On January 1, 2018, Water Wonderland issues $20 million of 7% bonds, due in nine years, with interest payable semiannually on June 30 and December 31 each year. Use Table 2 and Table 4. 1. If the market rate is 6%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. (Round "PV Factor" to 5 decimal places. Round other intermediate calculations and final answer to the nearest dollar amount. Enter your answer in dollars, not in millions.) 2. If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. (Round "PV Factor" to 5 decimal places. Round other intermediate calculations and final answer to the nearest dollar amount. Enter your answer in dollars, not in millions.) 3. If the market rate is 8%, will the bonds issue at face amount, a discount, or a premium? Calculate the issue price. (Round "PV Factor" to 5 decimal places. Round other intermediate calculations and final answer to the nearest dollar amount. Enter your answer in dollars, not in millions.)

Net Present Value Method

The following data are accumulated by Geddes Company in evaluating the purchase of $101,200 of equipment, having a four-year useful life:

a. Assuming that the desired rate of return is 12%, 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.

Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $28,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $148,000, Cost of Goods Sold - $88,000, Depreciation Expense - $44,000, Long-Term Capital Gains - $13,000, Qualified Dividends - $5,800, and Municipal Bond Interest - $3,800. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4?

• ($12,000).

• $6,400.

• $10,200.

• $16,000.

• None of the choices will be reported as ordinary business income (loss) on Schedule K-1.

Northern Illinois Manufacturing is preparing its budget for the coming year. The first step is to plan for the first quarter of the coming year. Northern Illinois gathered the following information from the managers.

Sales:

Northern Illinois wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.

Direct Materials:

The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.

Northern Illinois likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December 31 totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.

Direct Labor:

Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.

Manufacturing Overhead:

Selling and Administrative Expenses:

Variable selling and administrative cost per unit is $1.60.

Other Information:

The cash balance on December 31 totaled $100,500, but management has decided that it wants to maintain a cash balance of at least $800,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Northern Illinois borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Northern Illinois can pay the entire amount. A $500,000 equipment purchase is planned for February.

Instructions (Do all parts):

Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours. ALL IN EXCEL

e. Prepare a manufacturing overhead budget.

f. Prepare a selling and administrative budget.

g. Prepare a schedule for expected cash collections from customers.

h. Prepare a schedule for expected payments for materials purchases.

i. Prepare a cash budget.

Croy Inc. has the following projected sales for the next five months:   

Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $3.40 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,778 pounds.     

Required:

1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.)

2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.)

what are the benefits of becoming a CPA as an accounting student?

Transactions for Fixed Assets, Including Sale

The following transactions and adjusting entries were completed by Robinson Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.

Required:

Journalize the transactions and the adjusting entries. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Round your final answers to the nearest cent.

Acme Storage is evaluating an investment to produce a new product with an extended marketable life of 4 years. In order to produce this product, the company will have to acquire a piece of new equipment worth $400,000. The opportunity cost of borrowing for an asset which has a purchase price of $400,000 is 15%. Other details of each alternative are provided as follows:

Purchase:

This equipment can be depreciated at 30% reducing balance if owned, and has an expected salvage value of $100,000 after 4 years.

Lease:

If the lease is in advance, there will be four payments of $145,000 made at the beginning of each year and a residual payment of $40,000 made at the end of the term, i.e., at the end of year 4.

The company tax rate is 25%. Calculate the NPV of leasing and advise the company as to whether it should purchase or lease the equipment with payments made in advance?

Pat’s Pizzeria produces three types of deli style pizzas: Thin Crust, Deep Dish, and Stuffed Crust. Pat’s anticipated sales mix is 4:5:6 Thin:Deep:Stuffed. Current sales are 1,500 bundles per year.   

Fixed costs are estimated at $50,000, which include $44,000 for general overhead, such as rent, utilities, etc., and $6,000 for advertising. Pat’s tax rate is 20%.

Round all interim answers to 4 decimal places. For all questions, supporting calculations MUST be included.

1. What is the operating leverage ratio when 1,500 bundles are sold?

If sales increase by 15% from this level, by what percentage should Pat expect profit before tax to increase?

How much is this increase in dollars?

What is Pat’s expected profit before tax in dollars?

B. What is Pat’s margin of safety, in units of each type of pizza, at current level of sales?

C. Prepare a contribution margin income statement for the level of sales required to earn $100,000 of before tax profits. Show revenues and variable costs for each type of pizza in the contribution margin income statement.

D. If Pat increases advertising costs by 200%, sales of all types of pizzas are expected to increase by 12% above the original sales levels. Assuming the sales mix will remain the same, should Pat increase her advertising expenditure? Why or why not?

E. What is the minimum percentage sales would need to increase before Pat would consider the additional advertising? (Hint- at what point will she not lose anything?)

(Return to the original problem assumptions for parts F – G. Do not assume advertising has been increased.)

F. How many bundles of pizza will Pat have to sell to earn after-tax profits equal to 15% of revenue?

G. In analyzing results at the end of the year, Pat discovered that, although she sold 22,500 pizzas as planned, the actual sales mix was 6 Thin Crust, 6 Deep Dish, and 3 Stuffed Crust pizzas. How did Pat’s actual profit differ from her projected profit?   Explain why this happened.

The separate condensed balance sheet of Patrick Corporation and its wholly-owned subsidiary, Sean Corporation, are as follows:

Additional Information:
* On December 31, 2020, Patrick acquired 100% of Sean’s voting stock in exchange for $460,000.
* At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $25,000 more than their carrying amounts.

1. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total assets should be reported?

2. In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount
of total stockholders’ equity should be reported?

As a recently hired MBA intern, you are working in a consulting capacity to provide an analysis for Al Dente's Italian Restaurant. A financial income Statement is presented below: Sales $2,698,000 Cost of sales (all variable) $1,557,563 Gross Margin $1,140,438 Operating expenses: Variable $277,975 Fixed $213,675 Total operating expenses: $491,650 Administative expenses (all fixed) $564,375 Net operating income $84,413 This income statement presents the sales, expenses and pre-tax operating income for a local eating facility. At Al Dente, the average meal cost for lunches and dinners are $20 and $40 respectively. Al Dente serves both lunch and dinner 300 days per year and serves twice as many lunches as dinners. As the MBA intern you are to prepare a managerial accounting focused report to the owners of Al Dente's Italian Restaurant, to include the following:

1. Prepare a contribution margin income statement using the given financial data. Use the following format:

Sales

Variable costs

Cost of sales

Operating

Total variable costs

Contribution margin

Fixed costs

Operating

Administrative

Total fixed costs

Net operating income

Lionel Corporation manufactures pharmaceutical products sold through a network of sales agents in the United States and Canada. The agents are currently paid an 18% commission on sales; that percentage was used when Lionel prepared the following budgeted income statement for the fiscal year ending June 30, 2019:

Since the completion of the income statement, Lionel has learned that its sales agents are requiring a 5% increase in their commission rate (to 23%) for the upcoming year. As a result, Lionel’s president has decided to investigate the possibility of hiring its own sales staff in place of the network of sales agents and has asked Alan Chen, Lionel’s controller, to gather information on the costs associated with this change.

Alan estimates that Lionel must hire eight salespeople to cover the current market area, at an average annual payroll cost for each employee of $80,000, including fringe benefits expense. Travel and entertainment expenses is expected to total $700,000 for the year, and the annual cost of hiring a sales manager and sales secretary will be $200,000. In addition to their salaries, the eight salespeople will each earn commissions at the rate of 10% of sales. The president believes that Lionel also should increase its advertising budget by $600,000 if the eight salespeople are hired.

Required

1. Determine Lionel’s breakeven point (operating profit = 0) in sales dollars for the fiscal year ending June 30, 2019, if the company hires its own sales force and increases its advertising costs. Prove this by constructing a contribution income statement.

2. If Lionel continues to sell through its network of sales agents and pays the higher commission rate, determine the estimated volume in sales dollars that would be required to generate the operating profit as projected in the budgeted income statement.

Question 5

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ROI and Residual Income:
Impact of a New Investment
The Mustang Division of Detroit Motors had an operating income of $700,000 and net assets of $4,000,000. Detroit Motors has a target rate of return of 16 percent.

(a) Compute the return on investment. (Round your answer to three decimal places.)
Answer

(b) Compute the residual income.
$Answer

(c) The Mustang Division has an opportunity to increase operating income by $200,000 with an $950,000 investment in assets.

1. Compute the Mustang Division's return on investment if the project is undertaken. (Round your answer to three decimal places.)
Answer

2. Compute the Mustang Division's residual income if the project is undertaken.
$Answer

The companies Act, 71 of 2008, allows for the board of a company to appoint a number of committees.

1. How can one ensure that committees, once they are established, functions effectively.

2.Do you think that it is correct to say that king IV is silent on the issue of committees? Fully motivate your answer.

3.The establishment of an audit committee is a legislative requirements. Describe the responsibilities of the Audit committee as reflected in the companies Act.

Question 3

3.1 King IV establishes principles and make recommendations in relation to "ethical leadership" and the establishment of an "ethical culture" in organization. List the relevant principles and discuss the recommendations made by king IV on how to implement these principles in your organization.

3.2 The issue of "responsible investing" has become very important n recent years.

3.2.1 Explain what the objectives were when the code for responsible investing in south Africa (CRISA) was when it was launched in 2012?

3.2.2 To whom was it applicable?

3.2.3 Discuss the principles that it wishes to establish.

3.3.4 Describe how the CRISA principles relate to principle 17 of king IV.

3