Replacement Analysis

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $300 for 6 years. Its current book value is $1,800, and it can be sold on an Internet auction site for $4,500 at this time. Thus, the annual depreciation expense is $1,800/6=$300 per year. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life.

Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $7,900, and has an estimated useful life of 6 years with an estimated salvage value of $900. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and allows for an output expansion, so sales would rise by $2,000 per year; the new machine's much greater efficiency would reduce operating expenses by $1,600 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 40%, and the project cost of capital is 14%. Should it replace the old steamer?

The old steamer _________________ be replaced.

What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar.
$ ________

What information do users of accounting reports need?

In its first year of operations, 20X2,ABC Companyy., had credit sales of $420,000 to many different customers. Of this amount, Cindy Mol purchased $400 and J. Jocke purchased $180 on account. During the year, cash collections of $389,000 were made, of which Cindy Mol paid $360 and J. Jocke paid $60. At the end of 20X2, bad debts expense was estimated to be 5% of ending accounts receivable. At December 31, 20X2, the Allowance for Uncollectible Accounts is $0. On February 23, 20X3, the balance in J. Jocke's account was written off as uncollectible.

Prepare the appropriate journal entry on the books of ABC Company for

a. the $420,000 in credit sales.

b. the collection of $389,000 from credit customers.

c. the estimation of bad debts expense.

d. the write-off of J. Jocke's account.

A company's income statement showed the following: net income, $127,000; depreciation expense, $36,500; and gain on sale of plant assets, $10,500. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,700; merchandise inventory increased $24,500; prepaid expenses increased $7,500; accounts payable increased $4,700. Calculate the net cash provided or used by operating activities.

Multiple Choice

• $177,400.

• $156,200.

• $149,400.

• $151,400.

Fill in the remaining entries in the following table using the formulas for the expected return and the variance of a portfolio below. Please show your detailed calculations or provide arguments to support your answers. I will not be able to give you full credit even if your answer is correct.

Financial statements for Perez Company follow.

Required

Calculate the following ratios for 2019 and 2018. Since 2017 numbers are not presented do not use averages when calculating the ratios for 2018. Instead, use the number presented on the 2018 balance sheet.

1. Working capital.
2. Current ratio. (Round your answers to 2 decimal places.)
3. Quick ratio. (Round your answers to 2 decimal places.)
4. Receivables turnover (beginning receivables at January 1, 2018, were $45,000). (Round your answers to 2 decimal places.)
5. Average days to collect accounts receivable. (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.)
6. Inventory turnover (beginning inventory at January 1, 2018, was $151,000). (Round your answers to 2 decimal places.)
7. Number of days to sell inventory. (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.)
8. Debt to assets ratio. (Round your answers to the nearest whole percent.)
9. Debt to equity ratio. (Round your answers to 2 decimal places.)
10. Number of times interest was earned. (Round your answers to 2 decimal places.)
11. Plant assets to long-term debt. (Round your answers to 2 decimal places.)
12. Net margin. (Round your answers to 2 decimal places.)
13. Turnover of assets. (Round your answers to 2 decimal places.)
14. Return on investment. (Round your answers to 2 decimal places.)
15. Return on equity. (Round your answers to 2 decimal places.)
16. Earnings per share. (Round your answers to 2 decimal places.)
17. Book value per share of common stock. (Round your answers to 2 decimal places.)
18. Price-earnings ratio (market price per share: 2018, $12.30; 2019, $13.60). (Round your intermediate calculations and final answer to 2 decimal places.)
19. Dividend yield on common stock. (Round your answers to 2 decimal places.)

Assume you have bought a property worth 210,000 $ with a downpayment of $10,000 and Interest rate = 5%, Total number of installments to be made =24, monthly interest rate = 5%/12

How do we calculate all of these payment step by step ?

Mortgage Balance,   Monthly Payment,    Interest Payment, Principal Payment,     Ending Mortgage Balance

As mentioned in the opening part of the Robatelli's Pizzeria case, there are now 53 locations throughout the greater Pittsburgh area. Each one of those restaurant locations employs a full-time store manager and varying numbers of kitchen staff, servers, and delivery staff. The kitchen staff, servers, and delivery staff vary between full-time and part-time status. There tend to be high rates of turnover, especially among the part-time staff. Robatelli's pays its employees on a weekly basis each Friday for the week ending on the previous Saturday. Employee paychecks include withholdings for federal taxes as well as state and local taxes applicable for the employee's residence. Employees may live in one of three states and over 25 municipalities that are included in the greater Pittsburgh regional area. All payroll accounting is handled by Robatelli's at its home office.

Each restaurant must also maintain various fixed assets in order to operate.Following is a general list of fixed assets for each store:

 Furniture and store fixtures, including tables, chairs, and built-in items such as shelving, counters, and booths

 Kitchen equipments, such as refrigerators, stoves, ovens, and dishwashing machines

 Computers Note that the number of each of these fixed assets maintained at each location varies, depending upon the size of the store. Also note that each member of the delivery staff uses his or her personal automobile (rather than a company-owned car) for customer deliveries.

In addition, the home office maintains the following types of fixed assets:

 Land and the office building

 Office furniture and fixtures

 Computers and other office equipment

 Telephone systems

Finally, fixed assets maintained at the commissary include the following:

 Fixtures, such as built-in cabinets and shelving

 Kitchen equipment

 Computers

 Delivery trucks

All fixed asset accounting is handled by Robatelli's at its home office.

Required:

a. Describe how you believe an efficient and effective payroll system should be organized at Robatelli's. Include details such as the answers to these questions:

(a) What types of payroll documentation should be prepared at the restaurant locations?

(b) How will the necessary information for payroll flow between restaurants and the home office?

(c) How should IT systems be used in the payroll processes?

The Alternative Minimum Tax (AMT) was designed so that high-income taxpayers could avoid using tax loopholes to pay little to no income tax. AMT has not been adjusted for inflation so an increased number of middle-class taxpayersare having to pay AMT. What are your thoughts on AMT - should AMT be eliminated, is it necessary, should reform occur??? Please discuss your thoughts.

Sturdy has an opportunity to purchase frames for $115 each.

Additional Information

1. The manufacturing equipment, which originally cost $570,000, has a book value of $420,000, a remaining useful life of five years, and a zero salvage value. If the equipment is not used to produce bicycle frames, it can be leased for $73,000 per year.

2. Sturdy has the opportunity to purchase for $960,000 new manufacturing equipment that will have an expected useful life of five years and a salvage value of $77,500. This equipment will increase productivity substantially, reducing unit-level labor costs by 60 percent. Assume that Sturdy will continue to produce and sell 23,000 frames per year in the future.

3. If Sturdy outsources the frames, the company can eliminate 70 percent of the inventory holding costs.

Required

1. Determine the avoidable cost per unit of making the bike frames, assuming that Sturdy is considering the alternatives of making the product using the existing equipment or outsourcing the product to the independent contractor. Based on the quantitative data, should Sturdy outsource the bike frames?

2. Assuming that Sturdy is considering whether to replace the old equipment with the new equipment, determine the avoidable cost per unit to produce the bike frames using the new equipment and the avoidable cost per unit to produce the bike frames using the old equipment. Calculate the increase or decrease in the company's profit if the company uses new equipment.

3. Assuming that Sturdy is considering whether to either purchase the new equipment or outsource the bike frame, calculate.

The cash account for American Medical Co. at April 30 indicated a balance of $84,457. The bank statement indicated a balance of $127,190 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

Sales Order Processing System

The customer sales order is received via phone or through the mail. Gus Grinwich, the sales clerk, receives the sales order and checks the customer’s credit record. Once Grinwich checks the customer’s credit record, he prepares the sales order. From this sales order, Grinwich prepares a customer copy, stock release, shipping notice, two copies of the invoice, ledger copy, packing slip, and the file copy. One of the invoice copies, the ledger copy, and the file copy go to the billing department. The other copy of the invoice and the shipping notice are sent to the shipping department. The stock release and the file copy are sent to the warehouse department.

In the warehouse department, Steve Rossini, the warehouse clerk, receives the stock release and Phil Denuto, the stocker, checks the shelves to pick the gloves for the sales order. Once the goods are taken off the shelf in the warehouse, the stock release is sent to the billing department. Sparky Littleton, the billing clerk, reconciles the invoice, ledger copy, and stock release to make sure that the amount of inventory taken from the shelves is the same as the amount listed in the invoice. Littleton bills the customer for the goods released from the warehouse department. Littleton prepares the sales journal and makes the journal voucher. The journal voucher is sent to the general ledger department. The stock release is sent to the inventory control. The invoice is then filed in the billing department’s file and the ledger copy is sent to the general ledger department.

The shipping department receives the invoice and the shipping notice. They send the goods to the carrier along with the invoice, the packing slip, and the two copies of the bill of lading. The invoice states the amount and quantity of goods that the customer requested in the sales order form. The shipping department files the shipping notice from the customer’s order.

Inventory control receives the stock release form from the billing department. With the stock release form, Bobby Higgins, the inventory clerk, updates the inventory subsidiary ledger relating to the goods that have been released from the warehouse. The ledger copy arrives at the general ledger department from the billing department. Dave Fielder, the general ledger clerk, uses the ledger copy to update the accounts receivable subsidiary ledger. Periodically, Fielder prepares the accounts receivable summary and reconciles it with the journal voucher from the inventory subsidiary ledger and the journal voucher produced by the sales journal in the billing department in order to update the general ledger. These three forms are then filed by Fielder.

The Cash Receipts System

The cash receipts system starts when the wholesalers send back the remittance advice with their payment. This allows Craig Nelson, the mail room clerk, to collect the payment from the customer and process the cash receipt. Nelson then records the cash receipts in the cash receipts journal. Nelson prepares the deposit slips for the funds to be

deposited into the bank along with the checks. The remittance advice is sent to the general ledger department to update the accounts receivable records and is then filed in the billing department. Finally, Nelson prepares the cash receipt journal, out of which comes a journal voucher that is sent to the general ledger department.

Luis Gonzalez, the general ledger clerk, prepares the account summary and journal voucher, which is used to update the general ledger. The account summary and journal voucher is put into the files for record. Gonzalez uses the remittance advice copy sent from the mail room, the deposit slip copy from the bank, and the journal voucher from the account summary to reconcile the deposit slips. He then reconciles the deposit slips from the bank with the totals from the accounts receivable and mail room.

1. Analyze the current system and identify specific internal control problems.

Anna and Bess share partnership profits and losses at 60% and 40%, respectively. The partners agree to admit Cal into the partnership for a 50% interest in capital and earnings. Capital accounts immediately before the admission of Cal are: Anna (60%) $ 300,000 Bess (40%) 300,000 Total $ 600,000

Part 1: Prepare the journal entry(s) for the admission of Cal to the partnership, assuming Cal invested $400,000 for the ownership interest and that this is a fair price for that share of the partnership to be acquired. Cal paid the money directly to Anna and to Bess for 50% of each of their respective capital interests. The partnership records goodwill.

Part 2: Prepare the journal entry(s) for the admission of Cal to the partnership, assuming Cal invested $500,000 for the ownership interest. Cal paid the money to the partnership for a 50% interest in capital and earnings. Assume the valuation is based on the capital of the current partnership, which is fairly valued. The partnership records goodwill.

Part 3: Prepare the journal entry(s) for the admission of Cal to the partnership, assuming Cal invested $700,000 for the ownership interest and that this is a fair price for that share of the partnership to be acquired. Cal paid the money to the partnership for a 50% interest in capital and earnings. The partnership records goodwill.

Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $530,900 224,000 February 591,900 250,000 March 418,300 162,000 April 567,500 242,000 May 476,000 195,000 June 610,200 263,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (Round to two decimal places.) $ per gross-ton mile Total fixed cost $

Following are the transactions of a new company called Pose-for-Pics.

Prepare general journal entries for the above transactions.