Capital Rationing Decision for a Service Company Involving Four Proposals

Renaissance Capital Group is considering allocating a limited amount of capital investment funds among four proposals. The amount of proposed investment, estimated income from operations, and net cash flow for each proposal are as follows:

The company's capital rationing policy requires a maximum cash payback period of three years. In addition, a minimum average rate of return of 12% is required on all projects. If the preceding standards are met, the net present value method and present value indexes are used to rank the remaining proposals.

Required:

1. Compute the cash payback period for each of the four proposals.

2. Giving effect to straight-line depreciation on the investments and assuming no estimated residual value, compute the average rate of return for each of the four proposals. If required, round your answers to one decimal place.

3. Using the following format, summarize the results of your computations in parts (1) and (2) by placing the calculated amounts in the first two columns on the left and indicate which proposals should be accepted for further analysis and which should be rejected. If required, round your answers to one decimal place.

4. For the proposals accepted for further analysis in part (3), compute the net present value. Use a rate of 15% and the present value of $1 table above. Round to the nearest dollar.

5. Compute the present value index for each of the proposals in part (4). If required, round your answers to two decimal places.

6. Rank the proposals from most attractive to least attractive, based on the present values of net cash flows computed in part (4).

7. Rank the proposals from most attractive to least attractive, based on the present value indexes computed in part (5).

8. The present value indexes indicate that although Proposal   has the larger net present value, it is not as attractive as Proposal   in terms of the amount of present value per dollar invested. Proposal   requires the larger investment. Thus, management should use investment resources for Proposal   before investing in Proposal  , absent any other qualitative considerations that may impact the decision.

Periodic Inventory by Three Methods; Cost of Merchandise Sold

The units of an item available for sale during the year were as follows:

There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

A person has much of his savings invested in 15,000 shares of Grass Roots common stock. The stock is currently selling for $12 per share and has been paying a dividend of $.75 per share. Grass Roots has discontinued its dividend but begins to grow at 7% a year. Assuming no transaction costs.

Q. How can this person maintain his income and his position in the firm at the end of the year?

Pandemic Inc. provided the following comparative balance sheets for 2020 and 2019 and the 2020 income statement. Additional pertinent information is provided below.

- Fixed assets costing $8,000 with a book value of $3,000 were sold for $6,000.

- Long term investments costing $5,000 were sold for $5,000.

-Redeemed $5,000 of the bond issuance.

- Sold stock___________.

-Paid dividends_________.

All other transactions involved cash.

Be certain you have accounted for all the changes in the account line items somewhere in your 3 areas of SCF (ex. Fixed Assets account went from $28K to $40k - we did not just buy $12K this year....)

  2020     2019

Cash $30,000 $16,000

Acct Receivable 7,000                               5,000

Ppd Insurance 2,000 3,000

Inventory 13,000 11,000

L-T Investments 22,000                         27,000

Fixed Assets 40,000 28,000

Acc Depreciation 8,000                               6,000

Acct Payable 16,000                         14,000

Interest Payable 4,000                           ----000—

Taxes Payable 6,000 4,000

Bond Payable 20,000 25,000

Common Stock 21,000                         20,000

APIC 3,000                                      0

Retained Earnings 36,000                         21,000

Sales $120,000

-COGS   -   60,000

Gross Profit 60,000

- Operating Expenses   -   20,000  

Income from Operations 40,000

+/- Other

           Interest Expense -2,000

Gain on Sale of Equip +3,000        

Taxable Income 41,000

-Tax   -8,000

Net Income $33,000

Required: Prepare the Statement of Cash Flows for Operating, Investing and Financing using both the indirect and direct methods for Operating.

Do you think that investors are getting concerned that SOX has gotten stale and is not as much of a threat for bad behavior? Why or why not?

The following data from the just completed year are taken from the accounting records of Mason Company:

Required:

1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

2. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold.

3. Prepare an income statement.

• Required 1

Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold.

Prepare an income statement.

1. Perpetual Inventory Using FIFO

   Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

   Inventory		Purchases		Sales
   May 1	3,600 units at $32	May 10	1,800 units at $34	May 12	2,520 units
   		May 20	1,620 units at $36	May 14	2,160 units
   				May 31	1,080 units

   Assume that the business maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

   Schedule of Cost of Merchandise Sold
   FIFO Method
   Prepaid Cell Phones
   Date	Purchases Quantity	Purchases Unit Cost	Purchases Total Cost	Cost of Merchandise Sold Quantity	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
   May 1								$	$
   May 10		$	$
   May 12					$	$
   May 14
   May 20
   May 31
   May 31	Balances					$			$

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1. Perpetual Inventory Using LIFO

   Beginning inventory, purchases, and sales data for prepaid cell phones for May are as follows:

   Inventory		Purchases		Sales
   May 1	4,000 units at $21	May 10	2,000 units at $23	May 12	2,800 units
   		May 20	1,800 units at $25	May 14	2,400 units
   				May 31	1,200 units

   a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4. Under LIFO, if units are in inventory at two different costs, enter the units with the HIGHER unit cost first in the Cost of Merchandise Sold Unit Cost column and LOWER unit cost first in the Inventory Unit Cost column.

   Schedule of Cost of Merchandise Sold
   LIFO Method
   Prepaid Cell Phones
   Date	Quantity Purchased	Purchases Unit Cost	Purchases Total Cost	Quantity Sold	Cost of Merchandise Sold Unit Cost	Cost of Merchandise Sold Total Cost	Inventory Quantity	Inventory Unit Cost	Inventory Total Cost
   May 1								$	$
   May 10		$	$
   May 12					$	$
   May 14
   May 20
   May 31
   May 31	Balances					$			$

   b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?
   

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Post an analysis of the role of innovation in business strategy development within a global context. Your analysis should include the following: A description of P&G’s innovation, including the underlying strategy and specific context for its current success An analysis of the impact of geographic location and surrounding business communities on innovation and strategy development As a global change agent, explain the importance of researching global implementation of innovative business ideas or strategies from the research literature. Be sure to include relevant scholarly examples of successful or unsuccessful global implementations and how they can further influence the understanding of innovation as a component of business strategy.

Cash Budget

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of May 1 include cash of $45,000, marketable securities of $64,000, and accounts receivable of $140,600 ($103,000 from April sales and $37,600 from March sales). Sales on account for March and April were $94,000 and $103,000, respectively. Current liabilities as of May 1 include $11,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $35,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

2. The budget indicates that the minimum cash balance   be maintained in July. This situation can be corrected by   and/or by the   of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will   the minimum desired balance.

Joseph is considering a used car currently valued at $12,000. He can get an interest rate of 2.5% annually for a 5 year car loan. Joseph currently has $14,000 in a savings account and wants to use some of his savings for a down payment. If Joseph decided to put $3,000 down as a down payment, what are his monthly payments? If Joseph decided to put $5,000 down as a down payment, what are his monthly payments? How much does Joseph save in interest if he puts $5,000 down compared to $3,000? If Joseph decides to pay for the whole thing what could he potentially save in interest payments? If Joseph can invest $12,000 in an 8% annual investment. Alternatively he is considering just paying cash for the car leaving him no payment. Which would you recommend and why? Include the numbers!!

Critically evaluate the suggestion that with the recent emergence of Integrated Reporting we can readily recognise the vanguard role that managerial accounting will play in reshaping financial reporting.

The following information is available for Park Valley Spa for July Year 1:

The following is a list of checks and deposits recorded on the books of the Park Valley Spa for July Year 1:

Other Information

1. Check no. 2350 was outstanding from June.
2. The credit memo was for collection of notes receivable.
3. All checks were paid at the correct amount.
4. The debit memo was for printed checks.
5. The June 30 bank reconciliation showed a deposit in transit of $1,104.
6. The unadjusted Cash account balance at July 31 was $14,603.

Required
a. Prepare the bank reconciliation for Park Valley Spa at the end of July.
b. Record in general journal form any necessary entries to the Cash account to adjust it to the true cash balance.
  

A. record the collection of notes recievable

B. record cash paid for office supplies expenses

The Inventory at July 1st and the cost charged to work in process department B during July for the Parker Corporation are as follows:

32,000 units, 3/4 completed...................................1,312,000

From Department A 174,000 units.........................1,566,000

Direct Labor............................................................5,848,000

Factory Overhead...................................................1,292,000

During July, all direct materials are transferred from Department A, the units in process at July 1st were completed, and of the 174,000 units entering the Department, all were completed except 36,000 units which were 2/3 completed. Inventories are costed by the FIFO method.

Use the 5 Steps to prepare a cost of production report:

1. Units to be accounted for: Beginning WIP + Transferred In = Total

2.Units to be accounted for: Beginning WIP + Started and Completed + Ending WIP = Total

3. Equivalent Units of Production & Cost per EUP

4.Cost to be accounted for: Beg. WIP + Materials + Direct Labor + Overhead = Total Cost to be accounted for

5. Cost accounted for: Total cost of beginning WIP + Total cost for started and completed + Total Cost for ending WIP = Total cost accounted for