Present Value of Bonds Payable; Premium

Moss Co. issued $610,000 of five-year, 13% bonds, with interest payable semiannually, at a market (effective) interest rate of 11%.

Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.
$

Why is CVP analysis useful? Why is it an important concept in managerial accounting?

Common size and trend percents for Rustynail Company s sales,cost of goods sold,and expenses follow. Common size percents. 2017 sales 100 % 2016 sales 100 %,2015 sales 100 %. Cost of goods sold 2017. 63.1 . 2016 60.9. 2015. 57.4. Total expenses. 2017 , 14.3 , 2016. 13.8. 2015. 14.1
Trend percents. 2017.              2016           2015

           
sales.                   104.5%           103.3 %     100

cost of goods sold 114.9.        109.6.       100

total expenses.         106.1.        101.1.      100

	Year 1	year 2	year 3
Sales Units	2500	2750	2900
sales Price Unit	$150.00	$          150.00	$          150.00
REVENUE	$185,000	$250,000	$440,000
	$375,000.00	$ 412,500.00	$ 435,000.00
Variable Costs:
Direct Materials	$20.00	$20.50	$26.01
Direct Labor	$17.15	$17.60	$19.22
Variable OH	$2.50	$2.53	$2.55
Fixed Costs:
Rent	80,000	$80,000	$80,000
Supervision	200,000	$205,000	$210,250
Mixed Costs:
Utilites-Fixed	20,000	20,000	20,000
Utilities-Variable	$2.50	$2.50	$2.50
Total Costs:
Variable cost per unit	$42.15	$43.13	$50.28
Fixed Costs	$300,000	$305,000	$310,250
Contribution Margin	3.74	4.12	4.34
	37%	41%	43%
Breakeven:
Sales Units
Sales Revenue
Margin of Safety:
What would be the margin of safety and the breakeven sales units and sale revenue	im not understanding what details are wrong ?

Tiger Pride produces two product​ lines:

Tminus−shirts

and Sweatshirts. Product profitability is analyzed as​ follows:

	​T-SHIRTS		SWEATSHIRTS
Production and sales volume	72,000 units		40,000 units
Selling price	$18.00		​$29.00
Direct material	$1.90		​$5.00
Direct labor	$ 4.20$4.20		​$7.20
Manufacturing overhead	$ 4.40$4.40		​$3.00
Gross profit	​$7.50		​$13.80
Selling and administrative	$3.70		​$7.00
Operating profit	$3.80		​$6.80

Tiger​ Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost​ information:

Activity	Activity cost	Activityminus−cost driver
Supervision	$118,320	Direct labor hours​ (DLH)
Inspection	$143,250	Inspections
Activities demanded
Tminus−SHIRTS	SWEATSHIRTS
0.75​ DLH/unit	1.2​ DLH/unit
54,000 DLHs	48,000 DLHs
80,000 inspections	15,500 inspections

Under the revised ABC​ system, overhead costs per unit for the Sweatshirts will be​ ________. (Do not round interim calculations. Round the final answer to the nearest​ cent.)

A.

$ 1.97$1.97

per unit

B. $ 1.64 per unit

C. $ 1.10 per unit

D.$ 1.50 per unit

The following account balances are for Sycamore Subs in 2017.

Purchases	$755,000
Beginning Inventory	78,000
Purchase Returns	12,000
Sales	1,018,000
Cost of Goods Sold	326,000

Inventory roll-forward: What is the amount of ending inventory?

$508,000

$495,000

$692,000

$519,000

none of the answers are correct

What is gross profit? __________

2.   i._____

    

    What is the total effect of a stock dividend on the balance sheet?

a.   Stockholders’ equity is decreased

b.   Retained earnings is increased      

c.   Additional paid in capital is decreased     

d.   No effect… total stockholders’ equity stays the same, but total number of shares increases

e.   None of the above

ii._____

A corporation has 80,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be:

a.   20,000 shares.        

b.   80,000 shares.        

c.   100,000 shares.      

d.   320,000 shares.

Accy 306 Quiz #4, page 2 of 2

______3. Jimmy’s Company (Investor) owns 26% of the stock of Carlson Company (Investee). Carlson Company reports profits of $1,000,000. Carlson also pays $150,000 dividend to its shareholders during the same period. Jimmy’s Company will report equity income of:

a.	$740,000
b.	$39,000
c.	$260,000
d.	$150,000

______4. Listed below are Special Items” that may be reported in the income statement. All items are reported “net of tax”, except:

  

Discontinued Operations: example—segment of business placed up for sale

b. Extraordinary items: example—casualties from natural disasters       

c. Equity earnings: example—proportionate share of earnings from a non-controlling interest held

d. Unusual or infrequent item disclosed separately: example—restructuring charges

e. Net income attributable to non-controlling interests

______5. Which of the following is not included as a component of Comprehensive Income?

Foreign current translation adjustments

Changes in Stockholders’ Equity due to minimum pension liability adjustments

Unrealized gains and losses due to fair value accounting for derivative instruments

Treasury stock

All of the above are components of comprehensive income

  

Cotopaxi makes backpacks. Traditionally, they bought fabric in quantity, and cut out the forms for their backpacks from large pieces, discarding the interstitial material as scrap. Due to the integrated nature of the production facility, the cost of all this fabric was considered a joint cost, allocated by the approximate relative sales value method, and the scraps were considered a waste by-product.

Recently however, an enterprising employee had the great idea to use these scraps and make small, unique bags from the heretofore-discarded pieces of fabric. The company agreed to implement this idea on a trial basis, and the accounting department decided to consider these bags a by-product using the net realizable value method.

The marketing department set the price for the by-product bags at $50, and in the first year of production, 10,000 of these scrap bags were sold. At the end of the first year, the accounting department determined that each bag incurred an additional processing cost of $40 on average in additional materials (straps, buckles, thread, etc.), labor, and variable overhead (not including the cost of the scrap fabric from whence they came).

What happened to the joint cost of fabric allocated to the main product lines when the new by-product bags were introduced?

Increased the joint costs allocated to the other products

Decreased the joint costs allocated to the other products

No change in joint costs allocated to the other products What did this new line of by-product bags do to the recognized profitability of Cotopaxi’s main backpack products? Increased the profitability of the main products Decreased the profitability of the main products No change in the profitability of the main products What did this new line of by-product bags do to the total profitability of Cotopaxi’s as a whole? (Note: assume the new bags only incurred the variable costs listed above) Increased overall profitability Decreased overall profitability No change to overall profitability

The following are categories of accounts reported in the financial statements:

A.Current Assets                                                E. Long-Term Liabilities

B.Fixed Assets                                                   F. Stockholders’ Equity

C.Intangible Assets                                            G. Revenue

D.Current Liabilities                                           H. Expense

Indicate where each of the following accounts would be reported (classified) in the financial statement categories noted above (categories may be used more than once or not at all). Identify only one category for each account listed below.

_______Retained Earnings                              ________Accounts Receivable

_______Cash                                                    ________Machinery & Equipment

_______Accounts Payable                              ________Subscription Revenue

_______Wages Expense                                  ________Notes Payable, Long-term

2. i. What is total Stockholders’ Equity based on the following account balances?   _____________

   

          Paid in Capital:

Common Stock	$     750,000
Paid-in-Capital in excess of par	8,225,000
Retained Earnings	22,952,000
Other Comprehensive Income	200,000
Treasury Stock	65,000

ii.____Treasury stock represents

Cash

The cost of company shares repurchased by the company

A reduction of stockholders’ equity

b and c are both correct

a and c are both correct

____3. The time it takes McDonald’s to purchase beef patties, cook and sell burgers, and collect cash from customers is known as the:

a.	Investing cycle
b.	Financing cycle
c.	Inventory cycle
d.	Operating cycle
e.	Accounting cycle

Accy 306 Quiz #3, page 2 of 2

4. The following information has been provided about the restaurant building:              

                        Original Cost              $160,000

                        Residual Value            $    2,000

                        Estimated Life            40 years

                        Depreciation Method = Straight-line

      i. ____The depreciation expense for year 2 equals:

      a. $3,000

      b. $4,000

      c. $3,950

      d. none of the above

    

ii.       T or F: The building is classified as an Intangible Asset because of its long life and it is held for use in the business. (If false, correct the error.)

        

_____5. Which of the following is a current liability?

Prepaid insurance

Retained earnings

Salaries expense

Bonds payable

Unearned rent revenue

_____ 6. The Notes to the financial statements indicate the types of sales included in the receivables accounts along with the uncollectible amounts balance (Allowance for Doubtful Accounts). If gross receivables are $200,000 and the allowance for doubtful accounts is 25,000, the Balance Sheet will indicate a line item for “Receivables, net” = $175,000.

____The valuation method for receivables is called:

Net realizable value

Lower of cost or net realizable value (LCNRV)

Fair value

Historical cost

Net present value

ii.        Which of the above methods is used for inventory? ________

_____7. Bonds are popular source of financing because:

Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issue of stock.

A company having cash flow problems can postpone payment of interest to bondholders.

Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

The bondholders can always convert their bonds into stock if they choose.

None of the above is correct.

** SUBMIT IN EXCEL FORMAT

Consider the following information from Manufacturing Inc., then see the instructions that
follow.
Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning
of the production process and conversion costs are incurred uniformly. Production and cost
data for the month of June, 2016 are as follows.
	Production data				Units		Percent Complete
	Work in process units, June 1				2,600		61%
	Units started into production				6,285
	Work in process units, June 30				3,000		38%
	Cost data
	Work in process, June 1
	Materials			$7,250
	Coversion costs			6,050	$13,300
	Direct materials				23,600
	Direct labor				15,850
	Manufacturing overhead				12,750
Instructions:
Prepare a production cost report for the month of June, making sure to show equivalent
units of production for materials and conversion costs, unit costs of production for materials
and conversion costs, and the assignment of costs to units transferred out and in process at
the end of June.
THIS ASSIGNMENT MUST BE COMPLETED IN EXCEL. You should develop an efficient and
customizable production cost report, using formulas whenever possible instead of keyed in
values. No numeric values except the ones shown above should need to be keyed in.

K Company acquired 80 percent of the outstanding shares of Duo Company by paying $420,000 in cash. The fair value of Duo’s identifiable assets is $630,000, and the liabilities assumed by K Co. in this business combination are $205,000.

a. Please calculate the total amount of goodwill on the B/S this year. Also indicate the amount of goodwill that belongs to the noncontrolling interest account on B/S.

b. K Co. must conduct an impairment test of the goodwill related to the acquisition of Duo. The assets of Duo are the smallest group of assets that generate cash inflows, and it is a separate cash generating unit. K. Co estimated the following items:

Fair value less costs to sell is $ 370,000

Present value of future cash flows is $350,000

Please calculate the impairment loss that should be recorded on I/S.

Exercise 21-16 Presented below are four independent situations. (Round answers to 0 decimal places, e.g. 125. If answer is 0, please enter 0. Do not leave any fields blank.) (a) On December 31, 2017, Sandhill Inc. sold computer equipment to Daniell Co. and immediately leased it back for 10 years. The sales price of the equipment was $515,200, its carrying amount is $401,900, and its estimated remaining economic life is 12 years. Determine the amount of deferred revenue to be reported from the sale of the computer equipment on December 31, 2017. The amount of deferred revenue to be reported $

(b) On December 31, 2017, Teal Co. sold a machine to Cross Co. and simultaneously leased it back for one year. The sales price of the machine was $477,700, the carrying amount is $420,300, and it had an estimated remaining useful life of 14 years. The present value of the rental payments for the one year is $35,000. At December 31, 2017, how much should Teal report as deferred revenue from the sale of the machine? The amount of deferred revenue to be reported $

(c) On January 1, 2017, Flint Corp. sold an airplane with an estimated useful life of 10 years. At the same time, Flint leased back the plane for 10 years. The sales price of the airplane was $498,300, the carrying amount $375,100, and the annual rental $73,904. Flint Corp. intends to depreciate the leased asset using the sum-of-the-years’-digits depreciation method. How much gain on the sale should be reported at the end of 2017 in the financial statements? The gain on the sale should be reported $

(d) On January 1, 2017, Buffalo Co. sold equipment with an estimated useful life of 5 years. At the same time, Buffalo leased back the equipment for 2 years under a lease classified as an operating lease. The sales price (fair value) of the equipment was $214,700, the carrying amount is $303,000, the monthly rental under the lease is $6,100, and the present value of the rental payments is $116,494. For the year ended December 31, 2017, determine which items would be reported on its income statement for the sale-leaseback transaction. $ $

Consider the following information from Manufacturing Inc., then see the instructions that
follow.
Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning
of the production process and conversion costs are incurred uniformly. Production and cost
data for the month of June, 2016 are as follows.
	Production data				Units		Percent Complete
	Work in process units, June 1				2,600		61%
	Units started into production				6,285
	Work in process units, June 30				3,000		38%
	Cost data
	Work in process, June 1
	Materials			$7,250
	Coversion costs			6,050	$13,300
	Direct materials				23,600
	Direct labor				15,850
	Manufacturing overhead				12,750
Instructions:
Prepare a production cost report for the month of June, making sure to show equivalent
units of production for materials and conversion costs, unit costs of production for materials
and conversion costs, and the assignment of costs to units transferred out and in process at
the end of June.
THIS ASSIGNMENT MUST BE COMPLETED IN EXCEL. You should develop an efficient and
customizable production cost report, using formulas whenever possible instead of keyed in
values. No numeric values except the ones shown above should need to be keyed in.

1.A firm is considering replacing the existing industrial air conditioning unit. They will pick one of two units. The first, the AC360, costs $26,376.00 to install, $5,146.00 to operate per year for 7 years at which time it will be sold for $7,155.00. The second, RayCool 8, costs $41,333.00 to install, $2,023.00 to operate per year for 5 years at which time it will be sold for $8,968.00. The firm’s cost of capital is 6.46%. What is the equivalent annual cost of the RayCool8? Assume that there are no taxes.

2.A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $24,969.00 per year for 8 years and costs $99,057.00. The UGA-3000 produces incremental cash flows of $28,762.00 per year for 9 years and cost $123,561.00. The firm’s WACC is 8.84%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes.

3.A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $26,366.00 per year for 8 years and costs $98,324.00. The UGA-3000 produces incremental cash flows of $29,991.00 per year for 9 years and cost $123,592.00. The firm’s WACC is 8.77%. What is the equivalent annual annuity of the UGA-3000? Assume that there are no taxes.

Consider the following information from Manufacturing Inc., then see the instructions that
follow.
Manufacturing Inc. manufactures plastic thing-a-majigs. Materials are added at the beginning
of the production process and conversion costs are incurred uniformly. Production and cost
data for the month of June, 2016 are as follows.
	Production data				Units		Percent Complete
	Work in process units, June 1				2,600		61%
	Units started into production				6,285
	Work in process units, June 30				3,000		38%
	Cost data
	Work in process, June 1
	Materials			$7,250
	Coversion costs			6,050	$13,300
	Direct materials				23,600
	Direct labor				15,850
	Manufacturing overhead				12,750
Instructions:
Prepare a production cost report for the month of June, making sure to show equivalent
units of production for materials and conversion costs, unit costs of production for materials
and conversion costs, and the assignment of costs to units transferred out and in process at
the end of June.
THIS ASSIGNMENT MUST BE COMPLETED IN EXCEL. You should develop an efficient and
customizable production cost report, using formulas whenever possible instead of keyed in
values. No numeric values except the ones shown above should need to be keyed in.

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $367,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $565,000 and the fair value of the 30 percent noncontrolling interest was $157,500. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

	Protrade	Seacraft
Sales	680,000	400,000
Cost of Goods Sold	310,000	217,000
Operating Expenses	154,000	109,000
Retained Earnings, 1/1/18	780,000	220,000
Inventory	350,000	114,000
Buildings (net)	362,000	161,000
Investement Income	not given	-

Each of the following problems is an independent situation:

(A) Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $94,000 in 2017 and $114,000 in 2018. Of this inventory, Seacraft retained and then sold $32,000 of the 2017 transfers in 2018 and held $46,000 of the 2018 transfers until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(B) Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $54,000 in 2017 and $84,000 in 2018. Of this inventory, $25,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $39,000 of the 2018 transfers were held until 2019. Determine balances for the following items that would appear on consolidated financial statements for 2018:

(C) Protrade sells Seacraft a building on January 1, 2017, for $88,000, although its book value was only $54,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2018:

	a. Cost of goods sold Inventory Net income attributable to noncontrolling interest b. Cost of goods sold Inventory Net income attributable to noncontrolling interest c. Buildings (net) Operating expenses Net income attributable to noncontrolling interest