Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:
Cash | $ |
62,000 |
||
Accounts receivable |
217,600 |
|||
Inventory |
61,050 |
|||
Buildings and equipment (net) |
372,000 |
|||
Accounts payable | $ |
91,725 |
||
Common stock |
500,000 |
|||
Retained earnings |
120,925 |
|||
$ |
712,650 |
$ |
712,650 |
|
Actual sales for December and budgeted sales for the next four months are as follows:
December(actual) | $ |
272,000 |
January | $ |
407,000 |
February | $ |
604,000 |
March | $ |
319,000 |
April | $ |
215,000 |
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.
The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
Monthly expenses are budgeted as follows: salaries and wages, $37,000 per month: advertising, $59,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,620 for the quarter.
Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.
One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.
During February, the company will purchase a new copy machine for $3,200 cash. During March, other equipment will be purchased for cash at a cost of $81,000.
During January, the company will declare and pay $45,000 in cash dividends.
Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. 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 it is able, repay the loan plus accumulated interest at the end of the quarter.
Complete the cash budget. (Cash deficiency, repayments and interest should be indicated by a minus sign.)
|
In: Accounting
Cost Accounting II
Assignment III
(LO 7)
McLynn, Inc. is considering the purchase of a new machine that will cost $ Plug in the last 6 digits of your ID. The machine has an estimated useful life of 3 years. Assume that the company uses the straight-line method. The new machine will have a $10,000 salvage value at the end of its estimated useful life. The machine is expected to save the company $85,000 per year in operating expenses excluding depreciation expense. Cash flow from terminal disposal of motor $8,000. McLynn uses a 40% estimated income tax rate and a 16% required rate of return to evaluate capital projects.
Discount rates for a 16% rate are as follows:
Present Value of an
Present Value of $1 Ordinary Annuity of $1
Year 1 .862 .862
Year 2 .743 1.605
Year 3 .641 2.246
Instructions: Using excel
Calculate (a) net present value, (b) payback period, (c) discounted payback period
ID# 170022
In: Accounting
This year Jack intends to file a married-joint return. Jack received $172500 of salary and paid $5000 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid qualified moving expenses of $4300 and $28300 of alimony. (Do not round intermediate calculations.)
A.what is jack adjusted gross income
B.Suppose that jack also reported income of $8800 from a half share of profits from a partnership. Disregard any potential self employment taxes on this income. What AGI would jack report under these circumstances?
In: Accounting
Crane Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes.
Sales price$34
Variable cost of goods sold10
Variable selling expenses9.0
Variable administrative expenses3
Annual fixed expenses
Overhead$6,396,000
Selling expenses1,353,000
Administrative expenses2,583,000
Crane can produce 1,230,000 million cases a year. The projected
net income for the coming year is expected to be $1,476,000
million. Crane is subject to a 40% income tax rate.
During the planning sessions, Crane’s managers have been reviewing
costs and expenses. They estimate that the company’s variable cost
of goods sold will increase 15% in the coming year and that fixed
administrative expenses will increase by $123,000. All other costs
and expenses are expected to remain the same.
What amount of sales revenue will Crane need to achieve in the coming year to earn the projected net income of $1,476,000 million?
What price would Crane need to charge for the briefcase in the coming year to maintain the current year’s contribution margin ratio?
In: Accounting
Little Ricky's Village People Shop Inc.'s income statement for the year ending 12/31/18 showed that the company had a net loss of ($35,000). Is it still possible for Little Ricky's to have had a net cash inflow from operating activities for the year when using the indirect method for its cash flow statement? Explain your answer and give two examples (with numbers you make up) to support your argument. Use complete sentences.
In: Accounting
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates:
Activity Cost Pool Activity Rate
Supporting direct labor ....................... $26 per direct labor-hour
Order processing ................................ $284 per order
Custom design processing ................. $186 per custom design
Customer service ............................... $379 per customer
Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months:
Standard model |
Custom Design |
|
Number of gliders |
20 |
3 |
Number of orders |
1 |
3 |
Number of custom designs |
0 |
3 |
Direct labor-hours per glider |
26.35 |
28 |
Selling price per glider |
$ 1850 |
$ 2400 |
Direct materials cost per glider |
$ 564 |
$ 634 |
The company’s direct labor rate is $19.50 per hour.
Required:
Using the company’s activity-based costing system, compute the total customer margin.
In: Accounting
South Airlines purchased a 747 aircraft on January 1, 2019, at a cost of $35,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $5,000,000. Instructions
(a) Compute the depreciation for 2019 and 2020 using the straight-line method and the double-declining-balance method.
(b) under each method, what is the book value after two years on December 31, 2020?
In: Accounting
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates:
Activity Cost Pool Activity Rate
Supporting direct labor ....................... $26 per direct labor-hour
Order processing ................................ $284 per order
Custom design processing ................. $186 per custom design
Customer service ............................... $379 per customer
Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months:
Standard model |
Custom Design |
|
Number of gliders |
20 |
3 |
Number of orders |
1 |
3 |
Number of custom designs |
0 |
3 |
Direct labor-hours per glider |
26.35 |
28 |
Selling price per glider |
$ 1850 |
$ 2400 |
Direct materials cost per glider |
$ 564 |
$ 634 |
The company’s direct labor rate is $19.50 per hour.
Required:
Using the company’s activity-based costing system, compute the total direct material.
In: Accounting
Measures of liquidity, Solvency, and Profitability
The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 62 on December 31, 20Y2.
Marshall Inc. | ||||||
Comparative Retained Earnings Statement | ||||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||||
20Y2 | 20Y1 | |||||
Retained earnings, January 1 | $ 3,614,400 | $ 3,055,100 | ||||
Net income | 817,600 | 625,700 | ||||
Total | $4,432,000 | $ 3,680,800 | ||||
Dividends: | ||||||
On preferred stock | $ 10,500 | $ 10,500 | ||||
On common stock | 55,900 | 55,900 | ||||
Total dividends | $ 66,400 | $ 66,400 | ||||
Retained earnings, December 31 | $ 4,365,600 | $ 3,614,400 |
Marshall Inc. | ||||
Comparative Income Statement | ||||
For the Years Ended December 31, 20Y2 and 20Y1 | ||||
20Y2 | 20Y1 | |||
Sales | $ 5,101,970 | $ 4,700,720 | ||
Cost of goods sold | 1,696,520 | 1,560,800 | ||
Gross profit | $ 3,405,450 | $ 3,139,920 | ||
Selling expenses | $ 1,194,050 | $ 1,450,030 | ||
Administrative expenses | 1,017,160 | 851,600 | ||
Total operating expenses | $2,211,210 | $2,301,630 | ||
Income from operations | $ 1,194,240 | $ 838,290 | ||
Other revenue | 62,860 | 53,510 | ||
$ 1,257,100 | $ 891,800 | |||
Other expense (interest) | 328,000 | 180,800 | ||
Income before income tax | $ 929,100 | $ 711,000 | ||
Income tax expense | 111,500 | 85,300 | ||
Net income | $ 817,600 | $ 625,700 |
Marshall Inc. | |||||||
Comparative Balance Sheet | |||||||
December 31, 20Y2 and 20Y1 | |||||||
20Y2 | 20Y1 | ||||||
Assets | |||||||
Current assets | |||||||
Cash | $ 924,380 | $ 797,480 | |||||
Marketable securities | 1,399,060 | 1,321,530 | |||||
Accounts receivable (net) | 905,200 | 854,100 | |||||
Inventories | 686,200 | 525,600 | |||||
Prepaid expenses | 174,888 | 159,500 | |||||
Total current assets | $ 4,089,728 | $ 3,658,210 | |||||
Long-term investments | 1,933,912 | 467,256 | |||||
Property, plant, and equipment (net) | 5,330,000 | 4,797,000 | |||||
Total assets | $ 11,353,640 | $ 8,922,466 | |||||
Liabilities | |||||||
Current liabilities | $ 1,278,040 | $ 1,438,066 | |||||
Long-term liabilities: | |||||||
Mortgage note payable, 8% | $ 1,840,000 | $ 0 | |||||
Bonds payable, 8% | 2,260,000 | 2,260,000 | |||||
Total long-term liabilities | $ 4,100,000 | $ 2,260,000 | |||||
Total liabilities | $ 5,378,040 | $ 3,698,066 | |||||
Stockholders' Equity | |||||||
Preferred $0.70 stock, $50 par | $ 750,000 | $ 750,000 | |||||
Common stock, $10 par | 860,000 | 860,000 | |||||
Retained earnings | 4,365,600 | 3,614,400 | |||||
Total stockholders' equity | $ 5,975,600 | $ 5,224,400 | |||||
Total liabilities and stockholders' equity | $ 11,353,640 | $ 8,922,466 |
Required:
Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.
10. Times interest earned | ||
11. Asset turnover | ||
12. Return on total assets | % | |
13. Return on stockholders’ equity | % | |
14. Return on common stockholders’ equity |
In: Accounting
Problem 1-25 Traditional and Contribution Format Income Statements [LO1-6] Milden Company is a merchandiser that plans to sell 31,000 units during the next quarter at a selling price of $58 per unit. The company also gathered the following cost estimates for the next quarter: Cost Cost Formula Cost of good sold $28 per unit sold Advertising expense $178,000 per quarter Sales commissions 5% of sales Shipping expense $48,000 per quarter + $5.00 per unit sold Administrative salaries $88,000 per quarter Insurance expense $9,800 per quarter Depreciation expense $58,000 per quarter Required: 1. Prepare a contribution format income statement for the next quarter. 2. Prepare a traditional format income statement for the next quarter.
In: Accounting
Tax Year 2019
This year Jack intends to file a married-joint return. Jack received $173,400 of salary and paid $8,600 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid moving expenses of $4,550 and $30,055 of alimony to his ex-wife, Diane, who divorced him in 2012. (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
a. What is Jack’s adjusted gross income?
In: Accounting
TG manufactures Product Z. Its standard selling price is $55. The production and sales budget for the quarter ended 31 March 20X3 was 7,500 units. The standard specification per unit of Product Z comprises: Direct labour 4 standard hours at $6/hour Direct material 1.2 kg at $10/kg Standard variable overhead 4 standard hours at $1/hour Budgeted fixed overhead $75,000 At the end of the quarter the management accounts showed the following:
Production and sales of product Z in units: 7700
Actual sales revenue: $424270
Actual direct labour (31,750): $192577
Actual direct material (8855 kg) : $89436
Actual fixed overhead: $72400
(a) Prepare a statement reconciling budgeted and actual profit in the quarter, using absorption costing.
(b) Prepare a statement reconciling budgeted and actual profit in the quarter, using marginal costing.
In: Accounting
An acquirer made the following entry to report an acquisition:
Debit |
Credit |
||
Tangible assets |
4,000 |
||
Customer lists |
600 |
||
Goodwill |
1,000 |
||
Liabilities |
2,000 |
||
Cash |
3,600 |
Six months after the acquisition, the customer lists are determined to be worthless.
Using a T-account template:
In: Accounting
Westerville Company reported the following results from last year’s operations:
Sales | $ | 1,400,000 |
Variable expenses | 720,000 | |
Contribution margin | 680,000 | |
Fixed expenses | 470,000 | |
Net operating income | $ | 210,000 |
Average operating assets | $ | 875,000 |
At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:
Sales | $ | 560,000 | |
Contribution margin ratio | 70 | % of sales | |
Fixed expenses | $ | 336,000 | |
The company’s minimum required rate of return is 15%.
1. What is the ROI related to this year’s investment opportunity?
2. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year?
3. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
4. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year?
5. What is last year’s residual income?
6. What is the residual income of this year’s investment opportunity?
In: Accounting
Cloud Productivity Inc. uses flexible budgets that are based on the following data: Sales commissions 15% of sales Advertising expense 18% of sales Miscellaneous administrative expense $8,500 per month plus 12% of sales Office salaries expense $30,000 per month Customer support expenses $13,000 per month plus 20% of sales Research and development expense $32,000 per month Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.) Cloud Productivity Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending March 31 Total sales $400000 $500000 $600000 Variable cost: Sales commissions $ $ $ Advertising expense Miscellaneous administrative expense Customer support expenses Total variable cost $ $ $ Fixed cost: Miscellaneous administrative expense $ $ $ Office salaries expense Customer support expenses Research and development expense Total fixed cost $ $ $ Total selling and administrative expenses $ $ $
In: Accounting