nswer the following questions:

1. The launch of a new product is under consideration. Its unit variable costs will be £30 and it is estimated that incremental fixed costs of £250,000 will be incurred if production is commenced. Forecast sales are 50,000 units. At what level of price for the new product will the organisation break even? If the actual planned selling price is £48 per unit, what will be the organisation’s margin of safety?
   
2. The following information is about two organisations, A and B.

• Which firm has higher operating gearing?
• What is the expected net income of both firms?
• What would expected net income be for both firms if sales were a) 140,000 units and b) 180,000 units?
• Which firm is facing more risk in terms of its current sales predictions?

Be sure to demonstrate your numerical workings.

The net income reported on the income statement of CamilloX Inc. for the current year was $150,000. Depreciation recorded on equipment and building amounted to $45,000 for the year.  Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

Safe Inc. is a service firm that sells home security systems, which it installs and maintains. After the sales force makes initial contact with a new customer and completes the sale, setting up the new service requires two processes: (1) a home visit where the equipment is physically installed and (2) the remote connection from off-site at corporate headquarters. Given the different levels of skill and work required, Safe Inc. tracks costs separately for the Installation and Connection processes. Nevertheless, given the relative simplicity of these processes, Safe Inc. tracks them both on a single product cost report with one direct materials category for the equipment and two conversion cost categories for installation and connection services. Assume that all home installations are completed the same day they are started. After installation, there is sometimes a delay of up to two days before the remote connection is completed. However, in the ideal situation, both the home installation and connection are completed on the same day. What is Safe Inc.’s ending Cost of Contracts Completed and Incomplete Contracts for July, assuming it uses the FIFO costing method? Page 2 * The sales team closed 2,050 new security contracts during July. * Safe Inc. pays its suppliers $400, on average, to purchase one security system. However, the price experiences some variation due to fluctuations in suppliers cost of raw materials. * On average, the installation of each system requires approximately 3 labor hours and establishing and testing the connection requires 2 labor hours. However, Safe Inc. does encounter some variation across employees. * Labor and overhead costs for installation is approximately $20/hour. * Labor and overhead costs for connection costs approximately $35/hour. * Assume that the contracts outstanding at the beginning of July include $1,206 for equipment and $179 of installation costs. * Also assume that Safe Inc. actually incurs $816,270 for new equipment installed during July plus $119,652 of installation costs and $147,825 of connection-related costs. * At the beginning of July, Safe Inc. had 95 incomplete sales contracts. Of these incomplete contracts, 92 were awaiting both installation and connection and 3 had been installed but were still awaiting connection. * At the end of July, Safe Inc. had 120 incomplete sales contracts. Of these incomplete contracts, 114 jobs were awaiting both installation and connection and 6 jobs had been installed but were still awaiting connection.

2019 (Adjustment a) Dec. 31 Uncollectible Accounts Expense 4,290.00 Allowance for Doubtful Accounts 4,290.00 To record estimated loss from Uncollectible accounts based on 0.6% of net credit sales, $715,000 (Adjustment b) 31 Supplies Expense 3,700.00 Supplies 3,700.00 To record supplies used during the year (Adjustment c) 31 Insurance Expense 1,050.00 Prepaid Insurance 1,050.00 To record expired insurance on 1-year $4,200 policy purchased on Oct. 1 (Adjustment d) 31 Depreciation. Exp.—Store Equipment 13,300.00 Accum. Depreciation—Store Equip. 13,300.00 To record depreciation (Adjustment e) 31 Salaries Expense—Office 1,800.00 Salaries Payable 1,800.00 To record accrued salaries for Dec. 29–31 (Adjustment f) 31 Payroll Taxes Expense 137.70 Social Security Tax Payable 111.60 Medicare Tax Payable 26.10 To record accrued payroll taxes on accrued salaries: social security, 6.2% × 1,800 = $111.60; Medicare, 1.45% × 1,800 = $26.10 (Adjustment g) 31 Interest Expense 100.00 Interest Payable 100.00 To record accrued interest on a 4-month, 6% trade note payable dated Nov. 1: $10,000 × 0.06 × 2/12 = $100.00 (Adjustment h) 31 Interest Receivable 234.00 Interest Income 234.00 To record interest earned on 6-month, 8% note receivable dated Oct. 1: $7,800 × 0.12 × 3/12 = $234.00

Examine the above adjusting entries and determine which ones should be reversed. Show the reversing entries that should be recorded in the general journal as of January 1, 2020. (Record the entries in the order given. Round your answers to 2 decimal places.

The children's department of a major department store had $615,000 in merchandise at the beginning of the year During the year, $836,000 purchases were made. Assuming the yearend inventory was $573,200, what is the cost of goods sold? What was the total amount of merchandise available for sale?

According to the results, compare and contrast the cost elements associated with a retailer (or service-based business) and a manufacturer? What additional product costs must be recognized within a manufacturer? What additional factors must be recognized by a company that uses a JIT inventory system?

Net Present Value Method

The following data are accumulated by Paxton Company in evaluating the purchase of $98,100 of equipment, having a four-year useful life:

a. Assuming that the desired rate of return is 10%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.

b. Would management be likely to look with favor on the proposal? Yes or No

The net present value indicates that the return on the proposal is __________  than the minimum desired rate of return of 10%.

PIEPKORN MANUFACTURING WORKING CAPITAL MANAGEMENT, PART 1

You have recently been hired by Piepkorn Manufacturing to work in its newly established treasury department. Piepkorn Manufacturing is a small company that produces cardboard boxes in a variety of sizes. Gary Piepkorn, the owner of the company, works primarily in the sales and production areas. Currently, the company puts all receivables in one shoe box and all payables in another. Because of the disorganized system, the finance area needs work, and that's what you've been brought in to do. The company currently has a cash balance of $154,000 and plans to purchase new box folding machinery in the fourth quarter at a cost of $325,000. The purchase of the machinery will be made with cash because of the discount offered. The company's policy is to maintain a target cash balance of $100,000. All sales are in cash and all purchases are made on credit. Gary Piepkorn has projected the following gross sales for each of the next four quarters:

Gross sales for the first quarter of next year are projected at $908,000. Piepkorn typically orders 50 percent of next quarter's projected gross sales in the current quarter, and suppliers are typically paid in 53 days. Wages, taxes, and other costs run about 30 percent of gross sales. The company has a quarterly interest payment of $115,000 on its long-term debt. The company uses a local bank for its short-term financial needs. It pays 1.5 percent per quarter on all short-term borrowing and maintains a money market account that pays 1 percent per quarter on all short-term deposits. Gary has asked you to prepare a cash budget and short-term financial plan for the company under the current policies. He has also asked you to prepare additional plans based on changes in several inputs.

QUESTIONS

a. Use the numbers given to complete the cash budget and short-term financial plan.

b. Rework the cash budget and short-term financial plan assuming Piepkorn changes to a target balance of $80,000.

The Dawg corporation owns 13% of Company A and 23% of Company B. Dividends received from Company A were $104,000 and from Company B were $243,000. If Dawg's "adjusted" taxable income is $2,000,000, calculate Dawg's taxable income after including the dividend information.

Problem 20-6

Indigo Inc. has sponsored a noncontributory, defined benefit pension plan for its employees since 1994. Prior to 2017, cumulative net pension expense recognized equaled cumulative contributions to the plan. Other relevant information about the pension plan on January 1, 2017, is as follows.

1. The company has 200 employees. All these employees are expected to receive benefits under the plan. The average remaining service life per employee is 12 years.

2. The projected benefit obligation amounted to $4,952,000 and the fair value of pension plan assets was $3,032,000. The market-related asset value was also $3,032,000. Unrecognized prior service cost was $1,920,000.

On December 31, 2017, the projected benefit obligation and the accumulated benefit obligation were $4,907,000 and $4,064,000, respectively. The fair value of the pension plan assets amounted to $4,133,000 at the end of the year. A 10% settlement rate and a 10% expected asset return rate were used in the actuarial present value computations in the pension plan. The present value of benefits attributed by the pension benefit formula to employee service in 2017 amounted to $201,000. The employer’s contribution to the plan assets amounted to $762,000 in 2017. This problem assumes no payment of pension benefits.

Prepare a schedule, based on the average remaining life per employee, showing the prior service cost that would be amortized as a component of pension expense for 2017, 2018, and 2019. Compute pension expense for the year 2017. Compute pension expense for the year 2017.

Prepare the journal entries required to report the accounting for the company’s pension plan for 2017.

Required information

Schedules of Expected Cash Collections and Disbursements; Income Statement; Balance Sheet [LO8-2, LO8-4, LO8-9, LO8-10]

[The following information applies to the questions displayed below.]

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:

Exercise 8-12

Beech’s managers have made the following additional assumptions and estimates:

1. Estimated sales for July, August, September, and October will be $250,000, $270,000, $260,000, and $280,000, respectively.

2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.

3. Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.

4. Monthly selling and administrative expenses are always $46,000. Each month $5,000 of this total amount is depreciation expense and the remaining $41,000 relates to expenses that are paid in the month they are incurred.

5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.

Required:

1. Prepare a schedule of expected cash collections for July, August, and September.

2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.

2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September.

3. Prepare an income statement for the quarter ended September 30.

4. Prepare a balance sheet as of September 30.

With alternative choice decisions, managers seek to choose the alternative most likely to accomplish the objectives of the organization. In addition to ROI, discuss other business objectives that may be important in the choice of the best alternative.

When the computerised information system is significant,the auditor should obtain an understanding of the environment and whether it may influence the various risks involved. Required:

(a) Explain five(5)internal control characteristic in a computerised environment

(b) Discuss any five(5) problems encountered by an auditor in computerised environment

(c) Identify an two(2) audit objectives in a computerised system

Drs. Glenn Feltham and David Ambrose began operations of their physical therapy clinic, called Northland Physical Therapy, on January 1, 2017. The annual reporting period ends December 31. The trial balance on January 1, 2018, was as follows (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2018 (summarized in thousands of dollars) follow:

1. Borrowed $27 cash on July 1, 2018, signing a six-month note payable.
2. Purchased equipment for $30 cash on July 2, 2018.
3. Issued additional shares of common stock for $4 on July 3.
4. Purchased software on July 4, $4 cash.
5. Purchased supplies on July 5 on account for future use, $6.
6. Recorded revenues on December 6 of $62, including $10 on credit and $52 received in cash.
7. Recognized salaries and wages expense on December 7 of $35; paid in cash.
8. Collected accounts receivable on December 8, $7.
9. Paid accounts payable on December 9, $8.
10. Received a $4 cash deposit on December 10 from a hospital for a contract to start January 5, 2019.

Data for adjusting journal entries on December 31:

11. Amortization for 2018, $1.
12. Supplies of $4 were counted on December 31, 2018.
13. Depreciation for 2018, $2.
14. Accrued interest of $1 on notes payable.
15. Salaries and wages incurred but not yet paid or recorded, $2.
16. Income tax expense for 2018 was $5 and will be paid in 2019.

1. 9-a. How much net income did the physical therapy clinic generate during 2018? What was its net profit margin?

2. 9-b. Is the business financed primarily by liabilities or stockholders’ equity?

3. 9-c. What is its current ratio?

REQUIRED:
9A. How much net income did the physical therapy clinic generate during 2018? What was its net profit margin?

9B. Is the business financed primarily by liabilities or stockholders’ equity? Yes or no

9C. What is its current ratio?

George loves pork and carrot. Therefore, he has decided to go on a steady diet of only these two foods (plus some liquids and vitamin and supplements) for all his meals. George realizes that this isn’t the healthiest diet, so he wants to make sure that he eats the right quantities of the two foods to satisfy some key nutritional requirements. He has obtained the following nutritional requirement. He has obtained the following nutritional and cost information.

George wishes to determine the number of daily servings (may be fractional) of pork and carrot that will meet this requirement at a minimum cost.

(a) Identify decision variables, objective function, and constraints and explain them in words, using at least 100 words

(b) Formulate a mathematical linear programming model using equations. Make sure you provide the exact descriptions of each variable and mathematical notations shown in the assignment guideline ppt.

(c) Solve a linear programming model for this problem on a spreadsheet, and interpret the results (meaning what is the optimal amount of daily serving for pork and carrot, and what is the minimum cost at the optimal servings of pork and carrot?), using at least 100 words

Why do we keep a petty cash fund. What do we debit and credit when we replenish it?

How does a bank reconciliation help us control cash?