“We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm’s top management. Intercoastal is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal’s General Manager of Marketing, has recently completed a sales forecast. She believes the company’s sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month’s sales. Then Wilcox expects sales to remain constant for several months. Intercoastal’s projected balance sheet as of December 31, 20x0, is as follows:
Cash |
$ |
35,000 |
|
Accounts receivable |
252,000 |
||
Marketable securities |
10,000 |
||
Inventory |
231,000 |
||
Buildings and equipment (net of accumulated depreciation) |
670,000 |
||
Total assets |
$ |
1,198,000 |
|
Accounts payable |
$ |
220,500 |
|
Bond interest payable |
22,500 |
||
Property taxes payable |
4,800 |
||
Bonds payable (15%; due in 20x6) |
360,000 |
||
Common stock |
400,000 |
||
Retained earnings |
190,200 |
||
Total liabilities and stockholders’ equity |
$ |
1,198,000 |
|
Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated:
Sales salaries |
$ |
45,000 |
|
Advertising and promotion |
25,000 |
||
Administrative salaries |
45,000 |
||
Depreciation |
15,000 |
||
Interest on bonds |
4,500 |
||
Property taxes |
1,200 |
||
In addition, sales commissions run at the rate of 2 percent of sales.
PLEASE PREPARE THE FOLLOWING:
1) Sales budget:
2) Cash receipts budget:
3) Purchases Budget
4) Cash disbursements budget:
5) Complete the first three lines of the summary cash budget. Then do the analysis of short-term financing needs in requirement (6). Then finish requirement (5).
6) Calculation of required short-term borrowing.
7) Prepare Intercoastal Electronics’ budgeted income statement for the first quarter of 20x1. (Ignore income taxes.)
8) Prepare Intercoastal Electronics’ budgeted statement of retained earnings for the first quarter of 20x1.
9) Prepare Intercoastal Electronics’ budgeted balance sheet as of March 31, 20x1. (Hint: On March 31, 20x1, Bond Interest Payable is $9,000 and Property Taxes Payable is $1,200.)
PLEASE HELP! THANK YOU!!
In: Accounting
(Journal entries for a nonprofit)Fruits & Veggies, a nonprofit, conducts two types of programs: education and research. It does not use fund accounting. During 2018, the following transactions and events took place. Prepare journal entries for these transactions, identifying increases and decreases by net asset classification as appropriate.
1. Pledges amounting to $200,000 were received, to be used for any purpose designated by the trust-ees. Fruits & Veggies normally collects 90 percent of the amount pledged.
2. Fruits & Veggies collected $190,000 in cash on the amount pledged in the previous transaction. It wrote off the balance as uncollectible.
3. Ed Victor donated $5,000 cash in 2018, stipulating that it could be used for any purpose, but only during 2019.
4. Howard Gore donated $675,000, stipulating that the donation must be used solely to purchase a building that Fruits & Veggies could use for research.
5. Fruits & Veggies invested $20,000 of unrestricted resources in equity securities. Earnings on these resources amounted to $1,000 in 2018.
6. Late in the year, Fruits & Veggies used Howard Gore’s donation (see Transaction 4) and unre-stricted resources of $140,000 to purchase a building for research purposes.
7. The following services were donated to Fruits & Veggies:
a. Audit of the financial statements by an accounting firm—$5,000
b. Professional services by an advertising agency in connection with a fundraising campaign—$3,000
c. Ushering services at educational meetings, provided by high school students. If paid for, these services would cost $1,000.
8. At year-end, the investments referred to in Transaction 5 had a fair value of $22,000.
9. Fruits & Veggies conducted a fundraising campaign, the donations to be used solely for research into the health benefits of asparagus. Donations totaled $45,000 in cash.
10. The Board of Directors of Fruits & Veggies designated $35,000 for the acquisition of research equipment
In: Accounting
(Identifying the appropriate net asset classification)For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit’s financial statements for the year ended De-cember 31, 2019. Both net asset classifications may be affected in some transactions. .E13-27. (Recording journal entries for nonprofits)Prepare journal entries to record the transactions in Exercise E13-26
1. Donor A gave a nonprofit a $50,000 cash gift in June 2019, stipulating that the nonprofit could not use the gift until 2020.
2. Donor B gave a nonprofit a $25,000 cash gift in July 2019, telling the nonprofit the gift could be used only for research on a specific project.
3. In response to a special fundraising campaign, whereby contributions could be used only for con-struction of a new warehouse, a large number of individuals promised to make cash contributions totaling $2 million in 2019. The nonprofit believes it will actually collect 80 percent of the promised cash.
4. Donor C gave a nonprofit several investments having a fair value of $3 million in March 2019. Donor C stipulated that the nonprofit must hold the gift in perpetuity, but it could use the income from the gift for any purpose the trustees considered appropriate. Between March and December, the investments produced income of $100,000.
5. Using the resources raised in Transaction 3, a nonprofit paid an architect $50,000 in 2019 to make preliminary designs for a new building
In: Accounting
In: Accounting
Part A:
Rainbow City had the following transactions during the year.
Required: Prepare the necessary journal entries in the appropriate governmental fund general journal and the government-wide governmental activities general journal for each of the following Rainbow City transactions.
Part B:
In the current year, the building occupied by Surf Beach City’s Culture and Recreation Department suffered severe structural damage as a result of a hurricane. It had been 48 years since a hurricane had hit the Rainbow City area, although hurricanes in Rainbow City’s geographic area are not uncommon. The building had been purchased 10 years earlier at a cost of $2,000,000 and had accumulated depreciation of $500,000 as of the date of the hurricane. Based on a restoration cost analysis, city engineers estimate the impairment loss at $230,000; however, the city expects during the next fiscal year to receive insurance recoveries of $120,000 for the damage.
Requirements:
In: Accounting
The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow: Total Dirt Bikes Mountain Bikes Racing Bikes Sales $ 925,000 $ 265,000 $ 402,000 $ 258,000 Variable manufacturing and selling expenses 476,000 115,000 205,000 156,000 Contribution margin 449,000 150,000 197,000 102,000 Fixed expenses: Advertising, traceable 69,500 8,700 40,500 20,300 Depreciation of special equipment 43,600 20,600 7,300 15,700 Salaries of product-line managers 116,200 40,700 38,700 36,800 Allocated common fixed expenses* 185,000 53,000 80,400 51,600 Total fixed expenses 414,300 123,000 166,900 124,400 Net operating income (loss) $ 34,700 $ 27,000 $ 30,100 $ (22,400) *Allocated on the basis of sales dollars. Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out. Required: 1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes? 2. Should the production and sale of racing bikes be discontinued? 3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.
In: Accounting
Problem 4 Cliffhangers Company had the following product information for March 2019: Selling Price Direct Materials Direct Labor Variable Manufacturing Overhead Variable Selling Fixed Manufacturing Overhead Fixed Selling Production Sales (units) $149 per unit $35 per unit $29 per unit $13 per unit $6 per unit $129,000 $164,000 5,800 units 4,400 units REQUIRED: A. What is the product cost per unit under absorption costing? B. What is the product cost per unit under variable costing? C. Prepare an income statement using absorption costing. D. Prepare an income statement using variable costing.
In: Accounting
Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,065 hours each month to produce 2,130 sets of covers. The standard costs associated with this level of production are:
Total | Per Set of Covers |
||||
Direct materials | $ | 35,358 | $ | 16.60 | |
Direct labor | $ | 8,520 | 4.00 | ||
Variable manufacturing overhead (based on direct labor-hours) | $ | 3,195 | 1.50 | ||
$ | 22.10 | ||||
During August, the factory worked only 1,050 direct labor-hours and produced 2,700 sets of covers. The following actual costs were recorded during the month:
Total | Per Set of Covers |
||||
Direct materials (6,000 yards) | $ | 43,740 | $ | 16.20 | |
Direct labor | $ | 11,340 | 4.20 | ||
Variable manufacturing overhead | $ | 5,670 | 2.10 | ||
$ | 22.50 | ||||
At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production.
Required:
1. Compute the materials price and quantity variances for August.
2. Compute the labor rate and efficiency variances for August.
3. Compute the variable overhead rate and efficiency variances for August.
(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.)
|
In: Accounting
Below is data about 2 companies, please analyze the ratios provided and determine which company YOU think would be a more sound investment. Then give at least THREE reasons why.
Company A Company B
Avg Collection Period 22.1 days 45. 2 days
Inventory Turnover 4.5 3.2
Current Ratio 2.4 1.7
Quick Ratio 1.8 .5
Debt-to -Equity 33% 59%
Gross Profit 42% 45%
Return on Assets 16.3% 15.1%
Return on Equity 18.2% 11.8%
In: Accounting
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results:
Sales (30,000 balls) $ 750,000
Variable expenses 450,000
Contribution margin 300,000
Fixed expenses 210,000
Net operating income $ 90,000
Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year’s sales level.
2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls?
3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs?
5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company’s new CM ratio and new break-even point in balls?
6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
In: Accounting
Wellington Chocolate Company uses activity-based costing. The controller identified two activities and budgeted overhead costs based on these activities:
Setting up equipment $280,000
Baking $5,800,000
Setting up equipment is based on setup hours, and baking is based on oven hours. Wellington produces two products, fudge, and cookies. Information on each product is as follows
fudge | cookies | |
Units produced | 8,000 | 445,000 |
Setup hours | 4,000 | 1,000 |
Oven hours | 5,000 | 35,000 |
Required (round your answers to the nearest whole dollar, unless otherwise directed):
1. Calculate the activity rate for setting up equipment
2. Calculate the activity rate for baking
3. How much total overhead is assigned to Fudge?
In: Accounting
Union Local School District has a bond outstanding with a coupon rate of 3.7% paid semiannually and 16 years to maturity. The yield to maturity is 3.9% and the bond has a par value of $5,000. What is the price of the bond?
In: Accounting
The conceptual framework for Financial accounting and reporting plays an important role in the decisions of parties responsible for preparing General Purpose Financial Reports (GPFR) and in the development of financial reporting and accounting generally.
To some extent this question asks about the difference between US GAAP and IFRS. US GAAP is more heavily based on rules and tends to have more requirements spelled out in standards, with less reliance on the conceptual framework. However, all accounting systems combine rules and principles, and all accounting systems have standards that do not conform completely with their conceptual frameworks. You are to answer how important you think principles are and how important you think rules are.(600-800 words)
In: Accounting
Suppose you and your friend want to start a business, and the friend suggests to start a movie dvd rental store in the bronx. Is that an attractive market? Discuss using Porter's Five Forces
In: Accounting
Depreciation by Three Methods; Partial Years
Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4.
Required:
Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) units-of-activity method, and (c) the double-declining-balance method.
Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar.
a. Straight-line method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
b. Units-of-activity method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
c. Double-declining-balance Method
Year | Amount |
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
Year 4 | $ |
In: Accounting