Thornton Medical Clinic has budgeted the following cash flows:
| January | February | March | |||||||
| Cash receipts | $ | 116,000 | $ | 122,000 | $ | 142,000 | |||
| Cash payments | |||||||||
| For inventory purchases | 98,000 | 80,000 | 93,000 | ||||||
| For S&A expenses | 39,000 | 40,000 | 35,000 | ||||||
Thornton Medical had a cash balance of $16,000 on January 1. The company desires to maintain a cash cushion of $9,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per month. Repayments may be made in any amount available. Thornton pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year’s quarterly results.
Required
Prepare a cash budget. (Round intermediate and final answers to the nearest whole dollar amounts. Any repayments/shortage should be indicated with a minus sign. )
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Can you help me finish solving this question? Can you also show your work?
In: Accounting
| The Tarzan Company began business on 1/1/2016 when they issued the following; | |||||||||||
| 1000 shares of 200 par 8% preferred stock for $200,000 | |||||||||||
| 100,000 shares of $3 par common stock for $500,000 | |||||||||||
| In 2016 Tarzan reported income of $85,000 | |||||||||||
| In 2017 Tarzan reported income of $40,000 | |||||||||||
| Tarzan did not pay any dividends in 2016 | |||||||||||
| In 2017 Tarzan paid a dividend of $68,000 | |||||||||||
| Part 1: If the preferred stock is non-cumulative non-participating how is the $68,000 dividend divided between common and preferred stockholders (total dollars not per share) | |||||||||||
| What is Tarzan's earnings per share for 2016? | |||||||||||
| What was Tarzan's earnings per share for 2017? | |||||||||||
| Part 2: If the preferred stock is cumulative non-participating, how is the $68,000 dividend divided between common and preferred stockholders (total dollars not per share) | |||||||||||
| What was Tarzan's earnings per share for 2016? | |||||||||||
| What was Tarzan's earnings per share for 2017? | |||||||||||
In: Accounting
Outback Outfitters is a manufacturer of recreational equipment. It has been experiencing an average growth rate of 20% in sales over the past 5 years. It is August 31 and the financial controller has just prepared the company’s budgeted income statement for next year. The company has no sales force of its own and outsourcing its selling and marketing functions to an independent sales agents. The commission paid to the agent is 12% on sales for all the different products the company sold. The statement follows:
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Outback Outfitters |
||
|
Budgeted Income Statement |
||
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For the Year Ended December 31 (in thousand dollars) |
||
|
Sales |
$100,000 |
|
|
Manufacturing expenses: |
||
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Variable |
$40,000 |
|
|
Fixed overhead |
20,000 |
60,000 |
|
Gross margin |
40,000 |
|
|
Selling and administrative expenses: |
||
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Commissions to agents |
12,000 |
|
|
Fixed marketing expenses |
1,000 |
|
|
Fixed administrative expenses |
12,000 |
25,000 |
|
Net operating income |
$15,000 |
|
When the financial controller handed the statement to the CEO, the CEO informed the controller that the sales agent demanded an increase in the commission rate to 16% next year to cover the increasing expenses in marketing and selling the products of Outback Outfitters.
The CEO concerns that the sales agent might ask for further increase in the commission rate in the future and would like to set up its own sales team. He asks the help of the financial controller and he gathers the following information for setting up the sales team:
Commission rate to own sales team 8%
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Annual salaries paid to sales manager |
$ 600,000 |
|
Annual salaries paid to salespersons |
3,600,000 |
|
Travel and entertainment |
2,400,000 |
|
Advertising |
4,000,000 |
|
Total additional fixed expenses |
$10,600,000 |
Required:
a. Prepare a contribution margin income statement for next year at the 16% commission rate.
b. Calculate the contribution margin ratio and break-even in dollar sales for next year assuming:
(1) Commission rate remains at 12%.
(2) Commission rate is increased to 16%.
c. Determine the volume of sales under 16% commission rate that would be required to generate the same net operating income under the 12% commission rate. Compute the margin of safety percentage under 16% commission rate.
d. Calculate the contribution margin ratio, break-even dollar sales and margin of safety if the company employs its own sales team.
e. Determine the volume of sales at which the net operating income would be equal regardless of whether the company sells through agents at 16% commission rate or employs its own sales team.
f. What is meant by the term operating leverage? Calculate the degree of operating leverage that the company would expect to have for next year assuming the company (1) sells through agents at 16% commission rate and (2) employs its own sales team.
g. Based on the data in (a) through (f) above, make a recommendation as to whether the company should continue to use sales agent (at 16% commission rate) or employ its own sales team. Give reasons for your answer.
In: Accounting
Give short answers to the following questions: (16)
i. Who is an accountant?
ii. Describe various roles and activities that accountants
perform.
iii. What type of duties does a controller perform?
iv. What is a double entry system? Outline the steps involved in
Double entry system.
v. What is the meaning of ‘Debit’ and ‘Credit’ in accounting?
vi. What is meant by ‘Hybrid basis’ accounting? How the entries are
recorded using this method?
vii. What is the difference between ‘Real Accounts’ and ‘Personal
Accounts’?
viii. How do we record the entries using cash basis accounting
method
In: Accounting
The Walton Toy Company manufactures a line of dolls and a sewing kit. Demand for the company’s products is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:
| Product | Demand Next year (units) |
Selling Price per Unit |
Direct Materials |
Direct Labor |
|||
| Debbie | 51,000 | $ | 15.50 | $ | 4.40 | $ | 2.70 |
| Trish | 43,000 | $ | 6.00 | $ | 1.20 | $ | 1.20 |
| Sarah | 36,000 | $ | 25.00 | $ | 6.59 | $ | 4.50 |
| Mike | 40,000 | $ | 11.00 | $ | 2.10 | $ | 3.30 |
| Sewing kit | 326,000 | $ | 8.10 | $ | 3.30 | $ | 0.90 |
The following additional information is available:
The company’s plant has a capacity of 118,450 direct labor-hours per year on a single-shift basis. The company’s present employees and equipment can produce all five products.
The direct labor rate of $6 per hour is expected to remain unchanged during the coming year.
Fixed manufacturing costs total $530,000 per year. Variable overhead costs are $3 per direct labor-hour.
All of the company’s nonmanufacturing costs are fixed.
The company’s finished goods inventory is negligible and can be ignored.
Required:
1. How many direct labor hours are used to manufacture one unit of each of the company’s five products?
2. How much variable overhead cost is incurred to manufacture one unit of each of the company’s five products?
3. What is the contribution margin per direct labor-hour for each of the company’s five products?
4. Assuming that direct labor-hours is the company’s constraining resource, what is the highest total contribution margin that the company can earn if it makes optimal use of its constrained resource?
5. Assuming that the company has made optimal use of its 118,450 direct labor-hours, what is the highest direct labor rate per hour that Walton Toy Company would be willing to pay for additional capacity (that is, for added direct labor time)?
In: Accounting
Fanelli Corporation, a merchandising company, reported the following results for July:
| Number of units sold | 6,200 | |
| Selling price per unit | $ | 600 |
| Unit cost of goods sold | $ | 414 |
| Variable selling expense per unit | $ | 52 |
| Total fixed selling expense | $ | 125,700 |
| Variable administrative expense per unit | $ | 30 |
| Total fixed administrative expense | $ | 207,600 |
Cost of goods sold is a variable cost in this company.
Required:
a. Prepare a traditional format income statement for July.
b. Prepare a contribution format income statement for July.
In: Accounting
| The BooksteinCompany began business on 1/1/2016 when they sold 5000 shares of stock for $46,000 | ||||||||
| During 2016 Bookstein: | ||||||||
| a) on 1/13/2016 Bookstein purchased 100 books for $14 each | ||||||||
| b) on 7/1/2016 Bookstein purchased 400 books for $15 each | ||||||||
| c) On 10/1/2016 Bookstein purchased 300 books for $16 each | ||||||||
| On December 31, 2016 a count of the warehouse showed 270 books | ||||||||
| On average Bookstein sold books for $23 each | ||||||||
| At the end of the year Booksteinhad no receivables or payables. | ||||||||
| Booksteinis in the 40% tax rate | ||||||||
| PART 1: FOR 2016 DETERMINE | ||||||||
| A) COST OF GOODS SOLD FOR BooksteinIF SHE USES FIFO | ||||||||
| B) ENDING INVENTORY FOR BooksteinIF SHE USES FIFO | ||||||||
| C) NET INCOME IF Bookstein USES FIFO (DON'T FORGET ABOUT TAXES) | ||||||||
| D) ENDING CASH IF Bookstein USES FIFO | ||||||||
| E) COST OF GOODS SOLD FOR BooksteinIF SHE USES LIFO | ||||||||
| F) ENDING INVENTORY FOR BooksteinIF SHE USES LIFO | ||||||||
| G) NET INCOME IF BooksteinUSES LIFO (DON'T FORGET ABOUT TAXES) | ||||||||
| H) ENDING CASH IF MARY POPPINTS USES LIFO | ||||||||
| I) HOW MUCH DID BooksteinSAVE BY USING LIFO INSTEAD OF FIFO FOR HER UMBRELLAS | ||||||||
In: Accounting
On August 31, 2019, the balance in the checkbook and the Cash account of the Dry Creek Bed and Breakfast was $12,253. The balance shown on the bank statement on the same date was $13,182.
Notes
The firm’s records indicate that a $1,420 deposit dated August 30 and a $698 deposit dated August 31 do not appear on the bank statement.
A service charge of $7 and a debit memorandum of $305 covering an NSF check have not yet been entered in the firm’s records. (The check was issued by Art Corts, a credit customer.)
The following checks were issued but have not yet been paid by
the bank:
| Check 712, | $ | 107 | |
| Check 713, | $ | 122 | |
| Check 716, | $ | 235 | |
| Check 736, | $ | 574 | |
| Check 739, | $ | 75 | |
| Check 741, | $ | 117 | |
A credit memorandum shows that the bank collected a $2,069 note
receivable and interest of $60 for the firm. These amounts have not
yet been entered in the firm’s records.
Required:
Prepare a bank reconciliation statement for the firm as of August 31.
Record general journal entries for items on the bank reconciliation statement that must be journalized.
Analyze:
What effect did the journal entries recorded as a result of the
bank reconciliation have on the fundamental accounting
equation?
In: Accounting
ACD Company was formed on December 1, 2018. The following information is available from ACD's inventory record for Product X.
Units Unit Cost
January 1, 2019 (beginning inventory) 1,600 £18.00
Purchases:
January 5, 2019 2,600 £20.00
January 25, 2019 2,400 £21.00
February 16, 2019 1,000 £22.00
March 15, 2019 1,800 £23.00
A physical inventory on March 31, 2019, shows 2,500 units on hand.
Instructions
Prepare schedules assuming the periodic method to compute the 1/cost of goods sold and 2/the ending inventory at March 31, 2019, under each of the following inventory methods:
(a) FIFO.
(b) Weighted-average.
(c) LIFO.
In: Accounting
What are the three basic reports, or products, of the budget process that all other schedules are prepared to support?
Explain for easy understanding
In: Accounting
In: Accounting
Pete, a CPA, is participating in an audit engagement of ABC Company. He has performed the audit and has determined that an unqualified/unmodified is to be issued but he would like to expand on the rationale for the unqualified/unmodified opinion. What are the situations in which an explanatory paragraph would be necessary in an unqualified/unmodified opinion.
In: Accounting
Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division’s return on investment (ROI), which has exceeded 24% each of the last three years. He has computed the cost and revenue estimates for each product as follows:
| Product A | Product B | ||||
| Initial investment: | |||||
| Cost of equipment (zero salvage value) | $ | 330,000 | $ | 515,000 | |
| Annual revenues and costs: | |||||
| Sales revenues | $ | 370,000 | $ | 470,000 | |
| Variable expenses | $ | 168,000 | $ | 218,000 | |
| Depreciation expense | $ | 66,000 | $ | 103,000 | |
| Fixed out-of-pocket operating costs | $ | 82,000 | $ | 68,000 | |
The company’s discount rate is 15%.
Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor using tables.
Required:
1. Calculate the payback period for each product.
2. Calculate the net present value for each product.
3. Calculate the internal rate of return for each product.
4. Calculate the project profitability index for each product.
5. Calculate the simple rate of return for each product.
6a. For each measure, identify whether Product A or Product B is preferred.
6b. Based on the simple rate of return, Lou Barlow would likely:
In: Accounting
A CPA, is requested to prepare a written report on the application of the requirements of an applicable financial reporting framework to a specific transaction by an entity that is audited by another CPA. Should they accept the engagement? If so, must he consult with the continuing CPA?
In: Accounting
The managerial accountant at Fast and Mean Manufacturing reported that the organization contains an automated production line to manufacture and produce its products for consumers to enjoy in the marketplace. The managerial accountant reported that the company uses the high-low method to estimate the costs in the new budget. The managerial accountant reported the following information:
|
Month |
Total Machine-Hours |
Total Costs |
|
January |
250,000 |
$5,500,000 |
|
February |
248,000 |
$5,260,000 |
|
March |
249,000 |
$5,400,000 |
|
April |
248,000 |
$5,220,000 |
|
May |
238,000 |
$5,180,000 |
|
June |
230,000 |
$5,130,000 |
Compute the slope of the mixed cost, or the variable cost per unit of activity.
Compute the vertical intercept, or the fixed cost component of the mixed cost.
What is the mixed cost equation?
In: Accounting