At the beginning of 20X1, the accounting records of Friends Corp. reported the following:

During the year, the company acquired and retired shares, while other shares were issued:

2. Calculate the closing balance in each account in shareholders’ equity. (Round intermediate calculations to 2 decimal places. Round your final answers to the nearest whole dollar.)

You are a financial manager for Zoom Corp., which manufactures bicycles. In the most recent fiscal year,                      
Zoom manufactured and sold 20,000 bicycles. Wheels, seats, and brake calipers are three components of                      
the bicycles currently manufactured by Zoom. Three different vendors have proposed to provide those                       
components to Zoom, and quoted prices (including shipping) for their delivery. Your task is to determine                      
which, if any, of these proposals should be accepted.                      

Prepare a make vs. buy incremental analysis for each possible course of action in an Excel worksheet. Your                      
grade will be based on the correctness of your answers, as well as the use of Excel. That is, where possible,                       
you should use formulas to get your answers, rather than keyed-in values. See your instructor for help with                       
Excel basics if you need it.                      

In a Word document, prepare a memo stating which of the proposals you suggest accepting, as well as the                      
basis for your conclusions. Also identify any nonfinancial factors you should consider before accepting any                      
of the outsourcing proposals.          

Below is cost data for Zoom's production of wheels, seats, and calipers. Outside suppliers have offered to                      
provide wheels for $6.90, seats for $9.39, and calipers for $2.14 per piece. Both wheels and seats are branded                      
with the Zoom logo, and that logo will need to be added at the Zoom factory at a cost of $0.50 each for any                      
of these components that are outsourced. For all three components, 75% of the fixed costs are avoidable, and                       
will be eliminated if the component's production is outsourced. In addition, seats and calipers are both                       
produced out of the same small factory space. If both seats and calipers were outsourced, Zoom could lease                      
the space out and increase net income by $6,000 per year, while eliminating all fixed costs for the two                      
components.                      
           

Hints: Prepare incremental analyses for each component separately. Make wheels vs. buy wheels, etc. Since                      
there are additional implications to outsourcing both seats and calipers, do a make vs. buy analysis assuming                      
both are outsourced. A correct solution, then, will likely have at least four incremental analyses.                      

The following items were selected from among the transactions completed by O’Donnel Co. during the current year:

The comparative balance sheet for company “Delta” in € for years 2017 and 2018 is
given below:

The income statement of company “Delta” for 2018 is also given below:

Required:
1. Prepare the cash flow statement using the indirect method. For your answer you
need to consider that company “Delta” has repurchased shares and it has
decreased respectively its share capital. (20%).
2. Which is the dividend payout ratio for “Delta” for year 2018? If the company
increases the dividend payout ratio by 10%, what would the effect be to the
retained earnings? (5%)
3. Is the increase of the dividend payout ratio a good signal and what is the impact
on the free cash flows? What do you think that an analyst should consider when

the dividend payout ratio increases? (max: 200 words) (5%)
4. What inferences can you draw from the analysis of “Delta” cash flows? Explain
briefly (max: 300 words) (10%)

What is controlling? Have you ever been controlled at work? Have you been orally warned or written up?

Optimum Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on November 30, 2019, the end of the fiscal year, the balances of selected accounts from the ledger of Optimum Weight Loss Co. are as follows: Accounts Payable $37,200 Accounts Receivable 118,550 Accumulated Depreciation-Equipment 187,000 Cash ? Equipment 477,200 Land 300,000 Prepaid Insurance 6,200 Prepaid Rent 21,900 Salaries Payable 9,300 Cheryl Viers, Capital 714,600 Supplies 4,500 Unearned Fees 17,300 Prepare a classified balance sheet that includes the correct balance for Cash. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary.

McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $990 per set and have a variable cost of $445 per set. The company has spent $155,000 for a marketing study that determined the company will sell 50,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,400 sets of its high-priced clubs. The high-priced clubs sell at $1,490 and have variable costs of $620. The company also will increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $175 per set. The fixed costs each year will be $9,600,000. The company has also spent $1,150,000 on research and development for the new clubs. The plant and equipment required will cost $30,800,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs also will require an increase in net working capital of $2,500,000 that will be returned at the end of the project. The tax rate is 21 percent and the cost of capital is 14 percent. Suppose you feel that the values are accurate to within only ±10 percent.

What are the best-case and worst-case NPVs? (Hint: The price and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are uncertain.) (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Best-case:
Worst-Case:

Appendix: Completing an End-of-Period Spreadsheet Alert Security Services Co. offers security services to business clients. Complete the following end-of-period spreadsheet for Alert Security Services Co. If a box does not require an entry, leave it blank. Alert Security Services Co. End-of-Period Spreadsheet (Work Sheet) For the Year Ended October 31, 2019 Adjusted Trial Balance Income Statement Balance Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash 250 Accounts Receivable 1,830 Supplies 83 Prepaid Insurance 62 Land 2,080 Equipment 832 Accum. Depr.-Equipment 166 Accounts Payable 749 Wages Payable 83 Brenda Schultz, Capital 3,620 Brenda Schultz, Drawing 166 Fees Earned 2,038 Wages Expense 499 Rent Expense 250 Insurance Expense 208 Utilities Expense 146 Supplies Expense 125 Depreciation Expense 83 Miscellaneous Expense 42 Totals 6,656 6,656 Net income (loss) Check My Work

Marine Supply Company manufactures boat products. Its products move through two departments: development and packaging. Production and cost data for the packaging department are as follows:

All materials are added at the beginning of the packaging process. Ending inventory consists of 24,000 units, 100% complete as to materials and 60% complete as to conversion.

Prepare a production cost report for the packaging department for March. Use the average cost method.

(Use either format shown in Chapter 18 or in my Chapter 18 HW solution.)

Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 31,000 $ 36,000 Remaining book value $ 24,000 - Overhaul needed now $ 23,000 - Annual cash operating costs $ 22,000 $ 19,500 Salvage value-now $ 5,000 - Salvage value-five years from now $ 20,000 $ 12,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 7% discount rate. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What is the net present value of the “keep the old truck” alternative? 2. What is the net present value of the “purchase the new truck” alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one?

The Questor Corporation has experienced the following sales pattern over a 10-year period:

Complete the table using a first-order exponential smoothing model with a w=0.9w=0.9 to forecast sales in 2017.

Ocean World is considering purchasing a water park in Charlotte, North Carolina, for $2,100,000. The new facility will generate annual net cash inflows of $535,000 for eight years. Engineers estimate that the facility will remain useful for eight years and have no residual value. The company uses straight-line depreciation. Its owners want payback in less than five years and an ARR of 10% or more. Management uses a 12% hurdle rate on investments of this nature. Requirements Requirement 1. Compute the payback period, the ARR, the NPV, and the approximate IRR of this investment Requirement 2. Recommend whether the company should invest in this project

On August 3, Cinco Construction purchased special-purpose equipment at a cost of $4,883,900. The useful life of the equipment was estimated to be eight years, with an estimated residual value of $95,890.

a. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the straight-line depreciation method (half-year convention).

b. Compute the depreciation expense to be recognized each calendar year for financial reporting purposes under the 200 percent declining-balance method (half-year convention) with a switch to straight-line when it will maximize depreciation expense.

c. Which of these two depreciation methods (straight-line or double-declining-balance) results in the highest net income for financial reporting purposes during the first two years of the equipment’s use?

Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, T-1 and T-2. The sales for T-2 are decreasing and the purchase costs are increasing. The firm might drop T-2 and sell only T-1. Barbour allocates fixed costs to products on the basis of sales revenue. When the president of Barbour saw the income statements (see below), he agreed that T-2 should be dropped. If T-2 is dropped, sales of T-1 are expected to increase by 10% next year, but the firm’s cost structure will remain the same. T-1 T-2 Sales $ 280,000 $ 324,000 Variable costs: Cost of goods sold 86,000 162,000 Selling & administrative 12,000 66,000 Contribution margin $ 182,000 $ 96,000 Fixed expenses: Fixed corporate costs 76,000 91,000 Fixed selling and administrative 28,000 37,000 Total fixed expenses $ 104,000 $ 128,000 Operating income $ 78,000 $ (32,000 ) Required: 1. Find the expected change in annual operating income by dropping T-2 and selling only T-1. 2. By what percentage would sales from T-1 have to increase in order to make up the financial loss from dropping T-2? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) 3. What is the required percentage increase in sales from T-1 to compensate for lost margin from T-2, if total fixed costs can be reduced by $52,500? (Enter your answer as a percentage rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)

Decker Manufacturing is preparing its master budget for the first quarter of the upcoming year. The following data pertain to Decker Manufacturing's operations 1: Data Table Current Assets as of December 31 (prior year): Cash $ 4,600 Accounts receivable, net $ 46,000 Inventory $ 15,500 Property, plant, and equipment, net $ 123,000 Accounts payable $ 43,000 Capital stock $ 124,000 Retained earnings $ 22,700 a. Actual sales in December were $71,000. Selling price per unit is projected to remain stable at $12 per unit throughout the budget period. Sales for the first five months of the upcoming year are budgeted to be as follows: January $ 99,600 February $ 118,800 March $ 115,200 April $ 108,000 May $ 103,200 b. Sales are 35% cash and 65% credit. All credit sales are collected in the month following the sale. c. Decker Manufacturing has a policy that states that each month's ending inventory of finished goods should be 10% of the following month's sales (in units). d. Of each month's direct material purchases, 20% are paid for in the month of purchase, while the remainder is paid for in the month following purchase. Three pounds of direct material is needed per unit at $2.00 per pound. Ending inventory of direct materials should be 20% of next month's production needs. e. Most of the labor at the manufacturing facility is indirect, but there is some direct labor incurred. The direct labor hours per unit is 0.05. The direct labor rate per hour is $9 per hour. All direct labor is paid for in the month in which the work is performed. The direct labor total cost for each of the upcoming three months is as follows: January $ 3,807 February $ 4,442 March $ 4,293 f. Monthly manufacturing overhead costs are $5,500 for factory rent, $2,900 for other fixed manufacturing expenses, and $1.10 per unit for variable manufacturing overhead. No depreciation is included in these figures. All expenses are paid in the month in which they are incurred. g. Computer equipment for the administrative offices will be purchased in the upcoming quarter. In January, Decker Manufacturing will purchase equipment for $5,000 (cash), while February's cash expenditure will be $12,200 and March's cash expenditure will be $16,600. h. Operating expenses are budgeted to be $1.25 per unit sold plus fixed operating expenses of $1,800 per month. All operating expenses are paid in the month in which they are incurred. No depreciation is included in these figures. i. Depreciation on the building and equipment for the general and administrative offices is budgeted to be $5,000 for the entire quarter, which includes depreciation on new acquisitions. j. Decker Manufacturing has a policy that the ending cash balance in each month must be at least $4,000. It has a line of credit with a local bank. The company can borrow in increments of $1,000 at the beginning of each month, up to a total outstanding loan balance of $150,000. The interest rate on these loans is 1% per month simple interest (not compounded). The company would pay down on the line of credit balance in increments of $1,000 if it has excess funds at the end of the quarter. The company would also pay the accumulated interest at the end of the quarter on the funds borrowed during the quarter. k. The company's income tax rate is projected to be 30% of operating income less interest expense. The company pays $10,000 cash at the end of February in estimated taxes. Requirement 1. Prepare a schedule of cash collections for January, February, and March, and for the quarter in total Requirement 2. Prepare a production budget. (Hint: Unit sales = Sales in dollars / Selling price per unit.) Requirement 3. Prepare a direct materials budget. (Round your answers to the nearest whole dollar.) Requirement 4. Prepare a cash payments budget for the direct material purchases from Requirement 3. (Round your answers to the nearest whole dollar.) Requirement 5. Prepare a cash payments budget for direct labor. Requirement 6. Prepare a cash payments budget for manufacturing overhead costs. (Round your answers to the nearest whole dollar.) Requirement 7. Prepare a cash payments budget for operating expenses. (Round your answers to the nearest whole dollar.) Requirement 8. Prepare a combined cash budget. (If a box is not used in the table leave the box empty; do not enter a zero. Use parentheses or a minus sign for negative cash balances and financing payments.) Requirement 9. Calculate the budgeted manufacturing cost per unit (assume that fixed manufacturing overhead is budgeted to be $0.80 per unit for the year). (Round your answer to the nearest cent Requirement 10. Prepare a budgeted income statement for the quarter ending March 31. (Hint: Cost of goods sold = Budgeted cost of manufacturing one unit x Number of units sold.) (Round your answers to the nearest whole dollar.)