The Shippecasse Company had a Current Ratio of 1:2. The Company paid a $10,000 cash dividend to preferred shareholders that was previously declared. What is the effect of the payment journal entry on the current ratio and total stockholders' equity, respectively?

Select one:

a. Increase, Increase

b. Decrease, Decrease

c. Increase, No Effect

d. No Effect, Increase

e. Decrease, No Effect

1. Break-Even Sales

   BeerBev, Inc., reported the following operating information for a recent year:

   Net sales	$11,712,000
   Cost of goods sold	$2,928,000
   Selling, general and administration	610,000
   	$3,538,000
   Income from operations	$ 8,174,000*

   *Before special items

   In addition, assume that BeerBev sold 61,000 barrels of beer during the year. Assume that variable costs were 75% of the cost of goods sold and 50% of selling, general and administration expenses. Assume that the remaining costs are fixed. For the following year, assume that BeerBev expects pricing, variable costs per barrel, and fixed costs to remain constant, except that new distribution and general office facilities are expected to increase fixed costs by $31,100.

   When computing the cost per unit amounts for the break-even formula, round to two decimal places. If required, round your final answer to one decimal place.

   a. Compute the break-even number of barrels for the current year.
   barrels

   b. Compute the anticipated break-even number of barrels for the following year.
   barrels

Individual team member timely commitment and active participation are critical individual contributions to team-
based innovation.

Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows:     

Assume straight line depreciation method is used.

Required:
Help FCA evaluate this project by calculating each of the following:

1. Accounting rate of return. (Round your answer to 2 decimal places.)

2. Payback period. (Round your answer to 2 decimal places.)

3. Net present value (NPV). (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.)

4. Recalculate FCA's NPV assuming the cost of capital is 3% percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar amount.)

Greater than 7%

Between 3% and 7%

Less than 3%

LarkspurFurniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $6,000,000 on January 1, 2020. Larkspur expected to complete the building by December 31, 2020. Larkspur has the following debt obligations outstanding during the construction period.

A. Assume that Larkspur completed the office and warehouse building on December 31, 2020, as planned at a total cost of $6,240,000, and the weighted-average amount of accumulated expenditures was $4,320,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)

B. Compute the depreciation expense for the year ended December 31, 2021. Larkspur elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $360,000. (Round answer to 0 decimal places, e.g. 5,275.)

Gleason Guitars produces acoustic guitars. The table below contains budget and actual information for the month of June: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Accounts for Smith Corp. from the adjusted trial balance for the year ended December 31, 2018 are presented below in no particular order. Common Stock was $10,000 and Retained Earnings was $50,000 on January 1, the beginning of the current year. During the year, shareholders purchased an additional $7,000 in stock.

Depreciation expense—equipment    $4,600             Cash                                        $85,000

Depreciation expense—building        2,000             Accounts payable                         5,500

Office supplies                                    3,000             Land                                        150,000

Fees earned                                                       328,000                 Accounts receivable                           26,000

Salaries expense                                              135,000                 Supplies expense                                25,000

Interest expense                                                   4,700                Dividends                                                 4,200

Long-term notes payable                              190,000                 Salaries payable                                   14,000

Accumulated depreciation-building         110,000                 Building                                                220,000

Accumulated depreciation-equipment   65,000                 Equipment                                          120,000

1. Use the information above to prepare (a.) the income statement, (b.) the statement of retained earnings, and (c.) the balance sheet.

2. Prepare the necessary closing entries.

3. Prepare the post-closing trial balance.

Indicate the type of Deferred Tax account created by Prepaid Expenses and Unearned Revenue, respectively.

Select one:

a. Asset, Liability

b. Liability, Asset

c. Asset, Asset

d. Liability, Liability

Write an operation overview for a business plan for a Kentucky Fried Chicken franchise with start-up funding of $750,000.

Flint Company Limited, which follows ASPE, uses the gross profit method to estimate inventory for monthly reports. Information follows for the month of May:

Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales.

eTextbook and Media

Calculate the estimated inventory at May 31, assuming that the markup on cost is 25%.

[The following information applies to the questions displayed below.] Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given:

3. Assume that sales in Chicago increase by $40,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.

a. Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place (i.e. 0.1234 should be entered as 12.3).)

ATC 14-1 Business Applications Case Preparing and using pro forma statements

Maria Gutierrez and Devin Duzan recently graduated from the same university. After graduation they decided not to seek jobs at established organizations but, rather, to start their own small business hoping they could have more flexibility in their personal lives for a few years. Maria’s family has operated Mexican restaurants and taco trucks for the past two generations, and Maria noticed there were no taco truck services in the town where their university was located. To reduce the amount, they would need for an initial investment, they decided to start a business operating a taco cart rather than a taco truck, from which they would cook and serve traditional Mexican-styled street food.

They bought a used taco cart for $25,000. This cost, along with the cost for supplies to get started, a business license, and street vendor license brought their initial expenditures to $29,000. They took $5,000 from personal savings they had accumulated by working part-time during college, and they borrowed $15,000 from Maria’s parents. They agreed to pay interest on the outstanding loan balance each month based on an annual rate of 4 percent. They will repay the principal over the next few years as cash becomes available. They were able to rent space in a parking lot near the campus they had attended, believing that the students would welcome their food as an alternative to the typical fast food that was currently available.

After two months in business, September and October, they had average monthly revenues of $20,000 and out-of-pocket costs of $16,000 for rent, ingredients, paper supplies, and so on, but not interest. Devin thinks they should repay some of the money they borrowed, but Maria thinks they should prepare a set of forecasted financial statements for their first year in business before deciding whether or not to repay any principal on the loan. She remembers a bit about budgeting from a survey of accounting course she took and thinks the results from their first two months in business can be extended over the next 10 months to prepare the budget they need. They estimate the cart will last at least five years, after which they expect to sell it for $5,000 and move on to something else in their lives. Maria agrees to prepare a forecasted (pro forma) income statement, balance sheet, and statement of cash flows for their first year in business, which includes the two months already passed.

Required

1. Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her expectations for the business. Assume no principal will be repaid on the loan. [Note: Some amounts are different from the printed text version]

2. Review the statements you prepared for the first requirement and prepare a list of reasons why actual results for Devin and Maria’s business probably will not match their budgeted statements.

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods

The units of an item available for sale during the year were as follows:

There are 20 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (Round per unit cost to two decimal places and your final answer to the nearest whole dollar).

1. Inventory Turnover and Days' Sales in Inventory

   Financial statement data for years ending December 31 for Amsterdam Company follow:

   	20Y4				20Y3
   Cost of merchandise sold	$3,598,900				$3,015,630
   Inventories:
   Beginning of year	593,000				589,600
   End of year	648,000				593,000

   a. Determine the inventory turnover for 20Y4 and 20Y3. Round to one decimal place.

   	Inventory Turnover
   20Y4	fill in the blank 1
   20Y3	fill in the blank 2

   b. Determine the days' sales in inventory for 20Y4 and 20Y3. Assume 365 days a year. Round interim calculations and final answers to one decimal place.

   	Days' Sales in Inventory
   20Y4	fill in the blank 3 days
   20Y3	fill in the blank 4 days

   c. Does the change in the inventory turnover and the days' sales in inventory from 20Y3 to 20Y4 indicate a favorable or an unfavorable trend?
   

Check My Work

The following income statement and balance sheets for Virtual Gaming Systems are provided.

Earnings per share for the year ended December 31, 2021, are $1.20. The closing stock price on December 31, 2021, is $27.50.

Required:

Calculate the following profitability ratios for 2021. (Round your answers to 1 decimal place.)

2. Look at the last five(omit 2020 Q2) quarters covered in the table. Compare the most recent quarter to the same quarter in the previous year.

a) Which sector* had the largest percentage increase in profit (or largest decrease in loss)

b) Which sector had the smallest percentage increase in profit (or the largest percentage decrease in profit)?

c) Which sectors*, if any, experienced losses during any of the last four quarters covered in the table?

*Note: By "sector", I mean certain groups larger than an individual industry: These are: “Financial” (Row 10), “Utilities (Row 14), "Manufacturing" (Row 15), "Durable goods" (Row 16), "Nondurable goods" (Row 23) and Rows 28 through 32. The listings in Rows 17 through 22 and 24 through 27 (the rows which are most indented from the left margin) are industries, not sectors.