Can free cash flow be a negative number? What does a lack of free cash flow indicate for a business? Please indicate why free cash flow may be a better indicator than Cash Flows from Operating Activities of financial strength.

Hi-Tek Manufacturing, Inc., makes two types of industrial component parts—the B300 and the T500. An absorption costing income statement for the most recent period is shown:

Hi-Tek Manufacturing Inc. Income Statement
Sales	$	1,703,300
Cost of goods sold		1,222,248
Gross margin		481,052
Selling and administrative expenses		580,000
Net operating loss	$	(98,948	)

Hi-Tek produced and sold 60,400 units of B300 at a price of $20 per unit and 12,700 units of T500 at a price of $39 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below:

	B300		T500		Total
Direct materials	$	400,100	$	162,700	$	562,800
Direct labor	$	120,000	$	42,900		162,900
Manufacturing overhead						496,548
Cost of goods sold					$	1,222,248

The company has created an activity-based costing system to evaluate the profitability of its products. Hi-Tek’s ABC implementation team concluded that $54,000 and $103,000 of the company’s advertising expenses could be directly traced to B300 and T500, respectively. The remainder of the selling and administrative expenses was organization-sustaining in nature. The ABC team also distributed the company’s manufacturing overhead to four activities as shown below:

	Manufacturing Overhead			Activity
Activity Cost Pool (and Activity Measure)				B300	T500	Total
Machining (machine-hours)	$	205,288		90,600	62,600	153,200
Setups (setup hours)		129,360		74	220	294
Product-sustaining (number of products)		101,000		1	1	2
Other (organization-sustaining costs)		60,900		NA	NA	NA
Total manufacturing overhead cost	$	496,548

Required:

1. Compute the product margins for the B300 and T500 under the company’s traditional costing system.

2. Compute the product margins for B300 and T500 under the activity-based costing system.

3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.

Prepare a quantitative comparison of the traditional and activity-based cost assignments. (Round your intermediate calculations to 2 decimal places and "Percentage" answers to 1 decimal place and and other answers to the nearest whole dollar amounts.)

	B300 T500 Total % of % of Amount Amount Amount Traditional Cost System % % % % % % Total cost assigned to products $0 $0 $0 Total cost $0 B300 T500 Total % of % of Amount Total Amount Amount Total Amount Amount Activity-Based Costing System Direct costs: % % % % % % Indirect costs: % % % % % % Total cost assigned to products $0 $0 0 Costs not assigned to products: Total cost $0

​​​​​​​Vibrant Company had $910,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $505,000 in each of those years. It also maintained a $210,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $190,000 rather than the correct $210,000.

1. Determine the correct amount of the company’s gross profit in each of the years 2016–2018.
2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2016−2018.

Determine the correct amount of the company's gross profit in each of the years 2016−2018.

VIBRANT COMPANY Comparative Income Statements 2016 2017 2018 3-year total Cost of goods sold Cost of goods sold Gross profit

Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2016−2018.

VIBRANT COMPANY Comparative Income Statements 2016 2017 2018 3-year total Cost of goods sold Cost of goods sold Gross profit

Laker Company reported the following January purchases and sales data for its only product.
  

Date		Activities	Units Acquired at Cost								Units sold at Retail
Jan.	1	Beginning inventory	165	units	@	$	9.00	=	$	1,485
Jan.	10	Sales										125	units	@	$	18.00
Jan.	20	Purchase	110	units	@	$	8.00	=		880
Jan.	25	Sales										125	units	@	$	18.00
Jan.	30	Purchase	250	units	@	$	7.50	=		1,875
		Totals	525	units					$	4,240		250	units

rev: 09_15_2017_QC_CS-99723

Required:

The Company uses a periodic inventory system. For specific identification, ending inventory consists of 275 units, where 250 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO

Complete this questions by entering your answers in the below tabs.

• Specific Id

• Weighted Average
• FIFO
• LIFO

Determine the cost assigned to ending inventory and to cost of goods sold using specific identification. For specific identification, ending inventory consists of 275 units, where 250 are from the January 30 purchase, 5 are from the January 20 purchase, and 20 are from beginning inventory.

Determine the cost assigned to ending inventory and to cost of goods sold using weighted average.

b) Average Cost	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Average Cost per unit	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning inventory
Purchases:
Jan. 20
Jan. 30
Total	0		$0			$0			$0

Statutory employee versus independent contractor versus employee

A University considers its adjunct professors to be employees, and as employees the University withholds employee taxes on earnings. Full-time professors, unlike the adjunct professors, pay into their own retirement system and not social security.

There is a private letter ruling which states online instructors should or could be considered statuary employees. A statuary employee is one that gets no taxes withheld other than social security and still receives a W-2. A statutory employee can then use Schedule C to deduct any expenses. The advantage of being a statutory employee is that the employee can then write off any expenses directly associated with teaching, including the cost of laptops, internet service, software and other expenses. In other words, a statutory employee would not be limited to the Schedule A limitation of deducting expenses that only exceed 7.5% of adjusted gross income.

The University does not make this distinction between statutory employee versus employee.

Share your thoughts on whether the University is treating its adjunct professors correctly. Share your thoughts on whether its adjunct professors (or anyone else that is doing work for the benefit of an organization on a part time basis) would be better off being treated as a statutory employee, employee or independent contractor.

What would the calculations look like for Starbucks 2018 annual report on the listed ratio?

ROE =Net income - preferred dividends/Average common stockholders' equity

My number feels incorrect and i'm trying to see where I went wrong. I used 4518.3(Net income), couldn't find preferred dividends and (1175.8(2018)+5457(2017))/2= 1394.6 (Average common stockholders' equity).

I am questioning if I pulled the correct numbers from the annual report. My ratio was 136%, if that is correct what does it mean being such a high number?

Rutter Inc. granted 300,000 stock options to executives and employees on January 1, 2017. The options have a strike price is $10 per share and expire in 2019. The par value of the common stock is $1. Using an option pricing model, the company calculates a fair value of $20 per share. The expected service period, or benefit period, is 3 years.

a. Prepare the journal entries for 2017 and 2018.

b. In 2019, 30% of the options are exercised and the remaining options expire.

Western World Inc. issues $30,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares of the company’s $1 par common stock. The bonds are issued at 102 on January 1, 2019 and pay interest in Jan and July and mature on January 1, 2024. On July 1, 2020, 30% of the bonds are converted when the stock price is $80 per share and 30% of the bond premium has been amortized.

Record the following transactions:

a. Bond as issuance

b. Conversion of $30,000,000 in bonds to common stock.

1. Distinguish between managerial and financial accounting
   • Primary Users of Reports
   • Types and frequency of reports (examples)
   • Purpose of Reports ( examples)
2. What is the value chain? example

Houston-based Advanced Electronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 43,000 speaker sets:

Sales	$	3,526,000
Variable costs		881,500
Fixed costs		2,310,000

Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs. Variable costs are expected to average $18.00 per set; annual fixed costs are anticipated to be $1,988,000. (In the following requirements, ignore income taxes.)

Required:

1. Calculate the company’s current income and determine the level of dollar sales needed to double that figure, assuming that manufacturing operations remain in the United States.
2. Determine the break-even point in speaker sets if operations are shifted to Mexico.
3. Assume that management desires to achieve the Mexican break-even point; however, operations will remain in the United States.
   1. If variable costs remain constant, by how much must fixed costs change?
   2. If fixed costs remain constant, by how much must unit variable cost change?
4. Determine the impact (increase, decrease, or no effect) of the following operating changes.

Current Attempt in Progress

The condensed financial statements of Oriole Company for the years 2016 and 2017 are presented as follows. (Amounts in thousands.)

ORIOLE COMPANY Balance Sheets December 31
		2017		2016
Current assets
Cash and cash equivalents		$330		$360
Accounts receivable (net)		640		570
Inventory		540		470
Prepaid expenses		120		160
Total current assets		1,630		1,560
Investments		180		180
Property, plant, and equipment (net)		420		380
Intangibles and other assets		530		510
Total assets		$2,760		$2,630
Current liabilities		$1,070		$960
Long-term liabilities		490		460
Stockholders’ equity—common		1,200		1,210
Total liabilities and stockholders’ equity		$2,760		$2,630

ORIOLE COMPANY Income Statements For the Year Ended December 31
		2017		2016
Sales revenue		$3,880		$3,540
Costs and expenses
Cost of goods sold		1,125		1,060
Selling & administrative expenses		2,400		2,330
Interest expense		25		20
Total costs and expenses		3,550		3,410
Income before income taxes		330		130
Income tax expense		99		39
Net income		$ 231		$ 91

Compute the following ratios for 2017 and 2016. (Round current ratio and inventory turnover to 2 decimal places, e.g. 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 12.6%.)

(a)		Current ratio.
(b)		Inventory turnover. (Inventory on 12/31/15, was $360.)
(c)		Profit margin.
(d)		Return on assets. (Assets on 12/31/15, were $1,910.)
(e)		Return on common stockholders’ equity. (Stockholders’ equity on 12/31/15, was $920.)
(f)		Debt to assets ratio.
(g)		Times interest earned.

		2017			2016
Current ratio.		Enter a number rounded to 2 decimal places	:1		Enter a number rounded to 2 decimal places	:1
Inventory turnover.		Enter a number rounded to 2 decimal places			Enter a number rounded to 2 decimal places
Profit margin.		Enter percentages rounded to 1 decimal place	%		Enter percentages rounded to 1 decimal place	%
Return on assets.		Enter percentages rounded to 1 decimal place	%		Enter percentages rounded to 1 decimal place	%
Return on common stockholders’ equity.		Enter percentages rounded to 1 decimal place	%		Enter percentages rounded to 1 decimal place	%
Debt to assets ratio.		Enter percentages rounded to 1 decimal place	%		Enter percentages rounded to 1 decimal place	%
Times interest earned.		Enter a number rounded to 1 decimal place	times		Enter a number rounded to 1 decimal place	times

Sonia Inc. entered into a contract with Lala Inc. on July 1, 2018 to construct an office building. The total contract price for construction of the building is $400,000. The building was completed on December 31, 2020. Sonia’s fiscal year end is December 31.

Below is related information of Sonia Inc. regarding this construction:

	2018	2019	2020
Actual cost incurred during the year	$35,000	$215,000	$175,000
Estimated costs to complete	315,000	170,000	0
Billings to Lala Inc. to date	72,000	217,000	400,000

Please answer each of the following questions and clearly label which question you are answering. You can prepare it in Word, in Excel, or handwrite it. Once completed, upload the completed Word or Excel document or a picture of the handwritten work (22 points).

Please use the percentage-of-completion method for items 1-5.

1. Prepare journal entries for the actual construction costs incurred and billings made in 2018. (4 points)

1. Calculate the amount of revenue and gross profit or loss to be recognized in 2018. Please show supporting calculations. (5 points)

1. Prepare the adjusting journal entry for 2018 to record revenue recognition and gross profit/loss. (3 points)

1. Prepare a partial balance sheet for 2018 relating to the contract. You do NOT need to include Cash and Accounts Receivable in your answer. Be sure to indicate whether an item is an asset or liability. Please show supporting calculations. (3 points)

1. Calculate the amount of revenue and gross profit or loss to be recognized in 2019. Please show supporting calculations. If needed, round the percentage calculation to the fourth decimal (e.g. 22.36%) and round the dollar amount to the whole dollar. (5 points)

Please use the completed contract method for item 6.

1. Using the completed contract method, how much revenue would be recognized in 2018? (2 points)

Budgets: Discussion question

RD Ltd. is in the process of preparing its budgets for 2020. The company produces and sells a single product, Z, which currently has a selling price of £100 for each unit.

The budgeted sales units for 2020 are expected to be as follows:

Jan	Feb	Mar	Apr	May	Jun	July	Aug	Sep	Oct	Nov	Dec
5,000	5,500	6,000	6,000	6,250	6,500	6,250	7,000	7,500	7,750	8,000	7,500

The company expects to sell 7,000 units in January 2021.

The selling price for each unit will be increased by 15% with effect from 1 March 2020.

1,000 units of finished goods are expected to be in stock at the end of 2019. It is company policy to hold a closing stock balance of finished goods equal to 20% of the following month’s sales.

Each unit of Z produced requires 3 kgs of material X, which currently costs £5 for each kg. The price for each kg is expected to increase by 10% on 1 June 2020.

Stock of raw material at the end of 2019 is expected to be 3,750 kgs. The company wishes to avoid any stock-outs and requires the closing stock of raw materials to be set at 20% of the following month’s production requirements.

A purchase of fixed asset will be made in March, £50,000 – payment will be made in four equal installments starting in June. Opening cash balance of £20, 000.

The production of each unit of Z requires 4 hours of skilled labour and 2 hours of unskilled labour. Skilled labour is paid at a rate of £10 for each hour and unskilled labour at £8 for each hour. Each worker is expected to work 40 hours each week, 48 weeks each year.

Taxation on 2019’s profit will be paid in March and this am­­­­ounts to £15, 000. Fixed overhead including depreciation of £550 is £3,000 per month and this is expected to increase in May to £3,500.

Required:

Prepare the following budgets for the first six months of 2020.

(a) The sales budget (in value)                                   

(b) The production budget (in units)                        

(c) The material usage budget (in value)                

(d) The material purchase budget (in value)         

(e) The direct labour budget (in hours)                                                   

(f) Cash budget