventory. often does not provide the information needed for C-V-P analysis. All of the above choices are correct. 10. (TCO 5) If the number of units sold is less than the number of units produced (Points: 4) full costing and variable costing will yield the same net income. full costing will assign some fixed manufacturing overhead to the units in the ending inventory. net income will be higher under variable costing than under full costing. inventory levels will decrease. 11. (TCO 6) A major problem with cost-plus contracts is that they (Points: 4) are not acceptable under GAAP. cause the supplier to take significant financial risks. require the supplier to use variable costing. create an incentive to allocate as much cost as possible to the goods produced under the cost-plus contract. 12. (TCO 6) Which of the following steps is not involved in the ABC approach? (Points: 4) Identify activities which cause costs to be incurred. Allocate costs to products based on activity usage. Group costs of activities into cost pools. Improve processes based on benchmarking 13. (TCO 7) Which of the following is not a term used to describe the additional costs incurred as a result of selecting one decision over another? (Points: 4) Differential costs Sunk costs Relevant costs Incremental costs 1. (TCO 7) The value of benefits foregone by selecting one alternative over another is a(n) (Points: 4) sunk cost incremental benefit differential revenue opportunity cost 2. (TCO 8) Which of the following statements about price, demand and profit is most generally true? (Points: 4) As price increases, demand increases As demand increases, prices increase As prices increase, demand decreases As price increases, profits decrease 3. (TCO 8) When deciding to accept or reject a special order, which of the following costs would most likely not be relevant? (Points: 4) The wages of direct labor to make the order. Depreciation on the machinery used to make the order. The raw material used to make the order. The electricity used to run the machine to make the order. 4. (TCO 9) The required rate of return used to compute net present value is related to the firm s (Points: 4) contribution margin. depreciation methods. fixed costs. cost of capital. 5. (TCO 9) The internal rate of return (Points: 4) takes into account the time value of money. is the rate of return that equates the present value of future cash flows to the initial investment. both A and B neither A nor B 6. (TCO 10) Which of the following is not a reason that actual results may deviate from planned performance? (Points: 4) A bottom-up approach to budgeting was used. Managers have done a particularly good or particularly poor job of managing operations. Conditions have changed since the budget was developed. The budget was poorly conceived and constructed. 7. (TCO 10) The amount of direct material that must be purchased during a period depends on the amount of direct material (Points: 4) needed for production. available in the beginning inventory. desired as ending inventory. All of the above are correct. 8. (TCO 10) The difference between the stand and actual cost is a(n) (Points: 4) actual cost overrun. variance by exception. slack amount. standard cost variance. 9. (TCO 10) In general, an unfavorable material variance arises from (Points: 4) using more material than planned. paying a higher price for material than planned. Both A and B None of the above 10. (TCO 10) The type of center that has responsibility for generating revenue as well as controlling costs is a(n) (Points: 4) investment center. cost center. business center. profit center. 11. (TCO 10) Responsibility accounting holds managers responsible for (Points: 4) all costs charge to their department. all direct cost of their department plus part of the allocated company costs. only costs they have personally approved. only costs they can control. 12. The ratio that measures the return earned independently of how the firm is financed is the (Points: 4) return on stockholders equity. price earnings ratio. earnings per share. return on assets. 1. Distinguish between product costs and period costs. Define both types of costs and provide examples. 2. (TCO 6) Pacific Airlines has three service departments; ticketing, baggage handling, and aircraft maintenance. Costs of these departments are allocated to two revenue producing departments, domestic and international flights. Costs for the service departments are not separated into fixed and variable and the totals are as follows: Ticketing $4,000,000 Baggage handling $2,000,000 Aircraft maintenance $6,000,000 Air miles are as follows: Domestic 10,000,000 International 30,000,000 (a) Allocate the service department costs based on air miles. (b) Evaluate World Airlines use of air miles as a basis for allocation. Do you think the cause-and-effect relationship is strong? (c) Suggest alternative methods to allocate the service department costs. 3. Joanie Corp sells it products on both credit and cash basis. Monthly sales are sold 10% for cash, 90% for credit. Credit sales are collected 40% in the month of sale and 60% the following month. Sales for the first quarter are as follows: January $100,000 February $150,000 March $125,000 Compute cash collections for February. 4. Singleton Company is trying to determine a predetermined manufacturing overhead. Estimated overhead for the upcoming year is $600,000. Budgeted machine hours are 120,000 hours, and budgeted labor hours are 15,000 hours at a rate of $20.00 per hour. Compute the predetermined overhead rate based on: (a) Machine hours (b) Direct labor hours (c) Direct labor dollars 5. An investment of $185,575 is expected to generate returns of $65,000 per year for each of the next four years. What is the investment s internal rate of return? 6. Copper Queen Hotel is interested in estimating fixed and variable costs so the hotel can make more accurate projections of costs, break-even and profits. The hotel is in a resort area and busy from November through March. In July and August, the hotel has only a 50 percent occupancy rate. Classify each of the following costs as fixed, variable or mixed. A. Depreciation of the building B. Salaries of restaurant staff C. Salaries of hotel manager, desk manager, accounting clerks D. Soap, shampoo and other toiletries in the bathrooms E. Laundry costs (cost of bed linens, table cloths, cleaning products, depreciation on cleaning equipment. F. Food and beverage costs G. Grounds Maintenance 7. The following data has been taken from Air-Tite company in its first year of business. Units produced 100,000 Units sold 60,000 Units in ending inventory 40,000 Fixed manufacturing overhead $500,000 (a) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if full absorption costing is used. (b) Compute the amount of fixed manufacturing overhead that would be expensed in the current year if variable costing is used. (c) Compute the amount of fixed manufacturing overhead that would be included in ending inventory under full absorption costing.
Aug 29, 2021 | Uncategorized
Managerial Accounting
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Peter s Pretty PJs makes and sells children s pajamas. The standard cost of one unit of this product is:
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Direct Materials: 1.1 metre at $6.50 per metre
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$ 7.15
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Direct Labour: 1/2 hour at $10.00 per hour
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$ 5.00
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Variable Overhead: 1/2 Direct Labour hour at $7.50
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$ 3.75
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Total Standard Variable Cost per Unit
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$15.90
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During the month of October, 60,000 units were produced. Selected cost data relating to the month’s production follow:
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Material Purchased: 60,000 metres
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$396,000
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Material Used in Production: 64,000 metres
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–
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Direct Labour: hours at $ per hr
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$302,250
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Variable Overhead Cost Incurred
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$240,250
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Variable Overhead Efficiency Variance
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$ 7,500 unfavourable
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There was no beginning inventory of raw materials. The variable overhead rate is based on direct labour-hours.
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Required:
1)
For direct materials, compute the price and quantity variances for the month.
2)
For direct labour, compute the rate and efficiency variances for the month. Hint answer question 3 before this one.
3)
For variable overhead, compute the spending variance for the month, and prove the efficiency variance given above.
4)
Which variance should be investigated first, and who should be questioned? Explain your answers.
Aug 29, 2021 | Uncategorized
PROJECT OVERVIEW
Pete’s Pet Products is a sole proprietorship owned by Pete Thompson. The store provides a full-line of pet products, including food, grooming materials, toys, leashes, etc. The company also sells hand made pet houses, including dog houses, bird cages, and cat castles. Each of the pet houses is being evaluated in terms of cost-volume-profit. See the relevant information below:
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Dog house
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Bird cage
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Cat castle
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Sales Price
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$140
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$95
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$160
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Variable cost
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$65
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$34
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$56
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Fixed monthly cost
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30%
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25%
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45%
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When Pete uses a distributor to sell additional pet houses, he has to pay a sales commission of 8% of the sales price. On average, he sells 60% of each pet house through distributors. The fixed costs (shown above) are based on estimated design time for each product. Pete’s store averages $32,000 of fixed costs per month.
Refer to the Course Schedule within the Syllabus for specific project deliverables and due dates.
DELIVERABLE
Based on the information presented above, please answer the following questions. Use Excel for this assignment. Complete your calculations using the Excel features and simply type in narrative answers.
Calculate the contribution margin for each pet house. Ignore the sales commission for this computation.
Calculate the monthly break-even units for each pet house. Ignore the sales commission for this computation.
. Assuming that Pete plans to sell 750 dog houses, 335 bird cages, and 640 cat castles (60% through distributors), prepare a contribution margin income statement based on these sales volumes. Include sales, each type of variable cost (including sales commission), and fixed costs.
Assuming the distributors decide to ask for a 12% commission on each pet product, compute how much Pete will have to reduce his other costs to make up for this. Are there other counter proposals Pete could suggest?
. Based on fierce competition from a rival store named Fran’s Fuzzy Friends, Pete has decided to decrease his selling price for a dog house by 10%. He has also decided to pay a local celebrity $2,000 a month to promote his store. This cost will be allocated only to the dog houses. Recalculate the dog house break-even point given this new information. Ignore sales commission for this computation.
Pete was recently asked to submit a bid for a new customer who is interested in purchasing 450 dog houses, 250 bird cages, and 550 cat castles to stock his newly opened store in another state. What factors would impact Pete’s bid to the new customer? What happens if a competitor’s bid comes in lower than what Pete can offer? Would you recommend Pete drop the selling price rather than lose the opportunity? Why or why not? Explain how much he can afford to drop the price.
Aug 29, 2021 | Uncategorized
| Module 2 Assignment: |
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Pets Unlimited had a piece of equipment that it purchased 10 years ago. Its cost was $110,000 and it had accumulated depreciation of $75,000.
Record the disposition of the asset under the following independent situations: |
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Pets Unlimited sold the equipment for $25,000. |
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Pets Unlimited discarded the equipment at a cost of $10,000. |
| 3 |
Pets Unlimited traded in the asset for a new similar asset with a list price of $120,000. Pets Unlimited was given $10,000 as a trade-in allowance and paid cash for the balance. |
| 4 |
Pets unlimited traded in the asset for a new similar asset with a list price of $200,000. Pets Unlimited was given a trade-in allowance of $50,000 and took signed a note payable for the remainder. |
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Aug 29, 2021 | Uncategorized
On January 3, 2012, Trusty Delivery Service purchased a truck at a cost of $90,000. Before placing the truck in service, Trusty spent $3,000 painting it, $1,500 replacing tires, and $4,500 overhauling the engine. The truck should remain in service for five years and have a residual value of $9,000. The truck’s annual mileage is expected to be 22,500 miles in each of the first four years and 10,000 miles in the fifth year 100,000 miles in total. In deciding which depreciation method to use, Mikail Johnson, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance).
Requirements:
1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value.
2. Trusty prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year that Trusty uses the truck. Identify the depreciation methods that meet the general manager’s objectives, assuming the income tax authorities permit the use of any of the methods.
Aug 29, 2021 | Uncategorized
In recent years, Pablo Company purchased three machines. Because of heavy turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and each selected a different method. Information concerning the machines is summarized below.
Machine Acquired Cost Salvage Value Useful Life in Years Depreciation Method
1 1/1/09 $105,000$ 5,000 10 Straight-line
2 1/1/09 150,000 10,000 8 Declining-balance
3 11/1/11 100,000 15,000 6 Units-of-activity
For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 25,000. Actual hours of use in the first 3 years were: 2011, 2,000; 2012, 4,500; and 2013, 5,500.
Compute depreciation under different methods.
Instructions:
(a) Compute the amount of accumulated depreciation on each machine at December 31, 2011.
(b) If machine 2 had been purchased on May 1 instead of January 1, what would be the depreciation expense for this machine in (1) 2009 and (2) 2010?
Aug 29, 2021 | Uncategorized
P9-3AOn January 1, 2014, Thao Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $35,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Thao esti mates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $80,000. Thao estimates that the useful life of the machine is 4 years with a $5,000 salvage value remain ing at the end of that time period.
Instructions
(a)’ Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2014.
(2) The journal entry to record annual depreciation at December 31, 2014.
(b) Calculate the amount of depreciation expense that Thao should record for Machine Beach year of its useful life under the following assumptions.
(1) Thao uses the straight-line method of depreciation..
(2) Thao uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Thao uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2014, 42,000 units; 2015, 35,000units; 2016, 28,000 units; 2017, 20,000 units.
(c) Which method used to calculate depreciation on Machine B reports the highest amount of depreciation expense in year 1 (2014)? The highest amount in year 4 (2017)? The highest total amount over the 4-year period?
Aug 29, 2021 | Uncategorized
At December 31, 2011, Starkey Company reported the following as plant assets.
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Land
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$ 2,000,000
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Buildings
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$20,000,000
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Less: Accumulated depreciation buildings
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8,000,000
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12,000,000
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Equipment
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30,000,000
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Less: Accumulated depreciation equipment
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4,000,000
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26,000,000
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Total plant assets
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$40,000,000
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During 2012, the following selected cash transactions occurred.
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April 1
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Purchased land for $1,200,000.
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May 1
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Sold equipment that cost $420,000 when purchased on January 1, 2008. The equipment was sold for $240,000.
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June 1
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Sold land purchased on June 1, 2002, for $1,000,000. The land cost $340,000.
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July 1
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Purchased equipment for $1,100,000.
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Dec. 31
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Retired equipment that cost $300,000 when purchased on December 31, 2002. No salvage value was received.
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Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.
Instructions
(a) Journalize the above transactions. Starkey uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year useful life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
(b) Record adjusting entries for depreciation for 2012.
Check answers: Depreciation expense
Building $400,000;
Equipment $2,983,000
(c) Prepare the plant assets section of Starkey’s balance sheet at December 31, 2012.
check Answer: Total plant assets $38,295,000
Aug 29, 2021 | Uncategorized
2. Consider the following income statement for WatchoverU Savings Inc. (in millions): (LG 19-1)
ssets liabilities
floating rate NOW account (6% annually) 70
mortgages(currently10%annually) $50 Time deposit (6% annually) 20
30-year fixed rate loans(7%annually) 50 Equity 10
Total 100 Total 100
a.What is WatchoverU s expected net interest income at year-end?
b.What will be the net interest income at year-end if interest rates rise by 2 percent?
The following is ABC, Inc. s, balance sheet (in thousands): (LG 20-5)
Assets Liabilities
Cash 20 Accounts payable 30
Accounts receivable 90 notes payable 90
inventory 90 accruals 30
plant and equip 500 long term debt 150
total 700 equity 400
total 700
Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning retained earnings is $0, the market value of equity is equal to its book value, and the company pays no dividends.
a.Calculate Altman s Z-score for ABC, Inc., if ABC has a 50 percent dividend payout ratio and the market value of equity is equal to its book value. Recall the following: Net working capital = Current assets Current liabilities Current assets = Cash+ Accounts receivable+ Inventories Current liabilities = Accounts payable+Accruals+Notes payable EBIT = Revenues Cost of goods sold Depreciation Taxes = (EBIT Interest)(Tax rate) Net income = EBIT Interest Taxes Retained earnings = Net income(1 Dividend payout ratio)
b.Should you approve ABC Inc. s application to your bank for $500,000 for a capital expansion loan?
c.If ABC s sales were $450,000, taxes were $16,000, and the market value of equity fell to one-quarter of its book value (assume cost of goods sold and interest are unchanged), how would that change ABC s income statement? If ABC s tax liability could be used to offset tax liabilities incurred by the other divisions of the firm, would your credit decision change?
d.What are some of the shortcomings of using a discriminant function model to evaluate credit risk?
6.
A DI has the following assets in its portfolio: $20 million in cash reserves with the Fed, $20 million in T-bills, and $50 million in mortgage loans. If it needs to dispose of its assets at short notice, it will receive only 99 percent of the fair market value of the T-bills and 90 percent of the fair market value of its mortgage loans. If the DI waits one month to liquidate these assets, it would receive the full fair market value for each security. Calculate the one-month liquidity index using the above information.
Aug 29, 2021 | Uncategorized
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Pacific Company provides the following information about its budgeted and actual results for June 2013. Although the expected volume for June was 25,000 units produced and sold, the company actually produced and sold 27,000 units.
Budget data 25,000 units
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(asterisks identify factory overhead items):
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Selling price
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$5.00 per unit
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Variable costs (per unit of output)
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Direct materials
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1.24 per unit
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Direct labour
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1.50 per unit
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*Factory supplies
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0.25 per unit
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*Utilities
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0.50 per unit
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Selling costs
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0.40 per unit
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Fixed costs (per month)
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*Amortization of machinery
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$3,750
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*Amortization of building
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2,500
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General liability insurance
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1,200
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Property taxes on office equipment
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500
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Other administrative expense
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750
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Actual data 27,000 units
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(asterisks identify factory overhead items):
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Selling price
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$5.23 per unit
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Variable costs (per unit of output)
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Direct materials
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1.12 per unit
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Direct labour
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1.40 per unit
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*Factory supplies
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0.37 per unit
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*Utilities
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0.60 per unit
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Selling costs
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0.34 per unit
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Fixed costs (per month)
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*Amortization of machinery
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$3,710
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*Amortization of building
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2,500
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General liability insurance
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1,250
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Property taxes on office equipment
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485
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Other administrative expense
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900
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Standard manufacturing costs based on expected output of 25,000 units:
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Per Unit of Output
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Quantity to be Used
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Total Cost
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Direct materials, 4 grams @ $0.31/g
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$1.24/unit
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100,000 g
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$31,000
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Direct labour, 0.25 hr @$6.00/hr
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$1.50/unit
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6,250 hr
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37,500
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Overhead
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$1.00/unit
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25,000
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Actual costs incurred to produce 27,000 units:
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Per Unit of Output
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Quantity to be Used
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Total Cost
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Direct materials, 4 grams @ $0.28/g
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$1.12/unit
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108,000 g
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$30,240
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Direct labour, 0.20 hr @$7.00/hr
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$1.40/unit
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5,400 hr
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37,800
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Overhead
Standard costs based on expected output of 27,000 units:
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$1.20/unit
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32,400
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Per Unit of Output
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Quantity to be Used
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Total Cost
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Direct materials, 4 grams @ $0.31/g
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$1.24/unit
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108,000 g
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$33,480
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Direct labour, 0.25 hr @$6.00/hr
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$1.50/unit
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6,750 hr
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40,500
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Overhead
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26,500
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Required:
1. Prepare flexible budgets for June showing expected sales, costs, and income under assumptions of 20,000, 25,000, and 30,000 units of output produced and sold.
2. Prepare a flexible budget performance report that compares actual results with the amounts budgeted if the actual volume had been expected.
3. Apply variance analyses for direct materials, and direct labour.
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Aug 29, 2021 | Uncategorized
The Ventura County Grand Jury recently remarked upon workplace bullying as being a problem in county government offices and asked county officials to build up a policy against bullying in the workplace. The reward product is measured in points and before beginning any survey you will note how many points you are going to earn after the offer may be fulfilled. Checking the credibility and reviews can play to your advantage.
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Aug 29, 2021 | Uncategorized
Paint More LLC has organized a new division to manufacture and sell specialty paint. The division s monthly costs are shown below:
Manufacturing costs:
Variable costs per unit:
Direct materials $12
Variable manufacturing overhead $1
Fixed manufacturing overhead costs (total) $100,000
Selling and administrative costs:
Variable 7% of sales
Fixed (total) $31,000
Because the production is highly automated, the company includes its labor costs in its fixed manufacturing overhead. The gallons of paint sell for $68 each. During September, the first month of operations, the following activity was recorded:
Units produced 5,000
Units sold 4,000
Submit an Excel document which each tab labeled by item number in good form that demonstrates the following:
Compute the unit product cost under:
Absorption costing
Variable costing
Prepare an absorption costing income statement for September
Prepare a contribution format income statement for September using variable costing
Aug 29, 2021 | Uncategorized
On January 1, 2012, Palmer Company leased equipment to Woods Corporation. The following information pertains to this lease.
1. The term of the noncancelable lease is 6 years, with no renewal option. The equipment reverts to the lessor at the termination of the lease.
2. Equal rental payments are due on January 1 of each year, beginning in 2012.
3. The fair value of the equipment on January 1, 2012, is $232,200, and its cost is $190,404.
4. The equipment has an economic life of 8 years, with an unguaranteed residual value of $10,940. Woods depreciates all of its equipment on a straight-line basis.
5. Palmer sets the annual rental to ensure an 8% rate of return. Woods s incremental borrowing rate is 9%, and the implicit rate of the lessor is unknown.
6. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by the lessor.
(Both the lessor and the lessee s accounting period ends on December 31.)
Instructions
(Both the lessor and the lessee’s accounting period ends on December 31.)
(b) Calculate the amount of the annual rental payment.
(c) Prepare all the necessary journal entries for Woods for 2011.
(d) Prepare all the necessary journal entries for Palmer for 2011.
Aug 29, 2021 | Uncategorized
Paper B2- Organizational Policy to address an IT-related ethical issue that you wrote about in your matrix for the B1 assignment (Individual) (12%) Write an organizational policy to address the IT-related ethical issue that you described in Matrix B1, where you mapped key organizational issues and identified how these ethical issues were affected by laws, regulations and policies. For this assignment, you will write an organizational policy that specifically addresses that ethical workforce issue. Please incorporate the instructor s feedback from the review and grade and then use the Matrix B1 you produced as a supporting document. There are many IT ethical challenges in the 21st century. As a result, there are constant clashes between organizational and personal policy issues in the workforce. For example, Chapter 8 of your Reynolds textbook looks at trade-offs between the standard of living and worker productivity. This is only one example of a potential ethical conflict when differences arise between our organizational and personal beliefs. The following elements must be addressed: Look at other policies to see how they are written Use the current ethical IT-related workforce issue you developed in the B 1 Matrix; research its related organizational policy. Describe how your policy the one you are writing for this assignment (What s in it for me? How/why?) will help the organization and describe its positive or negative consequences Document any conflicts that may arise between organizational and personal ethical beliefs that this policy the one you are writing for this assignment may impose on you Does your organizational policy imply a commitment to ethical professional conduct of its members (e.g. code of conduct)? What happens when your policy is not followed? Prepare a 3-5 page, double-spaced paper describing your thought process as you developed the matrix, and submit it to your Assignments Folder as an attached Microsoft Word file. This assignment requires a minimum of three external clickable references in addition to your textbook. Indicate appropriate APA reference citations for all sources you use. In addition to critical thinking and analysis skills, your paper should reflect appropriate grammar and spelling, good organization, and proper business-writing style.
Aug 29, 2021 | Uncategorized
Part A: 20 Marks
Brandon Ltd is considering the following expansion.
Details are as follows:
|
|
Stock
|
Stock A
|
Sales
|
|
Working
|
|
|
Year
|
Market
|
Share
|
Units
|
Year
|
Capital
|
|
|
t
|
Index
|
Price
|
|
|
Outlays
|
|
|
1993
|
2005
|
5.00
|
510000
|
0
|
$ 2,100
|
|
|
1994
|
2201
|
5.50
|
550000
|
1
|
$ 2,600
|
|
|
1995
|
2410
|
5.75
|
540000
|
2
|
$ 3,200
|
|
|
1996
|
2520
|
5.90
|
560000
|
3
|
$ 3,700
|
|
|
1997
|
2602
|
6.00
|
565000
|
4
|
$ 4,100
|
|
|
1998
|
2835
|
6.10
|
590000
|
5
|
$ 4,500
|
|
|
1999
|
2650
|
6.00
|
600000
|
6
|
$ 4,000
|
|
|
2000
|
2502
|
5.90
|
610000
|
7
|
$ 3,500
|
|
|
2001
|
2854
|
6.50
|
615559
|
8
|
$ –
|
|
|
2002
|
3210
|
7.00
|
669000
|
|
|
|
|
2003
|
3420
|
7.25
|
700000
|
|
|
|
|
|
|
|
|
|
|
|
Project Life: 8 years
Capital outlays are as follows:
Beginning of project: $1,500,000
Upgrade at end of third year: $700,000
Scrap / Salvage value: $25,000
The firm applies the reducing balance method of depreciation to its projects. For tax purposes the Tax Commissioner allows the use of straight line depreciation.
The investment analyst has decided to forecast the sales (units) by using time-trend projections. These are to be adjusted from year four onwards to account for the increased sales resulting from the upgrade, which is estimated as 0.5 million units per year.
Product price is expected to be 55 cents per unit for the first five years, and 80 cents thereafter. Production cost is estimated to be 12 cents per unit. Other operating costs (which do not include depreciation) are $55,000 per year for the first five years and $60,000 per year for the rest of the project life.
Company tax rate is 34%
Government bond yield is 5.2%
The managers believe that the degree of risk of the proposed project is basically the same as that of the existing business risk. The analyst would like to use a risk-adjusted discount rate calculated by employing the CAPM.
Required:
Calculate the Accounting Rate of Return (ARR), Payback Period, NPV and IRR. ARR has many variants and you are required to define your method used for your calculation.
Part B: 10 Marks
Consider a portfolio comprising of a $3 million investment in Ariel Ltd and a $5 million investment in in Snowy Ltd. Assume that the standard deviations of the returns for the shares are 0.4 and 0.25 respectively. Assume also that the correlation between the returns on the shares in these companies is 0.7. Assume a 4% chance of abnormally bad market conditions and that returns follow a normal probability distribution.
Required:
a.
Explain the Value at Risk (VaR) approach to examining risk
b.
Calculate the value at risk of each individual investment and then of the portfolio.
c.
Calculate the value of risk for the portfolio if the correlation between investments increases to .85
d.
Calculate the value of risk for the portfolio if the correlation between investments increases to 1
e.
Calculate the value of risk for the portfolio if the correlation between investments decreases to .55
f.
Discuss your findings
Assessment Criteria:
Student work will generally be assessed in terms of the following criteria:
1. Effectiveness of communication – ie readability, legibility, grammar, spelling, neatness, completeness and presentation will be a minimum threshold requirement for all written work submitted for assessment. Work that is illegible or incomprehensible and does not meet the minimum requirement will be awarded a fail grade.
2. Accuracy – This will be the primary criterion for assessing the computational and procedural tasks.
3. Demonstrated understanding – This will be evidenced by the student’s ability to be dialectical in the discussion of contentious issues. Few, if any, accounting concepts are scientific facts and stereotype answers will demonstrate poor understanding on the part of the student.
4. Evidence of research – This will be evidenced by the references made to the statutes, accounting standards, books, journal articles and inclusion of a bibliography.
Note:
1. All written work must conform with the University of Ballarat General Guide for the Presentation of Academic Work.
2. For all written work students must ensure that they submit their own original work. Any act of plagiarism will be severely penalised.
Aug 29, 2021 | Uncategorized
Part A: Absorption and Marginal Costing
Golden Star Company manufactures and sells a unique product that has been quickly accepted by the consumers. The results of last month s operations are shown below (absorption costing basis):
|
Sales (10,000 units @ $20)
|
$200,000
|
|
Less: cost of goods sold (10,000 units @ $14)
|
140,000
|
|
Gross margin
|
60,000
|
|
Less: selling and administrative expenses
|
45,000
|
|
Net income
|
$ 15,000
|
Variable selling and administrative expenses are $2 per unit. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month. There was no beginning inventory. The company produced 12,000 units during the month.
Required:
1- Restate Golden Star s income statement in contribution margin format, using variable costing.
2- Reconcile the variable costing and absorption costing net income figures.
3- State which costing approach is used in published financial statements, and briefly explain the usefulness of the other approach.
4- The easiest way to distinguish between relevant and irrelevant costs is by cost behavior; variable costs are relevant costs and fixed costs are irrelevant costs. Explain why you do or do not agree with this statement and support your answer with suitable example(s).
[Marks (Words): 15(150) + 10(150) + 10(200) + 10(200) = 45(700)]
Part B:Capital Investment Decisions
The management of a New Hotel Group is deciding whether to scrap an old but still serviceable machine bought five years ago to produce fruit pies, and replace it with a newer type of machine. It is expected that the demand for the fruit pies will last for further five years only and will be as follows:
|
Year
|
Number of pies
produced and sold
|
|
1
|
70,000
|
|
2
|
50,000
|
|
3
|
40,000
|
|
4
|
30,000
|
|
5
|
25,000
|
Each machine is capable of meeting these requirements. Data for two machines are as follows:
|
|
Existing
Machine
($)
|
New
Machine
($)
|
|
Capital cost
|
400,000
|
180,000
|
|
Operating cost per unit:
|
|
|
|
Direct labor
|
0.70
|
0.50
|
|
Materials
|
0.70
|
0.70
|
|
Variable overheads
|
0.40
|
0.30
|
|
Fixed overheads per unit:
|
|
|
|
Depreciation
|
0.90
|
1.10
|
|
Allocated costs (75% direct labor)
|
0.525
|
0.375
|
|
|
3.225
|
2.975
|
The fruit pies are currently sold for $4 per pie. Unit operating costs, fixed overhead costs and selling price are expected to remain constant throughout the five year period.
Required:
a- Using data relating only to the new machine:
1- Calculate the net present value of the new machine. The New Hotel Group expects that its cost of capital will be 8% throughout the period.
2- Calculate the payback period of the new machine.
b- Using present value calculations, determine whether the existing machine should bereplaced by the new machine. Assume that the existing machinery could be sold for$150,000 immediately, if it were replaced.
c- Discuss the nonfinancial factors would you recommend that Hotel Group executives take into consideration regarding this proposal.
d- If the Hotel Group s management is uncertain about the accuracy of the cost savings that have been estimated for this proposal. Explain the actions that they can take to ensure that the estimates of: costs, revenues, and cash flows are not overly optimistic or pessimistic.
Aug 29, 2021 | Uncategorized
Part I Answer the following questions based on the information below:
Beginning Inventory 1,000 units
Purchases 1,500 units
Units available for sale 2,500 units
Units sold 2,200 units
Ending inventory 300 units
Inventory Purchases History:
Beginning Inventory value 1,000 units @ $2.00
March 1 Purchase 700 units @ $4.00
March 12 Purchase 600 units @ $6.00
March 23 Purchase 200 units @ $8.00
1. Calculate the cost of goods sold under the FIFO inventory method. (12 points)
2. Calculate the ending inventory monetary value under the FIFO inventory method. (12 points)
3. Calculate the cost of goods sold under the LIFO inventory method. (12 points)
4. Calculate the ending inventory monetary value under the LIFO inventory method. (12 points)
5. Calculate the cost of goods sold under the Average Cost inventory method. Round to the nearest cent. (12 points)
6. Calculate the ending inventory monetary value under the Average Cost inventory method. Round to the nearest cent. (12 points)
Part II Answer the questions below based on the following information.
Sales Discounts $ 25,000
Operating Expenses $ 76,000
Sales Returns and Allowances $ 10,000
Total Sales $500,000
Cost of Goods Sold $250,000
1. Calculate net sales. (9 points)
2. Calculate gross profit. (9 points)
3. Calculate net income. (10 points)
Aug 29, 2021 | Uncategorized
The partial financial statement items below were taken from the financial statements of Calibar Company. This account information can be used to correctly solve each of the ratios below. The information is in alphabetical order.
Accounts payable $5,000 Net sales $100,000
Accounts receivable $18,000 Other current liabilities $4,000
Average common shares outstanding 5,000 Salaries payable $4,000
Cash $8,000 Stockholder’s equity $33,000
Gross profit $38,000 Total assets $66,000
Net income $10,000
Instructions: Compute the following.
a) Current ratio
b) Working capital
c) Earnings per share
d) Debt-to-total-assets ratio
To earn full credit, you must show the formula you are using, show your computations, and explain the meaning of each of your ratio results.
Aug 29, 2021 | Uncategorized
Eric and Denise are partners in ED Partnership. Eric owns a 60% capital, profits and loss interest. Denise owns the remaining interest. Both materially participate in the partnership activities. At the beginning of the current year, ED s only liabilities are $50,000 in accounts payable, which remain outstanding at year-end. In August, ED borrowed $120,000 on a nonrecourse basis from Delta Bank. The loan is secured by property with a $230,000 FMV. These are ED s only liabilities at year-end. Basis for the partnership interest at the beginning of the year is $40,000 for Denise and $60,000 for Eric before considering the impact of liabilities and operations. ED has a $200,000 ordinary loss during the current year. How much loss can Eric and Denise recognize?
Problem 6
Linda pays $100,000 cash for Jerry s interest in the JILL Partnership. The partnership has a Sec. 754 election effect. Just before the sale of Jerry s interest, JILL s balance sheet appears as follows:
Partnership s Basis FMV
Assets:
Cash $75,000 $75,000
Land $225,000 $325,000
Total $300,000 $400,000
Partners’ capital
Jerry $75,000 $100,000
Instrument Corp $75,000 $100,000
Logo Corp $75,000 $100,000
Lighthouse Corp $75,000 $100,000
Total $300,000 $400,000
a. What is Linda s total optional basis adjustment?
b. If JILL Partnership sells the land for its $325,000 FMV immediately after Linda purchases her interest, how much gain or loss will the partnership recognize?
c. How much gain will Linda report as a result of the sale?
Aug 29, 2021 | Uncategorized
After the accounts are closed on July 3, 2012, prior to liquidating the partnership, the capital accounts of Rebecca Adams, Austin Cooper, and Ricardo Ruiz are $31,500, $5,700, and $23,700, respectively. Cash and noncash assets total $7,200 and $61,300, respectively. Amounts owed to creditors total $7,600. The partners share income and losses in the ratio of 1:1:2. Between July 3 and July 29, the noncash assets are sold for $32,500, the partner with the capital deficiency pays his or her deficiency to the partnership, and the liabilities are paid.
1. Prepare a statement of partnership liquidation, indicating
(a) the sale of assets and division of loss,
(b) the payment of liabilities,
(c) the receipt of the deficiency (from the appropriate partner), and
(d) the distribution of cash.
Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss) as negative numbers using a minus sign. If there is no amount or an amount is zero, enter “0”.
2. Assume the partner with the capital deficiency declares bankruptcy and is unable to pay the deficiency.
a. Journalize the entry to allocate the partner’s deficiency. If an amount box does not require an entry, leave it blank.
b. Journalize the entry to distribute the remaining cash. If an amount box does not require an entry, leave it blank.
Aug 29, 2021 | Uncategorized
Partnerships Distributions, Sales, and Exchanges
TRUE-FALSE QUESTIONS CHAPTER 20
1. Only a cash basis partnership is concerned with the problem of unrealized receivables.
2. The inclusion of accounts receivable of an accrual basis partnership in the determination of its substantially appreciated inventory items reduces the chances of the partnership being affected by Section 751.
3. A partner’s interest in a partnership is a capital asset.
4. When a partner acquires an interest in a partnership by purchase, the basis of the underlying assets of the partnership must be adjusted to reflect the price the incoming partner paid for his interest.
5. Where property for which a special basis adjustment was made because a partnership interest was purchased is distributed to a nonpurchasing partner, the basis adjustment carries over to the distributee partner.
6. With respect to the allocation of a basis adjustment to partnership assets, the total fair market value of all of the assets is compared with the total adjusted basis of those same assets and the difference between the two amounts is allocated to each asset based upon its relative adjusted basis.
7. A partner who receives a current property distribution (other than cash), made pro rata to all the partners, will not have to report a gain with respect to the distribution.
8. As a general rule, property distributed to a partner, not in liquidation of an interest in the partnership, takes the same basis in the hands of the partner as it had in the hands of the partnership.
9. If the partnership agreement is silent but the partners recognize that a retiring partner had created substantial goodwill for the partnership while a partner, the retiring partner may report as capital gain so much of the payments for the partnership interest as are designated as payment for goodwill.
10. A partnership may elect to adjust the basis of its property merely because one partner sells an interest to another partner and there is no transfer of any partnership assets involved.
MULTIPLE CHOICE QUESTIONS CHAPTER 20
11. On April 1, George Hart, Jr. acquired a 25 percent interest in the Wilson, Hart, and Company partnership by gift from his father. The 25 percent partnership interest had been acquired by a $50,000 cash investment by Hart, Sr. 10 years ago. The fair market value of Hart, Sr.’s partnership interest was $60,000 at the time of the gift. Hart, Jr. sold the 25 percent interest for $85,000 on December 17. What type and amount of capital gain should Hart, Jr. report on his tax return?
a. Long-term capital gain of $25,000
b. Short-term capital gain of $25,000
c. Long-term capital gain of $35,000
d. Short-term capital gain of $35,000
12. Ralph Elin contributed a plot of land to the partnership of Anduz and Elin. Elin’s adjusted basis for this land was $50,000, and its fair market value was $75,000. Under the partnership agreement, Elin’s capital account was credited with the full fair market value of the land. Anduz matched Elin’s contribution with a $75,000 cash contribution to the partnership. Thus, each partner’s capital account was credited with $75,000. Elin and Anduz share profits and losses equally. What is the adjusted basis of Elin’s interest in the partnership?
a. $25,000
b. $37,500
c. $50,000
d. $75,000
13. On July 1, Clark Cootes acquired a 20 percent interest in the partnership of Davis & Denny, by contributing a parcel of land for which his basis was $8,000. At the date of the contribution, the land had a fair market value of $20,000 and was subject to a mortgage of $4,000. Responsibility for the mortgage was assumed by the partnership. Assuming there are no other partnership liabilities, the basis of Clark’s interest in the partnership is:
a. $4,000
b. $4,800
c. $16,000
d. $16,800
14. For 20 years, Henry Humboldt has been a 25 percent partner in HIG, a calendar year, cash basis partnership. This year, HIG averaged ordinary partnership income of $20,000 each month. As of September 30, when Henry’s adjusted basis for his partnership interest, prior to consideration of the current year operations, was $40,000, he sold his interest to George for $90,000. Henry should include in his current year return as income from the partnership:
a. $70,000 long-term capital gain
b. $50,000 long-term capital gain
c. $20,000 long-term capital gain and $50,000 ordinary income
d. $5,000 long-term capital gain and $45,000 ordinary income
e. $70,000 ordinary income
15. John Albin is a retired partner of Brill & Crum, a personal service partnership. Albin has not rendered any services to Brill & Crum since his retirement over 10 years ago. Under the provisions of Albin’s retirement agreement, Brill & Crum is obligated to pay Albin 10 percent of the partnership’s net income each year. In compliance with this agreement, Brill & Crum paid Albin $25,000 this year. How should Albin treat this $25,000?
a. Not taxable
b. Ordinary income
c. Short-term capital gain
d. Long-term capital gain
16. A partnership has no Section 751 assets. Assuming that the partnership has a Code Sec. 754 election in effect, the partnership would make all of the following adjustments except:
a. Increase the basis of partnership property because of capital gain which a distributee partner recognizes in a current distribution.
b. Decrease the basis of partnership property because of capital loss which a distributee partner recognizes in a liquidating distribution.
c. Increase the basis of partnership property because the distributee partner’s basis for the partnership interest limits the basis assigned to partnership property received in a current distribution.
d. Decrease the basis of partnership property because the amount of the distributee partner’s basis assigned to partnership property distributed in a liquidating distribution exceeds the partnership’s pre-distribution basis in the property.
e. Decrease the basis of partnership property for the excess of the amount a purchasing partner pays for a partnership interest over the partner’s proportionate share of the partnership’s basis in its properties.
17. Mark, Pete and Mickey are equal partners in the 2MP Partnership. At the beginning of the year, Mark’s basis in his partnership interest was $15,000, Pete’s basis was $10,000, and Mickey’s basis was $20,000. The partnership reported taxable income of $30,000 (allocated equally among the partners). At year-end, the partnership made a nonliquidating distribution of $25,000 cash to Pete. How much income or gain will Pete recognize on receipt of the distribution (assume the partnership has no hot assets)? Assume the partnership has no liabilities.
a. zero
b. $25,000
c. $5,000
d. $15,000
e. none of the above
18. Ellen is a 25 percent partner in Heartland Partners. Her tax basis in her partnership interest is $18,000. She received a non-liquidating distribution of land with a tax basis of $23,000 and a fair market value of $45,000. The partnership has no liabilities. What will be Ellen’s tax basis in the land received in the non-liquidating distribution?
a. $18,000
b. $23,000
c. $45,000
d. zero
e. none of the above
Aug 29, 2021 | Uncategorized
TAX RETURN PROBLEM*
Use the following information to complete Paul and Judy Vance’s 2012 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
You may need the following forms and schedules to complete the project: Form 1040, Schedule A, Schedule B, Schedule C, Schedule D, Schedule E, Schedule SE, Form 2106-EZ, Form 4562 (for the dental practice), Form 4562 (for the rental property), Form 4797, and Form 8863. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.
FACTS:
1. Paul J. and Judy L. Vance are married and file a joint return. Paul is self-employed as a dentist, and Judy is a college professor. Paul and Judy have three children. The oldest is Vince who lives at home. Vince is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Paul and Judy provided $6,000 toward Vince’s support (including $4,000 for Vince’s fall tuition). They also provided over half the support of their daughter, Joan, who is a full-time student at Edgecliff College in Cincinnati. Joan worked part-time as an independent contractor during the year, earning $3,200. Joan lived at home until she was married in December 2012. She filed a joint return with her husband, Patrick, who earned $20,000 during the year. Jennifer is the youngest and lived in the Vances’ home for the entire year. The Vances provide you with the following additional information:
o Paul and Judy would like to take advantage on their return of any educational expenses paid for their children.
o The Vances do not want to contribute to the presidential election campaign.
o The Vances live atXXXXX Cincinnati, OH 45211.
o Paul’s birthday is XXXXX and his Social Security number isNNN-NN-NNNN
o Judy’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o Vince’s birthday is XXXXX and his Social Security number isNNN-NN-NNNN
o Joan’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o Jennifer’s birthday is XXXXX and her Social Security number isNNN-NN-NNNN
o The Vances do not have any foreign bank accounts or trusts.
2. Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, state income tax of $900, Cincinnati city income tax of $375, $1,260 of Social Security tax and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary, and withheld federal income tax of $1,125, state income tax of $300, Cincinnati city income tax of $125, Social Security tax of $420, and Medicare tax of $145.
3. The Vances received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. They paid interest of $1,100 on the loan. Paul received a dividend of $540 on General Bicycle Corporation stock he owns. Judy received a dividend of $390 on Acme Clothing Corporation stock she owns. Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company. All of the dividends received in 2012 are qualified dividends.
4. Paul practices under the name Paul J. Vance, DDS. His business is located atXXXXX Cincinnati, OH 45211, and his employer identification number is XXXXX Paul’s gross receipts during the year were $111,000. Paul uses the cash method of accounting for his business. Paul’s business expenses are as follows:
Advertising $ 1,200
Professional dues 490
Professional journals 360
Contributions to employee benefit plans 2,000
Malpractice insuranc e 3,200
Fine for overbilling State of Ohio for work performed on welfare patient 5,000
Insurance on office contents 720
Interest on money borrowed to refurbish office 600
Accounting services 2,100
Miscellaneous office expense 388
Office rent 12,000
Dental supplies 7,672
Utilities and telephone 3,360
Wages 30,000
Payroll taxes 2,400
In June, Paul decided to refurbish his office. This project was completed and the assets placed in service on July 1. Paul’s expenditures included $8,000 for new office furniture, $6,000 for new dental equipment (seven-year recovery period), and $2,000 for a new computer. Paul elected to compute his cost recovery allowance using MACRS. He did not elect to use 179 immediate expensing, and he chose to not claim any bonus depreciation.
5. Judy’s mother, Sarah, died on July 2, 2007, leaving Judy her entire estate. Included in the estate was Sarah’s residence (325 Oak Street, Cincinnati, OH 45211). Sarah’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2007, was $155,000. The property was distributed to Judy on January 1, 2008. The Vances have held the property as rental property and have managed it themselves. From 2008 until June 30, 2012, they rented the house to the same tenant. The tenant was transferred to a branch office in California and moved out at the end of June. Since they did not want to bother finding a new tenant, Paul and Judy sold the house on June 30, 2012. They received $140,000 for the house and land ($15,000 for the land and $125,000 for the house), less a 6 percent commission charged by the broker. They had depreciated the house using the MACRS rules and conventions applicable to residential real estate. To compute depreciation on the house, the Vances had allocated $15,000 of the property’s basis to the land on which the house is located. The Vances collected rent of $1,000 a month during the six months the house was occupied during the year. They incurred the following related expenses during this period:
Property insurance $500
Property taxes800
Maintenance 465
Depreciation (to be computed)?
6. The Vances sold 200 shares of Capp Corporation stock on September 3, 2012, for $42 a share (minus a $50 commission). The Vances received the stock from Paul’s father on June 25, 1980, as a wedding present. Paul’s father originally purchased the stock for $10 per share in 1967. The stock was valued at $14.50 per share on the date of the gift. No gift tax was paid on the gift.
7. Judy is required by Xavier University to visit several high schools in the Cincinnati area to evaluate Xavier University students who are doing their practice teaching. However, she is not reimbursed for the expenses she incurs in doing this. During the spring semester (January through April 2012), she drove her personal automobile 6,800 miles in fulfilling this obligation. Judy drove an additional 6,700 personal miles during 2012. She has been using the car since June 30, 2011. Judy uses the standard mileage method to calculate her car expenses.
8. Paul and Judy have given you a file containing the following receipts for expenditures during the year:
Prescription medicine and drugs (net of insurance reimbursement)$ 376
Doctor and hospital bills (net of insurance reimbursement)2,468
Penalty for underpayment of last year’s state income tax 15
Real estate taxes on personal residence 4,762
Interest on home mortgage (paid to Home State Savings & Loan) 8,250
Interest on credit cards (consumer purchases) 595
Cash contribution to St. Matthew’s church 3,080
Payroll deductions for Judy’s contributions to the United Way 150
Professional dues (Judy) 325
Professional subscriptions (Judy)245
Fee for preparation of 2011 tax return paid April 12, 2012 500
9. The Vances filed their 2011 federal, state, and local returns on April 12, 2012. They paid the following additional 2011 taxes with their returns: federal income taxes of $630, state income taxes of $250, and city income taxes of $75.
10. The Vances made timely estimated federal income tax payments of $1,500 each quarter during 2012. They also made estimated state income tax payments of $300 each quarter and estimated city income tax payments of $160 each quarter. The Vances made all fourth-quarter payments on December 31, 2012. They would like to receive a refund for any overpayments.
Aug 29, 2021 | Uncategorized
Question 1
Transactions for Mehta Company for the month of May are presented below.
|
May
|
1
|
B.D. Mehta invests $3,091 cash in exchange for common stock of Mehta Company, a small welding corporation.
|
|
3
|
Buys equipment on account for $1,153.
|
|
13
|
Pays $659 to landlord for May rent.
|
|
21
|
Bills Noble Corp. $539 for welding work done.
|
Prepare journal entries for each of these transactions.
Question 2
On July 1, 2012, Crowe Co. pays $18,673 to Zubin Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Crowe Co. journalize the entry on July 1 and the adjusting entry on December 31. (Round answers to zero decimal places, e.g. 2,555.)
Question 3
Dresser Company’s weekly payroll, paid on Fridays, totals $7,700. Employees work a 5-day week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to record the $7,700 cash payment on Friday, January 2. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 4
Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. Prepare the year-end closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 5
Financial information exhibits the characteristic of consistency when
Question 6
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the United States?
Question 7
Starr Co. had sales revenue of $621,700 in 2012. Other items recorded during the year were:
|
Cost of goods sold
|
$330,000
|
|
Wage expense
|
129,300
|
|
Income tax expense
|
26,400
|
|
Increase in value of company reputation
|
15,100
|
|
Other operating expenses
|
12,500
|
|
Unrealized gain on value of patents
|
20,600
|
Prepare a single-step income statement for Allen for 2012. Allen has 100,000 shares of stock outstanding. (List multiple entries from largest to smallest amount, e.g. 10, 5, 2. Round earnings per share to 2 decimal places, e.g. 0.20. Enter all amounts as positive amounts and subtract where necessary.)
Question 8
Portman Corporation has retained earnings of $728,900 at January 1, 2012. Net income during 2012 was $1,897,010, and cash dividends declared and paid during 2012 totaled $77,690. Prepare a retained earnings statement for the year ended December 31, 2012. Assume an error was discovered: land costing $86,630 (net of tax) was charged to repairs expense in 2009. (Enter all amounts as positive amounts and subtract where necessary.)
Question 9
On January 1, 2012, Richards Inc. had cash and common stock of $62,700. At that date the company had no other asset, liability or equity balances. On January 2, 2012, it purchased for cash $21,030 of equity securities that it classified as available-for-sale. It received cash dividends of $4,200 net of tax during the year on these securities. In addition, it has an unrealized holding gain on these securities of $5,520 net of tax. Determine the following amounts for 2012: (a) net income; (b) comprehensive income; (c) other comprehensive income; and (d) accumulated other comprehensive income (end of 2012).
Question 10
(Comprehensive Income)
Armstrong Corporation reported the following for 2012: net sales $1,286,800; cost of goods sold $763,800; selling and administrative expenses $331,100; and an unrealized holding gain on available-for-sale securities $23,000.
Prepare a statement of comprehensive income, using the two-income statement format. Ignore income taxes and earnings per share. (Enter all amounts as positive amounts and subtract where necessary.)
Question 11
Guillen, Inc. began work on a $7,081,900 contract in 2012 to construct an office building. Guillen uses the completed-contract method. At December 31, 2012, the balances in certain accounts were construction in process $1,748,100; accounts receivable $255,100; and billings on construction in process $1,119,000. Indicate how these accounts would be reported in Guillen’s December 31, 2012, balance sheet.
Question 12
Lazaro, Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $950, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $550, and the fair value of the repossessed merchandise is $299. Prepare Lazaro’s entry to record the repossession. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 13
Harding Corporation has the following accounts included in its December 31, 2012, trial balance: Accounts Receivable $110,620; Inventories $293,520; Allowance for Doubtful Accounts $9,270; Patents $73,940; Prepaid Insurance $9,710; Accounts Payable $78,930; Cash $34,760. Prepare the current assets section of the balance sheet listing the accounts in proper sequence.
Question 14
Patrick Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2012: Prepaid Rent $20,500; Goodwill $54,940; Franchise Fees Receivable $2,200; Franchises $46,280; Patents $32,380; Trademarks $13,490. Prepare the intangible assets section of the balance sheet. (List amounts from largest to smallest, e.g. 10, 5, 3, 2.)
Question 15
Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2012: Retained Earnings $121,510; Common Stock $708,320; Bonds Payable $104,690; Additional Paid-in Capital $202,370; Goodwill $60,810; Accumulated Other Comprehensive Loss $151,950. Prepare the stockholders’ equity section of the balance sheet. (List entries in order of stock preferred status. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Question 16
Keyser Beverage Company reported the following items in the most recent year.
|
Net income
|
$45,500
|
|
Dividends paid
|
6,030
|
|
Increase in accounts receivable
|
11,770
|
|
Increase in accounts payable
|
7,510
|
|
Purchase of equipment (capital expenditure)
|
9,470
|
|
Depreciation expense
|
6,510
|
|
Issue of notes payable
|
20,990
|
Compute net cash flow provided by operating activities and the net change in cash during the year. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 17
Linden Corporation is preparing its December 31, 2012, financial statements. Two events that occurred between December 31, 2012, and March 10, 2013, when the statements were issued, are described below.
- A liability, estimated at $162,910 at December 31, 2012, was settled on February 26, 2013, at $181,060.
- A flood loss of $79,500 occurred on March 1, 2013.
What effect do these subsequent events have on 2012 net income? (If there is no impact select not change and 0 for the amount.)
Question 18
Roder Corporation has seven industry segments with total revenues as follows.
|
Penley
|
$1,743
|
Cheng
|
$581
|
|
Konami
|
1,992
|
Takuhi
|
498
|
|
KSC
|
664
|
Molina
|
2,075
|
|
Red Moon
|
747
|
Based only on the total revenues test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Question 19
Operating profits and losses for the seven industry segments of Roder Corporation are:
|
Penley
|
$130
|
Cheng
|
$(30)
|
|
Konami
|
(60)
|
Takuhi
|
45
|
|
KSC
|
40
|
Molina
|
215
|
|
Red Moon
|
75
|
Based only on the operating profit (loss) test, which industry segments are reportable?
Enter 1 if the segment is reportable. Enter 0 if the segment is not reportable.
Question 20
Which of the following events will appear in the cash flows from financing activities section of the statement of cash flows?
Question 21
Heartland Company’s budgeted sales and budgeted cost of goods sold for the coming year are $140,520,000 and $34,749,000 respectively. Short-term interest rates are expected to average 10%. If Heartland can increase inventory turnover from its present level of 9 times a year to a level of 12 times per year, compute its expected cost savings for the coming year.
Question 22
The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the
Question 23
Ames Company reported 2012 net income of $155,580. During 2012, accounts receivable increased by $15,020 and accounts payable increased by $9,900. Depreciation expense was $41,710. Prepare the cash flows from operating activities section of the statement of cash flows.(List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 24
Martinez Corporation engaged in the following cash transactions during 2012.
|
Sale of land and building
|
$197,470
|
|
Purchase of treasury stock
|
41,520
|
|
Purchase of land
|
38,050
|
|
Payment of cash dividend
|
86,150
|
|
Purchase of equipment
|
56,870
|
|
Issuance of common stock
|
153,880
|
|
Retirement of bonds
|
100,610
|
Compute the net cash provided (used) by investing activities. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
Question 25
Martinez Corporation engaged in the following cash transactions during 2012.
|
Sale of land and building
|
$188,620
|
|
Purchase of treasury stock
|
46,180
|
|
Purchase of land
|
46,390
|
|
Payment of cash dividend
|
89,690
|
|
Purchase of equipment
|
58,090
|
|
Issuance of common stock
|
152,810
|
|
Retirement of bonds
|
101,810
|
Determine Martinez’s free cash flow, assuming that it reported net cash provided by operating activities of $408,610. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)
Question 26
(Preparation of a Statement of Cash Flows)
A comparative balance sheet for Orozco Corporation is presented below.
|
December 31
|
|
Assets
|
2012
|
2011
|
|
Cash
|
$63,005
|
$22,000
|
|
Accounts receivable
|
84,797
|
68,792
|
|
Inventories
|
182,797
|
191,792
|
|
Land
|
73,797
|
112,792
|
|
Equipment
|
267,203
|
197,208
|
|
Accumulated depreciation-equipment
|
(71,797)
|
(44,792)
|
|
Total
|
$599,802
|
$547,792
|
|
Liabilities and Stockholders’ Equity
|
|
Accounts payable
|
$36,797
|
$49,792
|
|
Bonds payable
|
150,000
|
200,000
|
|
Common stock ($1 par)
|
214,000
|
164,000
|
|
Retained earnings
|
199,005
|
134,000
|
|
Total
|
$599,802
|
$547,792
|
Additional information:
- Net income for 2012 was $110,594.
- Cash dividends of $45,589 were declared and paid.
- Bonds payable amounting to $50,000 were retired through issuance of common stock.
|
(a)
|
Prepare a statement of cash flows for 2012 for Orozco Corporation. (List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
|
|
(b)
|
Determine Orozco Corporation’s current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. (Round ratios to 2 decimal places, e.g. 1.55. List multiple entries from the largest positive to the smallest positive amount followed by the most negative to the least negative amount, e.g. 15, 14, 10, -17, -5, -1. For negative numbers use either a negative sign preceding the number, e.g. -45 or parenthesis, e.g. (45).)
|
Question 27
Chris Spear invested $11,349 today in a fund that earns 8% compounded annually. To what amount will the investment grow in 3 years? To what amount would the investment grow in 3 years if the fund earns 8% annual interest compounded semiannually? (Round answers to 2 decimal places, e.g. 12,250.25. Hint: Use tables in text.)
Question 28
Amy Monroe wants to create a fund today that will enable her to withdraw $32,450 per year for 8 years, with the first withdrawal to take place 5 years from today. If the fund earns 10% interest, how much must Amy invest today? (Round the answer to zero decimal places, e.g. 120,250. Hint: Use tables in text.)
Question 29
Zach Taylor is settling a $25,000 loan due today by making 6 equal annual payments of $5,909.41.
What payments must Zach Taylor make to settle the loan at the interest rate of 11%, but with the 6 payments beginning on the day the loan is signed? (Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)
Question 30
(Simple and Compound Interest Computations)
Lyle O ‘Keefe invests $32,100 at 8% annual interest, leaving the money invested without withdrawing any of the interest for 9 years. At the end of the 9 years, Lyle withdrew the accumulated amount of money.
|
(a)
|
Compute the amount Lyle would withdraw assuming the investment earns simple interest.
|
|
(b)
|
Compute the amount Lyle would withdraw assuming the investment earns interest compounded annually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)
|
|
(c)
|
Compute the amount Lyle would withdraw assuming the investment earns interest compounded semiannually. (Round to 2 decimal places, e.g. 25,250.25. Hint: Use tables in text.)
|
Aug 29, 2021 | Uncategorized
FINAL EXAM PBHE525
1. US Census statistics show that college graduates make more than $254,000 more intheir lifetime than non-college graduates. If you were to question the validity ofthis observation, what would be your basis for doing so?
A. Definition of a college graduate
B. Work lifestyles of the population
C. Defining lifetime
D. How the Census was taken
2. The average age in a sample of 190 students at City College is 22. As a result of this sample, it can be concluded that the average age of all the students at City College
A. must be more than 22, since the population is always larger than the sample
B. must be less than 22, since the sample is only a part of the population
C. could not be 22
D. could be larger, smaller, or equal to 22
3. Since a sample is a subset of the population, the sample mean
A. is always smaller than the mean of the population
B. is always larger than the mean of the population
C. must be equal to the mean of the population
D. can be larger, smaller, or equal to the mean of the population
Use the following situation for Questions 4-7. Michael, Inc., a manufacturer ofelectric defibrillators, is a firm that makes 50 types of electric defibrillators . Thetable below shows the price distribution of the defibrillators .
Price (In $) Number of Defibrillators
100 130 8
140 – 170 12
180 – 210 20
220 – 250 10
TOTAL 761.22
Select from the following choices for Questions 4-7. Use letter only in the blank.
A. 32 B. 50% C. 20 D. 30 E. 16% F. 10 G. 60% H. 50
4. How many defibrillators have a price of at least $180?__ D. _____
5. What percentage of the defibrillators has a price of at least $180? ___%___
6. What percentage of the defibrillators has a price of less than $140? ___ E. __
7. How many defibrillators cost at least $140 but no more than $210? __ A. ____
8. Temperature is an example ofa quantitative variable
A. a qualitative variable
B. a quantitative variable
C. either a quantitative or qualitative variable
D. neither a quantitative nor qualitative variable
Use the following situation for Questions 9 and 10.
The following frequency distribution shows the frequency of outbreaks of the 1 1 virus (statistics flu) for the following households in a small rural community.
Households 1134 406 168 41 25 12 : 1786
Outbreaks 0 1 2 3 4 5
9.
Use the frequency distribution to construct a probability distribution by filling in
the blanks below.
x 0 1 2 3 4 5
P(x) P(0) = P(1) = P(2) = P(3) = P(4) = P(5) =
10. Compute the mean and the standard deviation and select from the following the appropriate interpretation of the results (select best response)
A. A household on the average has 0.9 outbreaks with a standard deviation of.6 outbreaks
B. A household on the average has 0.6 outbreaks with a standard deviation of12 outbreaks
C. A household on the average has 0.9 outbreaks with a standard deviation of.9 outbreaks
D. A household on the average has 0.6 outbreaks with a standard deviation of.9 outbreaks
Use the following situation for Questions 11 – 13.
Twenty students were randomly selected for cholesterol screening. The following
data were collected.
260 164 210 225 244 254 233 184 269 206
158 209 221 213 198 179 214 257 246 221
11. Using the information above compute the following: (Round to nearest hundredth)
A. Mean = _____
B. Median = _____
C. Mode = _____
D. Sample Standard Deviation = _____
E. The Sample Variance = ______
F. The Coefficient of Variation = ______ (as a percent, for example 27.43%)
12. Is the data skewed _______ (select correct letter from list below)
A. No B. Skewed left C. Skewed right D. Unable to determine
13. Which is the best measure of central tendency for the randomly selected cholesterol
screenings? _______ (select correct letter from list below)
A. Mean B. Median C. Mode D. It does not matter, one is as good as the other
14. Let event A = a patient does not survive a new treatment procedure for prostrate cancer and event B = the patient is permanently rendered sexually dysfunctional by
the new treatment. Furthermore, events A and B are mutually exclusive. Which of
the following statements is also true?
A. A and B are also independent. B. P(A or B) = P(A)P(B)
C. P(A or B) = P(A) + P(B) D. P(A and B) = P(A) + P(B)
15. Twenty-five percent of the employees of a large hospital are minorities. A random sample of 7 employees is selected.
A. What is the probability that the sample contains exactly 4 minorities? G. 0.0577
B. What is the probability that the sample contains fewer than 2 minorities? C. 0.4449
C. What is the probability that the sample contains exactly 1 non-minority? F. 1.3125
D. What is the expected number of minorities in the sample? I. 1.75
E. What is the variance of the minorities? F. 1.3125
Select from the answers below. Place the correct letter in the blanks above.
A. 0.5551 B. 1.1456 C. 0.4449 D. 0.0013 E. 1.7226
F. 1.3125 G. 0.0577 H. .0001 I. 1.75 J. 0.0286
16. The life expectancy of a lung cancer patient treated with a new drug is normally distributed with a mean of 4 years and a standard deviation of 10 months. (0.833)
A. What is the probability that a randomly selected lung cancer patient will last more than 5 years B. 11.51%
B. What percentage of lung cancer patients will last between 5 and 6 years? A. 10.69% ____
C. What percentage of lung cancer patients will last less than 4 years I. 50%
D. What percentage of lung cancer patients will last between 2.5 and 4.5 years?83.98 %
E. If the drug manufacturer guarantees the drug will be effective for a minimum of 3years (and will pay for the entire treatment program if the patient does not survive), what percentage of lung cancer patients will have to pay for the treatment? B. 11.51%
Select from the answers below. Place the correct letter in the blanks above.
A. 10.69% B. 11.51% C. .0796 D. 46.01% E. 88.49%
F. 68.9% G. 53.98% H. 0% I. 50% J. 0.06172
17. The life expectancy in the United States is 75 with a standard deviation of 7 years.
A random sample of 49 individuals is selected.
A. What is the standard error of the mean? C. 1.0
B. What is the probability that the sample mean will be larger than 77 years? F0.0228
C. What is the probability that the sample mean will be less than 72.7 years? A. 0.0107
D. What is the probability that the sample mean will be between 73.5 and 76 years? B. 0.7745
E. What is the probability that the sample mean will be between 72 and 74 years? J. 0.1573____
F. What is the probability that the sample mean will be larger than 73.46 years? H. 0.9389
Select from the answers below. Place the correct letter in the blanks above.
A. 0.0107 B. 0.7745 C. 1.0 D. 0.8427 E. 0.9772
F. 0.0228 G. 1/7 H. 0.9389 I. 22.55% J. 0.1573
18. The standard hemoglobin reading for healthy adult men is 15 g/110 ml with a standard deviation of = 2 g. For a group of men, we find a mean hemoglobin of 16.0 g.
A. Obtain a 95% confidence interval for if the group size was 25
The calculation is as follows
16 1.96 * 2/ 25 = (15.216, 16.784)
B. Obtain a 95% confidence interval for if the group size was 36__
B. 15.347 – 16.653 ___
C. Obtain a 95% confidence interval for if the group size was 49
A. 15.440 – 16.560
Select from the answers below. Place the correct letter in the blanks above.
A. 15.440 – 16.560 B. 15.347 – 16.653 C. 14.440 – 15.560
D. 14.316 – 15.684 E. 15.316 16.684 F. 14.347 – 15.653
19. Doubling the size of the sample will
A. reduce the standard error of the mean to one-half its current value
B. reduce the standard error of the mean to approximately 70% of its current value
C. have no effect on the standard error of the mean
D. double the standard error of the mean
20. The fact that the sampling distribution of sample means can be approximated by a normal probability distribution whenever the sample size is large is based on the
A. central limit theorem
B. fact that we have tables of areas for the normal distribution
C. assumption that the population has a normal distribution
D. None of these alternatives is correct.
Use the following situation for Questions 21 – 23. In order to estimate the average time spent on the dialysis machines per kidney patient at a local university hospital, data were collected for a sample of 81 patients over a one week period.
Assume the population standard deviation is 1.2 hours.
21. The standard error of the mean is
A. 7.5 B. 0.014 C. 0.160 D. 0.133
22. With a 0.95 probability, the margin of error is approximately
A. 0.26B. 1.96 C. 0.21 D. 1.64
23. If the sample mean is 9 hours, then the 95% confidence interval is
A. 7.04 to 110.96 hours B. 7.36 to 10.64 hours
C. 7.80 to 10.20 hours D. 8.74 to 9.26 hours
24. The t distribution is applicable whenever:
A. the sample is considered large (n 30).
B. the population is normal and the sample standard deviation is used toestimate the population standard deviation
C. n 100
D. n 1000
Use the following situation for Questions 25 26.
A random sample of 16statistics examinations from a large population was taken. The average score inthe sample was 78.6 with a variance of 64. We are interested in determiningwhether the average grade of the population is significantly more than 75. Assume
the distribution of the population of grades is normal.
25. The test statistic is: A. 0.45 B. 1.80 C. 3.6 D. 8
26. At 95% confidence, it can be concluded that the average grade of the population
A. is not significantly greater than 75
B. is significantly greater than 75
C. is not significantly greater than 78.6
D. is significantly greater than 78.6
27. Independent samples are obtained from two normal populations with equalvariances in order to construct a confidence interval estimate for the differencebetween the population means. If the first sample contains 16 items and the secondsample contains 36 items, the correct form to use for the sampling distribution isthe
A. normal distribution
B. t distribution with 15 degrees of freedom
C. t distribution with 35 degrees of freedom
D. t distribution with 50 degrees of freedom
Use the following situation for Questions 28 33. A statistics teacher wants to see if there is any difference in the abilities of students enrolled in statistics today and those enrolled five years ago. A sample of final examination scores from students enrolled today and from students enrolled five years ago was taken. You
are given the following results.
Today Five Years Ago
Mean 82 88
Variance 112.5 54
Sample Size 45 36
28. The difference between the means of the two populations is (d) =
A. 58.5 B. 9 C. -9 D. -6
29. The standard deviation of the difference between the means of the two populations is
A. 12.9 B. 9.3 C. 4 D. 2
30. The 95% confidence interval for the difference between the two population means is
A. -9.92 to -2.08
B. -3.92 to 3.92
C. -13.84 to 1.84
D. -24.228 to 12.23
31. The test statistic for the difference between the two population means is
A. -.47 B. -.65 C. -1.5 D. -3
32. The p-value for the difference between the two population means is
A. .0014 B. .0028 C. .4986 D. .9972
33. What is the conclusion that can be reached about the difference in the average final examination scores between the two classes? (Use a .05 level of significance.)
A. There is a statistically significant difference in the average final
examination scores between the two classes.
B. There is no statistically significant difference in the average final
examination scores between the two classes.
C. It is impossible to make a decision on the basis of the information given.
D. There is a difference, but it is not significant.
Use the following situation for Questions 34 38. The director of a regional hospital is interested in determining whether or not the proportion of incoming female patients who needs a pap-smear has increased. A sample of female patients taken several years ago is compared with a sample of female patients this year.
Results are summarized below.
Sample Size No. Requiring Pap-Smear
Previous Sample 250 50
Present Sample 300 69
34. The difference between the two proportions is:
A. 50 B. 19 C. 0.50 D. – 0.03
35. The pooled proportion has a value of
A. 0.216 B. – 0.216 C. 1.645 D. 0.5
36. The interest of the director represents a
A. one tailed test
B. two tailed test
C. one tailed or a two tailed test, depending on the confidence coefficient
D. one tailed or a two tailed test, depending on the level of significance
37. The test statistics for this test is
A. 1.645 B. 1.96 C. 0.035 D. – 0.851
38. If the test is to be done with an =.05 the
A. null hypothesis should be rejected
B. null hypothesis should not be rejected
C. alternative hypothesis should be accepted
D. None of these alternatives is correct.
39. Regression analysis was applied between demand for a product (Y) and the price of the product (X), and the following estimated regression equation was obtained.
_Y
= 120 – 10 X
Based on the above estimated regression equation, if price is increased by 2 units,
then demand is expected to
A. increase by 120 units B. increase by 100 units
C. increase by 20 units D. decease by 20 units
40. If there is a very strong correlation between two variables, then the coefficient of correlation must be
A. much larger than 1, if the correlation is positive
B. much smaller than 1, if the correlation is negative
C. much larger than one
D. None of these alternatives is correct.
41. Regression analysis was applied between sales (in $1000) and advertising (in $100)
and the following regression function was obtained. _Y = 500 + 4 X
Based on the above estimated regression line if advertising is $10,000, then the
point estimate for sales (in dollars) is
A. $900 B. $900,000 C. $40,500 D. $505,000
Use the following situation for Questions 42 46. You are given the following
information about y and x.
y x
Dependent Variable Independent Variable
5 15
7 12
9 10
11 7
42. The least squares estimate of b1 equals
A. -0.7647 B. -0.13 C. 21.4 D. 16.412
43. The least squares estimate of b0 equals
A. -0.7647 B. -1.3 C. 164.1176 D. 16.41176
44. The sample correlation coefficient equals
A. -86.667 B. -0.99705 C. 0.9941 D. 0.99705
45. The coefficient of determination equals
A. -0.99705 B. -0.9941 C. 0.9941 D. 0.99705
46. A researcher selected a sample of 50 residents from each of three different cities to determine if they were willing to participate in a medical experiment. At _ = .05, test the claim that the proportions who will participate are equal.
Residents City 1 City 2 City 3
Willing to participate 20 12 22
Not willing to participate 30 38 28
Total 50 50 50
A. There is not evidence to reject the claim that the proportions are equal because the test value 4.861
B. There is evidence to reject the claim that the proportions are equal because the test value > 1.042
C. There is not evidence to reject the claim that the proportions are equal because the test value 5.991
D. There is evidence to reject the claim that the proportions are equal because the test value 5.991 > 1.042
47. A researcher is comparing samples from 6 different populations. Assume that the conclusion from an ANOVA is that the null hypothesis is rejected, in other words that the 6 population means are not all equal. How many of the population means would be significantly different from the others?
A. Three (half) B. At least 1
C. All would be different D. More than 2
Use the following situation for Questions 48 50. A research firm reported that15% of those surveyed described their health as poor, 26% as good, 40% as verygood, and 19% as excellent. A health professional in Chicago wanted to determine if people in Chicago had similar feelings toward their health. In a sample of 600 people in Chicago, 70 described their health as poor, 180 as good, 210 as very
good, and 140 as excellent. Complete the chart below by filling in the observed and expected values.
48.
observed expected
poor 70 90
good 180 156
Very good 210 240
excellent 140 114
Observed Expected
Poor
Good
Very Good
Excellent
49. Calculate the test statistic ________ (to two decimal places, i.e 2.34)
50. Given an = .05, what is the result of the chi-squared test?
A. There is not evidence to reject the claim that the proportions are equal because the test value is less than the critical 2 value.
B. There is evidence to reject the claim that the proportions are equal because the test value is greater than the critical 2 value.
C. There is not evidence to reject the claim that the proportions are equal because the test value is greater than the critical 2 value.
D. There is evidence to reject the claim that the proportions are equal because he test value is less than the critical 2 value.
Aug 29, 2021 | Uncategorized
This is the trial balance of Mimosa Company on September 30.
Debit Credit
Cash 8200
Accounts Receivable 2600
Supplies 2100
Equipment 8000
Accounts Payable 4800
Unearned Service Revenue 1100
Common Stock 15000
20900 20900
The October transactions were as follows.
Oct. 5 Received $1,300 in cash from customers for accounts receivable due.
Oct 10 Billed customers for services performed $5,100.
Oct 15 Paid employee salaries $1,200.
Oct 17 Performed $600 of services for customers who paid in advance in August
Oct 20 Paid $1,900 to creditors for accounts payable due.
Oct 29 Paid a $300 cash dividend.
Oct 31 Paid utilities $400.
Instructions
(a) Prepare a general ledger using T accounts. Enter the opening balances in the ledger
accounts as of October 1. Provision should be made for these additional accounts:
Dividends, Service Revenue, Salaries and Wages Expense, and Utilities Expense.
(b) Journalize the transactions, including explanations.
(c) Post to the ledger accounts.
(d) Prepare a trial balance on October 31, 2012.
Aug 29, 2021 | Uncategorized
P3. Cash budget Basic
Grenoble Enterprises had sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000, respectively. The firm has a cash balance of $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
1) The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following sale.
2) The firm receives other income of $2,000 per month.
3) The firm s actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively.
4) Rent is $3,000 per month.
5) Wages and salaries are 10% of the previous month s sales.
6) Cash dividends of $3,000 will be paid in June.
7) Payment of principal and interest of $4,000 is due in June.
8) A cash purchase of equipment costing $6,000 is scheduled in July.
9) Taxes of $6,000 are due in June.
Aug 29, 2021 | Uncategorized
The trial balance of Fugazy Investment Advisers at December 31, 2012, follows:
FUGAZY INVESTMENT ADVISERS
Trial Balance
December 31, 2012
Account Debit Credit
Cash 32,000
Accounts receivable 46,000
Supplies 3,000
Equipment 25,000
Accumulated depreciation 11,000
Accounts payable 15,000
Salary payable
Unearned service revenue 2,000
Note payable, long-term 39,000
Fugazy, capital 38,000
Fugazy, drawing 50,000
Service revenue 97,000
Salary expense 32,000
Supplies expense
Depreciation expense
Interest expense 3,000
Rent expense 9,000
Insurance expense 2,000
Total $202,000 $202,000
Adjustment data at December 31, 2012:
a. Unearned service revenue earned during the year, $500.
b. Supplies on hand, $1,000.
c. Depreciation for the year, $6,000.
d. Accrued salary expense, $1,000.
e. Accrued service revenue, $4,000.
Requirements:
1. Enter the account data in the Trial Balance columns of a worksheet, and complete the worksheet through the Adjusted Trial Balance. Key each adjusting entry by the letter corresponding to the data given. Leave a blank line under Service revenue.
2. Prepare the income statement, the statement of owner’s equity, and the classified balance sheet in account format.
3. Prepare closing journal entries from the worksheet.
4. Did the company have a good or a bad year during 2012? Give the reason for your answer.
Aug 29, 2021 | Uncategorized
Gil Vogel started his own consulting firm, Vogel Consulting, on June 1, 2012. The trial balance at June 30 is as follows.
VOGEL CONSULTING
Trial Balance
June 30, 2012
Debit Credit
Cash $ 6,850
Accounts Receivable 7,000
Prepaid Insurance 2,880
Supplies 2,000
Equipment 15,000
Accounts Payable $ 4,230
Unearned Service Revenue 5,200
Common Stock 22,000
Service Revenue 8,300
Salaries and Wages Expense 4,000
Rent Expense 2,000
$39,730 $39,730
In addition to those accounts listed on the trial balance, the chart of accounts for Vogel also contains the following accounts: Accumulated Depreciation Equipment, Utilities Payable, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense.
Other data:
1. Supplies on hand at June 30 total $720.
2. A utility bill for $180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $4,100 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,250 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7. Invoices representing $3,900 of services performed during the month have not been recorded as of June 30.
Instructions:
(a) Prepare the adjusting entries for the month of June.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. Use T accounts.
(c) Prepare an adjusted trial balance at June 30, 2012.
Aug 29, 2021 | Uncategorized
Nick Waege started his own consulting firm, Waegelein Consulting, on June 1, 2010. The trial balance at June 30 is as follows.
WAEGELEIN CONSULTING
Trial Balance
June 30, 2010
Debit Credit
Cash 6,850
Accounts Receivable 7,000
Prepaid Insurance 2,640
Supplies 2,000
Office Equipment 15,000
Accounts Payable 4,540
Unearned Service Revenue 5,200
Common Stock 21,750
Service Revenue 8,000
Salaries Expense 4,000
Rent Expense 2,000
39,490 39,490
In addition to those accounts listed on the trial balance, the chart of accounts for Waegelein also contains the following accounts:
Accumulated Depreciation – Office Equipment, Utilities Payable, Salaries Payable, Depreciation Expense, Insurance Expense, Utilities Expense, Supplies Expense
Other data:
1. Supplies on hand at June 30 total $980.
2. A utility bill for $180 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $3,900 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,250 are accrued at June 30.
6. The office equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months.
7. Invoices representing $3,500 of services performed during the month have not been recorded as of June 30.
Required:
a. Prepare the adjusting entries for the month of June.
b. Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. Use T accounts.
c. Prepare an adjusted trial balance at June 30, 2010.
Aug 29, 2021 | Uncategorized
The Vang Hotel opened for business on May 1, 2012. Here is its trial balance before adjustment on May 31.
VANG HOTEL
Trial Balance
May 31, 2012
Debit Credit
Cash $ 2,500
Prepaid Insurance 1,800
Supplies 2,600
Land 15,000
Buildings 70,000
Equipment 16,800
Accounts Payable $ 4,700
Unearned Rent Revenue 3,300
Mortgage Payable 36,000
Common Stock 60,000
Rent Revenue 9,000
Salaries and Wages Expense 3,000
Utilities Expense 800
Advertising Expense 500
$113,000 $113,000
Other data:
1. Insurance expires at the rate of $450 per month.
2. A count of supplies shows $1,050 of unused supplies on May 31.
3. Annual depreciation is $3,600 on the building and $3,000 on equipment.
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,500 has been earned.
6. Salaries of $900 are accrued and unpaid at May 31.
Instructions
(a) Journalize the adjusting entries on May 31.
(b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
(c) Prepare an adjusted trial balance on May 31.
(d) Prepare an income statement and a retained earnings statement for the month of May and a classified balance sheet at May 31.
(e) Identify which accounts should be closed on May 31.
Aug 29, 2021 | Uncategorized
P4-4A Mendocino Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,00 5-liter jugs. Mendocino also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called Litemist. Litemist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the Litemist product. The LiteMist product already demands considerably more attention than the CoolDay line.
Tyler Silva, president and founder of Mendocino, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line, and that it was always quite profitable. It wasn’t until the company started producing the more complicated LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-Liter bottles, it requires considerably more time and effort, both to bottle and to label and bpx than does CoolDay. The company must bottle and handle 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging;LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters.
Tyler has asked the accounting department to prepare an analysis of the cost per liter using the traditional costing approach and activity-based costing. The following information was collected.
|
|
|
|
|
|
|
|
|
|
CoolDay |
LiteMist |
| Direct materials per liter |
|
$0.40 |
$1.20 |
| Direct labor cost per liter |
|
$0.25 |
$0.50 |
| Direct labor hours per liter |
|
0.05 |
0.09 |
| Total direct labor hours |
|
150,000 |
27,000 |
Aug 29, 2021 | Uncategorized
P4-4A Mendocino Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,00 5-liter jugs. Mendocino also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called Litemist. Litemist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the Litemist product. The LiteMist product already demands considerably more attention than the CoolDay line.
yler Silva, president and founder of Mendocino, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line, and that it was always quite profitable. It wasn’t until the company started producing the more complicated LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-Liter bottles, it requires considerably more time and effort, both to bottle and to label and bpx than does CoolDay. The company must bottle and handle 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging;LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters.
| Tyler has asked the accounting department to prepare an analysis of the cost per liter using the traditional costing approach and activity-based costing. The following information was collected. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CoolDay |
LiteMist |
|
|
|
|
|
| Direct materials per liter |
|
$0.40 |
$1.20 |
|
|
|
|
|
| Direct labor cost per liter |
|
$0.25 |
$0.50 |
|
|
|
|
|
| Direct labor hours per liter |
|
0.05 |
0.09 |
|
|
|
|
|
| Total direct labor hours |
|
150,000 |
27,000 |
|
|
|
|
|
Aug 29, 2021 | Uncategorized
Lee Choi opened Choi s Window Washing, Inc. on July 1, 2008. During July the following transactions were completed.
July 1 Issued $12,000 of common stock for $12,000 cash.
1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,300 on account.
5 Paid $2,400 cash on one-year insurance policy effective July 1.
12 Billed customers $2,500 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $800 on amount owed on cleaning supplies.
20 Paid $1,200 cash for employee salaries.
21 Collected $1,400 cash from customers billed on July 12.
25 Billed customers $5,000 for cleaning services.
31 Paid gas and oil for month on truck $200.
31 Declared and paid $900 cash dividend.
The chart of accounts for Choi s Window Washing contains the following accounts:
No. 101 Cash, No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158 Accumulated Depreciation Equipment, No. 201 Accounts Payable, No. 212 Salaries Payable, No. 311 Common Stock, No. 320 Retained Earnings, No. 332 Dividends, No. 350 Income Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense ,No. 634 Cleaning Supplies
Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column
form of account.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Services provided but unbilled and uncollected at July 31 were $1,500.
(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $400 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $600.
(d) Prepare the income statement and a retained earnings statement for July and a classified balance
sheet at July 31.
(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.
Check for answers:
(b) Trial balance $22,000
(c) Adjusted trial balance $24,400
(d) Net income $5,600;
Total assets $19,800
(g) Post-closing trial balance $20,100
Aug 29, 2021 | Uncategorized
Dana La Fontsee opened Pro Window Washing Inc. on July 1, 2012. During July the following transactions were completed. July 1 Issued 12,000 shares of common stock for $12,000 cash.
1 Purchased used truck for $8,000, paying $2,000 cash and the balance on account.
3 Purchased cleaning supplies for $900 on account.
5 Paid $1,800 cash on 1-year insurance policy effective July 1.
12 Billed customers $3,700 for cleaning services.
18 Paid $1,000 cash on amount owed on truck and $500 on amount owed on cleaning supplies.
20 Paid $2,000 cash for employee salaries.
21 Collected $1,600 cash from customers billed on July 12.
25 Billed customers $2,500 for cleaning services.
31 Paid $290 for maintenance of the truck during month.
31 Declared and paid $600 cash dividend.
The chart of accounts for Pro Window Washing contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation Equipment, Accounts Payable, Salaries and Wages Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense.
Instructions
(a) Journalize the July transactions.
(b) Post to the ledger accounts. (Use T accounts.)
(c) Prepare a trial balance at July 31.
(d) Journalize the following adjustments.
(1) Services provided but unbilled and uncollected at July 31 were $1,700.
(2) Depreciation on equipment for the month was $180.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $320 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $400.
(e) Post adjusting entries to the T accounts.
(f ) Prepare an adjusted trial balance.
(g) Prepare the income statement and a retained earnings statement for July and a classified balance sheet at July 31.
(h) Journalize and post closing entries and complete the closing process.
(i) Prepare a post-closing trial balance at July 31.
Aug 29, 2021 | Uncategorized
Bjerg Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Bjerg s monthly manufacturing cost and other expense data are as follows.
Rent on factory equipment $ 7,000
Insurance on factory building 1,500
Raw materials (plastics, polystyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 43,000
Depreciation on office equipment 800
Miscellaneous materials (glue, thread, etc.) 1,100
Factory manager s salary 5,700
Property taxes on factory building 400
Advertising for helmets 14,000
Sales commissions 7,000
Depreciation on factory building 1,500
Requirements:
1. Prepare an answer sheet. Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns. (If answer is zero, please enter 0, do not leave any fields blank.)
2. Compute the cost to produce one helmet. Round answers to 2 decimal places.
Aug 29, 2021 | Uncategorized
P6-1AKirk Limited is trying to determine the value of its ending inventory as of February 28, 2012, the company s year-end. The accountant counted everything that was in the warehouse, as of February 28, which resulted in an ending inventory valuation of $48,000. However, she didn t know how to treat the following transactions so she didn t record them.
Determine items and amounts to be recorded in inventory.
(SO 1), AN
(a) On February 26, Kirk shipped to a customer goods costing $800. The goods were shipped FOB shipping point, and the receiving report indicates that the customer received the goods on March 2.
(b) On February 26, Seller Inc. shipped goods to Kirk FOB destination. The invoice price was $350 plus $25 for freight. The receiving report indicates that the goods were received by Kirk on March 2.
(c) Kirk had $500 of inventory at a customer s warehouse on approval. The customer was going to let Kirk know whether it wanted the merchandise by the end of the week, March 4.
(d) Kirk also had $400 of inventory at a Balena craft shop, on consignment from Kirk.
(e) On February 26, Kirk ordered goods costing $750. The goods were shipped FOB shipping point on February 27. Kirk received the goods on March 1.
(f) On February 28, Kirk packaged goods and had them ready for shipping to a customer FOB destination. The invoice price was $350 plus $25 for freight; the cost of the items was $280. The receiving report indicates that the goods were received by the customer on March 2.
(g) Kirk had damaged goods set aside in the warehouse because they are no longer saleable. These goods originally cost $400 and, originally, Kirk expected to sell these items for $600.
Instructions
For each of the above transactions, specify whether the item in question should be included in ending inventory, and if so, at what amount. For each item that is not included in ending inventory, indicate who owns it and what account, if any, it should have been recorded in.
Aug 29, 2021 | Uncategorized
P6-2A Turner Distribution markets CDs of numerous performing artists. At the beginning of March, Turner had in beginning inventory 2,500 CDs with a unit cost of $7. During March, Turner made the following purchases of CDs.
Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analysis.
(SO 2,3), AP
March 5 2,000 @ $8
March 13 3,500 @ $9
March 21 5,000 @ $10
March 26 2,000 @ $11
During March 12,000 units were sold. Turner uses a periodic inventory system.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
Aug 29, 2021 | Uncategorized
Turner Distribution markets CDs of numerous performing artists. At the beginning of March, Turner had in beginning inventory 2,500 CDs with a unit cost of $7. During March, Turner made the following purchases of CDs.
Determine cost of goods sold and ending inventory using FIFO, LIFO, and average-cost with analysis.
March 5 2,000 @ $8
March 13 3,500 @ $9
March 21 5,000 @ $10
March 26 2,000 @ $11
During March 12,000 units were sold. Turner uses a periodic inventory system.
Instructions
(a) Determine the cost of goods available for sale.
(b) Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). Prove the accuracy of the cost of goods sold under the FIFO and LIFO methods. (Note: For average-cost, round cost per unit to three decimal places.)
(c) Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
Check Figures (Cost of goods sold):
FIFO $105,000
LIFO $115,500
Average $109,601
Aug 29, 2021 | Uncategorized
Utech Company bottles and distributes Livit, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2008, management estimates the following revenues and costs.
Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio, and sales for target net income.
Net sales $1,800,000
Direct materials 430,000
Direct labor 352,000
Manufacturing overhead variable 316,000
Manufacturing overhead fixed 283,000
Selling expenses variable $70,000
Selling expenses fixed 65,000
Administrative expenses variable 20,000
Administrative expenses fixed 60,000
Instructions:
(a) Prepare a CVP income statement for 2008 based on management s estimates.
(b) Compute the break-even point in (1) units and (2) dollars.
(c) Compute the contribution margin ratio and the margin of safety ratio. (Round to full percents.)
(d) Determine the sales dollars required to earn net income of $238,000.
Aug 29, 2021 | Uncategorized
Suppose that on June 1, Rockin Gyrations, a disc jockey service, creates a petty cash fund with an imprest balance of $500. During June, Michael Martell, fund custodian, signs the following petty cash tickets:
Petty Cash Ticket Number Item Amount
1 Postage for package received $ 20
2 Decorations and refreshments for office party 25
3 Two boxes of stationery 35
4 Printer cartridges 15
5 Dinner money for sales manager entertaining a customer 75
On June 30, prior to replenishment, the fund contains these tickets plus cash of $325. The accounts affected by petty cash payments are Office supplies expense, Entertainment expense, and Postage expense.
Requirements:
1. On June 30, how much cash should this petty cash fund hold before it is replenished?
2. Journalize all required entries to (a) create the fund and (b) replenish it. Include explanations.
3. Make the entry on July 1 to increase the fund balance to $550. Include an explanation
Aug 29, 2021 | Uncategorized
P7-6
Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month.
Factory Overhead Cost Budget
Fixed cost:
Depreciation on building and machinery 1,200
Taxes on building and machinery 500
Insurance on building and machinery 500
Superintendent’s salary 1,500
Supervisors’ salaries 2,300
Maintenance wages 1,000 7,000
Variable cost:
Repairs 400
Maintenance supplies 300
Other supplies 200
Payroll taxes 800
Small tools 300 2,000
Total standard factory overhead $9,000
Required:
1. Assuming that variable costs will vary in direct proportion to the change in volume, prepare a flexible budget for production levels of 80%, 90% and 110% of normal capacity. Also determine the rate for application of factory overhead to work in process at each level of volume in both units and direct labor hours.
2. Prepare a flexible budget for production levels of 80%, 90% and 110%, assuming that variable costs will vary in direct proportion to the change in volume, but with the following exceptions. (Hint: Set up a third category for semi fixed expenses).
a. At 110% of capacity, an assistant department head will be needed at a salary of $10,500 annually.
b. At 80% of capacity, the repairs expense will drop to one-half of the amount at 100% capacity.
c. Maintenance supplies expense will remain constant at all levels of production.
d. At 80% of capacity, one part-time maintenance worker, earning $6,000 a year, will be laid off.
e. At 110% of capacity, a machine not normally in use and on which no depreciation is normally recorded will be used in production. Its cost was $12,000, it has a ten-year life, and straight-line depreciation will be taken.
3. Using the facts and the flexible budget prepared in 1, determine the budgeted cost at 96% of capacity, using interpolation.
4. Using the flexible budget prepared in 1, determine the budgeted cost at 104% capacity, using a method other than interpolation.
Aug 29, 2021 | Uncategorized
On August 31, 2012, Daisy Floral Supply had a $155,000 debit balance in Accounts receivable and a $6,200 credit balance in Allowance for uncollectible accounts. During September, Daisy made
sales on account, $590,000.
collections on account, $627,000.
write-offs of uncollectible receivables, $7,000.
Requirements
1. Journalize all September entries using the allowance method. Uncollectible account expense was estimated at 3% of credit sales. Show all September activity in Accounts receivable, Allowance for uncollectible accounts, and Uncollectible account expense (post to these T-accounts).
2. Using the same facts, assume instead that Daisy used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts receivable and Uncollectible account expense and show their balances at September 30, 2012.
3. What amount of uncollectible account expense would Daisy report on its September income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason.
4. What amount of net accounts receivable would Daisy report on its September 30, 2012 balance sheet under each of the two methods? Which amount is more realistic? Give your reason.
Aug 29, 2021 | Uncategorized
P8-3 Accelerator Inc. (Materials and labor variances analyses)
Accelerator, Inc. manufactures a fuel additive, Stomp, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month.
In connection with your examination of Accelerator s financial statements for the year ended September 30, management has asked you to review some computations made by Accelerator s cost accountant. Your working papers disclose the following about the company s operations:
Standard costs per drum of product manufactured:
Materials:
8 gallons of chemicals@$2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16
1 empty drum @ $1/drum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 $17
Direct labor: 1 hour @ $8/hour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8
Factory Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6
Costs and expenses during September:
Stomp: 600,000 gallons purchased at a cost of $1,140,000; 645,000 gallons used.
Empty drums: 94,000 purchased at a cost of $94,000; 80,000 drums used.
Direct labor: 81,000 hours worked at a cost of $654,480.
Factory overhead: $768,000.
Required:
Calculate the following variances for September
1. Materials quantity variance.
2. Materials purchase price variance.
3. Labor efficiency variance.
4. Labor rate variance.
P8-13 Folsom Shirts (Variance analysis)
Folsom Shirts, Inc., manufactures men s sport shirts for large stores. Folsom produces a single quality shirt in lots of a dozen according to each customer s order and attaches the store s label.
The standard costs for a dozen shirts include the following:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24yards@$0.55/yard $13.20
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3hours@$7.35/hour 22.05
Factory overhead . . . . . . . . . . . . . . . . . . . . . . . . . . 3hours@$2.00/hour 6.00
Standard cost per dozen . . . . . . . . . . . . . . . . . . $41.25
During October, Folsum worked on three orders for shirts. Job cost records for the month disclose the following:
Lot Units in Lot Materials Used Hours Worked
30 1,000 dozen 24,100 yards 2,980
31 1,700 dozen 40,440 yards 5,130
32 1,200 dozen 28,825 yards 2,890
The following information is also available:
a. Folsom purchased 95,000 yards of materials during October at a cost of $53,200. The materials price variance is recorded when goods are purchased, and all inventories are carried at standard cost.
b. Direct labor incurred amounted to $81,400 during October. According to payroll records, production employees were paid $7.40 per hour.
c. Overhead is applied on the basis of direct labor hours. Factory overhead totaling $22,800 was incurred during October.
d. A total of $288,000 was budgeted for overhead for the year, based on estimated production at the plant s normal capacity of 48,000 dozen shirts per year. Overhead is 40% fixed and 60% variable at this level of production.
e. There was no work in process at October 1. During October, Lots 30 and 31 were completed, and all materials were issued for Lot 32, which was 80% completed as to labor and overhead.
Required:
1. Prepare a schedule computing the October standard cost of Lots 30, 31, and 32.
2. Prepare a schedule computing the materials price variance for October and indicate whether it is favorable or unfavorable.
3. For each lot produced during October, prepare schedules computing the following (indicate whether favorable or unfavorable):
a. Materials quantity variance in yards.
b. Labor efficiency variance in hours. (Hint: Don t forget the percentage of completion.)
c. Labor rate variance in dollars.
4. Prepare a schedule computing the total controllable and volume overhead variances for October and indicate whether they are favorable or unfavorable.
Aug 29, 2021 | Uncategorized
The comparative financial statements of Lakeland Cosmetic Supply for 2012, 2011, and 2010 include the data shown here:
2012 2011 2010
Balance sheet partial
Current assets:
Cash $ 90,000 $ 70,000 $ 30,000
Short-term investments 145,000 175,000 125,000 Receivables, net 290,000 260,000 250,000
Inventories 370,000 335,000 325,000
Prepaid expenses 60,000 15,000 50,000
Total current assets $955,000 $855,000 $780,000
Total current liabilities $560,000 $600,000 $690,000
Income statement partial
Sales revenue (all on account) $5,860,000 $5,140,000 $4,200,000
Requirements:
1. Compute these ratios for 2012 and 2011:
a. Acid-test ratio
b. Days sales in receivables
c. Accounts receivable turnover
2. Considering each ratio individually, which ratios improved from 2011 to 2012 and which ratios deteriorated? Is the trend favorable or unfavorable for the company?
Aug 29, 2021 | Uncategorized
Galant Theater Production Company unadjusted and adjusted trial balances atDecember 31, 2012, follow.
GALANT THEATER PRODUCTION COMPANY
Adjusted Trial Balance
31-Dec-12
Account Debit Credit Debit Credit
Cash $3,900 $3,900
Accounts receivable 6,100 6,900
Supplies 1,700 300
Prepaid insurance 2,700 2,100
Equipment 25,000 25,000
Accumulated depreciation $8,800 $13,200
Accounts payable 4,000 4,000
Salary payable 300
Galant, capital 20,300 20,300
Galant, drawing 30,500 30,500
Service revenue 71,000 71,800
Depreciation expense 4,400
Supplies expense 1,400
Utilities expense 4,700 4,700
Salary expense 29,500 29,800
Insurance expense 600
Total $104,100 $104,100 $109,600 $109,600
Requirement
1. Journalize the adjusting entries that account for the differences between the two
trial balances.
Aug 29, 2021 | Uncategorized
Towne Architects incorporated as licensed architects on April 1, 2012. During the first month of the operation of the business, these events and transactions occurred:
Apr. 1 Stockholders invested $18,000 cash in exchange for common stock of the corporation.
Apr. 1 Hired a secretary-receptionist at a salary of $375 per week, payable monthly.
Apr. 2 Paid office rent for the month $900.
Apr. 3 Purchased architectural supplies on account from Spring Green Company $1,300.
Apr. 10 Completed blueprints on a carport and billed client $1,900 for services.
Apr. 11 Received $700 cash advance from J. Madison to design a new home.
Apr. 20 Received $2,800 cash for services completed and delivered to M. Svetlana.
Apr. 30 Paid secretary-receptionist for the month $1,500.
Apr. 30 Paid $300 to Spring Green Company for accounts payable due.
The company uses these accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.
Instructions
(a) Journalize the transactions, including explanations.
(b) Post to the ledger T accounts.
(c) Prepare a trial balance on April 30, 2012.
Aug 29, 2021 | Uncategorized
B-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes B-Mobile to issue 70,000 shares of 5%, $100-par preferred stock, and 110,000 shares of no-par common stock. B-Mobile completed the following transactions:
Oct 2 Issued 19,000 shares of common stock for equipment with a market value of $110,000.
6 Issued 800 shares of preferred stock to acquire a patent with a market value of $80,000.
9 Issued 15,000 shares of common stock for cash of $90,000.
Requirements:
1. Record the transactions in the general journal.
2. Prepare the stockholders equity section of the B-Mobile balance sheet at October 31. The ending balance of Retained earnings is $92,000.
Aug 29, 2021 | Uncategorized
Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln-Priest balance sheet reported the following stockholders equity:
LINCOLN-PRIEST, INC.
Stockholders’ Equity
December 31, 2011
Paid-in Capital:
Preferred stock, 7%, $40 par, 110,000 shares authorized, none issued$0
Common stock, $1 par, 520,000 shares authorized, 61,000 shares issued
and outstanding $61,000
Paid-in capital in excess of par – common 41,000
Total paid-in capital $102,000
Retained earnings 29000
Total stockholders’ equity $131,000
Requirements:
1. During 2012, the company completed the following selected transactions.
Journalize each transaction. Explanations are not required.
a. Issued for cash 1,300 shares of preferred stock at par value.
b. Issued for cash 2,400 shares of common stock at a price of $5 per share.
c. Net income for the year was $74,000, and the company declared no dividends.
Make the closing entry for net income.
2. Prepare the stockholders equity section of the Lincoln-Priest balance sheet at
December 31, 2012.
Aug 29, 2021 | Uncategorized
Bridger Bike Corp. manufactures mountain bikes and distributes them through retail outlets in Montana, Idaho, Oregon, and Washington. Bridger Bike Corp. has declared the following annual dividends over a six-year period ending December 31 of each year: 2005, $5,000; 2006, $18,000; 2007, $45,000; 2008, $45,000; 2009, $60,000; and 2010, $67,000. During the entire period, the outstanding stock of the company was composed of 10,000 shares of 2% cumulative preferred stock, $100 par, and 25,000 shares of common stock, $1 par.
Instructions:
Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2005. Summarize the data in tabular form, using the following column headings:
Preferred Dividends Common Dividends
Year Total Dividends Total Per Share Total Per Share
2005 $5,000
2006 18,000
2007 45,000
2008 45,000
2009 60,000
2010 67,000
Determine the average annual dividend per share for each class of stock for the six-year period.
Assuming a market price of $125 for the preferred stock and $8 for the common stock, calculate the average annual percentage return on initial shareholders investment, based on the average annual dividend per share
(a) for preferred stock and
(b) for common stock.
Aug 29, 2021 | Uncategorized
Summerborn Manufacturing, Co., completed the following transactions during 2012:
Jan 16 – Declared a cash dividend on the 5%, $100 par preferred stock (900 shares outstanding). Declared a $0.30 per share dividend on the 80,000 shares of common stock outstanding. The date of record is January 31, and the payment due date is February 15.
Feb 15 – Paid the cash dividends.
Jun 10 – Split common stock 2 for 1. Before the split, Summerborn had 80,000 shares of $6 par common stock outstanding.
Jul 30 – Distributed a 50% stock dividend on the common stock. The market value of the common stock was $9 per share.
Oct 26 – Purchased 1,000 shares of treasury stock at $13 per share.
Nov 8 – Sold 500 shares of treasury stock for $15 per share.
Nov 30 – Sold 300 shares of treasury stock for $8 per share.
Requirement
1. Record the transactions in Summerborn’s general journal
Aug 29, 2021 | Uncategorized
P13-9A Condensed financial data of sinjh Inc. follow.
|
|
|
Sinjh Inc.
|
|
|
|
Comparative Balance Sheets
|
|
|
December 31
|
|
|
|
Assets
|
2014 2013
|
|
|
Cash
|
$100,350 $ 48,400
|
|
|
Accounts receivable
|
92,800 33,000
|
|
|
Inventory
|
112,500 102,850
|
|
|
Prepaid expenses
|
29,300 26,000
|
|
|
Long-term investments
|
140,000 114,000
|
|
|
Plant assets
|
265,000 242,500
|
|
|
Accumulated depreciation
|
(47,000) (52,000)
|
|
|
Total
|
$692,950 $514,750
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Accounts payable
|
$112,000 $ 67,300
|
|
|
Accrued expenses payable
|
16,500 17,000
|
|
|
Bonds payable
|
110,000 150,000
|
|
|
Common stock
|
220,000 175,000
|
|
|
Retained earnings
|
234,450 105,450
|
|
|
Total “
|
$692,950 $514,750
|
|
|
|
|
|
Sinjh Inc
|
|
|
|
|
|
Sales revenue
Gain on disposal of plant assets
|
$392,780
5,000
|
|
|
|
|
Less:
|
|
|
|
|
|
Cost of goods sold
|
135,460
|
|
|
|
|
Operating expenses, excluding
|
|
|
|
|
|
depreciation
|
12,410
|
|
|
|
|
Depreciation expense
|
45,000
|
|
|
|
|
Income tax expense
|
27,280
|
|
|
|
|
Interest expense
|
4,730 224,880
|
|
|
|
|
Net income
|
$172,900
|
Additional information:
1. New plant assets costing $80,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $57,500 and accumulated depreciation of $50,000 were sold for $12,500 cash.
3. Bonds payable matured and were paid off at face value for cash.
4. A cash dividend of $43,900 was declared and paid during the year,
Instructions
Prepare a statement of cash flows using the indirect method.
P13-10A Data for Sigh Inc. are presented in P13-9A. Further analysis reveals that accounts payable pertains to Merchandise Creditors.
Prepare a statement of cash flows using the direct method.
Aug 29, 2021 | Uncategorized
P14-25A
Accountants for Johnson, Inc., have assembled the following data for the year ended December 31, 2012:
|
December 31,
|
|
2012
|
2011
|
|
Current Accounts:
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$ 92,100
|
$ 17,000
|
|
Accounts receivable
|
64,500
|
69,200
|
|
Inventories
|
87,000
|
80,000
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
57,900
|
56,200
|
|
Income tax payable
|
14,400
|
17,100
|
|
|
Issuance of common stock for cash
|
$ 40,000
|
|
Depreciation expense
|
25,000
|
|
Purchase of equipment
|
75,000
|
|
Acquisition of land by issuing long-term note payable
|
122,000
|
|
Cost basis of building sold
|
53,000
|
|
Payment of note payable
|
$48,100
|
|
Payment of cash dividends
|
54,000
|
|
Issuance of note payable to borrow cash
|
67,000
|
|
Gain on sale of building
|
5,500
|
|
Net income
|
70,500
|
|
|
|
|
|
Requirement
1.Prepare Johnson’s statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities.
Aug 29, 2021 | Uncategorized
P14-2A On July 1, 2010, Brower Industries Inc. issued $32,000,000 of 10-year, 12% bonds at an effective interest rate of 13%, receiving cash of $30,237, 139. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Instructions:
1. Journalize the entry to record the amount of cash proceeds from the sale of the bonds.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 2010, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2011, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2010.
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
5. Compute the price of $30,237,139 received for the bonds by using the tables of present value in Appendix A at end of text. (Round to the nearest dollar.)
Aug 29, 2021 | Uncategorized
P14-3A Maui Blends, Inc. produces and sells organically grown coffee. On July 1, 2010, Maui Blends, Inc. issued $3,000,000 of 15-year, 12% bonds at an effective interest rate of 10%, receiving cash of $3, 461,181. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Instructions:
1. Journalize the entry to record the amount of cash proceeds from the sale of the bonds.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 2010, and the amortization
of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2011, and the amortization of the bond premium,
using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2010.
4. Will the bond proceeds always be greater than the face amount of the bonds when
the contract rate is greater than the market rate of interest?
5. Compute the price of $ 3,461,181 received for the bonds by using the tables
of present value in Appendix A at the end of the text. (Round to the nearest dollar.)
Aug 29, 2021 | Uncategorized
P15-1 (Equity Transactions and Statement Preparation)
On January 5, 2010, Phelps Corporation received a charter granting the right to issue 5,000 shares of $100 par value, 8% cumulative and nonparticipating preferred stock, and 50,000 shares of $10 par value common stock. It then completed these transactions.
|
|
Jan. 11
|
Issued 20,000 shares of common stock at $16 per share.
|
|
|
Feb. 1
|
Issued to Sanchez Corp. 4,000 shares of preferred stock for the following assets: machinery with a fair market value of $50,000; a factory building with a fair market value of $160,000; and land with an appraised value of $270,000.
|
|
|
July 29
|
Purchased 1,800 shares of common stock at $17 per share. (Use cost method.)
|
|
|
Aug. 10
|
Sold the 1,800 treasury shares at $14 per share.
|
|
|
Dec. 31
|
Declared a $0.25 per share cash dividend on the common stock and declared the preferred dividend.
|
|
|
Dec. 31
|
Closed the Income Summary account. There was a $175,700 net income.
|
Aug 29, 2021 | Uncategorized
| Comparative financial statement data of Danfield, Inc., follow: |
|
| Danfield, Inc. |
|
| Comparative Income Statement |
|
| Years Ended December 31, 2012 and 2011 |
|
|
2012 |
2011 |
|
| Net sales |
467,000 |
428,000 |
|
| Cost of goods sold |
237,000 |
218,000 |
|
| Gross profit |
230,000 |
210,000 |
|
| Operating expenses |
136,000 |
134,000 |
|
| Income from operations |
94,000 |
76,000 |
|
| Interest expense |
9,000 |
10,000 |
|
| Income before income tax |
85,000 |
66,000 |
|
| Income tax expense |
24,000 |
27,000 |
|
| Net income |
61,000 |
39,000 |
|
|
|
|
|
| Danfield, Inc. |
| Comparative Balance Sheet |
| Years Ended December 31, 2012 and 2011 |
|
2012 |
2011 |
2010* |
| Current assets: |
|
|
|
| Cash |
97,000 |
95,000 |
|
| Current receivables, net |
112,000 |
118,000 |
102,000 |
| Inventories |
145,000 |
163,000 |
203,000 |
| Prepaid expenses |
12,000 |
5,000 |
|
| Total current assets |
366,000 |
381,000 |
|
| Property, plant, and equipment, net |
211,000 |
179,000 |
|
| Total assets |
577,000 |
560,000 |
598,000 |
|
|
|
|
| Total current liabilities |
225,000 |
246,000 |
|
| Long-term liabilities |
114,000 |
97,000 |
|
| Total liabilities |
339,000 |
343,000 |
|
| Preferred stock, 3% |
108,000 |
108,000 |
|
| Common stockholders’ equity, no par |
130,000 |
109,000 |
|
| Total liabilities and stockholders’ equity |
577,000 |
560,000 |
|
|
|
|
|
| * Selected 2010 amounts |
|
|
|
| 1. Market price of Danfield’s common stock: $86.58 at December 31, 2012 and $46.54 at December 31, 2011. |
| 2. Common shares outstanding: 12,000 during 2012 and 10,000 during 2011 and 2010. |
| 3. All sales on credit. |
|
|
|
|
|
|
|
| Requirements |
|
|
|
| 1. Compute the following ratios for 2012 and 2011: |
|
|
| a. Current ratio |
|
|
|
| b. Times-interest-earned ratio |
|
|
|
| c. Inventory turnover |
|
|
|
| d. Gross profit percentage |
|
|
|
| e. Debt to equity ratio |
|
|
|
| f. Rate of return on common stockholders’ equity |
|
|
| g. Earnings per share of common stock |
|
|
| h. Price/earnings ratio |
|
2. Decide (a) whether Danfield’s ability to pay debts and to sell inventory improved or deteriorated during 2012 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
Aug 29, 2021 | Uncategorized
Charlie’s Pets succeeded so well that Charlie decided to manufacture his own brand of chewing bone Fido Treats. At the end of December 2012, his accounting records showed the following:
Inventories: Beginning Ending
Materials $ 13,400 $ 9,500
Work in process 0 2,000
Finished goods 0 5,300
Other information:
Direct material purchases $ 33,000
Utilities for plant $ 1,600
Plant janitorial services 800 Rent of plant 13,000
Sales salaries expense 5,000 Customer service hotline expense 1,400
Delivery expense 1,700 Direct labor 22,000
Sales revenue 109,000
Requirements:
1.Prepare a schedule of cost of goods manufactured for Fido Treats for the year ended December 31, 2012.
2.Prepare an income statement for Fido Treats for the year ended December 31, 2012.
3.How does the format of the income statement for Fido Treats differ from the income statement of a merchandiser?
4.Fido Treats manufactured 18,075 units of its product in 2012. Compute the company’s unit product cost for the year.
Aug 29, 2021 | Uncategorized
Lu Technology, Co., manufactures CDs and DVDs for computer software and entertainment companies. Lu uses job order costing and has a perpetual inventory system.
On April 2, Lu began production of 5,900 DVDs, Job 423, for Stick People Pictures for $1.30 sales price per DVD. Lu promised to deliver the DVDs to Stick People by April 5. Lu incurred the following costs:
Date Labor Time Record No. Description Amount
4/2 655 10 hours @ $14 $140
4/3 656 20 hours @ $13 260
4/2 63 31 lbs. polycarbonate plastic @ $11 $341
4/2 64 25 lbs. acrylic plastic @ $27 675
4/3 74 3 lbs. refined aluminum @ $42 126
Stick People provides the movie file for Lu to burn onto the DVDs at a cost of $0.50 per DVD. Lu Technology allocates manufacturing overhead to jobs based on the relation between estimated overhead of $540,000 and estimated direct labor costs of $432,000. Job 423 was completed and shipped on April 3.
Requirements:
1. Prepare a job cost record similar to Exhibit 17-6 for Job 423. Calculate the predetermined overhead rate; then allocate manufacturing overhead to the job.
2. Journalize in summary form the requisition of direct materials (including the movie files) and the assignment of direct labor and manufacturing overhead to Job 423.
3. Journalize completion of the job and the sale of the 5,900 DVDs.
Aug 29, 2021 | Uncategorized
P17-2A The following account balances relate to the stockholders’ equity accounts of Gore Corp. at year-end. 2010 2009 Common stock, 10,500 and 10,000 shares, respectively, for 2010 and 2009 $160,000 $140,000 Preferred stock, 5,000 shares 125,000 125,000 Retained earnings 300,000 260,000 A small stock dividend was declared and issued in 2010. The market value of the shares was $10,500. Cash dividends were $15,000 in both 2010 and 2009. The common stock has no par or stated value. Hint: Determine cash flow effects of changes in equity accounts. (SO 3) Instructions (a) What was the amount of net income reported by Gore Corp. in 2010? Net income $65,500 (b) Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2010. (c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.
Aug 29, 2021 | Uncategorized
P17-5A Grania Company’s income statement contained the condensed information below. GRANIA COMPANY Income Statement For the Year Ended December 31, 2010 Revenues $970,000 Operating expenses, excluding depreciation $624,000 Depreciation expense 60,000 Loss on sale of equipment 16,000 700,000 Income before income taxes 270,000 Income tax expense 40,000 Net income $230,000 Grania’s balance sheet contained the comparative data at December 31, shown below. 2010 2009 Accounts receivable $75,000 $60,000 Accounts payable 41,000 28,000 Income taxes payable 11,000 7,000 Accounts payable pertain to operating expenses. Hint: Prepare the operating activities section indirect method. (SO 3) Instructions Prepare the operating activities section of the statement of cash flows using the indirect method. Cash from operations $308,000
Aug 29, 2021 | Uncategorized
Amy Electronics makes CD players in three processes: assembly, programming, and packaging. Direct materials are added at the beginning of the assembly process. Conversion costs are incurred evenly throughout the process. The Assembly Department had no Work in process inventory on October 31. In mid-November, Amy Electronics started production on 125,000 CD players. Of this number, 95,800 CD players were assembled during November and transferred out to the Programming Department. The November 30 Work in process inventory in the Assembly Department was 25% of the way through the assembly process. Direct materials costing $437,500 were placed in production in Assembly during November, and Direct labor of $200,800 and Manufacturing overhead of $134,275 were assigned to that department.
Requirements
1. Compute the number of equivalent units and the cost per equivalent unit in the Assembly Department for November.
2. Assign total costs in the Assembly Department to (a) units completed and transferred to Programming during November and (b) units still in process at November 30.
3. Prepare a T-account for Work in process inventory Assembly to show its activity during November, including the November 30 balance.
Aug 29, 2021 | Uncategorized
Kincaid Company sells flags with team logos. Kincaid has fixed costs of $583,200 per year plus variable costs of $4.80 per flag. Each flag sells for $12.00.
Requirements :
1. Use the income statement equation approach to compute the number of flags Kincaid must sell each year to break even.
2. Use the contribution margin ratio CVP formula to compute the dollar sales Kincaid needs to earn $33,000 in operating income for 2012. (Round the contribution margin to two decimal places.)
3. Prepare Kincaid’s contribution margin income statement for the year ended December 31, 2012, for sales of 72,000 flags. Cost of goods sold is 70% of variable costs. Operating costs make up the rest of variable costs and all of fixed costs. (Round your final answers to the nearest whole number.)
Aug 29, 2021 | Uncategorized
P3-1B Linda Ace started her own consulting firm, Modine Consulting, Inc. on May 1, 2008. The trial balance at May 31 is as follows.
MODINE CONSULTING, INC.
Trial Balance
May 31, 2008
Account Number Debit Credit
101 Cash $ 7,700
112 Accounts Receivable 4,000
126 Supplies 1,500
130 Prepaid Insurance 4,800
149 Office Furniture 9,600
201 Accounts Payable $ 3,500
209 Unearned Service Revenue 3,000
311 Common Stock 19,100
400 Service Revenue 6,000
726 Salaries Expense 3,000
729 Rent Expense 1,000
$31,600 $31,600
In addition to those accounts listed on the trial balance, the chart of accounts for Modine Consulting also contains the following accounts and account numbers:
No. 150 Accumulated Depreciation Office Furniture,
No. 212 Salaries Payable,
No. 229 Travel Payable,
No. 631 Supplies Expense,
No. 717 Depreciation Expense,
No. 722 Insurance Expense, and
No. 736 Travel Expense.
Other data:
1. $500 of supplies have been used during the month.
2. Travel expense incurred but not paid on May 31, 2008, $200.
3. The insurance policy is for 2 years.
4. $1,000 of the balance in the unearned service revenue account remains unearned at the end of the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Modine Consulting has two employees, who are paid $700 each for a 5-day work week.
6. The office furniture has a 5-year life with no salvage value. It is being depreciated at $160 per month for 60 months.
7. Invoices representing $1,000 of services performed during the month have not been recorded as of May 31.
Instructions:
(a) Prepare the adjusting entries for the month of May. Use J4 as the page number for your journal.
(b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column.
(c) Prepare an adjusted trial balance at May 31, 2008.
Check: (c) Adj. trial balance $33,800
Aug 29, 2021 | Uncategorized
Laughter Landscaping has the following independent cases at the end of the year on December 31, 2014.
a. Each Friday, Laughter pays employees for the current week’s work. The amount of the weekly payroll is $7,000 for a five-day workweek. This year December 31 falls on a Wednesday.
b. Details of Prepaid insurance are shown in the account: Jan 1st $4,500
Laughter prepays a full year’s insurance each year on January 1. Record insurance expense for the year ended December 31.
c. The beginning balance of Supplies was $4,000. During the year, Laughter purchased supplies for $5,200, and at December 31 the supplies on hand total $2,400.
d. Laughter designed a landscape plan, and the client paid Laughter $7,000 at the start of the project. Laughter recorded this amount as Unearned service revenue. The job will take several months to complete, and Laughter estimates that the company has earned 60% of the total revenue during the current year.
e. Depreciation for the current year includes Equipment, $3,700; and Trucks, $1,300. Make a compound entry.
Requirement :
1. Journalize the adjusting entry needed on December 31, 2014, for each of the previous items affecting Laughter Landscaping.
Aug 29, 2021 | Uncategorized
You have been hired as a managerial accountant by Mr. Smith of Wilson-West Manufacturing, a start-up company that produces several different product lines. He would like you to set up the cost accounting system for the cabinet division. Listed below are your new job requirements and at least 1 task for each.
Compile a 23 page document (1,0001,500 words) with all of the following task requirements:
- Your role as an accountant
- Prepare a job description that includes 34 typical duties of a managerial accountant.
- Types of costs
- Explain what types of costs you plan on using to distinguish the different types of cabinets that will be produced. Examples should include direct costs items, indirect costs items, as well as variable costing. In other words, include what are at least 5 types of expenses that are associated with manufacturing the cabinets?
- Cost accounting methods
- Explain how product costing is used for a cabinet division.
- Give 2 examples of how you will use product costing
- Which costing method will you use for the cabinet division: ABC, job order, or process costing? Validate your answer with 23 reasons for and 23 reasons against the other types of costing. Also, include examples of how you plan to use your chosen costs.
- Analysis for contribution margin, absorption, variable, throughput, and joint product costing
- Using examples, discuss how each will be used in the cabinet department.
- Include a formula where necessary (contribution margin).
- Explain in detail where you will find the appropriate information or calculation.
- Fixed, Variable, Mixed Costs
- Based on the cabinet division, give an explanation and 2 examples for each type of cost: fixed, variable, and mixed.
- Must have references and any intext citations
Assignment 2
| Deliverable Length: |
2 3 pages showing all calculations; 2 pages showing all calculations |
| Details: |
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.
Key Assignment Draft
Brian Miller is an entrepreneur. He started a small-town friendly grocery store. People stopped by his store to pick up things they did not want to run to the regular grocery store for. In 3 years, because of popular demand, he started adding more items on his shelf and pretty soon, he had grown into a regular grocery store. People loved his store because he knew everyone by their first name and would try to fulfill everyone s requests. He now needs some help with his inventory. He hired a CPA firm that would give him some advice on how he should maintain his inventory.
You are his CPA. You want to give Brian an overview on the inventory system, some different methods of recording cost of goods sold, and educate him on the accounting side of recording inventory and recording cost of goods sold.
Part 1
- Explain to Brian the perpetual and periodic inventory systems, covering the main differences between the two systems, and why companies use perpetual inventory system.
- Contrast the 4 methods of recording cost of goods sold:
- Specific identification
- Average cost
- First in, First out (FIFO)
- Last in, Last out (LIFO)
- ABC, a grocery company, uses a periodic inventory system. They have the following information for the month of January:
|
Beginning inventory
|
Jan 1: 400 units @ $10 each
|
|
Purchases
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Jan 10: 300 units @$12 each
Jan 15: 200 units @$15 each
|
|
Sales
|
Jan 5: 200 units @ $15 each
Jan 12: 200 units @ $20 each
Jan 18: 100 units @ $25 each
|
|
Ending inventory
|
Jan 31: 400 units
|
- Will LIFO or FIFO generate the highest cost of goods sold? Why? Show all calculations.
- Will the ending inventory balance will be higher under LIFO or FIFO? Why? Show all calculations.
- What is the cost of goods sold under LIFO? Show all calculations.
- What is the cost of goods sold under FIFO? Show all calculations.
|
Aug 29, 2021 | Uncategorized
Question 1.1. (TCO B) The original impetus of HMO development came from which of the following? (Points : 5)
Providers seeking patient revenues
Consumers seeking access to healthcare
Employers
All of the above
None of the above
Question 2.2. (TCO A) Key common characteristics of PPOs include _____.
(Points : 5)
selected provider panels
negotiated payment rates
consumer choice
utilization management
All of the above
A, B, and D only
Question 3.3. (TCO B) Basic elements of credentialing include _____.
(Points : 5)
hospital privileges
malpractice history
medical license
continuing medical education (CME)
All of the above
A, B, and C only
Question 4.4. (TCO D) A common financial risk arrangement used as a performance-based incentive is _____.
(Points : 5)
carve-outs
withholds
per diem
FFS
Question 5.5. (TCO B) Which of the following forms of hospital reimbursement contain no elements of risk sharing by the hospital? (Points : 5)
Capitation
DRGs
Per diem
Sliding scale FFS
Both C and D
Question 6.6. (TCO C) Common sources of information to trigger DM include _____.
(Points : 5)
claims
laboratory tests
referrals from inpatient care coordinators
pharmacy data
electronic medical records
All of the above
A through D only
Question 7.7. (TCO C) One potential negative consequence of drug formularies with high copayments is _____.
(Points : 5)
increased use of generic drugs
increased use of brand drugs
copayments may be a barrier to adherence.
decreased use of the most cost-effective medications
Question 8.8. (TCO C) Which of the following are components of a strong MCO prevention program? (Points : 5)
Member benefits
Services for members, such as health risk assessments
Contracts with providers
Public policies
A and C only
A, B, C, and D
Question 9.9. (TCO D) This federal law has established specific, enforceable regulations regarding the standardization of electronic transactions and code sets for procedures and diagnoses. (Points : 5)
OCR
HEDIS
HIPAA
EMTALA
Question 10.10. (TCO D) Employees who are engaged in their healthcare will do the following except what? (Points : 5)
Have better compliance with health intervention programs
Have lower healthcare costs
Have higher productivity
Have more direct reports
Question 11.11. (TCO D) Which of the following does HIPAA regulate? (Points : 5)
Electronic communications between payors and providers
Portability and access standards
Guaranteed renewability of group coverage
All of the above
Question 12.12. (TCO D) Which of the following clauses states that the provider agrees not to sue or assert any claims against the enrollee for services covered under the contract? (Points : 5)
Flow down clause
No-balance-billing clause
Force majeure clause
Hold-harmless clause
Aug 29, 2021 | Uncategorized
Ortiz Company’s sales budget projects unit sales of part 198Z of 11,100 units in January, 11,900 units in February and 12,600 units in March. Each unit of part 198Z requires 2 pounds of materials, which cost $6 per pound. Ortiz Company desires its ending raw materials inventory to equal 50% of the next month’s production requirements, and its ending finished goods inventory to equal 30% of the next month’s expected unit sales. These goals were met at December 31, 2010.
Prepare a production budget for January and February 2011. (Enter all amounts as positive amounts and subtract where necessary.)
ORTIZ COMPANY
Production Budget
For the Two Months Ending February 28, 2011
January February
Expected
Unit Sales
Add:Desired Ending Finished Goods Inv.
Total Required Units
Less: Beginning Finished Good Inv.
Required Production Units
Ortiz COMPANY
Direct Material Budget
For the month ending January 2011
January
Units to be Produced
Direct Materials Pounds per Unit
Total Pounds needed for Production
Add: Desired Pounds in Ending Direct
Material Inv.
Total Material Required
Less: Beginning Direct Materials
(Pounds)
Direct Materials Purchases
Cost per Pound
Total Cost of Direct Materials Purchases
Aug 29, 2021 | Uncategorized
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Required (Answer each question independently and always refer to the original data unless instructed otherwise.) Sales $ 20,000 Variable expenses 12,000 Contribution margin 8,000 Fixed expenses 6,000 Net operating income $ 2,000
1.What is the contribution margin per unit?
2.What is the contribution margin ratio?
3.What is the variable expense ratio?
4.If sales increase to 1,001 units, what would be the increase in net operating income?
5.If sales declined to 900 units, what would be the net operating income?
6.If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income?
7.If the variable cost per unit increases by $1, spending on advertising increases by $1,500, and unit sales increase by 250 units, what would be the net operating income?
8.What is the break even point in unit sales?
9.What is the break even point in sales dollars?
10.How many units must be sold to achieve a target profit of $5,000?
11.What is the margin of safety in dollars? What is the margin of safety percentage?
12.What us tge degree of operating leverage?
13.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?
14.Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $6,000 and the total fixed expenses are $12,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?
15.Using the degree of operating leverage that you computed in the previous question, what is the estimated percent increase in net operating income of a 5% increase in sales?
Aug 29, 2021 | Uncategorized
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):
% per unit $ Units sold
Sales $20,000.00 100% $20.00 1000
Variable expenses $12,000.00 60% $12.00
Contribution Margin $8,000.00 40% $8.00
Fixed Expenses $6,000.00
Net operating income $2,000.00
Required (Answer each question independently and always refer to the original data unless instructed otherwise.)
1.What is the contribution margin per unit?
2.What is the contribution margin ratio?
3.What is the variable expense ratio?
4.If sales increase to 1,001 units, what would be the increase in net operating income?
5.If sales declined to 900 units, what would be the net operating income?
6.If the selling price increases by $2 per unit and the sales volume decreases by 100 units, what would be the net operating income?
7.If the variable cost per unit increases by $1, spending on advertising increases by $1,500, and unit sales increase by 250 units, what would be the net operating income?
8.What is the break even point in unit sales?
9.What is the break even point in sales dollars?
10.How many units must be sold to achieve a target profit of $5,000?
11.What is the margin of safety in dollars? What is the margin of safety percentage?
12.What us tge degree of operating leverage?
13.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales?
14.Assume that the amounts of the company’s total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $6,000 and the total fixed expenses are $12,000. Under this scenario and assuming that total sales remain the same, what is the degree of operating leverage?
15.Using the degree of operating leverage that you computed in the previous question, what is the estimated percent increase in net operating income of a 5% increase in sales?
Aug 29, 2021 | Uncategorized
Outdoor Athletic Equipment Co. operates two divisions-the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of June 30, 2008, the end of the current fiscal year, after all adjustments, including those for inventories,were recorded and posted:
Sales-Winter Sports (WS) Division _______ $950,000
Sales-Summer Sports (SS) Division ________1,437,500
Cost of Goods Sold-Winter Sports (WS) Division ——– 512,500
Cost of Goods Sold-Summer Sports (SS) Division ——- 687,500
Sales Expense-Winter Sports (WS) Division ———– 150,000
Sales Expense-Summer Sports (SS) Division ———–205,000
Administrative Expense-Winter Sports (WS) Division —— 97,000
Administrative Expense-Summer Sports (SS) Division —— 128,000
Advertising Expense ——————– 64,500
Transportation Expense ————— 100,700
Accounts Receivable Collection Expense ————– 58,100
Warehouse Expense ——————–120,000
The bases to be used in allocating expenses, together with other essential information are as follows:
(a) Advertising expense-incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $28,000; Summer Sports Division, $36,500.
(b) Transportation Expense-charged back to divisions at a transfer price of $7.60 per bill of lading: Winter Sports Division, 6,000 bills of lading; Summer Sports Division, 7,250 bills of lading.
(c) Accounts Receivable collection expense-incurred at headquarters, charged back to divisions at a transfer price of $5.60 per invoice: Winter Sports Division, 4,500 sales invoices; Summer Sports Division, 5,875 sales invoices.
(d) Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 25,000 square feet; Summer Sports Division, 12,500 square feet.
Required:
1. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division.
2. Provide Supporting schedules for determining service department charges.
Aug 29, 2021 | Uncategorized
The outstanding capital stock of Pennington Corporation consists of 2,700 shares of $109 par value, 6% preferred, and 5,500 shares of $57 par value common.
Assuming that the company has retained earnings of $89,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions.
| (a) |
The preferred stock is noncumulative and nonparticipating.
(b)The preferred stock is cumulative and nonparticipating.
| (c) |
The preferred stock is cumulative and participating. (Round rate of participation to 4 decimal places, e.g. 5.1234. Round final answer to 0 decimal places, e.g. 25,320.) |
|
Aug 29, 2021 | Uncategorized
The owners have decided to go public and issue an IPO They issue 30 million shares ($2.00), of which the payment on application is to $0.80 per share (closes 18th April 2013), $0.50 four weeks after allocation (allocation is 13th May 2013) and the remaining amount to be paid on 30th July 2013 (the call will be made on 30th June). The IPO attracts requests for 30.4 million shares. In this case, it exceeds the allowable number of shares and the directors decide to apply the first-come, first-served approach and return the excess back to the unlucky applicants Required: You are to journalise the events (including dates and notations). You should assume that all monies were received on 18th April (applications). What other option did the directors have with the excess demand, returning the excess?
Aug 29, 2021 | Uncategorized
The Oxford Company has budgeted sales revenues as follows.
Oct Nov Dec
Credit sales $120,000 $96,000 $72,000
Cash sales 72,000 204,000 156,000
Total sales 192,000 300,000 228,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit, with 60% paid in the month of purchase and 40% in the month following purchase. Budgeted inventory purchases are $260,000 in October, $180,000 in November, and $84,000 in December.
Other budgeted cash receipts include (a) the sale of plant assets for $49,400 in November and (b) the sale of new common stock for $67,400 in December. Other budgeted cash disbursements include (a) operating expenses of $27,000 each month, (b) selling and administrative expenses of $50,000 each month, (c) dividends of $76,000 to be paid in November, and (d) purchase of equipment for $24,000 cash in December.
The company has a cash balance of $40,000 at the beginning of December and wishes to maintain a minimum cash balance of $40,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate of 12%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all repayments are made on the last day of the month in which excess cash is available. Also assume that $14,000 of financing was obtained on November 1.
Requirements:
Use this information to prepare a schedule of expected cash payments for purchases of inventory for the months of November and December only.
Aug 29, 2021 | Uncategorized
The Oxford Company has budgeted sales revenues as follows.
Jan Feb Mar
Credit sales $240,000 $192,000 $144,000
Cash sales 144,000 408,000 312,000
Total sales 384,000 600,000 456,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month.
Purchases of inventory are all on credit, with 60% paid in the month of purchase and 40% in the month following purchase. Budgeted inventory purchases are $520,000 in January, $360,000 in February, and $168,000 in March.
Other budgeted cash receipts include
(a) the sale of plant assets for $98,800 in February and
(b) the sale of new common stock for $134,800 in March.
Other budgeted cash disbursements include
(a) operating expenses of $54,000 each month,
(b) selling and administrative expenses of $100,000 each month,
(c) dividends of $152,000 to be paid in February, and
(d) purchase of equipment for $48,000 cash in March.
The company has a cash balance of $80,000 at the beginning of February and wishes to maintain a minimum cash balance of $80,000 at the end of each month. An open line of credit is available at the bank and carries an annual interest rate of 12%. Assume that all borrowing is done on the first day of the month in which financing is needed and that all repayments are made on the last day of the month in which excess cash is available. Also assume that there is no outstanding financing as of February 1.
Requirements:
Use this information to prepare a schedule of expected cash payments for purchases of inventory for the months of February and March only.
Aug 29, 2021 | Uncategorized
P15-1)
Comparative statement data for Douglas Company and Maulder Company, two competitors,
appear below. All balance sheet data are as of December 31, 2009, and December 31,
2008.
Douglas Company Maulder Company
2009 2008 2009 2008
Net sales $1,549,035 $339,038
Cost of goods sold 1,080,490 241,000
Operating expenses 302,275 79,000
Interest expense 8,980 2,252
Income tax expense 54,500 6,650
Current assets 325,975 $312,410 83,336 $ 79,467
Plant assets (net) 521,310 500,000 139,728 125,812
Current liabilities 65,325 75,815 35,348 30,281
Long-term liabilities 108,500 90,000 29,620 25,000
Common stock, $10 par 500,000 500,000 120,000 120,000
Retained earnings 173,460 146,595 38,096 29,998
Instructions
(a)Prepare a vertical analysis of the 2009 income statement data for Douglas Company and
Maulder Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return
on assets and the return on common stockholders equity ratios for both companies.
Aug 29, 2021 | Uncategorized
The December cash records of Dunlap Insurance follow:
Cash Receipts Cash Payments
Date Cash Debit Check No. Cash Credit
Dec 4 $ 4,170 1416 $ 860
9 510 1417 130
14 530 1418 650
17 2,180 1419 1,490
31 1,850 1420 1,440
1421 900
1422 630
Dunlap’s Cash account shows a balance of $16,740 at December 31. On December 31, Dunlap Insurance received the following bank statement:
Bank Statement for December
Beginning Balance $13,600
Deposits and other credits:
Dec 1 EFT $300
5 4,170
10 510
15 530
18 2,180
22 BC 1,400 $9,090
Checks and Other debits
Dec 8 NSF $1,000
11 (check no. 1416) 860
19 EFT 700
22 (check no. 1417) 130
29 (check no. 1418) 650
31 (check no. 1419) 1,940
31 SC $60 (5,340)
Ending Balance $17,350
Explanations: BC-bank collection; EFT-Electronic Funds Transfer; NSF-Nonsufficient Funds check;SC-Service charge
Additional data for the bank reconciliation follows:
a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.
b. The NSF check was received from a customer.
c. The $1,400 bank collection was for a note receivable.
d. The correct amount of check 1419 for rent expense is $1,940. Dunlap’s controller mistakenly recorded the check for $1,490.
Requirements
1. Prepare the bank reconciliation of Dunlap Insurance at December 31, 2012.
2. Journalize any required entries from the bank reconciliation.
Aug 29, 2021 | Uncategorized
Daniel Laird owns and operates an architectural firm called Laird Design. The following amounts summarize the financial position of his business an April 30 2009: As of April 30th, Laird had Cash of 1,720. He has 3,240 in accounts receivable, $24,000 in land. $5,400 in accounts payable, and Daniels capital is $23,660 Considering this info log below:
During May 2009, the following events occurred:
A- Laird received $12,000 as a gift and deposited the cash in the business bank account.
B- Paid off the beginning balance of Accounts Payable.
C- Performed services for a client and received cash of $1,100.
D- Collected cash from a customer on account, $750.00
E- Purchased supplies on account, $720.00
F- Consulted on the interior design of a major office building and billed the client for services performed, $5,000.
G- Invested personal cash of $1,700 in the business.
H- Paid Offices rent, $1,860
I- Sold supplies at cost to another interior designed for $80 cash
J- Withdrew cash of $4,000 for personal use.
Requirements: Analysis of transactions, balance sheet, income statement, and statement of owners equity completed.
Aug 29, 2021 | Uncategorized
The adjusted trial balance of Kokomo Furniture Company on November 30, the end of its first month of operation, is as follows:
Kokomo Furniture Company
Trial Balance
November 30, 2013
Cash 21,800
Accounts Receivable 16,200
Finished Goods 13,900
Work in Process –
Materials 7,400
Building 300,000
Accumulated depreciation – Building 3,000
Machinery and Equipment 88,000
Accumulated depreciation – Mach. And Equip. 2,200
Accounts Payable 8,900
Payroll –
Capital stock 422,550
Sales 68,300
Cost of goods sold 42,450
Factory overhead –
Selling and Administrative Expense 15,200
$504,950 $504,950
The general ledger reveals the following additional data:
a. There were no beginning inventories.
b. Materials purchases during the period were $33,000.
c. Direct labor cost was $18,500.
d. Factory overhead costs were as follows:
Indirect materials 1,400
Indirect labor 4,300
Depreciation – building 3,000
Depreciation – machinery and equipment 2,200
Utilities 2,750
$13,650
Required:
1. Prepare a statement of cost of goods manufactured for the month of November.
2. Prepare an income statement for the month of November.
3. Prepare a balance sheet as of November 30.
Aug 29, 2021 | Uncategorized
The following transactions of Denver Pharmacies occurred during 2011 and 2012.
2011
Jan 9 Purchased computer equipment at a cost of $9,000, signing a six-month, 6% note payable for that amount.
Jan 29 Recorded the week s sales of $64,000, three-fourths on credit, and one-fourth for cash. Sales amounts are subject to a 6% state sales tax.
Feb 5 Sent the last week s sales tax to the state.
Feb 28 Borrowed $204,000 on a four-year, 10% note payable that calls for $51,000 annual installment payments plus interest. Record the current and long-term portions of the note payable in two separate accounts.
July 9 Paid the six-month, 6% note, plus interest, at maturity.
Aug 31 Purchased inventory for $12,000, signing a six-month, 9% note payable.
Dec 31 Accrued warranty expense, which is estimated at 2% of sales of $603,000.
Dec 31 Accrued interest on all outstanding notes payable. Make a separate interest accrual of reach note payable.
2012
Feb 28 Paid the first installment and interest for one year on the four-year note payable.
Feb 29 Paid off the 9% note plus interest at maturity.
Aug 29, 2021 | Uncategorized
The general Ledger of Speedy Ship at June 30, 2012, the end of the company s fiscal year, includes the following account balances before adjusting entries.
Accounts payable ..$114,000
Current portion of notes payable _______
Interest payable _______
Salary payable ._______
Employee payroll taxes payable ..970
Employer payroll taxes payable .._______
Unearned rent revenue 6,900
Long-term note payable 210,000
The additional data needed to develop the adjusting entries at June 30 are as follows:
a.) The long-term debt is payable in annual installments of $42,000, with the next installment due on July 31. On that date, Speedy Ship will also pay one year s interest at 8%. Interest was last paid on July 3 of the preceding year. Make the adjusting entry to shift the current installment of the long-term note payable to a current liability. Also accrue interest expense at year end.
b.) Gross salaries for the last payroll of the fiscal year were $4,300.
c.) Employer payroll taxes owed are $850
d.) On February 1, the company collected one year s rent of $6,900 in advance.
Requirements
1. Using the four-column ledger format, open the listed accounts and insert the unadjusted June 30 balances.
2. Journalize and post the June 30 adjusting entries to the accounts that you opened. Key adjusting entries by letters.
3. Prepare the current liabilities section of the balance sheet at June 30, 2012
Aug 29, 2021 | Uncategorized
Park and Fly, near an airport, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building:
Purchase price of 3 acres of land ————- $60,000
Delinquent real estate taxes on the land to be paid by Park and Fly ———- 3,700
Additional dirt and earthmoving —————– 5,100
Title insurance on the land acquisition —————- 1,000
Fence around the boundary of the property ————— 44,200
Building permit for the building ———————– 200
g. Architect s fee for the design of the building ——————– 5,000
Signs near the approaches to the property ————————– 20,900
Materials used to construct the building ——————————- 40,000
Labor to construct the building ———————– 30,000
Interest cost on construction loan for the building ——————- 3,800
Parking lots on the property ———————— 120,000
Lights for the parking lot ———————- 8,900
Salary of construction supervisor (10% to building; 90% to parking lot) ——————— 50,000
Furniture ———————- 6,000
Transportation of furniture from seller to the building ————- 400
Landscaping (shrubs) ——————— 9,000
Park and Fly depreciates land improvements over 20 years, buildings over 30 years, and furniture over 8 years, all on a straight-line basis with zero residual value.
Requirements:
1. Set up columns for Land, Land Improvements, Building, and Furniture. Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.
2. All construction was complete and the assets were placed in service in March 31. Record partial-year depreciation for the year ended December 31.
Aug 29, 2021 | Uncategorized
On January 2, 2006, Speedway Delivery Service purchased a truck at a cost of $63,000. Before placing the truck in service, Speedway spent $2,200 painting it, $800 replacing tires, and $4,000 overhauling the engine. The truck should remain in service for 6 years and have a residual value of $14,200. The truck s annual mileage is expected to be 18,000 miles in each of the first four years and 14,000 miles in each of the next two years 100,000 miles in total. In deciding which depreciation method to use, Jerry Speers, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance).
Requirements:
1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value.
2. Speedway prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. For income-tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year that Speedway uses the truck. Identify the depreciation methods that meet the general manager s objectives, assuming the income tax authorities permit the use of any of the methods.
Aug 29, 2021 | Uncategorized
P10-3A
On January 1, 2008, Pele Company purchased the following two machines for use in its production process.
Machine A: The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Pele estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.
Machine B: The recorded cost of this machine was $160,000. Pele estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.
Instructions:
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2008.
(2) The journal entry to record annual depreciation at December 31, 2008.
(b) Calculate the amount of depreciation expense that Pele should record for machine B each year of its useful life under the following assumptions.
(1) Pele uses the straight-line method of depreciation.
(2) Pele uses the declining-balance method.The rate used is twice the straight-line rate.
(3) Pele uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2008, 45,000 units; 2009, 35,000 units; 2010, 25,000 units; 2011, 20,000 units.
(c) Which method used to calculate depreciation on machine B reports the highest amount of depreciation expense in year 1 (2008)? The highest amount in year 4 (2011)? The highest total amount over the 4-year period?
Aug 29, 2021 | Uncategorized
Arnold Corporation has been authorized to issue 40,000 shares of $100 par value, 8%, noncumulative preferred stock and 2,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2011, the ledger contained the following balances pertaining to stockholders equity.
Preferred Stock $ 240,000
Paid-in Capital in Excess of Par Value Preferred 56,000
Common Stock 2,000,000
Paid-in Capital in Excess of Stated Value Common 5,700,000
Treasury Stock Common (1,000 shares) 22,000
Paid-in Capital from Treasury Stock 3,000
Retained Earnings 560,000
The preferred stock was issued for land having a fair market value of $296,000. All common stock issued was for cash. In November, 1,500 shares of common stock were purchased for the treasury at a per share cost of $22. In December, 500 shares of treasury stock were sold for $28 per share. No dividends were declared in 2011.
Instructions:
(a) Prepare the journal entries for the:
(1) Issuance of preferred stock for land.
(2) Issuance of common stock for cash.
(3) Purchase of common treasury stock for cash.
(4) Sale of treasury stock for cash.
(b) Prepare the stockholders equity section at December 31, 2011.
Aug 29, 2021 | Uncategorized
Niagra Falls Sporting Goods Company, a wholesale supply company, engages independent sales agents to market the company s products throughout New York and Ontario. These agents currently receive a commission of 20 percent of sales, but they are demanding an increase to 25 percent of sales made during the year ending December 31, 20×2. The controller already prepared the 20×2 budget before learning of the agents demand for an increase in commissions. The budgeted 20×2 income statement is shown below. Assume that cost of goods sold is 100 percent variable cost.
The company s management is considering the possibility of employing full-time sales personnel. Three individuals would be required, at an estimated annual salary of $30,000 each, plus commissions of 5 percent of sales. In addition, a sales manager would be employed at a fixed annual salary of $160,000. All other fixed costs, as well as the variable cost percentages, would remain the same as the estimates in the 20×2 budgeted income statement.
Required:
- Compute Niagra Falls Sporting Goods estimated break-even point in sales dollars for the year ending December 31, 20×2, based on the budgeted income statement prepared by the controller.
- Compute the estimated break-even point in sales dollars for the year ending December 31, 20×2, if the company employs its own sales personnel.
- Compute the estimated volume in sales dollars that would be required for the year ending December 31, 20×2, to yield the same net income as projected in the budgeted income statement, if management continues to use the independent sales agents and agrees to their demand for a 25 percent sales commission.
- Compute the estimated volume in sales dollars that would generate an identical net income for the year ending December 31, 20×2, regardless of whether Niagra Falls Sporting Goods Company employs its own sales personnel or continues to use the independent sales agents and pays them a 25 percent commission.
Aug 29, 2021 | Uncategorized
Nixon & Ross, a law firm, is about to install a new accounting system that will allow the firm to track more of the overhead costs to individual cases.
Overheads are currently allocated to individual client cases based on billable professional staff salaries. Attorneys working on client cases charge their time to “billable professional staff salaries.” Attorney time spent in training, law firm administrative meetings, and the like is charged to an overhead account titled “unbilled staff salaries.”
The following is a summary of the costs for the current year:
Billable professional staff salaries $ 4,000,000
Overhead 8,000,000
Total costs $12,000,000
The overhead costs were as follows:
Secretarial costs $1,500,000
Staff benefits 2,750,000
Office rent 1,250,000
Telephone and mailing costs 1,500,000
Unbilled staff salaries 1,000,000
Total costs $8,000,000
Under the new accounting system, the firm will be able to trace secretarial costs, staff benefits, and telephone and mailing costs to specific clients.
The following are the costs incurred on the Lawson Company case:
Billable professional staff salaries $150,000
Secretarial costs 25,000
Staff benefits 13,500
Telephone and mailing costs 8,000
Total costs $196,500
a. Calculate the current year s overhead application rate under the old cost accounting system.
b. How would this application rate change if the secretarial costs, staff benefits, and telephone and mailing costs were reclassified as direct costs instead of overhead, and overhead was assigned based on direct costs (instead of staff salaries)? Direct costs are defined as billable staff salaries plus secretarial costs, staff benefits, and telephone and mailing costs.
c. Use the overhead application rates from (a) and (b) to compute the cost of the Lawson case.
d. Nixon & Ross bills clients 150 percent of the total costs of the job. What will be the total billings to the Lawson Co. if the old overhead application scheme is replaced with the new overhead scheme?
e. Steve Nixon , managing partner, has commented that replacing the old allocation system with the direct charge method of the new accounting system will result in more accurate costing and pricing of cases. Evaluate the new system
Aug 29, 2021 | Uncategorized
Dr. Steve Rosenthal has his own medical practice. He specializes in the treatment of diabetics. His staff consists of a receptionist, two nurses, a lab technician, and a dietitian. As patients enter the outer office, they check in with the receptionist. The patient then waits until called by a nurse. When called, the patient moves from the waiting room to the inner offices. The patient must weigh in and is then assigned a room. The nurse assigning the patient to a room gathers all the personal data for updating the medical records, such as insulin dosage, medication, illnesses since last visit, etc. The nurse also takes an initial blood sample for blood sugar testing and performs a blood pressure test. The patient then waits until the doctor comes in. After the doctor’s conference, the nurse returns to take more blood samples, depending on what is ordered by the doctor. The patient then waits until the dietitian comes to review eating habits and talk about how to improve meal planning and weight control. The patient returns to the receptionist to pay for the office visit and to schedule the next visit.
In your response include the following:
1. Identify the activities in the doctor’s office that fall into process time, inspection time, move time, wait time, and storage time.
2. List the activities in the doctor’s office that are candidates for nonvalue-added activities. Explain why you classify them as nonvalue-added activities.
Your initial post should be at least 200 words
Aug 29, 2021 | Uncategorized
|
Nordstrom, Inc.operates department stores in numerous states. Selected financial statement data for the year ending February 2, 2008, are as follows.
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NORDSTROM, INC.
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|
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Balance Sheet (partial)
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|
|
(in millions)
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End-of-Year
|
|
Beginning-of-Year
|
|
|
Cash and cash equivalents
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$ 358
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|
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$ 403
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|
|
|
Receivables (net)
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1,788
|
|
|
684
|
|
|
|
Merchandise inventory
|
956
|
|
|
997
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|
|
|
Prepaid expenses
|
78
|
|
|
61
|
|
|
|
Other current assets
|
181
|
|
|
597
|
|
|
|
Total current assets
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$3,361
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|
|
$2,742
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|
|
|
Total current liabilities
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$1,635
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|
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$1,433
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|
For the year, net sales were $8,828, and cost of goods sold was $5,526 (in millions).
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|
|
|
|
|
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Compute the four liquidity ratios at the end of the year. (Round answers to 1 decimal place, e.g. 10.5.)
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Current ratio
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:1
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Acid-test ratio
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:1
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|
Receivables turnover
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times
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|
Inventory turnover
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times
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|
|
|
|
|
|
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Using the data in the chapter, compare Nordstrom’s liquidity with (1) that of J.C. Penney Company, and (2) the industry averages for department stores. (Round answers to 1 decimal place, e.g. 10.5.)
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Ratio
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Nordstrom
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J. C. Penney
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Industry
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|
Current
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:1
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:1
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:1
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Acid-test
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:1
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:1
|
:1
|
|
Receivables turnover
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:1
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:1
|
:1
|
|
Inventory turnover
|
:1
|
:1
|
:1
|
Nordstrom is belowabove J.C. Penney for the current ratio
Nordstrom is abovebelow J.C. Penney for the acid-test ratio
Nordstrom is abovebelow J.C. Penney for the receivable turnover
Nordstrom is abovebelowJ.C. Penney for the inventory turnover
Nordstrom is belowabove Industry for the current ratio
Nordstrom is belowabove Industry for the acid-test ratio
Nordstrom is belowabove Industry for the receivable turnover
Nordstrom is belowaboveIndustry for the inventory turnover
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Aug 29, 2021 | Uncategorized
A northern hardware company is studying a plan to open a new distribution center in southeast. The company plans to rent a warehouse and an adjacent office, and distribute its main products to the local dealers. The company has decided to initially start with four of its main products: Pressure washers, Go karts, Generators, and Water pumps. The company s finance department has notified the management that such an investment is advised only if the new facility generates at least a net profit of $400,000 in the first year of its operation.
The company estimates that the monthly rent and utilities will be about $20,000. Also, the management plans to sign a contract with a local company to rent a number of forklifts for a monthly fee of $1,500. Furthermore, the company estimates that it will have to spend an additional $420,000 annually to hire a manager, a secretary, and five full time employees. The table below describes how much each of the products cost the company (including transportation costs):
Item Cost in dollars
-
- (Case of 5 Water Pumps) $645.00
The company has set aside a budget of $170,000 for merchandise each month to be sent to the new location. The selling prices (per unit) for each item are given below:
Item Selling price
Other than the budget, another of the company s concern is the available space in the warehouse. The warehouse has 82 shelves and each shelf is 30 ft long and 5 ft wide. Pressure washers and generators each are stored on 5 ft by 5 ft pallets whereas each Go Kart is stored on an 8 ft by 5 ft pallet. Furthermore, a 5 ft by 5 ft pallet is used to store four cases of water pumps (there are five water pumps in each case).
For promoting its brand products, the company s marketing department has decided to allocate at least 30% of its inventory to pressure washers and Go Karts, and sell at least twice as many generators as water pumps.
Perform a monthly analysis using a linear programming model. Then determine whether the company should open its new branch in southeast.
Please complete the following in a Word document
[GRADING RUBRIC]
1. Describe the three components of the LP problem. (5 points)
2. Write the formulation of the problem. (5 points)
3. Solve the problem in an Excel workbook by using the Excel Solver, and generate both the Answer and Sensitivity reports of Excel. (30 points)
4. Write the optimal solution in the word document, and explain whether the condition set by the company s finance department has been satisfied. (5 points)
5. One of the decision variables has an optimal value of zero. In the word document, explain what the selling price of that item should be in order for this optimal solution value to change. (5 points)
6. In the word document explain whether, in addition to the $170,000 allocated to the merchandise during the first month, the company should allocate additional money. If yes, how much additional investment do you recommend, and how much should the company expect its net profit to increase as a consequence? (5 points)
7. In the word document explain whether you recommend that the company should rent a smaller or a larger warehouse. In any case, indicate the size of your recommended warehouse in square feet, and indicate how much this change in the size of the warehouse will contribute to the yearly profit. (5 points)
Submissions must include both the completed Excel workbook and the completed Word document as attachments. Please note that incomplete submissions are not accepted.
Aug 29, 2021 | Uncategorized
Chapter7
7.11)
A simple random sample of n = 300 full-time employees is selected from a company list containing the names of all N = 5,000 full-time employees in order to evaluate job satisfaction.
A) Give an example of possible coverage error.
C) Give an example of possible sampling error.
7.15)
Given a normal distribution with = 100 and = 10, if you select a sample of n – 25, what is the probability that X is
A) less than 95?
C) above 102.2?
7.27)
You plan to conduct a marketing experiment in which students are to taste one of two different brands of soft drink. Their task is to correctly identify the brand tasted. You select a random sample of 200 students and assume that the students have no ability to distinguish between the two brands. (Hint : If an individual has no ability to distinguish between the two drinks, then each brand is equally likely to be selected).
A) What is the probability that the sample will have between 50% and 60% of the identifications correct?
C) What is the probability that the sample percentage of correct identifications is greater than 65%?
Chapter 8
8.1)
If X = 85, = 8, and n = 64, construct a 95% confidence interval estimate of the population mean, .
8.13)
Assuming that the population is normally distributed, construct a 95% confidence interval estimate for the population mean for each of the following samples:
Sample A: 1,1,1,1,8,8,8,8
Sample B: 1,2,3,4,5,6,7,8
Explain why these two samples produce different confidence intervals even though they have the same mean and range.
8.15)
A stationery store wants to estimate the mean retail value of greeting cards that it has in its inventory. A random sample of 100 greeting cards indicates a mean value of $2.55 and a standard deviation of $0.44.
A) Assuming a normal distribution, construct a 95% confidence interval estimate of the mean value of all greeting cards in the store’s inventory.
B) Suppose there were 2,500 greeting cards in the store’s inventory. How are the results in (a) useful in assisting the store owner to estimate the total value of her inventory?
8.17)
The U.S. Department of Transportation requires tire manufacturers to provide tire performance information on the sidewall of the tire to better inform prospective customers when making purchasing decisions. One very important measure of tire performance is the tread wear index, which indicates the tire’s resistance to tread wear compared with a tire graded with a base of 100. This means that a tire with a grade of 200 should last twice as long, on average, as a tire graded with a base of 100. A consumer organization wants to estimate the actual tread wear index of a brand name of tires that claims “graded 200” on the sidewall of the tire. A random sample of n = 18 indicates a sample mean tread wear index of 195.3 and a sample standard deviation of 21.4.
A) Assuming that the population of tread wear indexes is normally distributed, construct a 95% confidence interval estimate of the population mean tread wear index for tires produced by this manufacturer under this brand name.
B) Do you think that the consumer organization should accuse the manufacturer of producing tires that do not meet the performance information provided on the sidewall of the tire? Explain.
8.29)
In a survey of 1,200 social media users, 76% said it is
okay to friend co-workers, but 56% said it is not okay to
friend your boss. (Data extracted from Facebook Etiquette
at Work, USA Today, March 24, 2010, p. 1B.)
a. Construct a 95% confidence interval estimate for the
population proportion of social media users who would
say it is okay to friend co-workers
b. Construct a 95% confidence interval estimate for the
population proportion of social media users who would
say it is not okay to friend their boss.
8.39)
If the manager of a paint supply store wants to estimate the mean amount of paint in a 1 – gallon can to within 0.004 gallon with 95% confidence and also assumes that the standard deviation is 0.02 gallon, what sample size is needed?
Aug 29, 2021 | Uncategorized
The following items were selected from among the transactions completed by Isis Co. during the current year:
Feb 15. Purchased merchandise on account from Viper Co., $260,000, terms n/30.
Mar. 17. Issued a 45-day, 5% note for $260,000 to Viper Co., on account.
May 1. Paid Viper Co. the amount owed on the note of March 17.
June 15. Borrowed $300,000 from Ima Bank, issuing a 60-day, 9% note.
July 21. Purchased tools by issuing a $240,000, 60-day note to Charger Co., which discounted the note at the rate of 7%.
Aug. 14. Paid Ima Bank the interest due on the note of June 15 and renewed the loan by issuing a new 30-day, 10% note for $300,000. (Journalize both the debit and credit to the notes payable account.)
Sept. 13. Paid Ima Bank the amount due on the note of August 14.
19. Paid Charger Co. the amount due on the note of July 21.
Dec. 1. Purchased office equipment from Challenger Co. for $235,000, paying $35,000 and issuing a series of ten 7.5% notes for $20,000 each, coming due at 30-day intervals.
12. Settled a product liability lawsuit with a customer for $121,600, payable in January. Isis accrued the loss in a litigation claims payable account.
31. Paid the amount due Challenger Co. on the first note in the series issued on December 1.
Instructions
1. Journalize the transactions.
2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
(a) Product warranty cost, $26,240;
(b) Interest on the nine remaining notes owed to Challenger Co.
Aug 29, 2021 | Uncategorized
3. McBean Inc. reported net income of $300,000 for the year ended December 31, 2009. McBean Inc. had 50,000 shares of common stock outstanding throughout 2009. On January 1, 2009, McBean Inc. issued 400, five-year, $1,000 face value bonds at par. The bonds pay 6 percent interest, and each bond can be converted into 20 shares of common stock. Assume McBean Inc. has a 30 percent income tax rate. None of the bonds were converted in 2009. Required: 1 Compute the basic EPS and diluted EPS for McBean Inc. for 2009.
5. On Nov 1, 2010 you purchased a 2 year insurance policy for $4800. You debited insurance expense. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011?
6. On Sept 1, 2010 you received $3600 of rental income 1 year in advance. You credited rent revenue. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011?
7. On Oct 1, 2010 you borrowed $12000 and issued a 1 year note payable. The interest rate was 8%. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011? 8. On Jan 1, 2010 you had in supplies inventory $1200. On Feb 1 you purchased supplies costing $1800 and you debited supplies expense. On April 1, you purchased supplies costing $500 and debited supplies. On November 1, you purchased $900 of supplies and debited supplies expense. At the end of the year you had $300 of supplies on hand. You did not make an adjusting entry. The books are closed. What is the entry to be prepared at the beginning of 2011?
Aug 29, 2021 | Uncategorized
| Preview |
| 1.Week 2/NTC 362 Week 2 DQs.docx |
| 2.Week 2/NTC 362 Week 2 Individual Assignment- INDP, Part 1.docx |
| 3.Week 2/NTC362 Week 2 Learning Team Assignment- Analog and Digital Comparison Paper.docx |
| 4.Week 3/NTC 362 Week 3 DQs.docx |
| 5.Week 3/NTC 362 Week 3 Individual Assignment- INDP, Part 2.docx |
| 6.Week 3/NTC 362 Week 3 Learning Team Assignment- Protocol Paper.doc |
| 7.Week 4/NTC 362 Week 4 DQs.docx |
| 8.Week 4/NTC 362 Week 4 Individual Assignment- INDP, Part 3.docx |
| 9.Week 4/NTC 362 Week 4 Learning Team Assignment- Hardware and Software Paper.docx |
| 10.Week 5/NTC 362 Week 5 DQs.docx |
| 11.Week 5/NTC 362 Week 5 Individual Assignment- INDP Final Project.docx |
| 12.Week 5/NTC 362 Week 5 Learning Team Assignment- ImplementationTimeline.docx |
| 13.Week 5/NTC 362 Week 5 Learning Team Assignment- WLAN network.vsd |
| 14.Week 1/NTC 362 Week 1 DQs.docx |
| 15.Week 1/NTC 362 Week 1 Individual Assignment- Tele-communications Evolution Timeline.pptx |
| 16.Week 1/NTC 362 Week 1 Peer Evaluation Rating Scale.xlsx |
|
Aug 29, 2021 | Uncategorized
Below find the trial balance for Nybrostrand Company. Prepare an income statement and balance sheet in good format. After you have completed the two statements comment on the success of the company. Support your answer with information from the financial statements you just prepared.
Nybrostrand Company
31-Dec-11
Trial Balance (accounts in alphabetical order)
Debit
Credit
Accounts payable
$ 78,000
Accounts receivable
$ 36,500
Cash
16,700
Common stock
10,000
Depreciation expense
24,350
Cost of goods sold
317,000
Equipment (net of depreciation)
395,000
Insurance
1,400
Inventory
34,000
Long-term debt
127,000
Marketing
4,500
Paid-in capital
50,000
Property taxes
16,900
Rent
28,000
Retained earnings
?
Revenues
586,000
Salaries
78,500
Utilities
6,700
Total
959,550
851,000
The submission should be 2 to 4 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.
Aug 29, 2021 | Uncategorized
Integrative Case 4: O Grady Apparel Company O Grady Apparel Company was founded nearly 160 years ago when an Irish merchant named Garrett O Grady landed in Los Angeles with an inventory of heavy canvas, which he hoped to sell for tents and wagon covers to miners headed for the California goldfields. Instead, he turned to the sale of harder- wearing clothing. Today, O Grady Apparel Company is a small manufacturer of fabrics and clothing whose stock is traded on the over- the-counter exchange. In 2006, the Los Angeles based company experienced sharp increases in both domestic and European markets resulting in record earnings. Sales rose from $ 15.9 million in 2005 to $ 18.3 million in 2006 with earnings per share of $ 3.28 and $ 3.84, respectively. European sales represented 29% of total sales in 2006, up from 24% the year before and only 3% in 2001, 1 year after foreign operations were launched. Although foreign sales represent nearly one- third of total sales, the growth in the domestic market is expected to affect the company most markedly. Management expects sales to surpass $ 21 million in 2007, and earnings per share are expected to rise to $ 4.40. ( Selected income statement items are presented in Table 1.)
Table 1. Selected Income Statement Items
2004 2005 2006 Projected 2007
Net sales $ 13,860,000 $ 15,940,000 $ 18,330,000 $ 21,080,000
Net profits after taxes 1,520,000 1,750,000 2,020,000 2,323,000
Earnings per share ( EPS) 2.88 3.28 3.84 4.40
Dividends per share 1.15 1.31 1.54 1.76
Because of the recent growth, Margaret Jennings, the corporate treasurer, is concerned that available funds are not being used to their fullest potential. The projected $ 1,300,000 of internally generated 2007 funds is expected to be insufficient to meet the company s expansion needs. Management has set a policy of maintaining the current capital structure proportions of 25% long- term debt, 10% preferred stock, and 65% common stock equity for at least the next 3 years. In addition, it plans to continue paying out 40% of its earnings as dividends. Total capital expenditures are yet to be determined.
Jennings has been presented with several competing investment opportunities by division and product managers. However, because funds are limited, choices of which projects to accept must be made. The investment opportunities schedule ( IOS) is shown in Table 2. To analyze the effect of the increased financing requirements on the weighted average cost of capital ( WACC), Jennings contacted a leading investment banking firm that provided the financing cost data given in Table 3. O Grady is in the 40% tax bracket.
Investment Opportunities Schedule ( IOS)
Investment opportunity Internal rate of return ( IRR) Initial investment
A 21% $ 400,000
B 19 200,000
C 24 700,000
D 27 500,000
E 18 300,000
F 22 600,000
G 17 500,000
Financing Cost Data Long- term debt: The firm can raise $ 700,000 of additional debt by selling 10- year, $ 1,000, 12% annual interest rate bonds to net $ 970 after flotation costs. Any debt in excess of $ 700,000 will have a before- tax cost, kd, of 18%.
Preferred stock: Preferred stock, regardless of the amount sold, can be issued with a $ 60 par value and a 17% annual dividend rate. It will net $ 57 per share after flotation costs.
Common stock equity: The firm expects its dividends and earnings to continue to grow at a constant rate of 15% per year. The firm s stock is currently selling for $ 20 per share. The firm expects to have $ 1,300,000 of available retained earnings. Once the retained earnings has been exhausted, the firm can raise additional funds by selling new common stock, netting $ 16 per share after under- pricing and flotation costs.
1. Over the relevant ranges noted in the following table, calculate the after- tax cost of each source of financing needed to complete the table.
Source of capital Range of new financing After- tax cost (%)
Long- term debt $ 0 $ 700,000 ___
$ 700,000 and above ___
Preferred stock $ 0 and above ___
Common stock equity $ 0 $ 1,300,000 ___
$ 1,300,000 and above ___
2. a. Determine the break points associated with each source of capital. b. Using the break points developed in part ( 1), determine each of the ranges of total new financing over which the firm s weighted average cost of capital ( WACC) remains constant. c. Calculate the weighted average cost of capital for each range of total new financing.
3. a. Using your findings in part b( 3) with the investment opportunities schedule ( IOS), draw the firm s weighted marginal cost of capital ( WMCC) schedule and the IOS on the same set of axes, with total new financing or investment on the x axis and weighted average cost of capital and IRR on the y axis. b. Which, if any, of the available investments would you recommend that the firm accept? Explain your answer.
4. a. Assuming that the specific financing costs do not change, what effect would a shift to a more highly leveraged capital structure consisting of 50% long- term debt, 10% preferred stock, and 40% common stock have on your previous findings? ( Note: Rework parts b and c using these capital structure weights.) b. Which capital structure the original one or this one seems better? Why?
5. a. What type of dividend policy does the firm appear to employ? Does it seem appropriate given the firm s recent growth in sales and profits and given its current investment opportunities? b. Would you recommend an alternative dividend policy? Explain. How would this policy affect the investments recommended in part c( 2)?
Additional Requirements
Level of Detail: Show all workG
Aug 29, 2021 | Uncategorized
Accrual basis accounting
Oasis Health Care Inc. is owned and operated by Dr. George Hancock, the sole stockholder.
During January 2013, Oasis Health Care entered into the following transactions:
Jan. 1 Received $15,000 from Rivers Company as rent for the use of a vacant office in Oasis Health Care s building. Rivers paid the rent six months in advance.
1 Paid $4,200 for an insurance premium on a general business policy.
6 Purchased supplies of $1,800 on account.
9 Collected $27,500 for services provided to customers on account.
11 Paid creditors $3,000 on account.
18 Invested an additional $25,000 in the business in exchange for capital stock.
20 Billed patients $62,000 for services provided on account.
25 Received $12,900 for services provided to customers who paid cash.
30 Paid expenses as follows: wages, $24,000; utilities, $6,000; rent on medical equipment, $5,000; interest, $200; and miscellaneous, $2,500.
30 Paid dividends of $15,000 to stockholders (Dr. Hancock).
Instructions
Analyze and record the January transactions for Oasis Health Care Inc., using the integrated financial statement framework. Record each transaction by date, and show the balance for each item after each transaction. The January 1, 2013, balances for the balance sheet are shown below.
Aug 29, 2021 | Uncategorized
1. The Obama Corporation has 120,000 shares outstanding with a current market price of $8.10 per share. The company needs to raise additional $36,000 to finance new expenditures, and has decided on a rights issue. The issue will allow current shareholders to purchase one additional share for 20 rights at a subscription price of $6 per share.
If the Ex-Rights price were set at $7.90, would you, as a potential new shareholder, chose to buy shares ex-rights or buy shares at the old price ad exercise your rights?
a) Buysharesex-rights
b) Buy shares at old price and exercise her rights c) Beindifferentbetweenthetwostrategies
d) Cannot be determined
Use the following information to answer Questions 2 and 3
Your company will produce a pre-tax cash flow of $20 next year, $22 the year after that, $24 .20 the year after that… that is, cash flows will grow at 10% each year forever. The corporate tax rate is 30% nd there are no personal taxes. The all-equity cost of capital is 15%.
2. What is the value of your firm if it is all equity financed? a) $280.00
b) $93.33 c) $400.00 d) $240.00
3. You decide to issue $20 worth of perpetual debt. What is the value of your firm? a) $246.00
b) $406.00 c) $99.33 d) $286.00
Use the following information to answer Questions 4 to 5
Blackberry is currently all equity financed. Its earnings are $10M per year and will stay that way in perpetuity. The current value of the firm is $120M. The firm is considering issuing risk-free debt worth $50M, maturing 10 years at an interest rate of 6% and using it to repurchase $50M of equity. Assume there are no taxes.
4. Calculate the new value of Blackberry after the restructuring. a) $140M
b) $50M c) $120M d) $167M
5. What would be return on equity after the refinancing a) 8.33%
b) 10.00% c) 7.17% d) 6.00%
6. Now assume that the corporate tax rate is 40% and that the interest expense is tax deductible. Calculate the new cost of equity after the refinancing. Assume that the value of the unlevered firm at the all-equity cost of capital remain the same as in the absence of taxes.
a) 9.3%
b) 10.0% c) 9.9% d) 9.1%
Use the following information to answer questions 7 and 8.
Aqua Marine Corporation (AMC) currently has $200,000 market value (and book value) of perpetual debt outstanding carrying a coupon rate of 6 percent. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero-growth company. AMC s current cost of equity is 10 percent, and its tax rate is 40 percent. The firm has 10,000 shares of common stock outstanding.
7. What is AMC s current total market value? a) $500,000
b) $580,000
c) $700,000
d) $728,000
8. What is AMC s current stock price? a) $52.00
b) $52.80 c) $59.27 d) $60.36
9. According to M&M (Proposition II), as a firm s debt-to-equity ratio decreases:
I. Its operating risk increases
II. Its financial risk increases
III. The required rate of return on equity decreases
IV. The required rate of return on equity increases
a) I only
b) III only
c) I, II, and III only
d) I, II, and IV only
10.An all-equity firm is subject to a 30-percent corporate tax rate. Its equity holders require a 20-percent return. The firm s initial market value is $3,500,000, and there are 175,000 shares outstanding. The firm issues $1 million of bonds at 10 percent and uses the proceeds to repurchase common stock. Assume there is no change in the cost of financial distress for the firm. According to Modigliani & Miller, what is the new market value of the equity of the firm?
a) $3,800,000 b) $3,500,000 c) $2,800,000 d) $1,000,000
Aug 29, 2021 | Uncategorized
All based on FY2009 (ending 01/31/2010) Home Depot financial statements:
1. Is The Home Depot’s liquidity situation such that current liabilities can be easily paid? Why or why not?
2. Are the company’s receivables “turning over” at a rate that should be pleasing to management? Why or why not? What actions might management consider taking to speed up collections?
3. Is the company’s inventory turning over at a satisfactory rate? Why or why not? Does the company maintain an adequate level of inventory to meet customer demand? Might it be the case that the company maintains TOO HIGH a level of inventory? Why or why not?
4. Based on the composition of the company’s CURRENT assets, what problems is the company likely to encounter if its inventories turn over at a much slower than expected rate?
5. How has The Home Depot’s profitability changed over recent years? On what measures are you basing your response? If you were one of the company’s corporate managers, would you be satisfied with the trend in gross profit? The trend in operating income? Why or why not?
6. Are changes in the company’s operating cash flows consistent with changes in its operating income? Does The Home Depot appear to be experiencing any sort of a cash flow problem? Why or why not?
7. Does the company’s management appear to be managing debt properly? Is the company too reliant on long-term debt financing? Why or why not? What kinds of problems can this company (or any company) avoid by properly managing its debt?
8. Does the company appear to be investing appropriately in plant and equipment? (In other words, is there any indication that investments are too low/high?
9. Are the company’s dividend payouts at an appropriate level? Why or why not?
10.Is the company in a good position to obtain financing by issuing new shares of its stock? Why or why not?
11.Other than day-to-day operations, what are the primary uses of the company’s cash? Other than from day-to-day operations, what are the primary sources of the company’s cash?
12.What is your assessment of the company’s cash flow position over recent years?
13.Is this a good time for management to concentrate on new store construction? Why or why not?
14.Does the report of the independent auditors offer the kind of opinion that should be pleasing to them?
Aug 29, 2021 | Uncategorized
On January 1, 2012, Bailey Industries had stock outstanding as follows.
6% Cumulative preferred stock, $119 par value,
issued and outstanding 10,800 shares |
|
$1,285,200 |
Common stock, $10 par value, issued and
outstanding 241,200 shares |
|
2,412,000 |
To acquire the net assets of three smaller companies, Bailey authorized the issuance of an additional 176,400 common shares. The acquisitions took place as shown below.
| Date of Acquisition |
|
Shares Issued |
| Company A April 1, 2012 |
|
63,600 |
| Company B July 1, 2012 |
|
85,200 |
| Company C October 1, 2012 |
|
27,600 |
On May 14, 2012, Bailey realized a $106,800 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000.
On December 31, 2012, Bailey recorded net income of $321,600 before tax and exclusive of the gain.
Assuming a 43% tax rate, compute the earnings per share data that should appear on the financial statements of Bailey Industries as of December 31, 2012. Assume that the expropriation is extraordinary. (Round answer to 2 decimal places, e.g. $2.55.)
Bailey Industries
Income Statement
For the year ended December 31, 2012 |
| DividendsExpensesExtraordinary Loss per shareExtraordinary Gain per shareIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss) per shareRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
|
|
$ |
| DividendsExpensesExtraordinary Loss per shareExtraordinary Gain per shareIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss) per shareRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
|
|
|
| DividendsExpensesExtraordinary Loss per shareExtraordinary Gain per shareIncome Before Extraordinary ItemIncome From Continuing OperationsIncome Per Share Before Extraordinary ItemLoss From Discontinued OperationsNet Income / (Loss) per shareRetained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
|
|
$ |
Aug 29, 2021 | Uncategorized
One year ago XYZ Inc., issued $100 million of 11-year bonds with a 9% coupon, payable annually. The first coupon payment has just been paid. The bonds are callable at 103 beginning today. Floatation costs on that issue were $1 million. Copest has a 34% marginal tax rate.
Since interest rates have fallen, XYZ is considering calling in the bonds and refinancing at current rates. It has two, ten-year, financing alternatives.
1) A $100 million public issue of 8% annual coupon bon
2) An 8%, $100 million private placement with semi-annual coupons. There would be a front-end placement fee of $250,000.
Note: Call premiums and interest payments are tax deductible. However, front-end fees and floatation costs must be capitalized and amortized over the life of the bond.
Questions:
a) Calculate the effective cost of raising funds from the public bond issue. Use the IRR
procedure for all your calculations.
b) Calculate the effective cost of raising funds from the private placement of debt.
c) If XYZ Inc does call in the bonds, which of the two refinancing alternatives is preferable?
d) What is the effective, after-tax cost of leaving the existing bonds in place?
In other words, what would be the after-tax all-in cost of refinancing that would make XYZ Inc indifferent between calling the bonds and leaving them in place?
e) Should XYZ Inc call in the bonds?
Aug 29, 2021 | Uncategorized
INSTRUCTIONS: Each discussion question should be at least one page and double spaced.
DISCUSSION 1: “Operating Activities” Please respond to the following:
- From the e-Activity, evaluate the logic of reflecting key person life insurance in the operating activities of the cash flow statement and determine if this presentation is misleading to users of the financial statements.
- Currently, Financial Accounting Standards Board (FASB) has not provided guidance on the appropriate section for reflecting key person life insurance. As a member of FASB, determine the guidance you would provide for key person insurance in the cash flow statement. Provide your rationale.
E-ACTIVITY
- Go to Chief Financial Officer Magazine s Website to read the article titled Key-Person Insurance: a Cash-Flow Puzzle, dated April 4, 2012, located at http://www3.cfo.com/article/2012/4/cash-flow_free-cash-flow-mulford-georgia-tech-key-person-life-insurance-premium-classification?currpage=2. Be prepared to discuss.
DISCUSSION 2: “Free Cash Flow” Please respond to the following:
- Analyze the impact of erroneous classifications in the operating activities section of the cash flow statement on free cash flow and how this distortion can impact the decisions made by financial statement users.
- Assess the importance of free cash flow in a growth company. Provide a brief scenario of a specific type of business that would benefit from free cash flow.
Aug 29, 2021 | Uncategorized
Question 1
1. A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = ?5%). If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT?
The constant growth model cannot be used because the growth rate is negative.
The company’s dividend yield 5 years from now is expected to be 10%.
The company’s expected stock price at the beginning of next year is $9.50.
The company’s expected capital gains yield is 5%.
The company’s current stock price is $20.
1 points
Question 2
1. Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
Beta; beta.
Variance; correlation coefficient.
Beta; variance.
Coefficient of variation; beta.
Standard deviation; correlation coefficient.
1 points
Question 3
1. Assume a project has normal cash flows. All else equal, which of the following statements is CORRECT?
A project’s NPV increases as the WACC declines.
A project’s discounted payback increases as the WACC declines.
A project’s MIRR is unaffected by changes in the WACC.
A project’s IRR increases as the WACC declines.
A project’s regular payback increases as the WACC declines.
1 points
Question 4
1. Which of the following risk types can be diversified by adding stocks to a portfolio?
Systematic Risk.
Default risk.
Non diversifiable risks.
Unique risks.
Market Risk.
1 points
Question 5
1. Firms that make investment decisions based upon the payback rule may be biased towards rejecting projects:
with early cash inflows.
With short lives.
With long lives.
Those with negative NPVs.
None of above.
1 points
Question 6
1. When a project’s internal rate of return equals its opportunity cost of capital, then:
The net present value will be negative.
The net present value is a linear combination of MIRR and IRR.
The net present value will be positive.
The project has no cash inflows.
The net present value will be zero.
1 points
Question 7
1. When hard rationing exists, projects may be evaluated by the use of ?
Payback period.
borrowing rather than lending projects.
Modified payback period.
A profitability index.
MIRR.
1 points
Question 8
1. Because of its age, your car costs $3000 annually in maintenence expense. You could replace it with a newer vehicle costing $6000. Both vehicles would be expected to last 4 more years. If your opportunity cost is 10% what should be the maximum annual maintenance expense be on the newer vehicle to justify the purchase ? (Hint : EAC on the new vehicle should not exceed $3000)
$1250.34.
$1107.18.
$1893.88.
$3000.00.
$1415.51.
1 points
Question 9
1. Taggart Inc.’s stock has a 50% chance of producing a 39% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm’s expected rate of return?
16.90%
15.55%
16.22%
16.06%
18.42%
1 points
Question 10
1. Tom O’Brien has a 2-stock portfolio with a total value of $100,000. $55,000 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42. What is his portfolio’s beta?
1.18
0.79
1.05
1.31
0.99
1 points
Question 11
1. Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 22.5% and a beta of 1.80. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock?
14.82% and 1.25
12.15% and 1.26
13.49% and 1.11
11.18% and 1.06
10.69% and 1.03
1 points
Question 12
1. Cooley Company’s stock has a beta of 1.60, the risk-free rate is 2.25%, and the market risk premium is 5.50%. What is the firm’s required rate of return?
9.83%
10.39%
11.05%
9.28%
13.81%
1 points
Question 13
1. Roenfeld Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company’s stock?
State of the Economy Probability of State Occurring Stock’s Expected Return
Boom 0.11 25%
Normal 0.50 15%
Recession 0.39 5%
2.
0.6121
0.3992
0.6653
0.5322x
0.6387
1 points
Question 14
1. You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each. The portfolio’s beta is 1.12. You plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.25. What will the portfolio’s new beta be?
0.978
1.160
1.172
1.138
1.194
1 points
Question 15
1. Returns for the Dayton Company over the last 3 years are shown below. What’s the standard deviation of the firm’s returns? (Hint: This is a sample, not a complete population, so the sample standard deviation formula should be used.)
Year Return
2011 21.00%
2010 -12.50%
2009 15.00%
2.
14.47%
15.54%
17.15%
20.36%
17.86%
1 points
Question 16
1. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is r = 10.5%, and the expected constant growth rate is g = 2.8%. What is the stock’s current price?
$11.20
$11.88
$11.10
$12.08
$9.74
1 points
Question 17
1. If D = $2.25, g (which is constant) = 3.5%, and P = $40, what is the stock’s expected dividend yield for the coming year?
6.81%
5.82%
5.53%
5.47%
5.59%
1 points
Question 18
1. Bay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D = $1.25). The stock sells for $34.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?
5.78%
8.39%
7.08%
6.88%
8.46%
1 points
Question 19
1. Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $8.00 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell?
$123.08
$99.69
$121.85
$148.92
$100.92
1 points
Question 20
1. The Francis Company is expected to pay a dividend of D = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company’s beta is 1.35, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company’s current stock price?
$18.20
$28.80
$19.82
$20.97
$23.04
1 points
Question 21
1. Nachman Industries just paid a dividend of D0 = $2.75. Analysts expect the company’s dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?
$93.47
$78.52
$108.43
$111.23
$97.21
1 points
Question 22
1. A company’s perpetual preferred stock currently sells for $125.00 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm’s cost of preferred stock?
5.12%
5.46%
7.28%
6.74%
7.61%
1 points
Question 23
1. You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 16.50%. The firm will not be issuing any new stock. What is its WACC?
8.87%
12.15%
13.25%
8.32%
10.95%
1 points
Question 24
1. Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project’s NPV? Note that if a project’s projected NPV is negative, it should be rejected.
WACC: 11.75%
Year 0 1 2 3
Cash flows -$1,000 $500 $500 $500
2.
$206.09
$216.40
$179.30
$199.91
$204.03
1 points
Question 25
1. Daves Inc. recently hired you as a consultant to estimate the company’s WACC. You have obtained the following information. (1) The firm’s noncallable bonds mature in 20 years, have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,125.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC?
9.60%
10.21%
7.35%
8.65%
8.30%
1 points
Question 26
1. Warr Company is considering a project that has the following cash flow data. What is the project’s IRR? Note that a project’s projected IRR can be less than the WACC or negative, in both cases it will be rejected.
Year 0 1 2 3 4
Cash flows -$825 $400 $400 $400 $400
2.
35.95%
32.98%
39.91%
24.74%
28.69%
1 points
Question 27
1. Taggart Inc. is considering a project that has the following cash flow data. What is the project’s payback?
Year 0 1 2 3
Cash flows -$1,300 $500 $500 $500
2.
2.60 years
1.98 years
2.76 years
3.09 years
2.73years
1 points
Question 28
1. Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project’s MIRR? Note that a project’s projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.
WACC: 13.50%
Year 0 1 2 3
Cash flows -$1,000 $450 $450 $450
2.
15.65%
12.08%
17.35%
16.89%
15.49%
1 points
Question 29
1. Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project’s discounted payback?
WACC: 10.00%
Year 0 1 2 3
Cash flows -$625 $500 $500 $500
2.
1.30years
1.41 years
1.58years
1.09years
1.07years
1 points
Question 30
1. Francis Inc.’s stock has a required rate of return of 10.25%, and it sells for $70.00 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D ?
$3.12
$2.98
$2.23
$3.42
$2.83
Aug 29, 2021 | Uncategorized
1.Which of the following is considered a major process flow structure?
- Lead Time
- Fabrication
- Lean Manufacturing
- Project
2.ISO audits result in certifications that are done by first, second, or third parties. Which of the following result in the best certification of a firm?
- Certification is sought by any firm assuming they pay annual dues.
- 2nd Party where a customer audits its supplier
- 3rd Party where a qualified national or international standards/certifying agency serves as an auditor
- 1st Party where a firm audits itself against ISO standards
3.Which of the following is ISO 14000 primarily concerned with?
- Quality management
- Time management
- Continuous improvement management
- Environmental management
4. Which is the one correct value stream principle?
- Look for efficiencies in the factory, office, physical, procedural, and technical operations.
- Eliminate waste that stops, slows down, or diverts the value stream.
- Concentrate on speeding up value-adding operations rather than removing waste.
- Keep the value stream moving at minimum velocity.
5. What is the starting point in developing a capacity plan for a health care operation?
- Determining the effective capacity over time
- Estimating design capacity
- Forecasting patient demand for a reasonable length of time
- Discovery of the bottleneck operation
Aug 29, 2021 | Uncategorized
Ordering and Carrying Costs, EOQ
Q-Beck Company uses 50,000 circuit boards each year in its production of stereo units. The cost of placing an order is $50. The cost of holding one unit of inventory for one year is $5. Currently, Q-Beck orders 2,500 circuit boards in each order.
1.Compute the annual ordering cost.
$
2.Compute the annual carrying cost.
$
3.Compute the cost of Q-Beck’s current inventory policy.
$
4.Compute the economic order quantity.
units
5.Compute the ordering cost and the carrying cost for the EOQ.
| Ordering cost |
$
|
| Carrying cost |
$
|
6.How much money does using the EOQ policy save the company over the policy of purchasing 2,500 circuit boards per order?
$
7.Conceptual Connection: Suppose that the supplier charges an extra $0.05 per unit to purchase circuit boards in orders of 1,500 or less. Should Q-Beck switch to the EOQ policy or not?
SelectYesNoItem 8
Aug 29, 2021 | Uncategorized
Problem 1 – Nancy Company has budgeted sales of $300,000 with the following budgeted costs:
Direct materials $60,000
Direct manufacturing labor 40,000
Factory overhead
Variable 30,000
Fixed 50,000
Selling and administrative expenses
Variable 20,000
Fixed 30,000
Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)
Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)
Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)
Problem 2 – Better Food Company recently acquired an olive oil processing company that has an annual capacity of 2,000,000 liters and that processed and sold 1,400,000 liters last year at a market price of $4 per liter. The purpose of the acquisition was to furnish oil for the cooking division. The cooking division needs 800,000 liters of oil per year. It has been purchasing oil from suppliers at the market price. Production costs at capacity of the olive oil company, now a division, are as follows:
|
Direct materials per liter
|
$1.00
|
|
Direct processing labor
|
0.50
|
|
Variable processing overhead
|
0.24
|
|
Fixed processing overhead
|
0.40
|
|
Total
|
$2.14
|
Management is trying to decide what transfer price to use for sales from the newly acquired company to the cooking division. The manager of the olive oil division argues that $4, the market price, is appropriate. The manager of the cooking division argues that the cost of $2.14 should be used, or perhaps a lower price, since fixed overhead cost should be recomputed with the larger volume. Any output of the olive oil division not sold to the cooking division can be sold to outsiders for $4 per liter.
Question 1: Compute the operating income for the olive oil division using a transfer price of $4. (five points)
Question 2: Compute the operating income for the olive oil division using a transfer price of $2.14. (five points)
Question 3: What transfer price(s) do you recommend Compute the operating income for the olive oil division using your recommendation. (five points)
Aug 29, 2021 | Uncategorized
Problem 1 – Nancy Company has budgeted sales of $300,000 with the following budgeted costs:
Direct materials $60,000
Direct manufacturing labor 40,000
Factory overhead
Variable 30,000
Fixed 50,000
Selling and administrative expenses
Variable 20,000
Fixed 30,000
Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)
Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)
Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)
Problem 2 – Better Food Company recently acquired an olive oil processing company that has an annual capacity of 2,000,000 liters and that processed and sold 1,400,000 liters last year at a market price of $4 per liter. The purpose of the acquisition was to furnish oil for the cooking division. The cooking division needs 800,000 liters of oil per year. It has been purchasing oil from suppliers at the market price. Production costs at capacity of the olive oil company, now a division, are as follows:
|
Direct materials per liter
|
$1.00
|
|
Direct processing labor
|
0.50
|
|
Variable processing overhead
|
0.24
|
|
Fixed processing overhead
|
0.40
|
|
Total
|
$2.14
|
Management is trying to decide what transfer price to use for sales from the newly acquired company to the cooking division. The manager of the olive oil division argues that $4, the market price, is appropriate. The manager of the cooking division argues that the cost of $2.14 should be used, or perhaps a lower price, since fixed overhead cost should be recomputed with the larger volume. Any output of the olive oil division not sold to the cooking division can be sold to outsiders for $4 per liter.
Question 1: Compute the operating income for the olive oil division using a transfer price of $4. (five points)
Question 2: Compute the operating income for the olive oil division using a transfer price of $2.14. (five points)
Question 3: What transfer price(s) do you recommend Compute the operating income for the olive oil division using your recommendation. (five points)
Aug 29, 2021 | Uncategorized
Problem 1 – Nancy Company has budgeted sales of $300,000 with the following budgeted costs:
Direct materials $60,000
Direct manufacturing labor 40,000
Factory overhead
Variable 30,000
Fixed 50,000
Selling and administrative expenses
Variable 20,000
Fixed 30,000
Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)
Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)
Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)
Problem 2 – Better Food Company recently acquired an olive oil processing company that has an annual capacity of 2,000,000 liters and that processed and sold 1,400,000 liters last year at a market price of $4 per liter. The purpose of the acquisition was to furnish oil for the cooking division. The cooking division needs 800,000 liters of oil per year. It has been purchasing oil from suppliers at the market price. Production costs at capacity of the olive oil company, now a division, are as follows:
|
Direct materials per liter
|
$1.00
|
|
Direct processing labor
|
0.50
|
|
Variable processing overhead
|
0.24
|
|
Fixed processing overhead
|
0.40
|
|
Total
|
$2.14
|
Management is trying to decide what transfer price to use for sales from the newly acquired company to the cooking division. The manager of the olive oil division argues that $4, the market price, is appropriate. The manager of the cooking division argues that the cost of $2.14 should be used, or perhaps a lower price, since fixed overhead cost should be recomputed with the larger volume. Any output of the olive oil division not sold to the cooking division can be sold to outsiders for $4 per liter.
Question 1: Compute the operating income for the olive oil division using a transfer price of $4. (five points)
Question 2: Compute the operating income for the olive oil division using a transfer price of $2.14. (five points)
Question 3: What transfer price(s) do you recommend Compute the operating income for the olive oil division using your recommendation. (five points)
Aug 29, 2021 | Uncategorized
Natural Fragrance, Inc., began operations on January 1, 2012. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $80 per case. There is a selling commission of $16 per case. The January direct materials, direct labor, and factory overhead costs are as follows:
The management of Natural Fragrance, Inc., wishes to determine the number of cases required to break even per month. The utilities cost, which is part of factory overhead, is a mixed cost. The following information was gathered from the first six months of operation regarding this cost:
1. Determine the fixed and variable portion of the utility cost using the high-low method.
2. Determine the contribution margin per case. Enter your answer to the nearest cent.
3. Determine the fixed costs per month, including the utility fixed cost from part (1).
4. Determine the break-even number of cases per month.
part b
During July of the current year, the management of Natural Fragrance, Inc., asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,300 cases at $80 per case for August. Inventory planning information is provided as follows:
5. Prepare the August production budget.
6. Prepare the August direct materials purchases budget.
7. Prepare the August direct labor budget.
8. Prepare the August factory overhead budget.
9. Prepare the August budgeted income statement, including selling expenses.
part c
10. Determine and interpret the direct materials price and quantity variances for the three materials.
11. Determine and interpret the direct labor rate and time variances for the two departments.
12. Determine and interpret the factory overhead controllable variance.
13. Determine and interpret the factory overhead volume variance.
14. Why are the standard direct labor and direct materials costs in the calculations for parts (10) and (11) based on the actual 1,300-case production volume rather than the planned 1,200 cases of production used in the budgets for parts (6) and (7)?
Aug 29, 2021 | Uncategorized
The balance sheet that follows indicates the capital structure for Nealon. Inc. Flotation costs are (a) 15 percent of market value for a new bond issue, and (b) $2.01 per share for preferred stock. The dividends for common stock were $2.50 last year an are projected to have an annual growth rate of 6 percent. The firm is in a 34 percent tax bracket.. what is the weighted average cost of capital if the firm s finances are in the following proportions?
TYPE OF FINANCING PERCENTAGE OF FUTURE FINANCING
Bonds [8%, $1,000 par, 16 year maturity] 38%
Preferred stock [5,000 shares outstanding,
$50par, $1.50 dividend] 15%
Common equity 47%
Total 100%
- Market prices are $1.0.35 for bonds, $19 for preferred stock and $35 for common stock. There will be sufficient internal common equity funding (i.e., retained earnings) available suck that the firm does not plant to issue new common stock.
- In part a we assumed that Nealon would have sufficient retained earnings such that it would not need to sell additional common stock to finance its new investments. Consider the situation now, when Nealon s retained earnings anticipated for the coming year are expected to fall short of the equity requirement of 47 percent of new capital raised. Consequently, the firm foresees the possibility that new common shares will have to be issued. To facilitate the sale of shares, Nealon s investment banker has advised management that they should expect a price discount of approximately 7 percent, or $2.45 per share. Under these terms, the new shares should provide net proceeds of about $32.55. What is Nealon s cost of equity capital when new shares are sold, and what is the weighted average cost of the added funds involved in the issuance of new shares?
Aug 29, 2021 | Uncategorized
Ontario, Inc. manufactures two products, Standard and Enhanced, and applies overhead on the basis of direct-labor hours. Anticipated overhead and direct-labor time for the upcoming accounting period is $800,000 and 25,000 hours, respectively. Information about the company’s products follows.
|
Standard: |
Enhanced: |
|
Estimated production volume
|
3,000 units |
4,000 units |
|
Direct-material cost
|
$25 per unit |
$40 per unit |
|
Direct labor per unit
|
3 hours at $12 per hour |
4 hours at $12 per hour |
Ontario’s overhead of $800,000 can be identified with three major activities: order processing ($150,000), machine processing ($560,000), and product inspection ($90,000). These activities are driven by number of orders processed, machine hours worked, and inspection hours, respectively.
Data relevant to these activities follow:
|
Orders Processed |
Machine Hours Worked |
Inspection Hours |
|
Standard
|
300 |
18,000 |
2,000 |
|
Enhanced
|
200 |
22,000 |
8,000 |
|
Total
|
500 |
40,000 |
10,000 |
Top management is very concerned about declining profitability despite a healthy increase in sales volume. The decrease in income is especially puzzling because the company recently undertook a massive plant renovation during which new, highly automated machinery was installed machinery that was expected to produce significant operating efficiencies.
Using a Microsoft Excel format for calculations, complete the following:
- Assuming use of direct-labor hours to apply overhead to production, calculate the unit manufacturing costs of the standard and enhanced products if the expected manufacturing volume is attained.
- Assuming the use of activity-based costing, calculate the unit manufacturing cost of the standard and enhanced products if the expected manufacturing volume is attained.
- Ontario s selling price is based heavily on cost:
- Calculate which product is over cost and which is under cost by using direct-labor hours as an application base.
- Explain if it is possible that this over costing and under costing is responsible for the profit issues the company is facing.
- Illustrate how the solution will change if the following data changes:
- The overhead associated with order processing is $300,000 and the overhead associated with product inspection is $270,000.
Present your work in Microsoft Excel spreadsheet format. Apply APA standards to citation of sources.
| Assignment 2 Grading Criteria |
Maximum Points |
| Assuming the use of direct labor hours to apply overhead to production, calculated the unit manufacturing costs of the standard and enhanced products if the expected manufacturing volume is attained. |
16 |
| Assuming the use of activity-based costing, calculated the unit manufacturing cost of the standard and enhanced products if the expected manufacturing volume is attained. |
16 |
| Calculated which product is over cost and which is under cost by using direct-labor hours as an application base. |
16 |
| Explained if it is possible that this over costing and under costing is responsible for the profit issues the company is facing. |
16 |
| Illustrated how the solution will change if the following data changes in the described example. |
12 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. |
4 |
| Total: |
80 |
Aug 29, 2021 | Uncategorized
Exercise 6-4 Income effects of inventory methods L.O. A1
|
Park Company reported the following March purchases and sales data for its only product.
|
|
Date
|
Activities
|
Units Acquired at Cost
|
Units Sold at Retail
|
|
1
|
Beginning inventory
|
150
|
units
|
@ $7.00
|
=
|
$
|
1,050
|
|
10
|
Sales
|
90
|
units
|
@$15
|
|
20
|
Purchase
|
220
|
units
|
@ $6.00
|
=
|
1,320
|
|
25
|
Sales
|
145
|
units
|
@$15
|
|
30
|
Purchase
|
90
|
units
|
@ $5.00
|
=
|
450
|
|
Totals
|
460
|
units
|
$
|
2,820
|
235
|
units
|
|
Park uses a perpetual inventory system. For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory.
|
1. Complete comparative income statements for the month of March for Park Company for the four inventory methods. Assume expenses are $1,600, and that the applicable income tax rate is 30%.(Round per unit costs to three decimal places. Round your answers to the nearest dollar amounts. Input all amounts as positive values. Omit the “”$”” sign in your response.)
|
PARK COMPANY
Income Statements
For Month Ended March 31
|
|
Specific
Identification
|
Weighted
Average
|
FIFO
|
LIFO
|
|
Sales
|
$
|
$
|
$
|
$
|
|
Cost of goods sold
|
|
Gross profit
|
|
Expenses
|
|
Income before taxes
|
|
Income tax expense
|
|
Net income
|
$
|
$
|
$
|
$
|
2. Which method yields the highest net income?
LIFO
Weighted average
FIFO
Specific identification
2. Which method yields the highest net income?
3. Does net income using weighted average fall between that using FIFO and LIFO?
Yes
No
4. If costs were rising instead of falling, which method would yield the highest net income?
LIFO
Weighted average
FIFO
Specific identification problem 6-1A Alternative cost flows-perpetual L.O. P1
[The following information applies to the questions displayed below.]
|
Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
|
|
Date
|
Activities
|
Units Acquired at Cost
|
Units Sold at Retail
|
|
1
|
Beginning inventory
|
50
|
units
|
@ $50/unit
|
|
5
|
Purchase
|
200
|
units
|
@ $55/unit
|
|
9
|
Sales
|
210
|
units
|
@ $85/unit
|
|
18
|
Purchase
|
60
|
units
|
@ $60/unit
|
|
25
|
Purchase
|
100
|
units
|
@ $62/unit
|
|
29
|
Sales
|
80
|
units
|
@ $95/unit
|
|
Totals
|
410
|
units
|
290
|
units
|
references
2. value:
3.00 points
Problem 6-1A Part 1
|
Required:
|
|
Compute cost of goods available for sale and the number of units available for sale. (Omit the “”$”” sign in your response.)
|
|
Cost of goods available for sale
|
$
|
|
Number of units available for sale
|
units
|
check my workeBook Linkreferences
3. value:
3.00 points
Problem 6-1A Part 2
|
Compute the number of units in ending inventory.
|
check my workeBook Linkreferences
4. value:
3.00 points
Problem 6-1A Part 3
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and(d)specific identification. For specific identification, the March 9 sale consisted of 40 units from beginning inventory and 170 units from the March 5 purchase; the March 29 sale consisted of 20 units from the March 18 purchase and 60 units from the March 25 purchase. (Due to rounding, the sum of Cost of Goods Sold and Ending inventory may not equal the Cost of Good available for sales. Round your weighted average cost to 3 decimal places. Round your final answers to nearest whole dollar amount. Omit the “”$”” sign in your response.)
|
Ending
Inventory
|
|
(a)
|
FIFO
|
$
|
|
(b)
|
LIFO
|
$
|
|
(c)
|
Weighted average
|
$
|
|
(d)
|
Specific identification
|
$
|
rev: 12_18_2012
check my workeBook Linkreferences
5. value:
3.00 points
Problem 6-1A Part 4
|
Compute gross profit earned by the company for each of the four costing methods. (Round your per unit costs to 3 decimal places and inventory balances and final answer to the nearest dollar amount. Omit the “”$”” sign in your response.)
|
|
Gross profit
|
|
FIFO
|
$
|
|
LIFO
|
$
|
|
Weighted average
|
$
|
|
Specific identification
|
$
|
Problem 6-4A Analysis of inventory errors L.O. A2
|
Doubletree Company s financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Inventory on December 31, 2010, is understated by $50,000, and inventory on December 31, 2011, is overstated by $20,000.
|
|
For Year Ended December 31
|
2010
|
2011
|
2012
|
|
(a)
|
Cost of goods sold
|
$
|
725,000
|
$
|
955,000
|
$
|
790,000
|
|
(b)
|
Net income
|
268,000
|
275,000
|
250,000
|
|
(c)
|
Total current assets
|
1,247,000
|
1,360,000
|
1,230,000
|
|
(d)
|
Total equity
|
1,387,000
|
1,580,000
|
1,245,000
|
|
Required:
|
|
For each key financial statement figure (a), (b), (c), and (d) above prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted should be indicated with a minus sign. Leave no cells blank – be certain to enter “”0″” wherever required. Omit the “”$”” sign in your response.)
|
|
Cost of goods sold:
|
2010
|
2011
|
2012
|
|
Reported amount
|
$
|
$
|
$
|
|
Adjustments for:
|
12/31/2010 error
|
|
12/31/2011 error
|
|
Corrected amount
|
$
|
$
|
$
|
|
Net income
|
2010
|
2011
|
2012
|
|
Reported amount
|
$
|
$
|
$
|
|
Adjustments for:
|
12/31/2010 error
|
|
12/31/2011 error
|
|
Corrected amount
|
$
|
$
|
$
|
|
Total current assets
|
2010
|
2011
|
2012
|
|
Reported amount
|
$
|
$
|
$
|
|
Adjustments for:
|
12/31/2010 error
|
|
12/31/2011 error
|
|
Corrected amount
|
$
|
$
|
$
|
|
Equity:
|
2010
|
2011
|
2012
|
|
Reported amount
|
$
|
$
|
$
|
|
Adjustments for:
|
12/31/2010 error
|
|
12/31/2011 error
|
|
Corrected amount
|
$
|
$
|
$
|
|
What is the error in total net income for the combined three-year period resulting from the inventory errors(Leave no cells blank – be certain to enter “”0″” wherever required. Input your answer as a positive value. Omit the “”$”” sign in your response.)
|
|
Error in total net income of three years
|
$
|
Problem 6-5AA Alternative cost flows-periodic L.O. P3
[The following information applies to the questions displayed below.]
|
Viper Company began year 2011 with 20,000 units of product in its January 1 inventory costing $15 each. It made successive purchases of its product in year 2011 as follows. The company uses a periodic inventory system. On December 31, 2011, a physical count reveals that 35,000 units of its product remain in inventory.
|
|
7
|
28,000 units @ $18 each
|
|
25
|
30,000 units @ $22 each
|
|
1
|
20,000 units @ $24 each
|
|
10
|
33,000 units @ $27 each
|
eBook Linkreferences
7. value:
4.00 points
Problem 6-5AA Part 1
|
Compute the number and total cost of the units available for sale in year 2011. (Omit the “”$”” sign in your response.)
|
|
Number of units available for sale
|
units
|
|
Cost of the units available for sale
|
$
|
check my workreferences
8. value:
4.00 points
Problem 6-5AA Part 2
|
Compute the amounts assigned to the 2011 ending inventory and the cost of goods sold. (Input all amounts as positive values. Round per unit costs to 3 decimal places. Round your final answers to the nearest dollar amount. Omit the “”$”” sign in your response.)
|
|
Total cost of units available for sale
|
$
|
|
Less ending inventory on a FIFO basis
|
|
Cost of units sold
|
$
|
|
Total cost of units available for sale
|
$
|
|
Less ending inventory on a LIFO basis
|
|
Cost of units sold
|
$
|
|
(c) Weighted average periodic
|
|
Total cost of units available for sale
|
$
|
|
Less ending inventory on a weighted average
|
|
Cost of units sold
|
$
|
|
Aug 29, 2021 | Uncategorized
Consider the following scenario:
Dr. Stephanie White, the Chief Administrator of Uptown Clinic, a community mental health agency, is concerned about the dilemma of coping with reduced budgets next year and into the foreseeable future but increasing demand for services. To plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below are some data from the past year.
|
Program Area
|
Costs
|
|
Administration
|
|
|
Salaries:
|
|
|
Administrator
|
$60,000
|
|
Assistant
|
$35,000
|
|
Two Secretaries
|
$42,000
|
|
Supplies
|
$35,000
|
|
Advertising and promotion
|
$9,000
|
|
Professional meetings/dues
|
$14,000
|
|
Purchased Services:
|
|
|
Accounting and billing
|
$15,000
|
|
Custodial
|
$13,000
|
|
Security
|
$12,000
|
|
Consulting
|
$10,000
|
|
Community Mental Health Services
|
|
|
Salaries (two social workers)
|
$46,000
|
|
Transportation
|
$10,000
|
|
Outpatient mental health treatment
|
|
|
Salaries:
|
|
|
Psychiatrist
|
$86,000
|
|
Two Social Workers
|
$70,000
|
In an Excel spreadsheet:
- Provide a dollar range of costs to reduce budgets (worst and best case analysis).
- She needs to cut $94,000 in cost. Prioritize those cuts that can be made without impacting the operation or quality care of the organization.
For more information on creating Excel Spreadsheets, please visit the Excel Lab.
In addition to the Excel spreadsheet required to support your responses, you must prepare an APA formatted paper that will address the following:
- Describe how managerial accounting is different from cost accounting.
- Describe the lean production philosophy.
- Compare and contrast accounting principles in lean production to those of typical production.
- Describe how you would advise Dr. White to prepare for reduced budgets.
Submitting your assignment in APA format means, at a minimum, you will need the following:
- TITLE PAGE. Remember the Running head: AND TITLE IN ALL CAPITALS
- ABSTRACT.A summary of your paper not an introduction. Begin writing in third person voice.
- BODY.The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA level headings and references. The deliverable length of the body of your paper for this assignment is 4-5 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
- REFERENCE PAGE.References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper and lower case usage as appropriate for the type of resource used. Remember, the Reference Page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.
Aug 29, 2021 | Uncategorized
1. Two methods of accounting for uncollectible accounts are the (Points : 2) allowance method and the accrual method.
allowance method and the net realizable method.
direct write-off method and the accrual method.
direct write-off method and the allowance method.
| Question 2. 2. Which of the following would be considered as an unlikely occurrence? (Points : 2) |
Manufacturer offers a cash discount to a wholesaler.
Wholesaler offers a cash discount to a retailer.
Retailer offers a cash discount to a customer.
All of these are standard practices. |
| Question 3. 3. A reasonable amount of uncollectible accounts is evidence (Points : 2) |
that the credit policy is too strict.
that the credit policy is too lenient.
of a sound credit policy.
of poor judgments on the part of the credit manager. |
| Question 4. 4. Three accounting issues associated with accounts receivable are (Points : 2) |
depreciating, returns, and valuing.
depreciating, valuing, and collecting.
recognizing, valuing, and disposing.
accrual, bad debts, and disposing. |
| Question 5. 5. Notes or accounts receivables that result from sales transactions are often called (Points : 2) |
sales receivables.
non-trade receivables.
trade receivables.
merchandise receivables. |
| Question 6. 6. The net amount expected to be received in cash from receivables is termed the (Points : 2) |
cash realizable value.
cash-good value.
gross cash value.
cash-equivalent value. |
Question 7. 7. A customer charges a treadmill at Annie’s Sport Shop. The price is $4,000 and the financing charge is 9% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer’s account.
The accounts affected by the journal entry made by Annie’s Sport Shop to record the finance charge are (Points : 2) |
Accounts Receivable
Cash
Cash
Finance Receivable
Accounts Receivable
Interest Payable
Accounts Receivable
Interest Revenue |
| Question 8. 8. Lifetime sells softball equipment. On November 14, they shipped $2,000 worth of softball uniforms to Palos Middle School, terms 2/10, n/30. On November 21, they received an order from Tinley High School for $1,200 worth of custom printed bats to be produced in December. On November 30, Palos Middle School returned $200 of defective merchandise. Lifetime has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30? (Points : 2) |
$1,800
$2,000
$3,000
$3,200 |
| Question 9. 9. The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the (Points : 2) |
direct write-off method.
percentage of receivables basis.
percentage of sales basis.
percentage of receivables and percentage of sales basis. |
| Question 10. 10. The receivable that is usually evidenced by a formal instrument of credit is a(n) (Points : 2) |
trade receivable.
note receivable.
accounts receivable.
income tax receivable. |
Aug 29, 2021 | Uncategorized
Aegis Inc. is a home inspection firm based in the Northern Virginia area. The President of the company, Ms. Rose Wilson, is concerned about the morale of the sales team. Ms. Wilson had contracted a local firm to survey the employees of Aegis Inc. and the results were delivered to her in an EXCEL spreadsheet. She has tasked her Vice President of Human Resources, Mark Wolfe, to analyse the results of the survey and to report the results to her. Ms. Wilson told Mark that she was concerned about the attitudes of the sales force. In addition to the questions that were asked some additional data were recorded: the most recent base annual salary, commission and total pay, the years of seniority, the sales region of the individual, the gender (0=male, 1=female) and the number of contracts written in the pay period.
The survey instructions indicated that the first 5 questions were measured using a 5-point scale using the following key: 1 = strongly disagree, 2 = disagree, 3 = neither agree nor disagree, 4 = agree, 5 = strongly agree. The questions were as follows:
Q1: Aegis Inc. has a good mentoring program
Q2: Aegis Inc. is committed to delivering good value to customers
Q3: Aegis Inc. has very traditional and conservative values
Q4: Aegis Inc. company practices favor men
Q5: Aegis Inc. has a lot of internal power politics.
The final question used a 1-10 scale:
Q6: On a numeric scale, where 0 means totally autocratic and 10 means totally democratic, how would you rate the management style at Aegis Inc.?
There are only 2 divisional managers for Aegis Inc. The geographic regions of the sales team are as follows:
|
Region Number
|
Divisional
Manager
|
Area
|
Size of Sales Force
|
|
1
|
A
|
South East
|
60
|
|
2
|
A
|
North East
|
93
|
|
3
|
A
|
Midwest
|
59
|
|
4
|
B
|
South West
|
49
|
|
5
|
B
|
Mountain States
|
80
|
|
6
|
B
|
West Coast
|
67
|
|
|
|
Total
|
408
|
Region 4 was only established eight months ago. Prior to that time, the branches were part of Regions 1, 5 and 6.
INSTRUCTIONS
As a group: Answer the following questions involving Descriptive Statistics
Draw (create) a random sample of 50 from the full database then answer the following questions. You will ultimately use the sample of 50 from the full population of 408 to compare and contrast the sample and the population in the questions below. Typically you would not have the data for the entire population (such as in an election). So the point of this project is to use various statistical methods to examine how well your sample matches the population. It is obvious that the charts, figures etc. for the population should be the same for each group (or individual) that does this project. However, I would not expect to see the same results for any two groups (or individuals) samples since they are created using the Random number generator (RNG) mentioned below. This is a detailed and important project in this course, start early and take the time to do a good job. This assignment is worth twice what any one exam is worth.
1) Draw a random sample of 50 from the full population provided by using the Random number generator (RNG) in Excel as a random sampling method (see my example of the RNG under Course documents). After creating the sample of fifty paste it here under this question.
2) Describe how the random sample was taken. Discuss. This is the place that you discuss how you did number 1 above. Be detailed. Refer to the instructions for the RNG that are provided in the Excel document.
3) Determine the mean, mode, median, variance, standard deviation, high value, low value and range for years of seniority, base salary, commission and total salary for your SAMPLE. Save yourself some work here by using the Excel Descriptive statistics function.
4) Determine the mean, mode, median, variance, standard deviation, high value, low value and range for years of seniority, base salary, commission and total salary for the POPULATION. Save yourself some work here by using the Excel Descriptive statistics function.
5) Briefly explain the differences between the population and your sample. Discuss. I am looking for a paragraph or so here of prose. I would expect more than a few sentences.
6) Briefly explain the similarities between the population and your sample. Discuss. I am looking for a paragraph or so here of analysis. I would expect more than a few sentences.
7) Is there a difference between your sample and the population in how the sales force is distributed within the regions? (Is the number of sales people in each of your sample regions proportionally the same as in the total population?) The best way to answer this is to set up a table of the regions in the population and the sample. The table would show how many people are associated with each region. Does the sample mimic the population? Discuss. Again, I am looking for analysis here so I would expect more than a few sentences.
Answer the following questions involving Inferential Statistics
8) Is there a relationship between years of seniority and base pay for the sample? The population? (Hint: Use a Scatter chart- the scatter chart is required and should be displayed for this question.) If you determine if there is a relationship comment if the relationship is linear, curvilinear or something else. Does it change as the values change? Discuss fully.
9) Is there a relationship between years of seniority and commission pay for the sample? The population? (Hint: Use a Scatter chart- the scatter chart is required and should be displayed for this question.) If you determine if there is a relationship comment if the relationship is linear, curvilinear or something else. Does it change as the values change? Discuss fully.
10) Is there a relationship between years of seniority and total pay for the sample? The population? (Hint: Use a Scatter chart- the scatter chart is required and should be displayed for this question.) If you determine if there is a relationship comment if the relationship is linear, curvilinear or something else. Does it change as the values change? Discuss fully.
11) Is there a large or small difference in your answers for the sample and the population for questions 8, 9 and 10? (Hint: Compare the Scatter charts- the scatter charts in the prior questions can be referred to or you can copy them here.) Discuss fully.
Aug 29, 2021 | Uncategorized
Part C: Cost of procuring boilers
This part of the coursework requires you to use linear programming techniques to determine the best way to minimise the cost of supplying boilers to Lamberts Heating
As well as manufacturing radiators (as mentioned in Part A), Lamberts Heating is also reviewing the way it procures boilers to enable the installation of domestic heating systems.
The purchasing department has identified three possible suppliers of boilers; Apex, Brunswich and Centrale. It has also identified five kinds of domestic boiler that it wants to purchase so it can supply and fit these boilers to a variety of sizes of homes.
The five boilers are known and coded by Italian numbers as most are manufactured in Italy ; Uno (1), Duo (2), Tre (3), Quattro (4) and Cinque (5).
The table below gives the cost of each boiler (in s) from each supplier. The final row of the table specifies the minimum requirement of each type of boiler per year. Please note that not all boilers are available from each supplier.
|
|
Uno
|
Duo
|
Tre
|
Quattro
|
Cinque
|
|
Apex
|
500
|
750
|
300
|
—
|
450
|
|
Brunswich
|
—
|
725
|
320
|
875
|
420
|
|
Centrale
|
480
|
775
|
310
|
900
|
—
|
|
Requirement
(number of boilers)
|
2000
|
1500
|
3000
|
2500
|
2200
|
There are certain limitations that have to be taken into account;
Apex can supply no more than 1,000 of the Tre boiler each year.
Brunswich can supply no more than 800 of the Duo boiler each year.
Centrale can supply no more than 1,800 Uno boilers each year.
Lamberts Heating wants to meet its requirement for the number of boilers needed each year at the minimum cost.
Task
You are expected to use MS Excel software for this task.
Aug 29, 2021 | Uncategorized
Unit 1 Individual Project You have been asked to speak at a career fair for high school students in your home town.
Specifically, you are making a presentation about your role as an accountant.
- Describe for the students the primary objectives of accounting.
- Explain the basic terminology of the accounting process or financial reporting.
- Explain how accounting has affected your personal life emphasizing professional ethics.
- Explain the role that technology has played in small business accounting.
Please include APA in-text citations and references.
Background on Course Research Requirements: In the business world, it is important to use research to strengthen points made in presentations and projects. Learning to use the search functions in databases for research is a crucial critical thinking skill that complements other research techniques.
There are two main types of databases. The most popular databases are ABI …
(More)
Reading Assignment:
Accounting I & II, chapters 1 & 2
Due Date:
7/28/2013 11:59:59 PM (4 Days)
Total Pts:
100
Points Earned:
n/a
Category:
Instructions:
Instructor
Comments:
Deliverable Length:
3 to 4 pages
Assignment Type:
Individual Project
Attachments:
Task List:
| Submissions |
| LearningMaterials |
Objectives:
Other Info:
| Assignment will be counted |
| Submissions will not be added to student ePortfolios |
Aug 29, 2021 | Uncategorized
You are an accountant in a medium-sized manufacturing company. You have been asked to mentor an accounting clerk who is new to your accounting department.
- Explain why adjusting entries are necessary.
- Describe the 4 types of adjusting entries, and provide a manufacturing industry example of each.
- Describe how these entries would be recorded in a computerized accounting system.
- Describe 1 ethical issue that could result from the preparation of these manufacturing entries.
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.
Unit Materials
(More)
Reading Assignment:
Accounting I & II, chapters 3 & 4
Due Date:
8/4/2013 11:59:59 PM (2 Days)
Total Pts:
100
Points Earned:
n/a
Category:
Instructions:
Instructor
Comments:
Deliverable Length:
3-4 pages
Assignment Type:
Individual Project
Aug 29, 2021 | Uncategorized
Nemani Corporation is projecting a cash balance of $31,785 in its December 31, 2013, balance sheet. Nemani schedule of expected collections from customers for the first quarter of 2013 shows total collections of $180,885. The schedule of expected payments for direct materials for the first quarter of 2013 shows total payments of $40,200. Other information gathered for the first quarter of 2013 is: sale of equipment $3,392; direct labor $70,178, manufacturing overhead $34,583, and purchase of securities $12,372. Selling and administrative expenses are projected to be $45,117; this figure includes $1,117 in depreciation expense on the office equipment. All costs and expenses will be paid in cash. Nemani wants to maintain a balance of at least $25,000 cash at the end of each quarter.
Required:
Prepare cash budget for the first quarter of 2013
Aug 29, 2021 | Uncategorized
The Network Design project gives you the opportunity to practice developing an integrated business and network design strategy for a pre-selected topic listed in the topic selection section of this document, or it allows you to select your own topic to write about. This assignment should truly make the course “come alive” through application of the principles about which you’ve been reading in your book and provided by your instructor.
The development of this project is an integral part of the course, and will require several weeks of research, critical analysis, critical thinking, and writing. To do well, you will need to begin early and work on it consistently throughout the entire course. This project will have several graded milestones to assess your progress and provide feedback, so your final plan will be comprehensive and well developed.
In developing your content, try to demonstrate clarity of thinking, understanding, and application of basic network design principles. Exploration of your options and choices are an important part of the demonstration of your mastery of network design concepts. There is seldom only one potential course of action in developing a network design; demonstrate that you have considered options and alternatives at each step in your plan and have chosen the best.
As your instructor, I will look at your Network Design Plan from the point of view of a business proposal or Response for Proposal or Quote. Have you thought through and considered your options? Have you provided details of your proposal? Have you looked at the entire strategy, the “big picture”, while still considering the more operational elements that make for a successful implementation? How well written and persuasive is the plan?
The final Network Design project should be a minimum of 15 pages and should not exceed 20 pages in length. Be sure to include a cover page, along with a “Works Cited” page these should not be included in page count. The paper is to be double-spaced, 12 inch font and have 1 inch margins.
|
Dropbox
|
|
For instructions on how to use the Dropbox, please click here.
|
|
|
Title
|
Points
|
Description
|
|
Topic Choice
Week 1
|
30
|
The topic selection deliverable should be a minimum of two paragraphs. The first paragraph should explain why you chose the topic, what your approach will be, and what you hope to learn. The second paragraph should list some assumptions and requirements that you will use over and above what has been provided in the topic scenarios. If you do not select one of the three provided topics, then please include a description of the topic you did select commensurate with the details given in the three provided topics.
This deliverable should not become a part of the final plan.
|
|
First Draft
Week 3
|
60
|
As usual, this is the time to ask questions. It’s difficult for me to be of much help to you in Week 7.
Note that your FIRST draft’s evaluation is worth 60 points. The evaluation is based on the depth and quality of your work and demonstrated progress towards completion of each of the three requested sections Project Scope, Project Goal, and Design Requirements. Each section should demonstrate “almost there” depth of content, as the completeness of these three sections is important as you move forward with the remainder of your Network Design plan. Good grammar and writing is expected, of course, and is part of your FIRST draft’s evaluation.
Although your FIRST draft content is NOT the final version, it is expected that you will have invested serious time to prepare a good FIRST draft of the three sections. Your instructor’s comments should be helpful to you as you later modify your FIRST draft content to create these three “final” sections for your Network Design plan. These corrections are expected in the final paper due in Week 7.
|
|
Second Draft
Week 5
|
60
|
Again, this is the time to ask questions. Week 7 is too late.
At this point, I would expect to see most if not all of your research completed, and most of your sections fully developed. You’ll use the next two weeks to utilize my SECOND draft feedback and “fine tune” all of your sections, as appropriate.
Note that your SECOND draft evaluation is worth 60 points. The evaluation is based on the depth and quality of your work and demonstrated progress towards completion of the Current State of the Network section of your plan. This section should demonstrate “we’re almost there and done” depth of content, as the completeness of this section is important as you move forward to finish the project.
Although your SECOND draft content is NOT the final version, it is expected that you will have invested serious time to prepare a good SECOND draft of the Current Network section. These corrections are expected in the final paper due in Week 7.
|
|
Final Network Design Plan
Week 7
|
190
|
Your FINAL Network Design project will be evaluated upon its submission in Week 7. The FINAL plan will be worth 190 points. Thus, between your Topic Submission (30 points), FIRST draft (60 points), SECOND draft (60 points), and your FINAL Network Design Plan (190 points), this will total 340 points or 34 percent of your overall NETW585 course grade.
|
|
Total
|
340
|
A Quality Paper will meet or exceed all of the above requirements.
|
a) A wireless LAN for a 100-employee law firm situated in a two-story office building.
The law office uses Windows 7 (64 bit) Operating System laptops running standard MS Office 2010 Products. The administrative staff uses the network to send e-mail, browse the Internet, run payroll, bookkeeping (Quickbooks), scheduling appointments, invoicing, creating legal documents, etc. The lawyers and legal aides mainly use the computers to search electronic law libraries to research legal cases from around the state and country, as well as some of the above administrative tasks (e.g. e-mail, web search, calendaring). One of the office staff currently maintains the computers and the 10BaseT LAN but is a novice. This limited support is an issue with the law firm.
Aug 29, 2021 | Uncategorized
The Network Design project gives you the opportunity to practice developing an integrated business and network design strategy for a pre-selected topic listed in the topic selection section of this document, or it allows you to select your own topic to write about. This assignment should truly make the course “come alive” through application of the principles about which you’ve been reading in your book and provided by your instructor.
The development of this project is an integral part of the course, and will require several weeks of research, critical analysis, critical thinking, and writing. To do well, you will need to begin early and work on it consistently throughout the entire course. This project will have several graded milestones to assess your progress and provide feedback, so your final plan will be comprehensive and well developed.
In developing your content, try to demonstrate clarity of thinking, understanding, and application of basic network design principles. Exploration of your options and choices are an important part of the demonstration of your mastery of network design concepts. There is seldom only one potential course of action in developing a network design; demonstrate that you have considered options and alternatives at each step in your plan and have chosen the best.
As your instructor, I will look at your Network Design Plan from the point of view of a business proposal or Response for Proposal or Quote. Have you thought through and considered your options? Have you provided details of your proposal? Have you looked at the entire strategy, the “big picture”, while still considering the more operational elements that make for a successful implementation? How well written and persuasive is the plan?
The final Network Design project should be a minimum of 15 pages and should not exceed 20 pages in length. Be sure to include a cover page, along with a “Works Cited” page these should not be included in page count. The paper is to be double-spaced, 12 inch font and have 1 inch margins.
|
Dropbox
|
|
For instructions on how to use the Dropbox, please click here.
|
|
|
Title
|
Points
|
Description
|
|
Topic Choice
Week 1
|
30
|
The topic selection deliverable should be a minimum of two paragraphs. The first paragraph should explain why you chose the topic, what your approach will be, and what you hope to learn. The second paragraph should list some assumptions and requirements that you will use over and above what has been provided in the topic scenarios. If you do not select one of the three provided topics, then please include a description of the topic you did select commensurate with the details given in the three provided topics.
This deliverable should not become a part of the final plan.
|
|
First Draft
Week 3
|
60
|
As usual, this is the time to ask questions. It’s difficult for me to be of much help to you in Week 7.
Note that your FIRST draft’s evaluation is worth 60 points. The evaluation is based on the depth and quality of your work and demonstrated progress towards completion of each of the three requested sections Project Scope, Project Goal, and Design Requirements. Each section should demonstrate “almost there” depth of content, as the completeness of these three sections is important as you move forward with the remainder of your Network Design plan. Good grammar and writing is expected, of course, and is part of your FIRST draft’s evaluation.
Although your FIRST draft content is NOT the final version, it is expected that you will have invested serious time to prepare a good FIRST draft of the three sections. Your instructor’s comments should be helpful to you as you later modify your FIRST draft content to create these three “final” sections for your Network Design plan. These corrections are expected in the final paper due in Week 7.
|
|
Second Draft
Week 5
|
60
|
Again, this is the time to ask questions. Week 7 is too late.
At this point, I would expect to see most if not all of your research completed, and most of your sections fully developed. You’ll use the next two weeks to utilize my SECOND draft feedback and “fine tune” all of your sections, as appropriate.
Note that your SECOND draft evaluation is worth 60 points. The evaluation is based on the depth and quality of your work and demonstrated progress towards completion of the Current State of the Network section of your plan. This section should demonstrate “we’re almost there and done” depth of content, as the completeness of this section is important as you move forward to finish the project.
Although your SECOND draft content is NOT the final version, it is expected that you will have invested serious time to prepare a good SECOND draft of the Current Network section. These corrections are expected in the final paper due in Week 7.
|
|
Final Network Design Plan
Week 7
|
190
|
Your FINAL Network Design project will be evaluated upon its submission in Week 7. The FINAL plan will be worth 190 points. Thus, between your Topic Submission (30 points), FIRST draft (60 points), SECOND draft (60 points), and your FINAL Network Design Plan (190 points), this will total 340 points or 34 percent of your overall NETW585 course grade.
|
|
Total
|
340
|
A Quality Paper will meet or exceed all of the above requirements.
|
a) A wireless LAN for a 100-employee law firm situated in a two-story office building.
The law office uses Windows 7 (64 bit) Operating System laptops running standard MS Office 2010 Products. The administrative staff uses the network to send e-mail, browse the Internet, run payroll, bookkeeping (Quickbooks), scheduling appointments, invoicing, creating legal documents, etc. The lawyers and legal aides mainly use the computers to search electronic law libraries to research legal cases from around the state and country, as well as some of the above administrative tasks (e.g. e-mail, web search, calendaring). One of the office staff currently maintains the computers and the 10BaseT LAN but is a novice. This limited support is an issue with the law firm.
Aug 29, 2021 | Uncategorized
Question 1
A new project will generate sales of $74 million, costs of $42 million, and depreciation expense of $10 million in the coming year. The firm%u2019s tax rate is 35%. Calculate cash flow for the year by using all three methods: (a) direct method (dollar in – dollar out); (b) indirect method (net income adjusted for non-cash items); and (c) the depreciation tax shield approach. You should get the same answer. $7.7 Millions
$14.3 Millions
$24.3 Millions
$22 Millions
Question 2 2 pts
multiple_choice_question 9817783
The only capital investment required for a small project is investment in inventory. Profits this year were $10,000, and inventory increased from $4,000 to $5,000. What was the cash flow from the project? $11,000
$10,000
$9,000
$5,000
Question 3 2 pts
multiple_choice_question 9817813
What is the cash flow from operations for the following firm: $750,000 sales, $20,000 cash dividends, $500,000 COGS, $40,000 administrative expense, $30,000 depreciation expense, $55,000 interest expense, no changes in working capital, and a tax rate of 35%? $180,000
$81,250
$111,250
$125,000
Question 4 2 pts
multiple_choice_question 9817820
What is the amount of the annual depreciation tax shield for a firm with $200,000 in net income, $75,000 in depreciation expense and a 35% marginal tax rate? $48,750
$26,250
$43,750
$70,000
Question 5 1 pts
multiple_choice_question 9817850
Cowabunga Aquatics is considering expanding their operations by building a new water park. It already spent $1 million to excavate the land some years ago. Cowabunga also estimates that cash flows from its other water parks will decrease by $2 million if the new water park is built. Which of the costs should Cowabunga consider when determining the value of this project? The $1 million land excavation cost
Both costs
The $2 million decrease to its other water parks
None of these costs
Question 6 2 pts
multiple_choice_question 9817851
In what manner does depreciation affect cash flows of an investment projects? It increases cash flows by the amount of the depreciation expense.
It reduces taxes paid by the amount of depreciation tax shield.
It reduces cash flows by the amount of the depreciation expense.
It increases taxable income by the amount of the depreciation expense.
Question 7 1 pts
multiple_choice_question 9817853
Methods of accelerated depreciation: increase the depreciation tax shield.
decrease the depreciation tax shield.
allow more depreciation over the asset’s life.
allow assets to be depreciated more rapidly
Aug 29, 2021 | Uncategorized
|
P3.10.
|
(adjusting and Closing)
Presented below is the December 31 trial balance of New York Boutique.
|
NEW YORK BOUTIQUE
|
|
TrialBalance
|
|
December31
|
|
|
Debit
|
Credit
|
|
Cash
|
18,500$
|
|
|
Accounts Receivable
|
32,000
|
|
|
Allowance for Doubtful Accounts
|
|
700$
|
|
Inventory, December 31
|
80,000
|
|
|
Prepaid Insurance
|
5,100
|
|
|
Equipment
|
84,000
|
|
|
Accumulated Depreciation Equipment
|
|
35,000
|
|
Notes Payable
|
|
28,000
|
|
Common Stock
|
|
80,600
|
|
Retained Earnings
|
|
10,000
|
|
Sales Revenue
|
|
600,000
|
|
Cost of Goods Sold
|
408,000
|
|
|
Salaries and Wages Expense (sales)
|
50,000
|
|
|
Advertising Expense
|
6,700
|
|
|
Salaries and Wages Expense (administrative)
|
65,000
|
|
|
Supplies Expense
|
5,000
|
|
|
|
$754,300
|
$754,300
|
|
|
Instructions
|
(a)
|
Construct T-accounts and enter the balances shown.
|
|
(b)
|
Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.) Open additional T-accounts as necessary. (The books are closed yearly on December 31.)
|
|
|
|
|
1.
|
Bad debt expense is estimated to be $1,400.
|
|
2.
|
Equipment is depreciated based on a 7-year life (no salvage value).
|
|
3.
|
Insurance expired during the year $2,550.
|
|
4.
|
Interest accrued on notes payable $3,360.
|
|
5.
|
Sales salaries and wages earned but not paid $2,400.
|
|
6.
|
Advertising paid in advance $700.
|
|
7.
|
Office supplies on hand $1,500, charged to Supplies Expense when purchased.
|
|
|
|
|
|
(c)
|
Prepare closing entries and post to the accounts.
|
|
Aug 29, 2021 | Uncategorized
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Aug 29, 2021 | Uncategorized
Niagra Falls Sporting Goods Company, a wholesale supply company, engages independent sales agents to market the company s products throughout New York and Ontario. These agents currently receive a commission of 20 percent of sales, but they are demanding an increase to 25 percent of sales made during the year ending December 31, 20×2. The controller already prepared the 20×2 budget before learning of the agents demand for an increase in commissions. The budgeted 20×2 income statement is shown below. Assume that cost of goods sold is 100 percent variable cost.
Niagra Falls Company
Budgeted Income Statement
For the year ended Dec. 31, 20×2
Sales ———-10,000,000
Cost of goods sold —- 6,000,000
Gross profit ———– 4,000,000
Selling & Administrative expenses:
Commissions $2,000,000
All other expenses (fixed) 100,000 2,100,000
Income before taxes ——– 1,900,000
Income tax ————– 570,000
Net Income ———– $1,330,000
The company s management is considering the possibility of employing full-time sales personnel. Three individuals would be required, at an estimated annual salary of $30,000 each, plus commissions of 5 percent of sales. In addition, a sales manager would be employed at a fixed annual salary of $160,000. All other fixed costs, as well as the variable cost percentages, would remain the same as the estimates in the 20×2 budgeted income statement.
Required:
1. Compute Niagra Falls Sporting Goods estimated break-even point in sales dollars for the year ending December 31, 20×2, based on the budgeted income statement prepared by the controller.
2. Compute the estimated break-even point in sales dollars for the year ending December 31, 20×2, if the company employs its own sales personnel.
3. Compute the estimated volume in sales dollars that would be required for the year ending December 31, 20×2, to yield the same net income as projected in the budgeted income statement, if management continues to use the independent sales agents and agrees to their demand for a 25 percent sales commission.
4. Compute the estimated volume in sales dollars that would generate an identical net income for the year ending December 31, 20×2, regardless of whether Niagra Falls Sporting Goods Company employs its own sales personnel or continues to use the independent sales agents and pays them a 25 percent commission.
Aug 29, 2021 | Uncategorized
If you were given complete authority, how would you propose that generally accepted accounting principles (GAAP) should be developed and enforced in comparison with how the principles are now developed? What issues do you see with the way the current system handles this process?Please provide reference in APA format and make it about 300 words.
- Employees are paid every Saturday for the preceding work week. If a balance sheet is prepared on Wednesday, December 31st, what does the amount of wages earned during the first three days of the week (12/29, 12/30, 12/31) represent? Explain. What journal entry would be made for the days worked and what entry would be made when the wages are paid on Saturday?
- If you were a potential investor and could only review one financial statement of a company in which you would like to buy stock, which financial statement would you choose and why? Be specific with your answer and provide about 250 words.
- Identify three situations in which accounting measures are based on present values. Do these present value applications involve single sums or annuities, or both single sums and annuities? Explain. Be brief and provide 200 words and provide reference in APA format.
Aug 29, 2021 | Uncategorized
Question 1
Accidents and illnesses that must be reported are those that:
A. result in deaths.
B. cause the employee to miss work.
C. require treatment by a physician.
D. All of the above
Question 2
The color __________ is used to color-code areas where there is a danger of fire.
A. gray
B. orange
C. red
D. green
Question 3
Conflict is associated with job dissatisfaction and anxiety. It has also been linked to:
A. heart disease.
B. elevated blood pressure.
C. excessive eating.
D. All of the above
Question 4
In 2000, __________ was the sector most affected by repetitive stress injuries and carpel tunnel syndrome.
A. manufacturing
B. services
C. wholesale trade
D. retail trade
Aug 29, 2021 | Uncategorized
True & False
1. Because accounting often requires estimates to be made to assess the effect of a transaction, the shorter the time period, the easier it becomes to determine the proper adjustments.
2. The time period assumption states that the economic life of a business entity can be divided into artificial time periods.
3. The time period assumption is often referred to as the matching principle. False
4. A company’s calendar year and fiscal year are always the same.
5. Accounting time periods that are one year in length are referred to as interim periods.
6. Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.
7. The cash basis of accounting is not in accordance with generally accepted accounting
principles.
8. The matching principle requires that assets be matched with liabilities.
9. Accrual basis accounting requires that expenses be recognized when incurred regardless of when paid.
10. The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.
Multiple Choice Questions
11. Monthly and quarterly time periods are called
a. calender periods.
b. fiscal periods.
c. interim periods.
d. quarterly periods.
12. The time period assumption states that
a. a transaction can only affect one period of time.
b. estimates should not be made if a transaction affects more than one time period.
c. adjustments to the enterprise’s accounts can only be made in the time period when the
business terminates its operations.
d. the economic life of a business can be divided into artificial time periods.
13. Adjustments would not be necessary if financial statements were prepared to reflect net income
from
a. monthly operations.
b. fiscal year operations.
c. interim operations.
d. lifetime operations.
14. Management usually desires ________ financial statements and the IRS requires all
businesses to file _________ tax returns.
a. annual, annual
b. monthly, annual
c. quarterly, monthly
d. monthly, monthly
15. Which of the following are in accordance with generally accepted accounting principles?
a. Accrual basis accounting
b. Cash basis accounting
c. Both accrual basis and cash basis accounting
d. Neither accrual basis nor cash basis accounting
16. Joe’s Tune-up Shop follows the revenue recognition principle. Jim services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Jim on August 5. Jim receives the check in the mail on August 6. When should Jim show that the revenue was earned?
a. July 31
b. August 1
c. August 5
d. August 6
17. Adjusting entries are
a. not necessary if the accounting system is operating properly.
b. usually required before financial statements are prepared.
c. made whenever management desires to change an account balance.
d. made to balance sheet accounts only.
18. Faraway Beltway Company pays weekly salaries for a 5-day week of $2,000 every Friday,
January 31 falls on a Thursday. The monthly adjusting entry at January 31
a. should pay salaries of $1,600.
b. should accrue salaries of $400.
c. should accrue salaries of $1,600.
d. should record unearned salaries of $400.
19. On January 1, the Seigel-Jones Law Firm received a $12,000 cash retainer for legal services to
be rendered ratably over the next 6 months. The full amount was credited to the liability
account Unearned Legal Fees. Which of the following statements is true regarding adjusting
entries for this liability account?
a. the adjusting journal entry at the end of each month should include a debit to Unearned
Legal Fees and a credit to Fees Earned for $2,000.
b. the adjusting journal entry at the end of each month should include a debit to Unearned
Legal Fees and a credit to Cash for $2,000.
c. the adjusting journal entry at the end of January should include a debit to Unearned Legal
Fees and a credit to Fees Earned for $12,000.
d. No adjusting entries should be made until the full amount of the retainer has been earned
as of June 30.
20. Adjusting entries can be classified as
a. postponements and advances.
b. accruals and prepayments.
c. prepayments and postponements.
d. accruals and advances.
21.Pleymeyer Realty generates revenue through its many rental properties. As of August 31, the company has not collected $6,000 of August rental payments because of delinquencies. The monthly adjusting journal entry at August 31
a. is not required until the past due rent payments are collected
b. will include a debit to Cash and a credit to Rent Revenue of $6,000.
c. will include a debit to Unearned Rent and a credit to Rent Revenue for $200.
d. will include a debit to Rent Receivable and a credit to Rent Revenue for $6,000.
22. At March 1, 2006, Striped Candy Delights Inc. had supplies on hand of $500. During the
month, Candy purchased supplies of $1,200 and used supplies of $1,500. The March 31
adjusting journal entry should include:
a. a debit to the supplies account for $1,500
b. a credit to the supplies account for $500
c. a debit to the supplies account for $1,200
d. a credit to the supplies account for $1,500
23. Quirk-Wit Company purchased office supplies costing $4,000 and debited Office Supplies for
the full amount. At the end of the accounting period, a physical count of office supplies revealed
$1,600 still on hand. The appropriate adjusting journal entry to be made at the end of the period
would be
a. Debit Office Supplies Expense, $1,600; Credit Office Supplies, $1,600.
b. Debit Office Supplies, $2,400; Credit Office Supplies Expense, $2,400.
c. Debit Office Supplies Expense, $2,400; Credit Office Supplies, $2,400.
d. Debit Office Supplies, $1,600; Credit Office Supplies Expense, $1,600.
24. Silver Fleet Services Company purchased equipment for $5,000 on January 1, 2006. The
company expects to use the equipment for 5 years. It has no salvage value. What balance
would be reported on the December 21, 2006 balance sheet for Accumulated Depreciation?
a. $0 because Accumulated Depreciation is reported on the Income Statement
b. $1,000
c. $4,000
d. $5,000
25. Hardy Parties Company purchased a computer for $2,400 on December 1. It is estimated that
annual depreciation on the computer will be $480. If financial statements are to be prepared on
December 31, the company should make the following adjusting entry:
a. Debit Depreciation Expense, $480; Credit Accumulated Depreciation, $480.
b. Debit Depreciation Expense, $40; Credit Accumulated Depreciation, $40.
c. Debit Depreciation Expense, $1,920; Credit Accumulated Depreciation, $1,920.
d. Debit Office Equipment, $2,400; Credit Accumulated Depreciation, $2,400
Aug 29, 2021 | Uncategorized
1. Sources of increases to owner’s equity are
2. A small neighborhood barber shop that is operated by its owner would likely be organized as a
3.An account consists of
4. A numbering system for a chart of accounts
5. The ledger should be arranged in
6. A debit to an asset account indicates
7. Unearned revenue is classified as
Which of the following are in accordance with generally accepted accounting principles?
At December 31, 2010, before any year-end adjustments, Cable Car Company’s Insurance Expense account had a balance of $1,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $3,000 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be
Accumulated Depreciation is
Chapter 4
It is not true that current assets are assets that a company expects to
use up within one year.
acquire within one year.
realize in cash within one year.
sell within one year.
After closing entries are posted, the balance in the owner’s capital account in the ledger will be equal to
the beginning owner’s capital reported on the owner’s equity statement.
the amount of the owner’s capital reported on the balance sheet.
zero.
the net income for the period.
When using a worksheet, adjusting entries are journalized
before the adjustments are entered on to the worksheet.
after the worksheet is completed and after financial statements have been prepared.
before the adjusted trial balance is extended to the proper financial statement columns.
after the worksheet is completed and before financial statements are prepared.
Liabilities are generally classified on a balance sheet as
small liabilities and large liabilities.
tangible liabilities and intangible liabilities.
present liabilities and future liabilities.
current liabilities and long-term liabilities.
Chapter 5
At the beginning of the year, Hinz Company had an inventory of $400,000. During the year, the company
purchased goods costing $1,600,000. If Hinz Company reported ending inventory of $600,000
and sales of $2,000,000, the company’s cost of goods sold and gross profit rate must be
$1,000,000 and 50%.
$1,400,000 and 70%.
$1,000,000 and 30%.
$1,400,000 and 30%.
The Merchandise Inventory account is used in each of the following except the entry to record
the return of goods purchased.
payment of freight on goods sold.
payment within the discount period.
goods purchased on account.
On a classified balance sheet, merchandise inventory is classified as
property, plant, and equipment.
an intangible asset.
a current asset.
a long-term investment.
The Sales Returns and Allowances account does not provide information to management about
errors in overbilling customers.
inefficiencies in filling orders.
possible inferior merchandise.
the percentage of credit sales versus cash sales.
Chapter 6
Merchandise inventory is
generally valued at the price for which the goods can be sold.
reported under the classification of Property, Plant, and Equipment on the balance sheet.
often reported as a miscellaneous expense on the income statement.
reported as a current asset on the balance sheet.
Lee Industries had the following inventory transactions occur during 2010:
UnitsCost/unit
2/1/10Purchase18$45
3/14/10Purchase31$47
5/1/10Purchase22$49
The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory
system is used, what is the company’s gross profit using LIFO? (rounded to whole dollars)
$848
$2,441
$772
$2,365
Shandy Shutters has the following inventory information.
Nov.1Inventory15 units @$8.00
8Purchase60 units @$8.60
17Purchase30 units @$8.40
25Purchase45 units @$8.80
A physical count of merchandise inventory on November 30 reveals that there are 50 units on hand.
Assume a periodic inventory system is used. Ending inventory under FIFO is
$846.
$863.
$438.
$421.
During July, the following purchases and sales were made by James Company. There was no beginning inventory. James Company uses a perpetual inventory system.
PurchasesSales
July320 units @ $12July1325 units
1120 units @ $132210 units
2010 units @ $15
Under the FIFO method, the cost of goods sold for each sale is:
July 13July 22
375150
$300 $120
325130
305130
Chapter 7
The one characteristic that all entries recorded in a multi-column purchases journal have in common is a
credit to the Cash account.
debit to the Accounts Payable account.
debit to the Cash account.
credit to the Accounts Payable account.
The individual amounts in the Accounts Payable column in the cash payments journal are posted to
the subsidiary ledger
weekly.
daily.
yearly.
monthly.
The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger
yearly.
daily.
weekly.
monthly.
In which journal would a cash purchase of merchandise inventory be recorded?
Purchase journal
General journal
Cash payments journal
None of these.
Chapter 8
In large companies, the independent internal verification procedure is often assigned to
management.
computer operators.
outside CPAs.
internal auditors.
Which of the following would not be reported on the balance sheet as a cash equivalent?
Sixty-day certificate of deposit
Money market savings certificate
Six-month Treasury bill
Money market fund
If a petty cash fund is established in the amount of $250, and contains $150 in cash and $95 in receipts
for disbursements when it is replenished, the journal entry to record replenishment should include credits
to the following accounts
Petty Cash, $95.
Petty Cash, $100.
Cash, $100.
Cash, $95; Cash Over and Short, $5.
A $100 petty cash fund has cash of $15 and receipts of $80. The journal entry to replenish the account
would include a credit to
Cash for $85.
Petty Cash for $85.
Cash Over and Short for $5.
Cash for $80.
Chapter 9
The maturity value of a $30,000, 8%, 3-month note receivable is
$30,600.
$30,200.
$30,240.
$32,400.
The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record
estimated uncollectible accounts
is relevant to both bases of adjusting for uncollectible accounts.
is relevant when using the percentage of receivables basis.
will never show a debit balance at this stage in the accounting cycle.
is relevant when using the percentage of sales basis.
The percentage of receivables basis for estimating uncollectible accounts emphasizes
the relationship between sales and accounts receivable.
income statement relationships.
cash realizable value.
the relationship between accounts receivable and bad debts expense.
A note receivable is a negotiable instrument which
can only be collected by a bank.
eliminates the need for a bad debts allowance.
takes the place of checks in a business firm.
can be transferred to another party by endorsement.
Chapter 10
Depreciable cost is the
cost of an asset less its salvage value.
cost of an asset less accumulated depreciation.
book value of an asset.
book value of an asset less its salvage value.
Mather Company purchased equipment on January 1, 2010 at a total invoice cost of $224,000;
additional costs of $4,000 for freight and $20,000 for installation were incurred.
The equipment has an estimated salvage value of $8,000 and an estimated useful life of five years.
The amount of accumulated depreciation at December 31, 2011 if the straight-line method of depreciation is used is:
$96,000.
$86,400.
$99,200.
$88,000.
Hull Company acquires land for $86,000 cash. Additional costs are as follows:
Removal of shed$300
Filling and grading1,500
Salvage value of lumber of shed120
Broker commission1,130
Paving of parking lot10,000
Closing costs560
Hull will record the acquisition cost of the land as
$89,370.
$87,690.
$89,610.
$86,000.
The factor that is not relevant in computing depreciation is
salvage value.
useful life.
replacement value.
cost.
Chapter 11
Lincoln Company sells 600 units of a product that has a one-year warranty on parts.
The average cost of honoring one warranty contract is $50. During the year 30 contracts are honored
at a cost of $1,500. It is estimated that 60 contracts will be honored in the following year. The adjusting
entry at the end of the current year will include a
debit to Warranty Expense for $4,500.
credit to Estimated Warranty Liability for $3,000.
credit to Estimated Warranty Liability for $4,500.
debit to Warranty Expense for $1,500.
The paid absence that is most commonly accrued is
voting leave.
vacation time.
maternity leave.
disability leave.
Most companies pay current liabilities
by issuing stock.
by creating long-term liabilities.
out of current assets.
by issuing interest-bearing notes payable.
The entry to record the issuance of an interest-bearing note credits Notes Payable for the note’s
cash realizable value.
maturity value.
market value.
face value.
Chapter 12
Which one of the following would not be considered an expense of a partnership in determining income
for the period?
Freight-out
Salary allowance to partners
Supplies used
Expired insurance
Finney is admitted to a partnership with a 25% capital interest by a cash investment of $90,000.
If total capital of the partnership is $390,000 before admitting Finney, the bonus to Finney is
$30,000.
$15,000.
$60,000.
$45,000.
Mary Janane’s capital statement reveals that her drawings during the year were $50,000.
She made an additional capital investment of $25,000 and her share of the net loss for
the year was $10,000. Her ending capital balance was $200,000. What was Mary Janane’s beginning capital balance?
$225,000.
$260,000.
$185,000.
$235,000.
The most appropriate basis for dividing partnership net income when the partners do not plan to take
an active role in daily operations is
salaries to the partners and the remainder on a fixed ratio.
interest on capital balances and salaries to the partners.
on a ratio based average capital balances.
on a fixed ratio.
Chapter 13
The following data is available for BOX Corporation at December 31, 2010:
Common stock, par $10 (authorized 15,000 shares)$100,000
Treasury Stock (at cost $15 per share)600
Based on the data, how many shares of common stock are outstanding?
15,000
10,000
14,960
9,960
When stock is issued for legal services, the transaction is recorded by debiting Organization Expense
for the
stated value of the stock.
book value of the stock.
market value of the stock.
par value of the stock.
The two ways that a corporation can be classified by ownership are
publicly held and privately held.
majority and minority.
stock and non-stock.
inside and outside.
On January 2, 2007, Pacer Corporation issued 30,000 shares of 6% cumulative preferred stock
at $100 par value. On December 31, 2010, Pacer Corporation declared and paid its first
dividend. What dividends are the preferred stockholders entitled to receive in the current year before any distribution is made to common stockholders?
$720,000
$0
$180,000
$540,000
Aug 29, 2021 | Uncategorized
SET 1
1. (TCO 1) Which of the following would not be considered an internal user of accounting data for a company? (Points : 4)
President of a company
Controller of a company
Creditor of a company
Salesperson of a company
2. (TCO 1) Resources owned by a business are referred to as _________. (Points : 4)
stockholders equity.
liabilities.
assets.
revenues.
3. (TCO 1) To show how successfully your business performed during a period of time, you would report its revenues and expenses in the _________. (Points : 4)
balance sheet.
income statement.
statement of cash flows.
retained earnings statement.
4. (TCO 1) Henson Company began the year with retained earnings of $175,000. During the year, the company recorded revenues of $250,000, expenses of $190,000, and paid dividends of $20,000. What was Henson s retained earnings at the end of the year? (Points : 4)
$255,000
$215,000
$405,000
$235,000
5. (TCO 4) Which of the following statements is not true? (Points : 4)
Comparability means using the same accounting principles from year to year within a company.
Reliability is the quality of information that gives assurance that it is free of error or bias.
Relevant accounting information must be capable of making a difference in a decision.
The FASB s overriding criterion is that the accounting rule adopted should be the one that generates the most useful financial information for making a decision.
6. (TCO 4) Using the following balance sheet and income statement data, what is the current ratio?
Current assets $9,000 Net income $12,000
Current liabilities 4,000 Stockholders equity 24,000
Total assets 30,000 Total liabilities 6,000
Average common shares outstanding was 10,000 (Points : 4)
1.75:1
2.00:1
0.44:1
2.25:1
7. (TCO4) Using the following balance sheet and income statement data, what is the total amount of working capital?
Current assets $12,000 Net income $12,000
Current liabilities 8,000 Stockholders equity 24,000
Total assets 32,000 Total liabilities 8,000
Average common shares outstanding was 10,000 (Points : 4)
$4,000
$24,000
$3,000
$10,000
8. (TCO 4) Using the following balance sheet and income statement data, what is the debt to total assets ratio?
Current assets $7,000 Net income $12,000
Current liabilities 4,000 Stockholders equity 21,000
Total assets 30,000 Total liabilities 9,000
Average common shares outstanding was 10,000 (Points : 4)
75%
19%
57%
30%
9. (TCO 2) Franklin Company provided consulting services and billed the client $2,500. As a result of this event, _________. (Points : 4)
assets remained unchanged.
assets increased by $2,500.
equity increased by $2,500.
both assets increased by $2,500 and equity increased by $2,500
10. (TCO 2) A credit is not the normal balance for which account listed below? (Points : 4)
Common stock account
Revenue account
Liability account
Dividends account
11. (TCO 2) In the first month of operations, the total of the debit entries to the cash account amounted to $900 and the total of the credit entries to the cash account amounted to $400. The cash account has a _________ (Points : 4)
$500 debit balance.
$900 debit balance.
$500 credit balance.
$400 credit balance.
12. (TCO 2) A trial balance would only help in detecting which one of the following errors? (Points : 4)
A transaction that is not journalized
A journal entry that is posted twice
Offsetting errors made in recording the transaction
A transposition error when transferring the debit side of a journal entry to the ledger
13. (TCO 3) Related buying activities include _________ (Points : 4)
ordering, receiving, and paying.
ordering, selling, and paying.
ordering, shipping, and billing.
selling, shipping, and paying.
14. (TCO 3) Ron Jones has been a trusted employee for over 10 years. He is responsible for ordering merchandise inventory, receiving the inventory items, and authorizing the payment for these items. Which internal control principle, if any, is being violated? (Points : 4)
None, Ron has proven to be trustworthy and has enough experience to do a good job.
Documentation procedures
Establishment of responsibilities
Segregation of duties
15. (TCO 3) For which of the following errors should the appropriate amount be subtracted from the balance per bank on a bank reconciliation? (Points : 4)
Check for $43 recorded as $34
Deposit of $500 recorded by bank as $50
A returned $200 check recorded by bank as $20
Check for $35 recorded as $53
SET 2
1) The standards and rules that are recognized as a general guide for financial reporting are called __________. A. standards of financial reporting B. generally accepted accounting principles C. operating guidelines D. generally accepted accounting standards
2) Sam’s Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam s gross profit for March? A. $8,250 B. $4,500 C. $750 D. $5,250 ((9,000X2) (6,000+7,500))
3) Which one of the following items is not generally used in preparing a statement of cash flows? A. Additional information B. Comparative balance sheets C. Current income statement D. Adjusted trial balance
4) The cost principle requires that when assets are acquired, they be recorded at __________. A. list price B. exchange price paid C. selling price D. appraisal value
5) What is the preparation of reports for each level of responsibility in the company s organization chart called? A. Master budgeting analysis B. Responsibility reporting C. Exception reporting D. Static reporting
6) The cost principle is the basis for preparing financial statements because it is __________. A. the most accurate measure of purchasing power B. an international accounting standard C. relevant and objectively measured, and verifiable D. a conservative value
7) Which list below best describes the major services performed by public accountants? A. Cost accounting, production scheduling, recruiting B. Auditing, taxation, management consulting C. Employee training, auditing, bookkeeping D. Bookkeeping, mergers, budgets
8) A well-designed activity-based costing system starts with __________. A. analyzing the activities performed to manufacture a product B. assigning manufacturing overhead costs for each activity cost pool to products C. computing the activity-based overhead rate D. identifying the activity-cost pools
9) The income statement and balance sheet columns of Pine Company’s worksheet reflects the following totals: Income Statement Balance Sheet Dr. Cr. Dr. Cr. Totals $58,000 $48,000 $34,000 $44,000 Closing entries are necessary for __________. A. permanent or real accounts only B. both permanent and temporary accounts C. temporary accounts only D. permanent accounts only
10) What exists when budgeted costs exceed actual results? A. An excess profit B. An unfavorable difference C. A favorable difference D. A budgeting error
11) Multinational corporations __________. A. are U.S. companies that trade their securities on the exchanges in other countries B. are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries C. are U.S. companies that sell goods and services in other countries D. are required to use international accounting standards
12) The major reporting standard for management accounts is __________. A. generally accepted accounting principles B. relevance to decisions C. the Sarbanes-Oxley Act of 2002 D. the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management
13) The primary purpose of the statement of cash flows is to __________. A. facilitate banking relationships B. provide information about the investing and financing activities during a period C. prove that revenues exceed expenses if there is a net income D. provide information about the cash receipts and cash payments during a period
14) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead? A. The western division s vice president s salary B. Factory janitor C. General corporate liability insurance D. Cost of landscaping the corporate office
Aug 29, 2021 | Uncategorized
1. The management of Austin Corporation is considering dropping product R97C. Data from the company’s accounting system appear below: Sales…$130,000 variable expenses…$56,000 Fixed manufacturing expenses…$49,000 Fixed selling and administrative expenses…$35,000 In the company’s accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $34,000 of the fixed manufacturing expenses and $20,000 of the fixed selling and administrative expenses are avoidable if product R97C is discontinued. What would be the effect on the company’s overall net operating income if product R97C were dropped?
A. Overall net operating income would increase by $20,000.
B. Overall net operating income would increase by $10,000.
C. Overall net operating income would decrease by $20,000.
D. Overall net operating income would decrease by $10,000.
E. None of the above
2. Cybil Baunt just inherited a 1958 Chevy Impala from her late Aunt Joop. Aunt Joop purchased the car 25 years ago for $5,000. Cybil is either going to sell the car for $2,000 or have it restored and sell it for $16,000. The restoration will cost $10,000. Cybil would be better off by:
A. $4,000 to have the vehicle restored
B. $6,000 to have the vehicle restored
C. $9,000 to have the vehicle restored
D. $11,000 to have the vehicle restored
E. None of the above
3. Two products, TD and IB, emerge from a joint process. Product TD has been allocated $31,200 of the total joint costs of $48,000. A total of 5,000 units of product TD are produced from the joint process. Product TD can be sold at the split-off point for $24 per unit, or it can be processed further for an additional total cost of $15,000 and then sold for $26 per unit. If product TD is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?
A. $5,000 less profit
B. $115,000 more profit
C. $36,200 less profit
D. $26,200 more profit
E. None of the above
The Clemson Company reported the following results last year for the manufacture and sale of one of its products known as a Tam. Sales (6,500 Tams at $130 each)…$845,000 Variable costs of sales….390,000 Variable distribution costs…65,000 Fixed advertising expense….275,000 Salary of product line manager…25,000 Fixed manufacturing overhead…145,000 Net operating loss….. $(55,000) Clemson Company is trying to determine whether or not to discontinue the manufacture and sale of Tams. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The fixed manufacturing overhead represents the costs of production facilities and equipment that the Tam product shares with other products produced by Clemson. If the Tam product were dropped, there would be no change in the fixed manufacturing costs of the company.
4. Assume that discontinuing the manufacture and sale of Tams will have no effect on the sale of other product lines. If the company discontinues the Tam product line, the change in annual operating income (or loss) should be:
A. $55,000 decrease
B. $65,000 decrease
C. $90,000 decrease
D. $70,000 increase
E. None of the above
5. Assume that discontinuing the Tam product would result in a $120,000 increase in the contribution margin of other product lines. How many Tams would have to be sold next year for the company to be as well off as if it just dropped the line and enjoyed the increase in contribution margin from other products?
A. 5,000 units
B. 6,000 units
C. 6,500 units
D. 7,000 units E. None of the above
Aug 29, 2021 | Uncategorized
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:
A. will be greater than $5.
B. will also be $5.
C. will be less than $5.
D. may be either greater or less than $5.
A firm that is motivated by self interest should:
A. always use large amounts of cheap inputs and small amounts of expensive inputs in producing its output.
B. hire each input so the productivity of each is equal at the margin.
C. always use large amounts of the most productive inputs and small amounts of the least productive inputs in producing its output.
D. employ the combination of resources that will produce the profit-maximizing output at the minimum cost.
If price is above the equilibrium level, competition among sellers to reduce the resulting:
A. shortage will increase quantity demanded and decrease quantity supplied.
B. surplus will increase quantity demanded and decrease quantity supplied.
C. surplus will decrease quantity demanded and increase quantity supplied.
D. shortage will decrease quantity demanded and increase quantity supplied.
Camille’s Creations and Julia’s Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can’t keep up with the quantity demanded at that price), then we would expect both Camille’s and Julia’s to:
A. lower their price and increase their quantity supplied.
B. raise their price and reduce their quantity supplied.
C. lower their price and reduce their quantity supplied.
D. raise their price and increase their quantity supplied.
Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement:
A. constitutes an exception to the law of supply in that they suggest a downward sloping supply curve.
B. suggests that the supply of DVD players has increased.
C. constitutes an exception to the law of demand in that they suggest an upward sloping demand curve.
D. suggests that the demand for DVD players has increased.
In a market economy the distribution of output will be determined primarily by:
A. a social consensus as to what distribution of income is most equitable.
B. consumer needs and preferences.
C. government regulations that provide a minimum income for all.
D. the quantities and prices of the resources that households supply.
In a competitive market economy firms will select the least-cost production technique because:
A. “dollar voting” by consumers mandates such a choice.
B. such choices will result in the full employment of available resources.
C. this will prevent new firms from entering the industry.
D. to do so will maximize the firms’ profits.
Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus:
A. no inference can be made as to the elasticity of demand for peanuts.
B. the demand for peanuts is elastic.
C. the demand curve for peanuts has shifted to the right.
D. the demand for peanuts is inelastic.
If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use:
A. less labor as a consequence of the output effect.
B. more labor as a consequence of the output effect.
C. less labor as a consequence of the substitution effect.
D. more labor as a consequence of the substitution effect.
In which of the following industries are economies of scale exhausted at relatively low levels of output?
A. newspaper printing
B. automobile manufacturing
C. concrete mixing
D. aircraft production
If a firm decides to produce no output in the short run, its costs will be:
A. zero.
B. its fixed plus its variable costs.
C. its fixed costs.
D. its marginal costs.
Which of the following represents a long-run adjustment?
A. a supermarket hires four additional clerks
B. unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants
C. a steel manufacturer cuts back on its purchases of coke and iron ore
D. a farmer uses an extra dose of fertilizer on his corn crop
Paying an above-equilibrium wage rate might reduce unit labor costs by:
A. increasing the supply of labor.
B. increasing the cost to workers of being fired for shirking.
C. increasing voluntary worker turnover.
D. permitting the firm to attract lower-quality labor.
A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:
A. $21.
B. $10.
C. $15.
D. $9.
Price exceeds marginal revenue for the pure monopolist because the:
A. demand curve lies below the marginal revenue curve.
B. demand curve is downsloping.
C. monopolist produces a smaller output than would a purely competitive firm.
D. law of diminishing returns is inapplicable.
Oligopoly is difficult to analyze primarily because:
A. neither allocative nor productive efficiency is achieved.
B. the price and output decisions of any one firm depend on the reactions of its rivals.
C. output may be either homogenous or differentiated.
D. the number of firms is too large to make collusion understandable.
A competitive firm will maximize profits at that output at which:
A. the difference between marginal revenue and price is at a maximum.
B. total revenue and total cost are equal.
C. price exceeds average total cost by the largest amount.
D. total revenue exceeds total cost by the greatest amount.
Nonprice competition refers to:
A. reductions in production costs that are not reflected in price reductions.
B. price increases by a firm that are ignored by its rivals.
C. advertising, product promotion, and changes in the real or perceived characteristics of a product.
D. competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts.
Advertising can impede economic efficiency when it:
A. increases consumer awareness of substitute products.
B. enables firms to achieve substantial economies of scale.
C. reduces brand loyalty.
D. increases entry barriers.
Which of the following is not a possible source of natural monopoly?
A. rent-seeking behavior
B. greater use of specialized inputs
C. simultaneous consumption
D. large-scale network effects
Suppose that an industry is characterized by a few firms and price leadership. We would expect that:
A. marginal revenue would exceed marginal cost.
B. price would exceed both marginal cost and average total cost.
C. price would equal average total cost.
D. price would equal marginal cost.
When economists view technological change as internal to the economy, they mean that it:
A. arises mainly from government subsidies.
B. arises deliberately from the profit motive and competition.
C. occurs accidentally.
D. occurs randomly.
Firm X develops a new product and gets a head start in its production. Other firms try to produce a similar product but discover they have higher average total costs than the existing firm. This situation illustrates:
A. spillover costs.
B. learning-by-doing.
C. diminishing marginal returns.
D. diseconomies of scale.
In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:
A. average cost.
B. average variable cost.
C. marginal revenue.
D. average total cost.
If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium:
A. price level would necessarily rise.
B. price level would necessarily fall.
C. output would fall.
D. output would rise.
Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:
A. expenditures curve will shift downward.
B. supply curve will shift leftward.
C. supply curve will shift rightward.
D. demand curve will shift leftward.
Suppose the price level is fixed, the MPC is .5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should:
A. reduce taxes by $200 billion.
B. reduce taxes by $50 billion.
C. increase government expenditures by $50 billion.
D. increase government expenditures by $100 billion.
Expansionary fiscal policy is so named because it:
A. is designed to expand real GDP.
B. involves an expansion of the nation’s money supply.
C. is aimed at achieving greater price stability.
D. necessarily expands the size of government
Stabilizing a nation’s price level and the purchasing power of its money can be achieved:
A. with neither fiscal nor monetary policy.
B. only with fiscal policy.
C. with both fiscal and monetary policy.
D. only with monetary policy.
Suppose that US prices rise 4 percent over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?
A. The dollar will be revalued.
B. The dollar should depreciate.
C. The peso should depreciate.
D. The peso should appreciate.
Aug 29, 2021 | Uncategorized
1. Accountants refer to an economic event as a
a. purchase.
b. sale.
c. transaction.
d. change in ownership.
2. The use of computers in recording business events
a. has made the recording process more efficient.
b. does not use the same principles as manual accounting systems.
c. has greatly impacted the identification stage of the accounting process.
d. is economical only for large businesses.
3. Which of the following is an external user of accounting information
a. Labor unions
b. Finance directors
c. Company officers
d. Managers
4. The origins of accounting are generally attributed to the work of
a. Christopher Columbus.
b. Abner Doubleday.
c. Luca Pacioli.
d. Leonardo da Vinci.
5. Generally accepted accounting principles are
a. income tax regulations of the Internal Revenue Service.
b. standards that indicate how to report economic events.
c. theories that are based on physical laws of the universe.
d. principles that have been proven correct by academic researchers.
6. Which one of the following is not a part of an account
a. Credit side
b. Trial balance
c. Debit side
d. Title
7. Credits
a. decrease both assets and liabilities.
b. decrease assets and increase liabilities.
c. increase both assets and liabilities.
d. increase assets and decrease liabilities.
8. A debit to an asset account indicates
a. an error.
b. a credit was made to a liability account.
c. a decrease in the asset.
d. an increase in the asset.
9. The normal balance of any account is the
a. left side.
b. right side.
c. side which increases that account.
d. side which decreases that account.
10. The double-entry system requires that each transaction must be recorded
a. in at least two different accounts.
b. in two sets of books.
c. in a journal and in a ledger.
d. first as a revenue and then as an expense.
11. An accounting time period that is one year in length, but does not begin on January 1, is referred to as
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.
12. Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.
a. annual, annual
b. monthly, annual
c. quarterly, monthly
d. monthly, monthly
13. Which of the following time periods would not be referred to as an interim period
a. Monthly
b. Quarterly
c. Semi-annually
d. Annually
14. Which of the following are in accordance with generally accepted accounting principles
a. Accrual basis accounting
b. Cash basis accounting
c. Both accrual basis and cash basis accounting
d. Neither accrual basis nor cash basis accounting
15. The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
a. assets should be matched with liabilities.
b. efforts should be matched with accomplishments.
c. dividends to stockholders should be matched with stockholders’ investments.
d. cash payments should be matched with cash receipts.
16. The information for preparing a trial balance on a worksheet is obtained from
a. financial statements.
b. general ledger accounts.
c. general journal entries.
d. business documents.
17. Closing entries are necessary for
a. permanent accounts only.
b. temporary accounts only.
c. both permanent and temporary accounts.
d. permanent or real accounts only.
18. A post-closing trial balance will show
a. only permanent account balances.
b. only temporary account balances.
c. zero balances for all accounts.
d. the amount of net income (or loss) for the period.
19. The step in the accounting cycle that is performed on a periodic basis (i.e., monthly, quarterly) is
a. analyzing transactions.
b. journalizing and posting adjusting entries.
c. preparing a post-closing trial balance.
d. posting to ledger accounts.
20. A current asset is
a. the last asset purchased by a business.
b. an asset which is currently being used to produce a product or service.
c. usually found as a separate classification in the income statement.
d. an asset that a company expects to convert to cash or use up within one year.
21. The standards and rules that are recognized as a general guide for financial reporting are called
a. generally accepted accounting standards.
b. generally accepted accounting principles.
c. operating guidelines.
d. standards of financial reporting.
22. “Generally accepted” in the phrase generally accepted accounting principles means that the principles
a. are proven theories of accounting.
b. have substantial authoritative support.
c. have been approved by the Internal Revenue Service.
d. have been approved for use by the managements of business firms.
23. The conceptual framework developed by the Financial Accounting Standards Board
a. was approved by a vote of all accountants.
b. are rules that all accountants must follow.
c. is viewed as providing a constitution for setting accounting standards for financial reporting.
d. is legally binding on all accountants.
24. Accounting principles must be
a. proven and tested.
b. hypothesized and theorized.
c. developed or decreed.
d. universally accepted.
25. FASB has had the responsibility for developing accounting principles since the early
a. 1900s.
b. 1920s.
c. 1940s.
d. 1970s.
26. Which one of the following is primarily interested in the liquidity of a company
a. Federal government
b. Stockholders
c. Long-term creditors
d. Short-term creditors
27 Which one of the following is not a characteristic generally evaluated in analyzing financial statements
a. Liquidity
b. Profitability
c. Marketability
d. Solvency
28. In analyzing the financial statements of a company, a single item on the financial statements
a. should be reported in bold-face type.
b. is more meaningful if compared to other financial information.
c. is significant only if it is large.
d. should be accompanied by a footnote.
29. Short-term creditors are usually most interested in evaluating
a. solvency.
b. liquidity.
c. marketability.
d. profitability.
30. Long-term creditors are usually most interested in evaluating
a. liquidity and solvency.
b. solvency and marketability.
c. liquidity and profitability.
d. profitability and solvency.
31) Which one of the following is not a justification for adjusting entries? A. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. B. Adjusting entries are necessary to ensure that the matching principle is followed. C. Adjusting entries are necessary to ensure that revenue recognition principles are followed. D. Adjusting entries are necessary to bring the general ledger accounts in line with the budget.
32) The preparation of adjusting entries is A. only required for accounts that do not have a normal balance. B. often an involved process requiring the skills of a professional. C. straight forward because the accounts that need adjustment will be out of balance. D. optional when financial statements are prepared.
33) Accounts often need to be adjusted because A. there are always errors made in recording transactions. B. many transactions affect more than one time period. C. there are never enough accounts to record all the transactions. D. management can’t decide what they want to report.
34) The adjusted trial balance is prepared A. after financial statements are prepared. B. before the trial balance. C. after adjusting entries have been journalized and posted. D. to prove the equality of total assets and total liabilities.
35) Financial statements are prepared directly from the A. general journal. B. ledger. C. adjusted trial balance. D. trial balance.
36) An adjusted trial balance A. is prepared after the financial statements are completed. B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. C. cannot be used to prepare financial statements. D. is a required financial statement under generally accepted accounting principles.
Aug 29, 2021 | Uncategorized
1. Accountants refer to an economic event as a a. purchase. b. sale. c. transaction. d. change in ownership.
2. The use of computers in recording business events a. has made the recording process more efficient. b. does not use the same principles as manual accounting systems. c. has greatly impacted the identification stage of the accounting process. d. is economical only for large businesses.
3. Which of the following is an external user of accounting information? a. Labor unions b. Finance directors c. Company officers d. Managers
4. The origins of accounting are generally attributed to the work of a. Christopher Columbus. b. Abner Doubleday. c. Luca Pacioli. d. Leonardo da Vinci.
5. Generally accepted accounting principles are a. income tax regulations of the Internal Revenue Service. b. standards that indicate how to report economic events. c. theories that are based on physical laws of the universe. d. principles that have been proven correct by academic researchers.
6. Which one of the following is not a part of an account? a. Credit side b. Trial balance c. Debit side d. Title
7. Credits a. decrease both assets and liabilities. b. decrease assets and increase liabilities. c. increase both assets and liabilities. d. increase assets and decrease liabilities.
8. A debit to an asset account indicates a. an error. b. a credit was made to a liability account. c. a decrease in the asset. d. an increase in the asset.
9. The normal balance of any account is the a. left side. b. right side. c. side which increases that account. d. side which decreases that account.
10. The double-entry system requires that each transaction must be recorded a. in at least two different accounts. b. in two sets of books. c. in a journal and in a ledger. d. first as a revenue and then as an expense.
11. An accounting time period that is one year in length, but does not begin on January 1, is referred to as a. a fiscal year. b. an interim period. c. the time period assumption. d. a reporting period.
12. Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns. a. annual, annual b. monthly, annual c. quarterly, monthly d. monthly, monthly
13. Which of the following time periods would not be referred to as an interim period? a. Monthly b. Quarterly c. Semi-annually d. Annually
14. Which of the following are in accordance with generally accepted accounting principles? a. Accrual basis accounting b. Cash basis accounting c. Both accrual basis and cash basis accounting d. Neither accrual basis nor cash basis accounting 1
15. The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that a. assets should be matched with liabilities. b. efforts should be matched with accomplishments. c. dividends to stockholders should be matched with stockholders’ investments. d. cash payments should be matched with cash receipts.
16. The information for preparing a trial balance on a worksheet is obtained from a. financial statements. b. general ledger accounts. c. general journal entries. d. business documents.
17. Closing entries are necessary for a. permanent accounts only. b. temporary accounts only. c. both permanent and temporary accounts. d. permanent or real accounts only.
18. A post-closing trial balance will show a. only permanent account balances. b. only temporary account balances. c. zero balances for all accounts. d. the amount of net income (or loss) for the period.
19. The step in the accounting cycle that is performed on a periodic basis (i.e., monthly, quarterly) is a. analyzing transactions. b. journalizing and posting adjusting entries. c. preparing a post-closing trial balance. d. posting to ledger accounts.
20. A current asset is a. the last asset purchased by a business. b. an asset which is currently being used to produce a product or service. c. usually found as a separate classification in the income statement. d. an asset that a company expects to convert to cash or use up within one year.
21. The standards and rules that are recognized as a general guide for financial reporting are called a. generally accepted accounting standards. b. generally accepted accounting principles. c. operating guidelines. d. standards of financial reporting.
22. “Generally accepted” in the phrase generally accepted accounting principles means that the principles a. are proven theories of accounting. b. have substantial authoritative support. c. have been approved by the Internal Revenue Service. d. have been approved for use by the managements of business firms.
23. The conceptual framework developed by the Financial Accounting Standards Board a. was approved by a vote of all accountants. b. are rules that all accountants must follow. c. is viewed as providing a constitution for setting accounting standards for financial reporting. d. is legally binding on all accountants.
24. Accounting principles must be a. proven and tested. b. hypothesized and theorized. c. developed or decreed. d. universally accepted.
25. FASB has had the responsibility for developing accounting principles since the early a. 1900s. b. 1920s. c. 1940s. d. 1970s.
26. Which one of the following is primarily interested in the liquidity of a company? a. Federal government b. Stockholders c. Long-term creditors d. Short-term creditors
27 Which one of the following is not a characteristic generally evaluated in analyzing financial statements? a. Liquidity b. Profitability c. Marketability d. Solvency
28. In analyzing the financial statements of a company, a single item on the financial statements a. should be reported in bold-face type. b. is more meaningful if compared to other financial information. c. is significant only if it is large. d. should be accompanied by a footnote.
29. Short-term creditors are usually most interested in evaluating a. solvency. b. liquidity. c. marketability. d. profitability.
30. Long-term creditors are usually most interested in evaluating a. liquidity and solvency. b. solvency and marketability. c. liquidity and profitability. d. profitability and solvency
Aug 29, 2021 | Uncategorized
1. On July 1, 2010, Spear Co. issued 1,000 of its 10%, $1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2010 and mature on April 1, 2020. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance?
a. $1,015,000
b. $1,000,000
c. $990,000
d. $965,000
2. On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of $3,000,000, which mature on January 1, 2020. The bonds were issued for $3,405,000 to yield 8%, resulting in bond premium of $405,000. Solis uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. At December 31, 2010, Solis’s adjusted unamortized bond premium should be
a. $405,000.
b. $377,400.
c. $364,500.
d. $304,500.
3. On July 1, 2009, Noble, Inc. issued 9% bonds in the face amount of $5,000,000, which mature on July 1, 2015. The bonds were issued for $4,695,000 to yield 10%, resulting in a bond discount of $305,000. Noble uses the effective-interest method of amortizing bond discount. Interest is payable annually on June 30. At June 30, 2011, Noble’s unamortized bond discount should be
a. $264,050.
b. $255,000.
c. $244,000.
d. $215,000.
4. On January 1, 2010, Huff Co. sold $1,000,000 of its 10% bonds for $885,296 to yield 12%. Interest is payable semiannually on January 1 and July 1. What amount should Huff report as interest expense for the six months ended June 30, 2010?
a. $44,266
b. $50,000
c. $53,118
d. $60,000
5. On January 1, 2011, Doty Co. redeemed its 15-year bonds of $2,500,000 par value for 102. They were originally issued on January 1, 1999 at 98 with a maturity date of
January 1, 2014. The bond issue costs relating to this transaction were $150,000. Doty amortizes discounts, premiums, and bond issue costs using the straight-line method. What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)?
a. $90,000
b. $60,000
c. $50,000
d. $0
6. On its December 31, 2010 balance sheet, Emig Corp. reported bonds payable of $6,000,000 and related unamortized bond issue costs of $320,000. The bonds had been issued at par. On January 2, 2011, Emig retired $3,000,000 of the outstanding bonds at par plus a call premium of $70,000. What amount should Emig report in its 2011 income statement as loss on extinguishment of debt (ignore taxes)?
a. $0
b. $70,000
c. $160,000
d. $230,000
7. On January 1, 2006, Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2016 but were callable at 101 any time after December 31, 2009. Interest was payable semiannually on July 1 and January 1. On
July 1, 2011, Goll called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Goll’s gain or loss in 2011 on this early extinguishment of debt was
a. $30,000 gain.
b. $12,000 gain.
c. $10,000 loss.
d. $8,000 gain.
8. On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15-year bonds maturing on June 30, 2021. Interest is payable on June 30 and December 31. The unamortized balances in the bond discount and deferred bond issue costs accounts on June 30, 2011 were $105,000 and $30,000, respectively. On June 30, 2011, Omara acquired all of these bonds at 94 and retired them. What net carrying amount should be used in computing gain or loss on this early extinguishment of debt?
a. $2,970,000.
b. $2,895,000.
c. $2,865,000.
d. $2,820,000.
9. A ten-year bond was issued in 2009 at a discount with a call provision to retire the bonds. When the bond issuer exercised the call provision on an interest date in 2011, the carrying amount of the bond was less than the call price. The amount of bond liability removed from the accounts in 2011 should have equaled the
a. call price.
b. call price less unamortized discount.
c. face amount less unamortized discount.
d. face amount plus unamortized discount.
10. Paige Co. took advantage of market conditions to refund debt. This was the fourth refunding operation carried out by Paige within the last three years. The excess of the carrying amount of the old debt over the amount paid to extinguish it should be reported as a
a. gain, net of income taxes.
b. loss, net of income taxes.
c. part of continuing operations.
d. deferred credit to be amortized over the life of the new debt.
*11. Eddy Co. is indebted to Cole under a $400,000, 12%, three-year note dated
December 31, 2009. Because of Eddy’s financial difficulties developing in 2011, Eddy owed accrued interest of $48,000 on the note at December 31, 2011. Under a troubled debt restructuring, on December 31, 2011, Cole agreed to settle the note and accrued interest for a tract of land having a fair value of $360,000. Eddy’s acquisition cost of the land is $290,000. Ignoring income taxes, on its 2011 income statement Eddy should report as a result of the troubled debt restructuring
Gain on Disposal Restructuring Gain
a. $158,000 $0
b. $110,000 $0
c. $70,000 $40,000
d. $70,000 $88,000
Aug 29, 2021 | Uncategorized
Question 1
__________ marketing refers to the process of developing solid knowledge about customers and their likes and dislikes by tracking and using the pattern and content of communications to and from the customers.
A. Profile
B. Customer focused
C. Closed-loop
D. Responsive
Question 2
__________ refers to the ability of a business to identify and target individual customers, as with pointcast technologies.
A. Addressability
B. Accountability
C. Customer-centric
D. Modularization
Question 3
Prior to the emergence of relationship marketing, business researchers and practitioners emphasized the importance of understanding and implementing practices that promoted a company s ability to:
A. bring a product to market.
B. complete transactions.
C. compete in the marketplace.
D. increase product prices.
Question 4
__________ exists when an interaction between two parties indicates cooperative actions undertaken for mutual benefit; that is, the customer becomes an active partner in creating the nature of the exchange.
A. Synthesis
B. Symbiosis
C. A continuum
D. A collaborative orientation
Question 5
Which of the following is NOT one of the fundamental shifts in the ways that business researchers and practitioners address business exchange
A. From a competition focus to a cooperation focus
B. From a discrete, company-based focus to a networked focus
C. From a relational exchange focus to a transactional focus
D. From a product focus to a person focus
Question 6
By integrating and analyzing stored data, through a process known as data __________, businesses can better match targeted offers to customer needs and expectations.
A. analysis
B. warehousing
C. management
D. mining
Question 7
Customer __________ management is the oversight of the set of interactions between a company and its customers, from initial contact through customer support.
A. lifetime value
B. relationship
C. life cycle
D. expectations
Question 8
__________ is exhibited as willingness to rely on an exchange partner, based on perceptions of the partner s reliability and integrity.
A. Trust
B. Commitment
C. Satisfaction
D. Relationship
Question 9
A(n) __________ is a software agent that can learn a customer s preferences, and then carry out search actions that match this knowledge with knowledge of other user s preferences.
A. search engine
B. recommender system
C. CRM system
D. smart card
Question 10
Which of the following is NOT an expectation of a payment system
A. Integrity
B. Confidentiality
C. Authority
D. Authentication
Aug 29, 2021 | Uncategorized
SET 1
1)Which of the following statements is true?
A. A security is a claim issued by a firm that pays owners interest, not dividends.
B. A call option analyzes conflicts of interest and behavior in a principal-agent relationship.
C. An agent-manager can never make bad decisions.
D. The difference between the value of one action and the value of the best alternative is called an opportunity cost.
2) Book value, or net book value, refers to
A. the statement of a firm’s financial position at one point in time, including its assets and the claims on those assets by creditors and owners
B. the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of the item’sliquidity
C. an agent-manager never making bad decisions
D. the net of assets less liabilities shown in the accounting statements
3) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true?
A. The current yield was less than 9% when the bond was first issued.
B. The current yield was greater than 9% when the bond was first issued.
C. The market value of the bond is more than $1,000.
D. The market value of the bond is less than $1,000.
4) If the yield to maturity for a bond is less than the bond’s coupon rate, the market value of the bond is __________.
A. greater than the par value
B. less than the par value
C. equal to the par value
D. cannot tell
5) Forinvestors, the proper measure of a stock’s risk is its __________.
A. nondiversifiable risk
B. specific risk
C. nonsystematic risk
D. standard deviation
6) A company’s beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm’s stock price?
A. Share price decreases by 5%
B. Share price decreases by 6.5%
C. Share price increases by 7.5%
D. Share price decreases by 7.5%
7) Which of these investments would you expect to have the highest rate of return for the next 20 years?
A. U.S. Treasury bills
B. Long-term corporate bonds
C. Intermediate-term U.S. government bonds
D.Money marketfunds
8) Dimensions of risk include __________.
A. uncertainty about the future outcome
B. the certainty of a negative outcome
C. the impossibility of the same return
D. uncertainty about yesterday’s outcome
9) One problem with using negative values for the proportion invested in the riskless asset to represent a borrowed amount is that the implied borrowing rate of interest is the same as the __________.
A. prime rate of interest
B. current rate of interest
C. lending rate of interest
D. nominal rate of interest
10) If you were willing to bet that the overall stock market was heading up on a sustained basis, it would be logical to invest in
A. high beta stocks
B. low beta stocks
C. stocks with large amounts of unique risk
D. stocks that plot below the security market line
11) Stony Products has an inventory conversion period (ICP) of about 70 days. The receivables collection period (RCP) is 30 days. The payables deferral period (PDP) is about 40 days. What is Stony’s cash conversion cycle (CCC)?
A. 100 days
B. 60 days
C. 140 days
D. 70 days
CCC = ICP + RCP PDP = 70 days + 30 days 40 days = 60 days
12) The main source of short-term operating capital is _________.
A. trade credit
B. bank loans
C. bonds
D. sale of treasury stock
13) An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?
A. Each stock in the portfolio has its own beta.
B.Selling any stock in this portfolio will lower the beta of the portfolio.
C. An investor cannot change the risk of this portfolio by her choice about personal leverage.
D. Each stock in the portfolio will have a beta greater than 1.
14) An all-equity-financed firm would __________.
A. not pay any income taxes, because interest would exactly offset its taxable income.
B. pay corporate income taxes, because it would have interest expense.
C. not pay corporate income taxes, because it would have no interest expense.
D. pay corporate income taxes if its taxable income is positive.
15) If a firm wants to lower its weighted average cost of capital (WACC), one way to do so would be to
A. sell more common shares
B. sell more bonds
C. pay a cashdividend
D. issue a stock dividend
16) Boeing is a world leader in commercial aircraft. In the face of competition, Boeing often faces a critical __________ decision: whether to develop a new generation of passenger aircraft.
A. present value
B. payback
C. capital budgeting
D. dividend
17) Ideas for capital budgeting projects come from all levels within an organization. The bottom-up process results in ideas moving __________ through the organization.
A. downward
B. upward
C. sideways
D. any way
18) Which of the following statements is true?
A. A mutually exclusive project can be chosen independently of other projects
B. When undertaking one project preventsinvestingin another project, and vice versa, the projects have a positive payback.
C. A conventional project has an initial cash outflow followed by one or more expected future cash inflows.
D. Whenever projects are independent and conventional, the internal rate of return (IRR) and net present value (NPV) methods will disagree
19) In practice, the __________ rule is the preferred criteria to accept or reject a capital investment project.
A. NPV
B. profitability index
C. IRR
D. payback
20) The Jerome Inc. western regional branch has been looking to install a new distribution center. The analysts have run the numbers on the distribution center costs and annual inflow from the investment. The project will cost $5 million at the beginning of the first year. The project will generate $1 million in earnings before interest and taxes at the end of each year. Jerome is in the 35% tax bracket and annual depreciation equates to $500,000 per year. The distribution center’s end of the fifth year’s salvage equals its book value, or $2,500,000. Compute the project’s NPV, assuming Jerome’s WACC equals 12%.
A. -$1,238,328
B. $564,060
C. $1,825,731
D. -$66,776
21) The __________ method breaks down when evaluating projects in which the sign of the cash flow changes.
A. IRR
B. NVP
C. PI
D. Payback
22) Studies show systematic differences in capital structures across industries. These are due primarily to differences in __________.
A. a firm’s inventory turnover ratio
B. the ability of assets to support borrowing
C. accounting practices
D. management’s attitude toward what other industries are doing
23) Capital structure decisions refer to the
A. dividend yield of the firm’s stock
B. blend of equity and debt used by the firm
C. capital gains available on the firm’s stock
D.maturity datefor the firm’s securities
24) Which of the following statements concerning preferred stock is true?
A. Preferred stockholders have a prior claim on the income and assets of the firm, as compared to the claims of lenders.
B. Preferred stock dividends per share are normally increased as the earnings of the firm increase.
C. Preferred dividends per share are usually not cut or suspended unless the firm is faced with serious financial problems.
D. Preferred stockholders are the ultimate owners of the firm.
25) Mortgage bonds are __________.
A. secured by a lien on the issuer’s general assets
B. secured by the lien on the issuer’s specific, real assets
C. usually secured by assets such as common shares of one of the issuer’s subsidiaries
D. a form of unsecured debt
26) __________ says to calculate the net advantage of leasing based on the incremental after-tax benefits that leasing will provide.
A. The capital market efficiency
B. The options principle
C. The principle of comparative advantage
D. The principle of incremental benefits
27) From the lessee’s viewpoint, the relevant discount rate for evaluating a lease versus buy decision is the __________.
A. cost of issuing new common stock
B. pretax cost of issuing debt
C. after-tax cost of issuing debt
D. lessor’s cost of debt
28) The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost of production is $0.387 per loaf. Captain John’s expects that expansion will allow them to sell an additional 4.5 million loaves in the next 5 years. What additional revenues minus expenses will be generated from expansion?
A. $912,500
B. $1,000,500
C. $1,012,500
D. $1,102,500
29) Which of the following statements is true?
A. Soft capital rationing refers to the rationing imposed externally by limited funds for borrowing from outside sources.
B. Hard capital rationing refers to the rationing imposed internally by the firm.
C. A post audit is a set of procedures for evaluating a capital budgeting decision after the fact.
D. Few firms will engage in capital rationing.
30) In efficient markets, as in the United States, market prices are not expected to be __________.
A. wrong
B. fair
C. followed by many analysts
D. incorporate all information
SET 2
1) Dimensions of risk include ___________. A. the certainty of a negative outcomeB. uncertainty about the future outcomeC. uncertainty about yesterday s outcome D. the impossibility of the same return
2) One problem with using negative values for w1 (the proportion invested in the riskless asset) to represent a borrowed amount is that the implied borrowing rate of interest is the same as __________. A. the current rate of interest B. the prime rate of interest C. the nominal rate of interestD. the lending rate of interest
3) The Principle of __________ implies that the expected return for an asset equals its required return. A. Risk-Return Trade-OffB. Capital Market EfficiencyC. Signaling D. Comparative Advantage
4) __________ says to calculate the incremental after-tax cash flows connected with working capital decisions.A. The Principle of Incremental BenefitsB. The Signaling Principle C. The Options Principle D. The Principle of Time Value of Money
6) Stony Products has a payables turnover of six times. What is Stony’s payables deferral period (PDP)? A. about 30.42 days B. about 56.50 daysC. about 60.83 daysD. none of these
7) Firms make short-term financial decisions just about every day solving such questions as __________. A. Where should we borrow? B. Where should we invest our cash? C. How much liquidity should we have?D. all of these
8) __________ says to calculate the incremental after-tax cash flows connected with working capital decisions. A. The Options Principle B. The Signaling PrincipleC. The Principle of Incremental BenefitsD. The Principle of Time Value of Money
9) Main sources of short-term funds include __________. A. trade credit and commercial paper B. futures and bank loans C. bonds and trade credit D. none of these
10) Which of the following statements is (are) true? A. The “dating 120” or the “60 extra” mean that the clock does not start until 120 or 60 days after the invoice date. B. Prox or proximate refers to the next month. C. Invoices with “10th prox” must be paid by the 10th of the next month. D. all of these
11) Which (if any) of the following statements is false? A. The invoice is a written statement about goods that were ordered, along with their prices and the payment dates. In other words, the invoice is simply the bill for purchases.B. For the 4/10, net 40 credit terms, you are offering a total credit period of 30 days from the date of the invoice, a discount period of 10 days, and a 4% discount if paid on or before the discount period expires. C. When a firm is using invoice billing, the invoice that accompanies shipment is a separate bill to be paid. D. none of these
112) Most credit sales are made on an open account basis, which means __________. A. that suppliers cannot dictate the terms of the purchase.B. that customers simply purchase what they want. C. that suppliers dictate the terms of the purchase. D. that customers cannot simply purchase what they want.
13) An all-equity-financed firm would __________.A. pay corporate income taxes if its taxable income is positive. B. not pay any income taxes because interest would exactly offset its taxable income. C. pay corporate income taxes because it would have interest expense. D. not pay corporate income taxes because it would have no interest expense.
14) A profitable firm would __________. A. pay corporate income taxes because it would have interest expense. B. pay corporate income taxes because it would not have interest expense.C. pay corporate income taxes if it had a positive taxable income. D. none of these
15) An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true? A. Each stock in the portfolio will have a beta greater than one.B. Each stock in the portfolio has its own beta. C.Selling any stock in this portfolio willlower the beta of the portfolio. D. An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing).
16) Boeing Corporation is a world leader in commercial aircraft. In the face of competition, Boeing often faces a critical __________ decision: whether to develop a new generation of passenger aircraft. A. dividend B. present value C. paybackD. capital budgeting
17) The capital budgeting process can be broken down into five steps. These steps include which of the following? A. Generate ideas for capital budgeting projects B. Prepare proposals C. Review existing projects and facilitiesD. all of these
SET 3
2) Book value, or net book value, refers to
A. the statement of a firm s financial position at one point in time, including its assets and the claims on those assets by creditors and owners
B. the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of the item s liquidity
C. an agent-manager never making bad decisions
D. the net of assets less liabilities shown in the accounting statements
3) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true?
A. The current yield was less than 9% when the bond was first issued.
B. The current yield was greater than 9% when the bond was first issued.
C. The market value of the bond is more than $1,000.
D. The market value of the bond is less than $1,000.
4) If the yield to maturity for a bond is less than the bond’s coupon rate, the market value of the bond is __________.
A. greater than the par value
B. less than the par value
C. equal to the par value
D. cannot tell
5) For investors, the proper measure of a stock’s risk is its __________.
A. nondiversifiable risk
B. specific risk
C. nonsystematic risk
D. standard deviation
6) A company s beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm’s stock price?
A. Share price decreases by 5%
B. Share price decreases by 6.5%
C. Share price increases by 7.5%
D. Share price decreases by 7.5%
7) Which of these investments would you expect to have the highest rate of return for the next 20 years?
A. U.S. Treasury bills
B. Long-term corporate bonds
C. Intermediate-term U.S. government bonds
D. Money market funds
8) Dimensions of risk include __________.
A. uncertainty about the future outcome
B. the certainty of a negative outcome
C. the impossibility of the same return
D. uncertainty about yesterday s outcome
9) One problem with using negative values for the proportion invested in the riskless asset to represent a borrowed amount is that the implied borrowing rate of interest is the same as the __________.
A. prime rate of interest
B. current rate of interest
C. lending rate of interest
D. nominal rate of interest
10) If you were willing to bet that the overall stock market was heading up on a sustained basis, it would be logical to invest in
A. high beta stocks
B. low beta stocks
C. stocks with large amounts of unique risk
D. stocks that plot below the security market line
11) Stony Products has an inventory conversion period (ICP) of about 70 days. The receivables collection period (RCP) is 30 days. The payables deferral period (PDP) is about 40 days. What is Stony’s cash conversion cycle (CCC)?
A. 100 days
B. 60 days
C. 140 days
D. 70 days
12) The main source of short-term operating capital is _________.
A. trade credit
B. bank loans
C. bonds
D. sale of treasury stock
13) An investor s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?
A. Each stock in the portfolio has its own beta.
B. Selling any stock in this portfolio will lower the beta of the portfolio.
C. An investor cannot change the risk of this portfolio by her choice about personal leverage.
D. Each stock in the portfolio will have a beta greater than 1.
14) An all-equity-financed firm would __________.
A. not pay any income taxes, because interest would exactly offset its taxable income.
B. pay corporate income taxes, because it would have interest expense.
C. not pay corporate income taxes, because it would have no interest expense.
D. pay corporate income taxes if its taxable income is positive.
15) If a firm wants to lower its weighted average cost of capital (WACC), one way to do so would be to
A. sell more common shares
B. sell more bonds
C. pay a cash dividend
D. issue a stock dividend
16) Boeing is a world leader in commercial aircraft. In the face of competition, Boeing often faces a critical __________ decision: whether to develop a new generation of passenger aircraft.
A. present value
B. payback
C. capital budgeting
D. dividend
17) Ideas for capital budgeting projects come from all levels within an organization. The bottom-up process results in ideas moving __________ through organization.
A. downward
B. upward
C. sideways
D. any way
Aug 29, 2021 | Uncategorized
1. Building a dynamic organization is another way of describing which function of management?
a. Planning
b. Organizing
c. Leading
d. Controlling
Objective: Explain how internal and external factors impact the four functions of management.
2. Organizations that are affected by and that affect their environment are called __________.
a. inputs
b. outputs
c. open systems
d. macroenvironment
3. Specific government organizations in a firm’s immediate task environment are called __________.
a. substitutes
b. new entrants
c. regulators
d. economic indicators
Objective: Explain how managers use delegation.
4. The assignment of additional responsibilities to a subordinate is referred to as
a. pandering
b. centralization
c. delegation
d. span of control
Week Two: Planning as a Management Function
Objective: Evaluate the planning function of management.
5. The targets or ends the manager wants to reach are called
a. goals
b. plans
c. mission statement
d. vision
6. Which is the first step in the formal planning process?
a. Goal and plan evaluation
b. Situational analysis
c. Monitor and control
d. Implementation
Objective: Analyze various factors that influence strategic, tactical, operational, and contingency planning.
7. If expansion to Australia does not materialize, Widget, Inc.’s backup plan is to expand to Asia. This backup plan is an example of a
a. strategic plan
b. contingency plan
c. standing plan
d. single-use plan
Objective: Analyze the impact that legal issues, ethics, and corporate social responsibility have on management planning.
8. A system of rules that governs the ordering of values is referred to as
a. ethics
b. corporate legitimacy
c. justice
d. legal system
Week Three: Organizing as a Management Function
Objective: Evaluate the organizing function of management as it relates to organizational resources.
9. The final stage in the human resource planning process is to
a. evaluate the activities conducted to ensure they produce the desired results
b. discharge those employees determined to be ineffective at realizing organizational goals
c. restart the process
d. distribute compensation adjustments
10. The programming stage of human resources management consists of
a. setting up employee files in the computer
b. evaluating employee performance levels
c. determining appropriate automation methods
d. implementing plans determined earlier
11. Human resources planning has three stages. They are
a. planning, executing, and delivering
b. hiring, training, and firing
c. planning, programming, and evaluating
d. recruiting, screening, and hiring
Objective: Compare and contrast various types of organizational structures.
12. A process in which different individuals and units perform different tasks is
a. accountability
b. authority
c. specialization
d. differentiation
13. Which of these is created through the division of labor and job specialization?
a. Integration
b. Coordination
c. Differentiation
d. Span of control
Objective: Evaluate how organizational functions impact organizational structures.
14. The organizational pyramid is commonly called the
a. hierarchy
b. structure
c. bureaucracy
d. framework
15. An organization with departmentalization that groups units around products, customers, or geographic regions is called a
a. divisional organization
b. centralized organization
c. matrix organization
d. functional organization
Week Four: Leading as a Management Function
Objective: Differentiate between management and leadership.
16. Which of the following statements best differentiate leadership from management?
a. Leadership challenges the process, inspires a shared vision, enables others to act, models the way, and manages the heart.
b. Leadership deals with the ongoing day-to-day complexities of the organization.
c. Management orchestrates important changes to the organization while leadership does not.
d. Leadership is mostly transformational while management is mostly concerned with organizational controls.
17. Which of the following reflects a possible cause for an inappropriate vision?
a. The vision is too challenging.
b. The vision does not motivate all members of the organization.
c. The vision reflects only the leader’s needs.
d. The vision is too long-term.
Objective: Examine the role and responsibilities of leaders in creating and maintaining a health organizational culture.
18. Behavior that provides guidance, support, and corrective feedback for the day-to-day activities of work unit members is
a. strategic leadership
b. supervisory leadership
c. organizational leadership
d. task leadership
19. The ability to influence others is
a. power
b. cohesion
c. motivation
d. charisma
20. Which type of power is dominant when a leader utilizes her ability to control punishments?
a. Legitimate power
b. Reward power
c. Coercive power
d. Referent power
Objective: Examine the role and responsibilities of leaders in creating and maintaining a health organizational culture.
21. To be competitive in a global economy, Europeans must increase their level of
a. population density
b. productivity
c. espionage activity
d. philanthropic contributions
Week Five: Controlling as a Management Function
Objective: Compare and contrast various control mechanisms.
22. __________ control involves culture, shared values, beliefs, expectations, and trust. Works best where there is no one best way to do a job and employees are empowered to make decisions.
a. Market
b. Clan
c. Bureaucratic
d. Feedback
23. This type of control is involved when performance data have been gathered and analyzed and the results have been returned to someone or something in the process to make corrections.
a. Feedback control
b. Concurrent control
c. Feed forward control
d. Market control
24. Which of the following is the review of one organization by another organization?
a. Internal audit
b. External audit
c. Feedback audit
d. Telephonic audit
25. Control based on the norms, values, shared goals, and trust among group members is
a. clan control
b. feedback control
c. concurrent control
d. feed forward control
26. Control based on the use of pricing mechanisms and economic information is
a. clan control
b. feedback control
c. market control
d. feed forward control
27. The use of rules, regulations, and authority to guide performance is
a. clan control
b. bureaucratic control
c. market control
d. concurrent control
Objective: Examine positive and negative reactions to the use of controls.
28. Expected performance for a given goal is a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance, and is assessed as a
a. standard
b. management audit
c. budget
d. debt-equity ratio
29. When Jennifer concentrates on the significant deviations from established standards, she is using
a. unreasonable control
b. the principle of deviation
c. inefficient control
d. the principle of exception
Aug 29, 2021 | Uncategorized
Which of the following statements best represents what finance is about? How political, social, and economic forces affect corporations Maximizing profits Creation and maintenance of economic wealth Reducing risk
Consider the timing of the profits of the following certain investment projects: Profit L S Year 1 $ 0 $ 3000 Year 2 $ 3000 $ 0 Project S is preferred to Project L. Project L is preferred to Project S. Projects S and L are equally desirable. A goal of profit maximization would favor Project S only.
Which of the following factors enable a public corporation to grow to a greater extent, and perhaps at a faster rate, than a partnership or a proprietorship? Unlimited liability of shareholders Access to the capital markets Limited life Elimination of double taxation on corporate income All of the above
How could you compensate an investor for taking on a significant amount of risk? Increase the expected rate of return. Raise more debt capital. Offer stock at a higher price. Increase sales.
If an investor had a choice of receiving $1,000 today, or $1,000 in five years, which would the average investor prefer? $1,000 in five years because they are not good at saving money. $1,000 today because it will be worth more than $1,000 received in five years. $1,000 in five years because it will be worth more than $1,000 received today. Investors would be indifferent to when they would receive the $1,000. None of the above.
Which of the following is not a reason why financial analysts use ratio analysis? a. Ratios help to pinpoint a firm’s strengths. b. Ratios restate accounting data in relative terms. c. Ratios are ideal for smoothing out the differences that may exist when comparing firms that use different accounting practices. d. Some of a firm s weaknesses can be identified through the usage of ratios.
The question “Did the common stockholders receive an adequate return on their investment?” is answered through the use of: a. liquidity ratios. b. profitability ratios. c. coverage ratios. d. leverage ratios.
Marshall Networks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%. The firm has a return on equity of 17.5%. Calculate Marshall s debt ratio. a. 30% b. 40% c. 50% d. 60%
The quick ratio is a better measure of liquidity than the current ratio if the firm has current assets composed primarily of: a. cash. b. work in process inventory. c. marketable securities. d. accruals.
Which of the following is not a limitation related to the usage of ratios when reviewing a firm s performance? a. Many firms experience seasonality in their operations. b. Ratios cannot be used to compare firms that are in the same industry if one firm s sales are higher than another firm s. c. Some firms operate in a variety of business lines, which makes it difficult to make comparisons. d. Accounting practices differ widely among firms.
11. The _______ is the federal agency primarily responsible for regulating the securities industry. a. FTC b. SEC c. FRB d. SCC
12. __________ is a financial specialist who underwrites and distributes new securities of public corporations. a. The Federal Reserve Board b. A commercial banker c. The SEC d. An investment banker
13. What is the role of the SEC as it relates to the issuance of new securities by U.S. corporations? a. To guaranty the sale of securities to the public b. To ensure accurate and complete disclosure of information about the issuing firm to the public c. To reduce the cost of issuing securities to the public d. To provide investment advice to the purchasing public
14. All of the following are found in the cash budget except: a. a net change in cash for the period. b. inventory. c. cash disbursements. d. new financing needed.
A company collects 60% of its sales during the month of the sale, 30% one month after the sale, and 10% two months after the sale. The company expects sales of $10,000 in August, $20,000 in September, $30,000 in October, and $40,000 in November. How much money is expected to be collected in October? a. $25,000 b. $15,000 c. $35,000 d. None of the above
Which of the following are considered to be spontaneous sources of financing (i.e., they arise naturally during the course of doing business)? a. Notes payable and common stock b. Accounts receivable and bonds c. Fixed assets and inventory d. Accounts payable and accrued expenses
The first step involved in predicting financing needs is: a. projecting the firm s sales revenues and expenses over the planning period. b. estimating the levels of investment in current and fixed assets that are necessary to support the projected sales. c. determining the firm s financing needs throughout the planning period. d. none of the above.
18. At 8% compounded annually, how long will it take $750 to double? a. 6.5 years b. 48 months c. 9 years d. 12 years
19. A friend plans to buy a big-screen TV/entertainment system and can afford to set aside $1,320 toward the purchase today. If your friend can earn 5.0%, how much can your friend spend in four years on the purchase? Round off to the nearest $1. a. $1,444 b. $1,604 c. $1,764 d. $1,283
20. You have just purchased a share of preferred stock for $50.00. The preferred stock pays an annual dividend of $5.50 per share forever. What is the rate of return on your investment? a. .055 b. .010 c. .110 d. .220
21. A commercial bank will loan you $7,500 for two years to buy a car. The loan must be repaid in 24 equal monthly payments. The annual interest rate on the loan is 12% of the unpaid balance. What is the amount of the monthly payments? a. $282.43 b. $390.52 c. $369.82 d. $353.05
22. Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Gina s plan is to invest her money by depositing into an IRA at the end of every year. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Round off to the nearest $1. a. $1,497 b. $5,281 c. $75 d. $3,622
23. The break-even model enables the manager of the firm to: a. calculate the minimum price of common stock for certain situations. b. set appropriate equilibrium thresholds. c. determine the quantity of output that must be sold to cover all operating costs. d. determine the optimal amount of debt financing to use.
24. Financial leverage means financing some of a firm s assets with: a. commercial paper. b. preferred stock. c. corporate bonds. d. all of the above.
25. In general, as the level of sales rises above the break-even point, the degree of operating leverage: a. increases. b. decreases. c. remains constant. d. none of the above.
26. Due to a technical breakthrough, the fixed costs for a firm drop by 25%. Prior to this breakthrough, fixed costs were $100,000 and unit contribution margin was and remains at $5.00. The new amount of break-even units will be: a. 25,000. b. 20,000. c. 15,000. d. 10,000.
27. The firm should accept independent projects if: a. the payback is less than the IRR. b. the profitability index is greater than 1.0. c. the IRR is positive. d. the NPV is greater than the discounted payback.
28. The NPV method: a. is consistent with the goal of shareholder wealth maximization. b. recognizes the time value of money. c. uses cash flows. d. all of the above.
29. ABC Service can purchase a new assembler for $15,052 that will provide an annual net cash flow of $6,000 per year for five years. Calculate the NPV of the assembler if the required rate of return is 12%. (Round your answer to the nearest $1.) a. $1,056 b. $4,568 c. $7,621 d. $6,577
30. Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520. Year Net Cash Flow 1 $1,000 2 $1,500 3 $ 500 a. 48% b. 40% c. 32% d. 28%
31. An increase in ___________ would increase net working capital. a. plant and equipment b. accounts payable c. accounts receivable d. both b and c
32. Which of the following is most likely to be a temporary source of financing? a. Commercial paper b. Preferred stock c. Long-term debt d. All of the above
33. In order to maximize firm value, management should invest in new assets when the internal rate of return is: a. greater or equal to the firm s marginal cost of capital. b. greater than the cost of debt financing. c. less than or equal to the accounting rate of return. d. less than or equal to the firm s marginal cost of capital.
34. In the basic model, the optimal inventory level is the point at which: a. total cost is minimized. b. total revenue is maximized. c. carrying costs are minimized. d. ordering costs are minimized.
35. The management of inventory is important because: a. carrying too much inventory can result in a loss of efficiency and profitability. b. carrying excessive inventory can result in a loss of sales. c. carrying too little inventory can decrease the average collection period. d. carrying too little inventory will adversely affect the firm s CAPM.
36. An operating lease usually: a. is for a shorter length of time than a financial lease. b. is for high-tech equipment that might become obsolete rapidly. has the income tax advantage that the entire lease payment is a deductible expense. both a and c. e. all the above.
37. If a lease is extended for a length of time that is equal to the entire useful life of the equipment, the lease: a. is referred to as an operating lease. b. carries no income tax deduction. c. is a financial lease. d. will be terminated by the IRS.
38. Which of the following would decrease free cash flows? A decrease in: a. depreciation expense. b. interest expense. c. incremental sales. d. both a & c. e. all of the above.
39. An increase in the ____________ is likely to encourage a corporation to increase its debt ratio. a. corporate tax rate b. personal tax rate c. company s degree of operating leverage d. expected cost of bankruptcy
40. A merger that is driven by the potentially large reduction in the staffing of overlapping functions and the integration of the two companies strong similar product lines is referred to as a: a. conglomerate merger. b. vertical merger. c. horizontal merger. d. diversification merger.
Aug 29, 2021 | Uncategorized
- Leas Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with respect to the number of calls in a month. At a volume of 25,000 calls in a month, the costs of operating the helpline total $452,500.
To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)
(Points : 2)
$442,545
$452,500
$473,326
$432,590
2. Within the relevant range, as the number of units produced increases: (Points : 2)
the variable cost per unit remains the same.
fixed costs in total remain the same.
variable costs increase in total.
all of these.
3. An understanding of the underlying behavior of costs helps in all of the following EXCEPT: (Points : 2)
sales volume can be better estimated
costs can be better estimated as volume expands and contracts
true costs of processes can be better evaluated
process inefficiencies can be better identified and, as a result, improved
4. The following cost data pertain to the operations of Ladwig Department Stores, Inc., for the month of December.
Corporate legal office salaries: $68,000
Shoe Department cost of sales: Brentwood Store $66,000
Corporate headquarters building lease: $86,000
Store manager’s salary, Brentwood Store: $10,000
Shoe Department sales commissions, Brentwood Store: $5,000
Store utilities, Brentwood Store: $11,000
Shoe Department manager’s salary, Brentwood Store: $3,000
Central warehouse lease cost: $3,000
Janitorial costs, Brentwood Store: $11,000
The Brentwood store is just one of many stores owned and operated by the company. The shoe department is one of the many departments at the Brentwood store. The central warehouse serves all of the company’s stores.
What is the total amount of the costs listed above that are direct costs of the shoe department?
(Points : 2)
$66,000
$74,000
$106,000
$71,000
5. Mendoza, Inc. manufactures and sells aluminum dishes for camping and outdoor enthusiasts through a mail order catalog operation. Large rectangular sheets of aluminum are purchased by Mendoza. These sheets are cut down into smaller squares and are then fed into a machine where they are trimmed down into a circular shape. These aluminum circles are then fed into a stamping machine where they are formed into plates and bowls. After production, the dishes are shipped to warehouses where they are packed and then shipped to customers.
Which of the following terms could be used to correctly describe the cost of electricity used to run the stamping machine?
(Points : 2)
variable cost
indirect cost
manufacturing overhead cost
All of these
6. A manufacturing plant for Vanguard produces two product lines: Optimist sailboats and 420 sailboats. An indirect cost for the Optimist line is the: (Points : 2)
cloth used to make Optimist sails
labor to pour 420 hull molds
shift supervisor for the Optimist line
plant supervisor
7. A sunk cost is: (Points : 2)
a cost that is planned to be incurred in the near future.
irrelevant for decision making.
a cost connected with drilling for oil
affected by changes in the level of activity.
8. Depreciation of plant facilities is classified as a(n): (Points : 2)
direct material cost
direct labor cost
indirect manufacturing cost
general and administrative cost
9. Chezpere Company manufactures and sells washing machines. In order to make assembly of the machines faster and easier, some of the metal parts in the machines are coated with grease. How should the cost of this grease be classified?
a. Direct Material Cost
b. Fixed Cost
(Points : 2)
a. Yes, b. Yes
a. Yes, b. No
a. No, b. Yes
a. No, b. No
10. A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the: (Points : 2)
material used to make the hockey sticks
labor to bind the shaft to the blade of the hockey stick
shift supervisor for the hockey line
plant supervisor
11. Which of the following production costs, if expressed on a per unit basis, would be most likely to change significantly as the production level varies? (Points : 2)
Direct materials.
Direct labor.
Fixed manufacturing overhead.
Responses A and B are both correct.
12. The cost of the cushions that are used to manufacture sofas is best described as a: (Points : 2)
manufacturing overhead cost.
period cost.
variable cost.
conversion cost.
13. Cost behavior refers to: (Points : 2)
how costs react to a change in the level of activity
whether a cost is incurred in a manufacturing, merchandising, or service company
classifying costs as either product or period costs
whether a particular expense has been ethically incurred
14. Cost distortion is common in conventional costing systems because: (Points : 2)
of the recent change in cost structure
the number of products being manufactured is increasing
fixed costs are allocated using a volume measure
fixed costs create higher risks for a company
15. A mattress manufacturer has provided the following cost data. The cost of fabric, foam, springs, and lumber is $68,000. The cost of indirect materials is $21,000. Labor cost of assembly workers is $52,000 and for production supervisors is $14,000. How much indirect cost is included in the above costs? (Points : 2)
$21,000
$35,000
$89,000
$103,000
16. At a sales volume of 38,000 units, Tirri Corporation’s property taxes (a cost that is fixed with respect to sales volume) total $733,400.
To the nearest whole center, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.)
(Points : 2)
$19.30
$19.66
$19.72
$19.48
17. Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
The salary that Mark earns at his present employ is:
(Points : 2)
a variable cost
a fixed cost
a product cost
an opportunity cost
18. An example of a cost object is: (Points : 2)
a bicycle
an individual fast food franchise
the produce department of a grocery store
All of the above are correct.
19. Indirect manufacturing costs: (Points : 2)
can be traced to the product that created the costs
may have a cause-and-effect relationship with capacity rather than with individual units of production
generally include the cost of material and the cost of labor
are included in period costs
20. How much sunk cost is represented in the following list?
Annual operating cost $80,000
Fixed operating costs other than depreciation $14,000
Resale value, if sold now $25,000
Original cost of current machine $68,000
(Points : 2)
$80,000
$14,000
$25,000
$68,000
Aug 29, 2021 | Uncategorized
Musical Instruments Company manufactures two products (trumpets and trombones). Overhead costs ($175,000) have been divided into three cost pools that use the following activity drivers.
|
Product |
Number of setups |
Machine hours |
Packing orders |
|
|
Trumpets |
50 |
1,500 |
150 |
|
|
Trombones |
50 |
4,500 |
250 |
|
|
Cost per pool |
$60,000 |
$90,000 |
$25,000 |
|
|
|
|
|
|
|
| Required (show all calculations): |
|
|
|
| a. What is the allocation rate for trumpets per setup using activity-based costing? |
|
|
b. What is the allocation rate for trumpets per machine hours using activity-based costing?
|
| c. What is the allocation rate for trumpets per packing order using activity-based costing?
|
Aug 29, 2021 | Uncategorized
Assignment 1: Accounting Framework and Governing Boards
Write a three to four (3-4) page paper in which you:
1. Create an argument in agreement or disagreement of the premise that domestic and / or international governing boards are effective in setting and enforcing standards. Provide support for your position.
2. Choose a key area of disagreement between GAAP and IFRS, and positions held by the FASB, IASB, and the SEC on the identified area. Evaluate the positions of each party on the issue in question. Propose a new strategy that would better accommodate all of the parties involved.
3. Choose a recently proposed accounting regulation. Evaluate how and where the proposed regulation would impact financial statements. Provide feedback as to all or part of the proposed regulation with which you either agree or disagree.
4. Predict at least one (1) area of accounting regulation that may be changed, or where a new regulation could be generated. Assess how and where that potential change might impact financial statements or financial reporting.
5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources
Aug 29, 2021 | Uncategorized
Mycrone Case
ACBU 2223
Spring 2013
Instructions for faculty members
Students can work by themselves or in teams of up to four persons, all from the same class. They should not discuss the case with anyone except their teammates (if any). If a student chooses to work alone, the student should not ask others for help. When you collect the case, please do not give out the answers since the information will spread and some students will find out the answer before their case is due.
Mycrone Case ACBU 2223 Spring 2013
The Mycrone Company is a publicly traded corporation that produces different types of digital control systems. My name is Alan Smith and I have worked for this company for the last ten years in the controller s office. I was both an accounting and finance major in university. The company currently produces 300 products and does not anticipate any new products coming out over the next three years. I have previously mentioned to my superiors that it is not appropriate for our firm to use a traditional accounting system (where overhead costs are allocated across products at a rate of 500% of direct labor costs) when different products require different amounts of indirect resources. For example, under the traditional system all costs associated with testing of products for quality assurance purposes are part of overhead costs and therefore allocated across products based on direct labor costs. Yet, some of our products require as much as 5 hours of testing whereas some products require less than 1 minute of testing with no connection to direct labor costs. Given that traditional costing systems result in significant cost distortions when determining products costs and given that the firm now has revenues of over $700,000,000 a year, Mycrone has decided to adopt activity based costing over the next year or two.
Mycrone s management has hired Sabley Consulting to help us implement activity based costing. I will be acting as the liaison between our firm and Sabley. As part of the initial implementation phase, I have asked Sabley to derive the costs and profits associated with two of our products, lennair and decase, so that these costs and profits could be compared with the costs and profits under our current traditional accounting system. I picked these products since Mycrone management believe they have very different demands on indirect resources. Further, lennair is sold in large quantities whereas decase is sold in small quantities and traditional accounting systems can cause large cost distortions in different directions for products sold in large and small quantities.
Current information from our existing system on a per unit basis is shown in Exhibit 1.
Exhibit 1 lennair decase Direct material $6 $6 Direct labor hours 0.4 0.4 Direct labor wage rate per hour $25 $25 Sales price per unit $69.40 $97.50
My staff has identified for Sabley five cost pools. Information on those cost pools and the related allocation bases are provided in Exhibit 2. Exhibit 2 Total Costs Allocation Base Value of Allocation Base Equipment setups $20,400,000 Number of setups 60,000 Purchase orders $10,150,000 number of purchase orders 145,000 Machining $61,250,000 number of machine hours 1,750,000 Testing $5,440,000 number of testing hours 640,000 Packaging $10,240,000 number of containers 1,600,000 Although fixed costs are lumped in with variable costs across the five different cost pools, I am aware that machining related costs consists almost exclusively of depreciation costs. Hence, machining costs will be treated as entirely fixed with respect to machine hours. Each machine is used in the production of multiple product lines. The resale value of machines is only affected by the passage of time and not by how much they are used in a given year.
We will assume that costs associated with equipment setups, purchase orders, testing, and packaging are variable with respect to their respective allocation bases. In three years time we will investigate cost behavior patterns within cost pools further to see whether the accounting system can be improved upon by more accurately breaking down costs by their behavior. Currently, we believe our assumptions on cost behavior patterns are quite reasonable.
All products are produced in batches, where the size of a batch differs across products. For example, if we produce 80 units of a product in batch sizes of 40, then the product will be produced in two batches. An equipment setup must be performed before producing each batch of a product. Hence, in the example above, two equipment setups would be performed. Units of product are packaged in containers and sent to distributors.
Production volumes are set equal to sales volumes since the company only produces products that they have orders for. Consequently, the firm never has a beginning work in process inventory or a beginning finished goods inventory. (Hence, the firm never has ending inventories.)
Further information on our two products are provided in Exhibit 3
Exhibit 3 lennair decase annual sales and production in units 135,000 3,500 number of units per batch 75 25 number of purchase orders 300 80 number of machine hours per unit 0.30 1.50 total number of testing hours 12,150 11,200 total number of containers 1,350 1,750
REQUIRED: Students can work by themselves or in teams of up to four persons, all from the same class. Students should not discuss the case with anyone except their teammates (if any). If a student chooses to work alone, the student should not seek help from other students, faculty or other persons. The solution to all problems must be typed. Round off all calculations to two decimal points.
1. (20 Points) Prepare an income statement for lennair and an income statement for decase using the traditional accounting system where overhead is applied at a rate of 400% of direct labor costs. The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance:
lennair decase Sales $$$ $$$ Direct materials $$$ $$$ Direct labor $$$ $$$ Manufacturing overhead $$$ $$$ Total Costs $$$ $$$ Net operating income $$$ $$$ Average net operating income per unit $$$ $$$
2. (20 Points) Calculate the five activity rates (predetermined overhead rates) under activity based costing.
3. (35 Points) Prepare an income statement for lennair and an income statement for decase using activity based costing. The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance:
lennair decase Sales $$$ $$$ Direct materials $$$ $$$ Direct labor $$$ $$$ Equipment Setups $$$ $$$ Purchase orders $$$ $$$ Machining $$$ $$$ Testing $$$ $$$ Packaging $$$ $$$ Total Costs $$$ $$$ Net operating income $$$ $$$ Average net operating income per unit $$$ $$$
4. (10 Points) Assume next year that the activity rates (predetermined overhead rates) remain the same as you calculated in question (2). Assume that the demand for lennair is expected to increase significantly. Consequently, the firm expects to produce more batches of lennair next year than this year and the firm plans to produce in batch sizes of 100 rather than 75. Calculate what the equipment setup cost per unit of lennair will be next year if it can be calculated. If it cannot be calculated, then explain in words why the equipment setup cost per unit of lennair cannot be determined in the absence of more information. Excluding your quantitative analysis if any, your explanation should not be more than 1/3 page double spaced with a 12 font size. Your grade will be lowered for poor writing (e.g., grammar).
5. (15 Points) Question 5 is independent of question 4. Assume that the two accounting systems discussed in the case are allowed under GAAP. Also assume next year that the sales volume for each of the firm s products will be the same as this year and that the sales price of each product next year will be the same as the sales price this year. There will be no beginning or ending inventories next year since sales is always equal to production. Finally, assume that total costs next year will be the same as they are this year. If activity based costing is used next year in determining product costs for all of the company s products, would the company s total net operating income next year under activity based costing differ from the company s total net operating income if the company were to continue using the traditional accounting system? Why? Excluding any quantitative analysis, your explanation should not be more than 1/3 page double spaced with 12 font. Your grade will be lowered for poor writing (e.g., grammar).
Aug 29, 2021 | Uncategorized
Small businesses and entrepreneurs are the lifeblood of the economy. For this assignment, you will need to identify a LOCAL business and discuss its business model.
**If you would like to personalize this assignment, you may discuss a business that you either currently own or operate or it may be a business that you WISH to own or operate.
You are not allowed to discuss the business model of a national corporation such as Wal-Mart, Best Buy etc. There are too many papers online for you to use as a guide. I want to see your creativity!
Here are the steps of the assignment: (READ CHAPTER 1)
#1- Introduce the business to me- Tell me what the business does, how long it has been in business and what it s estimated annual revenue is (If you can interview the owner, you ll be further ahead!)
#2 What gives this business its competitive advantage?
#3 What are the main operating costs of the business?
#4 What generates the primary revenue in the business?
#5 What is one thing that you would suggest to the owner that would help the business increase revenue?
Write a 300-500 word response that addresses each of these topics. Your paper should have an introduction, conclusion and should cite the sources of your information.
If the company has a website, please also include the web address of the business.
Aug 29, 2021 | Uncategorized
Problem 1 – Nancy Company has budgeted sales of $750,000 with the following budgeted costs:
Direct materials $210,000
Direct manufacturing labor 110,000
Factory overhead
Variable 70,000
Fixed 100,000
Selling and administrative expenses
Variable 50,000
Fixed 60,000
Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)
Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)
Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)
Problem 2 – Better Food Company recently acquired an olive oil processing company that has an annual capacity of 3,000,000 liters and that processed and sold 2,300,000 liters last year at a market price of $4.60 per liter. The purpose of the acquisition was to furnish oil for the cooking division. The cooking division needs 1,100,000 liters of oil per year. It has been purchasing oil from suppliers at the market price. Production costs at capacity of the olive oil company, now a division, are as follows:
|
Direct materials per liter
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$1.25
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Direct processing labor
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0.60
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Variable processing overhead
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0.36
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Fixed processing overhead
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0.54
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Total
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$2.75
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Management is trying to decide what transfer price to use for sales from the newly acquired company to the cooking division. The manager of the olive oil division argues that $4.60, the market price, is appropriate. The manager of the cooking division argues that the cost of $2.75 should be used, or perhaps a lower price, since fixed overhead cost should be recomputed with the larger volume. Any output of the olive oil division not sold to the cooking division can be sold to outsiders for $4.60 per liter.
Question 1: Compute the operating income for the olive oil division using a transfer price of $4.60 (five points)
Question 2: Compute the operating income for the olive oil division using a transfer price of $2.75. (five points)
Question 3: What transfer price(s) do you recommend Compute the operating income for the olive oil division using your recommendation. (Five points)
Aug 29, 2021 | Uncategorized
Module 7 Assignment
Prepare the multi-step income statement, statement of retained earnings, and balance sheet for Ma and Pa Grocery as of December 31, 20XX.
Calculate the gross profit % for the year; calculate the current ratio for the year.
Sales Revenue 322,800
Equipment 104,000
Accounts Payable 16,500
Sales Discounts 2,200
Advertising Expense 12,600
Interest Expense 1,700
Wages Payable 1,600
Accounts Receivable 6,900
Building 140,000
Common Stock 35,000
Sales returns and Allownaces 6,700
Utilities Expense 10,300
Inventory 16,400
Commission Expense 22,300
Cost of goods sold 158,400
Accumulated depreciation-equipment 26,400
Unearned sales revenue 2,500
Prepaid Rent 1,200
Office salaries expense 52,000
Accumulated depreciation-building 40,500
Rent Expense 5,800
Dividends 14,000
cash 7,800
retained earnings 87,600
dielivery expense 1,300
insurance expense 5,700
mortgage payable(long term) 37,000
Supplies 600
Requirements:
- Prepare the Income Statement for the period ending December 31, 20XX.
- Prepare the Statement of Retained Earnings for the period ending 12/31/20XX.
- Prepare the Balance Sheet for the period ending 12/31/20XX.
- Calculate the gross profit % for the year.
- Calculate the current ratio for the year.
Aug 29, 2021 | Uncategorized
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Module 9 Assignment 1:
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Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##.
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Over the past 4 years gross profit has averaged 32% of net sales. The following records for August were recovered:
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Beginning Inventory
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$38,600
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Net Purchases
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$341,900
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Sales
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$530,400
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Sales returns and allownaces
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$12,300
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Sales discounts
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$6,500
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Requirements:
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1
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Estimate the August 31 inventory using the gross profit method.
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2
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Prepare the August income statement through gross profit for Whitewater Co.
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Module 9 Assignment 2:
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P.F. Johnson has the following information for the years ending December 31, 2009 and 2010.
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2010
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2009
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Sales Revenue
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$242
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$239
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Cost of Goods Sold:
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Beginning Inventory
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$22
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$38
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Net Purchases
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152
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144
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Goods Available for Sale
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$174
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$182
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Ending Inventory
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13
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22
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Cost of Goods Sold
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161
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160
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Gross Profit
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$81
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$79
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Operating Expenses
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55
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54
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Net Income
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$26
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$25
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Requirements:
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1
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Compute the inventory turnover rate for P.F. Johnson for 2009 and 2010. Round to two decimal places.
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2
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What is the likely cause of the change in turnover rate from 2009 to 2010?
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Aug 29, 2021 | Uncategorized
Module 9 Assignment:
The following information was available for Hamilton Industries for the year 20XX:
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Inventories
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1-Jan
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31-Dec
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Materials
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$85,000
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$105,000
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Work in process
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120,000
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105,000
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Finished goods
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125,000
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110,000
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Advertising expense
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$75,000
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Depreciation expense-office equipment
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25,000
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Depreciation expense-factory equipment
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16,000
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Direct Labor
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205,000
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Heat, light, and power-factory
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6,500
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Indirect labor
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26,000
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Materials purchased
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135,000
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Office salaries expense
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85,000
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Property taxes-factory
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4,500
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Property taxes-headquarters
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15,000
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Rent expense-factory
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7,500
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Sales
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950,000
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Sales salaries expense
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150,000
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Supplies-factory
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3,500
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Miscellaneous cost-factory
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4,500
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Requirements:
- Prepare the 20XX statement of cost of goods manufactured.
- Prepare the 20XX income statement.
Aug 29, 2021 | Uncategorized
A monopolist can sell in two markets. In the U.S.A. it faces demand given by:
QUS = 5500 100PUS, while in Europe it faces demand given by QEU = 18000 400PEU.
a) What is the practice of charging different prices in different markets called?
Why is it often not possible to price discriminate between markets?
b) The firm has fixed costs of $20,000 even if it produces nothing, and it has marginal costs of $15 for each unit it produces. Find the profit maximizing price and quantity sold in each market. What is the firm s profit?
c) Now the firm has access to a new technology with no fixed costs but slightly increasing marginal cost: MC = 0.075Q. Find the profit maximizing price and quantity sold in each market. How much will the firm produce with each technology. What is the firm s profit?
Aug 29, 2021 | Uncategorized
Montana Matt s Golf Inc. was formed on July 1, 2011, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid $767,500 cash for Old Master. At the time, Old Master s balance sheet reported assets of $658,800 and liabilities of $211,200 (thus owners equity was $447,600). The fair value of Old Master s assets is estimated to be $802,600. Included in the assets is the Old Master trade name with a fair value of $10,710 and a copyright on some instructional books with a fair value of $35,200. The trade name has a remaining life of 5 years and can be renewed at nominal cost indefinitely. The copyright has a remaining life of 40 years.
(a)Prepare the intangible assets section of Montana Matt s Golf Inc. at December 31, 2011. How much amortization expense is included in Montana Matt s income for the year ended December 31, 2011?
(b)Prepare the journal entry to record amortization expense for 2012. Prepare the intangible assets section of Montana Matt s Golf Inc. at December 31, 2012. (No impairments are required to be recorded in 2012.)(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(c)At the end of 2013, Magilke is evaluating the results of the instructional business. Due to fierce competition from online and television (e.g., the Golf Channel), the Old Master reporting unit has been losing money. Its book value is now $509,300. The fair value of the Old Master reporting unit is $422,000. The implied value of goodwill is $88,800. Magilke has collected the following information related to the company s intangible assets.
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Intangible Asset
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Expected Cash Flows
(undiscounted)
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Fair Values
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Trade names
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$9,420
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$3,400
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Copyrights
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42,190
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23,810
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Prepare the journal entries required, if any, to record impairments on Montana Matt s intangible assets. (Assume that any amortization for 2013 has been recorded.)(Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Aug 29, 2021 | Uncategorized
1. (Monthly compounding) How much would you have to invest today at 12% annual interest, compounded monthly, in order to end up with $1,000 in your investment account at the end of 12 months?
$887.45
$892.86
$256.68
$990.10
2.(Annualizing a rate) The effective annual rate (EAR) of 1% interest per month is:
12%
12.68%
1%
Not enough information to determine
3. (Annualizing a rate) Your bank advertises 12 month CDs with a stated annual interest rate of 12%, compounded monthly. What is the effective annual rate (EAR) on the CD?
1%
12%
12.68%
144%
4.(PV of annuity due) You are in charge of a new Missouri State Lottery. The lottery rules say that winners are to be paid $10 million in the form of 10 annual payments of $1 million each. Assuming that the interest rate is 10% and the payments are to be made at the beginning of each of the next 10 years, how much money does your lottery organization have to deposit in an account today in order to make the required payments to a lottery winner?
$10,000,000
$6,759,024
$6,144,567
$9,090,909
5.(Rate of return of annuity) If the Bank of America agreed to lend you $50,000 for 10 years in return for 10 annual payments of $7,791 (each payment due at the end of each year), what annual percent rate of interest are you being charged?
about 20%
about 16%
about 9%
5.4%
6.(Rate of return of annuity) Joe’s Dockyard is financing a new boat with an amortizing loan of $24,000 which is to be repaid in 10 annual installments of $4,247.62 each. What annual interest rate is Joe paying on the loan?
18.9%
17.7%
14.0%
12.0%
7.(Loan payments) Tom’s Toyotas has a 2004 4 Runner on sale for $16,995. If you could borrow that amount from Tom’s Credit Union at 7% for 4 years, what would be your monthly loan payments?
$232.30 $378.85 $406.97 $5,017.40
8.(PV of a perpetuity) The PV of an endless stream of annual payments (the payments in the stream continue to be paid forever) of $1,200 each to an investor with a required rate of return of 10% is: $1,000
$1,200
$12,000
$10,000
9. (FV of an uneven cash flow stream) What’s the future value (FV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300
$600
$660
$641
$799
10.(PV of uneven cash flow stream) What’s the present value (PV) of the following cash flow stream: (discount rate = 10%) Year Cash Flow 1 100 2 200 3 300
$451
$482
$545
$600
Aug 29, 2021 | Uncategorized
Grading Criteria must be strickly followed!
Manufacturing Overhead
Borealis Manufacturing has just completed a major change in its quality control (QC) process. Previously, products had been reviewed by QC inspectors at the end of each major process, and the company’s 10 QC inspectors were charged to the operation or job as direct labor. In an effort to improve efficiency and quality, a computerized video QC system was purchased for $250,000. The system consists of a minicomputer, fifteen video cameras, and other peripheral hardware and software. The new system uses cameras stationed by QC engineers at key points in the production process. Each time an operation changes or there is a new operation, the cameras are moved, and a new master picture is loaded into the computer by a QC engineer. The camera takes pictures of the units in process, and the computer compares them to the picture of a good unit. Any differences are sent to a QC engineer, who removes the bad units and discusses the flaws with the production supervisors. The new system has replaced the 10 QC inspectors with two QC engineers.
The operating costs of the new QC system, including the salaries of the QC engineers, have been included as factory overhead in calculating the company’s plant-wide manufacturing-overhead rate, which is based on direct-labor dollars. The company’s president is confused. His vice president of production has told him how efficient the new system is. Yet there is a large increase in the overhead rate. The computation of the rate before and after automation is as follows:
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Before |
After |
| Budgeted Manufacturing Overhead |
1,900,000 |
2,100,000 |
| Budgeted Direct Labor Cost |
1,000,000 |
700,000 |
| Budgeted Overhead Rate |
190% |
300% |
Three hundred percent, lamented the president. How can we compete with such a high overhead rate
Using the module readings and the Argosy University online library resources, research manufacturing overhead.
Review the situation. Complete the following:
- Define manufacturing overhead, and:
- Cite three examples of typical costs that would be included in manufacturing overhead.
- Explain why companies develop predetermined overhead rates.
- Explain why the increase in the overhead rate should not have a negative financial impact on Borealis Manufacturing.
- Explain how Borealis Manufacturing could change its overhead application system to eliminate confusion over product costs.
- Describe how an activity-based costing system might benefit Borealis Manufacturing.
Write a 3 4-pages paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M2_A2.doc.
| Assignment 2 Grading Criteria |
Maximum Points |
| Defined manufacturing overhead giving three examples of typical costs that would be included in manufacturing overhead. |
16 |
| Explained why companies develop predetermined overhead rates. |
16 |
| Explained why the increase in the overhead rate should not have a negative financial impact on Borealis Manufacturing. |
16 |
| Explained how Borealis Manufacturing could change its overhead application system to eliminate confusion over product costs. |
20 |
| Explained how an activity-based costing system might benefit Borealis Manufacturing. |
16 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. |
16 |
| Total: |
100 |
Aug 29, 2021 | Uncategorized
Question 3 (7 marks)
Samantha, CGA, has been assigned to audit the accounts receivable and inventory of Tasty Treats Inc., a large distributor of food products (canned goods, rice, frozen foods). Tasty Treats Inc. has a December 31 year end. Tasty Treats Inc. imports a variety of food products from various European countries to its central warehouse in Halifax and distributes the goods to various grocery chains across Canada. Tasty Treats customers consist of two large national grocery chain operators as well as approximately 200 small independent grocers. The two large national grocers make up approximately 40% of Tasty Treats accounts receivable balance. In order to facilitate distribution to central Canada, Tasty Treats Inc. also maintains inventory in several off-site warehouses. Samantha estimates that inventories and accounts receivable make up approximately 35% and 30% of total assets, respectively.
Required
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- Provide three examples of the risks of material misstatement for the inventory and accounts receivable balances at Tasty Treats. (3 marks)
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- Samantha was provided with a detailed accounts receivable sub-ledger and an open invoice file at year end in two electronic computer files. The sub-ledger listed each customer, the customer s credit limit, the amount owing at year end, and an aging classification (0 to 30 days, greater than 30 days old, greater than 60 days old, and greater than 90 days old). The open invoice file listed all unpaid invoices by customer. For each invoice listed in the open invoice file, she was provided with the customer name, the invoice number, the date of the invoice, and the amount. Provide two examples of computer-assisted audit techniques that Samantha could perform on the accounts receivable sub-ledger file and open invoice file. (2 marks)
- Meetings with the inventory manager reveal that a material amount of inventory is located off-site in warehouse outlets and on consignment. List two procedures that Samantha should conduct.(2 marks)
Aug 29, 2021 | Uncategorized
Moreno Industries has adopted the following production budget for the first 4 months of 2013.
Month Units Month Units
January 10,000 March 5,000
February 8,000 April 4,000
Each unit requires 3 pounds of raw materials costing $2 per pound. On December 31, 2012, the ending raw materials inventory was 9,000 pounds. Management wants to have a raw materials inventory at the end of the month equal to 30% of next month’s production requirements.
Complete the direct materials purchases budget by month for the first quarter.
MORENO INDUSTRIES
Direct Materials Purchases Budget
For the Quarter Ending March 31, 2013
January February March
Total pounds needed for production
Add:
Total materials required
Less:
Direct materials purchases $ $ $
Total cost of direct materials purchases $ $ $
Aug 29, 2021 | Uncategorized
Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operation:
a. The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 unites, respectively. All sales are on credit.
b. 40% of credit sales are collected in the month of the sale and 60% in the following month.
c. The ending finished goods inventory equals 20% of the following month’s unit sales.
d. The ending raw materials inventory equals 10% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
e. 30% of raw materials purchases are paid for in the month of purchase and 70% in the following month.
f. The direct labor wage is $15 per hour. Each unit of finished goods requires two direct labor-hours.
g. The variable selling and administrative expense per unit sold is $1.80. The fixed selling and administrative expense per month is $60,000.
REQUIRED!
1. What are the budgeted sales for July?
2. What are the expected cash collections for July?
3. What is the accounts receivable balance at the end of July?
4. According to the production budget, how many units should be produced in July?
5. If 61,000 pounds of raw materials are needed to meet production in August, how many pounds of raw materials should be purchased in July?
6. What is the estimated cost of raw materials purchases for July?
7. If the cost of raw materials purchases in June is $88.880, what are the estimated cash disbursements for raw materials purchases in July?
8. What is the estimated accounts payable balance at the end of July?
9. What is the estimated raw materials inventory balance at the end of July?
10. What is the total estimated direct labor cost for July assuming the direct labor workforce is adjusted to match the hours required to produce the forecasted number of units produced?
11. If the company always used an estimated predetermined plantwide overhead rate of $10 per direct labor-hour, what is the estimated unit product cost?
12. What is the estimated finished goods inventory balance at the end of July?
13. What is the estimated cost of goods sold and gross margin for July?
14. What is the estimated total selling and administrative expense for July?
15. What is the estimated net operating income for July?
Aug 29, 2021 | Uncategorized
Moss and Mcadams Accounting Firm Case Study (See the attached)
Questions
1. Explain how you would respond if you were Peter at the end of the case.
2. Discuss what Palmer could do, if anything, to avoid losing Olds.
3. Discuss the advantages and disadvantages of a matrix type organization that are apparent in this case.
4. Discuss what the management at M&M can do to more effectively manage situations like what occurred in the case.
Aug 29, 2021 | Uncategorized
A motor manufacturer is to develop a new car model to be produced from 1 January 2002 for six years until 31 December 2007. The development cost will be $33 million, of which $18 million will be incurred on 1 January 2000, $10 million on 1 July 2000 and $5 million on 1 January 2001
The production cost of each car is assumed to be incurred at the beginning of the calendar year of production and will be $9,000 during 2002. The sale price of each car is assumed to be received at the end of the calendar year of production. Both the production costs and the sale prices are assumed to increase by 5% each 1 January, the first increase occurring in 1 January 2003. It is also assumed that 5,000 cars will be produced each year and that all will be sold. The sale price of each car
produced in 2002 is $12,100.
Calculate the discounted payback period at an effective rate of interest of 9% per annum Without doing any further calculations, explain whether the discounted payback period would be greater than, equal to, or less than the period calculated in (a) if the effective rate of interest were substantially less than 9% per annum
Aug 29, 2021 | Uncategorized
Mr. Earl Pearl, Accountant for Margie Knall, Inc. has prepared the following product-line income data:
PRODUCT
Total A B C
Sales…………………………………………$ 100,000……..$50,000………$20,000………..$30,000
Variable Expenses………………………… 60,000……….30,000…………10,000………….20,000
Contribution Margin……………………….. .40,000……….20,000…………10,000………….10,000
Fixed Expenses:
Rent…………………………………………. .5,000………..2,500…………..1,000……………1,500
Depreciation………………………………. 6,000………..3,000…………..1,200…………….1,800
Utilities………………………………………4,000………..2,000……………..500…………….1,500
Supervisors’ salaries………………….. 5,000………. 1,500……………..500…………….3,000
Maintenance………………………………3,000………..1,500………………600………………900
Administrative Expenses……………. 10,000………..3,000……………..2,000…………..5,000
Total Fixed Expenses…………………… 33,000……….13,500……………5,800………….13,700
Net Operating Income…………………… $7,000……….$6,500………….$4,200…………($3,700)
The following additional information is available:
The factory rent of $1,500 assigned to product C is avoidable if the product were dropped.
The company’s total depreciation would not be affected by dropping C.
Eliminating product C will reduce the monthly utility bill from $1,500 to $800.
All supervisors’ salaries are avoidable.
If product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.
Elimination of product C will make it possible to cut two persons from the administrative staff, currently, their combined salaries total $2,000.
Required: Prepare an analysis showing whether product C should be eliminated. Articulate your findings.
Aug 29, 2021 | Uncategorized
E11-3 : Mucky Duck makes swimsuits and sells these suits directly to retailers. Although Mucky Duck has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $110. Given its experience, Mucky Duck believes the All-Body suit would have the following manufacturing costs.
Direct materials $ 25
Direct labor 30
Manufacturing overhead 45
Total costs $100
Instructions:
(a) Assume that Mucky Duck uses cost-plus pricing, setting the selling price 25% above its costs.
(1) What would be the price charged for the All-Body swimsuit?
(2) Under what circumstances might Mucky Duck consider manufacturing the All-Body swimsuit given this approach?
(b) Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge the retailer for the All-Body swimsuit?
(c) What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $25 per unit? (Assume target costing.)
E11-11: Allied Company s Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Allied then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $5
Variable cost per unit $8
Selling price per unit $30
Instructions
(a) Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.
(b) Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the small motor to the Household Division.
(c) Explain why the level of capacity in the Small Motor Division has an effect on the transfer price.
Problem 11-3: Hawks Electronic Repair Shop has budgeted the following time and material for 2008.
HAWKS ELECTRONIC REPAIR SHOP
Budgeted Costs for the Year 2008
Time Charges Material Loading Charges
Shop employees wages and benefits $108,000
Parts manager s salary and benefits $25,400
Office employee s salary and benefits 20,000 13,600
Overhead (supplies, depreciation, advertising, utilities) 26,000 18,000
Total budgeted costs $154,000 $57,000
Hawks budgets 5,000 hours of repair time in 2008 and will bill a profit of $5 per labor hour along with a 30% profit markup on the invoice cost of parts. The estimated invoice cost for parts to be used is $100,000.
On January 5, 2008 Hawks is asked to submit a price estimate to fix a 72-inch big-screen TV. Hawks estimates that this job will consume 20 hours of labor and $500 in parts.
Instructions
(a) Compute the labor rate for Hawks Electronic Repair Shop for the year 2008.
(b) Compute the material loading charge percentage for Hawks Electronic Repair Shop for the year 2008.
(c) Prepare a time-and-material price quotation for fixing the big-screen TV.
Aug 29, 2021 | Uncategorized
E11-3:
Mucky Duck makes swimsuits and sells these suits directly to retailers. Although Mucky Duck has a variety of suits, it does not make the All-Body suit used by highly skilled swimmers. The market research department believes that a strong market exists for this type of suit. The department indicates that the All-Body suit would sell for approximately $110. Given its experience, Mucky Duck believes the All-Body suit would have the following manufacturing costs.
Direct materials $ 25
Direct labor 30
Manufacturing overhead 45
Total costs $100
Instructions:
(a) Assume that Mucky Duck uses cost-plus pricing, setting the selling price 25% above its costs.
(1) What would be the price charged for the All-Body swimsuit?
(2) Under what circumstances might Mucky Duck consider manufacturing the All-Body swimsuit given this approach?
(b) Assume that Mucky Duck uses target costing. What is the price that Mucky Duck would charge the retailer for the All-Body swimsuit?
(c) What is the highest acceptable manufacturing cost Mucky Duck would be willing to incur to produce the All-Body swimsuit, if it desired a profit of $25 per unit? (Assume target costing.)
Aug 29, 2021 | Uncategorized
1. Which of the following states one of Williston s Rules regarding the parol evidence rule?
Based upon the Nanakuli Paving and Rock Co. v. Shell Oil Co. case, which of the following statements is true?
A The court limited the interpretation of the contract terms to the four corners of the written agreement.
B The case applied the common law in a way to promote flexibility in the expansion of commercial practices.
C The parties course of performance was more important than trade usage to determine the terms of an agreement.
D The court refused to consider the entire commercial context of the agreement.
2. Which of the following states the best definition of the parol evidence rule?
A Agreements that are not in writing are invalid.
B A final agreement supersedes tentative terms discussed in earlier negotiations.
C Parol evidence is not admissible for contracts involving the purchase of land.
D Proposed, oral terms of a contract cannot become part of the final agreement.
3. Which of the following statements is NOT true regarding course of dealing, course of performance and usage?
A These topics are not applicable at common law.
B A party engaged in a trade is bound by the usages of that trade even if that party has no knowledge of the trade usage in question.
C At common law, a course of dealing is admissible whenever extrinsic evidence is admissible.
D Under the UCC, trade usage and course of dealing are always admissible, but the evidence is not always controlling.
4. Which of the following statements about the parol evidence rule is false?
A A writing that is final integrates the terms embodied in it.
B A writing intended by the parties to be a final embodiment of their oral agreement should be protected from attack by evidence of contradictory prior or contemporaneous agreements.
C Oral evidence of a term not in the written agreement is not admissible.
D The parol evidence rule applies when the last expression is a written and binding contract.
Aug 29, 2021 | Uncategorized
4. Quentin’s current ratio on December 31, 2004 is:
1.25
0.80
0.53
1.125
2. The next 6 questions refer to Quentin Company’s December 31, 2004 Balance Sheet.
Quentin began 2004 with the following non-current asset balances: Plant and equipment (net) $59,000; Patent (net) $28,000. No long-term assets were purchased or sold during the year. How much amortization and depreciation expense did Quentin record during 2004?
$3,000
$4,000
$7,000
Cannot be estimated
3. Quentin’s 2004 net income was $5,000. No dividends were declared or paid during 2004. What was Quentin’s retained earnings balance on December 31, 2003?
$39,000
$49,000
$34,000
Cannot be estimated
1. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
What is the dollar gross margin earned by Turnadot on the special order for 200 planters?
$2,000
$7,000
$9,000
$6,000
Aug 29, 2021 | Uncategorized
1. Quentin’s total debt to equity ratio on December 31, 2004 is:
2.12
1.52
1.19
0.53
2. Quentin Company’s year-end 2004 total assets equals its year-end 2004 total liabilities and owners’ equity. This is most likely the result of the company following the:
Historical Cost concept
Dual-aspect concept
Materiality concept
Money measurement concept
3. Quentin’s December 31, 2003 inventory T-account debit balance was also $56,000. During 2004, its inventory purchases amounted to $25,000, and there were no inventory-related write-downs or losses. What was Quentin’s 2004 cost of goods sold expense?
$5,000
$67,000
$20,000
$45,000
4. The next 6 questions refer to Carlita Company’s 2004 Income Statement.
Carlita’s 2004 gross margin percentage is:
50%
33%
30%
25%
Aug 29, 2021 | Uncategorized
TRANSLATING FOREIGN CURRENCY FINANCIAL STATEMENTS
Charles Edward Company established a subsidiary in a foreign country on January 1, 2013, by investing FC 3,200,000 when the exchange rate was $0.50/FC. Charles Edward negotiated a bank loan of FC 3,000,000 on January 5, 2013, and purchased plant and equipment in the amount of FC 6,000,000 on January 8, 2013. It depreciated plant and equipment on a straight-line basis over a 10-year useful life. It purchased its beginning inventory of FC 1,000,000 on January 10, 2013, and acquired additional inventory of FC 4,000,000 at three points in time during the year at an average exchange rate of $0.43/FC. It uses the first-in, first-out (FIFO) method to determine cost of goods sold. Additional exchange rates per FC 1 during the year 2013 follow:
January 1–31, 2013. . . . . . . . . . . . . . $0.50
Average 2013 . . . . . . . . . . . . . . . . . . . 0.45
December 31, 2013. . . . . . . . . . . . . . 0.38
The foreign subsidiary’s income statement for 2013 and balance sheet at December 31, 2013, follow:
INCOME STATEMENT
For the Year Ended December 31, 2013
FC (in thousands)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FC 5,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Selling expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
Income before tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700
Retained earnings, 1/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . –0–
Retained earnings, 12/31/13 . . . . . . . . . . . . . . . . . . . . . . . FC 700
BALANCE SHEET
At December 31, 2013
FC (in thousands)
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. FC 1,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
Fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Less: Accumulated depreciation . . . . . . . . . . . . . . .. . . . . . (600)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FC 8,400
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . FC 1,500
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700
Total liabilities and stockholders’ equity . . . . . . .. . . . . . FC 8,400
As the controller for Charles Edward Company, you have evaluated the characteristics of the foreign subsidiary to determine that the FC is the subsidiary’s functional currency.
Required
a. Use an electronic spreadsheet to translate the foreign subsidiary’s FC financial statements into U.S. dollars at December 31, 2013, in accordance with U.S. GAAP. Insert a row in the spreadsheet after retained earnings and before total liabilities and stockholders’ equity for the cumulative translation adjustment. Calculate the translation adjustment separately to verify the amount obtained as a balancing figure in the translation worksheet.
b. Use an electronic spreadsheet to re measure the foreign subsidiary’s FC financial statements in U.S. dollars at December 31, 2013, assuming that the U.S. dollar is the subsidiary’s functional currency. Insert a row in the spreadsheet after depreciation expense and before income before taxes for the re measurement gain (loss).
c. Prepare a report for James Edward, CEO of Charles Edward, summarizing the differences that will be reported in the company’s 2013 consolidated financial statements because the FC, rather than the U.S. dollar, is the foreign subsidiary’s functional currency. In your report, discuss the relationship between the current ratio, the debt-to-equity ratio, and profit margin calculated from the FC financial statements and from the translated U.S. dollar financial statements. Also discuss the meaning of the translated U.S. dollar amounts for inventory and for fixed assets.
(2)
Lisali Company gathered the following information related to inventory that it owned on
December 31, 2013:
Historical cost $100,000
Replacement cost 95,000
Net realizable value 98,000
Normal profit margin 20%
a. Determine the amount at which Lisali should carry inventory on the December 31, 2013, balance sheet and the amount, if any, that should be reported in net income related to this inventory using (1) U.S. GAAP and (2) IFRS.
b. Determine the adjustments that Lisali would make in 2013 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS.
(3)
Bracy Company acquired a new piece of construction equipment on January 1, 2013, at a cost of $100,000. The equipment was expected to have a useful life of 10 years and a residual value of $20,000 and is being depreciated on a straight-line basis. On January 1, 2014, the equipment was appraised and determined to have a fair value of $101,000, a salvage value of $20,000, and a remaining useful life of nine years.
a. Determine the amount of depreciation expense that Bracy should recognize in determining net income in 2013, 2014, and 2015 and the amount at which equipment should be carried on the December 31, 2013, 2014, and 2015 balance sheets using (1) U.S. GAAP and (2) IFRS. In measuring property, plant, and equipment subsequent to acquisition, Bracy uses the revaluation model in
IAS 16.
b. Determine the adjustments that Bracy would make in 2013, 2014, and 2015 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS.
(4)
Moxie Corporation incurs research and development costs of $500,000 in 2013, 30 percent of which relates to development activities subsequent to certain criteria having been met that suggest that an intangible asset has been created. The newly developed product is brought to market in January 2014 and is expected to generate sales revenue for 10 years.
a. Determine the amount Moxie should recognize as research and development expense in 2013 under (1) U.S. GAAP and (2) IFRS.
b. Determine the adjustments that Moxie would make in 2013 and 2014 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS.
Aug 29, 2021 | Uncategorized
1. According to Bandura, the extent to which we feel we re able to meet a challenge or pursue a task to a favorable outcome is our level of
A. openness to experience
B. self-efficacy
C. extraversion
D. self-esteem
2. If you support the idea that physiological arousal and the experience of an associated emotion will occur simultaneously, you ll agree with the
A. Schachter-Singer theory of emotion
B. biological emotion-activation theory
C. Cannon-Bard theory of emotion
D. James-Lange theory of emotion
3. Sternberg s concept of practical intelligence is most directly related to
A. overall success in living
B. information processing
C. emotional intelligence
D. multiple intelligences
4. In Piaget s model of cognitive development, a child s tendency to view the world
entirely from his or her own perspective is referred to as
A. metacognition
B. egocentric thought
C. the concrete operational stage
D. the sensorimotor stage
Aug 29, 2021 | Uncategorized
Mike’s Meats incurs costs of $4,000 while processing raw chicken meat into three products: breasts, wings, and thighs. The meat is then sold to local grocery stores based on the following:
Sales Price per lb Quantity produced (lbs)
Breast $2.00 3,000
Wings $0.50 1,000
Thighs $1.00 2,000
Required: (Calculate relative quantity to three decimal points.)
1. Determine the cost and gross profit percentage for each type of chicken using the physical units method of joint cost allocation.
2. Repeat part (a) using the sales-value-at-split-off method of joint cost allocation.
3. The company has an opportunity to sell wings to local restaurants for $1.00 per pound but additional packaging is required, which will cost $300 per 1,000 lb. Assuming the physical unit method is used to allocate joint costs, should the offer be accepted?
Aug 29, 2021 | Uncategorized
Miller Design Studio Post-Closing Trial Balance July 31, 2011
Cash $22,480
Accounts Receivable 5,000
Office Supplies 3,660
Prepaid Rent 1,600
Office Equipment 16,320
Accumulated Depreciation
Office Equipment $ 300
Accounts Payable 6,280
Unearned Design Revenue 600
Wages Payable 720
J. Miller, Capital 41,160
$49,060 $49,060
During August, the studio engaged in these transactions:
Aug. 1 Received an additional investment of cash from J. Miller, $20,000.
2 Purchased additional office equipment with cash, $4,700.
7 Purchased additional office supplies for cash, $540.
8 Completed the series of designs that began on July 31 and billed for the total design services performed, including the accrued revenues of $800 that had been recognized in an adjusting entry in July, $1,400.
12 Paid the amount due for the office equipment purchased last month, $3,000.
13 Accepted an advance in cash for design work to be done, $2,400.
15 Performed design services and received a cash fee, $2,900.
16 Received payment on account for design services performed last month, $2,800.
19 Made a partial payment on the utilities bill that was received and recorded at the end of July, $140.
20 Performed design services for Rave Department Stores and agreed to accept payment next month, $3,200.
21 Performed design services for cash, $1,160.
22 Received and paid the utilities bill for August, $900.
23 Paid the assistant for four weeks wages, $4,800.
26 Paid the rent for September in advance, $1,600.
30 Paid cash to J. Miller as a withdrawal for personal expenses, $2,800.
Required
1. Record entries in journal form and post to the ledger accounts the optional reversing entries on August 1 for Wages Payable and Accounts Receivable (see adjustment for unrecorded wages on page 116 and adjustment for design revenue on page 119).
2. (Begin the general journal on page 5.)
3. Record the transactions for August in journal form.
4. Post the August transactions to the ledger accounts.
5. Prepare the Trial Balance columns of a work sheet. Miller Design Studio Post-Closing Trial Balance July 31, 2011 Cash $22,480 Accounts Receivable 5,000 Office Supplies 3,660 Prepaid Rent 1,600 Office Equipment 16,320 Accumulated Depreciation Office Equipment $ 300 Accounts Payable 6,280 Unearned Design Revenue 600 Wages Payable 720 J. Miller, Capital 41,160 $49,060 $49,060
6. Prepare adjusting entries and complete the work sheet using the information below
a. One month s prepaid rent has expired, $1,600.
b. An inventory of supplies reveals $2,020 still on hand on August 31.
c. Depreciation on equipment for August is calculated to be $300.
d. Services performed for which payment had been received in advance totaled $1,300.
e. Services performed that will not be billed until September totaled $580. f. Wages accrued by the end of August, $720.
7. From the work sheet, prepare an income statement, a statement of owner s equity, and a balance sheet for August 31, 2011.
8. Record the adjusting entries on August 31, 2011, in journal form, and post them to the ledger accounts.
9. Record the closing entries on August 31, 2011, in journal form, and post them to the ledger accounts.
10. Prepare a post-closing trial balance at August 31, 2011.
Chat (10)
Aug 29, 2021 | Uncategorized
Mills Sporting Goods Store –College Accounting – Comprehensive Review Problem II – paradigm 5th edition
You have now completed the accounting cycle for a merchandising business and are ready to try to put it all together in this second comprehensive review problem.
You are keeping the accounting records for Cindi Mills, owner of Mills Sporting Goods Store. You begin with the balances in her accounts and go through the accounting cycle for two months.
Directions:
1.Open accounts in the general ledger with the following balances as of January 1, 20X1
Account Balance
111 Cash $6,560
112 Accounts Receivable 2,955
113 Office Supplies 825
114 Store Supplies 1,915
115 Merchandise Inventory 13,540
116 Prepaid Insurance 750
121 Office Equipment 9,500
121.1 Accumulated Depreciation-Office Equipment 2,600
122 Store Equipment 16,600
122.1 Accumulated Depreciation-Store Equipment 4,000
123 Delivery Equipment 13,000
123.1 Accumulated Depreciation-Delivery Equipment 7,000
211 Accounts Payable 3,880
311 Cindi Mills, Capital 48,165
312 Cindi Mills, Drawing
313 Income Summary
411 Sales
412 Sales Returns and Allowances
413 Sales Discounts
511 Purchases
512 Purchases Returns and Allowances
513 Purchases Discounts
514 Freight in
611 Salaries Expense
612 Rent Expense
613 Utilities Expense
614 Office Supplies Expense
615 Store Supplies Expense
616 Insurance Expense
617 Depreciation Expense-Office Equipment
618 Depreciation Expense-Store Equipment
619 Depreciation Expense-Delivery Equipment
2.Open accounts in the accounts receivable ledger with the following balances as of January 1, 20X1:
Customer Name Balance
Henry Galvin $1,025
Lee Maddox 755
Neagle Co. 1,175
Smitz, Inc -0-
3.Open accounts in the accounts payable ledger with the following balances as of January 1, 20X1:
Creditor Name Balance
W. Bedford Co. $1,365
Jones Co. -0-
Lemke Brothers 1,540
Wohlers, Inc. 975
4.Record the January transactions in a general journal (page 12), a one column sales journal (page26), a purchases journal (page 10), a five-column cash receipts journal (page 11), or a four column cash payments journal (page 9). All credit sales carry terms of 2/10, n/30. Freight on all purchases is charged to the freight in account.
20X1
January
2 Paid rent for the month, $1.070, Check No. 234
2 Sold merchandise to Smitz, Inc., $765, Invoice No. 176
4 Collected the balance due from Henry Galvin, less 2% discount
5 Sold merchandise to Henry Galvin, $1,670, Invoice No. 177
6 Collected the balance due from Neagle Co., less 2% discount
7 Issued a credit memorandum to Henry Galvin for the return of defective merchandise sold on January 5, $210
7 Purchased merchandise from Lemke Brothers, $1,045; terms 2/10,n/30; Invoice No. 187
8 Paid W. Bedford Co. the balance due, less 2% discount; Check No. 235
9 Paid Wohlers, Inc., the balance due, less 1% discount; Check No. 236
10 Returned defective merchandise purchased on January 7 from Lemke Brothers, receiving a credit memorandum for $105
10 Collected the balance due from Lee Maddox, Less 2% discount
11 Paid Lemke Brothers the January 1 balance; no discount; Check No 237
12 Received a check from Smitz, Inc., for the amount due from the sale of January 2
14 Purchased merchandise from Jones Co. $2,550; terms, 2/10,n/30; Invoice No. 188
15 Received a check from Henry Galvin for the amount due from the sale of January 5, less the return of January 7
15 Recorded cash sales for the first half of January, $1,665
15 Cindi invested an additional$3,000 cash in the firm
16 Purchased office equipment from Wohlers, Inc., $4,400; terms, 2/30,n/60 Invoice No. 189
17 Sold merchandise to Lee Maddox, $950, Invoice No. 178
17 Paid Lemke Brothers the amount due from the purchase of January 7, less the return of January 10; Check No. 238
18 Purchased office supplies from W. Bedford Co., $860; terms, n/30; Invoice No. 190
19 Returned defective office supplies to W. Bedford Co., receiving a credit memorandum for $110
20 Purchased store supplies from Jones Co.,$555; terms, n/30; Invoice No. 191
22 Cindi invested a used truck valued at $4,700 in the business
23 Sold merchandise to Neagle Co., $820, Invoice No. 179
24 Paid the balance due to Jones Co. from the purchase of January 14; Check No. 239
24 Cindi wrote check No. 240 to pay her home phone bill, $205
25 Sold Merchandise to Smitz, Inc., $1,995, Invoice No. 180
26 Sold store supplies to another firm at cost for cash, $110
27 Issued a credit memorandum to Smitz, Inc., for a shortage from the sale of January 25, $75
27 Purchased merchandise from Jones Co., $750; terms, 2/10,n/30; Invoice No. 192
29 Paid January s electric bill, $595, Check No. 241
31 Recorded cash sales for the second half of January, $2,445
31 Paid freight on January purchases, $450, Check No. 242
31 Paid salaries for January, $4,450, Check No. 243
5. Total all special journals
6. Post all items that need to be posted
7. Prepare a trial balance on a work sheet as of January 31, 20X1
8. Prepare schedules of accounts receivable and accounts payable
9. Complete the worksheet. Adjustment data for January 31 are as follows:
(a) Office Supplies on hand, $830
(b) Store Supplies on hand, $750
(c) Insurance Expired, $20
(d) Depreciation of office equipment, $90
(e) Depreciation of store equipment, $125
(f) Depreciation of delivery equipment, $250
(g) Merchandise Inventory (beginning), $13,540
(h) Merchandise Inventory (ending), $12,210
10.Record and post adjusting entries as of January 31.
11. Record and post closing entries as of January 31.
12. Prepare a January 31 post-closing trial balance.
13. Prepare an income statement for the month of January. All salaries are sales salaries.
14. Prepare a statement of owner s equity for the month of January
15. Prepare a January 31 balance sheet
16. Record the following February transactions
20X1
February
1 Paid rent for the month, $1,070, Check No. 244
2 Purchased merchandise from Lemke Brothers, $740; terms, 2/10,n/30; Invoice No. 193
3 Returned merchandise purchased from Lemke Brothers on February 2, receiving a credit memorandum for $75
3 Collected the balance due from Lee Maddox
4 Collected the balance due from Smitz, Inc., for the sale of January 25 less the credit of January 27 and less the 2% discount
5 Cindi took home $40 of office supplies for her personal use
6 Sold merchandise to Henry Galvin, $2,140, Invoice No. 181
6 Paid Jones Co. the balance due on purchases of $555 and $750, less a 2% discount on the $750 purchase; Check No. 245
7 Collected the balance due from Neagle Co.
8 Issued a credit memorandum to Henry Galvin for damaged merchandise sold on February 6, $195
9 Purchased merchandise for cash, $375, Check No. 246
11 Paid Lemke Brothers for the balance due from the purchase of February 2, less the return of February 3; Check No. 247
11 Returned $20 of the merchandise purchased on February 9, receiving a cash refund
12 Sold merchandise to Lee Maddox, $1,185, Invoice No. 182
13 Cindi wrote Check No. 248 for personal expenses, $350
14 Recorded cash sales for the first half of the month, $3,095
15 Paid Wohlers, Inc., the balance due, less 2% discount, Check No. 249
16 Received a check from Henry Galvin for the amount due from the sale of February 6, less the return of February 8
17 Sold office supplies for cash, $85
17 Paid W. Bedford Co. the balance due for the purchase of January 18, less the return of January 19; Check No. 250
19 Purchased store supplies from W. Bedford Co. $340; terms, n/30; Invoice No. 194
20 Returned $30 of the store supplies purchased on February 19, receiving credit
21 Purchased merchandise from Lemke Brothers, $940; terms, 2/10,n/30; Invoice No. 195
22 Sold merchandise to Neagle Co., $1,095; Invoice No. 183
24 Purchased merchandise from Jones Co., $1,045; terms, 2/10,n/30; Invoice No 196
25 Sold merchandise to Smitz, Inc., $1,755, Invoice No. 184
26 Purchased store equipment from Wohlers, Inc., $2700; terms 2/30,n/60; Invoice No. 197
27 Paid the electric bill for February, $550, Check No. 251
28 Recorded cash sales for the second half of the month, $2,985
28 Paid freight on February purchases, $435, Check No. 252
28 Paid salaries for February, $4,450, Check No. 253
17.Total all special journals.
18. Post all items that need to be posted
19. Prepare a trial balance on a work sheet as of February 28, 20X1
20. Prepare schedules of accounts receivable and accounts payable.
21. Complete the work sheet. Adjustment data for February 28 are as follows
(a) Office Supplies on hand, $355
(b) Store Supplies on hand, $275
(c) Insurance Expired, $20
(d) Depreciation of office equipment, $90
(e) Depreciation of store equipment, $125
(f) Depreciation of delivery equipment, $250
(g) Merchandise Inventory (beginning), $12.210
(h) Merchandise Inventory (ending), $12,780
22.Record and post adjusting entries as of February 28.
23. Record and post closing entries as of February 28.
24. Prepare a February 28 post-closing trial balance.
25. Prepare an income statement for the month of February. All salaries are sales salaries.
26. Prepare a statement of owner s equity for the month of February.
27. Prepare a February 28 balance sheet.
Check figures for January only.
Net Loss: 4,946.75 Total Assets: 57,168.25 Cash Balance: 4,823.25
Aug 29, 2021 | Uncategorized
Mills Sporting Goods Store –College Accounting- Comprehensive Review Problem II – paradigm 5th edition
You have now completed the accounting cycle for a merchandising business and are ready to try to put it all together in this second comprehensive review problem.
You are keeping the accounting records for Cindi Mills, owner of Mills Sporting Goods Store. You begin with the balances in her accounts and go through the accounting cycle for two months.
Directions:
1. Open accounts in the general ledger with the following balances as of January 1, 20X1
Account Balance
111 Cash $6,560
112 Accounts Receivable 2,955
113 Office Supplies 825
114 Store Supplies 1,915
115 Merchandise Inventory 13,540
116 Prepaid Insurance 750
121 Office Equipment 9,500
121.1 Accumulated Depreciation-Office Equipment 2,600
122 Store Equipment 16,600
122.1 Accumulated Depreciation-Store Equipment 4,000
123 Delivery Equipment 13,000
123.1 Accumulated Depreciation-Delivery Equipment 7,000
211 Accounts Payable 3,880
311 Cindi Mills, Capital 48,165
312 Cindi Mills, Drawing
313 Income Summary
411 Sales
412 Sales Returns and Allowances
413 Sales Discounts
511 Purchases
512 Purchases Returns and Allowances
513 Purchases Discounts
514 Freight in
611 Salaries Expense
612 Rent Expense
613 Utilities Expense
614 Office Supplies Expense
615 Store Supplies Expense
616 Insurance Expense
617 Depreciation Expense-Office Equipment
618 Depreciation Expense-Store Equipment
619 Depreciation Expense-Delivery Equipment
2. Open accounts in the accounts receivable ledger with the following balances as of January 1, 20X1:
Customer Name Balance
Henry Galvin $1,025
Lee Maddox 755
Neagle Co. 1,175
Smitz, Inc -0-
3. Open accounts in the accounts payable ledger with the following balances as of January 1, 20X1:
Creditor Name Balance
W. Bedford Co. $1,365
Jones Co. -0-
Lemke Brothers 1,540
Wohlers, Inc. 975
4.Record the January transactions in a general journal (page 12), a one column sales journal (page26), a purchases journal (page 10), a five-column cash receipts journal (page 11), or a four column cash payments journal (page 9). All credit sales carry terms of 2/10, n/30. Freight on all purchases is charged to the freight in account.
20X1
January
2 Paid rent for the month, $1.070, Check No. 234
2 Sold merchandise to Smitz, Inc., $765, Invoice No. 176
4 Collected the balance due from Henry Galvin, less 2% discount
5 Sold merchandise to Henry Galvin, $1,670, Invoice No. 177
6 Collected the balance due from Neagle Co., less 2% discount
7 Issued a credit memorandum to Henry Galvin for the return of defective merchandise sold on January 5, $210
7 Purchased merchandise from Lemke Brothers, $1,045; terms 2/10,n/30; Invoice No. 187
8 Paid W. Bedford Co. the balance due, less 2% discount; Check No. 235
9 Paid Wohlers, Inc., the balance due, less 1% discount; Check No. 236
10 Returned defective merchandise purchased on January 7 from Lemke Brothers, receiving a credit memorandum for $105
10 Collected the balance due from Lee Maddox, Less 2% discount
11 Paid Lemke Brothers the January 1 balance; no discount; Check No 237
12 Received a check from Smitz, Inc., for the amount due from the sale of January 2
14 Purchased merchandise from Jones Co. $2,550; terms, 2/10,n/30; Invoice No. 188
15 Received a check from Henry Galvin for the amount due from the sale of January 5, less the return of January 7
15 Recorded cash sales for the first half of January, $1,665
15 Cindi invested an additional$3,000 cash in the firm
16 Purchased office equipment from Wohlers, Inc., $4,400; terms, 2/30,n/60 Invoice No. 189
17 Sold merchandise to Lee Maddox, $950, Invoice No. 178
17 Paid Lemke Brothers the amount due from the purchase of January 7, less the return of January 10; Check No. 238
18 Purchased office supplies from W. Bedford Co., $860; terms, n/30; Invoice No. 190
19 Returned defective office supplies to W. Bedford Co., receiving a credit memorandum for $110
20 Purchased store supplies from Jones Co.,$555; terms, n/30; Invoice No. 191
22 Cindi invested a used truck valued at $4,700 in the business
23 Sold merchandise to Neagle Co., $820, Invoice No. 179
24 Paid the balance due to Jones Co. from the purchase of January 14; Check No. 239
24 Cindi wrote check No. 240 to pay her home phone bill, $205
25 Sold Merchandise to Smitz, Inc., $1,995, Invoice No. 180
26 Sold store supplies to another firm at cost for cash, $110
27 Issued a credit memorandum to Smitz, Inc., for a shortage from the sale of January 25, $75
27 Purchased merchandise from Jones Co., $750; terms, 2/10,n/30; Invoice No. 192
29 Paid January s electric bill, $595, Check No. 241
31 Recorded cash sales for the second half of January, $2,445
31 Paid freight on January purchases, $450, Check No. 242
31 Paid salaries for January, $4,450, Check No. 243
5. Total all special journals
6. Post all items that need to be posted
7. Prepare a trial balance on a work sheet as of January 31, 20X1
8. Prepare schedules of accounts receivable and accounts payable
9. Complete the worksheet. Adjustment data for January 31 are as follows:
(a) Office Supplies on hand, $830
(b) Store Supplies on hand, $750
(c) Insurance Expired, $20
(d) Depreciation of office equipment, $90
(e) Depreciation of store equipment, $125
(f) Depreciation of delivery equipment, $250
(g) Merchandise Inventory (beginning), $13,540
(h) Merchandise Inventory (ending), $12,210
10.Record and post adjusting entries as of January 31.
11. Record and post closing entries as of January 31.
12. Prepare a January 31 post-closing trial balance.
13. Prepare an income statement for the month of January. All salaries are sales salaries.
14. Prepare a statement of owner s equity for the month of January
15. Prepare a January 31 balance sheet
16. Record the following February transactions
20X1
February
1 Paid rent for the month, $1,070, Check No. 244
2 Purchased merchandise from Lemke Brothers, $740; terms, 2/10,n/30; Invoice No. 193
3 Returned merchandise purchased from Lemke Brothers on February 2, receiving a credit memorandum for $75
3 Collected the balance due from Lee Maddox
4 Collected the balance due from Smitz, Inc., for the sale of January 25 less the credit of January 27 and less the 2% discount
5 Cindi took home $40 of office supplies for her personal use
6 Sold merchandise to Henry Galvin, $2,140, Invoice No. 181
6 Paid Jones Co. the balance due on purchases of $555 and $750, less a 2% discount on the $750 purchase; Check No. 245
7 Collected the balance due from Neagle Co.
8 Issued a credit memorandum to Henry Galvin for damaged merchandise sold on February 6, $195
9 Purchased merchandise for cash, $375, Check No. 246
11 Paid Lemke Brothers for the balance due from the purchase of February 2, less the return of February 3; Check No. 247
11 Returned $20 of the merchandise purchased on February 9, receiving a cash refund
12 Sold merchandise to Lee Maddox, $1,185, Invoice No. 182
13 Cindi wrote Check No. 248 for personal expenses, $350
14 Recorded cash sales for the first half of the month, $3,095
15 Paid Wohlers, Inc., the balance due, less 2% discount, Check No. 249
16 Received a check from Henry Galvin for the amount due from the sale of February 6, less the return of February 8
17 Sold office supplies for cash, $85
17 Paid W. Bedford Co. the balance due for the purchase of January 18, less the return of January 19; Check No. 250
19 Purchased store supplies from W. Bedford Co. $340; terms, n/30; Invoice No. 194
20 Returned $30 of the store supplies purchased on February 19, receiving credit
21 Purchased merchandise from Lemke Brothers, $940; terms, 2/10,n/30; Invoice No. 195
22 Sold merchandise to Neagle Co., $1,095; Invoice No. 183
24 Purchased merchandise from Jones Co., $1,045; terms, 2/10,n/30; Invoice No 196
25 Sold merchandise to Smitz, Inc., $1,755, Invoice No. 184
26 Purchased store equipment from Wohlers, Inc., $2700; terms 2/30,n/60; Invoice No. 197
27 Paid the electric bill for February, $550, Check No. 251
28 Recorded cash sales for the second half of the month, $2,985
28 Paid freight on February purchases, $435, Check No. 252
28 Paid salaries for February, $4,450, Check No. 253
17.Total all special journals.
18. Post all items that need to be posted
19. Prepare a trial balance on a work sheet as of February 28, 20X1
20. Prepare schedules of accounts receivable and accounts payable.
21. Complete the work sheet. Adjustment data for February 28 are as follows
(a) Office Supplies on hand, $355
(b) Store Supplies on hand, $275
(c) Insurance Expired, $20
(d) Depreciation of office equipment, $90
(e) Depreciation of store equipment, $125
(f) Depreciation of delivery equipment, $250
(g) Merchandise Inventory (beginning), $12.210
(h) Merchandise Inventory (ending), $12,780
22.Record and post adjusting entries as of February 28.
23. Record and post closing entries as of February 28.
24. Prepare a February 28 post-closing trial balance.
25. Prepare an income statement for the month of February. All salaries are sales salaries.
26. Prepare a statement of owner s equity for the month of February.
27. Prepare a February 28 balance sheet.
Check figures for January only.
Net Loss: 4,946.75 Total Assets: 57,168.25 Cash Balance: 4,823.25
Aug 29, 2021 | Uncategorized
Use Microsoft Word or the drawing application of your choice to create a context diagram for a hypothetical system design. Show at least two external entities and at least two data flows connecting the context diagram to each entity.
Accompany this with a description in your words addressing the following: 1) What functionality and what organization does the design apply to? 2) What information does each of the external entities put into or take out of the system? 3) What data elements are included in each data flow?
Example of #3: The data flow named “Student Biodata” contains the following elements: Gender (M/F), Date of Birth (date), Years of Education (integer), and Marital Status (Marrried/Not Married).
If you can get everything in one document, that’s fine. If not, just upload two documents, one for the diagram and one for the explanation.
Due data will be any time on Friday, Oct. 18th. plzzzzzzz help
Aug 29, 2021 | Uncategorized
1-What is a basic premise of the acquisition method regarding accounting for a noncontrolling interest?
A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.
Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry.
Consolidated financial statements should be primarily for the benefit of the parent company s stockholders.
Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company.
2. On January 1, 2012, Chamberlain Corporation pays $481,600 for a 60 percent ownership in Neville. Annual excess fair-value amortization of $24,700 results from the acquisition. On December 31, 2013, Neville reports revenues of $512,000 and expenses of $386,000 and Chamberlain reports revenues of $754,000 and expenses of $430,000. The parent figures contain no income from the subsidiary. What is consolidated net income attributable to the controlling interest?
$409.480
$425,300
$384,780
$512,000
3. On April 1, Pujols, Inc., exchanges $592,500 fair-value consideration for 70 percent of the outstanding stock of Ramirez Corporation. The remaining 30 percent of the outstanding shares continued to trade at a collective fair value of $212,500. Ramirez s identifiable assets and liabilities each had book values that equaled their fair values on April 1 for a net total of $635,000. During the remainder of the year, Ramirez generates revenues of $653,000 and expenses of $374,000 and paid no dividends. On a December 31 consolidated balance sheet, what amount should be reported as noncontrolling interest?
$274,200
$296,200
$275,275
$337,630
4. Willkom Corporation bought 100 percent of Szabo, Inc., on January 1, 2011. On that date, Willkom s equipment (10-year life) has a book value of $477,500 but a fair value of $602,500. Szabo has equipment (10-year life) with a book value of $253,000 but a fair value of $378,000. Willkom uses the equity method to record its investment in Szabo. On December 31, 2013, Willkom has equipment with a book value of $334,250 but a fair value of $479,750. Szabo has equipment with a book value of $177,100 but a fair value of $337,300. What is the consolidated balance for the Equipment account as of December 31, 2013?
$511,350
$636,350
$817.050
$598,850
Aug 29, 2021 | Uncategorized
2. Which of the following statements is CORRECT?
a. A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.
b. The capital structure that minimizes a firm s weighted average cost of capital is also the
capital structure that maximizes its stock price.
c. The capital structure that minimizes the firm s weighted average cost of capital is also the
capital structure that maximizes its earnings per share.
d. If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.
e. Other things held constant, if corporate tax rates declined, then the Modigliani-Miller tax- adjusted tradeoff theory would suggest that firms should increase their use of debt.
3. Which of the following statements is CORRECT?
a. In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.
b. There is no reason to think that changes in the personal tax rate would affect firms capital
structure decisions.
c. A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.
d. If a firm’s after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its
WACC by increasing its use of debt.
e. Suppose a firm has less than its optimal amount of debt. Increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing.
4. Companies HD and LD have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HD s basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?
a. Company HD has a higher return on assets (ROA) than Company LD.
b. Company HD has a higher times interest earned (TIE) ratio than Company LD.
c. Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LD s.
d. The two companies have the same ROE.
e. Company HD s ROE would be higher if it had no debt.
5. Which of the following statements is CORRECT?
a. Generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.
b. Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
c. Drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because
their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.
d. Wide variations in capital structures exist both between industries and among individual firms
within given industries. These differences are caused by differing business risks and also
managerial attitudes.
e. Since most stocks sell at or very close to their book values, book value capital structures are
almost always adequate for use in estimating firms’ costs of capital.
Question 1
Which of the following statements is CORRECT?
a) Since accounts payable and accrued liabilities must eventually be paid off, as these accounts increase, AFN as calculated by the AFN equation must also increase.
b) Suppose a firm is operating its fixed assets at below 100% of capacity, but it has no excess current assets. Based on the AFN equation, its AFN will be larger than if it had been operating with excess capacity in both fixed and current assets.
c) If a firm retains all of its earnings, then it cannot require any additional funds to support sales growth.
d) Additional funds needed (AFN) are typically raised using a combination of notes payable, long-term debt, and common stock. Such funds are non-spontaneous in the sense that they require explicit financing decisions to obtain them.
e) If a firm has a positive free cash flow, then it must have either a zero or a negative AFN.
Question 2
Which of the following statements is CORRECT?
a) Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by adding together increases in assets and spontaneous liabilities and then subtracting operating income.
b) The AFN equation for forecasting funds requirements requires only a forecast of the firm s balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet.
c) Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast.
d) A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed.
e) If the ratios of assets to sales and spontaneous liabilities to sales do not remain constant, then the AFN equation will provide more accurate forecasts than the forecasted financial statements method.
Question 3
A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase?
a) The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity.
b) The company increases its dividend payout ratio.
c) The company begins to pay employees monthly rather than weekly.
d) The company s profit margin increases.
e) The company decides to stop taking discounts on purchased materials.
Question 4
Last year Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan’s sales increase before it is required to increase its fixed assets?
a) $170.09
b) $179.04
c) $188.46
d) $197.88
e) $207.78
Question 5
Which of the following statements is CORRECT?
a) Once a firm has defined its purpose, scope, and objectives, it must develop a strategy or strategies for achieving its goals. The statement of corporate strategies sets forth detailed plans rather than broad approaches for achieving a firm’s goals.
b) A firm s corporate purpose states the general philosophy of the business and provides managers with specific operational objectives.
c) Operating plans provide management with detailed implementation guidance, consistent with the corporate strategy, to help meet the corporate objectives. These operating plans can be developed for any time horizon, but many companies use a 5-year horizon.
d) A firm s mission statement defines its lines of business and geographic area of operations.
e) The corporate scope is a condensed version of the entire set of strategic plans.
Question 6
The capital intensity ratio is generally defined as follows:
a) Sales divided by total assets, i.e., the total assets turnover ratio.
b) The percentage of liabilities that increase spontaneously as a percentage of sales.
c) The ratio of sales to current assets.
d) The ratio of current assets to sales.
e) The amount of assets required per dollar of sales, or A0*/S0.
Question 7
Which of the following assumptions is embodied in the AFN equation?
a) None of the firm’s ratios will change.
b) Accounts payable and accruals are tied directly to sales.
c) Common stock and long-term debt are tied directly to sales.
d) Fixed assets, but not current assets, are tied directly to sales.
e) Last year s total assets were not optimal for last year s sales.
Question 8
The term additional funds needed (AFN) is generally defined as follows:
a) Funds that are obtained automatically from routine business transactions.
b) Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations.
c) The amount of assets required per dollar of sales.
d) The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth.
e) A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant.
Question 9
Which of the following is NOT one of the steps taken in the financial planning process?
a) Forecast the funds that will be generated internally. If internal funds are insufficient to cover the required new investment, then identify sources from which the required external capital can be raised.
b) Monitor operations after implementing the plan to spot any deviations and then take corrective actions.
c) Determine the amount of capital that will be needed to support the plan.
d) Develop a set of forecasted financial statements under alternative versions of the operating plan in order to analyze the effects of different operating procedures on projected profits and financial ratios.
e) Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors.
Question 10
Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)?
a) A sharp increase in its forecasted sales.
b) A switch to a just-in-time inventory system and outsourcing production.
c) The company reduces its dividend payout ratio.
d) The company switches its materials purchases to a supplier that sells on terms of 1/5, net 90, from a supplier whose terms are 3/15, net 35.
e) The company discovers that it has excess capacity in its fixed assets.
Question 11
Last year Handorf-Zhu Inc. had $850 million of sales, and it had $425 million of fixed assets that were used at only 60% of capacity. What is the maximum sales growth rate the company could achieve before it had to increase its fixed assets?
a) 54.30%
b) 57.16%
c) 60.17%
d) 63.33%
e) 66.67%
Question 12
Which of the following statements is CORRECT?
a) The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm’s AFN equals zero.
b) If a firm s assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm s AFN to be negative.
c) If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm s actual AFN must, mathematically, exceed the previously calculated AFN.
d) Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio.
e) Dividend policy does not affect the requirement for external funds based on the AFN equation.
Question 13
Which of the following statements is CORRECT?
a) Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings.
b) The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales.
c) Forecasted financial statements, as discussed in the text, are used primarily as a part of the managerial compensation program, where management s historical performance is evaluated.
d) The capital intensity ratio gives us an idea of the physical condition of the firm s fixed assets.
e) The AFN equation produces more accurate forecasts than the forecasted financial statement method, especially if fixed assets are lumpy, economies of scale exist, or if excess capacity exists.
Question 14
Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets that were being operated at 80% of capacity. In millions, how large could sales have been if the company had operated at full capacity?
a) $312.5
b) $328.1
c) $344.5
d) $361.8
e) $379.8
Question 15
a) Spontaneous funds are generally defined as follows:Assets required per dollar of sales.
b) A forecasting approach in which the forecasted percentage of sales for each item is held constant.
c) Funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.
d) Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes
e) The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm s growth.
Question 16
Based on the corporate valuation model, the value of a company s operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stock s price per share?
a) $23.00
b) $25.56
c) $28.40
d) $31.24
e) $34.36
Question 17
Based on the corporate valuation model, the value of a company s operations is $1,200 million. The company s balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock s price per share?
a) $24.90
b) $27.67
c) $30.43
d) $33.48
e) $36.82
Question 18
Which of the following is NOT normally regarded as being a barrier to hostile takeovers?
a) Abnormally high executive compensation.
b) Targeted share repurchases.
c) Shareholder rights provisions.
d) Restricted voting rights.
e) Poison pills.
Question 19
Which of the following statements is NOT CORRECT?
a) The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.
b) The corporate valuation model discounts free cash flows by the required return on equity.
c) The corporate valuation model can be used to find the value of a division.
d) An important step in applying the corporate valuation model is forecasting the firm s pro forma financial statements.
e) Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.
Question 20
Which of the following is NOT normally regarded as being a good reason to establish an ESOP?
a) To increase worker productivity.
b) To enable the firm to borrow at a below-market interest rate.
c) To make it easier to grant stock options to employees.
d) To help prevent a hostile takeover.
e) To help retain valued employees.
Question 21
Suppose Leonard, Nixon, & Shull Corporation s projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company s weighted average cost of capital is 11%, what is the value of its operations?
a) $1,714,750
b) $1,805,000
c) $1,900,000
d) $2,000,000
e) $2,100,000
Question 22
Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm s value of operations, in millions?
a) $158
b) $167
c) $175
d) $184
e) $193
Question 23
Based on the corporate valuation model, Bernile Inc. s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm s value of equity, in millions?
a) $429
b) $451
c) $475
d) $500
e) $525
Question 24
Akyol Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?
a) $719
b) $757
c) $797
d) $839
e) $883
Question 25
Which of the following does NOT always increase a company s market value?
a) Increasing the expected growth rate of sales.
b) Increasing the expected operating profitability (NOPAT/Sales).
c) Decreasing the capital requirements (Capital/Sales).
d) Decreasing the weighted average cost of capital.
e) Increasing the expected rate of return on invested capital.
Question 26
Based on the corporate valuation model, Hunsader s value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock s price per share?
a) $13.72
b) $14.44
c) $15.20
d) $16.00
e) $16.80
Question 27
A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40
a) $315
b) $331
c) $348
d) $367
e) $386
Question 28
forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?
a) $840
b) $882
c) $926
d) $972
e) $1,021
Question 29
Suppose Yon Sun Corporation s free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm s value of operations, in millions?
a) $948
b) $998
c) $1,050
d) $1,103
e) $1,158
Question 30
Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a) $1,456
b) $1,529
c) $1,606
d) $1,686
e) $1,770
Aug 29, 2021 | Uncategorized
1. XYZ has been an S corporation since its inception six years ago. On January 1 of the current year, the corporation’s two equal shareholders, John and Jane, had adjusted bases of $150,000 and $175,000, respectively, for their S corporation’s stock. The shareholders plan to have the corporation distribute land with a $50,000 adjusted basis and a $200,000 FMV in the current year. Ordinary income is expected to be $180,000 in the current year. What tax issues should John and Jane consider with respect to the distribution?
2. Zap Corporation has always been an S corporation and is 100% owned by David. David has a basis of $40,000 in his Zap stock at the beginning of the year. During the year, Zap has an ordinary loss of $20,000 and a long-term capital gain of $10,000. In addition, Zap Corporation distributed $55,000 in cash to David on December 1. Will the distribution cause David to recognize a gain? If so, what are its amount and character?
3. An S corporation, reports the following results for the current year:
Ordinary income $70,000
Long-term capital gain $20,000
Municipal bond interest income $10,000
Domestic corporate dividends $6,000
Charitable contributions $16,000
The corporation AAA and accumulated E&P balances at the beginning of the year are $80,000 and $50,000, respectively. The corporation makes a $100,000 cash distribution to its sole shareholder on June 1 and a second $100,000 cash distribution on December 1. The shareholder’s basis for the S Corp stock on January 1 was $120,000. Discuss the tax consequences of these transactions.
Aug 29, 2021 | Uncategorized
1. (Weighted average cost of capital) The target capital structure for QM Industries is 45% common stock, 7%preferredstock, and 48% debt. If the cost of commonequityfor the firm is 17.8%, the cost of preferred stock is 9.8%, the before-tax cost of debt is 8.4%, and the firm s tax rate is 35%, what is QM s weighted average cost of capital?
QM s WACC is _________%. (Round to three decimal places.)
2. (Weighted average cost of capital) Crypton Electronics has a capital structure consisting of 35% common stock and 65% debt. A debt issue of $1,000 par value, 6.5% bonds that mature in 15 years and pay annual interest will sell for $972. Common stock of the firm is currently selling for $30.96 per share and the firm expects to pay a $2.16dividendnext year. Dividends have grown at the rate of 5.1% per year and are expected to continue to do so for the foreseeable future. What is Crypton s cost of capital where the firm s tax rate is 30%?
Crypton s cost of capital is _________%. (Round to three decimal places.)
3. (Weighted average cost of capital) The target capital structure for Jowers Manufacturing is 46% common stock, 13% preferred stock, and 41% debt. If the cost of common equity for the firm is 20.4%, the cost of preferred stock is 11.4%, and the beforetax cost of debt is 9.9%, what is Jowers cost of capital? The firm s tax rate is 34%.
Jowers WACC is ____________%. (Round to three decimal places.)
4. (Weighted average cost of capital) As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm s present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm s capital structure as follows:
To fianc the purchase, Ranch Manufacutring will sell 10-year bonds paying 7.1% per year at the market price of $1,027. Preferred stock paying a $2.09 dividend can be sold for $25.66. Common stock for Ranch Manufacturing is currently selling for 455.21 per share and the firm paid a $3.04 dividend last year. Dividends are expected to continue growing at a rate of 4.8% per year into the indefinite future. If the firm s tax rate is 30%, what discount rate should you use to evaluate the equipment purchase?
Ranch Manufacturing s WACC is __________%. (Round to three decimal places.)
DATA TABLE
Source of capital Market values
Bonds $3,700,000
Preferred stock $1,800,000
Common Stock $5,900,000
5. (EBIT-EPS analysis) Abe Forrester and three of his friends from college have interested a group of ventre capitalists in backing their business idea. The proposed operation would consist of a ceries of retail otlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be locted in Dallas, Houston, and San Antonio. To fiace the new ventre two plans have been proposed:
-Plan A is an all-common-equity structure in which $2.1 million dollars would be raised by selling 82,000 shares of common stock.
-Plan B would involve issuing $1.4 million dollars in long-term bonds with an effective interest rate of 11.8% plus $0.7 million would be raised by selling 41,000 shares of common stock. The debt funds raised under Plan B have no fixed maturity date, in that this amount of financial leverage is considered a permanent part of the firm s capital structure. Abe and his partners plan to use a 38% tax rate in their analysis, and they have hired you on a consulting basis to do the following:
a. Find the EBIT indifference level associated with the two financing plans.
b. Prepare a pro forma income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regarless whether Plan A or B is chosen.
a. Find the EBIT indifference level associated with the two financing plans.
The EBIT indifference level associated with the two financing plans is $__________. (round to the nearest dollar).
b. Prepare a pro forma income income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regarless whether Plan A or B is chosen.
Complete the segment of the income statement for Plan A below: (Round income statement amounts to the nearest dollar except the EPS to the nearest cent.)
Stock Plan
EBIT $____________
Less: interest expense $____________
Earnings Before Taxes $_____________
Less: Taxes at 38% $____________
Net Income $_____________
Number of common shares $_____________
EPS $_____________
Complete the segment of the income statement for Plan B below: (round income statement amount to the nearest dollar except the EPS to the nearest cent.)
Bond/Stock Pan
EBIT $____________
Less: Interest expense $____________
Earnings Before Taxes $_____________
Less: Taxes at 38% $_____________
Net Income $_______________
Number of common shares $_____________
EPS $________________
Aug 29, 2021 | Uncategorized
1. Value-added costs equal standard quantity times
non-value-added costs
currently attainable standards
standard price
actual price
2. As a general rule, an investigation of a variance should be undertaken only if the
anticipated benefits are greater than zero
anticipated benefits are greater than the expected costs
variance is negative
variance is positive
3. Which of the following statements is true regarding a long-range quality report?
This report measures trends of quality costs over time
This report measures interim progress towards the zero-defect goal.
This report measures actual costs of quality compared to budgeted costs of quality for a period of time.
This report measures actual costs of quality versus what quality costs would be at an ideal or targeted zero-defect standard
4. Which of the following equations measures the total budget variance?
AQ (AP SP)
SP (AQ SQ)
SQ (AP SP)
(AQ AP) (SQ SP)
5. An activity output measure is:
the number of outputs from a process
the cost of the activity measured
the effort expended to identify root causes
the number of times an activity is performed
6. An example of a prevention cost is:
field testing
quality audits
reinspection
repair costs
7. Which of the following is an example of a non-value-added manufacturing activity?
assembly
scheduling
finishing
assembling
8. A quality report that compares current actual quality costs with budgeted quality costs for the future is the:
interim quality performance report
one-year quality performance report
multiple-period quality trend report
long-range quality performance report
9. The number of units that can be produced in a given period of time is called:
velocity
cycle time
turnover
efficiency
10. Which of the following is a value-added activity?
moving
inspection
processing
waiting
11. Price/rate variances focus on the differences between
actual and standard inputs multiplied by actual prices.
actual and standard unit prices of an input multiplied by the actual quantity of inputs
actual and standard inputs multiplied by standard prices
actual and standard unit prices of an input multiplied by the budgeted quantity of inputs
12. For non-value-added activities that are unnecessary, the standard quantity is:
one
zero
actual quantity minus standard price
actual quantity plus standard price
13. The costs of a consumer complaint department are:
external failure costs
internal failure costs
appraisal costs
prevention costs
14. At the beginning of 2011, Peters Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company’s products:
Theoretical annual capacity 2,000
Actual production 1,800
Production hours available 500
Actual conversion cost per hour $7
1) The theoretical velocity per hour is:
2) What is the ideal conversion cost per unit?
15. Bender Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:
Materials: Standard Actual
Standard: 200 pounds at $3.00 per pound $600
Actual: 220 pounds at $2.85 per pound $627
Direct labor:
Standard: 400 hours at $15.00 per hour 6,000
Actual: 368 hours at $16.50 per hour 6,072
1)What is the material usage variance for Bender Corporation?
2) What is the material price variance for Bender Corporation?
16. At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
Preceding Year Current Year
Sales $3,000,000 $3,000,000
Quality training 3,000 4,500
Material inspections 7,500 12,000
Scrap 60,000 45,000
Rework 120,000 75,000
Product inspection 15,000 30,000
Product warranty 105,000 82,500
1)For the current year, prevention costs are what percentage of sales?
2) For the current year, appraisal costs are what percentage of sales?
3) For the current year, internal failure costs are what % of sales?
4)For the current year, external failure cost are what % of sales?
Aug 29, 2021 | Uncategorized
The Mitchum Company has a beginning inventory for July of $375 (75 units at $5/unit) and makes the following purchases and sales of tapes during July: (40 pts)
07/07 Purchase 50 units @ $7
07/12 Sales 100 units
07/20 Purchase 125 units @ $8
07/28 Sales 90 units
Compute the cost of sales and the ending inventory for May if the firm uses the following:
a. The perpetual inventory system and the FIFO cost flow assumption
b. The perpetual inventory system and the LIFO cost flow assumption
For the FIFO method, you have to show the cost of sales (cost of goods sold) and the value of ending inventory.
For the LIFO method, you have to show the cost of sales (cost of goods sold) and the value of ending inventory.
2. An examination of the accounting records and bank statement of the Brian Donleavy Corporation at 31 May 2012 provides the following information: (40 pts)
a) The firm s checkbook has a balance of $4,304
b) The firm s bank statement has a balance of $3,538
c) The 31 May cash receipts of $1,500 were deposited in the bank at the end of that day but were not recorded by the bank until 01 Jun 2005
d) Checks issued and mailed in May but not included among the checks listed as paid on the bank statement were as follows:
Check No. 1615 $568
Check No. 1618 $112
Check No. 1621 $235
e) A bank service charge of $25 for May was deducted on the bank statement
f) A check received from a customer for $135 in payment of their account and deposited by the Brian Donleavy Corporation was returned marked NSF with the bank statement.
g) Interest of $15 earned on the firm s checking account was added on the bank statement
h) The Brian Donleavy Corporation discovered that Check No. 1585, which was correctly written as $584 for the May rent, was recorded as $548 in the firm s checking account.
Prepare the bank reconciliation as well as the adjusting journal entries. (There are two items – one is a bank reconciliation and the second are various journal entries)
3. A condensed balance sheet and other financial data for the Alpha Company appear below:
Alpha Company
Balance Sheet
Dec 31, 20X2
ASSETS
Current Assets
Cash $ 100,000
Account Receivable 200,000
Marketable securities 100,000
Inventory 200,000
Total Current Assets $ 600,000
Fixed Assets 500,000
Total Assets $1,100,000
=========
LIABILITIES & STOCKHOLDERS’ EQUITY
Liabilities
Accounts Payable $ 150,000
Other Current Liab. 50,000
Current liabilities $ 200,000
Long-term liabilities 100,000
Total liabilities $ 300,000
Stockholders’ Equity
Common stock – $1 par value
100,000 shares $ 100,000
Additional Paid-in capital 500,000
Retained earnings 200,000
Total Stockholders’ Equity 800,000
Total Liabilities & Stockholders’ Equity $1,100,000
=========
Alpha Company
Income Statement
For the Year Ended Dec 31, 20X2
Net Sales (100% credit sales) $10,000,000
Cost of Goods Sold 6,000,000
Gross Income $ 4,000,000
Selling, General & Administrative Expenses 1,000,000
Earnings before Interest and Taxes $ 3,000,000
Interest Expense 500,000
Earnings before Income Taxes $ 2,500,000
Income Taxes (40%) 1,000,000
Net Income $ 1,500,000
=========
Compute the following ratios: (40 pts)
a. Working capital
b. Current ratio
c. Quick ratio (acid-test)
d. Average Collection Period (utilizing a banker’s year)
e. Profit Margin
All wor must be shown
Aug 29, 2021 | Uncategorized
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Aug 29, 2021 | Uncategorized
1000 to 1500 words (company for asssingment is Starbucks)
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.
In preparation for the survey to find out more about the customer, determine the target market. Develop a profile for the target audience. Conduct secondary research on your company/client s product or service and target audiences. Answer the following questions in your target customer report:
- Why is it important to select a target market first in the research process?
- Who is the target market?
- Identify the target market s personality traits, interests, and lifestyles.
- What research did you use to determine the target market?
- List 2 3 resources used to determine the target market.
- State how identifying the target market will help you develop the research design survey.
Aug 29, 2021 | Uncategorized
Bill Smith opened Smith Construction on April 1, 2010. The following amounts summarize the transactions and financial position of Smith construction as of May 31.
During May the following transactions occurred:
1-May Smith received $10,000 as an inheritance and used it to buy stock in the company.
7-May Smith paid his accounts payable balance.
15-May Smith replaced some windows for a client and received $5,000 cash for his services
17-May Smith collected $1,200 from a customer for a job performed in April
20-May Smith purchased supplies for $1,000 on account
24-May Smith gave a bid to a customer and billed the customer for the services performed $800
25-May Smith sold $5,000 of company stock to his brother
28-May Smith paid wages to his workers of $1,800
30-May Smith paid office rent of $1,000
30-May Smith paid dividends to himself of $1,400
Requirements:
1. Enter the transactions for May into the accounting equation, calculating new balances after each entry.
2. Prepare the Income Statement for the month of May for Smith Construction.
3. Prepare the Statement of Retained Earnings for Smith Construction for the Month of May.
4. Prepare the Balance Sheet for Smith Construction as of May 31, 2010.
Aug 29, 2021 | Uncategorized
Gooseberry Inc. had a cash balance on the books of $6171 on May 31. Cash records for May show the following:
Debits/DepositsCredits/Payments
2716 8
544 775
896 88
367 126
2037 970
200
2267
Gooseberry Inc. received the following bank Statement for May:
Bank Statement for May
Beginning Balance
Deposits and other additions:$4,045
May 1625EFT
52,716
10544
15896
18367
311,000BC$6,148
Checks and other deductions:
May 8441NSF
15(check number 1416)8
19340EFT
22(check number 1417)775
29(check number 1418)88
31(check number 1419)216
3125SC-$1,893
$8,300
Additional Data:
The EFT deposti was a receipt of rent revenue. The EFT debit was payment of insurance expense.
The NSF check was received from a customer
The $1000 bank collection was for a note receivable
The correct amount of check 1419 is $216. Gooseberry Inc. mistakingly recorded the check for $126
Requirements:
1. Prepare the bank reconciliation.
2. Prepare the journal entries.
Aug 29, 2021 | Uncategorized
| True Note Audio Company manufactures two models of speakers, DL and XL. True Note posted the following production and sales data for the month of November. |
|
DL |
XL |
| Estimated inventory in units November 1 |
380 |
140 |
| Desired Inventory in units November 30 |
450 |
110 |
| Expected sales volume in units: |
|
|
| North region |
4,400 |
3,200 |
| South region |
2,950 |
2,100 |
| Unit sales price |
$120 |
$170 |
| Requirements: |
|
|
|
1. Prepare a sales budget
2. Prepare a production budget
|
|
|
|
Aug 29, 2021 | Uncategorized
Outfitters Supply Co. completed the following transactions during the year.
20-Jan Sold Inventory to Henry G., $600, on account. Ignore COGS.
1-Jun Loaned $10,000 cash to Kayaks Inc., receiving a 6 month, 11% note.
30-Jun Wrote off the Henry G. account as uncollectible after repeated efforts to collect from him.
15-Aug Received $200 from Henry G., along with a letter stating his intention to pay within 30 days. Reinstated his account in full
7-Sep Received the balance from Henry G.
1-Dec Collected the maturity value on the Kayaks Inc. note.
19-Dec Received a $3000, 60 day, 12% note on account from Tommy R.
31-Dec Wrote off the following accounts as uncollectible: Jones $700, Smith $300, Kettle $600
31-Dec Based on an aging of accounts receivable, estimated uncollectible accounts is $2900
31-Dec Made an adjusting entry to accrue the interest on the Tommy R. note
Requirements:
1) Journalize the transactions, omitting explanations.
The December 31 balance of Accounts Receivable is $139,000 and the balance in the Allowance account is Credit $1,800.
2) Post the beginning balance to the allowance for uncollectible accounts T to determine the adjusting entry needed for bad debt expense.
Aug 29, 2021 | Uncategorized
Pets Unlimited had a piece of equipment that it purchased 10 years ago. Its cost was $110,000 and it had accumulated depreciation of $75,000.
Record the disposition of the asset under the following independent situations:
1. Pets Unlimited sold the equipment for $25,000.
2. Pets Unlimited discarded the equipment at a cost of $10,000.
3. Pets Unlimited traded in the asset for a new similar asset with a list price of $120,000. Pets Unlimited was given $10,000 as a trade-in allowance and paid cash for the balance.
4. Pets unlimited traded in the asset for a new similar asset with a list price of $200,000. Pets Unlimited was given a trade-in allowance of $50,000 and took signed a note payable for the remainder.
Aug 29, 2021 | Uncategorized
Module 3 Assignment:
During the past two years the following selected transactions occurred for Bass Boats Inc.:
Year 1
5-Jan Purchased equipment for $100,000, signing a 9 month, 6% note Payable.
26-Jan Recorded the week’s sales of $75,000, 70% on account and 30% cash. All sales are subject to a 6 1/2% sales tax.
7-Feb Remitted last week’s sales tax to the appropriate government agency.
1-May Borrowed $150,000 on a 6 year, 8% note payable calling for annual interest payments beginning next May 1.
5-Oct Paid off the January 5 note payable.
30-Nov Purchased inventory at a cost of $7,200, signing a 3-month, 8% note payable for that amount.
31-Dec Accrued warranty expense is estimated at 3% of total sales of $1,000,000.
31-Dec Record accrued interest on all outstanding notes payable (make a separate journal entry for each).
Year 2
28-Feb Paid off the 8% inventory note plus interest at maturity
1-May Paid the interest for one year on the long-term note payable.
Requirements:
1. Record the transactions in the journal. Omit explanations.
Aug 29, 2021 | Uncategorized
Module 3:
The following are the accounts and their balances as of May 31, 2010 for Smith Construction.
Prepare the trial balance for Smith Construction as of May 31, 2010 listing the accounts in the proper order.
Prepare the Income Statement, Statement of retained earnings and balance sheet for Smith Construction as of May 31.
These statements are for the period March, April, and May. Assume retained earnings starts at a 0 balance .
Account Balance
Repair expense 1,000
Cash 47,240
Tools 1,200
Accounts Payable 0
Supplies 1,500
Common Stock 41,000
Rent Expense 2,000
Equipment 24,000
Dividends 3,900
Accounts receivable 1,080
Salary Expense 10,780
Service Revenue 51,700
Retained Earnings 0
Aug 29, 2021 | Uncategorized
1.Truckel,Inc.currently manufactures a wicket as its main product.The costs per unit are as follows:Direct materials and direct labor$11 Variable overhead$5 Fixed overhead$8 Total$24
Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18each.If Truckel makes the wickets,variable costs are$16 per unit.Fixed costs are$8 per unit;however,$5 per unit is unavoidable.Should Truckels make or buy the wickets?
a.Buy;savings=$15,000
b.Buy;savings=5,000
c.Make;savings=10,000
d.Mkae;savings=5,000
2.Galley industries can produce 100units of a necessary component part with the following costs:Direct Materials$20,000 Direct Labor9,000 Variable Overhead21,000 Fixed Overhead8,000
If Galley industries purchases the component externally,$2,000 of the fixed costs can be avoided.Below what external price for the 100 units would Galley choose to buy instead of make?
a.50,000
b.56,000
c.44,000
d.52,000
3.Which decision will involve no incremental revenues?
a.Make or buy decision
b.Drop a product line
c.Accept a special order
d.Additional processing decision
4.An opportunity cost
a.should be initially recorded as an asset
b.is the cost of a new product proposal
c.is the potential benefit that may be obtained by following an alternative course of action
d.is classified as manufacturing overhead
5.Brislin Products has a new product going on the market next year.The following data are projections for production and sales:Variable costs$250,000 Fixt costs450,000 ROI 14% Investment2,000,000 Sales200,0000units
5-1.What is the target selling price per unit?
a.$4.90
b.3.50
c.2.65
d.3.65
5-2.What is the markup percentage?
a.112%
b.20
c.62
d.40
5-3.What would the markup percentage be if only 150,000 units were sold and Brislin still wanted to earn the desired ROI?
a.32.95%
b.53.33
c.35
d.44
6.A master budget consists of
a.an interrelated long-term plan and operating budgets
b.financial budgets and a long-term plan
c.interrelated financial budgets and operating budgets
d.all the accounting journals and ledgers used by a company
7.The starting point in preparing a master budget is the preparation of the
a.production budget
b.sales budget
c.purchasing budget
d.personnel budget
8.Which one of the following is not needed in preparing a production budget?
a.Budgeted unit sales
b.Budgeted raw materials
c.Beginning finished goods units
d.Ending finished goods units
9.A company budgeted unit sales of 204,000units for Jan.2013 and 240,000units for Feb.2013.The company has a policy of having an inventory of units on hand at the end of each month equal to 30%of next month’s budgeted unit sales.If there were 61,200units of inventory on hand on Dec.31,2012.How many units should be produced in Jan,2013 in order for the company to meet its goals?
a.214,800units
b.204,000
c.193,200
d.276,000
10.At Jan1,2013.Deer Corp.Has beginning inventory of 2,000 surfboards.Deer estimates it will sell 10,000 units during the first quarter of 2013 with a 12% increase in sales each quarter.Deer’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs$100 and is sold for $150.How much is budgeted sales revenue for the third quarter of 2013?
a.450,000
b.1,950,000
c.1,881,600
d.12,544
11.Doe Manufacturing plans to sell 6,000purple lawn chairs during May,5,700 in June,and 6,000 during July.The company keeps 15%of the next month’s sales as ending inventory.How many units should Doe produce during June?
a.5,745
b.6,600
c.5,655
d.not enough information to determine
12.Dingo Division’s operating results include:controllable margin of %150,000,sales totaling $1,200,000, and average operating assets of 500,000.Dingo is considering a project with sales of 100,000,expenses of 86,000,and an investment of average operating assets of200,000.Dingo’s required rate of return is 9%.Should Dingo accept this project?
a.Yes,ROI will drop by6.6% which is still above the minimum required rate of return
b.No,the return is less than the required rate of 9%
c.Yes,ROI still exceeds the cost of capital
d.No,ROI will decrease to 7%
13.Grown Industries reported the following items for 2013:Income tax expense$60,000 Contribution margin200,000 Controllable fixed costs80,000 Interest expense40,000 Total operating assets650,000
How much is controllable margin?
a.200,000
b.120,000
c.60,000
d.20,000
14.Griffin Corp.is evaluating its Piquette division, and investment center.The division has a60,000 controllable margin and 400,000 of sales.How much will Griffin’s average operating assets be when its retrun on investment is10%?
a.600,000
b.660,000
c.400,000
d.340,000
15.An investment center generated a contribution margin of 400,000,fixed costs of 200,000 and sales of 2,000,000.The center’s average operating assets were 800,000.How much is the return on investment?
a25%
b175
c50
d75
Aug 29, 2021 | Uncategorized
Which of the following is considered a hybrid organizational form?
sole proprietorship
partnership
limited liability partnership
corporation
Which of the following is a principal within the agency relationship?
the board of directors
a shareholder
a company engineer
the CEO of the firm
Which of the following presents a summary of the changes in a firm s balance sheet from the beginning of an accounting period to the end of that accounting period?
The statement of retained earnings.
The statement of net worth.
The statement of working capital.
The statement of cash flows.
Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales in inventory?
65.2 days
64.3 days
61.7 days
57.9 days
Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?
0
1.47
0.60
1.74
Which of the following is not a method of benchmarking
Identify a group of firms that compete with the company being analyzed.
Evaluating a single firm s performance over time.
Conduct an industry group analysis.
Utilize the DuPont system to analyze a firm s performance
Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)
$26,454
$16,670
$22,680
$19,444
Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows $450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)
$2,735,200
$2,815,885
$2,615,432
$2,431,224
Ajax Corp. is expecting the following cash flows $79,000, $112,000, $164,000, $84,000, and $242,000 over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
$429,560
$414,322
$480,906
$477,235
Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)
$5,233,442
$2,667,904
$1,745,600
$3,594,524
Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
40%
16%
12%
32%
Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
$923
$1,014
$972
$1,066
Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?
$12.50
$11.63
$13.50
$9.72
TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
0.90
1.90
0.11
1.11
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
The discounted payback.
The profitability index.
The internal rate of return.
The modified internal rate of return
The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?
33%
50%
70%
30%
Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm’s growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?
15.36%
15.00%
12.00%
14.65%
If a company’s weighted average cost of capital is less than the required return on equity, then the firm:
Must have preferred stock in its capital structure
Is financed with more than 50% debt
Has debt in its capital structure
Is perceived to be safe
A firm’s capital structure is the mix of financial securities used to finance its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock
Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?
$375
$600
$321
$225
Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
$1,334 million
$1,787 million
$453.6 million
$1,315 million
Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
30.3%
25.1%
27.3%
32.9%
Which of the following cannot be engaged in managing the business?
a limited partner
a sole proprietor
a general partner
none of these
Which of the following does maximizing shareholder wealth not usually account for?
Risk.
Amount of Cash flows.
Government regulation.
The timing of cash flows.
The strategic plan does NOT identify
working capital strategies.
the lines of business a firm will compete in.
major areas of investment in real assets.
future mergers, alliances, and divestitures
Firms that achieve higher growth rates without seeking external financing
none of these.
have a low plowback ratio.
are highly leveraged.
have less equity and/or are able to generate high net income leading to a high ROE.
Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm’s dividend payout ratio and retention ratio.
15%, 85%
55%, 45%
45%, 55%
85%, 15%
The cash conversion cycle
shows how long the firm keeps its inventory before selling it.
estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.
begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.
begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
You are provided the following working capital information for the Ridge Company:
Ridge Company
Account
$
Inventory
$12,890
Accounts receivable
12,800
Accounts payable
12,670
Net sales
$124,589
Cost of goods sold
99,630
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
83.5 days
38.3 days
129.9 days
46.4 days
Aug 29, 2021 | Uncategorized
Question 1
You ve decided to pursue higher education and enroll in a MS in Finance program. If you borrowed $150,000 at a fixed interest rate of 7.5% and can only make payments of $25,000 per year to pay off the loan, at the end of this and each additional year. How many years will it take before you can once again live debt-free?
Enter your answer in the answer box rounded off to TWO decimal points.
Answer .
1 points
Question 2
Mark invests $5,000 into a retirement account. He expects to earn 9 percent, compounded monthly, on his money for the next 15 years. After that, for the next 35 years, he wants to be more conservative, so he only expects to earn 5 percent, compounded semi-annually. How much money will Mark have in his account when he retires 50 years from now, assuming this is the only deposit he makes into the account?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 3
Stern Associates is considering a project that has the following cash flow data. What is the project’s payback?
Year 0 1 2 3 4 5
Cash flows -$1,100 $300 $310 $320 $330 $340
Answer 3.16 years
2.31 years
3.52 years
2.85 years
2.56 years
.
1 points
Question 4
Consider a 7-year loan with annual payments at 5%. If the loan amount is $45,000, compute the principal repaid in the seventh year.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 5
As the required rate of return is increased, the:
Answer PV decreases, FV increases
PV decreases, FV decreases
PV increases, FV decreases
PV increases, FV increases
.
1 points
Question 6
ABC’s current assets comprise of cash, accounts receivables, and inventory. ABC has $12,087 in cash, $7,459 in accounts receivables, and $11,981 in inventory. If the current ratio is 3.2 times, compute the quick ratio.
Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 7
If you receive $269 at the end of each year for the first three years and $800 at the end of each year for the next three years. What is the present value? Assume interest rate is 7%.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 8
An investment is acceptable if the profitability index (PI) of the investment is:
Answer greater than one.
less than the net present value (NPV).
greater than the internal rate of return (IRR).
less than one.
greater than a pre-specified rate of return.
.
1 points
Question 9
What is the net present value of the following cash flows? Assume an interest rate of 16.98%
Year CF
0 -$10,840
1 $5,514
2 $6,242
3 $9,352
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answers box.
Answer .
1 points
Question 10
ABC Company earned $756,889 in taxable income for the year. How much tax does the company owe on this income?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 11
In 2012, ABC had operating income (EBIT) of $21,307, interest expense of $1,698, and dividend expense of $2,587. If the tax rate is 38%, what is the transfer to Retained Earnings?
Enter your answer rounded off to two decimal points.
Answer .
1 points
Question 12
Assume that a company has $133,865 of taxable income from operations plus $9,687 of interest income and $16,768 of dividend income. What is the company s federal tax liability?
Answer .
1 points
Question 13
ABC has the following data for the year ending 12/31/10: Net income = $600; Net operating profit after taxes (NOPAT) = $2,759; Total assets = $2,500; Short-term investments = $200; Stockholders’ equity = $1,800; Total debt = $700; and Total operating capital = $4,614. ABC’s weighted average cost of capital is 15%. What is its economic value added (EVA)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer .
1 points
Question 14
ABC recently reported $20,909 of sales, $8,362 of operating costs other than depreciation, and $1,293 of depreciation. The company had $4,302 of bonds that carry a 7% interest rate
Question 14
-
ABC recently reported $20,909 of sales, $8,362 of operating costs other than depreciation, and $1,293 of depreciation. The company had $4,302 of bonds that carry a 7% interest rate, and its income tax rate was 35%. How much was its net cash flow?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer
1 points
Question 15
-
Suppose an investment offers to triple your money in 26 years. What annual rate of return are you being offered if interest is compounded monthly?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
1 points
Question 16
-
How many years will it take to double your money at 15% compounded semi-annually?
Enter your answer rounded off to TWO decimal points.
Answer
1 points
Question 17
-
Your firm has the following balance sheet statement items: total current liabilities of $325,000; total assets of $3,655,000; fixed and other assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm s net working capital?
Answer
| $1,080,000 |
| $1,885,000 |
| $1,685,000 |
| $1,560,000 |
| $325,000 |
1 points
Question 18
-
If you put $108 in a savings account at the beginning of each year for 19 years, how much money will be in the account at the end of the 19th year? Assume that the interest rate is 8.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer
1 points
Question 19
-
If you receive $792 at the end of each year for the first three years and $8,382 at the end of each year for the next two years. What is the future value of this cash flow stream? Assume interest rate is 7%.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer
1 points
Question 20
-
Consider a taxable bond with a yield of 10.6% and a tax-exempt municipal bond with a yield of 4.4%. At what tax rate would you be indifferent between the two bonds?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
1 points
Question 21
-
ABC Company offers a perpetuity which pays annual payments of $16,593. This contract sells for $221,788 today. What is the interest rate?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
1 points
Question 22
-
ABC is reviewing a project that will cost $1,494.The project will produce cash flows $429 at the end of each year for the first two years and $883 at the end of each year for the next two years. What is the profitability index? Assume interest rate is 7%.
Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
Answer
1 points
Question 23
-
A firm has a return on equity of 21 percent, a net profit margin of 8.4 percent, and total equity of $675.1. What is the net income?
Answer
1 points
Question 24
-
A project has the following cash flows. What is the internal rate of return?
Year 0 1 2 3
Cash flow -$121,000 68,150 $42,200 $39,100
Answer
| 14.39% |
| 13.47% |
| 12.71% |
| 13.85% |
| 14.82% |
1 points
Question 25
-
What is the effective rate of 24% compounded monthly?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
1 points
Question 26
-
ABC Company has a debt-equity ratio of 0.69. What is the debt ratio?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
1 points
Question 27
-
In its most recent financial statements, ABC reported $68,853 of net income and $592,366 of retained earnings. The previous retained earnings were $679,945. How much in dividends was paid to shareholders during the year?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer
1 points
Question 28
ABC Company has net income of $105,045, return on assets of 6.5 percent, and debt-equity ratio of 0.66. What is the return on equity?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer
Aug 29, 2021 | Uncategorized
Reiley Co. purchased land as a factory site for $1,000,000. Reiley paid $40,000 to tear down two buildings on the land. Salvage was sold for $5,400. Legal fees of $3,480 were paid for title investigation and making the purchase. Title insurance cost $2,400. Architect’s fees were $41,200. Excavation cost $10,040. The contractor was paid $2,400,000. Interest costs during construction were $170,000.
The cost of the building that should be recorded by Reiley Co. is (Points : 4) $2,611,200 $2,615,840 $2,621,240 $2,661,240
Question 2.2. On October 1, Carr Co. began construction of a small building. Payments of $150,000 were made monthly for three months beginning October 1. The building was completed and ready for occupancy on December 31. In determining the amount of interest cost to be capitalized, the weighted-average accumulated expenditures are (Points : 4) $37,500 $150,000 $75,000 450,000
Question 3.3. During 2012, Foster Co. incurred average accumulated expenditures of $500,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2012 was a $600,000, 10%, 5-year note payable dated January 1, 2010. What is the amount of interest that should be capitalized by Foster during 2012? (Points : 4) $0 $10,000 $50,000 $60,000
Question 4.4. On August 1, 2012, Kegan Corporation purchased a new machine on a deferred payment basis. A down payment of $3,000 was made and 4 monthly installments of $4,000 each are to be made beginning on September 1, 2012. The cash equivalent price of the machine was $16,200. Kegan incurred and paid installation costs amounting to $500. The amount to be capitalized as the cost of the machine is (Points : 4) $16,500. $16,200 $19,000 $16,700
Question 5.5. On December 1, Young Corporation exchanged 5,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Young at a cost of $40 per share, and on the exchange date the common shares of Young had a fair market value of $50 per share. Young received $9,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at (Points : 4) $191,000. $200,000 $241,000 $250,000
Question 6.6. Equipment that cost $55,000 and has accumulated depreciation of $25,000 is exchanged for similar equipment with a fair value of $40,000 and $10,000 cash is received (assume commercial substance).
The gain to be recognized from the exchange is (Points : 4) $4,000 gain $5,000 gain $15,000 gain $20,000 gain
Question 7.7. On March 6, 2013, Calle Corporation purchased machinery for $25,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. Calle uses straight-line depreciation and follows the half-year convention. What amount of depreciation expense should be recorded for 2013? (Points : 4) $1,000 $1,250 $2,000 $2,500
Question 8.8. Witten Co. purchased machinery that was installed and ready for use on January 3, 2011, at a total cost of $230,000. Salvage value was estimated at $30,000. The machinery will be depreciated over five years using the double-declining-balance method. For the year 2012, Witten should record depreciation expense on this machinery of (Points : 4) $48,000 $55,200 $60,000 $92,000
Question 9.9. On January 1, 2012, Reiley Co. purchased new machinery for $540,000. The machinery has an estimated useful life of five years, and depreciation is computed by the sum-of-the-years’-digits method. The accumulated depreciation on this machinery at December 31, 2013, should be (Points : 4) $360,000 $324,000 $216,000 $180,000
Question 10.10. In January 2012, Kohl Mining Corporation purchased a mineral mine for $6,300,000 with removable ore estimated by geological surveys at 3,000,000 tons. The property has an estimated value of $600,000 after the ore has been extracted. Kohl incurred $1,740,000 of development costs preparing the property for the extraction of ore. During 2012, 300,000 tons were removed and sold. For the year ended December 31, 2012, Kohl should include what amount of depletion in its cost of goods sold? (Points : 4) $646,000 $570,000 $744,000 $767,250
Question 11.11. The general ledger of Younger Corporation as of December 31, 2011, includes the following accounts:
Copyrights $20,000 Deposits with advertising agency $13,500 Discount on bonds payable $33,750 Goodwill $245,000 Trademarks $45,000
In the preparation of Younger’s balance sheet as of December 31, 2011, what should be reported as total intangible assets? (Points : 4) $357,250. $323,500. $310,000. $290,000.
Question 12.12. The following information is available for Barkley Company s patents:
Cost $860,000 Carrying amount $430,000 Expected future net cash flows $400,000 Fair value $320,000
Barkley would record a loss on impairment of (Points : 4) $540,000 $110,000 $80,000 $30,000
Question 13.13. On January 1, 2010, equipment was purchased that cost $50,000, has a useful life of 10 years, and no residual value. At the beginning of 2014, it was decided that there were only four years remaining in the asset’s useful life, instead of six. Assuming the company uses the straight-line method, depreciation expense for 2014 should be (Points : 4) $5,000 $6,250 $7,500 $8,750
Question 14.14. The interest cost to be capitalized as part of the cost of an asset should be (Points : 4)
the total interest cost actually incurred.
the cost of capital charge for stockholders’ equity.
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made.
that portion of average accumulated expenditures on which no interest cost was incurred.
Question 15.15. If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will (Points : 4) be constant. vary with unit sales. vary with sales revenue. vary with production.
Question 16.16. White Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should (Points : 4) recognize an extraordinary loss for the period. include a credit to the equipment accumulated depreciation account. include a credit to the equipment account. not be made if the equipment is still being used.
Question 17.17. Which of the following is true of depreciation accounting? (Points : 4) Depreciation is not a matter of valuation. Depreciation is an attempt to match revenues and expenses. Depreciation is a process of cost allocation. All of the above are true about depreciation.
Question 18.18. A loss on impairment of a limited-life intangible asset is the difference between the asset s (Points : 4) carrying amount and the expected future net cash flows. carrying amount and its fair value. fair value and the expected future net cash flows. cost and its fair value.
Question 19.19. Purchased goodwill should (Points : 4) be written off as soon as possible against retained earnings. be written off as soon as possible as an extraordinary item. be written off by systematic charges as a regular operating expense over the period benefited. not be amortized.
Question 20.20. Assets that qualify for interest cost capitalization include (Points : 4) assets under construction for a company’s own use. assets that are ready for their intended use in the earnings of the company. assets that are not currently being used because of excess capacity. All of these assets qualify for interest cost capitalization.
Aug 29, 2021 | Uncategorized
Ronaldo Inc. has a capital budget of $1,000,000, but it wants to maintain a target capital structure of 50% debt and 50% equity. The company forecasts this year s net income to be $1,000,000. If the company follows a residual dividend policy, what will be its dividend payout ratio?
a. 30%
b. 50%
c. 20%
d. 40%
ABC Communications recently completed a 5-for-4 stock split. Prior to the split, its stock price was $70 per share. The firm’s total market value increased by 20% as a result of the split. What was the price of the company s stock following the stock split?
a. $50.4
b. $61.6
c. $46.2
d. $67.2
Brandi Co. has an unlevered beta of 1.30. The firm currently has no debt, but is considering changing its capital structure to be 30% debt and 70% equity. If its corporate tax rate is 40%, what is Brandi’s levered beta?
a. 1.26
b. 1.38
c. 1.51
d. 1.63
e. 1.75
Brandi Co. has a levered beta of 1.30. The firm currently has 30% debt, but is considering changing its capital structure to be 0% debt and 100% equity. If its corporate tax rate is 40%, what is Brandi’s unlevered beta?
a. 0.80
b. 0.88
c. 0.95
d. 1.03
e. 2.0
Brandi Co. has a beta of 1.00. The firm currently has 30% debt, but is considering changing its capital structure to be 20% debt and 80% equity. If its corporate tax rate is 40%, what is Brandi’s levered beta at 20% debt level?
Hint: First calculate unlevered beta using old capital structure and then calculate levered beta using the new capital structure.
a. 1.19
b. 0.91
c. 1.01
d. 1.75
e. 1.10
On average, a firm purchases $2,000,000 in merchandise a month. It has inventories equal to two month purchases on hand at all times. If the firm analyzes its accounts using a 360-day year, what is the firm s inventory conversion period?
IC = Inv/Avg. daily purchases
a. 120 days
b. 30.0 days
c. 60 days
d. 15.0 days
e. 7.5 days
Helena Furnishings wants to sharply reduce its cash conversion cycle. Which of the following steps would reduce its cash conversion cycle?
a. Everything else being same, the company decreases its average inventory.
b. Everything else being same, the company increases the credit period provided to customers.
c. Everything else being same, the company pays faster to its suppliers.
d. All of the statements above are correct.
e. None of the statements above are correct.
The Danser Company expects to have sales of $40,000 in January, $40,000 in February, and $40,000 in March. If 25 percent of sales are for cash and get a 10 percent discount, 50 percent are credit sales paid in the month following the sale, and 25 percent are credit sales paid 2 months following the sale, what are the cash receipts from sales in March?
a. $44,000
b. $40,000
c. $36,000
d. $39,000
e. $30,000
The president of Lowell Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer’s price is $60,000, and it falls into the MACRS 3-year class (33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4). Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm’s before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 4 years and then be sold for $25,000. The firm’s marginal tax rate is 40 percent, and the project’s cost of capital is 14 percent. What is the net investment required at t = 0?
a. -$42,000
b. -$62,000
c. -$38,600
d. -$37,600
e. -$36,600
The president of Lowell Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer’s price is $60,000, and it falls into the MACRS 3-year class (33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4). Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm’s before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 4 years and then be sold for $25,000. The firm’s marginal tax rate is 40 percent, and the project’s cost of capital is 14 percent. What is the operating cash flow in Year 2?
a. $19,800
b. $10,240
c. $11,687
d. $13,453
$16200
The president of Lowell Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer’s price is $60,000, and it falls into the MACRS 3-year class (33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4). Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm’s before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 4 years and then be sold for $25,000. The firm’s marginal tax rate is 40 percent, and the project’s cost of capital is 14 percent. What is the total value of the terminal year non-operating cash flows (after-tax salvage value + working capital recovered) at the end of Year 4?
a. $17,000
b. $18,680
c. $21,000
d. $25,000
e. $27,000
The president of Lowell Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer’s price is $60,000, and it falls into the MACRS 3-year class (33% in year 1, 45% in year 2, 15% in year 3, and 7% in year 4). Purchase of the computer would require an increase in net operating working capital of $2,000. The computer would increase the firm’s before-tax revenues by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 4 years and then be sold for $25,000. The firm’s marginal tax rate is 40 percent, and the project’s cost of capital is 14 percent. What is the project’s NPV?
a. $2,622
b. $2,803
c. $2,917
d. -$7,029
e. -$10,809
When evaluating a new project, the firm should consider all of the following factors except:
a. Changes in working capital attributable to the project.
b. Previous expenditures associated with a market test to determine the feasibility of the project, if the expenditures have been expensed for tax purposes.
c. The current market value of any equipment to be replaced.
d. The resulting difference in depreciation expense if the project involves replacement.
e. All of the statements above should be considered.
The current price of a stock is $50 and the annual risk-free rate is 8 percent. A call option with an exercise price of $55 and one year until expiration has a current value of $7.20. What is the value of a put option (to the nearest dollar) written on the stock with the same exercise price and expiration date as the call option? (Use put-call parity)
a. $9.00
b. $5.00
c. $6.00
d. $7.00
e. $8.00
Deeble Construction Co. s stock is trading at $30 a share. There are also call options on the company s stock, some with an exercise price of $25 and some with an exercise price of $35. All options expire in three months. Which of the following best describes the value of these options?
a. The options with the $25 exercise price have an exercise value equal to $5.
b. The options with the $25 exercise price will sell for $5.
c. The options with the $25 exercise price will sell for less than the options with the $35 exercise price.
d. The options with the $35 exercise price have an exercise value greater than $0.
Albright Motors is expected to pay a year-end dividend of $3.00 a share (D1 = $3.00). The stock currently sells for $30 a share. The required (and expected) rate of return on the stock is 17 percent. If the dividend is expected to grow at a constant rate, g, what is g?
a. 5.00%
b. 6.00%
c. 8.00%
d. 9.00%
e. 7.00%
Dabney Electronics currently has no debt. Its operating income (EBIT) is $30 million and its tax rate is 40 percent. It pays out all of its net income as dividends and has a zero growth rate. It has 2.5 million shares of stock outstanding. If it moves to a capital structure that has 40 percent debt and 60 percent equity (based on market values), its investment bankers believe its weighted average cost of capital would be 10 percent. What would its stock price be immediately after issuing debt if it changes to the new capital structure?
(Hint: Find value of the firm after capitalization using Va = FCF1/(WACC-g), and then calculate price of the stock using P0 = [S + (D D0) ] / n0)
a. $72
b. $90
c. $200
d. $48
e. $60
Which of the following statements about the cost of capital is INCORRECT?
a. A company’s target capital structure affects its weighted average cost of capital.
b. Weighted average cost of capital calculations should be based on the after-tax-costs of all the individual capital components.
c. If a company’s tax rate increases, then, all else equal, its weighted average cost of capital will increase.
d. Flotation costs can increase the cost of preferred stock.
Cartwright Brothers stock is currently selling for $40 a share. The stock is expected to pay a $4 dividend at the end of the year. The stock s dividend is expected to grow at a constant rate of 12 percent a year forever. The risk-free rate (kRF) is 7 percent and the market risk premium (kM kRF) is 5 percent. What is the stock s beta?
a. 5.00
b. 1.00
c. 2.00
d. 3.00
e. 4.00
Aug 29, 2021 | Uncategorized
Some studies indicate the best approach for transformational change may have the chief executive officer create an atmosphere for change and establish a reward system but let others decide how to initiate change but carefully set limits for the program and begin establishing a vision
Which of the following statements is true with regard to the effectiveness of tactics?
The combination of a soft tactic with reasonable persuasion is more effective than a combination of two hard tactics.
Soft tactics are less effective than hard tactics when used individually
Individuals from collectivist cultures are typically more likely to use soft tactics that reflect personal power.
All tactics are equally effective with regard to upward influence.
Sam Meyers manages a telemarketing call center. He has 20 employees working for him who are displeased with the way he yells and threatens to terminate them for what they see as small issues. Which kind of power is Sam using to get the job done?
Reward power
Legitimate power
Coercive power
Referent power
Training that results in ______ is costly because of the cost of training (which proved to be useless) and the cost of hampered performance.
reinforcement of training
applicability of training
negative transfer of training
simulation of training
Deming s PDCA (plan, do, check, and act) cycle underlies what inherent Six Sigma principle?
Continuous improvement
Standard deviation
Project management
Control charting
Which of the following is an element that addresses elimination of waste under lean production?
Minimized run times
Production ahead of demand
Group plant loading technology
Kanban production control system
Conflicts can be resolved by withdrawing from them or suppressing them. This conflict-management technique is known as ________.
forcing
compromising
avoiding
accommodating
Which of the following is a desirable strategy for managers aiming to reduce the negative consequences of rumors?
Refusing to comment on issues that appear to be controversial and unfair
Creating a more informal communication environment at the workplace
Initiating disciplinary action against the employee who started the rumor
Encouraging employees to communicate their concerns and suggestions
A project can be segmented into which of the following
Events
Success markers
Sub-jobs
Work packages
Because practical considerations make job tryouts for all candidates infeasible, it is necessary to __________ the relative level of job performance for each candidate on the basis of available information.
abandon
predict
accept
assign
Which of the following is one of Dr. Eli Goldratt’s rules of production scheduling for optimized production technology
Do not allow bottlenecks to govern the flow of the line.
An hour saved at a bottleneck operation does not increase the process flow.
If you lose an hour at a bottleneck it is better than making scrap.
Utilization and activation of a resource are not the same
When an employee volunteers to run a canned food drive, this is an example of
job satisfaction
organizational citizenship behavior
employee happiness
employee productivity
In order to make their firm a learning organization, managers should
reinforce interdependence and reduce boundaries
avoid the use of cross-functional teams
increase the degree of departmentalization
penalize mistakes
The concept that some leadership attributes will work in some situations but not in others can be described by the
behavioral theory
contingency theory
tactical theory
leadership effectiveness theory
In _____, workers have been fired for refusing to quit smoking, for living with someone without being married, drinking a competitor s product, motorcycling, and other legal activities outside of work.
lifestyle discrimination
defamation
invasion of privacy
constructive discharge
According to the job characteristics model, autonomy is defined as the degree to which
a job provides the worker freedom, independence, and discretion
a job has an impact on the lives or work of other people
a job generates direct and clear information about performance
a job requires completion of a whole and identifiable piece of work
In performing a SWOT analysis, which of the following would be considered as a threat?
Increased product demand
Recognized brand
Competitors
Lack of a strategic plan
As a university student, your institution s social principles and practices reflect on you, as a stakeholder, in the organization. Therefore, it is your right to question how these practices should be evaluated in relation to the social issues that the school is addressing. If your university provides job-share programs, builds a day-care facility, and only uses recycled paper, it could be said to be ________.
socially image conscious
fulfilling its social obligation
socially aware
socially responsive
Which of the following is ISO 14000 primarily concerned with?
Continuous improvement management
Time management
Quality management
Environmental management
During the implementation of a project, which of the following should be the primary focus of a consulting firm?
The correct project software
People management skills
Tools and materials availability
Application of the learning curve theory
What can affirmative action assist organizations in achieving that diversity initiatives cannot?
Correcting specific problems of the past
Increased productivity
Maximizing creativity
Maximizing workforce commitment
The Civil Rights Act of 1991 offered what for victims of unintentional discrimination?
affirmative action
adverse impact
race norming
monetary damages and jury trials
Adoration of a charismatic leader by followers can lead to
greater understanding of the company mission
difficulty in developing a successor
a competitive work environment
limiting suggestions of fixes and improvements
An example of control criteria that can be used in any situation is ________.
number of calls taken per day
client requests completed per hour
employee satisfaction
average time to process paperwork.
Mary arrives at her new job. Before she can begin actually doing the work, she must complete a series of activities including role playing and virtual reality interactions. What type of training method does Mary s new employer use?
Information presentation
On-the-job training
Simulation
Organizational development
Aug 29, 2021 | Uncategorized
1. Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are:
A. Sunk labor.
B. Direct labor.
C. Indirect labor.
D. Finished labor.
E. Supervisory labor.
2. Flexibility of practice when applied to managerial accounting means that:
A. The information must be presented in electronic format so that it is easily changed.
B. Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.
C. The managerial accountants need to be on call twenty-four hours a day.
D. The design of a company’s managerial accounting system largely depends on the nature of the business and the arrangement of the internal operations of the company.
E. Managers must be flexible with information provided in varying forms and using inconsistent measures.
3. Which of the following items is a management concept that was not created to improve companies’ performances
A. Just-in-time manufacturing.
B. Customer orientation.
C. Total quality management.
D. Continuous improvement.
E. Theory of Constraints.
4. Which of the following items appears only in a manufacturing company’s financial statements
A. Cost of goods sold.
B. Cost of goods manufactured.
C. Goods available for sale.
D. Gross profit.
E. Net income.
5. Which of the following items does not represent a difference between financial and managerial accounting
A. Users of the information.
B. Flexibility of practices.
C. Timeliness and time dimension of the information reported.
D. Nature of the information.
E. Purpose of accounting.
6. Dell Builders manufactures each house to customer specifications. It most likely would use:
A. Capital process costing.
B. A periodic inventory system.
C. Unique costing.
D. Job order costing.
E. Activity-based costing.
7. Concept Company’s manufacturing accounting system uses direct labor costs to apply overhead to goods in process and finished goods inventories. Canoe Company’s manufacturing costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied, $6,000. The overhead application rate was:
A. 5.0%
B. 12.0%
C. 20.0%
D. 500.0%
E. 16.7%
8. A job cost sheet shows information about each of the following items except:
A. The direct labor costs assigned to the job.
B. The name of the customer.
C. The costs incurred by the marketing department in selling the job.
D. The overhead costs assigned to the job.
E. The direct materials costs assigned to the job.
9. The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units
A. $3,750
B. $2,000
C. $4,000
D. $6,000
E. $9,000
10. Job order costing systems normally use:
A. Periodic inventory systems.
B. Perpetual inventory systems.
C. Real inventory systems.
D. General inventory systems.
E. All of the above.
11. Over applied or under applied overhead should be removed from the Factory Overhead account at the end of each accounting period.
True False
12. If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.
True False
Aug 29, 2021 | Uncategorized
1. Which one of the following is not an objective of a system of internal controls? 2. Internal controls are concerned with _____. 3. Internal control is defined, in part, as a plan that safeguards _____. 4. Having one person post entries to accounts receivable subsidiary ledger and a different person _____. 5. Having one person responsible for the related activities of ordering merchandise, receiving _____. 6. The custodian of a company asset should _____. 7. When two or more people get together for the purpose of circumventing prescribed controls, it is called _____. 8. From an internal control standpoint, the asset most susceptible to improper diversion and use is _____. 9. The principle of establishing responsibility does not include _____. 10. The control principle related to not having the same person authorize and pay for goods is known as _____. 11. Two individuals at a retail store work the same cash register; this situation can be evaluated as _____. 12. An accounts payable clerk also has access to the approved supplier master file for purchases. The control principle of _____. 13. _____ is responsible for establishing a system of internal control. 14. The independent internal verification principle involves each of the following except the _____ of data prepared by other employees. 15. Jolene is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates _____. 16. The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit: true or false? If false, why? 17. Physical controls to safeguard assets do not include _____. 18. In large companies, the independent internal verification procedure is often assigned to_____. 19. Maximum benefit from independent internal verification is obtained when _____. 20. If employees are bonded _____. 21. A system of internal control _____. 22. Allowing only designated personnel to handle cash receipts is an example of _____. 23. Control over cash disbursements is generally more effective when _____. 24. Reconciling the bank statement monthly is an example of _____. 25. Allowing only the treasurer to sign checks is an example of _____.
Aug 29, 2021 | Uncategorized
When stock is issued for legal services, the transaction is recorded by debiting Organization Expense for the
|
|
stated value of the stock.
|
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market value of the stock.
|
A company would notacquire treasury stock
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in order to increase trading of the company’s stock.
|
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in order to reissue shares to officers.
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to have additional shares available to use in acquisitions of other companies.
|
A corporate board of directors does notgenerally
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formulate operating policies.
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Treasury Stock is a(n)
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retained earnings account.
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contra stockholders equity account.
|
Which one of the following events would not require a formal journal entry on a corporation’s books?
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$1 per share cash dividend
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The board of directors must assign a per share value to a stock dividend declared that is
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less than the par or stated value.
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at least equal to the par or stated value.
|
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equal to the par or stated value.
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greater than the par or stated value.
|
Which of the following is an incorrectstatement about a corporation?
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A corporation is subject to numerous state and federal regulations.
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A corporation is an entity separate and distinct from its owners.
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Creditors ordinarily have recourse only to corporate assets in satisfaction of their claims.
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A corporation may be formed in writing, orally, or implied.
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Aug 29, 2021 | Uncategorized
| MCQs_Company Shares |
Question Detail:
|
The stockholders of a corporation have unlimited liability.
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Which of these is not a major advantage of a corporation?
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Transferable ownership rights
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Which one of the following is a major disadvantage of a corporation?
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Limited liability of stockholders
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Transferable ownership rights
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Which of the following is not a characteristic of a corporation?
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Unlimited liability for stockholders
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Easy transfer of ownership interests
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Ability to acquire capital easily
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Which of the following is a disadvantage of the corporate business form?
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Easy acquisition of capital
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Which of the following is not a stockholder’s right?
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The right to share in dividends
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The right to vote in the election for the board of directors
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The right to participate in management decisions
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Ernest, an individual, receives $100 from Vernon Corp. in dividends and is in the 28% tax bracket. Vernon Corp. already paid corporate taxes on the $100 at a 20% tax rate. How much in personal taxes will Ernest need to pay?
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The par value of corporate shares issued represents a corporation’s legal capital.
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Which of these statements is false?
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Ownership of common stock gives the owner a voting right.
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The stockholders’ equity section begins with paid-in capital amounts.
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The authorization of capital stock does not result in a formal accounting entry.
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Legal capital is intended to protect stockholders.
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If a corporation issues 1,000 shares of $3 par common stock for $7 a share, how much is the legal capital?
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Which of the following represents the amount per share of stock that must be retained in the business for the protection of corporate creditors?
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Which of the following represents the maximum number of shares a corporation can issue?
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DT Inc. issued 3,000 shares of $5 par value common stock for $6 per share. Which of the following is one part of the journal entry to record the issuance?
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Debit to Paid-in Capital in Excess of Par Value for $3,000
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Debit to Cash for $15,000
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Credit to Common Stock for $15,000
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Credit to Common Stock for $18,000
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Wynola, Inc. issued 1,000 shares of common stock at $10 per share. If the stock has a par value of $4 per share, which of the following will be part of the journal entry to record the issuance?
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Credit to Common Stock for $4,000
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Credit to Paid-in Capital in Excess of Par Value for $10,000
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Debit to Retained Earnings for $6,000
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Harrison, Inc. issued 4,000 shares of common stock at $12 per share. If the stock has a par value of $0.50 per share, which of the following will be part of the journal entry to record the issuance?
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Credit to Common Stock for $2,000
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Credit to Paid-in Capital in Excess of Par Value for $48,000
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Debit to Retained Earnings for $46,000
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Harrison, Inc. issued 600 shares of common stock at $10 per share. If the stock was no-par value stock, which of the following will be part of the journal entry to record the issuance?
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Credit to Paid-in Capital in Excess of Par for $600
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Credit to Common Stock for $6,000
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Debit to Paid-in Capital $6,000
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The 13th Street Grill issued 10,000 of $1 par value common stock for $5 per share. Which of the following will be part of the journal entry to record the issuance?
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A debit of $10,000 to Common Stock
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A debit of $50,000 to Common Stock
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A credit of $10,000 to Common Stock
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A credit of $50,000 to Common Stock
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Dynatech issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, which accounts are credited?
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Common Stock $10,000 and Gain on Stock Sale $2,000
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Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000
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Common Stock $10,000 and Retained Earnings $2,000
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When treasury stock is purchased, the number of outstanding shares decreases.
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For what reason might a company acquire treasury stock?
|
To reissue the shares to officers and employees under bonus and stock compensation plans
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To signal to the stock market that management believes the stock is overpriced
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To increase the number of shares of stock outstanding
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|
|
Which one of the following decreases when a corporation purchases treasury stock?
|
|
What method is normally used to account for treasury stock?
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|
If 1,000 shares of $5 par common stock are reacquired by a corporation for $12 a share, by how much will total stockholders’ equity be reduced?
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A corporation sold 1,000 shares of its $2.00 par value common stock for $10.00 per share and later repurchased 100 of those shares for $12.00 per share. Which of the following will be debited to record the repurchase of the 100 shares?
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Treasury Stock for $1,200
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|
Which of the following increases when a corporation purchases treasury stock?
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Number of shares authorized
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|
Number of treasury shares
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|
Number of outstanding shares
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A cumulative dividend feature means that preferred stockholders must be paid only current-year dividends before common stockholders receive dividends.
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Dividends in arrears are reported as a current liability on the balance sheet.
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A corporation has cumulative preferred stock on which it pays dividends of $20,000 per year. The dividends are in arrears for two years. If the corporation plans to distribute $90,000 as dividends in the current year, how much will the common stockholders receive?
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Which one of the following statements is incorrect?
|
Dividends cannot be paid on common stock while any dividend on preferred stock is in arrears.
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Dividends in arrears on preferred are not considered a liability.
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Dividends may be paid on common stock while dividends are in arrears on preferred stock.
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When preferred stock is noncumulative, any dividend passed in a year is lost forever.
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Which one of the following is nota right of preferred stockholders?
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Priority in relation to dividends
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Priority to the assets in the event of liquidation
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Priority to dividends, assets and voting rights.
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Which of the following is a feature associated only with preferred stock?
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Preference to assets in the event of liquidation
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All of the answer choices are correct
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M-Bot Corporation has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2014. No dividends were declared in 2012 or 2013. If M-Bot wants to pay $375,000 of dividends in 2014, how much will common stockholders receive?
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How are dividends in arrears reported in the financial statements?
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Aug 29, 2021 | Uncategorized
Case: Mendel Paper Company
Mendel Paper Company produces four basic paper product lines at one of its plants: computer paper, napkins, place mats, and poster board. Materials and operations vary according to the line of product. The market has been relatively good. The demand for napkins and place mats has increased with more people eating out, and the demand for the other lines has been growing steadily.
The plant superintendent, Marlene Herbert, while pleased with the prospects for increased sales, is concerned about costs:
“We hear talk about a paperless office, but I haven’t seen it yet. The computers, if anything, have increased the market for paper. Our big problem now is the high fixed cost of production. As we have automated our operation, we have experienced increases in fixed overhead and even variable overhead. And, we will have to add more equipment since it appears that we need even more plant capacity. We are operating over our normal capacity as it is.
The place mat market concerns me. We may have to discontinue printing the mats. Our specialty printing is driving up the variable overhead to the point where we may not find it profitable to continue with that line at all.”
Cost and price data for the next fiscal quarter are as follows:
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Computer paper
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Napkins
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Place mats
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Poster board
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Estimated sales volume in units
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30,000
|
120,000
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45,000
|
80,000
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|
Selling prices…………….
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$14.00
|
$7.00
|
$12.00
|
$8.50
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Materials costs…………
|
6.00
|
4.50
|
3.60
|
2.50
|
Variable overhead includes the cost of hourly labor and the variable cost of equipment operation. The fixed plant overhead is estimated at $420,000 for the quarter. Direct labor, to a large extent, is salaried; the cost is included as a part of fixed plant overhead. The superintendent’s concern about the eventual need for more capacity is based on increases in production that may reach and exceed the practical capacity of 60,000 machine hours.
In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000.
“I share your concern about increasing fixed costs,” the supervisor of plant operations replies. “We are still operating with about the same number of people we had when we didn’t have this sophisticated equipment. In reviewing our needs and costs, it appears to me that we could cut fixed plant overhead to $378,000 a quarter without doing any violence to our operation. This would be a big help.”
“You may be right,” Herbert responds. “We forget that we have more productive power than we once had, and we may as well take advantage of it. Suppose we get some hard figures that show where the cost reductions will be made.”
Data with respect to production per machine hour and the variable cost per hour of producing each of the products are given as follows:
|
|
Computer paper
|
Napkins
|
Place mats
|
Poster board
|
|
Units per hour
|
6
|
10
|
5
|
4
|
|
Variable overhead per hour
|
$9.00
|
$6.00
|
$12.00
|
$8.00
|
“I hate to spoil things,” the vice-president of purchasing announces. “But the cost of our materials for computer stock is now up to $7. Just got a call about that this morning. Also, place mat materials will be up to $4 a unit.”
“On the bright side,” the vice-president of sales reports, “we have firm orders for 35,000 cartons of computer paper, not 30,000 as we originally figured.”
Questions:
- From all original estimates given, prepare estimated contribution margins by product line for the next fiscal quarter. Also, show the contribution margins per unit.
- Prepare contribution margins as in part (1) with all revisions included.
- For the original estimates, compute each of the following:
(a) Break-even point for the given sales mix.
(b) Margin of safety for the estimated sales volume.
- For the revised estimates, compute each of the following:
(a) Break-even point for the given sales mix.
(b) Margin of safety for the estimated sales volume.
- Comment on Herbert’s concern about the variable cost of the place mats.
Aug 29, 2021 | Uncategorized
Meriden Company has a unit selling price of $730, variable
Resolved Question:
Meriden Company has a unit selling price of $730, variable costs per unit of $438, and fixed costs of $195,932.
Compute the break-even point in units using the mathematical equation.
Break-even point units
For Turgo Company, variable costs are 65% of sales, and fixed costs are $176,700. Management s net income goal is $62,875.
Compute the required sales in dollars needed to achieve management s target net income of $62,875.
Required sales $
For Kozy Company, actual sales are $1,178,000 and break-even sales are $777,480.
Compute the margin of safety in dollars and the margin of safety ratio.
Margin of safety $
Margin of safety ratio %
Montana Company produces basketballs. It incurred the following costs during the year.
Direct materials $14,444
Direct labor $25,073
Fixed manufacturing overhead $9,836
Variable manufacturing overhead $31,563
Selling costs $21,066
What are the total product costs for the company under variable costing?
Total product costs $
Polk Company builds custom fishing lures for sporting goods stores. In its first year of operations, 2012, the company incurred the following costs.
Variable Cost per Unit
Direct materials $8.03
Direct labor $2.62
Variable manufacturing overhead $6.15
Variable selling and administrative expenses $4.17
Fixed Costs per Year
Fixed manufacturing overhead $250,272
Fixed selling and administrative expenses $256,907
Polk Company sells the fishing lures for $26.75. During 2012, the company sold 80,100 lures and produced 94,800 lures.
(a)Assuming the company uses variable costing, calculate Polk s manufacturing cost per unit for 2012. (Round answer to 2 decimal places, e.g.10.50.)
Manufacturing cost per unit $
For the quarter ended March 31, 2012, Maris Company accumulates the following sales data for its product, Garden-Tools: $322,900 budget; $330,000 actual.
Prepare a static budget report for the quarter.
MARIS COMPANY
Sales Budget Report
For the Quarter Ended March 31, 2012
Product Line Budget Actual Difference
Garden-Tools $
$ $
Link to Text
Brief Exercise 21-4
Gundy Company expects to produce 1,272,600 units of Product XX in 2012. Monthly production is expected to range from 84,440 to 116,020 units. Budgeted variable manufacturing costs per unit are: direct materials $3, direct labor $7, and overhead $9. Budgeted fixed manufacturing costs per unit for depreciation are $5 and for supervision are $3.
Prepare a flexible manufacturing budget for the relevant range value using 15,790 unit increments. (List variable costs before fixed costs.)
GUNDY COMPANY
Monthly Flexible Manufacturing Budget
For the Year 2012
Aug 29, 2021 | Uncategorized
2,000 2,500 words
Weekly tasks or assignments (Individual or Group Projects) will be due by Monday and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.
You have just been hired as the director of process improvement, a new position, by the VP of Operations for the ABC Manufacturing Company. ABC has been plagued by both internal and external vendor issues; the vendor issues involved repeated late deliveries and poor quality, while internally poor deliveries to customers resulted from both vendor issues, as well as quality and scheduling issues. The CEO s instinct is that the factory could benefit from some wide-reaching process improvements.
The VP of Operations has decided that a far greater focus on vendor quality and internal process improvements must be taken. The VP of Procurement, prior to your coming on board, had already met with the CEO s of ABC s 4 major vendors and alerted them that he expected them to begin turning around their quality performance. About a month prior, he had sent each a letter suggesting several formal overall quality programs that they may embark upon, which included the following:
- TQM
- Juran’s Trilogy
- Crosby’s program
- Deming’s program
- Six Sigma
The VP has already received the following responses from each of the main vendors, and he asked you, in coming months, to work with each vendor as they implement their quality initiatives.
- Company A had written back that it was planning to implement the Juran program but had not yet begun, hoping you could visit and shed some light on the overall concept, methodology, pros, and cons.
- Company B had written back that it was planning to implement the Crosby program but had not yet begun, hoping you could visit and shed some light on the overall concept, methodology, pros, and cons.
- Company C had written back that it was planning to implement the Deming program but had not yet begun, hoping you could visit and shed some light on the overall concept, methodology, pros, and cons.
- Company D had written back that it was planning to implement a TQM program but had not yet begun, hoping you could visit and shed some light on the overall concept, methodology, pros, and cons.
- Company E had written back that it was planning to implement the Six Sigma program but had not yet begun, hoping you could visit and shed some light on the overall concept, methodology, pros, and cons.
In addition, you know that as far as internal processes and overall supply chain management goes, that there may be opportunities for improvement. Currently, the following internal opportunities exist for possible process improvement:
- Supply Chain Management
- The company communicates separately with each vendor; usually when a forecast or production change is made, not every vendor finds out the same day. This leads to confusion, excess inventories, and stock outs.
- Demand Planning
- The primary method to establish the master production schedule is to use a forecast that is created prior to the beginning of the year and updated monthly using salesmen s inputs. Invariably, the company ends up producing too much of the wrong items (not demanded) and too few of what is in demand (real customer orders).
- Multistage Inventory
- To create ABC s final finished product requires a multiple-step supply chain, which looks something like the following:
- Raw material to vendors factory
- Vendor processes raw materials to make their parts
- Those parts are shipped to ABC s factory
- ABC processes purchased parts through a succession of departments, each one adding more and more vale
- Finally, all finished components are assembled into a finished product.
- Currently, every step in this entire supply chain is scheduled, monitored through some kind of MRP system, reported throughout the day, and seems to take an inordinate amount of system updating.
- Transportation Planning
- ABC continues to use its own fleet to deliver finished goods all over the country and to have common carriers deliver parts from its vendors, also located all over the country.
- Process Control, Performance, and Variability
- ABC s own internal process seem to all of a sudden go in and out of quality specifications; the company always seems to find out too late to avoid massive amounts of scrap, rejected parts, or labor costs to rework parts.
- Negative and Positive Cash Flow
- The company goes through frequent swings from positive to negative cash flows as inventory purchases for large lots create negative cash flows, but then using up these materials occur at a slower rate, and with less outgoing, cash flow becomes positive. The CFO really struggles with managing these cash flow swings.
Before you begin to put together a vendor visitation schedule, your boss, the VP of Procurement, advised you that the CEO expects a comprehensive report, in about a month, covering the following specific topics:
- The key characteristics and requirements and the pros and cons of each of the following overarching quality programs should be put into a chart format. The chart should have columns for an overall 1-sentence description of each program, its pros, and its cons.
- TQM
- Juran’s Trilogy
- Deming
- Crosby
- Six Sigma
- Provide your view on how a formal process improvement program could help at both vendor locations and inside ABC s own factory.
- Specifically, in the areas of vendor quality and delivery performance, what are the benefits of creating a vendor certification program, and what does it involve?
- Specifically, in the area of ABC s own internal workings, what opportunities for continuous improvement exist, and what exactly would you do?
- How do you get ABC itself to adopt a more continuous improvement mentality?
Finally, and most importantly, all these operational improvements could create a strategic advantage for ABC because most of its competitors have similar internal and vendor quality challenges, as well as internal operational challenges.
Aug 29, 2021 | Uncategorized
Prepare, in a table format, a SWOTT analysis on any real company in the auto industry. As you prepare your analysis, it must be based on the following definitions for strengths, weaknesses, opportunities, threats, and trends.
- Strengths: These are characteristics of a company that are stronger than its competitors are. If a company is good at something, but its competitors are as well, then it is not a strength.
- Weaknesses: These are characteristics of a company that are weaker than its competitors are. If a company is weak at something, but its competitors are as well, then it is not a weakness.
- Opportunities: These are issues that are external to a company that can affect the company and its competitors in a favorable way.
- Threats: These are issues that are external to a company that can affect the company and its competitors in an unfavorable way.
- Trends: These are developing opportunities and threats.
Deliverable Format
The table should have columns with the following labels:
- Strength
- Weakness
- Opportunity
- Threat
- Trend
It should have at least 8 rows for factors that you feel are important to the success of a firm in that particular industry.
For example, factors could include regulatory issues, financial resource issues, leadership issues, innovation issues, etc.
Cells should have 1 2 sentences of explanation as to why each has been identified as a strength, weakness, opportunity, threat, or trend. Not every identified factor will have all of its its row of cells annotated.
Aug 29, 2021 | Uncategorized
llocation of Service Department Costs [LO 3]
Marvin Company has three service departments, S1, S2, and S3, and two production departments, P1 and P2. The following data relate to Marvin’s allocation of service department costs:
|
|
Budgeted Costs
|
Number of Employees
|
|
S1
|
$4,000,000
|
|
80
|
|
|
S2
|
3,000,000
|
|
60
|
|
|
S3
|
2,000,000
|
|
30
|
|
|
P1
|
|
200
|
|
|
P2
|
|
300
|
|
Service department costs are allocated by the direct method. The number of employees is used as the allocation base for all service department costs.
Power Electronics manufactures portable power supply units. Power has recently decided to use an activity-based approach to cost its products. Production line setups is a major activity at Power. Next year Power expects to perform 2,000 setups at a total cost of $4,000,000. Power plans to produce 800 units of product EP150, which will require two setups.
How much setup cost will be allocated to each unit of EP150 produced?
Mighty Mint Co. produces a mint syrup used by gum and candy companies. Recently, the company has had excess capacity due to a foreign supplier entering its market. Mighty Mint is currently bidding on a potential order from Quality Candy for 5,000 cases of syrup. The estimated cost of each case is $21, as follows:
|
Direct material
|
$7
|
|
Direct labor
|
5
|
|
Overhead
|
9
|
|
|
Total
|
$21
|
|
|
|
The predetermined overhead rate is $1.80 per direct labor dollar. This was estimated by dividing estimated annual overhead ($1,080,000) by estimated annual direct labor ($600,000). The $1,080,000 of overhead is composed of $270,000 of variable costs and $810,000 of fixed costs. The largest fixed cost relates to depreciation of plant and equipment.
Aug 29, 2021 | Uncategorized
INSTRUCTIONS: Please complete this examination and bring it to class on the due date indicated on the syllabus. Remember this shall be an individual effort, and you shall not give or receive assistance in the completion of this examination. Please show all work, and feel free to attach additional pages as necessary. Full credit will not be given for providing only an answer, even if the answer is correct.
1.
Compute the average cost of debt for a corporation whose long-term debt consists of the following:
|
Bonds ($1,000 face value, semi-annual coupon payments)
|
|
Type
|
Amount Outstanding
|
Coupon Rate
|
Prevailing Rate
|
Years to Maturity
|
|
Mortgage Bonds
|
$170,000,000
|
6.00%
|
5.00%
|
25
|
|
Debentures
|
$ 50,000,000
|
9.25%
|
10.00%
|
5
|
|
Subordinated Debentures
|
$ 12,000,000
|
9.00%
|
10.50%
|
4
|
|
Convertible Bonds
|
$ 8,000,000
|
8.25%
|
7.75%
|
10
|
At a marginal tax rate of 40%, what would be the after-tax weighted average cost of its debt (20 points possible)
2.
The long-term debt of Bayboro Industries, Inc. consists of bonds with an average cost of 7.5% and term loans. If the firm s tax rate is 40%, and bonds comprise 74% of total long-term debt, what would be the average cost of the term loans if the weighted average after-tax cost of debt is 4.578% (10 points possible)
3.
Consolidated Frooble, Inc. has an issue of cumulative preferred stock paying an 11.5% annual dividend. If the issue had a 7% flotation cost and a $100 par value, calculate its capital component cost. Why is the capital component cost of the preferred stock different from the annual dividend rate HINT: An answer that merely states the flotation cost is the reason the cost of the preferred stock is different from the annual dividend rate is not a sufficiently detailed answer. (10 points possible)
4.
The Potable Ethanol Corporation uses the Capital Asset Pricing Model (CAPM) to compute its cost of existing common equity. If the firm computes its common equity cost at 21.30% using the CAPM and estimates the risk-free rate is 1.5%, what value does the firm use for returns in the stock market if the firm s beta coefficient is 1.5 (15 points possible)
5.
A firm has a capital structure consisting of 60% long-term debt at an average cost of 9.8%, 5% preferred equity at a cost of 10.5% and 35% common equity having an average cost of 15.5%. If the firm’s marginal tax rate is 40%, what would be the firm s weighted average cost of capital (WACC) (10 points possible)
6.
Cockroach Bay Mining is contemplating investment in new technology for processing phosphate rock. The operations manager reports the cost to purchase and install the new machinery will be $75,500,225. He estimates the equipment will produce $5,000,000 in annual savings over its 40 year life. Compute the payback period in years and the Net Present Value of this investment. (10 points possible)
7.
Evaluate the capital project below. Your firm has a hurdle rate of 15.75% for capital projects of this type. The initial outlay for the project is $65,500,000 and the project is expected to generate the following cash flows over its 15 year life:
|
Year
|
Cash Flow
|
Year
|
Cash Flow
|
Year
|
Cash Flow
|
|
1
|
$2,100,000
|
6
|
$4,600,000
|
11
|
$5,900,000
|
|
2
|
$3,500,000
|
7
|
$4,350,000
|
12
|
$6,000,000
|
|
3
|
$3,750,000
|
8
|
$5,000,000
|
13
|
$6,300,000
|
|
4
|
$4,250,000
|
9
|
$5,700,000
|
14
|
$6,250,000
|
|
5
|
$4,500,000
|
10
|
$5,500,000
|
15
|
$6,500,000
|
For the project, compute the payback period in years, the Net Present Value (NPV) and the Internal Rate of Return (IRR). Prepare a succinct summary of your findings and recommendation. (25 points possible)
Aug 29, 2021 | Uncategorized
Mid-Term Examination
1. Lucinda recently left a large insurance firm and opened a home-based business preparing medical transcriptions for doctors. Based on recent statistics, she can expect:
A) a negative reaction from friends and family who wonder when she will get a real job.
B) that affordable computer technology will allow her to compete with larger firms.
C) the government will discourage her attempts to create a new business.
D) to find security, routine and a paycheck from her new enterprise.
2. As his college graduation nears, Manny has focused his attention on finding full time employment. He has decided to narrow his job search to jobs with a major corporation. His job search strategy:
A) makes sense because managerial skills are best developed by working for big firms.
B) is smart because major corporations represent the most important source of employment growth in Canada.
C) indicates that Manny’s passion is to fulfill his dream of owning his own business.
D) will likely limit his job prospects since most new jobs are with small businesses.
3. A review of small business successes and failures indicates that the:
A) businesses that are easiest to start offer the greatest potential for long term growth and profits.
B) restaurant industry offers the least risk for entrepreneurs.
C) businesses with the potential of high profit levels tend to be difficult to start and hard to keep going.
D) reason the service sector is rapidly growing is that these firms are easy to start and keep going, and offer high levels of security and growth potential.
4. Motivated by his desire to operate his own business, Caleb is considering the purchase an existing business. As he carefully weights this option, he is likely to find that:
A) very few owners of small businesses have any interest in selling.
B) his potential for success would greatly improve if he started his own new firm.
C) the value of an existing business is determined by what the business owns, what it earns, and what makes it unique.
D) any entrepreneur willing to sell their business is experiencing serious financial problems.
5. Lamont wants to improve his chances to be a successful entrepreneur and so he has written a business plan. One advantage of developing this plan is that it:
A) meets federal reporting requirements of Revenue Canada.
B) insures financing will be available from the venture capitalists.
C) forces Lamont to think carefully about all aspects of his planned business.
D) will enable him to switch from a sole proprietorship to a corporation without any further paperwork.
6. Which of the following statements best describes the theory of comparative advantage?
A) The best way for a nation to ensure full employment is to be totally self-sufficient rather than relying on other nations to obtain goods and services.
B) Each nation should produce those goods that it can produce more efficiently than other nations, and buy the goods it can not produce efficiently from other nations.
C) The nation that has the largest reserves of gold and other natural resources will enjoy a position of comparative advantage in trade relationships.
D) A nation should produce those goods for which domestic demand is comparatively strong, and should import those goods for which domestic demand is comparatively weak.
7. Both the federal and provincial governments have provided incentives for Toyota to locate a new manufacturing facility in Woodstock Ontario because,
A) Toyota makes significant political contributions.
B) Canada is trying to establish an auto industry.
C) this new facility will export all of its output to Japan.
D) the auto industry is critical to the Canadian economy.
8. There are many ways in which an organization may participate in global trade. Which of the following strategies has the most amount of commitment, control, risk, and profit potential associated with it?
A) exporting
B) foreign direct investment
C) international joint venture and strategic alliances
D) licensing
9. In the article, “”Let’s make a deal, Western-style””, the trade agreement signed between Alberta and British Columbia will,
A) foster greater trade between Alberta and British Columbia with the Far East.
B) force Alberta and British Columbia to increase the amount of trade between the two provinces.
C) allow businesses in either province to buy goods or services from anywhere in Alberta or British Columbia without the added cost of tariffs.
D) impose trade barriers between every other province and the combined provinces of Alberta and British Columbia.
10. Active Learning implies,
A) coming to every lecture during the term.
B) buying all of the course resources identified in the course outline.
C) memorizing all the definitions and formulas in a course.
D) doing and thinking about what you are doing in a course.
11. Governments throughout Canada are privatizing services that they have traditionally offered in response to:
A) an opportunity to realize huge ongoing profits from royalties they will collect from private companies who acquire these services.
B) new laws and regulations that have been passed mandating that these services be privatized.
C) as a means to lower costs and improve efficiencies associated with the provision of these services.
D) as a means of increasing the scope of their involvement in the economy.
12. Ralph owns a small business. Some friends have suggested that he should switch from his current manual accounting system to one that is computerized. Ralph is not certain he wants to use computers in his small firm’s accounting system. He is concerned about the time it would take in learning the system, and wonders whether the benefits will justify the costs of setting up the system. As a small business owner, Ralph would probably find that:
A) computer software tends to be very helpful to small business owners who lack strong accounting support within their companies.
B) today’s accounting software tends to be very complex, so only people with extensive accounting experience can understand its features and use it effectively.
C) even though it is not yet cost effective, he should go ahead and adopt a computerized system, because government regulations will require most business functions to be computerized in the near future.
D) such systems actually reduce costs, because they eliminate the need to ever consult with an accountant.
13. Our Gang Transfer Company has shown consistent profits over the past five years. However, the company has recently found itself in financial trouble due to cash shortages. This indicates that:
A) an accounting profit does not guarantee a positive cash flow.
B) it’s not always important to prepare financial statements.
C) the accountants apparently made a mistake when they prepared the trial balance.
D) the state of the economy is less important than financial control techniques.
14. If a firm can reduce its cost of goods sold and continue to sell its product for the same price, we would expect the firm to enjoy an increase in its ________.
A) revenue
B) liabilities
C) employee turnover
D) gross margin
15. At the time the Jepson Plumbing Supply prepared its financial statements, it had several customers who had bought goods in the past three months on its “”90 days same as cash”” credit plan. These customers had not yet paid their bills, but they have good credit ratings and Jepson is confident that they will make their payments on time. The amount these credit customers owe would show up as part of the:
A) current assets listed on Jepson’s balance sheet.
B) current liabilities listed on Jepson’s balance sheet.
C) a deferred cash flow on Jepson’s statement of cash flows.
D) unrealized revenue reported on Jepson’s income statement.
16. Accountants at Rextech are seriously considering a change in the methods they use to depreciate equipment and value inventory. If they do so, the changes they make:
A) will have no impact on the “”bottom line”” of the firm.
B) will influence the cost of goods sold, but will have no impact on the firm’s operating expenses.
C) must be clearly explained to any readers of Rextech’s financial statements.
D) must be balanced by offsetting changes in the treatment of intangible assets.
17. Your firm is a supplier to a major chain of discount stores. You have heard rumors that this chain of discount stores is in some financial difficulty. Which financial ratios would indicate the discount stores’ ability to pay their short-term debts?
A) Liquidity ratios
B) Leverage ratios
C) Activity ratios
D) Profitability ratios
18. In trying to evaluate the management of inventory you could calculate the inventory turnover ratio and compare that ratio to the industry average. You would conclude that inventory could be managed better if,
A) the company’s inventory turnover was higher than the industry’s.
B) the company’s inventory turnover was lower than the industry’s.
C) cost of goods sold for the company was higher than the industry’s average.
D) cost of goods sold for the company was lower than the industry’s average.
19. When using ratios it’s important to compare a ratio calculated for one company to which of the following?
A) The cash balance at the beginning of the period.
B) The same ratio for the company from the previous year.
C) The same ratio for firms in a different industry.
D) The net income for the current year.
20. Which of the following statements about federal government deficit spending is most accurate?
A) The federal government violates the law by running deficits because the Canadian Constitution requires the government to balance its budget each year.
B) Although the government used to run big deficits, it has consistently run surpluses since the late 1980s.
C) The government has used deficit spending to lower the national debt.
D) One reason the government has a hard time reducing deficits is that there is a great deal of pressure on the government to expand its spending each year.
21. The Canadian system of marketing boards has been under attack by various organizations because:
A) they are illegal under NAFTA.
B) they favour certain provinces over others.
C) not all items are covered.
D) it does not permit normal competitive conditions to operate.
22. Federal and provincial governments use their enormous purchasing power to:
A) favour Canadian companies
B) favour foreign suppliers
C) reduce taxes
D) force private firms to comply with the laws
23. In the article, “”Help Wanted””, one of the current issues with the implementation of a strategy using immigration to grow our Canadian economy is,
A) focus on immigrants with strong technical skills which is not the skill set needed in Canada.
B) inefficient government procedures for processing immigration applications results in a massive backlog.
C) willingness of immigrants to settle everywhere in Canada, specifically in remote areas where their skills are not needed.
D) little regulation of immigrants leading to a lack of desire of immigrants to settle in Canada.
24. Ellen wants to start a business. She is leaning toward setting up her company as a sole proprietorship, but she is also looking at other possibilities. Ellen has two major goals. First, given her limited personal wealth and eagerness to get started, she wants to get her business up and running with the least possible hassle and expense. Second, she wants to minimize her personal risk in the event that her company experiences difficulties. If Ellen chooses a sole proprietorship, she would:
A) be able to achieve both goals since this form of ownership is both the easiest to form and the least risky.
B) meet her first goal since sole proprietorships are easy and inexpensive to form. However, she would expose herself to a high level of personal risk because owners of sole proprietorships have unlimited liability.
C) not achieve either goal since proprietorships are both costly to set up and subject to unlimited liability.
D) achieve her second goal, since the owners of sole proprietorships are legally protected from losing more than the amount they invest in their company. However, she would find that the start-up costs would be higher than if she had incorporated her business.
25. Mara plans to open a shop specializing in foods and cultural items from the Middle East. She wants to be the firm’s only general partner, but she is trying to get several friends to participate as limited partners. Apparently Mara wants to:
A) limit her personal liability to the amount she personally invests in the company.
B) be the only person allowed to share in the firm’s profits.
C) obtain a strong financial base for the firm while maintaining personal control over the firm’s management.
D) meet the legal requirements of the Uniform Partnership Act.
26. Marshall Officer is a stockholder in Endrun Investments, which is organized as a corporation. Endrun recently lost a major court decision and will probably be forced into bankruptcy. In fact, the damages awarded are so great that, even if all of its assets are sold and the proceeds are used to pay its debts, Endrun is likely to still owe money to its creditors. If Endrun does go bankrupt, Marshall and the other stockholders will:
A) be personally responsible for all remaining debts.
B) lose their investment but nothing else.
C) be entitled to full reimbursement of any investment losses.
D) automatically qualify for federal reimbursement for any losses suffered by the firm.
27. Which of the following statements about buying a franchise is most accurate?
A) One of the advantages of buying a franchise is that franchisors are so closely regulated that there is virtually no chance for scams to succeed.
B) Before purchasing a franchise, the buyer should carefully evaluate the franchise, the franchisor, his or her own situation, and the nature of the market.
C) Franchise agreements are simple to evaluate, since federal law requires that all such agreements must be written in plain English with all fees and terms clearly explained.
D) Buying a franchise is the simplest and least expensive way to set up a business, since the franchisor has already worked out all of the details for setting up and running the business.
28. If you sign a personal guarantee, which a lender happens to exercise to collect on a loan, then,
A) by asking for legal advise from a certified lawyer, none of your personal assets could be seized to repay the loan.
B) the guarantee is only valid if signed within the last year.
C) only those personal assets you are willing to have seized, can be taken by the bank.
D) any of your personal assets could be seized to repay the loan in full.
29. In order to resolve conflict within a team,
A) remember that confrontation is not a fight.
B) don’t spend time on issues, focus your attention on the personalities.
C) you should seek outside assistance initially, to speed up the resolve of the conflict.
D) you need to build the best case possible to justify your position, ignoring the position of those you are in conflict with.
30. As the campaign manager for a candidate for the Canadian Federal Parliament, Pete works to learn as much as possible about potential voters. With this information, he hopes to focus the campaign on the issues most important to voters. This represents:
A) the use of marketing by a nonprofit organization.
B) a nonprofit application of the production era strategy.
C) the selling of a political candidate.
D) an extension of the profit orientation to a nonprofit organization.
31. Andre is a real estate agent who has an idea for a software program that will help perform real estate appraisals more quickly and more accurately. He has worked with a buddy who is good at programming to develop a detailed description of what the software will do and how it differs from existing applications. Now Andre has taken this description and shown it to a number of fellow real estate agents to see if his idea appeals to them. Andre is engaging in:
A) prototype outsourcing.
B) test marketing.
C) concept testing.
D) word-of-mouth advertising.
32. Archie just bought a pickup truck with centre armrests that double as laptop workstations. What part of the four Ps is his automobile company addressing?
A) place
B) promotion
C) product
D) price
33. Which of the following is considered a source of selected secondary information?
A) focus group
B) company records
C) surveys
D) observation
34. As part of her responsibilities as a marketing manager, Jan has completed her review of data her department has gathered through telephone interviews, mail surveys and focus groups. Jan is disappointed because the research results strongly suggest that a product idea she helped develop is unlikely to be popular with potential customers. Jan should:
A) proceed with product development because the opinions of experienced marketing managers often turn out to be more accurate than marketing research.
B) accept the research results and reevaluate the proposed product.
C) continue developing the product, but try to find ways to reduce production costs.
D) put the product on temporary hold, throw out the results of the research, and design and conduct new surveys and questionnaires.
35. Which of the following represents an example of demographic segmentation?
A) A firm producing recreational equipment divides its market into groups by region of the country, designing different products for people in different parts of the country.
B) An automobile manufacturer offers different types of cars designed to appeal to different age groups and income levels.
C) A motion picture company divides its market according to the attitudes and interests of its customers, marketing some films to people who enjoy action movies and targeting other movies to people who prefer romantic comedies.
D) A company that produces food products has designed a special line of easy to prepare microwavable meals that are low in low fat and high in fiber to attract people interested in the health benefits of the foods they eat.
36. Which of the following is most consistent with a relationship marketing strategy?
A) The development of a web site that seeks customer feedback and allows customers to communicate with each other.
B) The creation of a national advertising campaign using radio and television to increase market share.
C) Designing a promotional campaign to increase cooperation among the firm’s suppliers.
D) Distributing goods through limited service discount stores.
37. After years of selling in the consumer market, Dave accepted a job as a salesperson for a firm that markets its products in the B2B market. As he considers his new responsibilities, it’s likely that he will:
A) find little difference between buyers in the consumer market and those in the business-to-business market.
B) discover that decision making in the B2B requires salespeople to be little more than order takers.
C) learn that industrial buyers generally require more personal service than buyers in the consumer market.
D) find that B2B buyers tend to purchase more on impulse than consumer buyers.
38. All of the following statements about the B2B market are true except:
A) the markets are often geographically concentrated.
B) industrial buyers are usually large.
C) industrial buyers tend to be more rational.
D) the size of the market is smaller than the consumer market.
39. The article, “”Mind the GAAP””, reminds us that when comparing the net income of two companies, one reporting using Canadian GAAP and the other using US GAAP,
A) there is no difference in the reported net income.
B) the use of Canadian GAAP will always result in higher reported income than the use of US GAAP.
C) there is no consistent difference when using these different GAAPs.
D) the difference in reported net incomes will depend on the current exchange rate between Canadian and US currencies.
40. Sweet Dream Confectioners uses the same ingredients as most other producers of chocolate candies. In fact, taste tests suggest that the candy itself, while quite good, isn’t much better than other well-known brands of chocolate. However, the company wraps its candies in expensive looking foil and places them in very attractive boxes. It promotes its products in advertisements as “”the ultimate in chocolate experience.”” Sweet Dream charges a much higher price than most competitors, but sales continue to grow. This success indicates that:
A) consumers often behave in an irrational manner.
B) there is more to the total product offer than the physical product.
C) consumers seldom consider price when making a buying decision for goods such as chocolate.
D) chocolate is best classified as a convenience good.
41. Which of the following statements about packaging is the most accurate?
A) Changes in packaging can improve the product itself and open up large new markets.
B) Packaging is the least critical element of a firm’s promotional strategy.
C) Technology has not changed the role of packaging.
D) Packaging has avoided federal regulations.
42. Yahoo once provided an auction service free in competition with eBay. Why would they give such a service away free?
A) To create an image.
B) To achieve a target return on investment or profit.
C) To further social objectives.
D) To build traffic.
43. Angie owns a small company that markets high quality office supplies to businesses. Angie faces stiff competition from some much larger firms. Which of the following competitive strategies would probably work best for Angie?
A) Keep costs as low as possible by offering a no-frills approach with little or no extra services.
B) Develop a skimming pricing strategy.
C) Utilize a high-low approach to pricing.
D) Focus on offering better service to customers and work on building good customer relationships.
44. Sharp Focus Cameras is facing intense competitive pressure. Top marketing managers are looking for ways to cut costs. They are considering a plan to cut distribution costs by eliminating marketing intermediaries from the channel of distribution. If Sharp Focus carries out this plan, it is likely to find that:
A) most of the marketing functions performed by marketing intermediaries are helpful, but they aren’t really necessary.
B) as the producer of the products, it will be able to perform the same functions more efficiently.
C) it will be unable to perform the functions as efficiently as they were performed by the marketing intermediaries.
D) telemarketing will become the only viable means of distributing its products.
45. Which of the following strategies is likely to be the best alternative for small retailers trying to compete against “”category killer”” stores?
A) Seek changes in zoning ordinances to limit the size of retail stores.
B) Concentrate on offering a greater selection within a smaller, more specialized category of items.
C) Work out arrangements with rack jobbers and administered system wholesalers to have them provide most of the marketing functions.
D) Form a retail cooperative with other small firms to offer a wide variety of goods.
46. All of the following are examples of consumers making purchases through a direct marketing arrangement except the purchase of:
A) a box of cereal at a local grocery store with a coupon on the box.
B) software through an online shopping service.
C) a set of towels featured in a department store catalog using a toll free number.
D) a book on the history of Canada by sending in an order form attached to a pamphlet sent to the customer by the publisher.
47. Bonnie faces the challenge of developing the promotion mix for a new business. Given the uniqueness of the new products and a very limited budget, Bonnie confronts a creditability problem. She realizes that the promotional messages of an unknown firm may be met with skepticism. Bonnie should consider:
A) publicity to help create a positive image for her firm and their products.
B) the extensive use of persuasive advertising.
C) emphasizing personal selling rather than public relations.
D) changing jobs because this situation is hopeless.
48. Consumer research indicates that the public is very concerned about underage drinking. In response, Texas Brewing Company has created a web site providing parents with information to help avoid underage drinking in their families. The firm also provides materials to retailers to help train their employees to avoid sales to minors. Publicizing these efforts:
A) will likely backfire, since few people will believe a beer company would seriously support a program that would reduce their sales.
B) represents a key step in a good public relations program.
C) illustrates a push strategy applied to public relations.
D) would distract the firm from its primary mission of selling beer to adults.
49. In the article, “”Customer relationship management (CMT) done right””, the central theme is,
A) there is a necessary set of steps to follow in properly implementing a CMT system.
B) CMT will always improve the profits of your company.
C) CMT can rarely be employed on a company wide basis, as you rarely will get everyone in the company to agree to use this tool.
D) It has been proven that CMT does little to improve the profits of your company.
50. One of the realities that businesses have to deal with if they choose to increase their research and development expenditures is they,
A) will lose their competitive edge.
B) have to spend money on research and development before they earn money from the sale of new products or services.
C) have to choose which of the new products or services to sell given that all their research and development efforts will result in marketable products or services.
D) will end up new products or services that are marketable only locally.
Aug 29, 2021 | Uncategorized
Case: Middlehurst House
Middlehurst House is a daycare center/preschool which operates as a partnership of George Friedman and Bill Compton. The center is in a city that has a large base of twoincome families who have a need for quality day care. The two men started the center this year. Compton contributed $40,000 to get the business started to purchase equipment and to operate through the early months. Friedman, who previously managed another center, is the director of the center and draws $2,000 per month for his services. Partnership profits and losses, after Friedman’s salary, are split 75 percent for Compton and 25 percent for Friedman.
Middlehurst House operates from 6 a.m. to 6 p.m., Monday through Friday. It is in a single building that has a capacity limit of 120 children and meets city and state regulations. At present, the center has six classes, all at maximum sizes, structured as follows:
|
|
Number of
classes |
Children
per class |
Total
children |
Monthly
tuition per
child |
| 2 to 3 |
|
2 |
10 |
20 |
$320 |
| 3 to 4 |
|
1 |
15 |
15 |
280 |
| 4 to 5 |
|
1 |
15 |
15 |
280 |
| 5 to 6 |
|
2 |
15 |
30 |
260 |
Class sizes are determined by state law which sets a limit on the number of children per instructor. The center uses one instructor per classroom.
Tuition is charged monthly. Minor adjustments are made on an individual basis. In October, the most recent month with data available, revenues were $21,500 ($22,600 less $1,100 adjustments). Monthly revenues should be rather stable since classes are full most of the time. Expenses for October were:
| Salaries for instructors |
$ 9,600 |
| Salary of director |
2,000 |
| Salary of part-time cook |
900 |
| Food expenses |
2,200 |
| Staff benefits expenses |
2,450 |
| Supplies expenses |
600 |
| Occupancy and other administrative expenses |
3,250 |
| Total expenses |
$21,000 |
Fixed expenses are the salary of the part-time cook and occupancy and other administrative expenses. The salary of the director is fixed as a partnership, this is in reality a distribution of profits, but it is included in expenses for comparative purposes.
Food is $1.25 per student per day. Staff benefits are 10 percent of salaries plus $200 per person for benefit programs for instructors and the part-time cook. Variable supplies are $1 per student per month. Step costs are salaries for instructors, averaging $1,600 per instructor per class.
Friedman wants to increase the quality of service by decreasing class sizes and also by expanding student enrollments. These alternatives are interrelated. Friedman thinks that class sizes are too large and that children are not getting the individual attention they require. Friedman surveyed parents of all 80 students to measure their support for a tuition increase tied to a reduction in class size. For children ages 2 to 5, most parents would support a 25 percent tuition increase, and nearly 50 percent would support a 50 percent increase. Of the 5-to-6 age group parents, nearly three fourths did not want any increase. The remainder said they would support a 25 percent increase but no more.
Proper class size is very subjective. However, Friedman feels that he could achieve a child/ instructor ratio of 6 to 1 for the 2-to-3 age group, an 8 to 1 ratio for the 3-to-4 and 4-to-5 age groups, and a 10 to 1 ratio for the 5-to-6 age group.
The center has easily maintained the 80-student level, with each class full. Friedman keeps in touch with waiting-list parents to make certain each is still interested. This list provides children when someone leaves the center. The current waiting list is as follows:
| Age group |
Number of children |
Age group |
Number of children |
| 2 to 3 |
5 |
4 to 5 |
4 |
| 3 to 4 |
7 |
5 to 6 |
11 |
Friedman does not start a new class unless more students are on the waiting list than are required per class. Obviously, enough students are on the 5-to-6 age group waiting list to start a new class. Lately, however, he has wondered if the center could make a profit by starting classes with fewer than the requisite number, taking the chance that new students would appear and could be added immediately.
Information from his various inquiries implies that a potential market for quality infant care (0 to 24 months) exists. Friedman doesn’t think this expansion would be profitable. However, he has never done an analysis of the situation and has not thought about an appropriate tuition. He believes that the infant/instructor ratio in his center should be no higher than 5 infants to one instructor. The center would have no food costs for the infants.
Compton will only agree to Friedman’s suggested changes if the center will continue to operate at or above the current profit level.
Questions:
- Look at each decision separately, as incremental to the current situation, and evaluate the marginal profit:
- If class size is decreased (keeping the same 80 students), what increase in tuition is necessary to keep the current monthly profit level?
- Without regard to (a), is it profitable to create the new class from the waiting list? Explain.
- Use the new fee structure as found in (a). Is it profitable to move to smaller class sizes, if new full classes are created and filled to their new maximums using the waiting list? Show calculations.
- Is a class for infant care profitable if tuition is the same as the proposed class tuition for the 2-to-3 age group?
- Write a brief memo to Friedman and Compton highlighting any concerns that underlie the analyses you have performed in Part 1.
Aug 29, 2021 | Uncategorized
1) An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (round your answer to the nearest whole dollar)
A. negative net present value of $2,923 B. positive net present value of $20,557 C. positive net present value of $1,520 D. negative net present value of $25,000
2) Mountain Brook Company is considering two investment opportunities whose cash flows are provided below:
Year Investment A Investment B
Year 0 ($15,000) ($9,000) Year 1 5,000 5,000 Year 2 5,000 4,000 Year 3 5,000 3,000 Year 4 4,000 1,000
The company’s hurdle rate is 12%. What is the present value index of Investment A?
A. 1.00 B. 0.97 C. 1.12 D. 1.01
3) Britannia Company has two investment opportunities. A cash flow schedule for the investments is provided below:
Year Investment A Investment B
Year 0 ($5,000) ($6,000) Year 1 2,000 3,000 Year 2 2,000 2,000 Year 3 2,000 2,000 Year 4 2,000 1,000
Assuming capital rationing is used, which of the following techniques would be most appropriate for choosing between Investment A and Investment B?
A. Payback technique B. Present value index C. Net present value technique D. None of these techniques apply
Which of the following statements concerning payback analysis is true? A. The payback method ignores the time value of money concept. B. The payback method and the unadjusted rate of return are different approaches that will consistently lead to the same conclusion. C. All of these are true. D. An investment with a longer payback is preferable to an investment with a shorter payback.
5) Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating capital projects. A. A project whose IRR is less than the cost of capital should be rejected. B. The higher the IRR the better. C. The internal rate of return is that rate that makes the present value of the initial outlay equal to zero. D. If a project has a positive net present value then its IRR will exceed the hurdle rate.
6) The rate of return that equates the present value of cash inflows and outflows is the
A. internal rate of return. B. minimum rate of return. C. none of these. D. desired rate of return
7) An investment that costs $5,000 will produce annual cash flows of $2,000 for a period of 4 years. Given a desired rate of return of 10%, the investment will generate a present value index of A. 1.268. B. 0.789. C. 7.745. D. 2.500.
8) An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was
A. equal to the desired rate of return. B. less than the desired rate of return. C. the answer cannot be determined from the information provided. D. greater than the desired rate of return.
9) Which of the following is the approximate internal rate of return for an investment that costs $45,880 and provides a $4,000 annuity for 20 years?
A. 6% B. 5% C. 10% D. 8%
10) Yoplait Company employs material handling employees who move materials between production divisions at a labor cost of $160,000 a year. It is estimated that these employees move 75,000 pounds of material per year. If 6,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March?
A. $12,800 B. $12,000 C. $75,000 D. $26,666
11) Perrot Company has three divisions. For Perrot, a cost should be considered a direct cost if
A. it can be allocated to a division using an volume-based cost driver. B. it meets certain guidelines imposed by generally accepted accounting principles. C. it is a fixed cost. D. it can be traced to a division in a cost-effective manner.
12) Joint products A and B emerge from common processing that costs $80,000 and yields 5,000 units of Product A and 4,000 units of Product B. Product A can be sold for $100 per unit. Product B can be sold for $80 per unit. What amount of the joint costs will be assigned to Product A if joint costs are allocated on the basis of number of units produced? A. $48,780 B. $35,556 C. $44,444 D. $31,220
13) When a particular job is completed in a job order cost system, the general journal entry would include a A. debit to Finished Goods Inventory and a credit to the appropriate job order cost sheet. B. debit to Work in Process Inventory and a credit to Finished Goods Inventory. C. debit to Work in Process and a credit to Manufacturing Overhead. D. debit to Finished Goods Inventory and a credit to Work in Process Inventory.
Moore Company uses process costing. The following information was available for October: Units Costs Work in process Oct. 1 100 $ 7,500
Work in process Oct. 30 200 (A) Transferred in 1,000 $12,500
Ending inventory is 50% complete. Based on the information given, (A) above would be what amount?
A. $4,000 B. $2,000 C. $1,650 D. $1,500
15) The Ragan Corporation uses a process cost system. The company started March with 2,300 units in Work in Process Dept. A. During the month 4,000 units were started. At the end of the month there were 3,200 units in ending Work in Process Dept. A inventory that were 30% complete. The beginning work in process balance was $240,540 and total manufacturing cost for the period was $608,000. Based on this information, the amount of cost transferred from Work in Process Dept. A to Work in Process Dept. B was
A. $254,562. B. $200,640. C. $647,900. D. $543,233.
16) Brumlow Company has a contribution margin ratio of 25%. The company is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total fixed costs increase by $20,000?
A. $20,000 B. $15,000 C. $25,000 D. $5,000
17) Select the incorrect break-even equation from the following: A. Total contribution margin = total variable costs B. Total revenue = total costs C. Total fixed costs / contribution margin ratio D. Total contribution margin = total fixed costs
18) A product has a contribution margin of $6 per unit and selling price of $20 per unit. Fixed costs are $18,000. Assuming new technology doubles the unit contribution margin but increases total fixed costs by $15,000, what is the breakeven point in units?
A. 2,750 units B. 5,500 units C. 4,000 units D. 1,250 units
19) Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business? A. Units in beginning inventory B. Desired units in ending inventory C. Expected unit selling price D. Expected unit sales
20) Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?
A. Cash receipts schedule B. Sales budget C. Inventory purchases budget D. Cash payments schedule
21) Select the incorrect statement about the master budget. A. The master budget usually includes operating budgets, capital budgets and pro forma financial statements. B. Preparing the master budget begins with the sales forecast. C. The budgeting process usually begins with preparing the operating budgets. D. The master budget is a group of detailed budgets and schedules representing the company’s operating and financial plans for the past accounting period.
22) Huntsville Company reported a $4,000 unfavorable direct labor price variance and a $1,500 favorable direct labor usage variance. Select the incorrect statement from the following.
A. It took the employees less time to produce the outputs than expected. B. It is possible that the supervisor attempted to use more highly skilled (and paid) employees than allowed for by the direct labor standards. C. The total direct labor variance is $2,500 unfavorable. D. The standard direct labor rate must have exceeded the actual direct labor rate.
23) When would a variance be labeled as favorable?
A. When standard costs are less than actual costs B. When actual costs are less than standard costs C. When expected sales are greater than actual sales D. When standard costs are equal to actual costs
24) Gonzalez Company makes a product that is expected to use 1.2 pounds of material per unit of product. The material has a standard cost of $2 per pound. Gonzalez actually used 1.25 pounds of material per unit of product made in January. The actual cost of material was $1.95 per pound. Based on this information alone, the condition of the variances for the January production would be
A. unfavorable for price and favorable for usage. B. favorable for price and favorable for usage. C. favorable for price and unfavorable for usage. D. unfavorable for price and unfavorable for usage.
25) You are considering an investment in Delta Airlines stock and wish to assess the firm’s ability to generate earnings. All of the following ratios can be used to assess profitability except:
A. Asset turnover B. Average days to collect receivables C. Return on investment D. Net margin
26) You are considering an investment in Coca Cola Company stock and wish to assess the firm’s long-term debt-paying ability and its use of debt financing. All of the following ratios can be used to assess solvency expect:
A. Net margin B. Debt to assets ratio C. Debt to equity ratio D. Number of times interest is earned
27) You are considering an investment in IBM Company stock and wish to assess the firm’s short-term debt-paying ability. All of the following ratios are used to assess liquidity except: A. Inventory turnover B. Debt to equity ratio C. Quick ratio D. Accounts receivable turnover
28) Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job. The difference between inflated and realistic standards is known as
A. budget slack. B. cooking the books. C. lowballing. D. making the numbers.
29) In monitoring process quality we might use which of the following statistics?
A. Percentage deviation from tolerance centers B. Logarithmic control intervals C. k values for the sample mean D. Difference between the highest and lowest value in a sample E. Absolute values
30) Which manager is usually held responsible for materials usage variances? A. purchasing agent B. marketing manager C. plant manager D. production supervisor
Aug 29, 2021 | Uncategorized
| Midterm in ACC 543 (Managerial Accounting) |
| Question Detail:
1) An investment that costs $25,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, the investment will generate a (round your answer to the nearest whole dollar)
|
A. negative net present value of $2,923
|
|
B. positive net present value of $20,557
|
|
C. positive net present value of $1,520
|
|
D. negative net present value of $25,000
|
2) Mountain Brook Company is considering two investment opportunities whose cash flows are provided below:
|
Year
|
Investment A
|
Investment B
|
|
Year 0
|
($15,000)
|
($9,000)
|
|
Year 1
|
5,000
|
5,000
|
|
Year 2
|
5,000
|
4,000
|
|
Year 3
|
5,000
|
3,000
|
|
Year 4
|
4,000
|
1,000
|
|
The company’s hurdle rate is 12%. What is the present value index of Investment A?
|
A. 1.00
|
|
B. 0.97
|
|
C. 1.12
|
|
D. 1.01
|
|
|
3) Britannia Company has two investment opportunities. A cash flow schedule for the investments is provided below:
|
Year
|
Investment A
|
Investment B
|
|
Year 0
|
($5,000)
|
($6,000)
|
|
Year 1
|
2,000
|
3,000
|
|
Year 2
|
2,000
|
2,000
|
|
Year 3
|
2,000
|
2,000
|
|
Year 4
|
2,000
|
1,000
|
|
Assuming capital rationing is used, which of the following techniques would be most appropriate for choosing between Investment A and Investment B?
|
A. Payback technique
|
|
B. Present value index
|
|
C. Net present value technique
|
|
D. None of these techniques apply
|
|
4) Which of the following statements concerning payback analysis is true?
|
A. The payback method ignores the time value of money concept.
|
|
B. The payback method and the unadjusted rate of return are different approaches that will consistently lead to the same conclusion.
|
|
C. All of these are true.
|
|
D. An investment with a longer payback is preferable to an investment with a shorter payback.
|
|
|
5) Select the incorrect statement concerning the internal rate of return (IRR) method of evaluating capital projects.
|
A. A project whose IRR is less than the cost of capital should be rejected.
|
|
B. The higher the IRR the better.
|
|
C. The internal rate of return is that rate that makes the present value of the initial outlay equal to zero.
|
|
D. If a project has a positive net present value then its IRR will exceed the hurdle rate.
|
|
|
6) The rate of return that equates the present value of cash inflows and outflows is the
|
A. internal rate of return.
|
|
B. minimum rate of return.
|
|
C. none of these.
|
|
D. desired rate of return
|
|
|
7) An investment that costs $5,000 will produce annual cash flows of $2,000 for a period of 4 years. Given a desired rate of return of 10%, the investment will generate a present value index of
|
A. 1.268.
|
|
B. 0.789.
|
|
C. 7.745.
|
|
D. 2.500.
|
|
|
8) An investment that cost $48,000 provided annual cash inflows of $9,000 per year for six years. The desired rate of return is 10%. The actual return from the investment was
|
A. equal to the desired rate of return.
|
|
B. less than the desired rate of return.
|
|
C. the answer cannot be determined from the information provided.
|
|
D. greater than the desired rate of return.
|
|
|
9) Which of the following is the approximate internal rate of return for an investment that costs $45,880 and provides a $4,000 annuity for 20 years?
|
|
10) Yoplait Company employs material handling employees who move materials between production divisions at a labor cost of $160,000 a year. It is estimated that these employees move 75,000 pounds of material per year. If 6,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March?
|
A. $12,800
|
|
B. $12,000
|
|
C. $75,000
|
|
D. $26,666
|
|
|
11) Perrot Company has three divisions. For Perrot, a cost should be considered a direct cost if
|
A. it can be allocated to a division using an volume-based cost driver.
|
|
B. it meets certain guidelines imposed by generally accepted accounting principles.
|
|
C. it is a fixed cost.
|
|
D. it can be traced to a division in a cost-effective manner.
|
|
|
12) Joint products A and B emerge from common processing that costs $80,000 and yields 5,000 units of Product A and 4,000 units of Product B. Product A can be sold for $100 per unit. Product B can be sold for $80 per unit. What amount of the joint costs will be assigned to Product A if joint costs are allocated on the basis of number of units produced?
|
A. $48,780
|
|
B. $35,556
|
|
C. $44,444
|
|
D. $31,220
|
|
|
13) When a particular job is completed in a job order cost system, the general journal entry would include a
|
A. debit to Finished Goods Inventory and a credit to the appropriate job order cost sheet.
|
|
B. debit to Work in Process Inventory and a credit to Finished Goods Inventory.
|
|
C. debit to Work in Process and a credit to Manufacturing Overhead.
|
|
D. debit to Finished Goods Inventory and a credit to Work in Process Inventory.
|
|
) Moore Company uses process costing. The following information was available for October:
|
Units
|
Costs
|
|
Work in process Oct. 1
|
100
|
$ 7,500
|
|
Work in process Oct. 30
|
200
|
(A)
|
|
Transferred in
|
1,000
|
$12,500
|
|
Ending inventory is 50% complete. Based on the information given, (A) above would be what amount?
|
A. $4,000
|
|
B. $2,000
|
|
C. $1,650
|
|
D. $1,500
|
|
15) The Ragan Corporation uses a process cost system. The company started March with 2,300 units in Work in Process Dept. A. During the month 4,000 units were started. At the end of the month there were 3,200 units in ending Work in Process Dept. A inventory that were 30% complete. The beginning work in process balance was $240,540 and total manufacturing cost for the period was $608,000. Based on this information, the amount of cost transferred from Work in Process Dept. A to Work in Process Dept. B was
|
A. $254,562.
|
|
B. $200,640.
|
|
C. $647,900.
|
|
D. $543,233.
|
|
|
16) Brumlow Company has a contribution margin ratio of 25%. The company is considering a proposal that will increase sales by $100,000. What increase in profit can be expected assuming total fixed costs increase by $20,000?
|
A. $20,000
|
|
B. $15,000
|
|
C. $25,000
|
|
D. $5,000
|
|
|
17) Select the incorrect break-even equation from the following:
|
A. Total contribution margin = total variable costs
|
|
B. Total revenue = total costs
|
|
C. Total fixed costs / contribution margin ratio
|
|
D. Total contribution margin = total fixed costs
|
|
|
18) A product has a contribution margin of $6 per unit and selling price of $20 per unit. Fixed costs are $18,000. Assuming new technology doubles the unit contribution margin but increases total fixed costs by $15,000, what is the breakeven point in units?
|
A. 2,750 units
|
|
B. 5,500 units
|
|
C. 4,000 units
|
|
D. 1,250 units
|
|
|
19) Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business?
|
A. Units in beginning inventory
|
|
B. Desired units in ending inventory
|
|
C. Expected unit selling price
|
|
D. Expected unit sales
|
|
|
20) Which of the following budgets or schedules uses data contained in the selling and administrative expense budget?
|
A. Cash receipts schedule
|
|
B. Sales budget
|
|
C. Inventory purchases budget
|
|
D. Cash payments schedule
|
|
|
21) Select the incorrect statement about the master budget.
|
A. The master budget usually includes operating budgets, capital budgets and pro forma financial statements.
|
|
B. Preparing the master budget begins with the sales forecast.
|
|
C. The budgeting process usually begins with preparing the operating budgets.
|
|
D. The master budget is a group of detailed budgets and schedules representing the company’s operating and financial plans for the past accounting period.
|
|
|
22) Huntsville Company reported a $4,000 unfavorable direct labor price variance and a $1,500 favorable direct labor usage variance. Select the incorrect statement from the following.
|
A. It took the employees less time to produce the outputs than expected.
|
|
B. It is possible that the supervisor attempted to use more highly skilled (and paid) employees than allowed for by the direct labor standards.
|
|
C. The total direct labor variance is $2,500 unfavorable.
|
|
D. The standard direct labor rate must have exceeded the actual direct labor rate.
|
|
|
23) When would a variance be labeled as favorable?
|
A. When standard costs are less than actual costs
|
|
B. When actual costs are less than standard costs
|
|
C. When expected sales are greater than actual sales
|
|
D. When standard costs are equal to actual costs
|
|
|
24) Gonzalez Company makes a product that is expected to use 1.2 pounds of material per unit of product. The material has a standard cost of $2 per pound. Gonzalez actually used 1.25 pounds of material per unit of product made in January. The actual cost of material was $1.95 per pound. Based on this information alone, the condition of the variances for the January production would be
|
A. unfavorable for price and favorable for usage.
|
|
B. favorable for price and favorable for usage.
|
|
C. favorable for price and unfavorable for usage.
|
|
D. unfavorable for price and unfavorable for usage.
|
|
|
25) You are considering an investment in Delta Airlines stock and wish to assess the firm’s ability to generate earnings. All of the following ratios can be used to assess profitability except:
|
A. Asset turnover
|
|
B. Average days to collect receivables
|
|
C. Return on investment
|
|
D. Net margin
|
|
|
26) You are considering an investment in Coca Cola Company stock and wish to assess the firm’s long-term debt-paying ability and its use of debt financing. All of the following ratios can be used to assess solvency expect:
|
A. Net margin
|
|
B. Debt to assets ratio
|
|
C. Debt to equity ratio
|
|
D. Number of times interest is earned
|
|
|
27) You are considering an investment in IBM Company stock and wish to assess the firm’s short-term debt-paying ability. All of the following ratios are used to assess liquidity except:
|
A. Inventory turnover
|
|
B. Debt to equity ratio
|
|
C. Quick ratio
|
|
D. Accounts receivable turnover
|
|
|
28) Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job. The difference between inflated and realistic standards is known as
|
A. budget slack.
|
|
B. cooking the books.
|
|
C. lowballing.
|
|
D. making the numbers.
|
|
|
29) In monitoring process quality we might use which of the following statistics?
|
A. Percentage deviation from tolerance centers
|
|
B. Logarithmic control intervals
|
|
C. k values for the sample mean
|
|
D. Difference between the highest and lowest value in a sample
|
|
E. Absolute values
|
|
|
30) Which manager is usually held responsible for materials usage variances?
|
A. purchasing agent
|
|
B. marketing manager
|
|
C. plant manager
|
|
D. production supervisor
|
|
|
Aug 29, 2021 | Uncategorized
1.Wasson Company reported the following year-end information:Beginning work in process inventory$35000 Beginning raw materials inventory18000 Ending work in process inventory 38000 Ending raw materials inventory 15000 Raw materials purchased 56000 Direct labor180000 Manufacturing overhead 120000
How much is Wasson’s total cost of work in process for the year?
a608000
b863000
c860000
d898000
2.Edmiston Company reported the following year-end information:beginning work in process inventory $80000;cost of goods manufactured 780000;beginning finished goods inventory 50000;ending work in process inventory 70,000;and ending finished goods inventory 40000. How much is Edmiston’s cost of goods sold for the year?
a780000
b790000
c770000
d800000
3.Using the following information, compute the direct materials used
Raw materials inventory, Jan.1 $20000
Raw materials inventory, Dec.31 40000
Work in process, Jan.1 18000
Work in process, Dec.31 12000
Finished goods, Jan.1 40000
Finished goods, Dec.31 32000
Raw materials purchases(NNN) NNN-NNNN
Direct labor 560000
Factory utilities 150000
Indirect labor 50000
Factory depreciation 400000
Operating expenses 420000
a1460000
b1420000
c1400000
d1380000
4.Assuming that the cost of goods manufactured is $2960000 compute the cost of goods sold using the following information
Raw materials inventory, Jan.1 $30000
Raw materials inventory, Dec.31 60000
Work in process, Jan.1 27000
Work in process, Dec.31 18000
Finished goods, Jan.1 60000
Finished goods, Dec.31 48000
Raw materials purchases(NNN) NNN-NNNN
Direct labor 690000
Factory utilities 225000
Indirect labor 75000
Factory depreciation 500000
Operating expenses 630000
a2969000
b2912000
c2948000
d2972000
5.Samson Company reported total manufaturing costs of $300000,manufacturing overhead totaling $52000 and direct materials totaling $64000. How much is direct labor cost?
a.Cannot be determined from the information provided
b416000
c416000
d184000
6.Given the following data for Mehring Company,compute (A) total manufacturing costs and (B) cost of goods manufactured:
Direct materials used $230000 Beginning work in process 30000 Direct labor 150000 Ending work in process 15000 Manufacturing overhead 225000 Beginning finished goods 38000 Operating expenses 263000 Ending finished goods 23000
(A) (B)
a$590000 620000
b605000 590000
c605000 620000
d620000 635000
7.Gulick Company developed the following data for the current year:
Beginning work in process inventory $160,000
Direct materials used 96,000
Actual overhead 192,000
Overhead applied 144,000
Cost of goods manufactured 176,000
Total manufacturing costs 480,000
7-1 Gulick Company’s direct labor cost for the year is
a.48,000
b.240,000
c.144,000
d.192,000
7-2 Gulick Company’s ending work in process inventory is
a.464,000
b.320,000
c.304,000
d.144,000
8.Hayward Manufacturing Company eveloped the following data:
Beginning work in process inventory 450000
Direct materials used 350000
Actual overhead 550000
Overhead applied 400000
Cost of goods manufactured 600000
Ending work in process 750000
Hayward Manufacturing Company’s total manufacturing costs for the period is
a950,000
b900,000
c650,000
d.cannot be determined from the data provided
9.Greer Company developed the following data for the current year:
Beginning work in process inventory $102000
Direct materials used 156,000
Actual overhead 132,000
Overhead applied 138,000
Cost of goods manufactured 675,000
Total manufacturing costs 642,000
9-1 How much is Greer Company’s direct labor cost for the year?
a.381,000
b.450,000
c.348,000
d.246,000
9-2 How much is Greer Company’s ending work in process inventory for the year?
a.69,000
b.363,000
c.63,000
d.279,000
10.Chmelar Manucfacturing Company developed the following data:
Beginning work in process inventory $80,000
Direct materials used 480,000
Actual overhead 560,000
Overhead applied 540,000
Cost of goods manufactured 1,280,000
Ending work in process 60,000
How much are total manufacturing cost for the period?
a.1,580,000
b.1,260,000
c.1,100,000
d.1,220,000
11.Maisley Company decided to analyze certain costs for June of the current year.Units started into production equaled 28,000 and ending work in process equaled 4,000.With no beginning work in process inventory,how much is the conversion cost per unit if ending work in process was 25% complete and total conversion costs equaled 105,000?
a.$3.30
b.3.75
c.4.20
d.2.10
15.For the Assembly Department,unit materials cost is $8 and unit conversion cost is $12.If there are 10,000units in ending work in process 75% complete as to converstion costs, the costs to be assigned to the inventory are
a.200,000
b.170,000
c.150,000
d.180,000
17.In a production cost report,which one of the following sections is not shown under costs?
a.Unit costs
b.Costs to be accounted for
c.Costs during the period
d.Units accounted for
Aug 29, 2021 | Uncategorized
3. McBean Inc. reported net income of $300,000 for the year ended December 31, 2009. McBean Inc. had 50,000 shares of common stock outstanding throughout 2009. On January 1, 2009, McBean Inc. issued 400, five-year, $1,000 face value bonds at par. The bonds pay 6 percent interest, and each bond can be converted into 20 shares of common stock. Assume McBean Inc. has a 30 percent income tax rate. None of the bonds were converted in 2009. Required: 1 Compute the basic EPS and diluted EPS for McBean Inc. for 2009. 5. On Nov 1, 2010 you purchased a 2 year insurance policy for $4800. You debited insurance expense. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011?
6. On Sept 1, 2010 you received $3600 of rental income 1 year in advance. You credited rent revenue. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011? 7. On Oct 1, 2010 you borrowed $12000 and issued a 1 year note payable. The interest rate was 8%. At the end of the year you did not prepare an adjustment. The books are closed. What is the entry to be prepared at the beginning of 2011? 8. On Jan 1, 2010 you had in supplies inventory $1200. On Feb 1 you purchased supplies costing $1800 and you debited supplies expense. On April 1, you purchased supplies costing $500 and debited supplies. On November 1, you purchased $900 of supplies and debited supplies expense. At the end of the year you had $300 of supplies on hand. You did not make an adjusting entry. The books are closed. What is the entry to be prepared at the beginning of 2011?
Aug 29, 2021 | Uncategorized
McGee Carpet and Trim installs carpets in commercial offices.
Andrea McGee has been very concerned with the amount of time it took to complete several recent jobs. Some of her workers are very unreliable. A list of activities and their optimistic completion time, the most likely completion time, and the pessimistic completion time (all in days) for a new contract are provided in a given table.
Following are the activities that are required to install the carpets in the offices: Activity 1 (Measure office room dimensions), Activity 2 (Estimate cost), Activity 3 (Material Requisition), Activity 4 (Workforce Requisition), Activity 5 (Special Tool Requisition), Activity 6 (Installation), Activity 7 (Inspection and customer acceptance).
Activity 2 starts immediately after Activity 1. Activity 3, Activity 4, and Activity 5 start concurrently after Activity 2. Activity 6 does not start until after Activity 3, Activity 4, and Activity 5 are completed. The carpet installation project is complete after Activity 7 is completed. If OT = Optimistic Time, MT = Most Likely Time, and PT = Pessimistic Time, use Program Evaluation Review Estimate (PERT) to compute the statistical time for each activity in the table shown below.
Activities
OT / MT / PT
Activity 1
4 / 6 / 14
Activity 2
5 / 12 / 16
Activity 3
7 / 15 / 23
Activity 4
13 / 16 / 28
Activity 5
17 / 20 / 35
Activity 6
20 / 32 / 50
Activity 7
5 / 6 / 13
(a) Determine the expected completion time and the variance for each activity
(b) Determine the total project completion time and the critical path for the project.
(c) Determine Early Start (ES), Early Finish (EF), Late Start (LS), and slack for each activity. What is the probability that McGee Carpet and Trim will finish the project in 40 days or less?
Aug 29, 2021 | Uncategorized
McGee Carpet and Trim installs carpets in commercial offices. Andrea McGee has been very concerned with the amount of time it took to complete several recent jobs. Some of her workers are very unreliable. A list of activities and their optimistic completion time, the most likely completion time, and the pessimistic completion time (all in days) for a new contract are provided in a given table. Following are the activities that are required to install the carpets in the offices: Activity 1 (Measure office room dimensions), Activity 2 (Estimate cost), Activity 3 (Material Requisition), Activity 4 (Workforce Requisition), Activity 5 (Special Tool Requisition), Activity 6 (Installation), Activity 7 (Inspection and customer acceptance).
Activity 2 starts immediately after Activity 1. Activity 3, Activity 4, and Activity 5 start concurrently after Activity 2. Activity 6 does not start until after Activity 3, Activity 4, and Activity 5 are completed. The carpet installation project is complete after Activity 7 is completed. If OT = Optimistic Time, MT = Most Likely Time, and PT = Pessimistic Time, use Program Evaluation Review Estimate (PERT) to compute the statistical time for each activity in the table shown below.
Activities
OT / MT / PT
Activity 1
4 / 6 / 14
Activity 2
5 / 12 / 16
Activity 3
7 / 15 / 23
Activity 4
13 / 16 / 28
Activity 5
17 / 20 / 35
Activity 6
20 / 32 / 50
Activity 7
5 / 6 / 13
Also, (a) Determine the expected completion time and the variance for each activity (b) Determine the total project completion time and the critical path for the project. (c) Determine Early Start (ES), Early Finish (EF), Late Start (LS), and slack for each activity. What is the probability that McGee Carpet and Trim will finish the project in 40 days or less?
Define project management and the necessary requirements.
Analyze implications of changes in project scheduling.
Evaluate application of project management techniques in terms of the firm’s business operational goals and requirements.
Please submit your assignment in an APA formatted paper.
Submitting your assignment in APA format means, at a minimum, you will need the following:
TITLE PAGE. Remember the Running head: AND TITLE IN ALL CAPITALS
ABSTRACT. A summary of your paper not an introduction. Begin writing in third person voice.
BODY. The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA level headings and references. The deliverable length of the body of your paper for this assignment is 2-3 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
REFERENCE PAGE. References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper and lower case usage as appropriate for the type of resource used. Remember, the Reference Page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.
Aug 29, 2021 | Uncategorized
| Mcgraw Hill Connect Chapter 10 help |
| Question Detail:
McGraw Hill Connect, Chapter 10 Accounting assignment includes:
CHAPTER 10 HOMEWORK and CHAPTER 10 QUIZ completed online through McGraw Hill Connect site with my credentials DUE NO LATER THAN Sunday, 04-28-2013
AS WELL AS:
Upload DOCUMENTS of Chapter 10 TEST submitted to me through homework market DUE NO LATER THAN Sunday 04-28-2013—- SEE BELOW:
PROBLEM #1 4 points
Classify each of the following as Aordinary maintenance and repairs, B asset improvements, or Cextraordinary repairs.
- Resurfacing a pool in an apartment building. ___________________
- Installing a new air conditioner in an old building. ___________________
- Exterior and interior painting. ___________________
- Fixing damage due to a car accident. ___________________
PROBLEM #2 14 points
Equipment acquired at a cost of $126,000 and has a book value of $42,000. Journalize the disposal of equipment under the following independentassumptions. Identify each assumption by letter.
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(a)
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The equipment had no market value and was discarded.
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(b)
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The equipment is sold for $53,000.
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(c)
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The equipment is sold for $27,000.
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(d)
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The equipment is traded-in for a similar asset. The list price of the new equipment is $63,000. The exchange has no commercial substance.
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Journal
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Date
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Description
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Debit
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Credit
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PROBLEM #3 22 points
An asset was purchased January 1, 20XX and the fiscal year ends December 31st. Calculate depreciation expense, accumulated depreciation, and net book value under the straight-line and the double declining balance methods. Round your answers to the nearest whole dollar.
Asset Cost = $200,000 Salvage Value = $25,000 Estimated Life = 8 Years
Straight-line method:
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Year
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Depreciation Expense
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Accumulated Depreciation
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Net Book Value
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20XX
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20X1
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20X2
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20X3
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20X4
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20X5
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20X6
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20X7
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Double Declining Balance method:
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Year
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Depreciation Expense
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Accumulated Depreciation
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Net Book Value
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20XX
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20X1
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20X2
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20X3
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20X4
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20X5
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20X6
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20X7
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Aug 29, 2021 | Uncategorized
McGraw Hill Connect, Chapter 8 Accounting assignment includes:
CHAPTER 8 HOMEWORK and CHAPTER 8 QUIZ completed online through McGraw Hill Connect site with my credentials DUE NO LATER THAN Sunday, 04-14-2013
AS WELL AS:
Upload DOCUMENTS of Chapter 8 TEST submitted to me through homework market DUE NO LATER THAN Sunday 04-14-2013—- SEE BELOW:
For $40.00 total, due no later than 04-14-2013
Down payment of $15
Chapter 8 TEST document:
PROBLEM #1 22 points
Greenview Food Store developed the following information in recording its bank statement for the month of March 20XX.
Balance per books on March 31 $ 829
Balance per bank on March 31 $ 7,030
1) Checks written in March but still outstanding, $5,200.
2) Checks written in February but still outstanding, $1,200.
3) Deposits of March 30 and 31 not yet recorded by bank, $3,100.
4) NSF check of customer returned by bank, $400.
5) Check #210 for $675 was correctly issued and paid by the bank but incorrectly entered in the cash payments journal as payment on account for $657, for payment to a creditor.
6) Bank service charge for March was $31.
7) A payment on account was incorrectly entered into the cash payments journal and posted to the accounts payable subsidiary ledger for $854 when check #318 was correctly prepared for $584. The check cleared the bank in March.
8) The bank collected a note receivable for the company for $3,000 plus $80 interest.
Instructions:
a) Prepare a bank reconciliation for the Greenview Food Store for the month of March 31, 20XX.
b) Journalize the adjusting entries for Greenview Food Store on March 31, 20XX.
Bank Reconciliation:
Journal Entries:
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General Journal
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Debit
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Credit
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PROBLEM #2 18 points
Jenrob Company completed the following selected transactions during January 20XX.
January 1 Established a petty cash fund of $500
15 The cash sales for the day per the register tape were $3,018.
The actual cash received from cash sales were $3,011.
31 Petty cash on hand was $123. Replenished the petty cash fund for the following
disbursements:
Jan 2 Office supplies, $45
10 Postage due on letter, $29 (Miscellaneous Expense)
14 Office supplies, $56.
17 Postage stamps, $42 (Office Supplies).
20 Express charges on merchandise sold, $136 (Delivery Expense).
22 Repair to desk, $63 (Miscellaneous Expense).
30 Office supplies, $12.
31 The cash sales for the day per the register tape were $2,812.
The actual cash received from cash sales were $2,822.
31 Decreased the petty cash fund by $100.
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General Journal
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Date
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Description
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Debit
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Credit
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What is the balance in the cash short/over account (DR or CR & $ amount)? Is it a revenue or an expense?
Balance in Cash Short/Over? ______________________________
Revenue or Expense? ____________________________________
Aug 29, 2021 | Uncategorized
McGraw Hill Connect, Chapter 9 Accounting assignment includes:
CHAPTER 9 HOMEWORK and CHAPTER 9 QUIZ completed online through McGraw Hill Connect site with my credentials DUE NO LATER THAN Sunday, 04-21-2013
AS WELL AS:
Upload DOCUMENTS of Chapter 9 TEST submitted to me through homework market DUE NO LATER THAN Sunday 04-21-2013 —- SEE BELOW:
PROBLEM #1 25 points
At the beginning of the year, Sonoran Park Equipment’s accounts receivable balance was $105,000 and the allowance for doubtful accounts had a $1,950 credit. Sonoran’s sales in the current year were $787,500, 80% of which were on credit. Collections on account during the year were $502,000. Additionally, Sonoran wrote off $3,000 of uncollectible accounts during the year. It is estimated that 6% of the year end accounts receivable are expected to be uncollectible.
Using the allowance for bad debts based on accounts receivable aging method, determine the journal entry for the estimate of bad debts. What is Sonoran’s net realizable value of accounts at the end of the year?
A. Journal Entry
Show work here:
B. Net Realizable Value
PROBLEM #2 10 points
Good Day Service Center received a 120 day, 6% note for $50,000, dated April 12, 20XX from a customer on account. Determine the (a) due date of the note, (b) the maturity value of the note, and (c) the journal entry to record the receipt of the payment of the note at maturity. Use a 360 day year.
a)
b)
c)
PROBLEM #3 5 points
What is the difference between an account receivable and a note receivable?
Aug 29, 2021 | Uncategorized
| Title:McGraw Hill Connect, chapters 8, 9,10 and 11 EXAMPLE HERE OF CHAPTER 8 HERE: |
| Question Detail:
Exercise 8-6 Petty cash fund accounting L.O. P2
[The following information applies to the questions displayed below.]
|
NetPerks Co. establishes a $200 petty cash fund on January 1. On January 8, the fund shows $28 in cash along with receipts for the following expenditures: postage, $64; transportation-in, $19; delivery expenses, $36; and miscellaneous expenses, $53. NetPerks uses the perpetual system in accounting for merchandise inventory.
|
references1.value:
2.00 points
Exercise 8-6 Part 1
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(1)
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Prepare journal entry to establish the fund on January 1. (Omit the “$” sign in your response.) |
| Date |
General Journal |
Debit |
Credit |
| Jan. 1 |
check my workeBook LinkView Hint #1references2.value:
2.00 points
Exercise 8-6 Part 2
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(2)
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Prepare journal entry to reimburse it on January 8. (Omit the “$” sign in your response.)
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| Date |
General Journal |
Debit |
Credit |
| Jan. 8 |
check my workeBook LinkView Hint #1references3.value:
2.00 points
Exercise 8-6 Part 3
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(3)
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Prepare journal entries to both reimburse the fund and increase it to $500 on January 8, assuming no entry in part 2. (Omit the “$” sign in your response.)
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| Date |
General Journal |
Debit |
Credit |
| Jan. 8 |
value:
6.00 points
Exercise 8-7 Bank reconciliation and adjusting entries L.O. P3
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A table for a monthly bank reconciliation dated September 30 is given below. For each item 1 through 12, indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. (Select the answers in the appropriate cells and Leave no cells blank be certain to select “NA” in fields which are not applicable.)
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| Bank Balance |
Book Balance |
Shown/Not Shown |
| 1. |
Bank service charge for September. |
| 2. |
Checks written and mailed to payees on October 2. |
| 3. |
Checks written by another depositor but charged against this company s account. |
| 4. |
Principal and interest on a note receivable to this company is collected by the bank but not yet recorded by the company. |
| 5. |
Special bank charge for collection of note in part 4 on this company’s behalf. |
| 6. |
Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper. |
| 7. |
Interest earned on the September cash balance in the bank. |
| 8. |
Night deposit made on September 30 after the bank closed. |
| 9. |
Checks outstanding on August 31 that cleared the bank in September. |
| 10. |
NSF check from customer is returned on September 25 but not yet recorded by this company. |
| 11. |
Checks written by the company and mailed to payees on September 30. |
| 12. |
Deposit made on September 5 and processed by the bank on September 6. |
value:
6.00 points
Problem 8-2A Establish, reimburse, and adjust petty cash L.O. P2
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Shawnee Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company’s fiscal year).
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| May |
1 |
Prepared a company check for $250 to establish the petty cash fund. |
| 15 |
Prepared a company check to replenish the fund for the following expenditures made since May1.
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| a. Paid $78 for janitorial services. |
| b. Paid $63.68 for miscellaneous expenses. |
| c. Paid postage expenses of $43.50. |
| d. Paid $57.15 to The County Gazette (the local newspaper) for an advertisement. |
| e. Counted $11.15 remaining in the petty cash box. |
| 16 |
Prepared a company check for $200 to increase the fund to $450.
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| 31 |
The petty cashier reports that $293.39 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15.
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| f. Paid postage expenses of $48.36. |
- Reimbursed the office manager for business mileage, $38.50.
- Paid $39.75 to deliver merchandise to a customer, terms FOB destination.
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| 31 |
The company decides that the May 16 increase in the fund was too large. It reduces the fund by $50, leaving a total of $400.
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| Required: |
| 1. |
Prepare journal entries to establish the fund on May 1, to replenish it on May 15 and on May 31, and to reflect any increase or decrease in the fund balance on May 16 and May 31. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
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| Date |
General Journal |
Debit |
Credit |
| May 1 |
| May 15 |
| May 16 |
| May 31 |
| May 31 |
Problem 8-4A Prepare a bank reconciliation and record adjustments L.O. P3
[The following information applies to the questions displayed below.]
|
The following information is available to reconcile Clark Company s book balance of cash with its bank statement cash balance as of July 31, 2011.
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| a. |
On July 31, the company s Cash account has a $26,193 debit balance, but its July bank statement shows a $28,020 cash balance.
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| b. |
Check No. 3031 for $1,380 and Check No. 3040 for $552 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $336 and Check No. 3069 for $2,148, both written in July, are not among the canceled checks on the July 31 statement.
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| c. |
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,230.
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| d. |
A credit memorandum enclosed with the July bank statement indicates the bank collected $9,000 cash on a non-interest-bearing note for Clark, deducted a $45 collection fee, and credited the remainder to its account. Clark had not recorded this event before receiving the statement.
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| e. |
A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Jim Shaw. Clark has not yet recorded this check as NSF.
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| f. |
Enclosed with the July statement is a $15 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.
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| g. |
Clark s July 31 daily cash receipts of $10,152 were placed in the bank s night depository on that date, but do not appear on the July 31 bank statement.
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references6.value:
3.00 points
Problem 8-4A Part 1
| Required: |
| 1. |
Prepare the bank reconciliation for this company as of July 31, 2011. (Input all amounts as positive values. Omit the “$” sign in your response.)
|
CLARK COMPANY
Bank Reconciliation
July 31, 2011 |
| Bank statement balance |
$ |
Book balance |
$ |
| Add: |
Add: |
| Deduct: |
Deduct: |
| $ |
$ |
| Adjusted bank balance |
$ |
Adjusted book balance |
$ |
check my workeBook Linkreferences7.value:
3.00 points
Problem 8-4A Part 2
| 2. |
Prepare the journal entries necessary to bring the company s book balance of cash into conformity with the reconciled cash balance as of July 31, 2011. (Omit the “$” sign in your response.) |
| Date |
General Journal |
Debit |
Credit |
| July 31 |
Problem 8-5A Prepare a bank reconciliation and record adjustments L.O. P3
[The following information applies to the questions displayed below.]
|
Els Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,038.05 and No. 5893 for $484.25. The following information is available for its September 30, 2011, reconciliation.
|
| From the September 30 Bank Statement |
| PREVIOUS BALANCE |
TOTAL CHECKS AND DEBITS |
TOTAL DEPOSITS AND CREDITS |
CURRENT BALANCE |
| 16,800.45 |
9,620.05 |
11,182.85 |
18,363.25 |
| CHECKS AND DEBITS |
DEPOSITS AND CREDITS |
DAILY BALANCE |
| Date |
No. |
Amount |
Date |
Amount |
Date |
Amount |
| 09/03 |
5888 |
1,038.05 |
09/05 |
1,103.75 |
08/31 |
16,800.45 |
| 09/04 |
5902 |
731.90 |
09/12 |
2,226.90 |
09/03 |
15,762.40 |
| 09/07 |
5901 |
1824.25 |
09/21 |
4,093.00 |
09/04 |
15,030.50 |
| 09/17 |
588.25 NSF |
09/25 |
2,351.70 |
09/05 |
16,134.25 |
| 09/20 |
5905 |
937.00 |
09/30 |
22.50 IN |
09/07 |
14,310.00 |
| 09/22 |
5903 |
399.10 |
09/30 |
1,385.00 CM |
09/12 |
16,536.90 |
| 09/22 |
5904 |
2,080.00 |
09/17 |
15,948.65 |
| 09/28 |
5907 |
213.85 |
09/20 |
15,011.65 |
| 09/29 |
5909 |
1,807.65 |
09/21 |
19,104.65 |
| 09/22 |
16,625.55 |
| 09/25 |
18,977.25 |
| 09/28 |
18,763.40 |
| 09/29 |
16,955.75 |
| 09/30 |
18,363.25 |
| From Els Company s Accounting Records |
| Cash Receipts Deposited |
| Date |
Cash
Debit |
| Sept. 5 |
1,103.75 |
| 12 |
2,226.90 |
| 21 |
4,093.00 |
| 25 |
2,351.70 |
| 30 |
1,582.75
|
| 11,358.10 |
| Cash Disbursements |
| Check No. |
Cash
Credit |
| 5901 |
1,824.25 |
| 5902 |
731.90 |
| 5903 |
399.10 |
| 5904 |
2,050.00 |
| 5905 |
937.00
|
| 5906 |
859.30 |
| 5907 |
213.85 |
| 5908 |
276.00 |
| 5909 |
1,807.65 |
| 9,099.05 |
| Cash |
Acct. No. 101 |
| Date |
Explanation |
PR |
Debit |
Credit |
Balance |
| Aug. 31 |
Balance |
15,278.15 |
| Sept. 30 |
Total receipts |
R12 |
11,358.10 |
26,636.25 |
| 30 |
Total disbursements |
D23 |
9,099.05 |
17,537.20 |
| Additional Information |
|
Check No. 5904 is correctly drawn for $2,080 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,050. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum is from the collection of a $1,400 note for Els Company by the bank. The bank deducted a $15 collection fee. The collection and fee are not yet recorded.
|
references8.value:
3.00 points
Problem 8-5A Part 1
| Required: |
| 1. |
Prepare the September 30, 2011, bank reconciliation for this company. (Round your answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
|
ELS COMPANY
Bank Reconciliation
September 30, 2011 |
| Bank statement balance |
$ |
Book balance |
$ |
| Add: |
Add: |
| $ |
| Deduct: |
Deduct: |
| $ |
| Adjusted bank balance |
$ |
Adjusted book balance |
$ |
check my workeBook Linkreferences9.value:
3.00 points
Problem 8-5A Part 2
| 2. |
Prepare the journal entries to adjust the book balance of cash to the reconciled balance. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
| Date |
General Journal |
Debit |
Credit |
| Sept. 30 |
AND CHAPTER TEST EXAMPLE SUBMITTED AS DOC:
PROBLEM #1 22 points
Greenview Food Store developed the following information in recording its bank statement for the month of March 20XX.
Balance per books on March 31 $ 829
Balance per bank on March 31 $ 7,030
1) Checks written in March but still outstanding, $5,200.
2) Checks written in February but still outstanding, $1,200.
3) Deposits of March 30 and 31 not yet recorded by bank, $3,100.
4) NSF check of customer returned by bank, $400.
5) Check #210 for $675 was correctly issued and paid by the bank but incorrectly entered in the cash payments journal as payment on account for $657, for payment to a creditor.
6) Bank service charge for March was $31.
7) A payment on account was incorrectly entered into the cash payments journal and posted to the accounts payable subsidiary ledger for $854 when check #318 was correctly prepared for $584. The check cleared the bank in March.
8) The bank collected a note receivable for the company for $3,000 plus $80 interest.
Instructions:
a) Prepare a bank reconciliation for the Greenview Food Store for the month of March 31, 20XX.
b) Journalize the adjusting entries for Greenview Food Store on March 31, 20XX.
Bank Reconciliation:
Journal Entries:
|
General Journal
|
|
Date
|
Description
|
Debit
|
Credit
|
PROBLEM #2 18 points
Jenrob Company completed the following selected transactions during January 20XX.
January 1 Established a petty cash fund of $500
15 The cash sales for the day per the register tape were $3,018.
The actual cash received from cash sales were $3,011.
31 Petty cash on hand was $123. Replenished the petty cash fund for the following
disbursements:
Jan 2 Office supplies, $45
10 Postage due on letter, $29 (Miscellaneous Expense)
14 Office supplies, $56.
17 Postage stamps, $42 (Office Supplies).
20 Express charges on merchandise sold, $136 (Delivery Expense).
22 Repair to desk, $63 (Miscellaneous Expense).
30 Office supplies, $12.
31 The cash sales for the day per the register tape were $2,812.
The actual cash received from cash sales were $2,822.
31 Decreased the petty cash fund by $100.
|
General Journal
|
|
Date
|
Description
|
Debit
|
Credit
|
What is the balance in the cash short/over account (DR or CR & $ amount)? Is it a revenue or an expense?
Balance in Cash Short/Over? ______________________________
Revenue or Expense? ____________________________________
|
Aug 29, 2021 | Uncategorized
McMullen Co. manufactures automatic door openers. The company uses 15,000 electronic hinges per year as a component in the assembly of the openers. You have been engaged by the McMullen to assist with an evaluation of whether the company should continue producing the hinges or purchase them from an outside vendor. The accounting Department provided the following detail regarding the annual cost to produce electronic hinges.
Direct material: 54,000
Direct labor: 60,000
Variable manufacturing overhead: 36,000
Fixed manufacturing overhead: 90,000
Total cost: 240,000
The procurement department provided the following supplier pricing:
Supplier A price per hinge: 11.00
Supplier B price per hinge: 10.75
Supplier C price per hinge: 10.50
The supplier pricing was obtained in response to a formal request for proposal (RFP). Procurement has determined these suppliers meet McMullens technical specifications and quality requirements. If McMullen stops producing the part internally, 10% of the manufacturing overhead would be eliminated.
Prepare a make or buy analysis showing the annual advantage or disadvantage of accepting an outside supplier s offer
Aug 29, 2021 | Uncategorized
Question 1
Seven years ago, Eleanor transferred property she had used in her sole proprietorship to Blue Corporation for 2,000 shares of Blue Corporation in a transaction that qualified under 351. The assets had a tax basis to her of $400,000 and a fair market value of $700,000 on the date of the transfer. In the current year, Blue Corporation ( E & P of $1 million) redeems 600 shares from Eleanor for $260,000 in a transaction that qualifies for sale or exchange treatment. With respect to the redemption, Eleanor will have a:
$140,000 dividend.
$260,000 dividend.
$140,000 capital gain.
$260,000 capital gain.
None of the above.
Question 2
Which of the following entity owners cannot participate in management of the entity?
A general partner in a general partnership.
A member of a limited liability company.
A partner in a limited liability partnership.
A limited partner in a limited liability limited partnership.
None of the above.
Question 3
Elk, a C corporation, has $370,000 operating income and $290,000 operating expenses during the year. In addition, Elk has a $10,000 long-term capital gain and a $17,000 short-term capital loss. Elk s taxable income is:
$63,000.
$73,000.
$80,000.
$90,000.
None of the above.
Question 4
Which of the following statements is incorrect with respect to determining current E & P?
All tax-exempt income should be added back to taxable income.
Dividends received deductions should be added back to taxable income.
Charitable contributions in excess of the 10% of taxable income limit should be subtracted from taxable income.
Federal income tax refunds should be added back to taxable income.
None of the above statements are incorrect.
Question 5
Rachel is the sole member of an LLC, and Jordan is the sole shareholder of a C corporation. Both businesses were started in the current year, and each business has a long-term capital gain of $10,000 for the year. Neither business made any distributions during the year. With respect to this information, which of the following statements is correct?
The C corporation receives a preferential tax rate on the LTCG of $10,000.
The LLC must pay corporate tax on taxable income of $10,000.
Jordan must report $10,000 of LTCG on his tax return.
Rachel must report $10,000 of LTCG on her tax return.
None of the above.
Question 6
Fred and Ella are going to establish a business. They expect the business to be very successful in the long-run, but project losses of approximately $100,000 for each of the first five years. Due to potential environmental concerns, limited liability is a requisite for the owners. Which form of business entity should they select?
General partnership.
Limited partnership.
C corporation.
S corporation.
Any of the above should satisfy Fred and Ella.
Question 7
During 2013, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2012, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct?
Nutt recognizes a $1,000 LTCG.
Nutt s stock basis will be $2,000.
Nutt s ordinary income is $15,000.
Nutt s return of capital is $11,000.
None of the above.
question 9
In the current year, Warbler Corporation (E & P of $250,000) made the following property distributions to its shareholders (all corporations):
Adjusted
Fair Market
Basis
Value
Pink Corporation stock (held for investment)
$150,000
$120,000
Non-LIFO inventory
80,000
110,000
Warbler Corporation is not a member of a controlled group. As a result of the distribution:
The shareholders have dividend income of $200,000.
The shareholders have dividend income of $260,000.
Warbler has a recognized gain of $30,000 and a recognized loss of $30,000.
Warbler has no recognized gain or loss.
None of the above.
Question 10
Bev and Cabel each have 50% ownership in Finch Partnership. Bev s partnership interest has a basis of $225,000. Finch s taxable income for the current year is $100,000, and it distributes $180,000 to each partner. Bev s partnership interest basis at the end of the year is:
$0.
$45,000.
$95,000.
$100,000.
None of the above.
Question 11
Finch Corporation distributes property (basis of $225,000, fair market value of $300,000) to a shareholder in a distribution that is a qualifying stock redemption. The property is subject to a liability of $160,000, which the shareholder assumes. The basis of the property to the shareholder is:
$0.
$140,000.
$225,000.
$300,000.
None of the above.
Aug 29, 2021 | Uncategorized
|
1.(TCO A)IBM creates and sells additional stock to the investment banker, Morgan Stanley. Morgan Stanley then resells the issue to the U.S. public.Morgan Stanley is acting as a(n) _____. (Points : 10)
|
asset transformer
asset broker
government regulator
foreign service representative
|
|
2.(TCO A)An individual actually earned a 4% nominal return last year. Prices went up by 3% over the year. Given that the investment income was subject to a federal tax rate of 28% and a state, and local tax rate of 6%, what was the investor’s actual real after tax rate of return? (Points : 10)
|
-0.36%
0.66%
0.72%
1.45%
2.64%
=0.04 * [1 – (0.28 + 0.06)] – 0.03 = -.36%
|
|
3.(TCO B)The required rate of return on a bond is (Points : 10)
|
the interest rate that equates the current market price of the bond with the present value of all future cash flows received.
equivalent to the current yield for non par bonds.
less than the ERR for discount bonds and greater than the ERR for premium bonds.
inversely related to a bond s risk and coupon.
None of the above
|
|
4.(TCO B)Convexity arises because(Points : 10)
|
bond’s pay interest semiannually.
coupon changes are the opposite sign of interest rate changes.
duration is an increasing function of maturity.
present values are a nonlinear function of interest rates.
duration increases at higher interest rates.
|
|
5.(TCO B)Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10%. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B. Bank B lends out the full amount possible as well, and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks? (Points : 10)
|
$48.00 million
$54.20 million
$56.33 million
$57.10 million
$60.00 million
|
|
6.(TCO B) Recently, oil prices have risen in the U.S., generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand, they could (Points : 10)
|
intervene in the currency markets to push the value of the dollar down.
decrease the discount rate.
lower the target fed funds rate.
lower the target money supply growth rate.
reduce reserve requirements at banks.
|
|
7.(TCO C)A municipal bond is paying a 6% annual yield. An equivalent risk corporate bond is paying 7%. Investors with a tax rate of _____, or higher would prefer the municipal bond.(Points : 10)
|
65.13%
14.28%
25.00%
80.75%
25.75%
|
|
8.(TCO C)Loans past due 90 days or more, and loans that are not accruing interest because of problems of the borrower are called _____. (Points : 10)
|
loan losses
net charge-offs
provisional loans
noncurrent loans
contra loans
|
|
9.(TCO C)A construction firm cannot obtain the necessary permits to begin building a shopping mall until it can show it either has or will have the necessary funding to complete the project. The firm may ask a bank for which of the following to allow it to obtain the permits?
I. Commercial letter of credit
II. Loan commitment
III. Credit line
IV. Repurchase agreement (Points : 10)
|
I or II
II or III
II or IV
III or IV
I or IV
|
|
10.(TCO C)The reduction in deposit funds cost to an individual bank brought about by government insurance is an example of the _____. (Points : 10)
|
social benefit of regulation
private cost of regulation to DIs
private benefits of regulation to DIs
net regulatory burden
|
Aug 29, 2021 | Uncategorized
|
Question 1. 1. Corresponds to CLO 1(a)
On January 15, 2013, Talbot Corporation purchased a parcel of land as a factory site for $450,000. An old building on the property was demolished, and construction began on a new building which was completed on November 31, 2013. Salvaged materials resulting from the demolition were sold for $12,000. Costs incurred during this period included: Demolition of old building, $35,000, Architect’s fees, $15,000, Legal fees for title investigation and purchase contract, $7,000, and Construction costs, $1,000,000. Talbot should record the cost of the land and new building, respectively, as (Points : 7)
$450,000 and $1,000,000
$450,000 and $1,015,000
$480,000 and $1,015,000
$485,000 and $1,003,000
|
|
2. Corresponds to CLO 1(b)
Which of the following costs should be fully expensed in the period in which the expenditure is made? (Points : 7)
|
An outlay made to increase the efficiency of an existing plant asset.
An outlay made to maintain an existing asset in operating condition.
An outlay made to extend the useful life of an existing asset.
None of the above costs should be fully expensed immediately; all should be capitalized.
|
|
3. Corresponds to CLO 1(c)
On January 2, 2013, Apple Valley Produce began construction of a new processing plant. The plant was expected to be finished and ready for use on September 30, 2014. Expenditures for construction during 2013 were as follows:
January 2, 2013, $500,000,
July 1, 2013, $1,200,000,
and December 31, 2013, $1,000,000.
To fund this project, on January 2, 2013, Apple Valley borrowed $1,800,000 on a construction loan at 10% interest. This loan was outstanding during the construction period. The company also had $5,000,000 in 9% bonds outstanding in 2013. The interest capitalized for 2013 should be: (Points : 7)
|
$110,000
$118,333
$99,000
$180,000
|
|
4. On March 1, 2004, Tucker Corporation purchased a new machine for $355,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $19,000. The company has recorded monthly depreciation using the straight-line method. On July 1, 2013, the machine was sold for $45,000. What gain should be recognized from the sale of the machine? (Points : 7)
$21,333
$3,600
$2,800
$19,000
|
|
5. Corresponds to CLO 2(a)
On July 2, 2013, Peak Power Corporation purchased machinery for $80,000. Salvage value was estimated to be $5,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, Peak Power should record depreciation expense on this machinery for 2014 of (Points : 7)
|
$14,400
$13,500
$8,000
$7,500
|
|
6. Corresponds to CLO 2(b)
At the beginning of 2013, Brennan Corporation purchased a delivery truck for $80,000. The truck was estimated to have a useful life of 150,000 miles and a salvage value of $5,000. It was driven 33,000 miles in 2013 and 31,000 miles in 2014. What is the depreciation expense for 2014? (Points : 7)
|
$14,500
$15,500
$16,533
$17,600
|
Question 7. 7. Corresponds to CLO 2(c)
Volmer Corporation owns machinery with a book value of $425,000. It is estimated that the machinery will generate future cash flows of $325,000. The machinery has a fair value of $300,000. Volmer should recognize a loss on impairment of (Points : 7)
$125,000
$100,000
$25,000
$ -0-
|
8. Corresponds to CLO 2(d)
Plymouth Mining Corporation acquired, for $5,500,000, a tract of land containing an extractable natural resource. Geological surveys estimate that the recoverable reserves will be 1,000,000 tons. Plymouth is required by its purchase contract to restore the land at an estimated cost of $750,000. The land is expected to have a value of $1,250,000 after restoration. Plymouth maintains no inventories of extracted materials. What is the amount of depletion per ton? (Points : 7)
|
$5.75
$5.00
$4.50
$3.75
|
|
9. Corresponds to CLO 3(a)
Titan Corporation acquired a patent on September 28, 2013. Titan paid cash of $65,000 to the seller. Legal fees of $2,000 were paid related to the acquisition. At what amount should Titan record the patent on its books? (Points : 7)
|
$2,000
$63,000
$65,000
$67,000
|
|
10. Corresponds to CLO 3(b)
Hodgson Company’s December 31, 2014 balance sheet reports assets of $10,000,000 and liabilities of $4,500,000. All of Hodgson’s book values approximate their fair value, except for land, which has a fair value that is $500,000 greater than its book value. On December 31, 3014, Motley Corporation paid $11,000,000 to acquire Hodgson. What amount of goodwill should Motley record as a result of this purchase? (Points : 7)
|
$ -0-
$1,000,000
$5,000,000
$6,500,000
|
|
11. Corresponds to CLO 3(c)
Innovative Technologies, Inc. incurred research and development costs of $160,000 and legal fees of $36,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Innovative Technologies record as Patent Amortization Expense in the first year? (Points : 7)
|
$1,800
$3,600
$8,000
$19,600
|
|
12.
|
Stewart Company acquired Meyer Manufacturing on January 1, 2013 for $6,800,000 and recorded goodwill of $1,800,000 as a result of that purchase. At December 31, 2013, Meyer Manufacturing Division had a fair value of $4,600,000. The net identifiable assets of the Division, excluding goodwill, had a fair value of $3,200,000 at that time. What amount of loss on impairment of goodwill should Stewart record in 2013? (Points : 7)
|
$ -0-
$2,200,000
$1,400,000
$400,000
|
|
13. Corresponds to CLO 4(a)
Lillian Properties leased a building to Hopping Industries for a ten year term at an annual rental of $250,000. The lease began January 1, 2013, at which time Lillian received $1,000,000 covering the first two years’ rent of $500,000 and a security deposit of $500,000. The deposit will not be returned to Hopping upon expiration of the lease, but will be applied to payment of rent for the last two years of the lease. What portion of the $1,000,000 should be shown as current and long-term liabilities, respectively, in Lillian’s December 31, 2013 balance sheet?
(Answers shown with Current Liabilities listed first, Long-term Liabilities listed second. ) (Points : 7)
|
$500,000 $500,000
$250,000 $500,000
$500,000 $250,000
$ -0- $1,000,000
|
|
14. Corresponds to CLO 4(b)
When is a contingent liability recorded? (Points : 7)
|
When the occurance of future events is probable and the amount can be reasonably estimated.
When the occurance of future events is possible and the amount can be reasonably estimated.
When the amount can be reasonably estimated.
When the occurance of future events is probable.
|
|
15. Corresponds to CLO 4(c)
On January 1, 2014, Huntington Corporation issued eight year bonds with a face value of $6,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are:
What is the issue price of the bonds?
(Points : 7)
|
$5,301,360
$5,308,920
$5,520,000
$6,742,800
|
|
16. Corresponds to CLO 4(d)
On December 31, 2013, the 11% bonds payable of Goodly Corporationhad a carrying amount of $2,040,000. The bonds, which had a face value of $2,000,000 were issued at a premium to yield 10%. Goodly uses the effective-interest method of amortization. Interest is paid on June 30 and December 31. On July 1, 2014, several years before their maturity, Goodly retired the bonds at 103. The interest payment on June 30, 2014 was made as scheduled. The loss on retirement, ignoring taxes, is (Points : 7)
|
$40,000
$28,000
$20,000
$ -0-
|
|
17. Corresponds to CLO 5(a)
Generally accepted accounting principles require the following treatment of leases: (Points : 7)
|
Companies should capitalize leases that are similar to installment purchases.
Companies should never capitalize leases.
Companies should capitalize all long-term leases.
Companies should capitalize all leases.
|
|
Question 18. 18. Corresponds to CLO 5(b)
On January 1, 2013, Martin Corporation signed a ten-year noncancelable lease for machinery. The terms of the lease called for Martin to make annual payments of $250,000 at the end of each year for ten years with title to pass to Martin at the end of this period. The machinery has an estimated useful life of 20 years and no salvage value. Martin uses the straight-line method of depreciation for all of its fixed assets. Martin accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,840,023 at an effective interest rate of 6%. With respect to this capitalized lease, Martin should record for 2013: (Points : 7)
|
Depreciation expense of $184,002 and interest expense of $150,000.
Depreciation expense of $92,001 and interest expense of $110,401.
Depreciation expense of 184,002 and interest expense of $110,401.
Lease expense of $250,000.
|
|
Question 19. 19. Corresponds to CLO 5(c)
On December 31, 2014, Pacific Rail Corporation leased a train car from Southern Transportation Company for a ten year period expiring December 30, 2024. Equal annual payments of $160,000 are due on December 31 of each year, beginning with December 31, 2014. The lease is properly classified as a capital lease on Pacific Rail’s books. The present value at December 31, 2013 of the ten lease payments over the lease term discounted at 8% is $1,159,502. Assuming the first payment is made on time, the amount that should be reported by Pacific Rail Corporation as the lease liability on its December 31, 2014 balance sheet is (Points : 7)
|
$1,440,000
$1,159,502
$1,066,742
$999,502
|
Question 20. 20. Corresponds to CLO 5(d)
Colfax Corporation enters into an agreement with Reynolds Rentals on January 1, 2014 for the purpose of leasing a machine to be used in its manufacturing operations. The term of the noncancelable lease is 4 years with no renewal option. Payments of $200,000 are due on December 31 of each year. The fair value of the machine on January 1, 2014, is $700,000. The machine has a remaining economic life of 10 years, with no salvage value. The machine reverts to the lessor upon termination of the lease. Colfax Corporation’s incremental borrowing rate is 8% per year. Colfax does not have knowledge of the 6% implicit rate used by Reynolds. The factor for the present value of an ordinary annuity of 1, for 4 periods at 8% is 3. 31213. The factor for the present value of an ordinary annuity of 1, for 4 periods at 6% is 3. 46511. What type of lease is this from Colfax Corporation’s point of view? (Points : 7)
|
Capital lease
Operating lease
Sales-type lease
Direct-financing lease
|
|
Question 21. 21. Corresponds to CLO 6(a)
Roberts Corporation has 100,000 shares of $10 par common stock authorized. The following transactions took place during 2013, the first year of the corporation’s existence:
Sold 10,000 shares of common stock for $14 per share
Issued 20,000 shares of common stock in exchange for legal services valued at $300,000
At the end of Roberts’ first year, total paid-in capital amounted to (Points : 7)
|
$100,000
$140,000
$300,000
$440,000
|
|
|
22. Corresponds to CLO 6(b)
On June 15, Handel Corporation reacquired 10,000 shares of its $10 par value common stock for $19 per share. Handel uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit (Points : 7)
|
Common Stock for $100,000
Common Stock for $100,000 and Paid-in Capital in Excess of Par for $90,000
Treasury Stock for $190,000
Treasury Stock for $100,000
|
|
23. Corresponds to CLO 6(c)
The fair value of Willow Company’s common stock was $57 per share at December 31, 2013 and $64 per share at December 31, 2014. Willow acquired 10,000 shares of its own common stock at $60 per share on March 10, 2014, and sold 6,000 of these shares at $65 per share on September 25, 2014. Willow Company uses the cost method to account for treasury stock. The journal entry to record the sale of the treasury stock should credit (Points : 7)
|
Treasury Stock for $360,000and Paid-in Capital from Treasury Stock for $30,000
Treasury Stock for $342,000 and Retained Earnings for $48,000
Treasury Stock for $360,000 and Retained Earnings for $30,000
Treasury Stock for $390,000
|
|
Question 24. 24. Corresponds to CLO 6(d)
Under GAAP, preferred stock with which of the following features should be reported as a liability on the balance sheet: (Points : 7)
|
Convertible
Noncumulative
Redeemable
Callable
|
25. Corresponds to CLO 7(a)
Farnsworth Inc. declared a $500,000 cash dividend. It currently has 10,000 shares of 8%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Farnsworth distribute to the common stockholders? (Points : 7)
|
$420,000
$500,000
$160,000
$340,000
|
|
26. Corresponds to CLO 7(b)
Weston Corporation owned 80,000 shares of Brandt Corporation, purchased in 2008 for $320,000. On December 20, 2013, Weston declared a property dividend of all of its Brandt Corporation shares on the basis of one share of Brandt for every 10 shares of Weston common stock held by its shareholders. The property dividend was distributed on January 10, 2014. On the declaration date, the aggregate market price of the Brandt Corporation shares held by Weston was $610,000. The entry to record the declaration of the dividend would include a debit to Retained Earnings (property dividends declared) of (Points : 7)
|
$320,000
$610,000
$290,000
$ -0-
|
|
27. Corresponds to CLO 7(c)
Harping Corporation declared an $800,000 dividend, $200,000 of which was liquidating. How would this distribution affect Retained Earnings and Additional Paid-in Capital, respectively?
(Answer is shown with Retained Earning listed first, Additional Paid-in Capital listed second. ) (Points : 7)
|
No effect $800,000 Decrease
$800,000 Decrease No effect
$600,000 Decrease $200,000 Decrease
Noeffect No effect
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Question 28. 28. Corresponds to CLO 7(d)
After several profitable years, Pear Corporation’s stock price had increased by 20-fold. Management prefers the stock price to be within range of the majority of potential investors, and on June 30, 2013, split its stock 4-for-1. Prior to the split, Pear’s stockholders’ equity section showed: Common Stock, 1,000 shares at $100 par. After the split, Pear’s stockholders’ equity section showed: (Points : 7)
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Common stock, 1,000 shares at $400 par
Common stock, 250 shares at $400 par
Common stock, 4,000 shares at $100 par
Common stock, 4,000 shares at $25 par
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Aug 29, 2021 | Uncategorized
- Next year’s annual dividend divided by the current stock price is called the:
(a) yield to maturity.
(b) total yield.
(c) dividend yield.
(d) capital gains yield.
(e) earnings yield.
2. Payments made by a corporation to its shareholders, in the form of either
cash, stock or payments in kind, are called:
(a) retained earnings.
(b) net income.
(c) dividends.
(d) redistributions.
(e) infused equity.
3. The excess return required from a risky asset over that required from a risk-free asset is called the:
(a) risk premium.
(b) geometric premium.
(c) excess return.
(d) average return.
(e) variance.
4. A stock had returns of 8 percent, -2 percent, 4 percent, and 16 percent over
the past four years. What is the standard deviation of this stock for the past
four years?
(a) 6.3 percent
(b) 6.6 percent
(c) 7.1 percent
(d) 7.5 percent (Based on Sample. If we wont to calculate based on Population its 6.5%)
(e) 7.9 percent
5. Nuvo, Inc. stock has a beta of .86 and an expected return of 10.5 percent.
The risk-free rate of return is 3.2 percent and the market rate of return is 11.2 percent. Which one of the following statements is true given this information?
(a) The return on Nuvo stock will graph below the Security Market Line.
(b) Nuvo stock is underpriced.
(c) The expected return on Nuvo stock based on the Capital Asset Pricing
Model is 9.88 percent.
(d) Nuvo stock has more systematic risk than the overall market.
(e) Nuvo stock is correctly priced.
6. The common stock of Flavorful Teas has an expected return of 14.4 percent.
The return on the market is 10 percent and the risk-free rate of return is 3.5
percent. What is the beta of this stock?
(a) 0.65
(b) 1.09
(c) 1.32
(d) 1.44
(e) 1.68
7. An investment is acceptable if its IRR:
(a) is exactly equal to its net present value (NPV).
(b) is exactly equal to zero.
(c) is less than the required return.
(d) exceeds the required return.
(e) is exactly equal to 100 percent.
8. A project costing $20,000 generates cash inflows of $9,000 annually for the
rst 3 years, followed by cash out
ows of $1,000 annually for 2 years. At
most, this project has different IRR(s).
(a) one
(b) two
(c) three
(d) Five
9. Which of the following stocks is (are) incorrectly priced if the risk-free rate is 4% and the market risk premium is 6%?
Stock A B C
Beta 1.25 .80 1.06
Expected Return 12.6% 8.8% 11.2%
(a) A only
(b) B only
(c) C only
(d) A and C only
(e) A, B, and C
10. The standard deviation of a portfolio that contains all securities in the market will equal:
(a) Zero.
(b) One.
(c) The portfolio beta.
(d) The systematic risk.
(e) The risk premium of the portfolio.
11. The internal rate of return on a project is 11.24%. Choose the TRUE state-
ment(s) if the project has a Required Rate of Return (RRR) of 9.5%? (Cash flows are conventional.)
I. Both NPV > 0 and IRR > RRR
II. IRR > RRR.
III. NPV > 0.
IV. IRR > RRR but there is not enough information to determine if
NPV > 0 or if NPV
(a) I, II and III are the only true statements.
(b) II and IV are the only true statements.
(c) II is the only true statement.
(d) IV is the only true statement.
(e) All of the statements are true.
3
12. The principle of diversification states that spreading an investment over a
number of assets will eliminate:
(a) All of the risk.
(b) All of the systematic risk and part of the unsystematic risk.
(c) All of the unsystematic risk and part of the systematic risk.
(d) The systematic risk.
(e) The unsystematic risk.
13. Suppose you observe the following situation:
Beta Expected Return
Pete Corp. 1.3 24%
Repeat Corp 0.65 13%
Assume these securities are correctly priced. Based on the CAPM, what is
the market risk premium?
(a) 14.9%
(b) 2.9%
(c) 16.9%
(d) 4.9%
(e) 17.9%
The following is for problems 13-15. A stock has a beta of 1.3 and an expected return of 17%. The market portfolio currently earns 12%.
14. What is the expected return on a portfolio that is equally invested in the two
assets? (The stock and the market portfolio).
(a) 14.5%
(b) 13.5%
(c) 12%
(d) 17%
(e) 16.5%
15. If a portfolio of the two assets has a beta of 0.80 what is the portfolio weights
on the stock?
(a) 2/3
(b) -2/3
(c) 1/3
(d) 23/45
(e) -23/45
16. If a portfolio of the two assets has an expected return of 10% what is it’s
beta? (If you found a negative risk-free rate you are on the right track)
(a) 0.78
(b) 0.88
(c) 1.08
(d) 1.18
(e) 3.54
17. Analyzing a Portfolio. You have to invest in a portfolio containing Stock X,
Stock Y, and a risk free asset. You must invest all of you money. Your goal
is to create a portfolio that has an expected return of 13% and that has only
80% of the risk of the overall market. If X has an expected return of 31%
and a beta of 1.8. Y has an expected return of 20% and a beta of 1.3 and
the risk free rate is 7%, what is the portfolio weight on X?
(a) 2/3
(b) -2/3
(c) 2/6
(d) -2/6
(e) -0.237
18. Efficient portfolios are those that are :
(a) Highest expected return for a given level of risk
(b) Highest risk for a given level of expected return
(c) The maximum risk and expected return
(d) All of the above
19. A project anticipates net cash flows of $10,000 at the end of year 1, with such amount growing at the expected 5% rate of inflation over the subsequent 4
years. Calculate the real present value of this 5-year cash stream if the rm
employs a nominal discount rate of 15%.
(a) $33,522
(b) $38,377
(c) $43,294
(d) $55,000
20. Arm generates sales of $250,000, depreciation expense of $50,000, taxable income of $50,000, and has a 35% tax rate. By how much does net cash flow deviate from net income?
(a) $17,500
(b) $50,000
(c) $67,500
(d) $82,500
21. How does net working capital a effect the NPV of a 5-year project if working capital is expected to increase by $25,000 and the rm has a 15% cost of
capital?
(a) NPV will increase by $9,322.
(b) NPV will increase by $12,571.
(c) NPV will decrease by $25,000.
(d) NPV will decrease by $12,571.
22. A parcel of corporate land was recently dedicated as the new plant site. Whatcost allocation should the land receive, based on the following: original cost of $200,000, market value of $300,000, net book value of $200,000, a recent oer to purchase for $250,000.
(a) $200,000
(b) $250,000
(c) $275,000
(d) $300,000
23. New projects or products can have an indirect effect on the rm as well as
a direct effect. Which of the following appears to be an indirect effect of
launching a new product?
(a) Additional working capital is required.
(b) Sales force will need to be increased.
(c) Sales of a similar product of your
rm’s will decline.
(d) Additional machinery must be purchased.
24. Mr. Hopper is expected to retire in 28 years and he wishes accumulate
$750,000 in his retirement fund by that time. If the interest rate is 10%
per year, how much should Mr. Hopper put into the retirement fund at the
end of each year in order to achieve this goal?
(a) $4,559.44
(b) $5,588.26
(c) $9,118.88
(d) $10,018.67
25. What is the monthly mortgage payment on a $150,000 mortgage for 30 years
an APR 5.85%?
(a) $784.71
(b) $805.65
(c) $884.91
(d) $925.64
26. The present value of a $2.50 dividend received at the end of this year that
grows at 4% forever given a cost of capital of 12% is worth how much today?
(a) $20.83
(b) $62.50
(c) $54.23
(d) $31.25
27. You would like to have enough money saved to receive a $100,000 per year
perpetuity after retirement so that you and your family can lead a good life.
How much would you need to save in your retirement fund to achieve this
goal (assume that the perpetuity payments start one year from the date of
your retirement. The interest rate is 10%)?
(a) $1,000,000
(b) $10,000,000
(c) $100,000
(d) None of the above
28. Sam’s Company expects to pay a dividend of $6 per share at the end of year one, $9 per share at the end of year two and then be sold for $136 per share.
If the required rate on the stock is 20%, what is the current value of the
stock?
(a) $100.10
(b) $105.69
(c) $110.00
(d) $120.29
29. Which of the following is the likely price on a bond that has a current price
of $1,100 when interest rates rise?
(a) $1,050
(b) $1,100
(c) $1,225
(d) Can not be determined
30. What is the expected YTM on a bond that pays a $15 coupon annually has
a $1,000 par value, and matures in 6 years if the current price of the bond is
$978?
(a) 1.89%
(b) 3.67%
(c) 9.78%
(d) 15.00%
Aug 29, 2021 | Uncategorized
A company has $56,000 in cash; $12,000 in accounts receivable; $25,000 in short-term investments; and $100,000 in merchandise inventory. The company also has $60,000 in current liabilities. The company’s quick ratio is
A.3.217.
B.1.550.
C.0.933.
D.1.133.
Patty’s Baker has cost of goods sold for the years 2011, 2010, and 2009, respectively, of $28,600, $26,900, and $25,600. If 2009 is the base year, the trend percentage for 2011 is
A.11.72%.
B.111.72%.
C.5.08%.
D.105.08%.
If total assets are $6,000, what is the common-size figure of cash, assuming that cash has a balance of $2,400?
A.100.0%
B.40.0%
C.120.0%
D.60.0%
Operating cash flows affect
A.current assets and current liabilities.
B.equity accounts.
C.long-term liability accounts.
D.long-term asset accounts.
If current assets were $100,000 in 2009 and $88,000 in 2010, what was the amount of increase or decrease in percentage terms from 2009 to 2010? (Round to the nearest percent.)
A.Increase of 14%
B.Increase of 12%
C.Decrease of 12%
D.Decrease of 14%
Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, and an accounts payable turnover of 40 days. Casey’s cash conversion cycle is _______ day(s).
A.81
B.1
C.73
D.153
Casey Company has 5,000 shares of treasury cost that it purchased for $13 per share. It later resold 2,000 of those shares for $17 per share. The amount to be credited to Paid-in Capital Treasury Stock is
A.$30,000.
B.$8,000.
C.$34,000.
D.$26,000.
Isaiah Corporation’s Accounts Receivable increased by $35,000, and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?
A. $18,000
B. $53,000
C.+$17,000
D.+$35,000
Operating expenses other than depreciation for the year were $335,000. Prepaid expenses decreased by $7,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be
A.$342,000.
B.$328,000.
C.$7,000.
D.$335,000.
For vertical analysis purposes, the base item on the income statement is
A.net income.
B.total expenses.
C.gross profit.
D.net sales.
Casey Company has a $2,400 credit balance in Paid-In Capital Treasury Stock. It sells 500 shares of treasury stock that the company reacquired at $21/share, for $18/share. After the transaction, what will the balance be in the Paid-In Capital in Excess of Par Treasury account?
A.$900 credit B.$3,900 credit C.$900 debit D.$1,500 debit
Ryan Industries has an inventory turnover of 112 days, an accounts payable turnover of 73 days, and an accounts receivable turnover of 82 days. Ryan’s cash conversion cycle is _______ days.
A.43
B.121
C.9
D.103
The Isaiah Corporation Stockholders’ Equity section includes the following information:
Preferred Stock
Paid-in Capital in Excess of Par Preferred Common Stock
Paid-in Capital in Excess of Par Common Retained Earnings
$22,000 2,980 48,000 3,400 7,350
Total par value of the preferred and common stock is
A.$70,000.
B.$83,730.
C.$77,350.
D.$76,380.
Earnings that a stockholder receives from a corporation are an example of which stockholder right? A.Preemption
B.Liquidation
C.Dividends
D.Vote
Tammy Corporation has 350,000 shares of $3 par common stock outstanding. It has declared a 5% stock dividend. The current market price of the common stock is $7.50/share. The amount that will be debited to retained earnings on the date of declaration is
A.$78,750.
B.$131,250.
C.$52,500.
D.$183,750.
Accounts receivable amounted to $215,000 at the beginning of the year and $245,000 at the end of the year. Income reported on the income statement for the year was $300,000. The cash flow from operating activities on the cash flow statement using the indirect method is
A.$315,000.
B.$300,000.
C.$270,000.
D.$330,000.
What are the rate of return on stockholders’ equity and the rate of return on common stockholders’ equity (rounded to the nearest one-tenth of a percent) given the following information:
Net Income
Preferred Dividends
Common Stock
Common Stockholders Equity 1/1/2011 4,400,000 Total Stockholders Equity 1/1/2011 5,300,000 Total Stockholders Equity 12/31/2011 5,500,000
A.Return on Stockholders’ Equity: 6.5 %; Return on Common Stockholders’ Equity: 7.6%
B.Return on Stockholders’ Equity: 7.8 %; Return on Common Stockholders’ Equity: 8.9%
C.Return on Stockholders’ Equity: 5.6 %; Return on Common Stockholders’ Equity: 6.7% D.Return on Stockholders’ Equity: 8.1 %; Return on Common Stockholders’ Equity: 9.2%
What is the rate of return on common stockholders’ equity if sales are $100,000, net income is $22,700, and average common stockholders’ equity is $86,000?
A.The rate of return can’t be determined from the information given.
B.26.4%
C.22.7%
D.86.0%
If you own 500 shares (2% of a corporation’s stock) and the corporation issues 15,000 new shares, how many of the new shares can you purchase under preemptive right?
A.0
B.300
C.500
D.800
Which activities are computed differently using the two methods of formatting a statement of cash flows?
A.Operating activities
B.Both operating activities and investing activities
C.Investing activities
D.Financing activities
Aug 29, 2021 | Uncategorized
Question 1 of 20 5.0 Points
When a speaker seeks to explain or illustrate a process, she or he is probably speaking to:
A. inform.
B. persuade.
C. entertain.
D. celebrate.
Question 2 of 20 5.0 Points
When the theme of a speech is, Be all you can be. Join the Navy, it is meant to:
A. entertain.
B. inform.
C. celebrate.
D. persuade.
Question 3 of 20 5.0 Points
A purpose is to have any of the following EXCEPT:
A. an objective.
B. a goal.
C. an intention.
D. a bad dream.
Question 4 of 20 5.0 Points
One of the primary jobs of an informative speech is to:
A. appeal to the emotions of the audience.
B. ask them to do something with the information.
C. communicate information accurately and clearly.
D. entertain the audience.
Question 5 of 20 5.0 Points
Patrick Henry s famous speech carries the theme give me liberty or give me death. This is a speech about:
A. events.
B. processes.
C. concepts.
D. objects.
Question 6 of 20 5.0 Points
When Elizabeth made a speech presentation demonstrating how to create an effective PowerPoint Presentation, her speech is about:
A. events.
B. processes.
C. concepts.
D. objects.
Question 7 of 20 5.0 Points
When speaking about abstract concepts, make them concrete to the audience by:
A. defining, describing, illustrating.
B. using jargon.
C. knowing their level of understanding.
D. none of the above.
Question 8 of 20 5.0 Points
Which of the following is NOT true about persuasive speaking compared to informative speaking?
A. Involves more emotional appeal.
B. Asks for commitment from the audience.
C. Impartial point of view.
D. Emotion-evoking language.
Question 9 of 20 5.0 Points
Credibility in Public Speaking is what Aristotle refers to as:
A. ethos.
B. pathos.
C. logos.
D. mythos.
Question 10 of 20 5.0 Points
Dr. Martin Luther King s I Have a Dream speech is an example of a(n) __________ speech.
A. informative
B. persuasive
C. commemorative
D. entertaining
Question 11 of 20 5.0 Points
The three Ps of persuasive speech address the issues of:
A. plus, minus, plan.
B. persons, people, perfection.
C. problem, plan, practicality.
D. purpose, people, plans.
Question 12 of 20 5.0 Points
To persuade my audience that drinking and driving laws should be stricter aims for:
A. passive agreement with a policy.
B. active agreement with a policy.
C. personal action to support a policy.
D. personal agreement to support a policy.
Question 13 of 20 5.0 Points
To persuade my classmates that cheating in an exam is just as wrong as plagiarism is a:
A. question of fact.
B. question of policy.
C. question of value.
D. question of guessing.
Question 14 of 20 5.0 Points
The process of changing people s beliefs or actions is called:
A. public relations.
B. public speaking.
C. persuasion.
D. public communication.
Question 15 of 20 5.0 Points
In persuasive speaking, the speaker is:
A. a teacher.
B. an adviser.
C. a leader.
D. an actor.
Question 16 of 20 5.0 Points
In public speaking, the process of drawing a conclusion based on evidence is called:
A. estimating.
B. research.
C. concluding.
D. reasoning.
Question 17 of 20 5.0 Points
When asked to speak to celebrate your best friend s wedding, your speech should be:
A. dedication.
B. toast.
C. roast.
D. commemoration.
Question 18 of 20 5.0 Points
When President Obama spoke at the 2009 graduation ceremony at the University of Notre Dame, he delivered a:
A. commemorative speech.
B. dedication speech.
C. commencement speech.
D. toast to the graduates.
Question 19 of 20 5.0 Points
Speeches of tribute are intended to do all of the following EXCEPT:
A. express feelings.
B. inspire the audience.
C. arouse sentiments.
D. describe an object.
Question 20 of 20 5.0 Points
This type of speech should be relatively brief.
A. Introduction
B. Presentation
C. Acceptance
D. Commencement
Aug 29, 2021 | Uncategorized
Question 1
If the coupon rate is less than the yield to maturity, the bond will:
Answer sell at a premium sell at par sell at a discount . 1 points Question 2
ABC Inc. issued sixteen-year, 6 percent semi-annual coupon bonds at par. Today, the bonds are priced at $1012. What is the firm s after-tax cost of debt if the tax rate is 30%?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer . 1 points Question 3
An investor puts $20,000 in a risk-free asset and $40,000 in the market portfolio. Compute the beta of his portfolio.
Answer 0.33 0.67 2 1 0.50 . 1 points Question 4
ABC Company’s last dividend was $0.8. The dividend growth rate is expected to be constant at 6% for 3 years, after which dividends are expected to grow at a rate of 3% forever. The firm’s required return (rs) is 10%. What is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer . 1 points Question 5
If you receive $1,746 at the end of each year for the first three years and $8,525 at the end of each year for the next three years. What is the net present value of this cash flow stream? Assume interest rate is 13.9%.
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer . 1 points Question 6
You want to create a portfolio as risky as the market. Suppose you invest your money in Stocks A, B, C, and the risk-free asset. Compute your investment in Stock C (i.e. solve for weight of Stock C)?
Stock Weights Beta
A 17 1.3
B 29 0.5
C ? 1.8
Rf ? ?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer . 1 points Question 7
What is the future value of $203 at 9% after 12 years?
Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
Answer . 1 points Question 8
Suppose that today’s stock price is $36.5. If the required rate on equity is 18.7% and the growth rate is 5.2%, compute the expected dividend (i.e. compute D1)
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer . 1 points Question 9
The ABC Co. has $1,000 face value stock outstanding with a market price of $1,081. The stock pays interest annually, matures in 18 years, and has a yield to maturity of 8.5 percent. What is the annual coupon amount?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer . 1 points Question 10
The nominal rate is 16% compounded monthly. Compute the effective rate.
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer . 1 points Question 11
You have observed the following returns on ABC’s stocks over the last six years:
3.1%, 6.2%, 13.5%, -6.3%, 11.9%, -7.7%
What is the geometric average returns on the stock over this six-year period.
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
Answer . 1 points Question 12
You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.93. What does the beta of the second stock have to be if you want the portfolio to have a beta of 0.61?
Enter your answer rounded off to two decimal points.
Answer . 1 points Question 13
Suppose a stock had an initial price of $16.3 per share, paid a dividend of $2.4 per share during the year, and had an ending share price of $20.9. What are the percentage returns if you own 22 shares?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
Answer . 1 points Question 14
The beta of the risk-free asset is: Answer 0
1
1.5
2
Aug 29, 2021 | Uncategorized
Principles of Accounting 2
1) Issued stock is:
A) Authorized shares of stock that can be sold.
B) Stock only sold to another company
C) Shares sold and in stockholders possession
D) Stock sold to stockholders.
2) In the statement of cash flows, which event would cause net income to be increased?
A) A decrease in Inventory
B) An increase in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
3) Finished Goods Inventory appears on which of the following statements on the worksheet?
A) Statement of cost of goods manufactured and income statement
B) Statement of cost of goods manufactured and balance sheet
C) Income statement and balance sheet
D) Income statement and cost of goods sold statement
4) One reason a corporation might issue bonds rather than sell stock is that:
a. Bond interest is a tax-deductible expense
b. Interest rates are high
c. Dividends will lower the amount of tax due
d. Bondholders have claims at liquidation
5) For a corporation, bond interest:
a. Is treated the same as dividends for tax purposes.
b. Has no effect on earnings and therefore has no effect on income taxes
c. Reduces income tax by reducing earning
d. None of the above
6) Dividends paid to stockholders area:
a. Taxable to the recipient stockholder
b. Taxable to the corporation
c. Treated the same as bond interest
d. None of the above
7) If beginning and ending inventories are $20,000 and $30,000, respectively, and cost of goods sold is $400,000, what is the inventory turnover ratio?
a. 18
b. 16
c. 15.5
d. 15
8) Declaration of a cash dividend causes:
a. An increase in stockholders equity
b. An increase in cash
c. An increase in liabilities
d. None of the above
9) The current ratio is:
a) Quick assets divided by current liabilities.
b) Assets divided by liabilities
c) Current assets divided by current liabilities
d) Net sales divided by current liabilities.
10)When the contract rate of interest on bonds is equal to the market rate of interest, bonds sell at:
a. A premium
b. Their face value
c. Their maturity rate
d. A discount
Principles of Finance
1) Of the following, which is NOT one of the four main areas of finance?
a. International finance
b. Corporate finance
c. Investments
d. All are considered main areas of finance.
2) ______________ is a major disadvantage of the corporate form of business.
a) Double taxation
b) Unlimited liability
c) Lack of ability to raise capital
d) Transfer of ownership
3) Everything else equal, an industry with more leverage will have a:
a. Higher return on assets
b. Higher return on equity
c. Lower return on equity
d. Both A & B
4) If you can earn 5.25% per year on your investments, how long will it take to double your money?
a. 6.31 years
b. 19.05 years
c. 13.55 years
d. There is not enough information to answer this question.
5) Travis bought a share of stock for $31.50 that paid a dividend of $.85 and sold six months later for $27.65. What was his dollar profit or loss and holding period return?
a. -$3.00, -9.52%
b. -$3.85, -12.22%
c. -$.85, -2.70%
d. -$3.85, -9.52%
6) If you were required to estimate the average return for one category of securities for the coming year, history tells us that you should have the greatest degree of confidence estimating which of the following?
a. Long-term government bonds
b. 3-month U.S. Treasury bills
c. Small-company stocks
d. Large-company stocks
7) Which of the following are not considered a part of the firm s capital structure?
a. Long-term debt
b. Retained earnings
c. Inventory
d. Preferred stock
8) Which of the following choices lists the least to most aggressive actions in the pursuit of overdue debt?
a. 1) A collection agency, 2) court action, 3) a letter requesting overdue payment
b. 1) Court action, 2) a collection agency, 3) a letter requesting overdue payment
c. 1) A letter requesting overdue payment, 2) count action, 3) a collection agency
d. 1) A letter requesting overdue payment, 2) a collection agency, 3) court action
9) John is in a high income-tax bracket and wishes to minimize current taxes payable. He also has a sizeable current income and prefers high growth rates to significant annual cash flow from his equity investments. Which of the following dividend polices would John most likely prefer if we assume that the dividend policy has no impact on the value of the firm and that the gains tax rate is lower than the ordinary tax rate?
a. High-dividend-payout policy
b. No-dividend-payout policy
c. Low-dividend-payout policy
d. John would be indifferent to all of the dividend policies
10) Which of the following would NOT be considered a cost of debt financing?
a. The required return on a bank loan
b. The required return on preferred stock
c. The yield-to-maturity of a bond issue
d. The required return on money borrowed from a venture capitalist.
Aug 29, 2021 | Uncategorized
1. Next year’s annual dividend divided by the current stock price is called the:
(a) yield to maturity.
(b) total yield.
(c) dividend yield.
(d) capital gains yield.
(e) earnings yield.
2. Payments made by a corporation to its shareholders, in the form of either
cash, stock or payments in kind, are called:
(a) retained earnings.
(b) net income.
(c) dividends.
(d) redistributions.
(e) infused equity.
3. The excess return required from a risky asset over that required from a risk-
free asset is called the:
(a) risk premium.
(b) geometric premium.
(c) excess return.
(d) average return.
(e) variance.
4. A stock had returns of 8 percent, -2 percent, 4 percent, and 16 percent over
the past four years. What is the standard deviation of this stock for the past
four years?
(a) 6.3 percent
(b) 6.6 percent
(c) 7.1 percent
(d) 7.5 percent
(e) 7.9 percent
5. Nuvo, Inc. stock has a beta of .86 and an expected return of 10.5 percent.
The risk-free rate of return is 3.2 percent and the market rate of return is 11.2
percent. Which one of the following statements is true given this information?
(a) The return on Nuvo stock will graph below the Security Market Line.
(b) Nuvo stock is underpriced.
(c) The expected return on Nuvo stock based on the Capital Asset Pricing
Model is 9.88 percent.
(d) Nuvo stock has more systematic risk than the overall market.
(e) Nuvo stock is correctly priced.
6. The common stock of Flavorful Teas has an expected return of 14.4 percent.
The return on the market is 10 percent and the risk-free rate of return is 3.5
percent. What is the beta of this stock?
(a) 0.65
(b) 1.09
(c) 1.32
(d) 1.44
(e) 1.68
7. An investment is acceptable if its IRR:
(a) is exactly equal to its net present value (NPV).
(b) is exactly equal to zero.
(c) is less than the required return.
(d) exceeds the required return.
(e) is exactly equal to 100 percent.
8. A project costing $20,000 generates cash inows of $9,000 annually for the
_rst 3 years, followed by cash outows of $1,000 annually for 2 years. At
most, this project has di_erent IRR(s).
(a) one
(b) two
(c) three
(d) _ve
9. Which of the following stocks is (are) incorrectly priced if the risk-free rate is
4% and the market risk premium is 6%?
Stock A B C
Beta 1.25 .80 1.06
Expected Return 12.6% 8.8% 11.2%
(a) A only
(b) B only
(c) C only
(d) A and C only
(e) A, B, and C
10. The standard deviation of a portfolio that contains all securities in the market
will equal:
(a) Zero.
(b) One.
(c) The portfolio beta.
(d) The systematic risk.
(e) The risk premium of the portfolio.
11. The internal rate of return on a project is 11.24%. Choose the TRUE state-
ment(s) if the project has a Required Rate of Return (RRR) of 9.5%? (Cash
ows are conventional.)
I. BothNPV >0andIRR > RRR
II.IRR > RRR.
III.NPV >0.
IV.IRR > RRRbut there is not enough information to determine if
NPV >0or ifNPV
(a) I, II and III are the only true statements.
(b) II and IV are the only true statements.
(c) II is the only true statement.
(d) IV is the only true statement.
(e) All of the statements are true.
12. The principle of diversi_cation states that spreading an investment over a
number of assets will eliminate:
(a) All of the risk.
(b) All of the systematic risk and part of the unsystematic risk.
(c) All of the unsystematic risk and part of the systematic risk.
(d) The systematic risk.
(e) The unsystematic risk.
13. Suppose you observe the following situation:
Beta Expected Return
Pete Corp. 1.3 24%
Repeat Corp 0.65 13%
Assume these securities are correctly priced. Based on the CAPM, what is
the market risk premium?
(a) 14.9%
(b) 2.9%
(c) 16.9%
(d) 4.9%
(e) 17.9%
The following is for problems 13-15. A stock has a beta of 1.3 and an expected
return of 17%. The market portfolio currently earns 12%.
14. What is the expected return on a portfolio that is equally invested in the two
assets? (The stock and the market portfolio).
(a) 14.5%
(b) 13.5%
(c) 12%
(d) 17%
(e) 16.5%
15. If a portfolio of the two assets has a beta of 0.80 what is the portfolio weights
on the stock?
(a) 2/3
(b) -2/3
(c) 1/3
(d) 23/45
(e) -23/45
16. If a portfolio of the two assets has an expected return of 10% what is it’s
beta? (If you _nd a negative risk-free rate you are on the right track)
(a) 0.78
(b) 0.88
(c) 1.08
(d) 1.18
(e) 3.54
17. Analyzing a Portfolio. You have to invest in a portfolio containing Stock X,
Stock Y, and a risk free asset. You must invest all of you money. Your goal
is to create a portfolio that has an expected return of 13% and that has only
80% of the risk of the overall market. If X has an expected return of 31%
and a beta of 1.8. Y has an expected return of 20% and a beta of 1.3 and
the risk free rate is 7%, what is the portfolio weight on X?
(a) 2/3
(b) -2/3
(c) 2/6
(d) -2/6
(e) -0.237
18. E_cient portfolios are those that o_er:
(a) Highest expected return for a given level of risk
(b) Highest risk for a given level of expected return
(c) The maximum risk and expected return
(d) All of the above
19. A project anticipates net cash ows of $10,000 at the end of year 1, with such
amount growing at the expected 5% rate of ination over the subsequent 4
years. Calculate the real present value of this 5-year cash stream if the _rm
employs a nominal discount rate of 15%.
(a) $33,522
(b) $38,377
(c) $43,294
(d) $55,000
20. A _rm generates sales of $250,000, depreciation expense of $50,000, taxable
income of $50,000, and has a 35% tax rate. By how much does net cash ow
deviate from net income?
(a) $17,500
(b) $50,000
(c) $67,500
(d) $82,500
21. How does net working capital a_ect the NPV of a 5-year project if working
capital is expected to increase by $25,000 and the _rm has a 15% cost of
capital?
(a) NPV will increase by $9,322.
(b) NPV will increase by $12,571.
(c) NPV will decrease by $25,000.
(d) NPV will decrease by $12,571.
22. A parcel of corporate land was recently dedicated as the new plant site. What
cost allocation should the land receive, based on the following: original cost
of $200,000, market value of $300,000, net book value of $200,000, a recent
o_er to purchase for $250,000.
(a) $200,000
(b) $250,000
(c) $275,000
(d) $300,000
23. New projects or products can have an indirect e_ect on the _rm as well as
a direct e_ect. Which of the following appears to be an indirect e_ect of
launching a new product?
(a) Additional working capital is required.
(b) Sales force will need to be increased.
(c) Sales of a similar product of your _rm’s will decline.
(d) Additional machinery must be purchased.
24. Mr. Hopper is expected to retire in 28 years and he wishes accumulate
$750,000 in his retirement fund by that time. If the interest rate is 10%
per year, how much should Mr. Hopper put into the retirement fund at the
end of each year in order to achieve this goal?
(a) $4,559.44
(b) $5,588.26
(c) $9,118.88
(d) $10,018.67
25. What is the monthly mortgage payment on a $150,000 mortgage for 30 years
an APR 5.85%?
(a) $784.71
(b) $805.65
(c) $884.91
(d) $925.64
26. The present value of a $2.50 dividend received at the end of this year that
grows at 4% forever given a cost of capital of 12% is worth how much today?
(a) $20.83
(b) $62.50
(c) $54.23
(d) $31.25
27. You would like to have enough money saved to receive a $100,000 per year
perpetuity after retirement so that you and your family can lead a good life.
How much would you need to save in your retirement fund to achieve this
goal (assume that the perpetuity payments start one year from the date of
your retirement. The interest rate is 10%)?
(a) $1,000,000
(b) $10,000,000
(c) $100,000
(d) None of the above
28. Sam’s Company expects to pay a dividend of $6 per share at the end of year
one, $9 per share at the end of year two and then be sold for $136 per share.
If the required rate on the stock is 20%, what is the current value of the
stock?
(a) $100.10
(b) $105.69
(c) $110.00
(d) $120.29
29. Which of the following is the likely price on a bond that has a current price
of $1,100 when interest rates rise?
(a) $1,050
(b) $1,100
(c) $1,225
(d) Can not be determined
30. What is the expected YTM on a bond that pays a $15 coupon annually has
a $1,000 par value, and matures in 6 years if the current price of the bond is
$978?
(a) 1.89%
(b) 3.67%
(c) 9.78%
(d) 15.00%
Aug 29, 2021 | Uncategorized
Which of the following is considered a hybrid organizational form?
sole proprietorship
partnership
limited liability partnership
corporation
Which of the following is a principal within the agency relationship?
the board of directors
a shareholder
a company engineer
the CEO of the firm
Which of the following presents a summary of the changes in a firm s balance sheet from the beginning of an accounting period to the end of that accounting period?
The statement of retained earnings.
The statement of net worth.
The statement of working capital.
The statement of cash flows.
Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm’s days’s sales in inventory?
65.2 days
64.3 days
61.7 days
57.9 days
Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio?
0
1.47
0.60
1.74
Which of the following is not a method of benchmarking
Identify a group of firms that compete with the company being analyzed.
Evaluating a single firm s performance over time.
Conduct an industry group analysis.
Utilize the DuPont system to analyze a firm s performance
Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.)
$26,454
$16,670
$22,680
$19,444
Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows $450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.)
$2,735,200
$2,815,885
$2,615,432
$2,431,224
Ajax Corp. is expecting the following cash flows $79,000, $112,000, $164,000, $84,000, and $242,000 over the next five years. If the company’s opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.)
$429,560
$414,322
$480,906
$477,235
Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.)
$5,233,442
$2,667,904
$1,745,600
$3,594,524
Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.)
40%
16%
12%
32%
Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company’s bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.)
$923
$1,014
$972
$1,066
Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 percent, what is the present value of their dividends over the next four years?
$12.50
$11.63
$13.50
$9.72
TuleTime Comics is considering a new show that will generate annual cash flows of $100,000 into the infinite future. If the initial outlay for such a production is $1,500,000 and the appropriate discount rate is 6 percent for the cash flows, then what is the profitability index for the project?
0.90
1.90
0.11
1.11
What decision criteria should managers use in selecting projects when there is not enough capital to invest in all available positive NPV projects?
The discounted payback.
The profitability index.
The internal rate of return.
The modified internal rate of return
The WACC for a firm is 13.00 percent. You know that the firm’s cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is financed with debt?
33%
50%
70%
30%
Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm’s growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?
15.36%
15.00%
12.00%
14.65%
If a company’s weighted average cost of capital is less than the required return on equity, then the firm:
Must have preferred stock in its capital structure
Is financed with more than 50% debt
Has debt in its capital structure
Is perceived to be safe
A firm’s capital structure is the mix of financial securities used to finance its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock
Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?
$375
$600
$321
$225
Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
$1,334 million
$1,787 million
$453.6 million
$1,315 million
Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
30.3%
25.1%
27.3%
32.9%
Which of the following cannot be engaged in managing the business?
a limited partner
a sole proprietor
a general partner
none of these
Which of the following does maximizing shareholder wealth not usually account for?
Risk.
Amount of Cash flows.
Government regulation.
The timing of cash flows.
The strategic plan does NOT identify
working capital strategies.
the lines of business a firm will compete in.
major areas of investment in real assets.
future mergers, alliances, and divestitures
Firms that achieve higher growth rates without seeking external financing
none of these.
have a low plowback ratio.
are highly leveraged.
have less equity and/or are able to generate high net income leading to a high ROE.
Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of $31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to shareholders. Find the firm’s dividend payout ratio and retention ratio.
15%, 85%
55%, 45%
45%, 55%
85%, 15%
The cash conversion cycle
shows how long the firm keeps its inventory before selling it.
estimates how long it takes on average for the firm to collect its outstanding accounts receivable balance.
begins when the firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.
begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
You are provided the following working capital information for the Ridge Company:
Ridge Company
Account
$
Inventory
$12,890
Accounts receivable
12,800
Accounts payable
12,670
Net sales
$124,589
Cost of goods sold
99,630
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
83.5 days
38.3 days
129.9 days
46.4 days
==========
Aug 29, 2021 | Uncategorized
1.Truckel,Inc.currently manufactures a wicket as its main product.The costs per unit are as follows:Direct materials and direct labor$11 Variable overhead$5 Fixed overhead$8 Total$24
Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18each.If Truckel makes the wickets,variable costs are$16 per unit.Fixed costs are$8 per unit;however,$5 per unit is unavoidable.Should Truckels make or buy the wickets?
a.Buy;savings=$15,000
b.Buy;savings=5,000
c.Make;savings=10,000
d.Mkae;savings=5,000
2.Galley industries can produce 100units of a necessary component part with the following costs:Direct Materials$20,000 Direct Labor9,000 Variable Overhead21,000 Fixed Overhead8,000
If Galley industries purchases the component externally,$2,000 of the fixed costs can be avoided.Below what external price for the 100 units would Galley choose to buy instead of make?
a.50,000
b.56,000
c.44,000
d.52,000
3.Which decision will involve no incremental revenues?
a.Make or buy decision
b.Drop a product line
c.Accept a special order
d.Additional processing decision
4.An opportunity cost
a.should be initially recorded as an asset
b.is the cost of a new product proposal
c.is the potential benefit that may be obtained by following an alternative course of action
d.is classified as manufacturing overhead
5.Brislin Products has a new product going on the market next year.The following data are projections for production and sales:Variable costs$250,000 Fixt costs450,000 ROI 14% Investment2,000,000 Sales200,0000units
5-1.What is the target selling price per unit?
a.$4.90
b.3.50
c.2.65
d.3.65
5-2.What is the markup percentage?
a.112%
b.20
c.62
d.40
5-3.What would the markup percentage be if only 150,000 units were sold and Brislin still wanted to earn the desired ROI?
a.32.95%
b.53.33
c.35
d.44
6.A master budget consists of
a.an interrelated long-term plan and operating budgets
b.financial budgets and a long-term plan
c.interrelated financial budgets and operating budgets
d.all the accounting journals and ledgers used by a company
7.The starting point in preparing a master budget is the preparation of the
a.production budget
b.sales budget
c.purchasing budget
d.personnel budget
8.Which one of the following is not needed in preparing a production budget?
a.Budgeted unit sales
b.Budgeted raw materials
c.Beginning finished goods units
d.Ending finished goods units
9.A company budgeted unit sales of 204,000units for Jan.2013 and 240,000units for Feb.2013.The company has a policy of having an inventory of units on hand at the end of each month equal to 30%of next month’s budgeted unit sales.If there were 61,200units of inventory on hand on Dec.31,2012.How many units should be produced in Jan,2013 in order for the company to meet its goals?
a.214,800units
b.204,000
c.193,200
d.276,000
10.At Jan1,2013.Deer Corp.Has beginning inventory of 2,000 surfboards.Deer estimates it will sell 10,000 units during the first quarter of 2013 with a 12% increase in sales each quarter.Deer’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs$100 and is sold for $150.How much is budgeted sales revenue for the third quarter of 2013?
a.450,000
b.1,950,000
c.1,881,600
d.12,544
11.Doe Manufacturing plans to sell 6,000purple lawn chairs during May,5,700 in June,and 6,000 during July.The company keeps 15%of the next month’s sales as ending inventory.How many units should Doe produce during June?
a.5,745
b.6,600
c.5,655
d.not enough information to determine
12.Dingo Division’s operating results include:controllable margin of %150,000,sales totaling $1,200,000, and average operating assets of 500,000.Dingo is considering a project with sales of 100,000,expenses of 86,000,and an investment of average operating assets of200,000.Dingo’s required rate of return is 9%.Should Dingo accept this project?
a.Yes,ROI will drop by6.6% which is still above the minimum required rate of return
b.No,the return is less than the required rate of 9%
c.Yes,ROI still exceeds the cost of capital
d.No,ROI will decrease to 7%
13.Grown Industries reported the following items for 2013:Income tax expense$60,000 Contribution margin200,000 Controllable fixed costs80,000 Interest expense40,000 Total operating assets650,000
How much is controllable margin?
a.200,000
b.120,000
c.60,000
d.20,000
14.Griffin Corp.is evaluating its Piquette division, and investment center.The division has a60,000 controllable margin and 400,000 of sales.How much will Griffin’s average operating assets be when its retrun on investment is10%?
a.600,000
b.660,000
c.400,000
d.340,000
15.An investment center generated a contribution margin of 400,000,fixed costs of 200,000 and sales of 2,000,000.The center’s average operating assets were 800,000.How much is the return on investment?
a25%
b175
c50
d75
Aug 29, 2021 | Uncategorized
On March 31, 2010, the balances of the accounts appearing in the ledger of El Dorado Furnishings Company, a furniture wholesaler, are as follows:
Administrative Expenses $ 250,000 Office Supplies $ 21,200
Building 1,025,000 Retained Earnings 937,600
Capital Stock 200,000 Salaries Payable 6,000
Cash 97,000 Sales 2,550,000
Cost of Merchandise Sold 1,400,000 Sales Discounts 40,000
Dividends 50,000 Sales Returns and Allowances 160,000
Interest Expense 15,000 Selling Expenses 410,000
Merchandise Inventory 260,000 Store Supplies 15,400
Notes Payable 59,000 .
a. Prepare a multiple-step income statement for the year ended March 31, 2010.
b. Compare the major advantages and disadvantages of the multiple-step and single-step forms of income statements.
Aug 29, 2021 | Uncategorized
- Week Four Exercise Assignment
Liability
1.Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:
Social Security taxes: 4% on the first $55,000 earned per employee
Medicare taxes: 1.5% on the first $130,000 earned per employee
Federal income taxes withheld from wages: $7,500
State income taxes: 4% of gross earnings
Insurance withholdings: 1% of gross earnings
State unemployment taxes: 5.4% on the first $7,000 earned per employee
Federal unemployment taxes: 0.8% on the first $7,000 earned per employee
The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.
a. Prepare the necessary entry to record Brookhaven s February payroll. The entry will include deductions for the following:
Social Security taxes
Medicare taxes
Federal income taxes withheld
State income taxes
Insurance withholdings
b. Prepare the journal entry to record Brookhaven s payroll tax expense. The entry will include the following:
Matching Social Security taxes
Matching Medicare taxes
State unemployment taxes
Federal unemployment taxes
2. Current liabilities: entries and disclosure.A review of selected financial activities of Visconti s during 20XX disclosed the following:
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1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.
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Interest and principal are due at maturity.
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10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to
|
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total 1,000 units during the month. Past experience with similar products indicates
|
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that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
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22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
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26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)
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31-Dec: Repaired six XY-80s during the month at a total cost of $162
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31-Dec: Accrued three days of salaries at a total cost of $1,400.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest.
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
3.Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:
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2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.
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20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.
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10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000. Issued
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a 30-day, 12% note in settlement of the balance owed.
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11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account
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payable of the same amount. The note is due in 30 days and carries a 14% interest rate.
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10-Oct: The note to Pans Enterprises was paid in full.
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11-Oct: The note to Datatex Equipment was paid in full.
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30-Oct: Paid note to Bank of Kingsville.
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Instructions
a. Prepare journal entries to record the transactions.
b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).
c. Prepare the Current Liability section of Red Bank s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.
- Current Liability
What is a current liability? From the perspective of a user of financial statements, why do you believe current liabilities are separated from long-term liabilities? Based on your current experience as well as and any additional research you may have done provide two examples of situations where businesses collect monies from customers and employees and report these amounts as a current liability.
Guided Response:
Review several of your peers posts and identify the core components of a current liability. Respond to at least two of your peers and provide recommendations to extend their thinking. Challenge your peers by asking a question that may cause them to reevaluate if their example is a current liability.
- Client Recommendations
A client comes to you thinking about starting a consulting business. Your client is specifically interested in what type of entity should be created for this new business. Based on your readings or any additional research you may have done, discuss the advantages and disadvantages of the following: sole proprietorship, partnership, and corporation. Based on these advantages and disadvantages provide a clear recommendation to your client.
Aug 29, 2021 | Uncategorized
The Martinez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows:
Capital-Intensive
Direct Materials 5$ per unit
Direct Labor 6$ per unit
Variable Overhead $3 per unit
Fixed Manufacturing Costs $2,508,000
Labor Intensive
Direct Materials 5.5$ per unit
Direct Labor 8$ per unit
Variable Overhead $4.5 per unit
Fixed Manufacturing Costs $1,538,000
Martinez market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.
a) Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company uses the:
1-Capital intensive manufacturing method
2-Labor intensive manufacturing method
b) Determine annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods
c) Explain the circumstance under which Martinez should employ each of the two manufacturing methods
Aug 29, 2021 | Uncategorized
Martinez Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows.
Capital-Intensive Labor-Intensive
Direct materials$5 per unit $5.50 per unit
Direct labor$6 per unit $8.00 per unit
Variable overhead $3 per unit $4.50 per unit
Fixed manufacturing costs $2,508,000 $1,538,000
Martinez’s market research department has recommended an introductory unit sales price of $30. The incremental selling expenses are estimated to be $502,000 annually plus $2 for each unit sold, regardless of manufacturing method.
Instructions:
(a) Calculate the estimated break-even point in annual unit sales of the new product if Martinez Company uses the:
1. Capital-intensive manufacturing method.
2. Labor-intensive manufacturing method.
(b) Determine the annual unit sales volume at which Martinez Company would be indifferent between the two manufacturing methods.
(c) Explain the circumstance under which Martinez should employ each of the two manufacturing methods.
NOTE: The tutorial answers provided here have NO GRAPH but ONLY Calculations shown
Aug 29, 2021 | Uncategorized
The Massive Mining Co refines iron ore for export markets. The following data relates to the company s mine for the month of April:
25,000 units of work in process existed at 1st April, the costs for which were:
Direct materials 18,500 Conversion 36,750
35,000 units commenced production during April. The costs incurred during the month for refining were:
Direct material 300,000 Conversion 230,000
The closing work in progress at 30th April was 15000 units. Materials were added at the beginning of the refining process and conversion was 1/3rd complete at month end.
a. Calculate the cost per equivalent unit for the month of April using the weighted average method of process costing.
b. Calculate the value of work in progress and the value of completed stock transferred to finished goods during the month
Aug 29, 2021 | Uncategorized
Matthews Delivery Service, Inc., completed the following transactions during its first month of operations for January 2012:
a. Matthews Delivery Service, Inc., began operations by receiving $6,000 cash and a truck valued at $11,000. The business issued common stock to aquire these assets.
b. Paid $300 cash for supplies.
c. Prepaid insurance, $700.
d. Performed delivery services for a customer and received $800 cash.
e. Completed a large delivery job, billed the customer $1,500, and received a promise to collect the $1,500 within one week.
f. Paid employee salary, $700.
g. Received $12,000 cash for performing delivery services.
h. Collected $600 in advance for delivery service to be performed later.
i. Collected $1,500 cash from a customer on account.
j. Purchased fuel for the truck, paying $200 with a company credit card. (Credit Accounts payable)
k. Performed delivery services on account, $900.
l. Paid office rent, $600. This rent is not paid in advance.
m. Paid $200 on account.
n. Paid cash dividends of $2,100.
Requirements
1. Record each transaction in the journal. Key each transaction by its letter. Explanations are not required.
2. Post the transactions that you recorded in Requirement 1 in the T-accounts.
Cash
Accounts receivable
Supplies
Prepaid insurance
Delivery truck
Accumulated depreciation
Accounts payable
Salary payable
Unearned service revenue
Common stock
Retained earnings
Dividends
Income summary
Service revenue
Salary expense
Depreciation expense
Insurance expense
Fuel expense
Rent expense
Supplies expense
3. Enter the trial balance in the worksheet for the month ended January 31, 2012.
Complete the worksheet using the adjustment data given at January 31.
a. Accrued salary expense, $700.
b. Depreciation expense, $60.
c. Prepaid insurance expired, $250.
d. Supplies on hand, $200.
e. Unearned service revenue earned during January, $500.
4. Prepare Matthews Delivery Service s income statement and statement of retained earnings for the month ended January 31, 2012, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount that is, the largest expense first, the smallest expense last.
5. Journalize and post the adjusting entries beginning with a.
6. Journalize and post the closing entries.
7. Prepare a post-closing trial balance at January 31, 2012.
Aug 29, 2021 | Uncategorized
Maverick Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below.
Work in process, beginning:
Units in beginning work-in-process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,600
Materials costs added during the month $112,500
Conversion costs added during the month $210,300
Ending work in process:
Units in ending work-in-process inventory 800
Percentage complete for materials 70%
Percentage complete for conversion 30%
Required: Calculate the equivalent units for materials for the month in the first processing department.
Aug 29, 2021 | Uncategorized
May
1 mike invested $15000 cash & a used truck worth $13500 in exchange for company stock
3 paid $4700 cash to purchase office equipment
7 purchased $860 of supplies on account
12 performed services for cash customer & received $850
15 paid salaries of $675 to office assistant
16 sold the company truck for $13500
18 signed a note payable for $31000 to purchase a new truck
21 performed $3200 of services on account for a hotel chain
27 paid $500 of the amount owed from the 5/7 supply purchase
30 received $2000 on account from credit customer
31 received utility bill for the month of may $480 (bill isn’t due until the 15th of June)
31 paid $1000 dividends to the shareholder, XXXXX XXXXXson
June
1 paid receptionist salary $675
2 paid cash to acquire land for a future office site $15,000
3 moved into a new location & paid 1st month’s rent $1800 for the business
4 performed service for a customer & received $1700 cash
5 received $500 on account
8 purchased $750 of supplies on account
11 billed customers for services performed $3800
13 sold an additional $10000 of stock
16 paid receptionist salary $675
17 received $1350 cash for services performed
18 received $1500 from customer on account
19 paid $325 to be listed in the yellow pages
21 paid $1000 on account
22 purchased office furniture on account $3300
24 paid misc expenses $275
26 billed customers for services provided $1000
28 received $300 from customer on account
30 paid utility bill $745
30 paid receptionist salary $675
30 paid $1800 of dividends
July
1 Paid three months rent, $4,500.
4 Performed service for a customer and received cash, $2,100.
9 Received $3,600 from customers for services to be performed later.
12 Purchased $750 of supplies on account.
15 Billed customers for services performed, $2,800.
16 Paid receptionist s salary, $675.
22 Received $3,100 on account.
25 Paid $2,800 on account.
28 Received $1,200 cash for services performed.
30 Paid $600 of dividends.
Prepare the Income Statement, Statement of Retained Earnings, and Balance Sheet for the three-month period May through July.
Aug 29, 2021 | Uncategorized
On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the following facts.
1. The statement included a debit memo of $40 for the printing of additional company checks.
2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company for the correct amount.
3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.
4. On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Logan Company for $658.
5. A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
6. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 that was incorrectly charged to Logan Company by the bank.
7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.
Requirements:
1. Prepare a bank reconciliation
2. Prepare adjusting entries
Aug 29, 2021 | Uncategorized
P8-3A(James Logan Company)
On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the following facts.
- The statement included a debit memo of $40 for the printing of additional company checks.
- Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company for the correct amount.
- Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.
- On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Logan Company for $658.
- A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
- Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 that was incorrectly charged to Logan Company by the bank.
- On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.
Aug 29, 2021 | Uncategorized
On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50. The bank
P8-3A(James Logan Company)
On May 31, 2010, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the following facts.
- The statement included a debit memo of $40 for the printing of additional company checks.
- Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company for the correct amount.
- Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15.
- On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Logan Company for $658.
- A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.
- Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 that was incorrectly charged to Logan Company by the bank.
- On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.
Aug 29, 2021 | Uncategorized
On May 31, 2011, James Logan Company had a cash balance per books of $6,781.50. The bank statement from Farmers State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the cash account revealed the following facts. 1.The statement included a debit memo of $40 for the printing of additional company checks. 2.Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Logan Company for the correct amount. 3.Outstanding checks at May 31 totaled $576.25. Deposits in transit were $1,916.15. 4.On May 18, the company issued check No. 1181 for $685 to Barry Trest, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Logan Company for $658. 5.A $2,500 note receivable was collected by the bank for Logan Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note. 6.Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for $800 that was incorrectly charged to Logan Company by the bank. 7.On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sandy Grifton, a customer, to Logan Company on account.
Aug 29, 2021 | Uncategorized
On May 5, 2013, Gina Ennabeortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning. She completed the following transactions during the month:
a.Gina invested $16,500 cash and a small truck with a value of $8,000 to start her business.
b.Prepaid $3,500 cash for 12 months rent on a small office.
c.Purchased office supplies for cash, $575.
d.Purchased equipment on account, $4,000.
e.Received cash for services performed, $3,350.
f.Performed services on credit, $2,350.
g.Purchased truck supplies on account, $125.
h.Received $15,350 cash in advance of providing cleaning services to a customer.
i.Paid $2,500 cash for the premium on a 6-month insurance policy.
j.Paid salary of employee, $1,550.
k.Purchased $2,500 of additional equipment by paying $400 cash and signing a long-term note payable for $2,100.
l.Paid for repairs to truck, $225.
m.Received $1,350 for the services performed in transaction f.
n.Paid utilities, $315.
o.Completed cleaning services and immediately collected $10,500.
p.Paid creditor $675 on the purchase in transaction g.
q.Provided $2,000 of cleaning services from transaction h.
r.Gina withdrew cash for personal use, $2,775.
s.Paid $5,000 cash for advertisements on the local television station during May.
Required:
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).
2. Open a set of T accounts with the following titles: Cash (101), Accounts Receivable (106); Office Supplies (124); Truck Supplies(128); Equipment (131); Prepaid Rent (140); Prepaid Insurance (150); Truck (163); Accounts Payable (201); Notes Payable (202); Unearned Cleaning Revenue (203); Gina Ennabeortiz, Capital (301); Gina Ennabeortiz, Drawing (302); Cleaning Revenue (403); Salaries Expense (620); Truck Expense (630); Utilities Expense (640) and Advertising Expense (650). Post journal entries from Part 1 to the T accounts and calculate the account balance for each account.
3. Prepare a trial balance as of the end of this month s operations.
4. Using the trial balance created above, prepare an income statement, statement of owner s equity and a balance sheet for the month ended May 31st.
Aug 29, 2021 | Uncategorized
Mazor Inc. s bank statement from Hometown Bank at August 31, 2012, gives the following information.
Balance, August 1 $18,639 Bank debit memorandum: August deposits 71,239 Safety deposit box fee $ 95 Checks cleared in August 68,608 Service charge 120 Bank credit memorandum: Balance, August 31 21,170 Interest earned 115
A summary of the Cash account in the ledger for August shows the following: balance, August 1, $18,939; receipts $74,239; disbursements $73,500; and balance, August 31, $19,678. Analysis reveals that the only reconciling items on the July 31 bank reconciliation were a deposit in transit for $4,870 and outstanding checks of $4,570. In addition, you determine that there was an error involving a company check drawn in August: A check for $490 to a creditor on account that cleared the bank in August was journalized and posted for $49.
Determine the deposits in transit
Aug 29, 2021 | Uncategorized
_______ 1. For a business, the advantage of offering credit to customers is that it:
A. increases the amount of sales.
B. increases cash flow from financing activities.
C. decreases cost of goods sold.
D. decreases the amount of inventory the company needs to carry.
_______ 2. The net realizable value of accounts receivable is calculated,
A. Accounts Receivable + Uncollectible Accounts Expense
B. Accounts Receivable + Notes Receivable
C. Accounts Receivable – Allowance for Doubtful Accounts
D. 365/Accounts Receivable
_______ 3. To estimate the amount of its uncollectible accounts receivable, a company might
A. consult industry publications.
B. look at its past history of uncollectible accounts.
C. take into account the current condition of the economy.
D. all of these.
_______ 4. Which of the following is not an advantage of accepting credit cards from retail customers
A. The acceptance of credit cards tends to increase sales.
B. There are fees charged for the privilege of accepting credit cards.
C. The credit card company performs credit worthiness assessments.
D. The credit card company assumes the cost of slow collections and write-offs.
_______ 5. The accounting records of the Schaller Company and Quimby Company contained the following account balances:
Select the true statement from the following options:
A. The accounts receivable for Schaller Company turned over 6 times per year.
B. The company with the higher turnover ratio will also have the longer average number of days to collect accounts receivable.
C. Quimby Company is likely to incur lower costs from extending credit to customers than Schaller Company.
D. The average number of days to collect accounts receivable for Schaller is 73 days.
_______ 6. Which of the following businesses would most likely have the longest operating cycle
A. A chain of pizza restaurants.
B. A national pharmacy chain.
C. A producer of wine.
D. A discount store.
_______ 7. The face value of Accounts Receivable less the balance in the Allowance for Doubtful Accounts is equal to the net realizable value of the receivables.
True False
_______ 8. A company that uses the allowance write-off method of accounting for uncollectible accounts does not prepare a year-end adjusting entry to estimate its uncollectibles.
True False
_______ 9. Which of the following would be classified as a long-term operational asset
A. Accounts Receivable.
B. Prepaid Insurance.
C. Office Equipment.
D. Inventory.
_______ 10. Which of the following terms is used to identify the process of expense recognition for buildings and equipment
A. Amortization
B. Depletion
C. Depreciation
D. Revision
_______ 11. On January 1, 2009, Rowley Company purchased a truck that cost $22,000. The truck had an expected useful life of 5 years and a $4,000 salvage value. The amount of depreciation expense recognized in 2010 assuming that Rowley uses the double declining balance method is:
A. $4,320.
B. $5,280.
C. $7,200.
D. $8,800.
_______ 12. Philips Corporation purchased a truck that cost $26,000. The company expected to drive the truck 100,000 miles. The truck had an estimated salvage value of $2,000. If the truck is driven 36,000 miles in the current accounting period, which of the following amounts should be recognized as depreciation expense
A. $8,280.
B. $9,360.
C. $8,000.
D. $8,640.
_______ 13. Zabrinski Company purchased oil rights on July 1, 2010 for $3,200,000. If 200,000 barrels of oil are expected to be extracted over the asset’s life and 30,000 barrels are extracted and sold in 2010, the amount of depletion expense recorded on December 31, 2010 would be:
A. $480,000.
B. $540,000.
C. $320,000.
D. $200,000.
_______ 14. Which of the following terms is used to identify the expense recognition for intangible assets
A. amortization.
B. depletion.
C. depreciation.
D. allocation.
_______ 15. The fair value of the assets and liabilities for Zane’s Restaurant were $450,000 and $160,000, respectively. If Reiner Company pays $325,000 cash for the restaurant and assumes its existing liabilities, what amount of goodwill would Reiner record
A. $25,000.
B. $35,000.
C. $55,000.
D. $125,000.
_______ 16. Intangible assets include patents, copyrights, and natural resources.
True False
_______ 17. Land differs from other property because it is not subject to depreciation.
True False
_______ 18. Double-declining-balance depreciation produces more depreciation in the later years of an asset’s life than does the straight-line method.
True False
On January 1, 2010, Fleming Company borrowed $160,000 cash from the First Trust Bank by issuing a five-year 8 % term note. The principal and interest are repaid by making annual payments beginning on December 31, 2010. The annual payment on the loan was $40,074.
_______ 19. The amount of principal repayment included in the December 31, 2010 payment is:
A. $27,274.
B. $27,615.
C. $37,329.
D. $40,575.
_______ 20. How does the amortization of the principal balance affect the amount of interest expense recorded each succeeding year
A. Has no effect on interest expense each succeeding year
B. Increases the amount of interest expense each succeeding year
C. Reduces the amount of interest expense each succeeding year
D. The effect depends on the interest rate.
_______ 21. A current ratio of 1.73 to 1 indicates that a company’s current liabilities are greater than its current assets.
True False
_______ 22. Which of the following is a disadvantage of a sole proprietorship
A. Entrenched management.
B. Unlimited liability of the owner.
C. Double taxation.
D. Excessive regulation.
_______ 23. The term “double taxation” refers to which of the following:
A. Sole proprietorships must pay income taxes on their net incomes and the owners are also required to pay income taxes on their withdrawals.
B. In a partnership, both partners are required to claim their share of net income on their tax returns.
C. Corporations must pay income taxes on their net income and their stockholders pay income tax on the dividends they receive.
D. Limited Liability Companies are forced to pay income taxes to both the state and the federal governments.
_______ 24. Which form of business organization is established as a separate legal entity from its owners
A. Sole proprietorship
B. Corporation
C. Partnership
D. None of these
_______ 25. Which of the following is not considered an advantage of the corporate form of business organization
A. Ability to raise large amounts of capital.
B. Government regulation.
C. Ease of transferability of ownership.
D. Continuity of existence.
_______ 26. The par value of common stock
A. changes in proportion to market value.
B. is not directly related to market value.
C. is greater than market value.
D. is less than market value.
_______ 27. Establishing a sole proprietorship generally requires the owner to get a charter from the state government.
True False
_______ 28. The Securities and Exchange Commission was established in response to the accounting scandals that occurred in 2001 and 2002.
True False
_______ 29. A small, closely-held corporation can avoid double taxation by electing S Corporation status.
True False
_______ 30. Pakeham Company has cash of $10,000, accounts receivable of $34,000, inventory of $26,000, and, equipment of $50,000. Assuming current liabilities of $24,000, this company’s working capital is
A. $ 6,000.
B. $22,000.
C. $46,000.
D. $72,000.
_______ 31. Mitchell Company has total current assets of $65,000 including inventory of $10,000, and current liabilities of $25,000. The company’s current ratio is
A. 3.1
B. 2.6
C. 3.6
D. 1.9
_______ 32. The Decker Company reported the following income for 2010:
What is the company’s number of times interest is earned
A. 4 times
B. 6 times
C. 7 times
D. 10 times
33. At the end of 2010, Delta Company reported total current assets of $450,000 and total current liabilities of $320,000. At the same time, Omega Company had current assets of $319,000 and current liabilities of $180,000.
Required:
a) Calculate the current ratio for Delta Company.
b) Calculate the current ratio for Omega Company.
c) Which company would you consider to have higher liquidity at the end of 2010
34. Marchant Company’s balance sheet and income statement are provided below:
The company paid cash dividends of $2.00 per share during 2010. On December 31, 2010, the stock was listed on the stock exchange at a price of $75.25 per share.
Required:
Compute the following ratios for 2010:
a) accounts receivable turnover
b) average number of days to collect receivables
c) inventory turnover
d) average number of days to sell inventory
e) debt to assets ratio
f) debt to equity ratio
g) net margin
h) asset turnover
i) return on investment
j) dividend yield
Aug 29, 2021 | Uncategorized
Problem 1. The May 31, 2012, balance per bank statement for Upton Company was $7,200. The cash balance per books was $9,500. Outstanding checks amounted to $800, and deposits in transit were $2,400. The bank statement contained an NSF check for $500, a service charge for $25, and a debit memo for direct payment of the telephone bill of $175.
Required:
1) Prepare a bank reconciliation to determine the true cash balance at May 31, 2012.
Problem 2. Scott Company is a merchandising business that was started in 2012. Scott uses the perpetual inventory system. It experienced the following events during 2012.
1. Acquired $25,000 cash by issuing common stock
2. Purchased inventory on account that cost $14,000, terms 2/10, n/30
3. Sold inventory that had cost $8,400 for $15,000 cash
4. Paid for the merchandise referred to in event 2, within the discount period
Required:
1) Record the events in the financial statements model below; include column totals.
2) Prepare an income statement for 2012.
3) What is the amount of total assets at the end of 2012?
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Assets
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Aug 29, 2021 | Uncategorized
Module 1 : Module 1 – Test 1: M/C
| 1.Which of the following accounts would not appear on a balance sheet? (Points : 2) |
Equipment
Interest Payable
Interest Revenue
Retained Earnings
|
| 2.Which of the following statements about the Public Company Accounting Oversight Board (PCAOB) is not true? (Points : 2) |
The PCAOB was created by the Sarbanes-Oxley Act to regulate the accounting firms that audit financial statements of public companies.
Independent auditors are required to register with the PCAOB.
The PCAOB has the power to impose sanctions against a registered accounting firm.
The PCAOB requires public accounting firms to conduct peer reviews of other such firms and make their report public.
|
| 3.Which financial statement matches asset increases from operating a business with asset decreases from operating the business? (Points : 2) |
Statement of changes in equity
Balance sheet
Income statement
Statement of cash flows
|
4.The Blumer Company entered into the following transactions during 2010:
- The company was started with $22,000 of common stock issued to investors for cash.
- On July 1, the company purchased land that cost $15,500 cash.
- There was $700 of supplies purchased on account.
The amount of total liabilities appearing on the December 31, 2010 balance sheet would be: (Points : 2)
|
$3,600
$4,000
$475
$700
|
| 5.Rowena Company spent cash to purchase equipment. As a result of this event: (Points : 2) |
total liabilities increased.
total assets increased.
net income increased.
total assets were unchanged.
|
6.ABC Company acquired $23,000 by issuing common stock to investors. Which of the following choices accurately reflects how this event would affect the company’s financial statement?
| Row |
Assets |
= |
Liab. |
+ |
Equity |
Rev. |
– |
Exp. |
= |
Net Inc. |
Cash Flow |
| One |
23,000 |
= |
NA |
+ |
23,000 |
NA |
– |
NA |
= |
NA |
23,000 FA |
| Two |
23,000 |
= |
NA |
+ |
23,000 |
23,000 |
– |
NA |
= |
23,000 |
NA |
| Three |
23,000 |
= |
NA |
+ |
23,000 |
23,000 |
– |
NA |
= |
23,000 |
23,000 FA |
| Four |
23,000 |
= |
23,000 |
+ |
NA |
23,000 |
– |
NA |
= |
23,000 |
23,000 OA |
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
7.Parrot Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event would affect the company’s financial statements?
| |
Balance Sheet |
Income Statement |
| Row |
Assets |
= |
Liab. |
+ |
Equity |
Rev. |
– |
Exp. |
= |
Net Inc. |
|
Statement of Cash Flows |
| One |
NA |
= |
300 |
+ |
(300) |
NA |
– |
300 |
= |
(300) |
NA |
| Two |
(300) |
= |
NA |
+ |
(300) |
NA |
– |
300 |
= |
(300) |
(300) FA |
| Three |
(300) |
= |
NA |
+ |
(300) |
NA |
– |
NA |
= |
NA |
(300) FA |
| Four |
(300) |
= |
NA |
+ |
(300) |
NA |
– |
NA |
= |
NA |
(300) OA |
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
8.Sefcik Company purchased supplies on account. Which of the following choices accurately reflects how this event would affect the company’s financial statements
| Row |
Assets |
= |
Liab. |
+ |
Equity |
Rev. |
– |
Exp. |
= |
Net Inc. |
Cash Flow |
| One |
+ |
= |
NA |
+ |
– |
NA |
– |
+ |
= |
– |
NA |
| Two |
+ – |
= |
NA |
+ |
NA |
NA |
– |
NA |
= |
NA |
– OA |
| Three |
+ |
= |
+ |
+ |
NA |
NA |
– |
NA |
= |
NA |
NA |
| Four |
+ – |
= |
NA |
+ |
NA |
NA |
– |
NA |
= |
NA |
NA |
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
| 9.Ohio Company provided services to a customer for $1,700 cash. As a result of this event: (Points : 2) |
total assets decreased.
total liabilities increased.
retained earnings increased.
cash flows from financing activities increased.
|
| 10.The claims of a business s creditors are called: (Points : 2) |
assets.
liabilities.
equity.
revenue.
|
| 11.The Sarbanes-Oxley Act: (Points : 2) |
was prompted by corporate bankruptcies and audit failures.
limits an auditor s ability to provide non-audit services to a client.
clarifies the responsibility of a company s management for its financial statements.
all of the above.
|
12.Hardin Company began operations in 2010. During the year, the following cash transactions
occurred:
- Issued stock for $40,000
- Borrowed $24,000 from bank
- Provided services to customers for $53,000 cash
- Paid back $8,000 of the loan from the bank
- Paid rent expense, $9,000
- Paid operating expenses, $29,000
Assuming that Hardin engaged in no transactions during the year other than those listed above, what was the amount of net income or loss for the year? (Points : 2)
|
$19,000 net income
$15,000 net income
$12,000 net income
$11,000 net loss
|
| 13.In event of liquidation of a business: (Points : 2) |
creditors have priority claim on the business s assets.
investors have priority claim on the business s assets.
resource users have priority claim on the business s assets.
stakeholders are assured of receiving the resources they had provided to the business.
|
| 14.The Blumer Company entered into the following transactions during 2010: There was $700 of supplies purchased on account. Sales on account amounted to $9,500. Cash collections of receivables were $5,500. Supplies on hand as of December 31, 2010 amounted to $225. The beginning balance of supplies at January 1, 2010 was $100.
The adjusting entry necessary to record the supplies expense would result in a: (Points : 2) |
$700 increase in assets and liabilities.
$700 decrease in assets and equity.
$575 decrease in assets and equity.
$575 increase in assets and liabilities.
|
| 15.The amount of land owned by a business appears on which financial statement? (Points : 2) |
Income statement
Statement of changes in stockholders equity
Statement of cash flows
Balance sheet
|
| 16.The purpose of the accrual basis of accounting is to: (Points : 2) |
report revenue when cash is received.
improve the matching of revenue and expense in the proper period.
report expenses when cash disbursements are made.
improve the company’s earnings per share.
|
| 17.Which of the following groups has primary responsibility for establishing generally accepted accounting principles for businesses in the United States? (Points : 2) |
The U.S. Supreme Court
Each state s Secretary of the Treasury
The Financial Accounting Standards Board
The Internal Revenue Service
|
| 18.In 1998, Parker Corporation purchased land for $130,000. In 2010, Parker Company had the land appraised, and its value was estimated to be $190,000. Also during 2010, another company offered Parker $145,000 for the parcel of land. When the balance sheet is prepared at the end of 2010, at what dollar amount should the land be reported? (Points : 2) |
$190,000
$145,000
$130,000
None of the above
|
| 19.Which of the following accounts is a permanent account (an account that is not closed)? (Points : 2) |
Prepaid Insurance
Service Revenue
Salaries Expense
Rent Expense
|
| 20.Which of the following lists represents the correct sequence of stages in an accounting cycle? (Points : 2) |
Record transactions, prepare statements, adjust accounts, and close temporary accounts
Prepare statements, close temporary accounts, record transactions, and adjust accounts
Close temporary accounts, record transactions, prepare statements, and adjust accounts
Record transactions, adjust accounts, prepare statements, and close temporary accounts
|
Aug 29, 2021 | Uncategorized
| mba-560 unit 3 quiz |
Question Detail:
|
1.Bay Company began using the allowance method in 2010. On January 1, 2010, Bay had a $3,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2010, Bay provided $25,000 of service on account. The company collected $21,000 cash from account receivable. Uncollectible accounts are estimated to be 2% of sales on account. The balance in Accounts Receivable as of December 31, 2010 was: (Points : 2)
|
$7,000
$4,000
$8,000
$500
|
|
2.Bay Company began using the allowance method in 2010. On January 1, 2010, Bay had a $3,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2010, Bay provided $25,000 of service on account. The company collected $21,000 cash from account receivable. Uncollectible accounts are estimated to be 2% of sales on account. The amount of uncollectible accounts expense to recognize on the 2010 income statement is: (Points : 2)
|
$80
$250
$480
$500
|
|
3.Accounts receivable turnover is computed by dividing: (Points : 2)
|
365 by accounts receivable.
sales by accounts receivable.
accounts receivable by net income.
accounts receivable by sales.
|
|
4.The amount of accounts receivable that is actually expected to be collected is known as: (Points : 2)
|
net realizable value.
uncollectible accounts expense.
accounts receivable turnover.
allowance for doubtful accounts.
|
|
5.The net realizable value of accounts receivable is calculated: (Points : 2)
|
Accounts Receivable + Uncollectible Accounts Expense.
Accounts Receivable + Notes Receivable.
Accounts Receivable Allowance for Doubtful Accounts.
365/Accounts Receivable.
|
|
6.Howard Company accepts a credit card as payment for $950 of services provided to a customer. The credit card company charges a 4% fee for its services. Select the answer that shows how the entry to record the service revenue would affect Barlett’s financial statements.
|
Row
|
Assets
|
=
|
|
+
|
Equity
|
|
–
|
|
=
|
Net Inc.
|
Cash Flow
|
|
One
|
912
|
=
|
NA
|
+
|
912
|
950
|
–
|
38
|
=
|
912
|
NA
|
|
Two
|
912
|
=
|
38
|
+
|
874
|
912
|
–
|
NA
|
=
|
912
|
NA
|
|
Three
|
912
|
=
|
NA
|
+
|
912
|
912
|
–
|
NA
|
=
|
912
|
912 OA
|
|
Four
|
950
|
=
|
NA
|
+
|
950
|
950
|
–
|
NA
|
=
|
950
|
950 OA
|
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
|
7.The practice of reporting the net realizable value of receivables in the financial statements is commonly called: (Points : 2)
|
the cash flow method of accounting for uncollectible accounts.
the direct write-off method of accounting for uncollectible accounts.
the allowance method of accounting for uncollectible accounts.
both A and B are correct.
|
|
8.For a business, the advantage of offering credit to customers is that it: (Points : 2)
|
increases the amount of sales.
increases cash flow from financing activities.
decreases cost of goods sold.
decreases the amount of inventory the company needs to carry.
|
|
9.On March 1, Zane Company purchased a new stamping machine with a list price of $24,000. The company paid cash for the machine; therefore, it was allowed a 3% discount. Other costs associated with the machine were: transportation costs, $1,270; sales tax paid, $1,680; installation costs, $450; routine maintenance during the first month of operation, $500. The cost recorded for the machine was: (Points : 2)
|
$23,730
$24,000
$25,960
$26,680
|
|
10.On September 10, 2009, Barden Company sold a piece of equipment for $3,000. The equipment had an original cost of $17,000 and accumulated depreciation of $15,500 at the time of the sale. Which of the following correctly shows the effect of the sale on the 2009 financial statements?
|
Row
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
Revenues or Gains
|
–
|
Expenses or Losses
|
=
|
Net Inc.
|
Cash
|
|
One
|
1,500
|
NA
|
1,500
|
1,500
|
NA
|
1,500
|
3,000 OA
|
|
Two
|
(1,500)
|
NA
|
(1,500)
|
NA
|
1,500
|
(1,500)
|
3,000 IA
|
|
Three
|
1,500
|
NA
|
1,500
|
NA
|
(1,500)
|
1,500
|
NA
|
|
Four
|
1,500
|
NA
|
1,500
|
1,500
|
NA
|
1,500
|
3,000 IA
|
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
|
11.Which of the following is an intangible asset with an identifiable useful life? (Points : 2)
|
Copyrights
Renewable franchises
Goodwill
Trademarks
|
|
12.Which of the following measurements would not be affected by the choice of depreciation methods? (Points : 2)
|
Debt to assets ratio
Total assets
The ratio of current assets to current liabilities
Return on equity ratio
|
|
13.Rouse Company owned an asset that had cost $32,000. The company sold the asset on January 1, 2009 for $8,000. Accumulated depreciation on the day of sale amounted to $26,000. Based on this information, the sale would result in a(n): (Points : 2)
|
$8,000 increase in total assets.
$6,000 cash inflow in the financing activities section of the cash flow statement.
$2,000 decrease in total assets.
$8,000 cash inflow in the investing activities section of the cash flow statement.
|
|
14.The recognition of depletion expense acts to: (Points : 2)
|
decrease assets and equity and increase cash flow from operating expenses.
increase cash flow from operating activities and does not affect the amount of total assets.
increase assets, equity, and cash flow from operating activities.
decrease assets and equity, with no effect on cash flow.
|
|
15.Parker Company purchased Eynon Corporation in 2004, recording $80,000 in goodwill at the time of purchase. In January, 2009, Parker decides that the value of the goodwill has declined substantially due to local economic and demographic changes. Parker estimates that the true value of the goodwill should only be $30,000. Which of the following shows the effect of this situation on the financial statements?
|
Row
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
Revenue
|
–
|
Expenses
|
=
|
Net Inc.
|
Cash
|
|
One
|
–
|
=
|
+
|
+
|
NA
|
NA
|
–
|
NA
|
=
|
NA
|
NA
|
|
Two
|
–
|
=
|
NA
|
+
|
–
|
NA
|
–
|
+
|
=
|
NA
|
– IA
|
|
Three
|
NA
|
=
|
NA
|
+
|
NA
|
NA
|
–
|
NA
|
=
|
NA
|
NA
|
|
Four
|
–
|
=
|
NA
|
+
|
–
|
NA
|
–
|
+
|
=
|
–
|
NA
|
(Points : 2)
|
Row One
Row Two
Row Three
Row Four
|
|
16.Which one of the following would not be classified as an intangible operational asset? (Points : 2)
|
Patent
Copyright
Iron Ore Deposit
Goodwill
|
|
17.On January 1, 2008, Stetson Company paid $160,000 to obtain a patent. Stetson expected to use the patent for 5 years before it became technologically obsolete. Based on this information, the amount of amortization expense on the December 31, 2010 income statement and the book value of the patent on the December 31, 2010 balance sheet would be: (Points : 2)
|
$32,000 / $64,000
$32,000 / $96,000
$64,000 / $64,000
$64,000 / $96,000.
|
|
18.Frye Company uses the LIFO cost flow method. They had no beginning inventory and Frye purchased 500 units of inventory that cost $4.00 each. At a later date, the company purchased an additional 600 units of inventory that cost $4.50 each. If Frye sold 800 units of the inventory, the amount of ending inventory appearing on the balance sheet would be: (Points : 2)
|
$1,400
$1,350
$1,200
$1,450
|
|
19.The inventory records for Freer reflected the following:
|
Jan 1
|
Beginning Inventory
|
300 units @ $2.10
|
|
Jan 12
|
First Purchase
|
400 units @ $2.40
|
|
Jan 21
|
Second Purchase
|
600 units @ $2.50
|
|
Jan 31
|
Sales
|
800 units @ $5.00
|
Assuming Freer uses a FIFO cost flow method, the ending inventory on January 31 is: (Points : 2)
|
$1,110
$980
$880
$1,250
|
|
20.The inventory records for Freer reflected the following:
|
Jan 1
|
Beginning Inventory
|
300 units @ $2.10
|
|
Jan 12
|
First Purchase
|
400 units @ $2.40
|
|
Jan 21
|
Second Purchase
|
600 units @ $2.50
|
|
Jan 31
|
Sales
|
800 units @ $5.00
|
Assuming that Freer uses a FIFO cost flow method, the cost of goods sold for January is: (Points : 2)
|
$1,590
$1,840
$1,740
$1,680
|
|
Aug 29, 2021 | Uncategorized
Multiple Choice Questions
1. What is the primary goal of financial management?
A) Increased earnings
B) Maximizing cash flow
C) Maximizing shareholder wealth
D) Minimizing risk of the firm
Difficulty: Easy Type: Memorization
2. The partnership form of organization
A) avoids the double taxation of earnings and dividends found in the corporate form of organization.
B) usually provides limited liability to the partners.
C) has unlimited life.
D) simplifies decision making.
Difficulty: Easy Type: Memorization
3. Increased productivity due to technology has
A) increased corporations’ reliance on debt for capital expansion needs.
B) created larger asset values on the firm’s historical balance sheet.
C) made it cheaper (in terms of interest costs) for firms to borrow money.
D) helped to keep corporate costs in check.
Difficulty: Medium Type: Conceptual
4. Insider trading occurs when
A) someone has information not available to the public which they use to profit from trading in stocks.
B) corporate officers buy stock in their company.
C) lawyers, investment bankers, and others buy common stock in companies represented by their firms.
D) any stock transactions
occur in violation of the Federal Trade Commissions restrictions on monopolies.
Difficulty: Medium Type: Memorization
Chapter 2 Review of Accounting
5. When a firm’s earnings are falling more rapidly than its stock price, its P/E ratio will:
A) remain the same
B) go up
C) go down
D) could go either up or down
Difficulty: Medium Type: Conceptual
6. The net worth of a firm
A) is usually the same as the firm’s market value.
B) is based on current asset costs.
C) is based on current liabilities.
D) none of the above.
Difficulty: Medium Type: Application
7. A statement of cash flows allows a financial analyst to determine
A) whether a cash dividend is affordable.
B) how increases in asset accounts have been financed.
C) whether long-term assets are being financed with long-term or short-term financing.
D) all of the above
Difficulty: Medium Type: Conceptual
8. A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
A) $120,000
B) $320,000
C) $520,000
D) none of the above
Difficulty: Medium Type: Application
Chapter 3 Financial Analysis
Multiple Choice Questions
9. The ______________ method of inventory costing is least likely to lead to inflation-induced profits.
A) FIFO
B) LIFO
C) Weighted average
D) Lower of cost or market
Difficulty: Medium Type: Conceptual
10. The Bubba Corp. had net income before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:
A) 5%
B) 12%
C) 20%
D) 25%
Difficulty: Medium Type: Application
11. XYZ’s receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
A) $60,000
B) $6,000,000
C) $24,000,000
D) none of the above
Difficulty: Hard Type: Application
12. A firm has total assets of $2,000,000. It has $900,000 in long-term debt. The stockholders equity is $900,000. What is the total debt to asset ratio?
A) 45%
B) 40%
C) 55%
D) none of the above
Difficulty: Hard Type: Application
Chapter 4 Financial Forecasting
13. Required production during a planning period will depend on the
A) beginning inventory of products.
B) sales during the period.
C) desired level of ending inventory.
D) all of the above
Difficulty: Medium Type: Conceptual
14. XYZ Co. has forecasted June sales of 600 units and July sales of 1000 units. The company maintains ending inventory equal to 125% of next month’s sales. June beginning inventory reflects this policy. What is June’s required production?
A) 1100 units
B) -0- units
C) 500 units
D) 400 units
Difficulty: Medium Type: Application
15. The difference between total receipts and total payments referred to as
A) cumulative cash flow.
B) beginning cash flow.
C) net cash flow.
D) cash balance.
Difficulty: Easy Type: Conceptual
16. In developing the pro forma income statement we follow four important steps:
1) compute other expenses,
2) determine a production schedule,
3) establish a sales projection,
4) determine profit by completing the actual pro forma statement.
What is the correct order for these four steps?
A) 1,2,3,4
B) 4,3,2,1
C) 2,1,3,4
D) 3,2,1,4
Difficulty: Medium Type: Conceptual
Chapter 5 Operating and Financial Leverage
17. In break-even analysis the contribution margin is defined as
A) sales minus variable costs.
B) sales minus fixed costs.
C) variable costs minus fixed costs.
D) fixed costs minus variable costs.
Difficulty: Easy Type: Memorization
18. Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true?
A) A has a lower break-even point than B, but A’s profit grows faster after the break-even.
B) A has a higher break-even point than B, but A’s profit grows slower after the break-even.
C) B has a lower break-even point than
A, but A’s profit grows faster after break-even.
D) B has a lower break-even point than A, and profit grows the same rate for both companies after the breakeven point.
Difficulty: Hard Type: Application
19. Heavy use of long-term debt may be beneficial in an inflationary economy because
A) the debt may be repaid in more “expensive” dollars.
B) nominal interest rates exceed real interest rates.
C) inflation is associated with the peak of a business cycle.
D) the debt may be repaid in “cheaper” dollars.
Difficulty: Medium Type: Conceptual
20. Under which of the following conditions could the overuse of financial leverage be detrimental to the firm?
A) Stable industry
B) Cyclical demand for the firm’s products.
C) Upswing of business cycle.
D) Low interest cost compared to return on assets
Difficulty: Medium Type: Application
Chapter 6 Working Capital and the Financial Decision
21. Risk exposure due to heavy short-term borrowing can be compensated for by
A) carrying highly liquid assets.
B) carrying illiquid assets.
C) carrying longer term, more profitable current assets.
D) carrying more receivables to increase cash flow.
Difficulty: Medium Type: Conceptual
22. When actual sales are greater than forecasted sales
A) inventory will decline.
B) production schedules might have to be revised upward.
C) accounts receivable will rise.
D) all
of the above
Difficulty: Medium Type: Application
23. Yield curves change daily to reflect
A) changing conditions in the money and capital markets.
B) new inflation expectations.
C) changing conditions in the overall economy.
D) all of the above.
Difficulty: Medium Type: Conceptual
24. Retail companies like Target and Limited Brands are more likely to have
A) stable sales and earnings per share.
B) cyclical sales but less volatile earnings per share.
C) cyclical sales and more volatile earnings per share.
D) cyclical sales but stable accounts receivable and inventory.
Difficulty: Easy Type: Conceptual
Chapter 7 Current Asset Management
25. When using the economic order quantity model
A) ordering costs increase as the level of inventory increases.
B) carrying costs decrease as the level of inventory increases.
C) costs are minimized when total carrying costs and total ordering costs are equal.
D) none of the above
Difficulty: Medium Type: Conceptual
26. Hedging
A) is a way to protect your accounts receivable position.
B) increases risk.
C) is a legal agreement to buy or sell a financial futures contract.
D) can be carried out with a futures contract.
Difficulty: Medium Type: Conceptual
27. Which of the following is not a true statement about commercial paper?
A) Finance paper is sold directly to the lender
by the finance company.
B) Finance paper is also referred to as direct paper.
C) Dealer paper is sold directly to the lender by a finance company.
D) Industrial companies, utility firms or finance companies too small to sell direct paper sell dealer paper.
Difficulty: Medium Type: Memorization
28. Which of the following best describes the benefits to the borrower of selling asset backed securities?
A) Due to the portfolio effect, the borrower can package up low quality accounts receivable and sell them for a premium price.
B) The borrower trades future cash flows for current cash flows.
C) The asset-backed security is likely to carry a high credit rating of AA or better.
D) b and c are correct.
Difficulty: Easy Type: Conceptual
29. Price Corp. is considering selling to a group of new customers and creating new annual sales of $70,000. 5% will be uncollectible. The collection cost on these accounts is 3.5% of new sales, the cost of producing and selling is 80% of sales and the firm is in the 31% tax bracket. What is the profit on new sales?
A) $5,554.50
B) $9,660.00
C) $7,245.00
D) none of the above.
Difficulty: Hard Type: Application
Chapter 8 Sources of Short-Term Financing
30. Mr. Jones borrows $2,000 for 90 days and pays $35 interest. What is his effective rate of interest?
A) 9.3%
B) 7.0%
C) 11.7%
D) None of the above
Difficulty: Medium Type:
Application
31. The prime rate
A) is the effective rate of interest for banks’ best customers.
B) has been quite volatile during the past two decades, moving as much as 8 percentage points in a 12-month period.
C) is usually lower than treasury bill rates.
D) none of the above
Difficulty: Medium Type: Memorization
32. Accounts receivable may be used as a source of financing by
A) pledging the receivables as loan collateral.
B) factoring the receivables to a finance company.
C) selling securities backed by the receivables.
D) all of the above
Difficulty: Medium Type: Conceptual
33. The required compensating balance is usually computed as a
A) percentage of customer loans outstanding.
B) factor of accounts receivable.
C) percentage of the bank’s commitments toward future loans.
D) a and c are correct
Difficulty: Medium Type: Conceptual
Chapter 9 The Time Value of Money
34. The concept of time value of money is important to financial decision making because
A) it emphasizes earning a return on invested capital.
B) it recognizes that earning a return makes $1 worth more today than $1 received in the future.
C) it can be applied to future cash flows in order to compare different streams of income.
D) all of the above
Difficulty: Medium Type: Conceptual
35. Mr. Nailor invests $5,000 in a certificate of deposit at his local
bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?
A) $2,915
B) $3,570
C) $6,254
D) $8,570
Difficulty: Medium Type: Application
36. Mr. Fish wants to build a house in 10 years. He estimates that the total cost will be $170,000. If he can put aside $10,000 at the end of each year, what rate of return must he earn in order to have the amount needed?
A) Between 11% and 12%
B) Between 8% and 9%
C) 17%
D) None of the above
Difficulty: Medium Type: Application
Chapter 10 Valuation and Rates of Return
37. A 20-year bond pays 12% on a face value of $1,000. If similar bonds are currently yielding 9%, What is the market value of the bond Use annual analysis.
A) over $1,000
B) under $1,000
C) over $1,200
D) not enough information given to tell
Difficulty: Easy Type: Application
38. An issue of preferred stock is paying an annual dividend of $5. The growth rate for the firm’s common stock is 14%. What is the preferred stock price if the required rate of return is 11%?
A) $45.45
B) $41.67
C) $35.71
D) none of the above
Difficulty: Easy Type: Application
39. Which of the following does not influence the yield to maturity for a security?
A) required real rate of return
B) risk free rate
C) business risk
D) yields of similar securities
Difficulty:
Medium Type: Conceptual
40. The cost of common stock is usually greater than the simple dividend yield because
A) investors perceive risk in common stock.
B) investors expect both a current dividend and future growth.
C) dividends are not tax-deductible.
D) the company must make profits before it can pay dividends.
Difficulty: Easy Type: Memorization
41. The dividend valuation model stresses the
A) importance of earnings per share.
B) importance of dividends and legal rules for maximum payment.
C) relationship of dividends to market prices.
D) relationship of dividends to earnings per share.
Difficulty: Easy Type: Memorization
Chapter 11 Cost of Capital
42. Although debt financing is usually the cheapest component of capital, it cannot be used to excess because
A) interest rates may change.
B) the firm’s stock price will increase and raise the cost of equity financing.
C) the financial risk of the firm may increase and thus drive up the cost of all sources of financing.
D) underwriting costs may change.
Difficulty: Medium Type: Conceptual
43. Each project should be judged against
A) the specific means of financing used to support its implementation.
B) the going interest rate at that point in time.
C) the cost of new common stock equity.
D) none of the above.
Difficulty: Medium Type: Conceptual
44. The cost of debt is
determined by taking the
A) present value of the interest payments and principal times one minus the tax rate.
B) historical yield on bonds times one minus the tax rate
C) estimated yield on new bond issues of the same risk times one minus the shareholder marginal tax rate.
D) none of the above
Difficulty: Medium Type: Conceptual
45. The pre-tax cost of debt for a new issue of debt is determined by
A) the investor’s required rate of return on issued stock.
B) the coupon rate of existing debt.
C) the yield to maturity of outstanding bonds.
D) all of the above.
Difficulty: Medium Type: Conceptual
Chapter 14 Capital Markets
46. During the next ten years, the major threat to the dominance of the U.S. money and capital markets will come from
A) Russia’s difficulty in transforming its economy into a capitalistic one.
B) Japan’s prolonged recession and banking crisis.
C) The Euro-zone countries comprising the European Monetary Union and a single currency.
D) The huge Chinese economy and its billion plus people.
Difficulty: Medium Type: Conceptual
47. With respect to the United States and its relationship with the rest of the world, it can be said that
A) the U.S. has invested more dollars in the rest of the world than foreign countries have invested in the U.S.
B) the U.S. has actively helped foreign countries finance the government deficits.
C) foreign investors hold
large positions in U.S. government securities.
D) All of the above.
Difficulty: Medium Type: Memorization
48. Financial instruments in the capital markets generally fall under what category in the Balance Sheet?
A) Short-term liabilities and equities.
B) Long-term liabilities and equities.
C) Near cash assets.
D) None of the above.
Difficulty: Easy Type: Conceptual
Chapter 16 Long-Term Debt and Lease Financing
49. With regard to interest rates and bond prices it can be said that
A) a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices.
B) a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices.
C) long-term rates are more volatile than short-term rates.
D) a decrease in interest rates will cause bond prices to fall.
Difficulty: Medium Type: Conceptual
50. Which one of these conditions must be met for a lease to qualify as a capital lease?
A) The lease contains a bargain purchase price at the end of the lease.
B) The lease must have a value of at least $10 million.
C) The lease must have a life of 10 years.
D) All of the above.
Difficulty: Medium Type: Memorization
Chapter 17 Common and Preferred Stock Financing
51. Which of the following is not a true statement?
A) Common stockholders have a residual claim to income.
B) Bondholders
may force a corporation into bankruptcy for failure to make interest payments.
C) Common stockholders are legally entitled to some dividend.
D) A minority interest can still elect members to the Board of Directors under cumulative voting even though someone else owns 51% of the stock.
Difficulty: Medium Type: Memorization
52. Kuhns Corp. has 200,000 shares of preferred stock outstanding that is cumulative. The dividend is $6.50 per share and has not been paid for 3 years. If Kuhns earned $3 million this year, what could be the maximum payment to the preferred stockholders on a per share basis?
A) $19.50 per share
B) $15.00 per share
C) $13.00 per share
D) $6.50 per share
Difficulty: Easy Type: Application
53. When comparing common stock of the same company it is fair to say that
A) all shares, no matter how many classes, are all created with the same equal rights.
B) companies sometimes have two different classes of shares with unequal rights to dividends and votes.
C) the Securities and Exchange Commission allows only one class of common stock.
D) investors are indifferent between class A and class B shares.
Difficulty: Easy Type: Memorization
54. Dr. J. wants to buy an IBM personal computer which will cost $2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn 7% annual return.
How much should he set aside?
A) $697.00
B) $627.93
C) $823.15
D) $531.81
Difficulty: Medium Type: Application
Problems to be solved-Chapter 2
55. The following is the December 31, 2003 balance sheet for the Epics Corporation.
Assets Liabilities
Cash $ 70,000 Accounts Payable $ 100,000
Accounts Receivable 150,000 Notes Payable 120,000
Inventory 280,000 Bonds Payable 300,000
Total Current Assets $ 500,000 Total Liabilities $ 520,000
Plant and Equipment $1,250,000 Equity
Less: Accum. Deprec. 250,000 Common Stock 300,000
Net plant and Equipment $1,000,000 Paid In Capital 200,000
Retained Earnings 480,000
Total Assets $1,500,000 Total Equity $ 980,000
Total Liab. & Equity $1,500,000
Sales for 2003 were $2,000,000, with the cost of goods sold being 55% of sales. Depreciation expense was 10% of the gross plant and equipment at the beginning of the year. Interest expense was 9% on the notes payable and 11% on the bonds payable. Selling and administrative expenses were $200,000 and the firm’s tax rate is 40%.
Prepare an income statement.
Difficulty: Medium
Answer:
56. Given the financial information for the A.E. Neuman Corporation,
a) Prepare a Statement of Cash Flows for the year ended December 31, 2002.
b) What is the dividend payout ratio for 2003?
c) If we increased the dividend payout ratio to 100%, what would happen to retained earnings?
Difficulty: Medium to Hard
Answer:
Aug 29, 2021 | Uncategorized
1. Which of the following accounts would not appear on a balance sheet? (Points : 2)
Equipment
Interest Payable
Interest Revenue
Retained Earnings
2. Which of the following statements about the Public Company Accounting Oversight Board (PCAOB) is not true? (Points : 2)
The PCAOB was created by the Sarbanes-Oxley Act to regulate the accounting firms that audit financial statements of public companies.
Independent auditors are required to register with the PCAOB.
The PCAOB has the power to impose sanctions against a registered accounting firm.
The PCAOB requires public accounting firms to conduct peer reviews of other such firms and make their report public.
3. Which financial statement matches asset increases from operating a business with asset decreases from operating the business? (Points : 2)
Statement of changes in equity
Balance sheet
Income statement
Statement of cash flows
4. The Blumer Company entered into the following transactions during 2010:
The company was started with $22,000 of common stock issued to investors for cash.
On July 1, the company purchased land that cost $15,500 cash.
There was $700 of supplies purchased on account.
The amount of total liabilities appearing on the December 31, 2010 balance sheet would be: (Points : 2)
$3,600
$4,000
$475
$700
5. Rowena Company spent cash to purchase equipment. As a result of this event: (Points : 2)
total liabilities increased.
total assets increased.
net income increased.
total assets were unchanged.
6. ABC Company acquired $23,000 by issuing common stock to investors. Which of the following choices accurately reflects how this event would affect the company’s financial statement?
RowAssets=Liab.+EquityRev.-Exp.=Net Inc.Cash Flow
One23,000=NA+23,000NA-NA=NA23,000 FA
Two23,000=NA+23,00023,000-NA=23,000NA
Three23,000=NA+23,00023,000-NA=23,00023,000 FA
Four23,000=23,000+NA23,000-NA=23,00023,000 OA
(Points : 2)
Row One
Row Two
Row Three
Row Four
7. Parrot Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event would affect the company’s financial statements?
Balance SheetIncome Statement
RowAssets=Liab.+EquityRev.-Exp.=Net Inc.
Statement of Cash Flows
OneNA=300+(300)NA-300=(300)NA
Two(300)=NA+(300)NA-300=(300)(300) FA
Three(300)=NA+(300)NA-NA=NA(300) FA
Four(300)=NA+(300)NA-NA=NA(300) OA
(Points : 2)
Row One
Row Two
Row Three
Row Four
8. Sefcik Company purchased supplies on account. Which of the following choices accurately reflects how this event would affect the company’s financial statements
RowAssets=Liab.+EquityRev.-Exp.=Net Inc.Cash Flow
One+=NA+-NA-+=-NA
Two+ -=NA+NANA-NA=NA- OA
Three+=++NANA-NA=NANA
Four+ -=NA+NANA-NA=NANA
(Points : 2)
Row One
Row Two
Row Three
Row Four
9. Ohio Company provided services to a customer for $1,700 cash. As a result of this event: (Points : 2)
total assets decreased.
total liabilities increased.
retained earnings increased.
cash flows from financing activities increased.
10. The claims of a business s creditors are called: (Points : 2)
assets.
liabilities.
equity.
revenue.
11. The Sarbanes-Oxley Act: (Points : 2)
was prompted by corporate bankruptcies and audit failures.
limits an auditor s ability to provide non-audit services to a client.
clarifies the responsibility of a company s management for its financial statements.
all of the above.
12. Hardin Company began operations in 2010. During the year, the following cash transactions
occurred:
Issued stock for $40,000
Borrowed $24,000 from bank
Provided services to customers for $53,000 cash
Paid back $8,000 of the loan from the bank
Paid rent expense, $9,000
Paid operating expenses, $29,000
Assuming that Hardin engaged in no transactions during the year other than those listed above, what was the amount of net income or loss for the year? (Points : 2)
$19,000 net income
$15,000 net income solution: 53000-9000-29000 = 15000
$12,000 net income
$11,000 net loss
13. In event of liquidation of a business: (Points : 2)
creditors have priority claim on the business s assets.
investors have priority claim on the business s assets.
resource users have priority claim on the business s assets.
stakeholders are assured of receiving the resources they had provided to the business.
14. The Blumer Company entered into the following transactions during 2010: There was $700 of supplies purchased on account. Sales on account amounted to $9,500. Cash collections of receivables were $5,500. Supplies on hand as of December 31, 2010 amounted to $225. The beginning balance of supplies at January 1, 2010 was $100.
The adjusting entry necessary to record the supplies expense would result in a: (Points : 2)
$700 increase in assets and liabilities.
$700 decrease in assets and equity.
$575 decrease in assets and equity.
$575 increase in assets and liabilities.
15. The amount of land owned by a business appears on which financial statement? (Points : 2)
Income statement
Statement of changes in stockholders equity
Statement of cash flows
Balance sheet
16. The purpose of the accrual basis of accounting is to: (Points : 2)
report revenue when cash is received.
improve the matching of revenue and expense in the proper period.
report expenses when cash disbursements are made.
improve the company’s earnings per share.
17. Which of the following groups has primary responsibility for establishing generally accepted accounting principles for businesses in the United States? (Points : 2)
The U.S. Supreme Court
Each state s Secretary of the Treasury
The Financial Accounting Standards Board
The Internal Revenue Service
18. In 1998, Parker Corporation purchased land for $130,000. In 2010, Parker Company had the land appraised, and its value was estimated to be $190,000. Also during 2010, another company offered Parker $145,000 for the parcel of land. When the balance sheet is prepared at the end of 2010, at what dollar amount should the land be reported? (Points : 2)
$190,000
$145,000
$130,000
None of the above
19. Which of the following accounts is a permanent account (an account that is not closed)? (Points : 2)
Prepaid Insurance
Service Revenue
Salaries Expense
Rent Expense
20. Which of the following lists represents the correct sequence of stages in an accounting cycle? (Points : 2)
Record transactions, prepare statements, adjust accounts, and close temporary accounts
Prepare statements, close temporary accounts, record transactions, and adjust accounts
Close temporary accounts, record transactions, prepare statements, and adjust accounts
Record transactions, adjust accounts, prepare statements, and close temporary accounts
Aug 29, 2021 | Uncategorized
Assignment 2: Johnson Controls Capital Investments
Due Week 9 and worth 450 points
Visit the Website of Johnson Controls Inc., located at http://www.johnsoncontrols.com, and review its 2012 financial forecasts. According to the forecasts, Johnson Controls will increase capital investments to approximately $1.7 billion. More than 70% of the company’s capital expenditures in 2012 are associated with growth and margin expansion opportunities.
Write a five to six (5-6) page paper in which you:
- Suggest a methodology to supplement the traditional methods for evaluating the capital investments of Johnson Controls in the emerging markets to reduce risk providing a rationale of how risk will be reduced.
- Assess the potential impact of inflation on planned capital investments in China and examine approaches for an accurate evaluation of the investments. Suggest how this knowledge may impact management s decisions.
- Contrast the modifications you would make in evaluating the projects to increase internal capacity in North America to evaluating expansion projects in the global market and how this information will impact the decisions made related to expansion.
- Examine the benefits of using sensitivity analysis in evaluating the projects for Johnson Controls and how this approach can provide a competitive advantage for the company.
- Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student s name, the professor s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
- Plan and evaluate capital investments.
- Use technology and information resources to research issues in managerial accounting.
- Write clearly and concisely about managerial accounting using proper writing mechanics.
Aug 29, 2021 | Uncategorized
Characteristics of Budgets
E 1.You recently attended a workshop on budgeting and overheard the following
comments as you walked to the refreshment table:
1. Budgets are the same regardless of the size of an organization or management s
role in the budgeting process.
2. Budgets can include financial or nonfinancial data. In our organization, we
plan the number of hours to be worked and the number of customer contacts we want our sales people to make.
3. All budgets are complicated. You have to be an expert to prepare one.
4. Budgets don t need to be highly accurate. No one in our company stays
within a budget anyway.
Do you agree or disagree with each comment? Explain your answers.
Aug 29, 2021 | Uncategorized
Operating Activities” Please respond to the following:
- From the e-Activity, evaluate the logic of reflecting key person life insurance in the operating activities of the cash flow statement and determine if this presentation is misleading to users of the financial statements.
- Currently, Financial Accounting Standards Board (FASB) has not provided guidance on the appropriate section for reflecting key person life insurance. As a member of FASB, determine the guidance you would provide for key person insurance in the cash flow statement. Provide your rationale.
“Free Cash Flow” Please respond to the following:
- Analyze the impact of erroneous classifications in the operating activities section of the cash flow statement on free cash flow and how this distortion can impact the decisions made by financial statement users.
- Assess the importance of free cash flow in a growth company. Provide a brief scenario of a specific type of business that would benefit from free cash flow.
Key-Person Insurance: a Cash-Flow Puzzle
With many companies sitting atop piles of cash and looking for productive ways to use it, buying life-insurance policies on key executives is an increasingly popular tactic.
Although that can be financially effective, it requires companies to make a critical accounting decision for which there is no clear guidance. What they decide can affect operating and free-cash flow and, therefore, influence investor behavior.
Premiums paid on company-owned life insurance policies typically generate a net yield of 0% to 4%, according to Scott Bresnick, an independent sales representative for life insurance products. In other words, for each premium-dollar paid, the cash surrender value of the policy grows by $1 to $1.04. Also, the policies can provide tax-deferred growth and tax-free death benefits, and while in many cases their value is tied in part to stock indices, they often stipulate that for the first few years the policy value can t decline below the amount of premiums paid.
That means such policies can outperform the paltry returns that companies are currently getting on their cash, especially given that some banks now charge deposit fees that may outweigh the interest on an account s principal.
As for the accounting issues, some companies record the premiums on their cash-flow statements as a use of cash for operating activities. The most likely rationale for that approach, suggests Charles Mulford, an accounting professor at Georgia Tech University and director of the Georgia Tech Financial Analysis Lab, is that since the companies expense the premium payments (net of any increase in the cash surrender value of the policies) on their income statements, they should also record the use of cash in the operating-activities section of their cash-flow statements.
But that s faulty thinking, Mulford says. First, while U.S. generally accepted accounting principles say nothing about how to treat corporate-owned life insurance premiums on cash-flow statements, they are classified as an investing use of cash under the Accounting Standards Codification. While there’s no rule, there is an implication that COLI premiums should be designated as investments on cash-flow statements. Classifying these premiums as an operating use of cash appears to run contrary to the spirit, if not the letter, of GAAP, says Mulford.
More important, though, classifying premiums under operating activities can either deflate or inflate both operating cash flow and free cash flow — key indicators of a company s financial health.
The line that appears in the operating-activities section of many cash-flow statements as change in cash surrender value of insurance, or similar wording, normally reflects some mix of premiums paid, any company borrowing from or sales of policies, and stock movements.
Depending on whether those factors cumulatively cause the cash surrender value to increase or decrease, operating and free cash flow will also gain or lose. In cases where those cash-flow metrics are dragged down, the company may have contributed by not classifying the premiums as investment activity. In the opposite case, the company in effect has artificially boosted those key metrics, perhaps misleading investors, say both Mulford and Bresnick.
Mulford s Financial Analysis Lab has just published a report identifying four companies that in their fiscal 2011 financials classified premiums on COLI policies as cash used for operations. Two of the four are multibillion-dollar companies (Darden Restaurants and Jack in the Box) and two are in the range of $135 million to $165 million in revenue (Golden Enterprises and Fisher Communications, respectively).
Changes in the cash surrender value of those companies policies during fiscal year 2011 caused the most drag ($1.6 million) on the key cash-flow metrics of Fisher Communications. The other losers were Jack in the Box (a reduction of $1.1 million in its operating and free cash flow) and Golden Enterprises. Darden Restaurants, meanwhile, enjoyed a boost of $13.7 million. (None of the four companies responded to a request to comment for this article.)
Much is Guesswork
It s apparent that many other companies include such insurance premiums within the operating activities section, because they’re not accounted for in the cash investment section. Beyond that, much is guesswork. In many cases, you can t tell from the financials explicitly how they ve done it, says Mulford. You have to infer from their filings, and you can t always get that inference.
Classifying premiums as an operating use of cash rather than an investing use can distort reported cash flow and free-cash flow. But GAAP is silent.
More specifically, most companies that include premium payments within operating activities do not actually state how much they paid in premiums. They show the gain or loss in the cash surrender value of their policies, but don’t show how much of that result is attributable to premium payments or the other factors that cause surrender value to fluctuate.
Not only can classifying the premiums within operating activities be misleading to investors, it also can be illogical, Mulford notes. If, for example, $100 in premiums increases cash surrender value by $100 or more, it should clearly be classified as investment. If that $100 increases cash surrender value by only, say, $80 (because the value is tied partly to a stock index), $20 should be classified as operating cash flow and $80 as investment cash flow.
Mulford says the matter doesn t rise to the level at which a whole new accounting standard is needed, though it s the kind of smaller issue that the Emerging Issues Task Force of the Financial Accounting Standards Board was created to render opinions on. It s a classification issue faced by all CFOs with company-owned life-insurance policies, he says.
While the task force s opinions do not have the force of a FASB standard, companies typically follow them once they re issued. FASB, though, has not yet said whether the committee will look into the premium-classification matter.
Mulford says he first looked at this topic for a book he wrote on cash-flow classifications that was published in 2005, but he didn t make much of it and basically let it drop.
Recently, though, Bresnick approached him after putting 36 hours of research into the subject. He d been trying to sell a key-person life-insurance policy to a large technology company. Its finance chief was quite interested, but declined the deal after his tax advisers told him the premiums would have to be classified as operating expense.
Bresnick says he responded, No, I don t think so; where the premium generates an equal or greater cash value, it s an investment. The answer was still no, so he performed his research and brought the results to Mulford, who got his team working on it within a few weeks.
Mulford was enthusiastic partly because so many companies are buying these policies. It was a common practice until 2004, when new regulations prohibited using the present value of the future proceeds on the policies to offset deferred-compensation liabilities, which was commonly done at the time. For that reason, the market for the products essentially died until about 2010. That’s when life-insurance products began to appear that provided gains in cash surrender values in excess of the return companies could get from money markets.
Aug 29, 2021 | Uncategorized
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Clopack Company manufactures one product that goes through one processing department called Mixing. All raw materials are introduced at the start of work in the Mixing Department. The company uses the weighted-average method to account for units and costs. Its Work in Process T-account for the Mixing Department for June follows (all forthcoming questions pertain to June):
|
| Work in Process Mixing Department |
|
|
|
| June 1 balance |
28,000 |
Completed and transferred |
|
| Materials |
120,000 |
to Finished Goods |
|
| Direct labor |
79,500 |
|
|
| Overhead |
97,000 |
|
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| June 30 balance |
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The June 1 work in process inventory consisted of 5,000 pounds with $16,000 in materials cost and $12,000 in conversion cost. The June 1 work in process inventory was 100% complete with respect to materials and 50% complete with respect to conversion. During June 37,500 pounds were started into production. The June 30 work in process inventory consisted of 8,000 pounds that were 100% complete with respect to materials and 40% complete with respect to conversion.
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| Required: |
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How many units were completed and transferred to finished goods during the period
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Compute the equivalent units of production for materials.
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Compute the equivalent units of production for conversion.
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What is the amount of the cost of beginning work in process inventory plus the cost added during the period for materials?
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What is the amount of the cost of beginning work in process inventory plus the cost added during the period for conversion?
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What is the cost per equivalent unit for materials (Round your answer to 2 decimal places.)
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What is the cost per equivalent unit for conversion?
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What is the cost of ending work in process for materials (Do not round your intermediate calculation.)
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What is the cost of ending work in process for conversion?
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What is the cost of materials transferred to finished goods (Do not round your intermediate calculation.)
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What is the amount of conversion cost transferred to finished goods?
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What is the total cost to be accounted for?
| What is the total cost accounted for? |
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Aug 29, 2021 | Uncategorized
Jonathan Macintosh is a highly successful Pennsylvania orchardman who has formed his own company
to produce and package applesauce. Apples can be stored for several months in cold storage, so applesauce
production is relatively uniform throughout the year. The recently hired controller for the firm is
about to apply the high-low method in estimating the company s energy cost behavior. The following
costs were incurred during the past 12 months:
Month Pints of Applesauce Produced Energy Cost
January ………………………………………………………. 35,000 ………………………………………. $23,400
February ……………………………………………………… 21,000 ………………………………………. 22,100
March ………………………………………………………… 22,000 ………………………………………. 22,000
April …………………………………………………………… 24,000 ………………………………………. 22,450
May …………………………………………………………… 30,000 ………………………………………. 22,900
June ………………………………………………………….. 32,000 ………………………………………. 23,350
July ……………………………………………………………. 40,000 ………………………………………. 28,000
August ……………………………………………………….. 30,000 ………………………………………. 22,800
September …………………………………………………… 30,000 ………………………………………. 23,000
October ………………………………………………………. 28,000 ………………………………………. 22,700
November ……………………………………………………. 41,000 ………………………………………. 24,100
December …………………………………………………… 39,000 ………………………………………. 24,950
Required:
1. Use the high-low method to estimate the company s energy cost behavior and express it in
equation f orm.
2. Predict the energy cost for a month in which 26,000 pints of applesauce are produced.
Aug 29, 2021 | Uncategorized
True/False
1.Managerial accounting information includes both historical and estimated data.
2. The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.
3.If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.
4.For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
5.A receiving report is prepared when purchased materials are first received by the manufacturing department.
6.In applying the first-in, first-out method of costing inventories, if 8,000 units which are 30% completed are in process at June 1, 28,000 units are completed during June, and 4,000 units were 75% completed at June 30, the number of equivalent units of production for June was 33,400.
7.The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.
8.If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.
9.If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.
10.Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.
11. In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.
12.In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.
13.In contribution margin analysis, the unit price or unit cost factor is computed as the difference between the actual unit price or unit cost and the planned unit price or unit cost, multiplied by the actual quantity sold.
14.The objectives of budgeting are (1) establishing specific goals for future operations, (2) executing plans to achieve the goals, and (3) periodically comparing actual results with these goals.
15.The flexible budget is, in effect, a series of static budgets for different levels of activity.
Multiple Choice (2 points each)
16. In most business organizations, the chief management accountant is called the:
a. chief accounting officer
b. controller
c. chairman of the board
d. chief executive officer
17. The following are all product costs except:
a. Direct materials
b. Sales and administrative expenses
c. Direct labor
d. Factory overhead
18. All of the following are ways that managers use managerial information except
a. to evaluate the company s stock performance
b. to evaluate the performance of a company s operations
c. to support long-term planning decisions
d. to determine the cost of manufacturing a product
19. Job order costing and process costing are
a. pricing systems.
b. cost accounting systems.
c. cost flow systems.
d. inventory tracking systems.
20. The recording of the jobs completed would include a debit to:
a. Factory Overhead
b. Finished Goods
c. Work in Process
d. Cost of Goods Sold
21. The following budget data are available for Oldest Company:
Estimated direct labor hours 12,000
Estimated direct dollars $90,000
Estimated factory overhead costs $179,000
If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is
a. $2.57
b. $.51
c. $.067
d. $14.92
22. Which of the following entities would probably use a process costing system?
a. A custom boat builder
b. A custom furniture manufacturer
c. A one of a kind jewelry creator
d. An oil refinery.
The following unit data were assembled for the assembly process of the Super Co. for the month of June. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO process.
Units
Beginning work in process 5,000
(60% complete)
Units started in September 51,000
Ending work in process 4,000
(30% complete)
23. The number of equivalent units produced with respect to direct materials costs is:
a. 51,000
b. 50,000
c. 47,000
d. 56,000
Department J had no work in process at the beginning of the period, 18,000 units were completed during the period, 2,000 units were 30% completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period (Assuming the company uses FIFO and rounds average cost per unit to two decimal places):
Direct materials (20,000 at $5) $ 100,000
Direct labor 142,300
Factory overhead 57,200
24. Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?
a. $90,000
b. $283,140
c. $199,500
d. $16,438
25. Which of the following statements is correct concerning variable and fixed costs?
a. Both costs are constant when considered on a per unit basis.
b. Variable costs vary in total and fixed costs are constant on a per unit basis.
c. Fixed costs are constant in total and variable costs are constant on a per unit basis.
d. Variable costs are constant in total and fixed costs are constant on a per unit basis.
26. If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point (dollars)?
a. $1,875,000
b. $300,000
c. $2,500,000
d. $1,250,000
27. When a business sells more than one product at varying selling prices, the business’s break-even point can be determined as long as the number of products does not exceed:
a. two
b. three
c. fifteen
d. there is no limit
28. If variable selling and administrative expenses totaled $120,000 for the year (80,000 units at $1.50 each) and the planned variable selling and administrative expenses totaled $120,900 (78,000 units at $1.55 each), the effect of the unit cost factor on the change in variable selling and administrative expenses is:
a. $900 decrease
b. $3,100 decrease
c. $4,000 decrease
d. $3,100 increase
29. A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed:
a. flexible budgeting
b. continuous budgeting
c. zero-based budgeting
d. master budgeting
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January – 200,000 units; February – 180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales.
30. What would be the budgeted production for March?
a. 256,000
b. 206,000
c. 214,000
d. 298,000
Problems
31. The Cake Factory has the following information for the month of March. Prepare a schedule of cost of goods manufactured. (6 points)
Purchases $85,000
Materials inventory, March 1 6,000
Materials inventory, March 31 7,000
Direct labor 25,000
Factory overhead 34,000
Work in process, March 1 17,000
Work in process, March 31 18,500
Finished goods inventory, March 1 21,000
Finished goods inventory, March 31 23,000
Sales 235,000
Sales and administrative expenses 78,000
32. A summary of the time tickets for August follows:
Description Amount Description Amount
Job No. 321 $11,000 Job No. 342 $8,300
Job No. 329 8,200 Job No. 346 5,700
Job No. 336 2,000 Indirect labor 5,000
Present the journal entries to record (a) the labor cost incurred and (b) the application of factory overhead to production for August. The factory overhead rate is 70% of direct labor cost. (5 points)
33. The cost of direct materials transferred into the Bottling Department of the Desert Springs Water Company is $27,225. The conversion cost for the period in the Bottling Department is $7,596. The total equivalent units for direct materials and conversion are 60,500 and 63,300 respectively. Determine the direct materials and conversion cost per equivalent unit. (6 points)
34. Barrack Inc. manufactures laser printers within a relevant range of production of 50,000 to 70,000 printers per year. The following partially completed manufacturing cost schedule has been prepared: (15 points)
Number of Printers Produced
70,00090,000100,000
Total costs:
Total variable costs $350,000 (d) (j)
Total fixed costs 630,000 (e) (k)
Total costs $980,000 (f) (l)
Cost per unit:
Variable cost per unit (a) (g) (m)
Fixed cost per unit (b) (h) (n)
Total cost per unit (c) (i) (o)
35. On August 31, the end of the first year of operations, during which 18,000 units were manufactured and 13,500 units were sold, Finberg Inc. prepared the following income statement based on the variable costing concept:
Finberg Inc.
Income Statement
For Year Ended August 31, 20–
Sales $297,000
Variable cost of goods sold:
Variable cost of goods manufactured$279,000
Less ending inventory 67,500
Variable cost of goods sold 211,500
Manufacturing margin $ 85,500
Variable selling and administrative
expenses 40,500
Contribution margin $ 45,000
Fixed costs:
Fixed manufacturing costs $ 12,000
Fixed selling and administrative
expenses 10,800 22,800
Income from operations $ 22,200
========
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Aug 29, 2021 | Uncategorized
Managerial accounting project. Due 4/15.
MIDWEST UNIVERSITY LIBRARY Case Study By L. Melissa Walters and Teresa M. Pergola
This case is designed to help you develop a working understanding of fundamental cost concepts (cost behavior, cost traceability, cost flexibility, and unit costs) and the proper use of cost data for managerial analysis purposes. The case narrative describes a business scenario and a problematic managerial analysis based on certain cost data. The case requirements ask you to apply basic cost concepts to analyze the cost data, evaluate the use of cost data in the analysis described in the case narrative, and then effectively communicate the results of your analysis and evaluation in the form of a professional written memo. Midwest University Library maintains a small book donations department in the basement section of the library. The process for accepting the typical donated book includes searching the current holdings to determine if the book is already held by the library, placing a small inventory tracking device (a radio frequency identification [RFID] tag) in the book, assigning the book a card catalog number, and finally entering the book into the library s online computer database/card catalog system. The process of accepting a collection of periodicals involves a similar process. When the current holdings search reveals that the library already holds the donated item, and when there is no need for duplicate copies, the items are set aside in a small storage area and offered for sale twice a year during end-of-semester book sales. Books that are not sold during the book sale are donated to charity. In the previous year, the library raised $1,500 from the bi-annual book sales. In recent years, the library s donations department has been quite active. Sally Reading, the librarian responsible for the donations department, has become exceedingly effective at soliciting donations from alumni, retiring academics, eccentric collectors, and estates all over the world. Many of the items are in-print texts that the library would otherwise have had to purchase at full price. However, some of the donated books are extremely rare or out of print and would be quite expensive if purchased by the library. Her effort has, to some extent, compensated for the dwindling library budget and allowed the library to create and maintain an exceptional, although unusual, library offering. In addition, the university library has acquired a unique academic reputation due to some of the rare holdings acquired through the donations department s efforts. Both academics and graduate students from other universities make use of Midwest University s peculiar library resources. Perhaps more importantly, the number of students seeking specialized graduate studies at Midwest (especially in the areas of literature, mathematics, and ancient folklore) has increased significantly. There is some evidence to suggest that this is due, at least in part, to the increased visibility of the university, along with the research potential afforded by the unique resources accumulating at the university s library (due almost entirely to the success of the donations department s activities). The Midwest University Library donations department is operated by the head librarian, Sally Reading, and a graduate assistant, Joe Filer, a folklore student at Midwest University. The head librarian is a salaried position ($44,000 per year), and since Sally currently spends approximately one-quarter of her time soliciting and processing book donations, one-fourth of her contracted annual base salary ($11,000) is allocated to the book donations department. The Midwest University Library is also allotted $5,200 per academic year in additional funds to support the library donations function. This meager sum is used to provide a graduate work-study student a stipend to assist Sally in the donations department during the fall and spring semesters. Work-study students typically work 20 hours per week and are paid on an hourly basis at a rate of $10 per hour. A typical semester is 13 weeks long. Currently, Joe is working all his allotted hours in the book donations department. If he were not fully utilized by the book donations department, he would work elsewhere in the university, as his work hours and stipend are guaranteed as a part of his financial aid program. In addition, the library has allotted a small space in the basement of its main building for donations activities. The library allocates a portion of the library s general facilities costs ($1,500 per year). General facility costs include depreciation on the building, property taxes, insurance, general maintenance costs, and utilities. Since the library s catalog system is computerized, the only other applicable cost is for the RFID inventory tags, which are relatively minimal and cost $0.40 per book; these RFID tags are purchased by the library as needed. Typically, Sally and her assistant solicit and process an average of 1,000 books per academic year and can, without too much difficulty, solicit and process up to 1,300 books per academic year. However, each year for the past five years, the number of books donated and processed for the library has increased noticeably. Unfortunately, Paige, as head librarian, has library duties other than donations and cannot devote any additional time to the donations department. Joe s current work-study contract is restricted to only 20 hours per week and only applies to the fall and spring semester. Sally has no additional help during the summer months, which creates quite a backlog of unprocessed books going into the fall semester. Of late, Sally and Joe have begun to experience difficulty processing the increasing number of book donations, and some recent acquisitions are still sitting in boxes on the floor of the donations department s basement space. Consequently, the library has approached the university budget committee with a request to increase the funds allotted to the book donations department by $5,000 per year. These additional funds would be used to employ part-time students to work an additional ten hours per week during the fall and spring semester, and to work 20 hours per week during the summer months to compensate for the increasing number of donated books. This would increase the department s annual capacity to approximately 2,000 books. Sally can handle the workload between semesters and during the holiday breaks herself with no additional help. Using the cost information provided by the library, the budget committee computed a unit cost per book of $18.10, calculated as follows: Librarian salary allocation $11,000 Graduate assistant stipend @ $5,200 Facility cost allocation $1,500 Total costs $17,700 Per book (based on 1,000 books) $17.70 RFID tag per book $.40 Total unit cost $18.10 (@ 13 weeks @ 20 hours per week = 260 hours per semester at $10 per hour = $2,600 each semester for a total of $5,200 per year.) The committee has since denied the request for additional funds and expressed the following sentiments. First, the unit cost of $18.10 per donated book is already too high; an additional $5,000 per year would bring the cost per book to $23.10 per book, an entirely unacceptable cost for the processing of an old used book. Librarian salary allocation $11,000 Graduate assistant stipend $5,200 Facility cost allocation $1,500 Part-time student help $5,000 Total costs $22,700 Per book (based on 1,000 books) $22.70 RFID tag per book $.40 Total unit cost $23.10 (* 10 hours per week x 13 weeks = 130 hours per semester for the fall and spring semesters; 20 hours per week for 12 weeks in the summer = 240 hours; total additional hours are 130 + 130 + 240 = 500 hours x $10 per hour = $5,000.) Second, at the already-high cost of $18.10 per book, the library can hardly afford to accept more than 1,000 books per year; if, for instance, the library were to accept 2,000 books, it would cost the university $36,200. Finally, we have serious doubts as to the value of the donations department; if it were eliminated entirely, the university could save, at the very least $23,100 per year. These savings could be used to support some other, more worthwhile function within the library. Librarian salary allocation $11,000 Graduate assistant stipend $5,200 Facility cost allocation $1,500 Part-time student help * $5,000 RFID tags ($.40 x 1,000 books) $400 Total savings $23,100 Case Requirements 1. Explain what is meant by an activity measure. Identify an appropriate activity measure for analyzing the cost structure of the book donations department within the university s library. Justify your answer. Is the activity measure you identified a true cost driver? Explain. 2. Explain what is meant by relevant range. Based on your chosen activity measure above, identify the current relevant range of activity for the book donations department. Justify your answer. Explain why the consideration of relevant range is significant to the analysis here. 3. Cost Analysis: a. Identify each cost associated with the library s book donations department and classify as fixed or variable within the relevant range of activity you identified above. Justify your classifications. Would your classifications change if the book donations department s activity moved outside the relevant range of activity you identified above? Explain. b. Classify each cost associated with the library s book donations department as direct or indirect, assuming that the cost object of interest is the book donations department as a whole. Justify your classification. Would your classifications change if you were to assume that the cost object of interest were an individual book processed? Explain. c. Classify each cost associated with the library s book donations department as committed or flexible. Justify your classifications. Would your classification of the graduate student s stipend change if you were told that the stipend was guaranteed only for the current academic year? Explain. Would your classification of the RFID tag cost change if you were told that the library is contracted to purchase the inventory tags in lots of a hundred tags at a time? Explain. d. Explain how the analysis of cost behavior, cost traceability, and cost flexibility is relevant to the analysis of the book donations department s request for additional funds. 4. Explain what is meant by a unit cost. Is the initial unit cost used by the budget committee computationally appropriate? Explain. Does the inclusion of fixed costs as a component of the unit costs make it problematic for managerial analysis purposes? Explain. 5. Examine and discuss the use of cost data in each of the three statements made by the budget committee justifying their decision to deny the request for additional funds. In your discussion, address the following for each statement: Are their cost computations correct? What assumptions did they make? What errors in logic did they make? Prepare a revised cost computation. 6. In a professional memo (use proper headings and formatting) directed to the Chair of the Budget Committee: (1) summarize (do not reiterate all of the details) your evaluation of the budget committee s analysis (in Part 5), and (2) based on your analysis, present a succinct, logical argument in support of the library s request for additional funds for the book donations department. Limit your logical argument to three or four key points.
Aug 29, 2021 | Uncategorized
1. Not all pricing methods apply to the market place. In manufacturing it is common practice to determine the cost of a product as it moves through it transformation to a finished product. (1) Explain how a transfer price could be used to make other financial decisions and (2) provide an example of the application of transfer price data
2. Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain how proper approvals can satisfy the purpose of internal control and (2) provide an example of how this control could be implemented
3. To promote better management control of business centers financial responsibilities are assigned to managers. There are three basic types of responsibility centers. (1) Explain how a investment center operates (10 points) and (2) provide an example of its application in business.
4. To evaluate the financial operation and health of a business ratio analysis is used. (1) Provide the formula for Debt to Total Assets Ratio and explain how it is computed and (2) provide an example of how this ratio can be used in decision making in business
5. Planning for capital investments is an important function of management. You are responsible for considering purchasing new equipment for $450,000. It is expected that the equipment will produce net annual cash flows of $55,000 over its 10-year useful life. Annual depreciation will be $45,000. Compute the cash payback period. (1) Explain the pros and cons of using this method to evaluate a capital expenditure (10 points) and (2) show all computations required to arrive at the correct solution.
6. To adequately plan for the success of the business a budget must be developed. (1) Identify the budgets that comprise the master budget and (2) Describe the sources for preparing the budgeted income statement. I
7. Financial statement analysis is used by investors, creditors and managers of business to evaluate the operation and health of the business. This information is in part the basis for decision making. (1) Identify ratios used to evaluate the profitability of a company and (2) provide an example of how the results of this analysis could be used to make business decisions.
8. There are three different forms of business; sole-proprietor, partnership and corporation. (1) Explain why a corporation’s separation of ownership and management may be a benefit (10 points) and (2) as a stockholder explain why preemption may be a benefit.
9. Allgood Inc. has fixed costs of $480,000. It has a unit selling price of $6, unit variable cost of $4.50, and a target net income of $1,500,000. Compute the required sales in units to achieve its target net income. (1) Explain how the analysis is to be performed and (2) Show all computations required to arrive at the correct answer.
10. At the Wilber Company it costs $30 per unit ($20 variable and $10 fixed) to make a product at full capacity that normally sells for $45. A foreign wholesaler offers to buy 3,000 units at $24 each. Wilber will incur special shipping costs of $2 per unit. Assuming that Wilber has excess operating capacity, indicate the net income (loss) Wilber would realize by accepting the special order. (1) Explain how the analysis is to be performed (10 points) and (2) Show all computations required to arrive at the correct answer.
Aug 29, 2021 | Uncategorized
Sorce Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
|
Activity
|
Cost Driver
|
Total Cost
|
|
1. Materials handling
|
Number of requisitions
|
$35,000
|
|
|
2. Machine setups
|
Number of setups
|
27,500
|
|
|
3. Quality inspections
|
Number of inspections
|
27,000
|
|
|
|
|
$89,500
|
|
The cost driver volume for each product was as follows.
|
Cost Driver
|
Instruments
|
Gauges
|
Total
|
|
Number of requisitions
|
400
|
|
600
|
|
1,000
|
|
|
Number of setups
|
200
|
|
300
|
|
500
|
|
|
Number of inspections
|
200
|
|
400
|
|
600
|
|
a) Determine the overhead rate for each activity.
b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.
Skaros Stairs Co. of Moore designs and builds factory-made premium wooden stairs for homes. The manufactured stair components (spindles, risers, hangers, hand rails) permit installation of stairs of varying lengths and widths. All are of white oak wood. Budgeted manufacturing overhead costs for the year 2011 are as follows.
|
Overhead Cost Pools
|
Amount
|
|
Purchasing
|
$ 57,000
|
|
|
Handling materials
|
82,000
|
|
|
Production (cutting, milling, finishing)
|
210,000
|
|
|
Setting up machines
|
85,000
|
|
|
Inspecting
|
90,000
|
|
|
Inventory control (raw materials and finished goods)
|
126,000
|
|
|
Utilities
|
180,000
|
|
|
Total budget overhead costs
|
$830,000
|
|
For the last 4 years, Skaros Stairs Co. has been charging overhead to products on the basis of machine hours. For the year 2011, 100,000 machine hours are budgeted.
Anthony Morse, owner-manager of Skaros Stairs Co., recently directed his accountant, Neal Seagren, to implement the activity-based costing system that he has repeatedly proposed. At Anthony Morse’s request, Neal and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.
|
Activity Cost Pools
|
Cost Drivers
|
Expected
Use of
Cost Drivers
|
|
Purchasing
|
|
Number of orders
|
600
|
|
|
Handling materials
|
|
Number of moves
|
8,000
|
|
|
Production (cutting, milling, finishing)
|
|
Direct labor hours
|
100,000
|
|
|
Setting up machines
|
|
Number of setups
|
1,250
|
|
|
Inspecting
|
|
Number of inspections
|
6,000
|
|
|
Inventory control (raw materials and finished goods)
|
|
Number of components
|
168,000
|
|
|
Utilities
|
|
Square feet occupied
|
90,000
|
|
David Hannon, sales manager, has received an order for 280 stairs from Community Builders, Inc., a large housing development contractor. At David’s request, Neal prepares cost estimates for producing components for 280 stairs so David can submit a contract price per stair to Community Builders. He accumulates the following data for the production of 280 stairways.
|
Direct materials
|
$103,600
|
|
Direct labor
|
$112,000
|
|
Machine hours
|
14,500
|
|
Direct labor hours
|
5,000
|
|
Number of purchase orders
|
60
|
|
Number of material moves
|
800
|
|
Number of machine setups
|
100
|
|
Number of inspections
|
450
|
|
Number of components
|
16,000
|
|
Number of square feet occupied
|
8,000
|
Compute the predetermined overhead rate using traditional costing with machine hours as the basis. (Enter answer to 2 decimal places, e.g. 10.50.)
What is the manufacturing cost per stairway under traditional costing? (Use rounded amount from part (a). Round answer to 2 decimal places, e.g. 10.50.)
Polzin Corporation produces two grades of wine from grapes that it buys from California growers. It produces and sells roughly 3,000,000 liters per year of a low-cost, high-volume product called CoolDay. It sells this in 600,000 5-liter jugs. Polzin also produces and sells roughly 300,000 liters per year of a low-volume, high-cost product called LiteMist. LiteMist is sold in 1-liter bottles. Based on recent data, the CoolDay product has not been as profitable as LiteMist. Management is considering dropping the inexpensive CoolDay line so it can focus more attention on the LiteMist product. The LiteMist product already demands considerably more attention than the CoolDay line.
Greg Kagen, president and founder of Polzin, is skeptical about this idea. He points out that for many decades the company produced only the CoolDay line, and that it was always quite profitable. It wasn’t until the company started producing the more complicated LiteMist wine that the profitability of CoolDay declined. Prior to the introduction of LiteMist, the company had simple equipment, simple growing and production procedures, and virtually no need for quality control. Because LiteMist is bottled in 1-liter bottles, it requires considerably more time and effort, both to bottle and to label and box than does CoolDay. The company must bottle and handle 5 times as many bottles of LiteMist to sell the same quantity as CoolDay. CoolDay requires 1 month of aging; LiteMist requires 1 year. CoolDay requires cleaning and inspection of equipment every 10,000 liters; LiteMist requires such maintenance every 600 liters.
Greg has asked the Accounting department to prepare an analysis of the cost per liter using the traditional costing approach and using activity-based costing. The following information was collected.
|
|
CoolDay
|
LiteMist
|
|
Direct materials per liter
|
$0.40
|
|
$1.20
|
|
|
Direct labor cost per liter
|
$0.25
|
|
$0.50
|
|
|
Direct labor hours per liter
|
0.05
|
|
0.09
|
|
|
Total direct labor hours
|
150,000
|
|
27,000
|
|
|
Activity Cost Pool
|
Cost Driver
|
Estimated Overhead
|
Expected
Use of
Cost Drivers
|
Expected Use of
Cost Drivers per Product
|
|
Activity Cost Pool
|
Cost Driver
|
Estimated Overhead
|
Expected
Use of
Cost Drivers
|
Expected Use of
Cost Drivers per Product
|
|
CoolDay
|
LiteMist
|
|
|
|
|
|
|
|
|
Grape processing
|
|
Cart of grapes
|
$145,860
|
|
6,600
|
|
6,000
|
|
600
|
|
|
Aging
|
|
Total months
|
396,000
|
|
6,600,000
|
|
3,000,000
|
|
3,600,000
|
|
|
Bottling and corking
|
|
Number of bottles
|
270,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Labeling and boxing
|
|
Number of bottles
|
189,000
|
|
900,000
|
|
600,000
|
|
300,000
|
|
|
Maintain and inspect equipment
|
|
Number of inspections
|
240,800
|
|
800
|
|
350
|
|
450
|
|
|
|
|
$1,241,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under traditional product costing using direct labor hours, compute the total manufacturing cost per liter of both products. (Round computations and final answers to 3 decimal places, e.g. 2.250.)
Under ABC, prepare a schedule showing the computation of the activity-based overhead rates (per cost driver). (Enter overhead rate to 2 decimal places, e.g. 10.50.)
Prepare a schedule assigning each activity’s overhead cost pool to each product, based on the use of cost drivers. What is the overhead cost per liter? (Enter overhead rate to 2 decimal places, e.g. 10.50 and round overhead cost per liter to 3 decimal places, e.g. 2.250.)
Compute the total manufacturing cost per liter for both products under ABC. (Round answers to 3 decimal places, e.g. 2.250.)
Aug 29, 2021 | Uncategorized
WILLINGHAM CORPORATION Comparative Balance Sheet December 3 2011 2010 Cash $14,300 $10,700 Accounts receivable 21,200 23,400 Land 20,000 26,000 Building 70,000 70,000 Accumulated depreciation (15,000) (10,000) Total $ 110,500 $ 120,100 Accounts payable $ 12,370 $31,100 Common stock 75,000 69,000 Retained earnings 23,130 20,000 Total $110,500 $120,100 Additional information: 1. Net income was $22,630. Dividends declared and paid were $19,500. 2. 2. All other changes in noncurrent account balances had a direct effect on cash flow, except the change in accumulated depreciation. The land was sold for $4,900. a). Prepare a statement of cash flow for 2011 using the direct method. b). Compute free cash flow.
An analysis of comparative balance sheets, the current year s income statement, and the general ledger accounts of Conard Corp. uncovered the following items . Assume all items involve cash unless there is information to the contrary. (a). Payment of interest on notes payable (h). Issuance of capital stock. (b). Exchange of land for patent. (i). Amortization of patent (c). Sale of building at book value (j). Issuance of bonds for land. (d). Payment of dividends. (k). Purchase of Land. (e). Depreciation. (l). Conversation of bonds into common stock. (f). Receipt of dividends on investment in stock. (m). Loss on sale of land. (g). Receipt of interest on notes receivable. (n). Retirement of bonds. Indicate how each item should be classified in thee statement of cash flows using these four major classifications: operation activity ( indirect method), investing activity, financing activity, and significant investing and financing activity.
2. The current section of Leach Inc s balance sheet at December 31, 2010 and Leach s net income for 2011 was $153,000. Depreciation expense was $24,000. 2011 2010 Current assets Cash $105,000 $99,000 Accountings receivable 110,000 89,000 Inventory 158,000 172,000 Pre paid expenses 27,000 22,000 Total current assets $400,000 $382,000 Current liabilities Accrued expenses payable $ 15,000 $ 5,000 Accounts payable 85,000 92,000 Total current liabilities $100,000 $97,000 Prepare the cash net provided by operating activities section of the company s statement of cash flow for the year ended December 31, 2011, using the indirect method.
Aug 29, 2021 | Uncategorized
9/27/13 Assignment Print View
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1. aw ard:
2.00 points
2. aw ard:
2.00 points
3. aw ard:
2.00 points
4. aw ard:
3.00 points
Price Corporation reported a $2,000 balance in accounts receivable on January 1, 2012. During the year,
$14,400 of sales on account were made. During the year, Price wrote off accounts receivable of $950 as
uncollectible. If the ending balance of accounts receivable is $1,200, what is the amount of cash received from
customers?
$16,400
$12,650
$14,250
$12,400
Bridges Company pays cash for all inventory purchases. Bridges reports that it had a beginning inventory of
$2,050 and an ending inventory of $1,250. Its cost of goods sold was $4,350. Based on this information, the
amount of cash paid for inventory purchases was:
$8,150
$5,150
$1,500
$3,550
The Updike Company reported a beginning balance of $900 and an ending balance of $1,200 in its unearned
revenue account for 2012. During the year, $5,900 of revenue was recognized. Based on this information, how
much cash was received from customers?
$4,500
$7,900
$5,900
$6,200
Bella, Inc. had beginning and ending accounts payable balances of $2,700 and $2,800, respectively. Inventory
had beginning and ending balances of $2,800 and $2,750, respectively. If cost of goods sold was $2,600, how
much cash was spent to obtain inventory?
$2,450
$2,700
9/27/13 Assignment Print View
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5. aw ard:
3.00 points
6. aw ard:
3.00 points
7. aw ard:
3.00 points
8. aw ard:
3.00 points
$2,400
$2,600
On January 1, 2012, the balance of Baldwin Corporation’s accounts receivable was $8,000. Sales on account for
2012 amounted to $70,000 and the ending balance of accounts receivable was $9,000. What is the amount of
cash collected from customers?
$78,000
$71,000
$69,000
$61,000
Everest Company began the accounting period with $15,500 in accounts receivable. The ending balance in
accounts receivable was $7,000. If the credit sales during the period were $42,000, what is the amount of cash
received from customers?
$50,500
$42,000
$33,500
$64,500
Powell Associates, a small consulting firm, charges all of its expenses on accounts payable. On January 1,
2012, Powell’s accounts payable balance was $7,000 and, during the year, an additional $38,000 of expenses
were charged on account. The ending Accounts payable balance was $9,000. What is the amount of cash paid
for expenses during 2012?
$47,000
$40,000
$24,000
$36,000
The 2012 income statement of Winkler Co. reported wages expense of $80,000. The 2011 balance sheet
showed a balance in wages payable of $8,000 while the 2012 balance sheet showed a balance in wages
payable of $11,000. What amount of cash was paid for wages in 2012?
$83,000
$88,000
$72,000
9/27/13 Assignment Print View
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9. aw ard:
3.00 points
10. aw ard:
3.00 points
11. aw ard:
3.00 points
$77,000
The 2012 income statement of Columbus Co. reported total sales revenue of $250,000. The 2011 balance
sheet showed a balance in accounts receivable of $37,000, while the 2012 balance sheet showed a balance in
accounts receivable of $52,000. The cash inflow from customers for 2012 would be:
$265,000.
$250,000.
$287,000.
$235,000.
For the year ended December 31, 2012, Burlington Company had cash collections from customers of $60,000,
cash paid to employees of $9,000, cash paid to suppliers of $26,000, cash used to retire long-term bonds of
$9,000, and cash payments for dividends of $6,000. Cash provided by operating activities for 2012 is:
$25,000.
$34,000.
$16,000.
$10,000.
Morrow Company reported the following in 2012: property, plant and equipment account increased by $50,000;
accumulated depreciation account increased by $6,000. During the year, the company sold equipment that
originally cost $26,000, and had $18,000 of accumulated depreciation for $11,000.
rev: 07_27_2012
What will Morrow Company report as additions to property, plant, and equipment on its 2012 statement of cash
flows?
rev: 07_27_2012
$50,000
$76,000
$61,000
$24,000
9/27/13 Assignment Print View
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12. aw ard:
3.00 points
13. aw ard:
3.00 points
What will Morrow Company report as proceeds from the sale of property, plant, and equipment on its 2012
statement of cash flows?
rev: 07_27_2012
$35,000
$28,000
$1,000
$11,000
If cash from operations was $9,000, cash from investing activities was ($15,000) and the net change in cash
was $15,000, what was cash from financing activities?
$21,000
($24,000)
$15,000
$9,000
Abercrombie Associates reports the following comparative balance sheets and income statement information.
9/27/13 Assignment Print View
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14. aw ard:
2.00 points
15. aw ard:
2.00 points
The amount of cash revenue received from customers during 2012 was:
$31,000.
$33,000.
$35,000.
$37,000.
The amount of cash paid for inventory purchases during 2012 was:
Rev: 03-05-2012
$20,000.
$11,000.
$17,000.
$18,000.
9/27/13 Assignment Print View
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16. aw ard:
2.00 points
17. aw ard:
2.00 points
18. aw ard:
2.00 points
The following account balances are for Cullen Company:
Additional data for 2012:
(1) Sales on account for the period were $20,000.
(2) Salary expense was $7,000.
(3) Rent expense was $6,000.
Based on this information, what was the net cash inflow from operating activities for 2012?
$23,000.
$18,000.
$12,000.
$10,000.
Worcester Company sold equipment for $25,000 cash. The equipment had cost $40,000 and had accumulated
depreciation of $22,000 at the time of the sale. Based on this information alone, select the True statement.
Cash flow from investing activities would be less if the statement of cash flows is prepared by the
direct method than if it is prepared under the indirect method.
Cash flow from investing activities would be greater if the sale of equipment is reported on the
statement of cash flows under the direct method than if it is reported under the indirect method.
Cash flow from investing activities would be the same regardless of whether the statement of cash
flows is prepared by the direct method or the indirect method.
The answer cannot be determined because the amount of the salvage value is unknown.
Which of the following would not be reported as an investing activity on the statement of cash flows?
Cash loaned to another company.
Cash dividends received from an investment in marketable securities.
Cash received from the sale of equipment.
Cash paid to purchase production equipment.
9/27/13 Assignment Print View
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19. aw ard:
2.00 points
20. aw ard:
2.00 points
During 2012, the Afton Company had the following changes in account balances:
1) The accumulated depreciation account had a beginning balance of $50,000 and an ending balance of
$70,000. The increase was due to depreciation expense
2) The long-term notes payable account had a beginning balance of $80,000 and an ending balance of $30,000.
The decrease was due to repayment of debt.
3) The accounts receivable account had a beginning balance of $120,000 and an ending balance of $100,000.
The difference was due to collection of receivables.
4) The equipment account had a beginning balance of $50,000 and an ending balance of $185,000. The
increase was due to the purchase of equipment for cash.
5) The long term investments account (marketable securities) had a beginning balance of $36,000 and an
ending balance of $25,000. The decrease was due to the sale of investments at cost.
6) The amount of cash dividends declared and paid during the year was $44,000.
7) The interest payable account had a beginning balance of $4,500 and an ending balance of $2,500. The
difference was due to the payment of interest.
What is the net cash flow from investing activities?
$124,000 outflow
$124,000 inflow
$144,000 inflow
$144,000 outflow
Assume that a statement of cash flows has been prepared. The combination of the three major components
(operating activities, investing activities, financing activities) equals the:
Change in the cash account balance between the beginning and end of the period.
Net income for the period.
Ending cash balance.
Amount of cash inflow for the period.
Aug 29, 2021 | Uncategorized
Dr. Stephanie White, is concerned about the dilemma of coping with reduced budgetsd and demand for services. In order to plan for reduced budgets, she must first identify where costs can be cut or reduced and still keep the agency functioning. Below data from past year.
Program Area Costs Administration Salaries: Administrator 60,000 Assist 35,000 2 Secretaries 42,000 Supplies 35,000 Advert & promotion 9,000 Professional meetings/dues 14,000 Purchased Services:Acct & bill 15,000 Custodial 13,000 Security 12,000 Consulting 10,000 Community Mental Health Services Salaries (two s w) 46,000 ;Trans 10,000 Outpt mental health tx Salaries:Psychiatrist 86,000 2 SW 70,000
a.Give a Give a dollar range of costs to reduce budgets (worst and best case analysis).
b.You need to cut $94,000 in cost. Prioritize those cuts that can be made withwithout impacting the operation or quality care of the organization.
c.How would you advise Dr. White to prepare for reduced budgets? excel spread sheet
Aug 29, 2021 | Uncategorized
The following data (in thousands of dollars) have been taken from the accounting records of Larklin Corporation for the just completed year.
1.(TCO A).
| Sales | $820 |
| Purchases of raw materials | $195 |
| Direct labor | $170 |
| Manufacturing overhead | $250 |
| Administrative expenses | $180 |
| Selling expenses | $140 |
| Raw materials inventory, beginning | $80 |
| Raw materials inventory, ending | $35 |
| Work in process inventory, beginning | $65 |
| Work in process inventory, ending | $30 |
| Finished goods inventory, beginning | $130 |
| Finished goods inventory, ending | $165 |
Required: Prepare a Schedule of Cost of Goods Manufactured statement in the text box below.(Points : 15)
Aug 29, 2021 | Uncategorized
| Managerial Finance -Capital Structure and Leverage |
| Question Detail:
1)
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If a firm utilizes debt financing, an X% decline in earnings before interest and taxes (EBIT) will result in a decline in earnings per share that is larger than X.
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True
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False
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2)
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Firm A has a higher degree of business risk than Firm B. Firm A can offset this by using less financial leverage. Therefore, the variability of both firms’ expected EBITs could actually be identical.
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True
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False
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3)
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It is possible that two firms could have identical financial and operating leverage, yet have different degrees of risk as measured by the variability of EPS.
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True
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False
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4)
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Which of the following events is likely to encourage a company to raise its target debt ratio, other things held constant?
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An increase in the corporate tax rate.
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An increase in the personal tax rate.
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An increase in the company s operating leverage.
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The Federal Reserve tightens interest rates in an effort to fight inflation.
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The company’s stock price hits a new high.
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5)
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The firm s target capital structure should be consistent with which of the following statements?
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Maximize the earnings per share (EPS).
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Minimize the cost of debt (rd).
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Obtain the highest possible bond rating.
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Minimize the cost of equity (rs).
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Minimize the weighted average cost of capital (WACC).
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6)
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Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will
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normally lead to an increase in its fixed assets turnover ratio.
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normally lead to a decrease in its business risk.
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normally lead to a decrease in the standard deviation of its expected EBIT.
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normally lead to a decrease in the variability of its expected EPS.
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normally lead to a reduction in its fixed assets turnover ratio.
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7)
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Reynolds Resorts is currently 100% equity financed. The CFO is considering a recapitalization plan under which the firm would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the company s total assets, nor would it affect the firm s basic earning power, which is currently 15%. The CFO believes that this recapitalization would reduce the WACC and increase stock price.Which of the following would also be likely to occur if the company goes ahead with the recapitalization plan?
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The company s net income would increase.
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The company s earnings per share would decline.
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The company s cost of equity would increase.
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The company s ROA would increase.
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The company s ROE would decline.
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8)
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Vu Enterprises expects to have the following data during the coming year.What is Vu’s expected ROE?
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Assets
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$200,000
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Interest rate
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8%
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D/A
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65%
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Tax rate
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40%
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EBIT
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$25,000
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12.51%
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13.14%
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13.80%
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14.49%
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15.21%
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9)
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Ang Enterprises has a levered beta of 1.10, its capital structure consists of 40% debt and 60% equity, and its tax rate is 40%. What would Ang’s beta be if it used no debt, i.e., what is its unlevered beta?
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0.64
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0.67
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0.71
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0.75
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0.79
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10)
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Firms HD and LD are identical except for their level of debt and the interest rates they pay on debt–HD has more debt and pays a higher interest rate on that debt. Based on the data given below, what is the difference between the two firms’ ROEs?
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Applicable to Both Firms
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Firm HD’s Data
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Firm LD’s Data
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Assets
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$200
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Debt ratio
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50%
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Debt ratio
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30%
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EBIT
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$40
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Interest rate
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12%
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Interest rate
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10%
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Tax rate
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35%
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2.18%
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2.29%
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2.41%
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2.54%
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2.66%
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11)
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Michaely Inc. is an all-equity firm with 200,000 shares outstanding. It has $2,000,000 of EBIT, which is expected to remain constant in the future. The company pays out all of its earnings, so earnings per share (EPS) equal dividends per shares (DPS). Its tax rate is 40%.
The company is considering issuing $5,000,000 of 10.0% bonds and using the proceeds to repurchase stock. The risk-free rate is 6.5%, the market risk premium is 5.0%, and the beta is currently 0.90, but the CFO believes beta would rise to 1.10 if the recapitalization occurs.
Assuming that the shares can be repurchased at the price that existed prior to the recapitalization, what would the price be following the recapitalization?
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$65.77
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$69.23
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$72.69
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$76.33
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$80.14
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12)
The MM model is the same as the Miller model, but with zero corporate taxes.
a. True
b. False
13)
The major contribution of the Miller model is that it demonstrates that
a. personal taxes increase the value of using corporate debt.
b. personal taxes decrease the value of using corporate debt.
c. financial distress and agency costs reduce the value of using corporate debt.
d. equity costs increase with financial leverage.
e. debt costs increase with financial leverage.
14)
Which of the following statements concerning capital structure theory is NOT CORRECT?
a. The major contribution of Miller’s theory is that it demonstrates that personal taxes decrease the value of using corporate debt.
b. Under MM with zero taxes, financial leverage has no effect on a firm s value.
c. Under MM with corporate taxes, the value of a levered firm exceeds the value of the unlevered firm by the product of the tax rate times the market value dollar amount of debt.
d. Under MM with corporate taxes, rs increases with leverage, and this increase exactly offsets the tax benefits of debt financing.
e. Under MM with corporate taxes, the effect of business risk is automatically incorporated because rsL is a function of rsU.
15)
The Kimberly Corporation is a zero growth firm with an expected EBIT of $100,000 and a corporate tax rate of 30%. Kimberly uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
[i]. What is the value of the firm according to MM with corporate taxes?
a. $475,875
b. $528,750
c. $587,500
d. $646,250
e. $710,875
[ii]. What is the firm’s cost of equity?
a. 21.0%
b. 23.3%
c. 25.9%
d. 28.8%
e. 32.0%
[iii]. Assume that the firm’s gain from leverage according to the Miller model is $126,667. If the effective personal tax rate on stock income is TS = 20%, what is the implied personal tax rate on debt income?
a. 16.4%
b. 18.2%
c. 20.2%
d. 22.5%
e. 25.0%
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Aug 29, 2021 | Uncategorized
1. The Embroidery Shoppe had beginning retained earnings of $18,670. During the year, the company reported sales of $83,490, costs of $68,407, depreciation of $8,200, dividends of $950, and interest paid of $478. The tax rate is 35 %. What is the retained earnings balance at the end of the year?
A. $21,883.25B. $22,193.95C. $22,833.24D. $23,783.24E. $30,393.95
2. Denbo’s, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $627,600. What is the total debt ratio?
A. 0.19B. 0.38C. 0.67D. 1.49E. 3.85
3. Goshen Industrial Sales has sales of $828,900, total equity of $539,200, a profit margin of 4.6 %, and a debt-equity ratio of 0.55. What is the return on assets?
A. 3.89%B. 4.56 %C. 6.67%D. 12.86%E. 13.33%
4. You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn a 5 % rate of return and make no additional contributions, what will your account be worth when you retire in 35 years? What if you wait for 5 years before contributing?
A. $26,335.37; $23,011.60B. $27,311.20; $29,803.04C. $27,311.20; $22,614.08
D. $27,580.08; 21,609.71E. $31,241.90; $32,614.08
5. Turntable Industrial, Inc. owes your firm $138,600. This amount is seriously delinquent so your firm has offered to arrange a payment plan in the hopes that it might at least collect a portion of this receivable. Your firm’s offer consists of weekly payments for one year at an interest rate of 3 %. What is the amount of each payment?
A. $2,229.90B. $2,318.11C. $2,409.18D. $2,599.04E. $2,706.33
6. The Food Store is planning a major expansion for four years from today. In preparation for this, the company is setting aside $35,000 each quarter, starting today, for the next four years. How much money will the firm have when it is ready to expand if it can earn an average of 6.25 % on its savings?
A. $528,409.29B. $540,288.16C. $610,411.20D. $640,516.63E. $662,009.14
7. Kris will receive $800 a month for the next five years from an insurance settlement. The interest rate is 4 %, compounded monthly, for the first two years and 5 %, compounded monthly, for the final three years. What is this settlement worth to him today?
A. $36,003.18B. $38,219.97C. $41,388.71D. $43,066.22E. $45,115.16
8. Julie is borrowing $12,800 to purchase a car. The loan terms are 36 months at 7.5 % interest. How much interest will she pay on this loan if she pays the loan as agreed? Round your answer to the nearest whole dollar.
A. $1,338B. $1,414C. $1,459D. $1,506E. $1,534
9. Which one of the following statements is correct, all else held constant?
A. Beta is used to compute the return on equity and the standard deviation is used to compute the return on preferred.
B. A decrease in a firm’s WACC will increase the attractiveness of the firm’s investment options.
C. The aftertax cost of debt increases when the market price of a bond increases.
D. If you have both the dividend growth and the security market line’s costs of equity, you should use the higher of the two estimates when computing WACC.
E. WACC is applicable only to firms that issue both common and preferred stock.
10. Country Kitchen’s cost of equity is 15.3 % and its aftertax cost of debt is 6.9 %. What is the firm’s weighted average cost of capital if its debt-equity ratio is 0.58 and the tax rate is 30 %?
A. 8.94 %B. 11.47 %C. 12.21 %D. 12.28 %E. 13.01 %
11. Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 %. The firm has 6,000 shares of 7 % preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $350,000 and currently sells for 102 % of face. The yield to maturity on the debt is 8.49 %. What is the firm’s weighted average cost of capital if the tax rate is 34 %?
A. 12.69 %B. 13.44 %C. 14.19 %D. 14.47 %E. 14.92 %
12. Bob’s is a retail chain of specialty hardware stores. The firm has 21,000 shares of stock outstanding that are currently valued at $68 a share and provide a 13.2 % rate of return. The firm also has 500 bonds outstanding that have a face value of $1,000, a market price of $1,068, and a 7 % coupon. These bonds mature in 6 years and pay interest semiannually. The tax rate is 35 %. The firm is considering expanding by building a new superstore. The superstore will require an initial investment of $12.3 mil. and is expected to produce cash inflows of $1.1 mil. annually over its 10-year life. The risks associated with the superstore are comparable to the risks of the firm’s current operations. The initial investment will be depreciated on a straight line basis over the life of the project. At the end of the 10 years, the firm expects to sell the superstore for $6.7 mil.. Should the firm accept or rej the superstore project and why?
Aug 29, 2021 | Uncategorized
Due Friday at 12 noon
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company’s factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for plant department heads. These meetings had been held on the third Tuesday of each month since Robert Ferguson, Jr., the president’s son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: Boy, I hate those meetings! I never know whether my department’s accounting reports will show good or bad performance. I’m beginning to expect the worst. If the accountants say I saved the company a dollar, I’m called Sir, but if I spend even a little too much boy, do I get in trouble. I don’t know if I can hold on until I retire.
Tom had just been given the worst evaluation he had ever received in his long career with Ferguson & Son. He was the most respected of the experienced machinists in the company. He had been with the company for many years and was promoted to supervisor of the machine shop when the company expanded and moved to its present location. The president (Robert Ferguson, Sr.) had often stated that the company’s success was due to the high-quality work of machinists like Tom. As supervisor, Tom stressed the importance of craftsmanship and told his workers that he wanted no sloppy work coming from his department.
When Robert Ferguson, Jr., became the plant manager, he directed that monthly performance comparisons be made between actual and budgeted costs for each department. The departmental budgets were intended to encourage the supervisors to reduce inefficiencies and to seek cost reduction opportunities. The company controller was instructed to have his staff tighten the budget slightly whenever a department attained its budget in a given month; this was done to reinforce the plant manager’s desire to reduce costs. The young plant manager often stressed the importance of continued progress toward attaining the budget; he also made it known that he kept a file of these performance reports for future reference when he succeeded his father.
Tom Emory’s conversation with Jim Morris continued as follows:
Emory: I really don’t understand. We’ve worked so hard to meet the budget, and the minute we do so they tighten it on us. We can’t work any faster and still maintain quality. I think my men are ready to quit trying. Besides, those reports don’t tell the whole story. We always seem to be interrupting the big jobs for all those small rush orders. All that setup and machine adjustment time is killing us. And quite frankly, Jim, you were no help. When our hydraulic press broke down last month, your people were nowhere to be found. We had to take it apart ourselves and got stuck with all that idle time.
Morris: I’m sorry about that, Tom, but you know my department has had trouble making budget, too. We were running well behind at the time of that problem, and if we had spent a day on that old machine, we would never have made it up. Instead, we made the scheduled inspections of the forklift trucks because we knew we could do those in less than the budgeted time.
Emory: Well, Jim, at least you have some options. I’m locked into what the scheduling department assigns to me and you know they’re being harassed by sales for those special orders. Incidentally, why didn’t your report show all the supplies you guys wasted last month when you were working in Bill’s department?
Morris: We’re not out of the woods on that deal yet. We charged the maximum we could to other work and haven’t even reported some of it yet.
Emory: Well, I’m glad you have a way of getting out of the pressure. The accountants seem to know everything that’s happening in my department, sometimes even before I do. I thought all that budget and accounting stuff was supposed to help, but it just gets me into trouble. It’s all a big pain. I’m trying to put out quality work; they’re trying to save pennies.
Review the case. Respond to the following:
- Identify the problems that appear to exist in Ferguson & Son Manufacturing Company’s budgetary control system and explain how the problems are likely to reduce the effectiveness of the system. (approximately 1 page)
- Explain how Ferguson & Son Manufacturing Company’s budgetary control system could be revised to improve its effectiveness. (approximately 1 2 pages)
- Explain how the use of an activity-based costing system could change the results of the budget, if utilized. (approximately 1 page)
- As stated in the case, many employees have quit trying and have altered behavior on the job. Provide specific ways for how you would use a budget to change employee behavior and align goals in the organization. Explain how goal alignment can improve profitability and overall return to the shareholders of the company. (approximately 1 page)
- Synthesize data to explain the concept of ROI and describe how the use of an activity-based costing system can improve the company s ROI and the potential impact on free cash flow. (approximately 1 page)
Write a 5 6-page report in Word format. Apply APA standards to citation of sources.
| Assignment 2 Grading Criteria |
Maximum Points |
| Identified the problems that appear to exist in the company s budgetary control system and explained how the problems are likely to reduce the effectiveness of the system. |
64 |
| Explained how the company’s budgetary control system could be revised to improve its effectiveness. |
64 |
| Explained how the use of an activity-based costing system could change the results of the budget if utilized. |
44 |
| Identified ways of how one can use a budget to change employee behavior and align goals in the organization and explained how goal alignment can improve profitability and overall return to shareholders of the company. |
44 |
| Synthesized data to explain the concept of ROI, how the use of an activity-based costing system can improve the company s ROI, and the potential impact on free cash flow. |
56 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. |
28 |
| Total: |
300 |
Aug 29, 2021 | Uncategorized
|
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company’s factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for plant department heads. These meetings had been held on the third Tuesday of each month since Robert Ferguson, Jr., the president’s son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: Boy, I hate those meetings! I never know whether my department’s accounting reports will show good or bad performance. I’m beginning to expect the worst. If the accountants say I saved the company a dollar, I’m called Sir, but if I spend even a little too much boy, do I get in trouble. I don’t know if I can hold on until I retire.
Tom had just been given the worst evaluation he had ever received in his long career with Ferguson & Son. He was the most respected of the experienced machinists in the company. He had been with the company for many years and was promoted to supervisor of the machine shop when the company expanded and moved to its present location. The president (Robert Ferguson, Sr.) had often stated that the company’s success was due to the high-quality work of machinists like Tom. As supervisor, Tom stressed the importance of craftsmanship and told his workers that he wanted no sloppy work coming from his department.
When Robert Ferguson, Jr., became the plant manager, he directed that monthly performance comparisons be made between actual and budgeted costs for each department. The departmental budgets were intended to encourage the supervisors to reduce inefficiencies and to seek cost reduction opportunities. The company controller was instructed to have his staff tighten the budget slightly whenever a department attained its budget in a given month; this was done to reinforce the plant manager’s desire to reduce costs. The young plant manager often stressed the importance of continued progress toward attaining the budget; he also made it known that he kept a file of these performance reports for future reference when he succeeded his father.
Tom Emory’s conversation with Jim Morris continued as follows:
Emory: I really don’t understand. We’ve worked so hard to meet the budget, and the minute we do so they tighten it on us. We can’t work any faster and still maintain quality. I think my men are ready to quit trying. Besides, those reports don’t tell the whole story. We always seem to be interrupting the big jobs for all those small rush orders. All that setup and machine adjustment time is killing us. And quite frankly, Jim, you were no help. When our hydraulic press broke down last month, your people were nowhere to be found. We had to take it apart ourselves and got stuck with all that idle time.
Morris: I’m sorry about that, Tom, but you know my department has had trouble making budget, too. We were running well behind at the time of that problem, and if we had spent a day on that old machine, we would never have made it up. Instead, we made the scheduled inspections of the forklift trucks because we knew we could do those in less than the budgeted time.
Emory: Well, Jim, at least you have some options. I’m locked into what the scheduling department assigns to me and you know they’re being harassed by sales for those special orders. Incidentally, why didn’t your report show all the supplies you guys wasted last month when you were working in Bill’s department?
Morris: We’re not out of the woods on that deal yet. We charged the maximum we could to other work and haven’t even reported some of it yet.
Emory: Well, I’m glad you have a way of getting out of the pressure. The accountants seem to know everything that’s happening in my department, sometimes even before I do. I thought all that budget and accounting stuff was supposed to help, but it just gets me into trouble. It’s all a big pain. I’m trying to put out quality work; they’re trying to save pennies.
|
Review the case. Respond to the following:
- Identify the problems that appear to exist in Ferguson & Son Manufacturing Company’s budgetary control system and explain how the problems are likely to reduce the effectiveness of the system. (approximately 1 page)
- Explain how Ferguson & Son Manufacturing Company’s budgetary control system could be revised to improve its effectiveness. (approximately 1 2 pages)
- Explain how the use of an activity-based costing system could change the results of the budget, if utilized. (approximately 1 page)
- As stated in the case, many employees have quit trying and have altered behavior on the job. Provide specific ways for how you would use a budget to change employee behavior and align goals in the organization. Explain how goal alignment can improve profitability and overall return to the shareholders of the company. (approximately 1 page)
- Synthesize data to explain the concept of ROI and describe how the use of an activity-based costing system can improve the company s ROI and the potential impact on free cash flow. (approximately 1 page)
Write a 5 6-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M5_A2.doc
Aug 29, 2021 | Uncategorized
A manufacturing company is thinking of launching a new product. The company expects to sell $950,000 of the new product in the first year and $1,500,000 each year thereafter. Direct costs including labor and materials will be 45% of sales. Indirect incremental costs are estimated at $95,000 a year. The project requires a new plant that will cost a total of $1,500,000, which will be a depreciated straight line over the next 5 years. The new line will also require an additional net investment in inventory and receivables in the amount of $200,000.
Assume there is no need for additional investment in building the land for the project. The firm’s marginal tax rate is 35%, and its cost of capital is 10%.
To receive full credit on this assignment, please show all work, including formulae and calculations used to arrive at financial values.
Assignment Guidelines:
Using the information in the assignment description:
Prepare a statement showing the incremental cash flows for this project over an 8-year period.
Calculate the payback period (P/B) and the net present value (NPV) for the project.
Answer the following questions based on your P/B and NPV calculations:
Do you think the project should be accepted? Why?
Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.
If the project required additional investment in land and building, how would this affect your decision? Explain.
Aug 29, 2021 | Uncategorized
Borealis Manufacturing has just completed a major change in its quality control (QC) process. Previously, products had been reviewed by QC inspectors at the end of each major process, and the company’s 10 QC inspectors were charged to the operation or job as direct labor. In an effort to improve efficiency and quality, a computerized video QC system was purchased for $250,000. The system consists of a minicomputer, fifteen video cameras, and other peripheral hardware and software. The new system uses cameras stationed by QC engineers at key points in the production process. Each time an operation changes or there is a new operation, the cameras are moved, and a new master picture is loaded into the computer by a QC engineer. The camera takes pictures of the units in process, and the computer compares them to the picture of a good unit. Any differences are sent to a QC engineer, who removes the bad units and discusses the flaws with the production supervisors. The new system has replaced the 10 QC inspectors with two QC engineers.
The operating costs of the new QC system, including the salaries of the QC engineers, have been included as factory overhead in calculating the company’s plant-wide manufacturing-overhead rate, which is based on direct-labor dollars. The company’s president is confused. His vice president of production has told him how efficient the new system is. Yet there is a large increase in the overhead rate. The computation of the rate before and after automation is as follows:
|
Before |
After |
| Budgeted Manufacturing Overhead |
1,900,000 |
2,100,000 |
| Budgeted Direct Labor Cost |
1,000,000 |
700,000 |
| Budgeted Overhead Rate |
190% |
300% |
Three hundred percent, lamented the president. How can we compete with such a high overhead rate
Using the module readings and the Argosy University online library resources, research manufacturing overhead.
Review the situation. Complete the following:
- Define manufacturing overhead, and:
- Cite three examples of typical costs that would be included in manufacturing overhead.
- Explain why companies develop predetermined overhead rates.
- Explain why the increase in the overhead rate should not have a negative financial impact on Borealis Manufacturing.
- Explain how Borealis Manufacturing could change its overhead application system to eliminate confusion over product costs.
- Describe how an activity-based costing system might benefit Borealis Manufacturing.
Write a 3 4-pages paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention:
Aug 29, 2021 | Uncategorized
Maple, Inc. manufactures syrup that goes through three processing stages prior to completion. Information on work in the first department, Blending, is given below for August:
Production data: Pounds in process, August 1; materials 100% complete; conversion 70% complete 3,000 Pounds started into production during August 85,000 Pounds completed and transferred out ? Pounds in process, August 31; materials 80% complete; conversion 30% complete 6,000 Cost data: Work in process inventory, August 1: Materials cost $900 Conversion cost $5,900 Cost added during May: Materials cost $151,000 Conversion cost $161,700
The company uses the weighted-average method.
Submit an Excel document which each tab labeled by item number in good form that demonstrates the following: Compute the equivalent units of production. Compute the costs per equivalent unit for the month. Determine the cost of ending work in process inventory and of the units transferred out to the next department. Prepare a cost reconciliation schedule for the month.
Aug 29, 2021 | Uncategorized
1) At the operating breakeven point, ________ equals zero.
a. variable operating costs
b. sales revenue
c. earnings before interest and taxes
d. fixed operating costs
2) Breakeven analysis is used by the firm
a. to determine the level of operations necessary to cover all operating costs.
b. to evaluate the profitability associated with various levels of sales.
c. Both A and B.
d. none of the above
3) If a firm s variable costs per unit increase, the firm s operating breakeven point will
a. decrease.
b. remain unchanged.
c. change in an undetermined direction.
d. increase.
4) Noncash charges such as depreciation and amortization ________ the firm s breakeven
point.
a. decrease
b. understate
c. overstate
d. do not affect
5) ________ leverage is concerned with the relationship between sales revenues and
earnings before interest and taxes.
a. Total
b. Financial
c. Variable
d. Operating
6) The three basic types of leverage are
a. operating, production, and total.
b. operating, financial, and total.
c. production, financial, and total.
d. operating, production, and financial.
7) ________ is the potential use of fixed costs, both operating and financial, to magnify
the effect of changes in sales on the firm s earnings per share.
a. Total leverage
b. Debt service
c. Operating leverage
d. Financial leverage
8) With the existence of fixed operating costs, an increase in sales will result in
________ increase in EBIT.
a. a less than proportional
b. a proportional
c. an equal
d. a more than proportional
9) All of the following affect business risk EXCEPT
a. cost stability.
b. interest rate stability.
c. revenue stability.
d. operating leverage.
10) A corporation has $5,000,000 of 10 percent bonds and $3,000,000 of 12 percent
preferred stock outstanding. The firm s financial breakeven (assuming a 40 percent
tax rate) is
a. $860,000.
b. $716,000.
c. $1,400,000.
d. $1,100,000.
11) Operating and financial constraints placed on a corporation by loan provision are
a. agency costs to the lender.
b. interest rate costs to the fi rm.
c. necessary to control the risk of the fi rm.
d. agency costs to the fi rm.
12) In order to enhance the wealth of stockholders and to send positive signals to the
market, corporations generally raise funds using the following order:
a. Equity, retained earnings, debt.
b. Debt, retained earnings, equity.
c. Retained earnings, equity, debt.
d. Retained earnings, debt, equity.
13) According to the traditional approach to capital structure, the value of the firm will be
maximized when
a. the financial leverage is maximized.
b. the weighted average cost of capital is minimized.
c. the cost of debt is minimized.
d. the dividend payout is maximized.
14) In the EBIT-EPS approach to capital structure, risk is represented by
a. shifts in the times-interest-earned ratio.
b. shifts in the cost of debt capital.
c. the slope of the capital structure line.
d. shifts in the cost of equity capital.
15) Nico Trading Company must choose its optimal capital structure. Currently, the firm
has a 20 percent debt ratio and the firm expects to generate a dividend next year of
$5.44 per share. Dividends are expected to remain at this level indefinitely. Stockholders
currently require a 12.1 percent return on their investment. Nico is considering
changing its capital structure if it would benefit shareholders. The firm estimates
that if it increases the debt ratio to 30 percent, it will increase its expected dividend
to $5.82 per share. Again, dividends are expected to remain at this new level indefinitely. However, because of the added risk, the required return demanded by stock
holders will increase to 12.6 percent. Based on this information, should Nico make
the change?
a. Yes
b. No
c. It s irrelevant
d. Not enough information
16) At the quarterly meeting of Tangshan Mining Corporation, held on September 10th,
the directors declared a $1.00 per share dividend for the firm s 100,000 shares of
common stock outstanding. The net effect of declaring and paying this dividend
would be to
a. increase total assets by $100,000 and decrease stockholders equity by $100,000.
b. increase total assets by $100,000 and increase stockholders equity by $100,000.
c. decrease total assets by $100,000 and decrease stockholders equity by $100,000.
d. decrease total assets by $100,000 and increase stockholders equity by $100,000.
17) Tangshan Mining has common stock at par of $200,000, paid in capital in excess
of par of $400,000, and retained earnings of $280,000. In states where the firm s
legal capital is defined as the par value of common stock, the firm could pay out
________ in cash dividends without impairing its capital.
a. $200,000
b. $880,000
c. $600,000
d. $680,000
18) Shareholder wealth considerations in the payment of dividends include all of the
following EXCEPT
a. the criminal status of the firm s owners.
b. the tax status of the firm s owners.
c. the investment opportunities of the firm s owners.
d. the potential dilution of ownership on behalf of the firm s owners.
19) Gordon s bird-in-the-hand argument suggests that
a. shareholders are generally risk averse and attach less risk to current dividends.
b. dividends are irrelevant.
c. firms should have a 100 percent payout policy.
d. the market value of the firm is unaffected by dividend policy.
20) A firm that has a large percentage of ________ investors may pay out a lower percentage
of its earnings as dividends.
a. wealthy
b. business
c. middle-income
d. pension fund
21) A firm has current after-tax earnings of $1,000,000 and has declared a cash dividend
of $400,000. The firm s dividend payout ratio is
a. 4.0 percent.
b. 2.0 percent.
c. 2.5 percent.
d. 40 percent.
22) The advantage of using the low-regular-and-extra dividend policy is that
a. cyclical shifts in earnings may be avoided.
b. the extra dividend may become a regular event.
c. the firm avoids giving the shareholders false hopes.
d. if the firm s earnings drop, so does the dividend payment.
23) Mr. R. owns 20,000 shares of ABC Corporation stock. The company is planning to
issue a stock dividend. Before the dividend Mr. R. owned 10 percent of the outstanding
stock, which had a market value of $200,000, or $10 per share. Upon receiving
the 10 percent stock dividend the value of his shares is
a. $210,000.
b. $200,000.
c. $220,000.
d. greater, but cannot be determined.
24) The accounting in a stock split will transfer funds
a. from the Retained Earnings account to the Paid in Capital account.
b. from the Common Stock and Paid in Capital accounts to the Retained Earnings account.
c. from the Paid in Capital account to the Retained Earnings account.
d. from the Retained Earnings account to the Preferred Stock account.
e. none of the above
25) When purchasing outstanding shares of common stock a firm can utilize all of the following
methods EXCEPT
a. a tender offer at a specified price.
b. a purchase on the open market at market prices.
c. a tender offer at varying prices.
d. by purchasing a large block on a negotiated basis.
Aug 29, 2021 | Uncategorized
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 13
Exercise 13-3 Computation and analysis of trend percents L.O. P1
|
|
2013
|
2012
|
2011
|
2010
|
2009
|
|
Sales
|
$ 283,880
|
$ 271,800
|
$ 253,680
|
$ 235,560
|
$ 151,000
|
|
Cost of goods sold
|
129,200
|
123,080
|
116,280
|
107,440
|
68,000
|
|
Accounts receivable
|
19,100
|
18,300
|
17,400
|
16,200
|
10,000
|
|
|
Compute trend percents for the above accounts, using 2009 as the base year. (Omit the “%” sign in your response.)
|
Exercise 13-7 Common-size percents L.O. P2
|
Sanderson Company s year-end balance sheets follow.
|
|
|
At December 31
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
30,800
|
|
$
|
35,625
|
|
$
|
36,800
|
|
|
Accounts receivable, net
|
|
|
88,500
|
|
|
62,500
|
|
|
49,200
|
|
|
Merchandise inventory
|
|
|
111,500
|
|
|
82,500
|
|
|
53,000
|
|
|
Prepaid expenses
|
|
|
9,700
|
|
|
9,375
|
|
|
4,000
|
|
|
Plant assets, net
|
|
|
277,500
|
|
|
255,000
|
|
|
229,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
518,000
|
|
$
|
445,000
|
|
$
|
372,500
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch12 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 12
Exercise 12-5B Computation of cash flows (direct) L.O. P5
|
|
|
|
|
Case A:
|
Compute cash received from customers:
|
|
|
|
Sales
|
$
|
510,000
|
|
Accounts receivable, December 31, 2011
|
|
25,200
|
|
Accounts receivable, December 31, 2012
|
|
34,800
|
|
Case B:
|
Compute cash paid for rent:
|
|
|
|
Rent expense
|
$
|
140,800
|
|
Rent payable, December 31, 2011
|
|
8,800
|
|
Rent payable, December 31, 2012
|
|
7,200
|
|
Case C:
|
Compute cash paid for merchandise:
|
|
|
|
Cost of goods sold
|
$
|
528,000
|
|
Merchandise inventory, December 31, 2011
|
|
159,600
|
|
Accounts payable, December 31, 2011
|
|
67,800
|
|
Merchandise inventory, December 31, 2012
|
|
131,400
|
|
Accounts payable, December 31, 2012
|
|
84,000
|
|
|
For each of the above three separate cases, use the information provided about the calendar-year 2012 operations of Sahim Company to compute the required cash flow information. (Omit the “$” sign in your response.)
|
|
|
|
|
Case A:
|
Cash received from customers
|
|
|
Case B:
|
Cash paid for rent
|
|
|
Case C:
|
Cash paid for merchandise
|
|
|
Exercise 12-6 Cash flows from operating activities (indirect) L.O. P2
|
BEKHAM COMPANY
Income Statement
For Year Ended December 31, 2011
|
|
Sales
|
|
|
|
$
|
1,818,000
|
|
|
Cost of goods sold
|
|
|
|
|
891,000
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
927,000
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Salaries expense
|
$
|
248,535
|
|
|
|
|
|
Depreciation expense
|
|
43,200
|
|
|
|
|
|
Rent expense
|
|
48,600
|
|
|
|
|
|
Amortization expenses Patents
|
|
5,400
|
|
|
|
|
|
Utilities expense
|
|
19,125
|
|
|
364,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,140
|
|
|
Gain on sale of equipment
|
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
569,340
|
|
|
|
|
|
|
|
|
|
|
Changes in current asset and current liability accounts for the year that relate to operations follow.
|
|
Accounts receivable
|
$
|
40,500
|
increase
|
Accounts payable
|
$
|
13,500
|
decrease
|
|
Merchandise inventory
|
|
27,000
|
increase
|
Salaries payable
|
|
4,500
|
decrease
|
|
|
Use the above income statement and information about changes in noncash current assets and current liabilities to prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response)
|
Exercise 12-7B Cash flows from operating activities (direct) L.O. P5
|
BEKHAM COMPANY
Income Statement
For Year Ended December 31, 2011
|
|
Sales
|
|
|
|
$
|
1,818,000
|
|
|
Cost of goods sold
|
|
|
|
|
891,000
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
927,000
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Salaries expense
|
$
|
248,535
|
|
|
|
|
|
Depreciation expense
|
|
43,200
|
|
|
|
|
|
Rent expense
|
|
48,600
|
|
|
|
|
|
Amortization expenses Patents
|
|
5,400
|
|
|
|
|
|
Utilities expense
|
|
19,125
|
|
|
364,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
562,140
|
|
|
Gain on sale of equipment
|
|
|
|
|
7,200
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
569,340
|
|
|
|
|
|
|
|
|
|
|
Changes in current asset and current liability accounts for the year that relate to operations follow.
|
|
|
Accounts receivable
|
$
|
40,500
|
increase
|
Accounts payable
|
$
|
13,500
|
decrease
|
|
Merchandise inventory
|
|
27,000
|
increase
|
Salaries payable
|
|
4,500
|
decrease
|
|
|
Use the above income statement and information about changes in noncash current assets and current liabilities to prepare only the cash provided or used by operating activities section of the statement of cash flows for this company using the direct method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)
|
Exercise 12-10 Preparation of statement of cash flows (indirect) L.O. P1
[The following information applies to the questions displayed below.]
|
Use the following financial statements and additional information.
|
|
GECKO INC.
Comparative Balance Sheets
June 30, 2011 and 2010
|
|
2011
|
|
|
2010
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
85,800
|
|
|
$
|
45,000
|
|
|
|
Accounts receivable, net
|
|
70,000
|
|
|
|
52,000
|
|
|
|
Inventory
|
|
66,800
|
|
|
|
96,800
|
|
|
|
Prepaid expenses
|
|
5,400
|
|
|
|
5,200
|
|
|
|
Equipment
|
|
130,000
|
|
|
|
120,000
|
|
|
|
Accum. depreciation Equipment
|
|
(28,000
|
)
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
330,000
|
|
|
$
|
309,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
$
|
26,000
|
|
|
$
|
32,000
|
|
|
|
Wages payable
|
|
7,000
|
|
|
|
16,000
|
|
|
|
Income taxes payable
|
|
2,400
|
|
|
|
3,600
|
|
|
|
Notes payable (long term)
|
|
40,000
|
|
|
|
70,000
|
|
|
|
Common stock, $5 par value
|
|
230,000
|
|
|
|
180,000
|
|
|
|
Retained earnings
|
|
24,600
|
|
|
|
7,400
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
$
|
330,000
|
|
|
$
|
309,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GECKO INC.
Income Statement
For Year Ended June 30, 2011
|
|
Sales
|
|
|
|
$
|
668,000
|
|
|
Cost of goods sold
|
|
|
|
|
412,000
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
256,000
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
Depreciation expense
|
$
|
58,600
|
|
|
|
|
|
Other expenses
|
|
67,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
125,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130,400
|
|
|
Other gains (losses)
|
|
|
|
|
|
|
|
Gain on sale of equipment
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
|
|
132,400
|
|
|
Income taxes expense
|
|
|
|
|
45,640
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
86,760
|
|
|
|
|
|
|
|
|
|
|
A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash.
|
|
The only changes affecting retained earnings are net income and cash dividends paid.
|
|
New equipment is acquired for $58,600 cash.
|
|
Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain.
|
|
Prepaid Expenses and Wages Payable relate to Other Expenses on the income statement.
|
|
All purchases and sales of merchandise inventory are on credit.
|
Exercise 12-10 Part 1
|
(1)
|
Prepare a statement of cash flows for the year ended June 30, 2011, using the indirect method.(Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)
|
Exercise 12-10 Part 2
|
(2)
|
Compute the company’s cash flow on total assets ratio for its fiscal year 2011. (Round your answer to 1 decimal place. Omit the “%” sign in your response.)
|
|
Cash flow on total assets ratio
|
Exercise 12-13B Preparation of statement of cash flows (direct) from Cash T-account L.O. P1
[The following information applies to the questions displayed below.]
|
The following summarized Cash T-account reflects the total debits and total credits to the Cash account of Texas Corporation for calendar year 2011.
|
|
|
|
|
Balance, Dec. 31, 2010
|
|
135,200
|
|
|
|
Receipts from customers
|
|
6,000,000
|
Payments for merchandise
|
1,590,000
|
|
Receipts from dividends
|
|
208,400
|
Payments for wages
|
550,000
|
|
Receipts from land sale
|
|
220,000
|
Payments for rent
|
320,000
|
|
Receipts from machinery sale
|
|
710,000
|
Payments for interest
|
218,000
|
|
Receipts from issuing stock
|
|
1,540,000
|
Payments for taxes
|
450,000
|
|
Receipts from borrowing
|
|
2,600,000
|
Payments for machinery
|
2,236,000
|
|
|
|
Payments for long-term investments
|
2,260,000
|
|
|
|
Payments for note payable
|
386,000
|
|
|
|
Payments for dividends
|
500,000
|
|
|
|
Payments for treasury stock
|
218,000
|
|
|
|
Balance, Dec. 31, 2011
|
$
|
?
|
|
|
|
|
|
|
|
|
6. Exercise 12-13B Part 1
|
(1)
|
Use this information to prepare a complete statement of cash flows for year 2011. The cash provided or used by operating activities should be reported using the direct method. (Amounts to be deducted should be indicated with a minus sign. Omit the “$” sign in your response.)
|
7. Exercise 12-13B Part 2
|
(2)
|
Refer to the statement of cash flows in part 1 to answer the following questions a through d:
|
|
a.
|
(i) Which section shows the largest cash inflow?
|
|
|
|
|
|
|
|
(ii) Which section shows the largest cash outflow?
|
|
|
|
|
|
|
b.
|
What is the largest individual item among the investing cash outflows?
|
|
|
|
|
|
|
|
c.
|
The cash proceeds are larger from
|
|
|
|
|
|
|
|
d.
|
From borrowing activities the company has
|
|
Aug 29, 2021 | Uncategorized
Exercise 13-3 Computation and analysis of trend percents L.O. P1
|
2013
|
2012
|
2011
|
2010
|
2009
|
|
Sales
|
$ 283,880
|
$ 271,800
|
$ 253,680
|
$ 235,560
|
$ 151,000
|
|
Cost of goods sold
|
129,200
|
123,080
|
116,280
|
107,440
|
68,000
|
|
Accounts receivable
|
19,100
|
18,300
|
17,400
|
16,200
|
10,000
|
|
|
Compute trend percents for the above accounts, using 2009 as the base year. (Omit the “%” sign in your response.)
|
Exercise 13-7 Common-size percents L.O. P2
|
Sanderson Company s year-end balance sheets follow.
|
|
At December 31
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
30,800
|
|
$
|
35,625
|
|
$
|
36,800
|
|
Accounts receivable, net
|
|
|
88,500
|
|
|
62,500
|
|
|
49,200
|
|
Merchandise inventory
|
|
|
111,500
|
|
|
82,500
|
|
|
53,000
|
|
Prepaid expenses
|
|
|
9,700
|
|
|
9,375
|
|
|
4,000
|
|
Plant assets, net
|
|
|
277,500
|
|
|
255,000
|
|
|
229,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
518,000
|
|
$
|
445,000
|
|
$
|
372,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
128,900
|
|
$
|
75,250
|
|
$
|
49,250
|
|
Long-term notes payable secured by
mortgages on plant assets
|
|
|
97,500
|
|
|
102,500
|
|
|
82,500
|
|
Common stock, $10 par value
|
|
|
162,500
|
|
|
162,500
|
|
|
162,500
|
|
Retained earnings
|
|
|
129,100
|
|
|
104,750
|
|
|
78,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
518,000
|
|
$
|
445,000
|
|
$
|
372,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the “%” sign in your response.)
|
Exercise 13-9 Liquidity analysis and interpretation L.O. P3
[The following information applies to the questions displayed below.]
|
Sanderson Company s year-end balance sheets follow.
|
|
At December 31
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
30,800
|
|
$
|
35,625
|
|
$
|
36,800
|
|
Accounts receivable, net
|
|
|
88,500
|
|
|
62,500
|
|
|
49,200
|
|
Merchandise inventory
|
|
|
111,500
|
|
|
82,500
|
|
|
53,000
|
|
Prepaid expenses
|
|
|
9,700
|
|
|
9,375
|
|
|
4,000
|
|
Plant assets, net
|
|
|
277,500
|
|
|
255,000
|
|
|
229,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
518,000
|
|
$
|
445,000
|
|
$
|
372,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
128,900
|
|
$
|
75,250
|
|
$
|
49,250
|
|
Long-term notes payable secured by
mortgages on plant assets
|
|
|
97,500
|
|
|
102,500
|
|
|
82,500
|
|
Common stock, $10 par value
|
|
|
162,500
|
|
|
162,500
|
|
|
162,500
|
|
Retained earnings
|
|
|
129,100
|
|
|
104,750
|
|
|
78,250
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
518,000
|
|
$
|
445,000
|
|
$
|
372,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The company s income statements for the years ended December 31, 2012 and 2011, follow. Assume that all sales are on credit:
|
|
For Year Ended December 31
|
2012
|
2011
|
|
Sales
|
|
|
|
$
|
672,500
|
|
|
|
|
$
|
530,000
|
|
Cost of goods sold
|
$
|
410,225
|
|
|
$
|
344,500
|
|
|
|
Other operating expenses
|
208,550
|
|
|
133,980
|
|
|
|
Interest expense
|
|
11,100
|
|
|
|
|
|
12,300
|
|
|
|
|
Income taxes
|
|
8,525
|
|
|
|
|
|
7,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
|
|
638,400
|
|
|
|
|
|
498,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
34,100
|
|
|
|
|
$
|
31,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
$
|
2.10
|
|
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Section Break
|
Exercise 13-9 Liquidity analysis and interpretation L.O. P3
|
|
Exercise 13-9 Part 1
|
(1)
|
Compute days’sales uncollected. (Use 365 days a year. Do not round intermediate calculations and roundyour final answers to the nearest whole number.)
|
Exercise 13-9 Part 2
|
(2)
|
Compute accounts receivable turnover. (Round your answers to 1 decimal place.)
|
Exercise 13-9 Part 3
|
(3)
|
Compute inventory turnover. (Round your answers to 1 decimal place.)
|
Exercise 13-9 Part 4
|
(4)
|
Compute days’ sales in inventory. (Use 365 days a year. Do not round intermediate calculations and round your final answers to the nearest whole number.)
|
Problem 13-1A Ratios, common-size statements, and trend percents L.O. P1, P2, P3
[The following information applies to the questions displayed below.]
|
Selected comparative financial statements of Bennington Company follow:
|
|
|
BENNINGTON COMPANY
|
|
Comparative Income Statements
|
|
For Years Ended December 31, 2012, 2011, and 2010
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2010
|
|
|
Sales
|
|
$
|
444,000
|
|
|
$
|
340,000
|
|
|
$
|
236,000
|
|
|
Cost of goods sold
|
|
|
267,288
|
|
|
|
212,500
|
|
|
|
151,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
176,712
|
|
|
|
127,500
|
|
|
|
84,960
|
|
|
Selling expenses
|
|
|
62,694
|
|
|
|
46,920
|
|
|
|
31,152
|
|
|
Administrative expenses
|
|
|
40,137
|
|
|
|
29,920
|
|
|
|
19,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
102,831
|
|
|
|
76,840
|
|
|
|
50,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
73,881
|
|
|
|
50,660
|
|
|
|
34,338
|
|
|
Income taxes
|
|
|
13,764
|
|
|
|
10,370
|
|
|
|
6,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
60,117
|
|
|
$
|
40,290
|
|
|
$
|
27,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BENNINGTON COMPANY
|
|
Comparative Balance Sheets
|
|
December 31, 2012, 2011, and 2010
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2010
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
48,480
|
|
|
$
|
37,924
|
|
|
$
|
50,648
|
|
|
Long-term investments
|
|
|
0
|
|
|
|
500
|
|
|
|
3,720
|
|
|
Plant assets, net
|
|
|
90,000
|
|
|
|
96,000
|
|
|
|
57,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
138,480
|
|
|
$
|
134,424
|
|
|
$
|
111,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
20,200
|
|
|
$
|
19,960
|
|
|
$
|
19,480
|
|
|
Common stock
|
|
|
72,000
|
|
|
|
72,000
|
|
|
|
54,000
|
|
|
Other paid-in capital
|
|
|
9,000
|
|
|
|
9,000
|
|
|
|
6,000
|
|
|
Retained earnings
|
|
|
37,280
|
|
|
|
33,464
|
|
|
|
31,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
138,480
|
|
|
$
|
134,424
|
|
|
$
|
111,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Problem 13-1A Part 1
|
Required:
|
|
Compute each year’s current ratio. (Round your answers to 1 decimal place.)
|
|
|
|
|
|
|
Current ratio
|
December 31, 2012:
|
|
|
|
|
Current ratio
|
December 31, 2011:
|
|
|
|
|
Current ratio
|
December 31, 2010:
|
|
|
|
|
Problem 13-1A Part 2
|
Express the income statement data in common-size percents. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)
|
Problem 13-1A Part 3
|
Express the balance sheet data in trend percents with 2010 as the base year. (Round your answers to 2 decimal places. Leave no cells blank – be certain to enter “0” wherever required. Omit the “%” sign in your response.)
|
Aug 29, 2021 | Uncategorized
Managerial Accounting 1B – Ch16
1.
Exercise 16-6 Recording cost flows in a process cost system L.O. P1, P2, P3, P4
|
Lowes Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October.
|
|
Bagging
Department
|
|
Direct materials used
|
$
|
230,000
|
|
|
Direct labor used
|
$
|
38,000
|
|
|
Predetermined overhead rate (based on direct labor)
|
|
120
|
%
|
|
Goods transferred from bagging to finished goods
|
$
|
(203,500
|
)
|
|
|
The company’s revenue for the month totaled $450,000 from credit sales, and its cost of goods sold for the month is $250,000.
|
|
(1)
|
Prepare journal entry dated October 31 to record its October production activities for direct material usage.(Omit the “”$”” sign in your response.)
|
(2)
|
Prepare journal entry dated October 31 to record its October production activities for direct labor usage.(Omit the “”$”” sign in your response.)
|
|
(3)
|
Prepare journal entry dated October 31 to record its October production activities for overhead allocation.(Omit the “”$”” sign in your response.)
|
|
(4)
|
Prepare journal entry dated October 31 to record its October production activities for goods transfer from production to finished goods. (Omit the “”$”” sign in your response.)
|
|
(5)
|
Prepare journal entries dated October 31 to record its October activities for sales. (Omit the “”$”” sign in your response.)
|
2.Exercise 16-8 Computing equivalent units of production-weighted average L.O. C2
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
1.
|
Compute the number of units transferred to finished goods.
|
|
2.
|
Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the weighted-average method.
|
3.Exercise 16-9 Costs assigned to output and inventories-weighted average L.O. C2, P4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
|
The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor.
|
|
1.
|
Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “”$”” sign in your response.)
|
2. ng the weighted-average method, assign April’s costs to the department s output specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations an
4.Exercise 16-10 Computing equivalent units of production-FIFO L.O. C4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the FIFO method.
|
d final a
5.Exercise 16-11A Costs assigned to output-FIFO L.O. C4, P4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
|
The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor.
|
|
1.
|
Using the FIFO method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “”$”” sign in your response.)
|
|
2.
|
Using the FIFO method, assign April’s costs to the department s output specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “”$”” sign in your response.)
|
Problem 16-1A Production cost flow and measurement; journal entries L.O. P1, P2, P3, P4
[The following information applies to the questions displayed below.]
|
Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.
|
6. Problem 16-1A Part 1
|
Required:
|
|
1(a)
|
Compute the cost of products transferred from production to finished goods. (Omit the “”$”” sign in your response.)
|
|
1(b)
|
Compute the cost of goods sold. (Omit the “”$”” sign in your response.)
|
7.Problem 16-1A Part 2
|
2(a)
|
Prepare journal entry dated May 31 to record the raw materials purchases. (Omit the “”$”” sign in your response.)
|
2(b)
|
Prepare journal entry dated May 31 to record the direct materials usage. (Omit the “”$”” sign in your response.)
|
|
2(c)
|
Prepare journal entry dated May 31 to record the indirect materials usage. (Omit the “”$”” sign in your response.)
|
|
2(d)
|
Prepare journal entry dated May 31 to record the payroll costs. (Omit the “”$”” sign in your response.)
|
|
2(e)
|
Prepare journal entry dated May 31 to record the direct labor costs. (Omit the “”$”” sign in your response.)
|
|
2(f)
|
Prepare journal entry dated May 31 to record the indirect labor costs. (Omit the “”$”” sign in your response.)
|
|
2(g)
|
Prepare journal entry dated May 31 to record the other overhead costs. (Omit the “”$”” sign in your response.)
|
|
2(h)
|
Prepare journal entry dated May 31 to record the overhead applied. (Omit the “”$”” sign in your response.)
|
|
2(i)
|
Prepare journal entry dated May 31 to record the goods transferred from production to finished goods.(Omit the “”$”” sign in your response.)
|
|
2(j)
|
Prepare journal entry dated May 31 to record the sale of finished goods. (Omit the “”$”” sign in your response.)
|
Problem 16-2A Cost per equivalent unit; costs assigned to products L.O. C2, C3
[The following information applies to the questions displayed below.]
|
Fairfax Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During September, the company transferred 735,000 units of product to finished goods. At the end of September, the goods in process inventory consists of 207,000 units that are 90% complete with respect to labor. Beginning inventory had $244,920 of direct materials and $69,098 of direct labor cost. The direct labor cost added in September is $1,312,852, and the direct materials cost added is $1,639,080.
|
8.Problem 16-2A Part 1
|
Required:
|
|
1(a)
|
Determine the equivalent units of production with respect to direct labor.
|
|
1(b)
|
Determine the equivalent units of production with respect to direct materials.
|
9. Problem 16-2A Part 2
|
2.
|
Compute both the direct labor cost and the direct materials cost per equivalent unit. (Round your answers to 2 decimal place. Omit the “”$”” sign in your response.)
|
10. Problem 16-2A Part 3
|
3(a)
|
Compute both direct labor cost and direct materials cost assigned to units completed and transferred out. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)
|
|
3(b)
|
Compute both direct labor cost and direct materials cost assigned to ending goods in process inventory. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)
|
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch16 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 16
- Exercise 16-6 Recording cost flows in a process cost system L.O. P1, P2, P3, P4
|
Lowes Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October.
|
|
Bagging
Department
|
|
Direct materials used
|
$
|
230,000
|
|
|
Direct labor used
|
$
|
38,000
|
|
|
Predetermined overhead rate (based on direct labor)
|
|
120
|
%
|
|
Goods transferred from bagging to finished goods
|
$
|
(203,500
|
)
|
|
|
The company’s revenue for the month totaled $450,000 from credit sales, and its cost of goods sold for the month is $250,000.
|
|
(1)
|
Prepare journal entry dated October 31 to record its October production activities for direct material usage. (Omit the “$” sign in your response.)
|
|
(2)
|
Prepare journal entry dated October 31 to record its October production activities for direct labor usage.(Omit the “$” sign in your response.)
|
|
(3)
|
Prepare journal entry dated October 31 to record its October production activities for overhead allocation.(Omit the “$” sign in your response.)
|
|
(4)
|
Prepare journal entry dated October 31 to record its October production activities for goods transfer from production to finished goods. (Omit the “$” sign in your response.)
|
|
(5)
|
Prepare journal entries dated October 31 to record its October activities for sales. (Omit the “$” sign in your response.)
|
Exercise 16-8 Computing equivalent units of production-weighted average L.O. C2
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
Compute the number of units transferred to finished goods.
|
|
Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the weighted-average method.
|
|
Direct
Materials
|
Direct Labor
|
|
Number of equivalent units
|
|
|
|
- Exercise 16-9 Costs assigned to output and inventories-weighted average L.O. C2, P4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
|
The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor.
|
|
Using the weighted-average method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
Direct Materials
|
Direct Labor
|
|
Cost per equivalent unit
|
|
|
|
|
Using the weighted-average method, assign April’s costs to the department s output specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.)
|
- Exercise 16-10 Computing equivalent units of production-FIFO L.O. C4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April’s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
Compute the number of equivalent units with respect to both materials used and labor used in the production department for April using the FIFO method.
|
|
Direct
Materials
|
Direct Labor
|
|
Number of equivalent units
|
|
|
|
- Exercise 16-11A Costs assigned to output-FIFO L.O. C4, P4
|
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 37,500 were in process in the production department at the beginning of April and 150,000 were started and completed in April. April s beginning inventory units were 60% complete with respect to materials and 40% complete with respect to labor. At the end of April, 51,250 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to labor.
|
|
|
The production department had $531,480 of direct materials and $407,689 of direct labor cost charged to it during April. Also, its beginning inventory included $74,075 of direct materials cost and $28,493 of direct labor.
|
|
Using the FIFO method, compute the direct materials cost and the direct labor cost per equivalent unit for the department. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
Direct Materials
|
Direct Labor
|
|
Cost per equivalent unit
|
$
|
$
|
|
|
Using the FIFO method, assign April’s costs to the department s output specifically, its units transferred to finished goods and its ending goods in process inventory. (Round your intermediate calculations and final answer to 2 decimal places. Omit the “$” sign in your response.)
|
Problem 16-1A Production cost flow and measurement; journal entries L.O. P1, P2, P3, P4
[The following information applies to the questions displayed below.]
|
Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories.
|
|
Beginning
Inventory
|
|
Ending
Inventory
|
|
|
Raw materials inventory
|
$
|
28,000
|
|
$
|
25,500
|
|
|
Goods in process inventory
|
|
220,750
|
|
|
252,000
|
|
|
Finished goods inventory
|
|
319,000
|
|
|
277,000
|
|
|
|
The following additional information describes the company’s production activities for May.
|
|
|
|
|
|
Raw materials purchases (on credit)
|
$
|
135,000
|
|
|
Factory payroll cost (paid in cash)
|
|
791,500
|
|
|
Other overhead cost (Other Accounts credited)
|
|
43,000
|
|
|
Materials used
|
|
|
|
|
Direct
|
$
|
93,500
|
|
|
Indirect
|
|
31,000
|
|
|
Labor used
|
|
|
|
|
Direct
|
$
|
352,000
|
|
|
Indirect
|
|
439,500
|
|
|
Overhead rate as a percent of direct labor
|
|
110
|
%
|
|
Sales (on credit)
|
$
|
1,500,000
|
|
|
Problem 16-1A Part 1
|
Required:
|
|
1(a)
|
Compute the cost of products transferred from production to finished goods. (Omit the “$” sign in your response.)
|
|
Cost of products transferred
|
|
1(b)
|
Compute the cost of goods sold. (Omit the “$” sign in your response.)
|
- Problem 16-1A Part 2
|
2(a)
|
Prepare journal entry dated May 31 to record the raw materials purchases. (Omit the “$” sign in your response.)
|
|
2(b)
|
Prepare journal entry dated May 31 to record the direct materials usage. (Omit the “$” sign in your response.)
|
|
2(c)
|
Prepare journal entry dated May 31 to record the indirect materials usage. (Omit the “$” sign in your response.)
|
|
2(d)
|
Prepare journal entry dated May 31 to record the payroll costs. (Omit the “$” sign in your response.)
|
|
2(e)
|
Prepare journal entry dated May 31 to record the direct labor costs. (Omit the “$” sign in your response.)
|
|
2(f)
|
Prepare journal entry dated May 31 to record the indirect labor costs. (Omit the “$” sign in your response.)
|
|
2(g)
|
Prepare journal entry dated May 31 to record the other overhead costs. (Omit the “$” sign in your response.)
|
|
2(h)
|
Prepare journal entry dated May 31 to record the overhead applied. (Omit the “$” sign in your response.)
|
|
2(i)
|
Prepare journal entry dated May 31 to record the goods transferred from production to finished goods.(Omit the “$” sign in your response.)
|
|
2(j)
|
Prepare journal entry dated May 31 to record the sale of finished goods. (Omit the “$” sign in your response.)
|
Problem 16-2A Cost per equivalent unit; costs assigned to products L.O. C2, C3
[The following information applies to the questions displayed below.]
|
Fairfax Company uses weighted-average process costing to account for its production costs. Direct labor is added evenly throughout the process. Direct materials are added at the beginning of the process. During September, the company transferred 735,000 units of product to finished goods. At the end of September, the goods in process inventory consists of 207,000 units that are 90% complete with respect to labor. Beginning inventory had $244,920 of direct materials and $69,098 of direct labor cost. The direct labor cost added in September is $1,312,852, and the direct materials cost added is $1,639,080.
|
Problem 16-2A Part 1
|
Required:
|
|
1(a)
|
Determine the equivalent units of production with respect to direct labor.
|
|
1(b)
|
Determine the equivalent units of production with respect to direct materials.
|
Problem 16-2A Part 2
|
Compute both the direct labor cost and the direct materials cost per equivalent unit. (Round your answers to 2 decimal place. Omit the “$” sign in your response.)
|
|
Per equivalent
unit
|
|
Direct labor cost
|
|
|
Direct materials cost
|
|
|
- Problem 16-2A Part 3
|
3(a)
|
Compute both direct labor cost and direct materials cost assigned to units completed and transferred out. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)
|
|
Cost transferred
out
|
|
Direct materials
|
|
|
Direct labor
|
|
|
|
3(b)
|
Compute both direct labor cost and direct materials cost assigned to ending goods in process inventory. (Round your per unit costs to 2 decimal places and final answers to the nearest dollar amount.)
|
|
Costs of ending goods in process
|
|
Direct materials
|
|
|
Direct labor
|
|
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch19 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 19
Exercise 19-1 Income reporting under absorption costing and variable costing L.O. P2
|
Adams Company, a manufacturer of in-home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.
|
|
|
|
|
|
Production costs
|
|
|
|
|
Direct materials
|
$
|
40
|
per unit
|
|
Direct labor
|
$
|
60
|
per unit
|
|
Overhead costs for the year
|
|
|
|
|
Variable overhead
|
$
|
3,000,000
|
|
|
Fixed overhead
|
$
|
7,000,000
|
|
|
Nonproduction costs for the year
|
|
|
|
|
Variable selling and administrative
|
$
|
770,000
|
|
|
Fixed selling and administrative
|
$
|
4,250,000
|
|
|
Production and sales for the year
|
|
|
|
|
Units produced
|
|
100,000
|
units
|
|
Units sold
|
|
70,000
|
units
|
|
Sales price per unit
|
$
|
350
|
per unit
|
|
|
Prepare an income statement for the company using absorption costing. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)
|
|
Prepare an income statement for the company using variable costing. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)
|
|
Under what circumstance(s) is reported income identical under both absorption costing and variable costing?
|
Exercise 19-4 Income reporting under absorption costing and variable costing L.O. P2
[The following information applies to the questions displayed below.]
|
Woodson Company, a producer of solid oak tables, reports the following data from its current year operations, which is its second year of business.
|
|
|
|
|
|
Sales price per unit
|
$
|
320
|
per unit
|
|
Units produced this year
|
|
115,000
|
units
|
|
Units sold this year
|
|
118,000
|
units
|
|
Units in beginning-year inventory
|
|
3,000
|
units
|
|
Beginning inventory costs
|
|
|
|
|
Variable (3,000 units $135)
|
$
|
405,000
|
|
|
Fixed (3,000 units $80)
|
|
240,000
|
|
|
|
|
|
|
Total
|
$
|
645,000
|
|
|
Production costs this year
|
|
|
|
|
Direct materials
|
$
|
40
|
per unit
|
|
Direct labor
|
$
|
62
|
per unit
|
|
Overhead costs this year
|
|
|
|
|
Variable overhead
|
$
|
3,220,000
|
|
|
Fixed overhead
|
$
|
7,400,000
|
|
|
Nonproduction costs this year
|
|
|
|
|
Variable selling and administrative
|
$
|
1,416,000
|
|
|
Fixed selling and administrative
|
|
4,600,000
|
|
|
- Exercise 19-4 Part 1
|
Prepare the current year income statement for the company using absorption costing. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
- Exercise 19-4 Part 2
|
Prepare the current year income statement for the company using variable costing. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
- Exercise 19-6 Converting variable costing income to absorption costing income L.O. P2, P4
|
Lyon Furnaces prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 375 furnaces were produced and 225 were sold; this left 150 furnaces in ending inventory. The income statement information under variable costing follows.
|
|
|
|
|
Sales (225 $1,600)
|
$
|
360,000
|
|
Variable production cost (225 $625)
|
|
140,625
|
|
Variable selling and administrative expenses (225 $65)
|
|
14,625
|
|
|
|
|
Contribution margin
|
|
204,750
|
|
Fixed overhead cost
|
|
56,250
|
|
Fixed selling and administrative expense
|
|
75,000
|
|
|
|
|
Net income
|
$
|
73,500
|
|
|
|
|
|
Prepare this company’s income statement for its first month of operations under absorption costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)
|
Exercise 19-9 Contribution margin format income statement L.O. P3
|
Polarix is a retailer of ATVs (all terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell, on average, for $3,800. Variable selling expenses are $270 each. The remaining selling expenses are fixed. Administrative expenses are 40% variable and 60% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,830 each.
|
|
POLARIX
Income Statement Consumer ATV Department
For Year Ended December 21, 2011
|
|
Sales
|
|
|
$
|
646,000
|
|
Cost of goods sold
|
|
|
|
311,100
|
|
|
|
|
|
|
Gross margin
|
|
|
|
334,900
|
|
Operating expenses
|
|
|
|
|
|
Selling expenses
|
$
|
135,000
|
|
|
|
Administrative expenses
|
|
59,500
|
|
194,500
|
|
|
|
|
|
|
Net income
|
|
|
$
|
140,400
|
|
|
|
|
|
|
|
Prepare an income statement for this current year using the contribution margin format. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)
|
|
For each ATV sold during this year, what is the contribution toward covering fixed expenses and that toward earning income (Omit the “$” sign in your response.)
|
|
Contribution margin per ATV
|
|
Exercise 19-11 Absorption costing and over-production L.O. C2
|
Rourke Inc. reports the following annual cost data for its single product.
|
|
|
|
|
|
Normal production and sales level
|
|
60,000
|
units
|
|
Sales price
|
$
|
56.00
|
per unit
|
|
Direct materials
|
$
|
9.00
|
|
|
Direct labor
|
$
|
6.50
|
per unit
|
|
Variable overhead
|
$
|
11.00
|
per unit
|
|
Fixed overhead
|
$
|
720,000
|
in total
|
|
|
If Rourke increases its production to 80,000 units, while sales remain at the current 60,000 unit level, by how much would the company s gross margin increase or decrease under absorption costing? Assume the company has idle capacity to double current production. (Omit the “$” sign in your response.)
|
- Problem 19-1A Variable costing income statement and conversion to absorption costing income L.O. P2, P4
|
Torres Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for its first year of operations follows.
|
|
|
Sales (80,000 units $50 per unit)
|
|
|
$
|
4,000,000
|
|
Cost of goods sold
|
|
|
|
|
|
Beginning inventory
|
$
|
0
|
|
|
|
Cost of goods manufactured (100,000 units $30 per unit)
|
|
3,000,000
|
|
|
|
|
|
|
|
|
Cost of good available for sale
|
|
3,000,000
|
|
|
|
Ending inventory (20,000 $30)
|
|
600,000
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
|
2,400,000
|
|
|
|
|
|
|
Gross margin
|
|
|
|
1,600,000
|
|
Selling and administrative expenses
|
|
|
|
530,000
|
|
|
|
|
|
|
Net income
|
|
|
$
|
1,070,000
|
|
|
|
|
|
|
Selling and administrative expenses consist of $350,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses.
|
|
The company’s product cost of $30 per unit is computed as follows.
|
|
|
Direct materials
|
$
|
5
|
per unit
|
|
Direct labor
|
$
|
14
|
per unit
|
|
Variable overhead
|
$
|
2
|
per unit
|
|
Fixed overhead ($900,000 / 100,000 units)
|
$
|
9
|
per unit
|
|
|
Prepare an income statement for the company under variable costing. (Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch20 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting-Chapter-20
1.
Exercise 20-5 Computing budgeted cash payments for purchases L.O. P1
|
Powerdyne Company s cost of goods sold is consistently 60% of sales. The company plans to carry ending merchandise inventory for each month equal to 40% of the next month s budgeted cost of good sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for in that month. Another 35% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are: August (actual), $150,000; September (actual), $350,000; October (estimated), $200,000; November (estimated), $300,000.
|
|
Use this information to determine October s expected cash payments for purchases. (Omit the “$” sign in your response.)
|
|
Cash payments for purchases
|
|
|
|
- Exercise 20-6 Computing budgeted purchases and costs of goods sold L.O. P1
|
Sand Dollar Company purchases all merchandise on credit. It recently budgeted the following month-end accounts payable balances and merchandise inventory balances. Cash payments on accounts payable during each month are expected to be: May, $1,300,000; June, $1,450,000; July, $1,350,000; and August, $1,400,000.
|
|
Accounts
Payable
|
Merchandise Inventory
|
|
May 31
|
$
|
120,000
|
$
|
250,000
|
|
June 30
|
|
170,000
|
|
400,000
|
|
July 31
|
|
200,000
|
|
300,000
|
|
August 31
|
|
160,000
|
|
330,000
|
|
|
Compute the budgeted amounts of merchandise purchases for June, July, and August. (Omit the “$” sign in your response.)
|
|
June
|
July
|
August
|
|
Budgeted merchandise purchases
|
$
|
$
|
$
|
|
|
Compute the budgeted amounts of cost of goods sold for June, July, and August. (Omit the “$” sign in your response.)
|
|
June
|
July
|
August
|
|
Budgeted cost of goods sold
|
$
|
$
|
$
|
|
Explanation:
|
Budgeted merchandise purchases
|
2.
|
Budgeted cost of goods sold
|
- Exercise 20-16 Cash budget L.O. P1
|
Kool-Ray is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow:
|
|
Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $12,000 in cash; $45,000 in accounts receivable; $4,500 in accounts payable; and a $2,000 balance in loans payable. A minimum cash balance of $12,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).
|
|
(1)
|
Prepare a cash receipts budget for July, August, and September. (Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
(2)
|
Prepare a cash budget for each of the months of July, August, and September. (Input all amounts as positive values. Round your answers to the nearest dollar amount. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
Problem 20-5A: Preparation of a complete master budget L.O. C2, P1, P2
[The following information applies to the questions displayed below.]
|
Near the end of 2011, the management of Simid Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2011.
|
|
To prepare a master budget for January, February, and March of 2012, management gathers the following information.
|
|
Simid Sports single product is purchased for $30 per unit and resold for $55 per unit. The expected inventory level of 2,500 units on December 31, 2011, is more than management s desired level for 2012, which is 20% of the next month s expected sales (in units). Expected sales are: January, 3,500 units; February, 4,500 units; March, 5,500 units; and April, 5,000 units.
|
|
Cash sales and credit sales represent 25% and 75%, respectively, of total sales. Of the credit sales, 60% is collected in the first month after the month of sale and 40% in the second month after the month of sale. For the December 31, 2011, accounts receivable balance, $62,500 is collected in January and the remaining $200,000 is collected in February.
|
|
Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2011, accounts payable balance, $40,000 is paid in January and the remaining $140,000 is paid in February.
|
|
Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $30,000 per year.
|
|
General and administrative salaries are $72,000 per year. Maintenance expense equals $1,000 per month and is paid in cash.
|
|
Equipment reported in the December 31, 2011, balance sheet was purchased in January 2011. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $18,000; February, $48,000; and March, $14,400. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full month s depreciation is taken for the month in which equipment is purchased.
|
|
The company plans to acquire land at the end of March at a cost of $75,000, which will be paid with cash on the last day of the month.
|
|
Simid Sports has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $12,500 in each month.
|
|
The income tax rate for the company is 40%. Income taxes on the first quarter s income will not be paid until April 15.
|
Problem 20-5A Part 1
|
Monthly sales budgets. (Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
Sales Budget
January, February, and March 2012
|
|
Budgeted
Units
|
Budgeted
Unit Price
|
Budgeted
Total Dollars
|
|
January 2012
|
|
$
|
$
|
|
February 2012
|
|
|
|
|
March 2012
|
|
|
|
|
|
|
|
|
Total for the first quarter
|
|
|
$
|
|
|
|
|
|
|
SIMID SPORTS CO.
Merchandise Purchases Budget
January, February, and March 2012
|
|
January
|
February
|
March
|
Total
|
|
Next month s budgeted sales
|
|
|
|
|
|
Ratio of inventory to future sales
|
%
|
%
|
%
|
|
|
|
|
|
|
|
Budgeted ending inventory
|
|
|
|
|
|
Add: Budgeted sales
|
|
|
|
|
|
|
|
|
|
|
Required units of available merchandise
|
|
|
|
|
|
Deduct: Beginning inventory
|
|
|
|
|
|
|
|
|
|
|
Units to be purchased
|
|
|
|
|
|
|
|
|
|
|
Budgeted cost per unit
|
$
|
$
|
$
|
$
|
|
Budgeted merchandise purchases
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Problem 20-5A Part 2
|
Monthly merchandise purchases budgets. (Units to be deducted should be indicated with a minus sign. Omit the “$” & “%” signs in your response.)
|
6.Problem 20-5A Part 3
|
Monthly selling expense budgets. (Omit the “$” & “%” signs in your response.)
|
|
SIMID SPORTS CO.
Selling Expense Budget
January, February, and March 2012
|
|
January
|
February
|
March
|
Total
|
|
Budgeted sales
|
$
|
$
|
$
|
|
|
Sales commission percent
|
%
|
%
|
%
|
|
|
|
|
|
|
|
Sales commissions expense
|
|
|
|
$
|
|
Sales salaries
|
|
|
|
|
|
|
|
|
|
|
Total selling expenses
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
7.Problem 20-5A Part 4
|
Monthly general and administrative expense budgets. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
General and Administrative Expense Budget
January, February, and March 2012
|
|
January
|
February
|
March
|
Total
|
|
Salaries
|
$
|
$
|
$
|
$
|
|
Maintenance
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
$
|
$
|
$
|
$
|
|
|
|
|
|
|
Problem 20-5A Part 5
|
Monthly capital expenditures budgets. (Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
Capital Expenditures Budget
January, February, and March 2012
|
|
January
|
February
|
March
|
|
Equipment purchases
|
$
|
$
|
$
|
|
Land purchase
|
|
|
|
|
|
|
|
|
Total
|
$
|
$
|
$
|
|
|
|
|
|
9.
Problem 20-5A Part 6
|
Monthly cash budgets. (Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
Cash Budget
January, February, and March 2012
|
|
January
|
February
|
March
|
|
Beginning cash balance
|
$
|
$
|
$
|
|
Cash receipts from customers
|
|
|
|
|
|
|
|
|
Total cash available
|
|
|
|
|
Cash disbursements
|
|
|
|
|
Payments for merchandise
|
|
|
|
|
Sales commissions
|
|
|
|
|
Sales salaries
|
|
|
|
|
General & administrative salaries
|
|
|
|
|
Maintenance expense
|
|
|
|
|
Interest
|
|
|
|
|
Taxes payable
|
|
|
|
|
Purchases of equipment
|
|
|
|
|
Purchase of land
|
|
|
|
|
|
|
|
|
Total cash disbursements
|
|
|
|
|
|
|
|
|
Preliminary cash balance
|
|
|
|
|
Repayment of loan to bank
|
|
|
|
|
|
|
|
|
Ending cash balance
|
$
|
$
|
$
|
|
|
|
|
|
Loan balance, end of month
|
$
|
$
|
$
|
|
|
|
|
|
Problem 20-5A Part 7
|
Budgeted income statement for the entire first quarter (not for each month). (Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
Budgeted Income Statement
For Three Months Ended March 31, 2012
|
|
Sales
|
|
$
|
|
Cost of goods sold
|
|
|
|
|
|
|
Gross profit
|
|
|
|
Operating expenses
|
|
|
|
Sales commissions
|
$
|
|
|
Sales salaries
|
|
|
|
General administrative salaries
|
|
|
|
Maintenance expense
|
|
|
|
Depreciation expense
|
|
|
|
Interest expense
|
|
|
|
|
|
|
Income before taxes
|
|
|
|
Income taxes
|
|
|
|
|
|
|
Net income
|
|
$
|
|
|
|
|
Problem 20-5A Part 8
|
Budgeted balance sheet as of March 31, 2012. (Input all amounts as positive values. Be sure to list the assets in order of their liquidity. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
SIMID SPORTS CO.
Budgeted Balance Sheet
March 31, 2012
|
|
Assets
|
|
|
|
|
Cash
|
|
|
$
|
|
Accounts receivable
|
|
|
|
|
Inventory
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
|
|
Land
|
|
|
|
|
Equipment
|
$
|
|
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
$
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
Accounts payable
|
|
|
$
|
|
Bank loan payable
|
|
|
|
|
Taxes payable
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
|
|
Common stock
|
$
|
|
|
|
Retained earnings
|
|
|
|
|
|
|
|
|
Total Stockholders’Equity
|
|
|
|
|
|
|
|
|
Total Liabilities & Equity
|
|
|
$
|
|
|
|
|
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch21 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 21
- Exercise 21-1 Preparation of flexible budgets L.O. P1
|
Mesa Company’s fixed budget for the first quarter of calendar year 2011 reveals the following.
|
|
Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 7,500, 10,000, and 12,500 units. (Round your “Variable amount per unit” to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
MESA COMPANY
Flexible Budgets
For Quarter Ended March 31, 2011
|
|
Flexible Budget
|
|
|
|
|
|
|
|
|
Exercise 21-4 Preparation of a flexible budget performance report L.O. P1
|
Daytec Company s fixed budget performance report for June follows. The $440,000 budgeted expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses.
|
|
Prepare a flexible budget performance report showing any variances between budgeted and actual results. List fixed and variable expenses separately. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
DAYTEC COMPANY
Flexible Budget Performance Report
For Month Ended June 30
|
|
Flexible Budget
|
Actual Results
|
Variances
|
|
|
Sales
|
$
|
$
|
$
|
F
|
|
Variable expenses
|
|
|
|
U
|
|
|
|
|
|
|
Contribution margin
|
|
|
|
F
|
|
Fixed expenses
|
|
|
|
F
|
|
|
|
|
|
|
Income from operations
|
$
|
$
|
$
|
F
|
|
|
|
|
|
|
Exercise 21-7A Computation and interpretation of overhead spending, efficiency, and volume variances L.O. P3
[The following information applies to the questions displayed below.]
|
Sonic Company set the following standard costs for one unit of its product for 2011.
|
|
|
|
|
|
|
Direct material (20 Ibs. @ $2.50 per Ib.)
|
|
$
|
|
|
|
Direct labor (15 hrs. @ $8.00 per hr.)
|
|
|
|
|
|
Factory variable overhead (15 hrs. @ $2.50 per hr.)
|
|
|
|
|
|
Factory fixed overhead (15 hrs. @ $0.50 per hr.)
|
|
|
|
|
|
|
|
|
|
|
Standard cost
|
|
$
|
|
|
|
|
|
|
|
|
|
The $3.00 ($2.50 + $0.50) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget information is also available.
|
|
During the current month, the company operated at 70% of capacity, employees worked 500,000 hours, and the following actual overhead costs were incurred.
|
|
|
|
|
|
|
Variable overhead costs
|
|
$
|
|
|
|
Fixed overhead costs
|
|
|
|
|
|
|
|
|
|
|
Total overhead costs
|
|
$
|
|
|
|
|
|
|
|
|
Exercise 21-7 Part 1
|
Compute variable overhead spending and efficiency variances. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Spending variances
|
$
|
U
|
|
Efficiency variances
|
$
|
F
|
|
4.
Exercise 21-7 Part 2
|
Compute Fixed overhead spending and volume variances. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Spending variances
|
$
|
U
|
|
Volume variances
|
$
|
U
|
|
5.Exercise 21-7 Part 3
|
Compute controllable variance. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
Controllable variance
|
$
|
F
|
6.Exercise 21-8 Computation and interpretation of materials variances L.O. P2
|
BTS Company made 6,000 bookshelves using 88,000 board feet of wood costing $607,200. The company s direct materials standards for one bookshelf are 16 board feet of wood at $7 per board foot.
|
|
(1)
|
Compute the direct materials variances incurred in manufacturing these bookshelves. (Do not round your intermediate calculations. Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Price variance
|
$
|
F
|
|
Quantity variance
|
$
|
F
|
|
|
|
|
Total materials variance
|
$
|
F
|
|
|
|
Problem 21-1A Computation of materials, labor, and overhead variances L.O. P2, P3
[The following information applies to the questions displayed below.]
|
Tuna Company set the following standard unit costs for its single product.
|
|
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.
|
|
Operating Levels
|
|
|
|
|
70%
|
|
80%
|
|
90%
|
|
Production in units
|
|
42,000
|
|
48,000
|
|
54,000
|
|
Standard direct labor hours
|
|
252,000
|
|
288,000
|
|
324,000
|
|
Budgeted overhead
|
|
|
|
|
|
|
|
Fixed factory overhead
|
$
|
2,016,000
|
$
|
2,016,000
|
$
|
2,016,000
|
|
Variable factory overhead
|
$
|
1,260,000
|
$
|
1,440,000
|
$
|
1,620,000
|
|
|
During the current quarter, the company operated at 70% of capacity and produced 42,000 units of product; actual direct labor totaled 250,000 hours. Units produced were assigned the following standard costs:
|
|
Actual costs incurred during the current quarter follow:
|
- Problem 21-1A Part 1
|
Required:
|
|
Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
Problem 21-1A Part 2
|
Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
- Problem 21-1A Part 3
|
Compute the overhead controllable and volume variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Controllable variance
|
$
|
|
Fixed overhead volume variance
|
$
|
|
Problem 21-3A Preparation and analysis of a flexible budget L.O. P1
[The following information applies to the questions displayed below.]
|
Pebco Company s 2011 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units.
|
|
PEBCO COMPANY
Fixed Budget Report
For Year Ended December 31, 2011
|
- Problem 21-3A Part 1
|
Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate. (Round your variable amount answers to 2 decimal places. Omit the “$” sign in your response.)
|
11. Problem 21-3A Part 2
|
Prepare flexible budgets for the company at sales volumes of 18,000 and 24,000 units. (Round your variable amount per unit answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
PEBCO COMPANY
|
|
Flexible Budgets
|
|
For Year Ended December 31, 2011
|
12.Problem 21-3A Part 3
|
The company s business conditions are improving. One possible result is a sales volume of approximately 28,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2011 budgeted amount of $125,000 if this level is reached without increasing capacity (Do not round intermediate calculations.Omit the “$” sign in your response.)
|
|
Operating income increase
|
$
|
13.Problem 21-3A Part 4
|
An unfavorable change in business is remotely possible; in this case, production and sales volume for 2011 could fall to 14,000 units. How much income (or loss) from operations would occur if sales volume falls to this level (Input the amount as positive value. Do not round intermediate calculations.Omit the “$” sign in your response.)
|
|
Potential operating loss
|
$
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch21 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 21
- Exercise 21-1 Preparation of flexible budgets L.O. P1
|
Mesa Company’s fixed budget for the first quarter of calendar year 2011 reveals the following.
|
|
Prepare flexible budgets that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 7,500, 10,000, and 12,500 units. (Round your “Variable amount per unit” to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
MESA COMPANY
Flexible Budgets
For Quarter Ended March 31, 2011
|
|
Flexible Budget
|
|
|
|
|
|
|
|
|
Exercise 21-4 Preparation of a flexible budget performance report L.O. P1
|
Daytec Company s fixed budget performance report for June follows. The $440,000 budgeted expenses include $300,000 variable expenses and $140,000 fixed expenses. Actual expenses include $130,000 fixed expenses.
|
|
Prepare a flexible budget performance report showing any variances between budgeted and actual results. List fixed and variable expenses separately. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
DAYTEC COMPANY
Flexible Budget Performance Report
For Month Ended June 30
|
|
Flexible Budget
|
Actual Results
|
Variances
|
|
|
Sales
|
$
|
$
|
$
|
F
|
|
Variable expenses
|
|
|
|
U
|
|
|
|
|
|
|
Contribution margin
|
|
|
|
F
|
|
Fixed expenses
|
|
|
|
F
|
|
|
|
|
|
|
Income from operations
|
$
|
$
|
$
|
F
|
|
|
|
|
|
|
Exercise 21-7A Computation and interpretation of overhead spending, efficiency, and volume variances L.O. P3
[The following information applies to the questions displayed below.]
|
Sonic Company set the following standard costs for one unit of its product for 2011.
|
|
|
|
|
|
|
Direct material (20 Ibs. @ $2.50 per Ib.)
|
|
$
|
|
|
|
Direct labor (15 hrs. @ $8.00 per hr.)
|
|
|
|
|
|
Factory variable overhead (15 hrs. @ $2.50 per hr.)
|
|
|
|
|
|
Factory fixed overhead (15 hrs. @ $0.50 per hr.)
|
|
|
|
|
|
|
|
|
|
|
Standard cost
|
|
$
|
|
|
|
|
|
|
|
|
|
The $3.00 ($2.50 + $0.50) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget information is also available.
|
|
During the current month, the company operated at 70% of capacity, employees worked 500,000 hours, and the following actual overhead costs were incurred.
|
|
|
|
|
|
|
Variable overhead costs
|
|
$
|
|
|
|
Fixed overhead costs
|
|
|
|
|
|
|
|
|
|
|
Total overhead costs
|
|
$
|
|
|
|
|
|
|
|
|
Exercise 21-7 Part 1
|
Compute variable overhead spending and efficiency variances. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Spending variances
|
$
|
U
|
|
Efficiency variances
|
$
|
F
|
|
4.
Exercise 21-7 Part 2
|
Compute Fixed overhead spending and volume variances. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Spending variances
|
$
|
U
|
|
Volume variances
|
$
|
U
|
|
5.Exercise 21-7 Part 3
|
Compute controllable variance. (Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
Controllable variance
|
$
|
F
|
6.Exercise 21-8 Computation and interpretation of materials variances L.O. P2
|
BTS Company made 6,000 bookshelves using 88,000 board feet of wood costing $607,200. The company s direct materials standards for one bookshelf are 16 board feet of wood at $7 per board foot.
|
|
(1)
|
Compute the direct materials variances incurred in manufacturing these bookshelves. (Do not round your intermediate calculations. Input all amounts as a positive value. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Price variance
|
$
|
F
|
|
Quantity variance
|
$
|
F
|
|
|
|
|
Total materials variance
|
$
|
F
|
|
|
|
Problem 21-1A Computation of materials, labor, and overhead variances L.O. P2, P3
[The following information applies to the questions displayed below.]
|
Tuna Company set the following standard unit costs for its single product.
|
|
The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.
|
|
Operating Levels
|
|
|
|
|
70%
|
|
80%
|
|
90%
|
|
Production in units
|
|
42,000
|
|
48,000
|
|
54,000
|
|
Standard direct labor hours
|
|
252,000
|
|
288,000
|
|
324,000
|
|
Budgeted overhead
|
|
|
|
|
|
|
|
Fixed factory overhead
|
$
|
2,016,000
|
$
|
2,016,000
|
$
|
2,016,000
|
|
Variable factory overhead
|
$
|
1,260,000
|
$
|
1,440,000
|
$
|
1,620,000
|
|
|
During the current quarter, the company operated at 70% of capacity and produced 42,000 units of product; actual direct labor totaled 250,000 hours. Units produced were assigned the following standard costs:
|
|
Actual costs incurred during the current quarter follow:
|
- Problem 21-1A Part 1
|
Required:
|
|
Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
Problem 21-1A Part 2
|
Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
- Problem 21-1A Part 3
|
Compute the overhead controllable and volume variances. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
|
|
|
|
Controllable variance
|
$
|
|
Fixed overhead volume variance
|
$
|
|
Problem 21-3A Preparation and analysis of a flexible budget L.O. P1
[The following information applies to the questions displayed below.]
|
Pebco Company s 2011 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units.
|
|
PEBCO COMPANY
Fixed Budget Report
For Year Ended December 31, 2011
|
- Problem 21-3A Part 1
|
Classify all items listed in the fixed budget as variable or fixed. Also determine their amounts per unit or their amounts for the year, as appropriate. (Round your variable amount answers to 2 decimal places. Omit the “$” sign in your response.)
|
11. Problem 21-3A Part 2
|
Prepare flexible budgets for the company at sales volumes of 18,000 and 24,000 units. (Round your variable amount per unit answers to 2 decimal places. Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
PEBCO COMPANY
|
|
Flexible Budgets
|
|
For Year Ended December 31, 2011
|
12.Problem 21-3A Part 3
|
The company s business conditions are improving. One possible result is a sales volume of approximately 28,000 units. The company president is confident that this volume is within the relevant range of existing capacity. How much would operating income increase over the 2011 budgeted amount of $125,000 if this level is reached without increasing capacity (Do not round intermediate calculations.Omit the “$” sign in your response.)
|
|
Operating income increase
|
$
|
13.Problem 21-3A Part 4
|
An unfavorable change in business is remotely possible; in this case, production and sales volume for 2011 could fall to 14,000 units. How much income (or loss) from operations would occur if sales volume falls to this level (Input the amount as positive value. Do not round intermediate calculations.Omit the “$” sign in your response.)
|
|
Potential operating loss
|
$
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch22 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 22
- Exercise 22-1 Departmental expense allocations L.O. C1
|
Won Han Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow.
|
|
Indirect Expense
|
|
Cost
|
Allocation Base
|
|
Supervision
|
$
|
75,000
|
Number of employees
|
|
Utilities
|
|
60,000
|
Square feet occupied
|
|
Insurance
|
|
16,500
|
Value of assets in use
|
|
|
|
|
|
Total
|
$
|
151,500
|
|
|
|
|
|
|
|
Departmental data for the company s recent reporting period follow.
|
|
Department
|
Employees
|
Square Feet
|
Asset Values
|
|
Materials
|
|
18
|
|
|
27,000
|
|
$
|
6,000
|
|
|
Personnel
|
|
6
|
|
|
4,500
|
|
|
1,200
|
|
|
Manufacturing
|
|
66
|
|
|
45,000
|
|
|
37,800
|
|
|
Packaging
|
|
30
|
|
|
13,500
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
120
|
|
|
90,000
|
|
$
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Use this information to allocate each of the three indirect expenses across the four departments. (Omit the “$” & “%” signs in your response.)
|
|
(2)
|
Prepare a summary table that reports the indirect expenses assigned to each of the four departments.(Omit the “$” sign in your response.)
|
Exercise 22-12B Joint real estate costs assigned L.O. C4
|
Tidy Home Properties is developing a subdivision that includes 300 home lots. The 225 lots in the Garden section are below a ridge and do not have views of the neighboring gardens and hills; the 75 lots in the Premier section offer unobstructed views. The expected selling price for each Garden lot is $50,000 and for each Premier lot is $100,000. The developer acquired the land for $2,500,000 and spent another $2,000,000 on street and utilities improvements.
|
|
Assign the joint land and improvement costs to the lots using the value basis of allocation and determine the average cost per lot. (Omit the “$” sign in your response.)
|
Exercise 22-13B Joint product costs assigned L.O. C4
[The following information applies to the questions displayed below.]
|
Pike Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20 per pound and the flakes for $15 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 24 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,000 pounds of lobster for $6.00 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. The company sold 1,510 pounds of tails and 710 pounds of flakes.
|
- Exercise 22-13B Part 1
|
(1)
|
What is the allocated cost of the sold items? The company allocates joint costs on a value basis.(Round your cost per pound to 2 decimal places. Omit the “$” sign in your response.)
|
|
Cost of goods sold
|
|
Lobster tails
|
|
|
Lobster flakes
|
|
|
Exercise 22-13B Part 2
|
(2)
|
What is the allocated cost of the ending inventory? The company allocates joint costs on a value basis.(Round your cost per pound to 2 decimal places. Omit the “$” sign in your response.)
|
|
Cost of the ending inventory
|
|
Lobster tails
|
|
|
Lobster flakes
|
|
|
Problem 22-1A Allocation of building occupancy costs to departments L.O. P1
[The following information applies to the questions displayed below.]
|
City Bank has several departments that occupy both floors of a two-story building. The departmental accounting system has a single account, Building Occupancy Cost, in its ledger. The types and amounts of occupancy costs recorded in this account for the current period follow.
|
|
|
Depreciation Building
|
$
|
18,000
|
|
Interest Building mortgage
|
|
27,000
|
|
Taxes Building and land
|
|
8,000
|
|
Gas (heating) expense
|
|
2,500
|
|
Lighting expense
|
|
3,000
|
|
Maintenance expense
|
|
5,500
|
|
|
|
|
Total occupancy cost
|
$
|
64,000
|
|
|
|
|
|
The building has 4,000 square feet on each floor. In prior periods, the accounting manager merely divided the $64,000 occupancy cost by 8,000 square feet to find an average cost of $8 per square foot and then charged each department a building occupancy cost equal to this rate times the number of square feet that it occupied.
|
|
Laura Diaz manages a first-floor department that occupies 1,000 square feet, and Lauren Wright manages a second-floor department that occupies 1,800 square feet of floor space. In discussing the departmental reports, the second-floor manager questions whether using the same rate per square foot for all departments makes sense because the first-floor space is more valuable. This manager also references a recent real estate study of average local rental costs for similar space that shows first-floor space worth $30 per square foot and second-floor space worth $20 per square foot (excluding costs for heating, lighting, and maintenance).
|
Problem 22-1A Part 1
|
Allocate occupancy costs to the Diaz and Wright departments using the current allocation method.(Omit the “$” sign in your response.)
|
|
Department
|
Total
|
|
Diazs Dept.
|
|
|
Wright’s Dept.
|
|
|
6.
Problem 22-1A Part 2
|
Allocate the depreciation, interest, and taxes occupancy costs to the Diaz and Wright departments in proportion to the relative market values of the floor space. Allocate the heating, lighting, and maintenance costs to the Diaz and Wright departments in proportion to the square feet occupied (ignoring floor space market values). (Round your cost per Sq. ft rate to 2 decimal places and final answers to the nearest whole number. Omit the “$” sign in your response.)
|
|
Department
|
Total
|
|
Diazs Dept.
|
$
|
|
Wright’s Dept.
|
$
|
|
Problem 22-3A Departmental income statements; forecasts L.O. P1
|
Time-To-See Company began operations in January 2011 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.
|
|
TIME-TO-SEE COMPANY
Departmental Income Statements
For Year Ended December 31, 2011
|
|
|
Clock
|
|
|
Mirror
|
|
Combined
|
|
Sales
|
$
|
122,500
|
|
$
|
52,500
|
|
$
|
175,000
|
|
Cost of goods sold
|
|
60,000
|
|
|
32,000
|
|
|
92,000
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
62,500
|
|
|
20,500
|
|
|
83,000
|
|
Direct expenses
|
|
|
|
|
|
|
|
|
|
Sales salaries
|
|
20,000
|
|
|
7,000
|
|
|
27,000
|
|
Advertising
|
|
1,200
|
|
|
500
|
|
|
1,700
|
|
Store supplies used
|
|
900
|
|
|
400
|
|
|
1,300
|
|
Depreciation Equipment
|
|
1,500
|
|
|
300
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
Total direct expenses
|
|
23,600
|
|
|
8,200
|
|
|
31,800
|
|
Allocated expenses
|
|
|
|
|
|
|
|
|
|
Rent expense
|
|
7,020
|
|
|
3,780
|
|
|
10,800
|
|
Utilities expense
|
|
2,600
|
|
|
1,400
|
|
|
4,000
|
|
Share of office department expenses
|
|
10,500
|
|
|
4,500
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Total allocated expenses
|
|
20,120
|
|
|
9,680
|
|
|
29,800
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
43,720
|
|
|
17,880
|
|
|
61,600
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
18,780
|
|
$
|
2,620
|
|
$
|
21,400
|
|
|
|
|
|
|
|
|
|
|
|
Time-To-See plans to open a third department in January 2012 that will sell paintings. Management predicts that the new department will generate $35,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,000; advertising, $800; store supplies, $500; and equipment depreciation, $200. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened the new painting department will fill one-fifth of the space presently used by the clock department and one-sixth used by the mirror department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the painting department to increase total office department expenses by $7,000. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 7%. No changes for those departments gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales.
|
|
Required
|
|
Prepare departmental income statements that show the company s predicted results of operations for calendar year 2012 for the three operating (selling) departments and their combined totals. (Input all amounts as positive values. Round your percentage values to 1 decimal place, intermediate and final answers to the nearest whole dollar amount. Omit the “$” sign in your response.)
|
|
Aug 29, 2021 | Uncategorized
| Managerial Accounting 1B Ch23 |
| Question Detail:
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 23
Exercise 23-2 Scrap or rework L.O.A1
|
A company must decide between scrapping or reworking units that do not pass inspection. The company has 15,000 defective units that cost $6.00 per unit to manufacture. The units can be sold as is for $2.50 each, or they can be reworked for $4.50 each and then sold for the full price of $9.00 each. If the units are sold as is, the company will also be able to build 15,000 replacement units at a cost of $6.00 each, and sell them at the full price of $9.00 each.
|
|
(1)
|
What is the incremental income from selling the units as scrap (Omit the “$” sign in your response.)
|
|
(2)
|
What is the incremental income from reworking and selling the units (Omit the “$” sign in your response.)
|
|
(3)
|
What must the company decide?
|
|
The units should not be reworked
|
re5-02-2012
2.Exercise 23-4 Decision to accept additional business or not L.O. A1
|
Feist Co. expects to sell 200,000 units of its product in the next period with the following results.
|
|
|
|
|
|
|
Sales (200,000 units)
|
|
$
|
3,000,000
|
|
|
Costs and expenses
|
|
|
|
|
|
Direct materials
|
|
|
400,000
|
|
|
Direct labor
|
|
|
800,000
|
|
|
Overhead
|
|
|
200,000
|
|
|
Selling expenses
|
|
|
300,000
|
|
|
Administrative expenses
|
|
|
514,000
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
2,214,000
|
|
|
|
|
|
|
|
Net income
|
|
$
|
786,000
|
|
|
|
|
|
|
|
|
The company has an opportunity to sell 20,000 additional units at $12 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would create the following incremental costs: (1) total overhead would increase by 15% and (2) administrative expenses would increase by $86,000.
|
|
Calculate the combined total net income if the company accepts the offer to sell additional units at the reduced price of $12 per unit. (Leave no cells blank – be certain to enter “0” wherever required. Input all amounts as positive values. Omit the “$” sign in your response.)
|
Exercise 23-6 Make or buy decision L.O. A1
|
Santos Company currently manufactures one of its crucial parts at a cost of $3.40 per unit. This cost is based on a normal production rate of 50,000 units per year. Variable costs are $1.50 per unit, fixed costs related to making this part are $50,000 per year, and allocated fixed costs are $45,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Santos is considering buying the part from a supplier for a quoted price of $2.70 per unit guaranteed for a three-year period.
|
|
Calculate the total incremental cost of making 50,000 units. (Omit the “$” sign in your response.)
|
|
Calculate the total incremental cost of buying 50,000 units. (Omit the “$” sign in your response.)
|
|
Should the company continue to manufacture the part, or should it buy the part from the outside supplier?
|
|
|
- Exercise 23-8 Sell or process decision L.O. A1
|
Cantrell Company has already manufactured 20,000 units of Product A at a cost of $20 per unit. The 20,000 units can be sold at this stage for $500,000. Alternatively, the units can be further processed at a $300,000 total additional cost and be converted into 4,000 units of Product B and 8,000 units of Product C. Per unit selling price for Product B is $75 and for Product C is $50.
|
|
Calculate the Incremental Net Income (or loss) if processed further. (Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)
|
|
Incremental net income (or loss)
|
|
|
Indicate whether the 50,000 units of Product A should be processed further or not.
|
- Exercise 23-12 Sales mix determination and analysis L.O. A1
|
Bethel Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine s capacity is 2,200 hours per year. Both products are sold to a single customer who has agreed to buy all of the company s output up to a maximum of 3,750 units of Product TLX and 2,000 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
|
|
Product TLX
|
|
Product MTV
|
|
|
Selling price per unit
|
|
$
|
12.50
|
|
|
|
$
|
7.50
|
|
|
|
Variable costs per unit
|
|
|
3.75
|
|
|
|
|
4.50
|
|
|
|
|
Determine the company’s most profitable sales mix.
|
|
Determine the contribution margin that results from that sales mix. (Do not round your cost per unit rate, round your intermediate and final answer to the nearest dollar amount. Omit the “$” sign in your response.)
|
Problem 23-6A Analysis of possible elimination of a department L.O. A1
[The following information applies to the questions displayed below.]
|
Home Decor Company s management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The company s 2011 departmental income statement shows the following.
|
|
HOME DECOR COMPANY
Departmental Income Statements
For Year Ended December 31, 2011
|
|
Dept. 100
|
Dept. 200
|
Combined
|
|
Sales
|
|
$
|
872,000
|
|
|
|
$
|
580,000
|
|
|
|
$
|
1,452,000
|
|
|
Cost of goods sold
|
|
|
524,000
|
|
|
|
|
414,000
|
|
|
|
|
938,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
348,000
|
|
|
|
|
166,000
|
|
|
|
|
514,000
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
34,000
|
|
|
|
|
24,000
|
|
|
|
|
58,000
|
|
|
Store supplies used
|
|
|
8,000
|
|
|
|
|
7,600
|
|
|
|
|
15,600
|
|
|
Depreciation Store equipment
|
|
|
10,000
|
|
|
|
|
6,600
|
|
|
|
|
16,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total direct expenses
|
|
|
52,000
|
|
|
|
|
38,200
|
|
|
|
|
90,200
|
|
|
Allocated expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales salaries
|
|
|
130,000
|
|
|
|
|
78,000
|
|
|
|
|
208,000
|
|
|
Rent expense
|
|
|
18,880
|
|
|
|
|
9,440
|
|
|
|
|
28,320
|
|
|
Bad debts expense
|
|
|
19,800
|
|
|
|
|
16,200
|
|
|
|
|
36,000
|
|
|
Office salary
|
|
|
37,440
|
|
|
|
|
24,960
|
|
|
|
|
62,400
|
|
|
Insurance expense
|
|
|
4,000
|
|
|
|
|
2,200
|
|
|
|
|
6,200
|
|
|
Miscellaneous office expenses
|
|
|
4,800
|
|
|
|
|
3,200
|
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allocated expenses
|
|
|
214,920
|
|
|
|
|
134,000
|
|
|
|
|
348,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
266,920
|
|
|
|
|
172,200
|
|
|
|
|
439,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
81,080
|
|
|
|
$
|
(6,200
|
)
|
|
|
$
|
74,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In analyzing whether to eliminate Department 200, management considers the following:
|
|
The company has one office worker who earns $1,200 per week, or $62,400 per year, and four sales clerks who each earn $1,000 per week, or $52,000 per year.
|
|
The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments.
|
|
Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon. Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time. Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office worker s salary would be reported as sales salaries and half would be reported as office salary.
|
|
The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 200.
|
|
Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 70% of the insurance expense allocated to it to cover its merchandise inventory; and 25% of the miscellaneous office expenses presently allocated to it.
|
Problem 23-6A Part 1
|
Required:
|
|
Complete the three-column report that lists items and amounts for (a) the company s total expenses (including cost of goods sold) in column 1, (b) the expenses that would be eliminated by closing Department 200 in column 2, and (c) the expenses that will continue in column 3. (Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
|
- Problem 23-6A Part 2
|
Complete the forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it will not affect Department 100 s sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk. (Input all amounts as positive values. Omit the “$” sign in your response.)
|
|
Aug 29, 2021 | Uncategorized
Managerial Accounting 1B
Financial and Managerial Accounting
Chapter 24
1.Exercise 24-1 Payback period computation; even cash flows L.O. P1
|
Compute the payback period for each of these two separate investments:
|
|
a.
|
A new operating system for an existing machine is expected to cost $260,000 and have a useful life of five years. The system yields an incremental after-tax income of $75,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. (Round your answer to 2 decimal places.)
|
|
b.
|
A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. (Round your answer to 1 decimal place.)
|
2.
Exercise 24-2 Payback period computation; uneven cash flows L.O. P1
|
Wenro Company is considering the purchase of an asset for $90,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year.
|
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Total
|
|
Net cash flows
|
|
$
|
30,000
|
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
19,000
|
|
|
$
|
159,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compute the payback period for this investment. (Round your intermediate calculations to 3 decimal places and final answer to 1 decimal place.)
|
3.
Exercise 24-3 Payback period computation; declining-balance depreciation L.O. P1
|
A machine can be purchased for $300,000 and used for 5 years, yielding the following net incomes. In projecting net incomes, double-declining balance depreciation is applied, using a 5-year life and a $50,000 salvage value.
|
|
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
|
Net incomes
|
|
$
|
20,000
|
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
$
|
75,000
|
|
|
$
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compute the machine s payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and final answer to 2 decimal places.)
|
4.
Exercise 24-4 Accounting rate of return L.O. P2
|
A machine costs $500,000 and is expected to yield an after-tax net income of $15,000 each year. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute this machine s accounting rate of return. (Omit the “%” sign in your response.)
|
|
Accounting rate of return
|
|
5.
Exercise 24-6 Computing net present value L.O. P3
|
K2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $240,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. K2B Co. concludes that it must earn at least a 8% return on this investment. The company expects to sell 96,000 units of the equipment s product each year. The expected annual income related to this equipment follows. (UseTable B.3)
|
|
|
|
|
|
|
Sales
|
$
|
150,000
|
|
|
Costs
|
|
|
|
|
Materials, labor, and overhead (except depreciation)
|
|
80,000
|
|
|
Depreciation on new equipment
|
|
20,000
|
|
|
Selling and administrative expenses
|
|
15,000
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
115,000
|
|
|
|
|
|
|
|
Pretax income
|
|
35,000
|
|
|
Income taxes (30%)
|
|
10,500
|
|
|
|
|
|
|
|
Net income
|
$
|
24,500
|
|
|
|
|
|
|
|
|
Compute the net present value of this investment. (Round “PV Factor” to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the “$” sign in your response.)
|
Aug 29, 2021 | Uncategorized
Variance Analysis” Please respond to the following:
- From the first e-Activity, the article indicates approximately 90% of the companies in the study were sensitive to the variances in material prices. Examine the causes of material price variances and the potential impact on pricing decisions.
- Examine the reasons service companies are more sensitive to labor and price variances, as compared to material price variances, in the industrial sector and why managing these variances is essential to sustaining profitability.
Balanced Scorecard” Please respond to the following:
- Create an argument for using a balanced scorecard approach to evaluating business performance considering how you convince management and employees that it is an effective business tool.
- Describe the techniques you would employ to determine the effectiveness of a balanced scorecard in your organization.
Aug 29, 2021 | Uncategorized
Details:
2 pages + APA format w/reference page
You are the manager of an accounting department and would like to hire
another managerial accountant to focus on internal accounting. The CEO is not
convinced that a managing accountant position is needed. Prepare a 2 page memo
for the CEO on the following:
- Explain the objectives and characteristics of an internal accounting
system.
- Include an explanation of the importance of this information to the
company.
- Include an explanation of ethics in business and the managerial accountant s
role in upholding the code of ethics.
|
Objective:
|
- describe the functions of, and explain the nature and scope of managerial
accounting
|
|
Grading Criteria
|
Percentage
|
|
Objectives and characteristics of an internal accounting system
|
35%
|
|
Importance of internal accounting information to the company
|
35%
|
|
Ethics in business and the managing accountant s
role
|
|
Aug 29, 2021 | Uncategorized
QUESTIONS : MGT 465 :
1)Entrepreneurs have more control over more aspects of their working lives than employees. Of which aspect of their working lives do employees have more control
A)Time
B)Working conditions
C)Financial uncertainty
2)The most successful entrepreneurs say they are motivated by the desire to make
A)money and make their vision come true.
B)their vision come true.
C)money.
3) A competitive advantage can be based on any of six factors. Which factor below is not one of the six
A)Quality
B)Opportunity
C)Selection
D)Service
E)Cost
4)The cost of producing one additional unit of a product is called cost of
A)services sold.
B)goods sold.
C)materials.
5)Which of the following should be included in a business s mission statement
A)Unique selling proposition
B)Tactics
C)Prices
D)Marketing
6)Dividing a population on the basis of age, gender, income, or education is
A)demographics.
B)behavioral data.
C)marketing statistics.
7)New entrepreneurs often feel they should sell their product or service at the lowest price they can afford, yet
A)sometimes consumers think low price indicates low quality.
B)often consumers are willing to pay higher prices than the entrepreneur will charge.
C)purchasers of luxury goods may want to pay a higher price rather than a lower price.
D)all of the above are true.
8)Pricing strategies include
A)cost-plus.
B)penetration.
C)skimming.
D)all of the above.
9)If you decide to pay yourself a commission from your business, you will be earning a
A)percentage of your business profit.
B)set salary.
C)percentage of each sale.
10)Entrepreneurs ____ constantly, not just to customers but to investors, bankers, and people they want to hire.
A)try to make a good impression
B)sell
C)do both of the above
11)Carla sells hot coffee, cider, and tea from a sidewalk cart near Wall Street in New York City. Last month she sold $4,500 worth of product to 1,000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: Utilities $100, Salary $2,000, Advertising $0, Insurance $0, Interest $0, Rent (cart) $600, Depreciation $0. What are Carla s fixed costs
A)$3,000
B)$2,700
C)$2,000
12)Using the information from the question above, what is Carla s monthly cost of goods sold?
A)$800
B)$100
C)$450
13)Entrepreneurs use a ________________________ to track assets and liabilities.
A)cash flow statement
B)balance sheet
C)income statement
14)The last line of an income statement shows a business s
A)profit or loss.
B)gross profit or gross loss.
C)net profit or net loss.
15)Venture capitalists can make their money by
A)selling their percentage share of the business to another investor.
B)waiting until the company goes public and converting their shares into stock, which can then be traded on the stock market.
C)doing either A or B.
D)doing neither A nor B.
16)Methods of bootstrap financing include
A)using temporary help rather than permanent employees.
B)getting suppliers to extend you credit terms.
C)working from home or borrowing office space.
D)doing all of the above.
17)Which of the three financial statements an entrepreneur prepares is used to guide the day-to-day operations of the business
A)Income statement
B)Cash flow statement
C)Balance sheet
18)Which statement best describes how the cash flow statement differs from the income statement
A)The income statement records income, as it comes in, while the cash flow statement records cash from sales.
B)The income statement keeps track of cash when sales are made; the cash flow statement keeps track of cash after sales are made.
C)The income statement records sales and expenses when they happen, not when cash is actually exchanged. The cash flow statement records cash inflows and outflows when they actually occur.
19)If the retail price of an item is $21 and the retail gross profit margin is 33 percent, what is the wholesale cost
A)$14
B)$12
C)$25
D)$17
20)A good contract will spell out ___________________, or unforeseeable acts of God beyond anyone s control, for which neither party is responsible.
A)liabilities
B)contingencies
C)amendments
21)The act of Congress that requires employers to pay men and women the same amount for the same work is called the
A) Equal Opportunity Act.
B)Work Compensation Act.
C)Equal Pay Act.
22)The standards and rules that help someone decide right from wrong are called
A)laws.
B)ethics.
C)corporate governance.
23)If a company has a debt-to-equity ratio of 1:1, then for every $1,000 of debt the company has, it has
A)$100 of equity.
B)$10,000 of equity.
C)$1,000 of equity.
24)To quickly grasp a company s financing strategy, look at its
A)income statement.
B)balance sheet.
C)cash flow statement.
25)A brand is a combination of name, logo, and design that
A)becomes associated in the minds of consumers with the products or services of a company.
B)identifies the owner of a company.
C)expresses the philanthropic intentions of a company to consumers.
26)Licensors must be careful that a licensee
A)doesn t damage the licensing company s name.
B)franchises the brand to as many others as possible.
C)controls every aspect of the licensor s business.
27Typically, the more risky an investment is, the
A)higher the potential return.
B)lower the potential return.
C)longer it takes to pay off.
28)Liquidity is the
A)amount of risk an investment carries.
B)amount of cash an investment is worth.
C)speed with which an investment can be turned into cash.
29)Entrepreneurs look at five basic roots of opportunity for business ideas. Which is not one of those five
A)Raising prices in an existing market
B)Finding new ways to use existing technology
C)Producing a product more cheaply
D)Developing a new market for an existing product
E)Exploring new technology
30)The reward for satisfying a customer need is earning a
A)business.
B)profit.
C)discount.
Aug 29, 2021 | Uncategorized
Assignment 2 Applying Decision-Making Skills
As a manager, part of your role is to develop strategy, and share this strategy with various stakeholders within the organization. This assignment will allow you to take your findings as a manager and communicate these findings to those who are affected.
Your company has been presented with a decision on replacing a piece of equipment for a new computerized version that promotes efficiency for the upcoming year. As manager you will need to decide whether or not the purchase of the new equipment is a worthwhile investment and to communicate your recommendations to Executive Management for a final decision. To be convincing, sufficient support for your recommendations must be provided in order to be considered valid and accepted.
| Existing Equipment |
| Original Cost |
60,000 |
| Present Book Value |
30,000 |
| Annual Cash Operating Costs |
145,000 |
| Current Market Value |
15,000 |
| Market Value in Ten Years |
0 |
| Remaining useful Life |
10 years |
| Replacement Equipment |
| Cost |
600,000 |
| Annual Cash Operating Costs |
50,000 |
| Market Value in Ten Years |
0 |
| Useful Life |
10 years |
| Other Information |
| Cost of Capital |
10% |
| Payback requirement |
6 years |
In this assignment, use the information above to develop a comprehensive analysis using NPV, Payback Method, and IRR to develop a recommendation on replacing the existing equipment with a new computerized version. Develop an executive summary of your findings in a Microsoft PowerPoint presentation format to present to Executive Management.
Do the following in your presentation:
- Include a statement of the problem or topic, a concise analysis of the findings, and a recapitulation of any main conclusions or recommendations.
- Be sure to incorporate specific details to highlight or support the summary including calculations.
- Using your knowledge of capital budgeting techniques, explain how principles of capital budgeting, such as the payback method, IRR, and NPV, can be used to assess the potential projects and assist in the decision-making process.
Develop a 10-12 slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M4_A2.ppt.
By Wednesday, September 25, 2013, deliver your assignment to the M4: Assignment 2 Dropbox.
| Assignment 2 Grading Criteria |
Maximum Points |
| Wrote a statement of the problem or topic, a concise analysis of the findings, and a recapitulation of any main conclusions or recommendations. |
28 |
| Explained the summary using specific details including calculations. |
28 |
| Explained how principles of capital budgeting, such as the payback method, IRR, and NPV, can be used to assess the potential projects and assist in the decision-making process displaying knowledge of capital budgeting techniques. |
36 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. |
8 |
| Total: |
100 |
Aug 29, 2021 | Uncategorized
Required Assignment 2 Manufacturing Budget Analysis
|
Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company’s factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for plant department heads. These meetings had been held on the third Tuesday of each month since Robert Ferguson, Jr., the president’s son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: Boy, I hate those meetings! I never know whether my department’s accounting reports will show good or bad performance. I’m beginning to expect the worst. If the accountants say I saved the company a dollar, I’m called Sir, but if I spend even a little too much boy, do I get in trouble. I don’t know if I can hold on until I retire.
Tom had just been given the worst evaluation he had ever received in his long career with Ferguson & Son. He was the most respected of the experienced machinists in the company. He had been with the company for many years and was promoted to supervisor of the machine shop when the company expanded and moved to its present location. The president (Robert Ferguson, Sr.) had often stated that the company’s success was due to the high-quality work of machinists like Tom. As supervisor, Tom stressed the importance of craftsmanship and told his workers that he wanted no sloppy work coming from his department.
When Robert Ferguson, Jr., became the plant manager, he directed that monthly performance comparisons be made between actual and budgeted costs for each department. The departmental budgets were intended to encourage the supervisors to reduce inefficiencies and to seek cost reduction opportunities. The company controller was instructed to have his staff tighten the budget slightly whenever a department attained its budget in a given month; this was done to reinforce the plant manager’s desire to reduce costs. The young plant manager often stressed the importance of continued progress toward attaining the budget; he also made it known that he kept a file of these performance reports for future reference when he succeeded his father.
Tom Emory’s conversation with Jim Morris continued as follows:
Emory: I really don’t understand. We’ve worked so hard to meet the budget, and the minute we do so they tighten it on us. We can’t work any faster and still maintain quality. I think my men are ready to quit trying. Besides, those reports don’t tell the whole story. We always seem to be interrupting the big jobs for all those small rush orders. All that setup and machine adjustment time is killing us. And quite frankly, Jim, you were no help. When our hydraulic press broke down last month, your people were nowhere to be found. We had to take it apart ourselves and got stuck with all that idle time.
Morris: I’m sorry about that, Tom, but you know my department has had trouble making budget, too. We were running well behind at the time of that problem, and if we had spent a day on that old machine, we would never have made it up. Instead, we made the scheduled inspections of the forklift trucks because we knew we could do those in less than the budgeted time.
Emory: Well, Jim, at least you have some options. I’m locked into what the scheduling department assigns to me and you know they’re being harassed by sales for those special orders. Incidentally, why didn’t your report show all the supplies you guys wasted last month when you were working in Bill’s department?
Morris: We’re not out of the woods on that deal yet. We charged the maximum we could to other work and haven’t even reported some of it yet.
Emory: Well, I’m glad you have a way of getting out of the pressure. The accountants seem to know everything that’s happening in my department, sometimes even before I do. I thought all that budget and accounting stuff was supposed to help, but it just gets me into trouble. It’s all a big pain. I’m trying to put out quality work; they’re trying to save pennies.
|
Review the case. Respond to the following:
- Identify the problems that appear to exist in Ferguson & Son Manufacturing Company’s budgetary control system and explain how the problems are likely to reduce the effectiveness of the system. (approximately 1 page)
- Explain how Ferguson & Son Manufacturing Company’s budgetary control system could be revised to improve its effectiveness. (approximately 1 2 pages)
- Explain how the use of an activity-based costing system could change the results of the budget, if utilized. (approximately 1 page)
- As stated in the case, many employees have quit trying and have altered behavior on the job. Provide specific ways for how you would use a budget to change employee behavior and align goals in the organization. Explain how goal alignment can improve profitability and overall return to the shareholders of the company. (approximately 1 page)
- Synthesize data to explain the concept of ROI and describe how the use of an activity-based costing system can improve the company s ROI and the potential impact on free cash flow. (approximately 1 page)
Write a 5 6-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M5_A2.doc.
By Wednesday, October 2, 2013, deliver your assignment to the M5: Assignment 2 Dropbox.
| Assignment 2 Grading Criteria |
Maximum Points |
| Identified the problems that appear to exist in the company s budgetary control system and explained how the problems are likely to reduce the effectiveness of the system. |
64 |
| Explained how the company’s budgetary control system could be revised to improve its effectiveness. |
64 |
| Explained how the use of an activity-based costing system could change the results of the budget if utilized. |
44 |
| Identified ways of how one can use a budget to change employee behavior and align goals in the organization and explained how goal alignment can improve profitability and overall return to shareholders of the company. |
44 |
| Synthesized data to explain the concept of ROI, how the use of an activity-based costing system can improve the company s ROI, and the potential impact on free cash flow. |
56 |
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation. |
28 |
| Total: |
300 |
Aug 29, 2021 | Uncategorized
Pena Corporation incurred the following costs while manufacturing its product.
| Materials used in product |
$102,000 |
|
Advertising expense |
$48,000 |
| Depreciation on plant |
67,000 |
|
Property taxes on plant |
24,000 |
| Property taxes on store |
8,500 |
|
Delivery expense |
24,000 |
| Labor costs of assembly-line workers |
115,000 |
|
Sales commissions |
45,000 |
| Factory supplies used |
29,000 |
|
Salaries paid to sales clerks |
53,000 |
Work-in-process inventory was $14,000 at January 1 and $17,500 at December
31. Finished goods inventory was $69,000 at January 1 and $56,800 at December
31.
Compute the following:
| Cost of goods manufactured |
$ |
| Cost of goods sold |
$ |
Aug 29, 2021 | Uncategorized
QUESTIONS :
1. Evaluating a special order (LO 7-5)
Miyamoto Jewelers is considering a special order for 10 handcrafted gold bracelets to be given as gifts to members of a wedding party. The normal selling price of a gold bracelet is $389.95 and its unit product cost is $264 as shown below.
|
Direct Materials ..$143.00
Direct Labor . 86.00
Manufacturing Overhead ..35.00
Unit Product Cost $264.00
|
Most of the manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $7 of the overhead is variable with respect to the number of bracelets produced. The customer who is interested in the special bracelet order would like special filigree applied to the bracelets. This filigree would require additional material costing $6 per bracelet and would also require acquisition of a special tool costing $465 that would have no other use once the special order is completed. This order would have no effect on the company s regular sales and the order could be fulfilled using the company s existing capacity without affecting any other order.
Required:
What effect would accepting this order have on the company s net operating income if a special price of $349.95 is offered per bracelet for this order Should the special order be accepted at this price?
2. Uncertain Future Cash Flows (LO 8-3)
Union Bay Plastics is investigating the purchase of automated equipment that would save $100,000 each year in direct labor and inventory carrying costs. This equipment costs $750,000 and is expected to have a 10-year useful lift with no salvage value. The company s required rate of return is 15% on all equipment purchases. This equipment would provide intangible benefits such as greater flexibility and higher-quality output that are difficult to estimate and yet are quite significant.
Required:
(Ignore income taxes)
What dollar value per year would the intangible benefits have to have in order to make the equipment an acceptable investment?
3.Production Budget (LO -9-3)
Chrystal Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows:
|
Sales in Units
|
|
July 30,000
August .45,000
September ..60,000
October .50,000
|
The company is now in the process of preparing a production budget for the third quarter. Past experience has shown that end-of-month finished goods inventories must equal 10% of the next month s sales. The inventory at the end of Jun was 3,000 units.
Required:
Prepare a production budget for the third quarter showing the number of units to be produced each month and for the quarter in total.
4. The direct labor budget of Krispin Corporation for the upcoming fiscal year includes the following budgeted direct labor-hours.
The company s variable manufacturing overhead rate is $1.75 per direct labor-hour and the company s fixed manufacturing overhead is $35,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $15,000 per quarter.
Required:
- Construct the company s manufacturing overhead budget for the upcoming fiscal year.
- Compute the company s manufacturing overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year. Round off to the nearest whole cent.
5. Prepare a flexible budget (LO 10-1)
Gator Divers is a company that provides divers services such as underwater ship repairs to clients in the Tampa Bay area. The company’s planning budget for March appears below.
Required:
During March, the company s activity was actually 190 diving-hours. Prepare a flexible budget for that level of activity.
6. Prepare a Report Showing Activity Variances (L0 10-2)
Air Meals is a company that prepares in-flight meals for airlines in its kitchen located next to the local airport. The company’s planning budget for December appears below:
In December, 21,000 meals were actually served. The company’s flexible budget for this level of activity follows:
Required:
- Prepare a report showing the company s activity variances for December.
- Which of the activity variances should be of concern to management? Explain
7. Residual Income (LO 12-2)
Midlands Design Ltd. Of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of 400,000 on sales of 2,000,000. The company s average operating assets for the year were 2,200,000 and its minimum required rate of return was 16%. (The currency in the United Kingdom is the pound, denoted by )
Required:
Compute the company s residual income for the year.
8. Effects of Changes in Sales, Expenses, and Assets on ROI (LO 12-1)
BusServ.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Required:
Consider each question below independently. Carry out all computations to two decimal places.
- Compute the company s return on investment (ROI).
- The entrepreneur who founded the company is convinced that sales will increase next year by 150% and that net operating income will increase by 400%, with no increase in average operating assets. What would the company s ROI?
- The Chief Financial Officer of the company believes a more realistic scenario would be a $2 million increase in sales, requiring an $800,000 increase in average operating assets, with a resulting $250,000 increase in net operating income. What would be the company s ROI in this scenario?
Aug 29, 2021 | Uncategorized
AC505 Week 3 Alternate Case Study
Instructions
Lone Star Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:
Number of seats per passenger train car 80
Average load factor (percentage of seats filled) 70%
Average full passenger fare $160
Average variable cost per passenger $75
Fixed operating cost per month $3,000,000
Questions
a. What is the break-even point in passengers and revenues per month?
b. What is the break-even point in number of passenger train cars per month?
c. If Lone Star Express raises its average passenger fare to $190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?
d. (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $90. What will be the new break-even point in passengers and in number of passenger train cars?
e. Lone Star Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,400,000. The company has decided to raise the average fare to $ 195. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 575,000?
f. (Use original data except as noted). Lone Star Express is considering offering a discounted fare of $ 120, which the company believes would increase the load factor to 80 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 180,000. How much pre-tax income would passengers traveling on the discounted fare provide Lone Star Express if the company has 50 passenger train cars per day, 30 days per month?
g. Lone Star Express has an opportunity to obtain a new route that would be traveled 20 times per month (i.e., 20 train cars per month). The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 75.
1. Should the company obtain the route?
2. How many passenger train cars must Lone Star Express operate to earn pre-tax income of $120,000 per month on this route?
3. If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route?
4. What qualitative factors should be considered by Lone Star Express in making its decision about acquiring this route?
Aug 29, 2021 | Uncategorized
|
The long-term liability section of Twin Digital Corporation?s balance sheet as of December 31, 2012, included 14% bonds having a face amount of $35 million and a remaining discount of $1 million. Disclosure notes indicate the bonds were issued to yield 16%.
|
| |
|
Interest expense is recorded at the effective interest rate and paid on January 1 and July 1 of each year. On July 1, 2013, Twin Digital retired the bonds at 102 ($35.7 million) before their scheduled maturity.
|
|
1.
|
Prepare the journal entry by Twin Digital to record the semiannual interest on July 1, 2013. (Enter your answers in whole dollars. If no journal entry is required for a transaction, select “No journal entry required” in the first account field.)
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2.
|
Prepare the journal entry by Twin Digital to record the redemption of the bonds on July 1, 2013. (Enter your answers in whole dollars. If no journal entry is required for a transaction, select “No journal entry required” in the first account field.)
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| |
|
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Aug 29, 2021 | Uncategorized
Loxham Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Work in process, beginning:
Units in beginning work in process inventory 400
Materials costs $6,900
Conversion costs $2,500
Percent complete for materials 80%
Percent complete for conversion 15%
Units started into production during the month 6,000
Units transferred to the next department during the month 5,400
Materials costs added during the month $112,500
Conversion costs added during the month $210,300
Ending work in process:
Units in ending work-in-process inventory 1,000
Percentage complete for materials 80%
Percentage complete for conversion 30%
Required: Calculate the equivalent units for materials for the month in the first processing department.
Aug 29, 2021 | Uncategorized
Lu Technology, Co., manufactures CDs and DVDs for computer software and entertainment companies. Lu uses job order costing and has a perpetual inventory system.
On April 2, Lu began production of 5,900 DVDs, Job 423, for Stick People Pictures for $1.30 sales price per DVD. Lu promised to deliver the DVDs to Stick People by April 5. Lu incurred the following costs:
Date Labor Time Record No. Description Amount
4/2 655 10 hours @ $14 $140
4/3 656 20 hours @ $13 260
4/2 63 31 lbs. polycarbonate plastic @ $11 $341
4/2 64 25 lbs. acrylic plastic @ $27 675
4/3 74 3 lbs. refined aluminum @ $42 126
Stick People provides the movie file for Lu to burn onto the DVDs at a cost of $0.50 per DVD. Lu Technology allocates manufacturing overhead to jobs based on the relation between estimated overhead of $540,000 and estimated direct labor costs of $432,000. Job 423 was completed and shipped on April 3.
Requirements:
1. Prepare a job cost record similar to Exhibit 17-6 for Job 423. Calculate the predetermined overhead rate; then allocate manufacturing overhead to the job.
2. Journalize in summary form the requisition of direct materials (including the movie files) and the assignment of direct labor and manufacturing overhead to Job 423.
3. Journalize completion of the job and the sale of the 5,900 DVDs.
Aug 29, 2021 | Uncategorized
1. Conduct a DuPont decomposition of Lucent’s ROE for the 1998, 1999 and 2000 first (December) quarters. What factors contributed to the differences in Lucent’s performance between those quarters?
2. Evaluate the seasonally adjusted change (i.e., quarter i in year t to quarter i in year t-1) in Lucent’s: Sales, Accounts Receivable, Inventory and Gross Margin for the five quarterly periods: December 1998 through December 1999. Be sure to include an evaluation of the Footnote disclosures regarding Lucent’s inventories in your examination. Does the explanation for the earnings shortfall provided by Lucent’s managers make sense in light of your analysis
3. Based on your analysis:
a) When might you have determined that Lucent would be unable to maintain its streak of record earnings
b) Do you think the class-action lawsuits have merit
c) Would you expect Lucent’s earnings to ‘recover’ by the second quarter of 2000? What obstacles to Lucent’s earnings recovery present themselves?
Aug 29, 2021 | Uncategorized
On October 29, 2010, Lue Co. began operations by purchasing razors for resale. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company’s cost per new razor is $18 and its retail selling price is $80 in both 2010 and 2011. The manufacturer has advised the company to expect warranty costs to equal 7% of dollar sales. The following transactions and events occurred. Lue uses the perpetual inventory method.
2010
Nov.11 Sold 75 razors for $6,000 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 15 razors that were returned under the warranty.
16 Sold 210 razors for $16,800 cash.
29 Replaced 30 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2011
Jan. 5 Sold 130 razors for $10,400 cash.
17 Replaced 50 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
1. Prepare journal entries to record above transactions and adjustments for 2010 and 2011
2. How much warranty expense is reported for November 2010 and for December 31, 2010?
3. How much warranty expense is reported for January 2011?
4. What is the balance of the Estimated Warranty Liability account as of December 31, 2010?
5. What is the balance of the estimated warranty Liability account as of January 31, 2011?
Aug 29, 2021 | Uncategorized
Using the following income statements, perform the calculations needed for horizontal analyses. Round percentages to one decimal place.
LOCKEY FENCING CORPORATION
Income Statements
For the year ended December 31
2013 2012
Amounts Amounts
Net Sales $100,000.00 $75,000.00
Cost of Goods Sold $58,000.00 $45,000.00
Gross Profit $42,000.00 $30,000.00
Selling, General, and Administrative Expenses $9,000.00 $4,500.00
Income from Operations$33,000.00 $25,500.00
Interest Expense $3,000.00 $3,750.00
Income before Income Tax $30,000.00 $21,750.00
Income Tax Expense $9,000.00 $6,525.00
Net Income $21,000.00 $15,225.00
Aug 29, 2021 | Uncategorized
M17-15. Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2012 for one of the plants of Milliken & Company:
– Total manufacturing overhead for the year $40,000,000
– Total machine hours for the year 2,000,000
Actual results for February 2012 were as follows:
– Manufacturing overhead . $5,520,000
– Machine hours . 310,000
Required
a. Determine the 2012 predetermined overhead rate per machine hour
b. Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.
c. As of February 1, actual overhead was underapplied by $400,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.
E17.21. Analyzing Activity in Inventory Accounts
Select data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:
Raw materials used .. $300,000
Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs 680,000
Cost of goods available for sale 826,000
Selling and general expenses .. 30,000
Inventories
Beginning Ending
Raw materials $70,000 $80,000
Work in process $85,000 30,000
Finished goods . $90,000 110,000
Required
Determine each of the following:
a. Cost of raw materials purchased
b. Direct labor costs charged to production
c. Cost of goods manufactured
d. Cost of goods sold
Aug 29, 2021 | Uncategorized
M17-15. Developing and Using a Predetermined Overhead Rate
Assume that the following predictions were made for 2012 for one of the plants of Milliken & Company:
– Total manufacturing overhead for the year $40,000,000
– Total machine hours for the year 2,000,000
Actual results for February 2012 were as follows:
– Manufacturing overhead . $5,520,000
– Machine hours . 310,000
Required
a. Determine the 2012 predetermined overhead rate per machine hour
b. Using the predetermined overhead rate per machine hour, determine the manufacturing overhead applied to Work-in-Process during February.
c. As of February 1, actual overhead was underapplied by $400,000. Determine the cumulative amount of any overapplied or underapplied overhead at the end of February.
E17.21. Analyzing Activity in Inventory Accounts
Select data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:
Raw materials used .. $300,000
Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs 680,000
Cost of goods available for sale 826,000
Selling and general expenses .. 30,000
Inventories
Beginning Ending
Raw materials $70,000 $80,000
Work in process $85,000 30,000
Finished goods . $90,000 110,000
Required
Determine each of the following:
a. Cost of raw materials purchased
b. Direct labor costs charged to production
c. Cost of goods manufactured
d. Cost of goods sold
Aug 29, 2021 | Uncategorized
M3-1 Reporting Cash Basis versus Accrual Basis Income
Mostert Music Company had the following transactions in March:
a. Sold music lessons to customers for $10,000; received $6,000 in cash and the rest on account.
b. Paid $600 in wages for the month.
c. Received a $200 bill for utilities that will be paid in April.
d. Received $1,000 from customers as deposits on music lessons to be given in April.
Complete the following statements for March:
Cash Basis Income Statement Accural Basis Income Statement
Revenues Revenues
Cash Sales $ Sales to Customers $
Customers Deposits
Expenses Expenses
Wages Paid Wages Expenses
Utilities Expenses
Cash Income $ Net Income $
For each of the transactions, if revenue is to be recognized in September, indicate the amount. If revenue is not to be recognized in September, Explain why?.
E3-3 Identifying Accrual Basis Revenues
According to the revenue principle, revenues should be recognized when they are earned, which happens when the company performs acts promised to the customer. For most businesses, this condition is met at the point of delivery of goods or services. The following transactions occured in September 2010.
a. Gillespie Enterprises Inc. Issues $26 million in new common stock.
b. Cal State University receives $20,000,00 cash for 80,000 five-game season football tickets. None of the games have been played.
c. Cal State plays the first football game referred to in (b).
d. Hall Construction Company signed a contract with a customer for the construction of a new $500,000 warehouse. At the signing, Hall receives a check for $50,000 as a deposit to be applied against amounts earned during the first phase of construction. Answer from Hall s standpoint.
e. A popular snowboarding magazine company receives a total of $1,800 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company s standpoint.
f. T-Mobile sells a $100 cell phone plan for service in September to a customer who charges the sale on his credit card. Answer from the standpoint of T-Mobile.
Required:
For each of the transactions, if revenue is to recognized in September, indicate the amount. If revenue is not to be recognized in September, Explain Why?.
E3-4
Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expenses has occurred. Assume the following transactions occurred in January 2010:
a. Gateaway pays its computer service technicians $90,000 in salary for work done in January 2010. Answer from Gateway s standpoint.
b. At the beginning of January, Turner Construction Company pays $4,500 in rent for February-April 2010.
c. The McGraw-Hill Companies- publisher of this textbook and BusinessWeek- uses $1,000 worth of electricity and natural gas in January for which it has not yet been billed.
d. Pooler Company receives and pays in January a $1,500 invoice from a consulting firm for services received in January.
e. The campus bookstore receives consulting services at a cost of $5,000. The terms indicate that payment is due within 30 days of the consultation.
f. Schergevitch Incorporated has its delivery van repaired in January for $280 and charges the amount on account.
Required:
For each of the transactions, if an expense is to be recognized in January, indicate the amount. If an expense is not to be recognized in January, Indicate Why.?
Aug 29, 2021 | Uncategorized
Caterpillar Inc., reported the following accounts and amounts (in millions) in its December 31, 2010, year-end financial statements. Prepare the current assets section of a classified balance sheet. Assume that the Allowance for Doubtful Accounts relates to Accounts Receivable rather than Notes Receivable.
Accouts Payable $5,856 Long-Term Debt $30,675
Accounts Receivable 17,149 Long-Term Notes Receivable 12,057
Accumulated Depreciation 12,367 Notes Receivable-Current 931
Allowance for Doubtful Accounts 357 Other Current Assets 908
Cash and Cash Equivalents 3,592 Other Current Liabilities 12,239
Inventories 9,587 Other Noncurrent Assets 7,614
Loans Payable-Current 3,925 Property, Plant, and Equipment 24,906
Aug 29, 2021 | Uncategorized
Madison Optometry is considering the purchase of a new lens grinder to replace a machine that was purchased several years ago. Selected information on the two machines is given below:
Ignore inignore income taxes and the time value of money in this problem.
Required:
Compute the total advantage or disadvantage of using the new machine instead of the old machine over the next four years.
Be careful with depreciation in this question. You are looking at the decision in terms of cashflows rather than traditional accounting expense recording. Depreciation is designed to recover, over time, the cash expended for an asset purchase.
Aug 29, 2021 | Uncategorized
Maffei Company, which has only one product, has provided the following data concerning its most recent month of operations:
| Selling price |
|
$ 175 |
|
|
|
| Units in beginning inventory |
|
0 |
| Units produced |
|
9,500 |
| Units sold |
|
8,000 |
| Units in ending Inventory |
|
1,500 |
|
|
|
| Variable costs per unit: |
|
|
| Direct materials |
|
$ 55 |
| Direct labor |
|
$ 38 |
| Variable manufacturing overhead |
|
$ 2 |
| Variable selling and admin |
|
$ 10 |
|
|
|
| Fixed costs: |
|
|
| Fixed manufacturing overhead |
|
$ 300,000 |
| Fixed selling and admin |
|
$ 125,000 |
Required:
a.What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare an income statement for the month using the variable costing method.
d. Prepare an income statement for the month using the absorption costing method.
(Points : 30)
Aug 29, 2021 | Uncategorized
| Problem – 2 |
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| Main Company has a fiscal year ending on December 31. The company purchased equipment costing $88,000 on Octber 2, 2011. The equipment was purchased by signing a 9%, 120 – day note payable for the equipment. |
| 1. Prepare the Journal entries to record the following events. Use a 360-day year and round all amounts to the nearest dollar. |
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a. The purchase of equipment on October 2, 2011 |
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b. The accrual of interest on December 31, 2011 |
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c. Payment of note on January 30, 2012 |
| 2. Determine the balance of any current liabilities associated the note on December 31, 2011 |
Aug 29, 2021 | Uncategorized
P8-1A : Malone Company estimates that 360,000 direct labor hours will be worked during the coming year, 2008, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.
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Fixed Overhead Costs
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Variable Overhead Costs
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Supervision
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$ 90,000
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Indirect labor
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$126,000
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Depreciation
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60,000
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Indirect materials
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90,000
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Insurance
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30,000
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Repairs
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54,000
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Rent
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24,000
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Utilities
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72,000
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Property taxes
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18,000
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Lubricants
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18,000
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$222,000
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$360,000
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It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours.
During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,500, Depreciation $5,000, Insurance $2,470, Rent $2,000, and Property taxes $1,500.
Variable overhead costs: Indirect labor $10,360, Indirect materials, $6,400, Repairs $4,000, Utilities $5,700, and Lubricants $1,640.
Required:
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2008.
(b) Prepare a flexible budget report for October.
(c) Comment on management s efficiency in controlling manufacturing overhead costs in October.
Aug 29, 2021 | Uncategorized
Q 1: Consider a firm with a daily demand of 100 units, a production rate per day of 500 units, a setup cost of $200, and an annual holding cost per unit of $10. Suppose that the firm operates 300 days per year. How many units of inventory must their storage area be able to hold?
a) close to 975
b) close to 980
c) close to 1095
d) close to 1224
e) close to 1225
Q 2: If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost?
a) 50
b) 600
c) 1200
d) 2400
e) Can not be determined
Q 3: If the Economic Order Quantity (EOQ) is ordered, which of the following is true?
a) Annual ordering cost exceeds annual holding cost.
b) Annual holding cost exceeds annual ordering cost.
c) Annual ordering cost is equal to annual holding cost.
d) The sum of annual ordering cost plus annual holding cost is maximized.
e) The annual holding cost curve is decreasing.
Q 4: The basic Economic Order Quantity (EOQ) model can be considered a special case of the
Economic Production Quantity (EPQ) model under which of the following condition?
a) The demand per day is greater than production per day.
b) The production rate per day approaches 0.
c) The production rate per day approaches infinity.
d) The back order cost approaches infinity.
e) d/p = 1, where d is the demand per day and p Is the production per day.
Q 5: If the Economic Order Quantity (EOQ) model is used to order material, which of the following
represents the total annual cost of ordering and holding?
Please note the following symbols.
D: Annual Demand, S: Ordering Cost/Order and H: Inventory holding cost per unit per year.
a) 2DS H
b) 2DH S
c) 2DSH
d) DSH
e) 2H SD
Q 6: A.K. Plywood Products offers the following all-units quantity discount schedule for its 4 feet
by 8 feet sheets of quality plywood.
Order Size Price
1-9 sheets $25
10-49 sheets $23
50-99 sheets $21
100 sheets or more $18
Miami Home Furnishings (MHF) orders plywood from A.K. Plywood Products. MHF s accounting
department determines an ordering cost of $50 per order and an annual inventory holding cost
percentage of 20% of the price of the item. The annual demand is 250 sheets. What should the
order size be every time that an order is placed to minimize total annual cost?
Q 7: Consider the data given in the following table and identify the appropriate category for item
Stock Number D in an ABC classification.
Item
Stcok
Number
Annual
Volume
(Units)
Unit Cost
A 1250 $92.00
B 335 $0.64
C 1970 $18.75
D 2430 $62.35
E 990 $13.80
F 680 $89.40
G 2150 $0.98
H 210 $9.80
I 1250 $0.52
J 970 $16.80
ABC Analysis
a) A
b) B
c) C
Q 8: A company is using the Economic Order Quantity (EOQ) model to manage its inventories.
Suppose its inventory holding cost per unit per year doubles while the annual demand and the
ordering cost per order do not change. What will happen to the EOQ?
a) It doubles.
b) It increases by 41.42%.
c) It remains the same.
d) The EOQ reduces by about 30%.
e) It quadruples (increases by 400%).
Q 9: The annual demand for an item is 2400 units. The inventory holding cost is $ 6.00 per
unit per year. The demand is continuous and constant, that is, 200 units/month. The item is
purchased in two lots. The size of the first lot is 1600 units and the size of the second lot is
800 units. Find the total annual cost of holding inventory.
a) 7200
b) 4000
c) 2400
d) 1200
e) 600
Q 10: A manufacturing company sells its products directly to customers and operates 5 days a week, 52 weeks a year. The production department of this company can produce at the rate of 60 units per day. The setup cost for a production run is $ 125.00. The cost of holding is $ 4.00 per unit per year. The demand for the item is continuous and constant and is 3,900 units per year. (Note: The demand occurs only when the company is operating, that is, 5 days a week for 52 weeks). Find the optimum number of units to be produced in one batch (economic production quantity). Round the number to nearest integer.
a) 3900 b) 570 c) 494 d) 300 e) 60
Aug 29, 2021 | Uncategorized
For this assignment you are to read three case studies as they appear in your text. The case studies you will be reading are as follows:
Chapter 11, pg. 427: Denver Goes Alfresco (50 points)
Chapter 11, pg. 432: Firewire Surfboards Light Up with CAD (40 points)
Chapter 12, pg. 476: Colgate-Palmolive Keeps Managers Smiling with Executive Dashboards (60 points)
For each of these, only answer the case study questions associated with them found at the end of the discussion. You do not need to answer the “MIS in Action” questions.
Please see below;
http://wow.coursesmart.com/9781269197403/firstsection#X2ludGVybmFsX0J2ZGVwRmxhc2hSZWFkZXI/eG1saWQ9OTc4MTI2OTE5NzQwMy9JRkMtMw==
Aug 29, 2021 | Uncategorized
The management of Drummer Corporation is considering dropping product D84L. Data from the company’s accounting system appear below.
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Sales
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$800,000
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Variable Expenses
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$440,000
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Fixed Manufacturing Expenses
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$248,000
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Fixed Selling and Administrative Expenses
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$184,000
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All fixed expenses of the company are fully allocated to products in the company’s accounting system. Further investigation has revealed that $201,000 of the fixed manufacturing expenses and $156,000 of the fixed selling and administrative expenses are avoidable if product D84L is discontinued.
Required:
What would be the effect on the company’s overall net operating income if product D84L were dropped? Should the product be dropped? Show your work!
Aug 29, 2021 | Uncategorized
| Accounting questions |
Question Detail:
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On March 1, 2012, Mitch Quade established Mitch Realty, which completed the following transactions during the month:
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(a)
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Mitch Quade transferred cash from a personal bank account to an account to be used for the business in exchange for capital stock, $18,000.
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(b)
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Purchase supplies on account, $1,200.
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(c)
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Earned sales commission, receiving cash, $14,000.
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(d)
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Paid rent on office and equipment for the month, $2,800.
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(e)
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Paid creditor on account, $750.
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(f)
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Paid office salaries, $3,000.
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Instructions:
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1
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Journalize entries for transactions (a) through (f). Omit the journal entry explanations. Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.
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2
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Post the journal entries the T accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balance after all posting is complete. Accounts containing only a single entry do not need a balance.
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3
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Prepare and unadjusted trial balance as of March 31, 2012.
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Jacksonville Financial Services Co., which specializes in appliance repair services, is owned and operated by Cindy Latty. Jacksonville Financial Services Co.’s accounting clerk prepared the unadjusted trial balance at December 31, 2011, shown below.
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Jacksonville Financial Services Co.
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Unadjusted Trial Balance
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December 31, 2011
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Debit
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Credit
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Balances
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Balances
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Cash
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10,200
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Accounts Receivable
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34,750
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Prepaid Insurance
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6,000
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Supplies
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1,725
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Land
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50,000
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Building
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80,750
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Accumulated Depreciation — Building
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37,850
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Equipment
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45,000
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Accumulated Depreciation — Equipment
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17,650
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Accounts Payable
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3,750
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Unearned Rent
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3,600
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Capital Stock
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25,000
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Retained Earnings
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78,550
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Dividends
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8,000
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Fees Earned
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158,600
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Salaries and Wages Expense
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56,850
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Utilities Expense
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14,100
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Advertising Expense
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7,500
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Repairs Expense
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6,100
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Miscellaneous Expense
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4,025
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325,000
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325,000
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The data needed to determine year end adustments are as follows:
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(a)
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Depreciation of building for the year, $2,100.
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(b)
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Depreciation of equipment for the year, $3000.
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(c)
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Accrued salaries and wages at December 31, $800.
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(d)
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Unexpired insurance at December 31, $1,500.
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(e)
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Fees earned but unbilled on December 31, $2,150.
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(f)
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Supplies on hand at December 31, $600.
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(g)
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Rent unearned at December 31, $1,500.
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Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.
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To Do:
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Using the form provided on the next worksheet, journalize the adjusting entries. Add additional accounts as needed.
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Wizard Services Co. offers security services to business clients.
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To Do:
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Complete the following end of period spreadsheet (work sheet) for Wizard Services Co.
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Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.
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Prepare the following:
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a. an income statement for July
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b. a retained earnings statement for July
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c. a balance sheet as of July 31.
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Wizard Services Co.
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The cash account for Interactive Systems at February 28, 2011 indicated a balance of $7,635. The bank statement indicated a balance of $13,333 on February 28, 2011. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items:
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Checks outstanding totaled $4,118
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A deposit of $4,500, representing receipts of February 28, had been made too late to appear on the bank statement.
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The bank had collected $5,200 on a note left for collection. The face of the note was $5,000.
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A check for $290 returned with the statement had been incorrectly recorded by Interactives Systems as $920. The check was for the payment of an obligation to Busser Co. for the purchase of office supplies on account.
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A check drawn for $415 had been incorrectly charged by the bank as $145.
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Bank service charges for February amounted to $20.
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To Do:
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1
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Prepare a bank reconciliation. Use the provided form on the following worksheet.
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Please use the drop-down list (right of the cell) to enter the account description box on the worksheet.
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2
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Journalize the necessary entries. The accounts have not been closed. Use the provided form on the following worksheet.
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Close |
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