Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016: Common stock—$25 par value, 50,000 shares authorized, 33,000 shares issued and outstanding $ 825,000 Paid-in capital in excess of par value, common stock 66,000 Retained earnings 350,000 Total stockholders’ equity $ 1,241,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 3,300 shares of its own stock at $25 cash per share. Jan. 7 Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record. Feb. 28 Paid the dividend declared on January 7. July 9 Sold 1,320 of its treasury shares at $30 cash per share. Aug. 27 Sold 1,650 of its treasury shares at $20 cash per share. Sept. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. Oct. 22 Paid the dividend declared on September 9. Dec. 31 Closed the $55,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Required: 1. Prepare journal entries to record each of these transactions for 2017. 2. Prepare a statement of retained earnings for the year ended December 31, 2017. 3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017.
In: Accounting
The following information is provided to assist you in evaluating the performance of the production operations of Studio Company: Units produced (actual) 57,000 Master production budget Direct materials $127,380 Direct labor 108,080 Overhead 167,910 Standard costs per unit Direct materials $1.65 × 2 gallons per unit of output Direct labor $14 per hour × 0.2 hour per unit Variable overhead $12.50 per direct labor-hour Actual costs Direct materials purchased and used $150,960 (81,600 gallons) Direct labor 134,231 (9,980 hours) Overhead 177,200 (61% is variable) Variable overhead is applied on the basis of direct labor-hours. Required: Calculate all variable production cost price and efficiency variances and fixed production cost price and production volume variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
In: Accounting
Required information
Problem 3-4A Weighted average: Process cost summary, equivalent units, cost estimates LO C2, C3, P4
[The following information applies to the questions
displayed below.]
Tamar Co. manufactures a single product in one department. All
direct materials are added at the beginning of the manufacturing
process. Conversion costs are added evenly throughout the process.
During May, the company completed and transferred 22,700 units of
product to finished goods inventory. Its 3,100 units of beginning
work in process consisted of $19,900 of direct materials and
$226,440 of conversion costs. It has 2,450 units (100% complete
with respect to direct materials and 80% complete with respect to
conversion) in process at month-end. During the month, $483,100 of
direct material costs and $1,992,960 of conversion costs were
charged to production.
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In: Accounting
(Weighted average cost of capital) Crypton Electronics has a capital structure consisting of
3939
percent common stock and
6161
percent debt. A debt issue of
$1 comma 0001,000
par value,
6.36.3
percent bonds that mature in
1515
years and pay annual interest will sell for
$974974.
Common stock of the firm is currently selling for
$29.8429.84
per share and the firm expects to pay a
$2.252.25
dividend next year. Dividends have grown at the rate of
4.94.9
percent per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the firm's tax rate is
3030
percent?
a. The after-tax cost of debt is
(Round to two decimal places.)
b. The cost of common equity is
(Round to two decimal places.)
c. Crypton's cost of capital is
(Round to three decimal places.)
In: Accounting
(Individual or component costs of capital) Compute the cost of capital for the firm for the following:
a. Currently bonds with a similar credit rating and maturity as the firm's outstanding debt are selling to yield
7.237.23
percent while the borrowing firm's corporate tax rate is
3434
percent.
b. Common stock for a firm that paid a
$1.041.04
dividend last year. The dividends are expected to grow at a rate of
5.75.7
percent per year into the foreseeable future. The price of this stock is now
$24.5824.58.
c. A bond that has a
$1 comma 0001,000
par value and a coupon interest rate of
11.411.4
percent with interest paid semiannually. A new issue would sell for
$1 comma 1491,149
per bond and mature in
2020
years. The firm's tax rate is
3434
percent.
d. A preferred stock paying a dividend of
7.47.4
percent on a
$9090
par value. If a new issue is offered, the shares would sell for
$83.0783.07
per share.
In: Accounting
What are the four ways to test internal Controls?
In: Accounting
Imperial Jewelers manufactures and sells a gold bracelet for $405.00. The company’s accounting system says that the unit product cost for this bracelet is $261.00 as shown below:
| Direct materials | $ | 142 | |
| Direct labor | 86 | ||
| Manufacturing overhead | 33 | ||
| Unit product cost | $ | 261 | |
The members of a wedding party have approached Imperial Jewelers about buying 26 of these gold bracelets for the discounted price of $365.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $454 and that would increase the direct materials cost per bracelet by $11. The special tool would have no other use once the special order is completed.
To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $12.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party’s order using its existing manufacturing capacity.
Required:
1. What is the financial advantage (disadvantage) of accepting the special order from the wedding party?
2. Should the company accept the special order?
The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:
| Total | Dirt Bikes |
Mountain Bikes | Racing Bikes |
|||||||||
| Sales | $ | 918,000 | $ | 261,000 | $ | 401,000 | $ | 256,000 | ||||
| Variable manufacturing and selling expenses | 481,000 | 117,000 | 206,000 | 158,000 | ||||||||
| Contribution margin | 437,000 | 144,000 | 195,000 | 98,000 | ||||||||
| Fixed expenses: | ||||||||||||
| Advertising, traceable | 70,200 | 9,000 | 40,600 | 20,600 | ||||||||
| Depreciation of special equipment | 44,200 | 20,600 | 7,700 | 15,900 | ||||||||
| Salaries of product-line managers | 115,200 | 40,200 | 38,600 | 36,400 | ||||||||
| Allocated common fixed expenses* | 183,600 | 52,200 | 80,200 | 51,200 | ||||||||
| Total fixed expenses | 413,200 | 122,000 | 167,100 | 124,100 | ||||||||
| Net operating income (loss) | $ | 23,800 | $ | 22,000 | $ | 27,900 | $ | (26,100) | ||||
*Allocated on the basis of sales dollars.
Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.
Required:
1. What is the financial advantage (disadvantage) per quarter of discontinuing the Racing Bikes?
2. Should the production and sale of racing bikes be discontinued?
3. Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.
In: Accounting
Related to Checkpoint 13.5) (Real options and capital budgeting) You are considering introducing a new Tex-Mex-Thai fusion restaurant. The initial outlay on this new restaurant is
$6.96.9
million and the present value of the free cash flows (excluding the initial outlay) is
$5.35.3
million, such that the project has a negative expected NPV of
$1.61.6
million. Upon closer examination, you find that there is a
5555
percent chance that this new restaurant will be well received and will produce annual cash flows of
$805 comma 000805,000
per year forever (a perpetuity), while there is a
4545
percent chance of it producing a cash flow of only
$199 comma 000199,000
per year forever (a perpetuity) if it isn't received well. The required rate of return you use to discount the project cash flows is
10.110.1
percnet. However, if the new restaurant is successful, you will be able to build
1515
more of them and they will have costs and cash flows similar to the successful restaurant's costs and cash flows.
a. In spite of the fact that the first restaurant has a negative NPV, should you build it anyway? Why or why not?
b. What is the expected NPV for this project if only one restaurant is built but isn't well received? What is the expected NPV for this project assuming
1515
more are built if the first restaurant is well received? (Ignore the fact that there would be a time delay in building additional new restaurants.)
In: Accounting
The Shareholders’ Equity section of Hamilton Design Company’s December 31, 2019, balance sheet appeared as follows:
| Contributed Capital: | |
| Preferred stock, 6%, $100 par (10,000 shares authorized, 1,250 shares issued) | $125,000 |
| Additional paid-in capital on preferred stock | $55,000 |
| Common stock, $10 par (60,000 shares authorized, 15,000 shares issued | $150,000 |
| Additional paid-in capital on common stock | $105,000 |
| Total contributed capital | $435,000 |
| Retained earnings | $78,000 |
| Contributed capital and retained earnings | $513,000 |
| Less: Treasury Stock (300 shares of common at $14 per share) | ($4,200) |
| Total Shareholders' Equity | $508,800 |
During 2020, the company entered into the following transactions affecting shareholders’ equity:
1. Issued 250 shares of preferred stock at $160 per share.
2. Issued 3,000 shares of common stock at $16 per share.
3. Declared and issued a 15% stock dividend. On the date of declaration, the market price of the shares was $19 per share.
4. Reacquired 200 of its own common shares as treasury stock for $15 per share.
5. Reissued 250 shares of treasury stock at $17 per share (FIFO basis).
6. Net income for 2020 was $70,400. Dividends of $25,000 were distributed.
Instructions: Prepare a statement of stockholders’ equity for the year ended December 31, 2020, for Hamilton. Use the “columnar format” show in your textbook.
***Please show all supporting calculations.
In: Accounting
What are the four main steps in doing a business strategy analysis using financial statements? Why, at each step, is analysis in a cross-border context more difficult than a single-country analysis?
In: Accounting
Journal entries and financial statement extracts
An office building sub-let to a subsidiary of Suria Berhad. At 1st January 2018, it had a fair value of RM1.5 million and had risen to RM1.65 million at 31st December 2018.
Q1/Fair value change journal entry and the financial statement extract
In: Accounting
Required
Prepare a vertical analysis of both the balance sheets and income statements for 2019 and 2018.
Prepare a vertical analysis of the balance sheets for 2019 and 2018. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
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Prepare a vertical analysis of an income statements for 2019 and 2018. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
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In: Accounting
Carlsbad Corporation's sales are expected to increase from $5 million in 2019 to $6 million in 2020, or by 20%. Its assets totaled $4 million at the end of 2019. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%.
choose one
In: Accounting
Prepare a horizontal analysis of both the balance sheet and income statement.
Prepare a horizontal analysis of the balance sheet. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)
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Prepare a horizontal analysis of the income statement. (Negative answers should be indicated by a minus sign. Round your answers to 1 decimal place. (i.e., .234 should be entered as 23.4).)
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In: Accounting
Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses. There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in binoculars, cameras, and similar equipment (B-13). The manufacturing cost of each unit is calculated using activity-based costing, using the following manufacturing cost pools: Cost Pools Allocation Base Costing Rate Materials handling Number of parts $ 2.40 per part Manufacturing supervision Hours of machine time $ 14.80 per hour Assembly Number of parts $ 3.30 per part Machine setup Each setup $ 56.50 per setup Inspection and testing Logged hours $ 45.50 per hour Packaging Logged hours $ 19.50 per hour LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing costs and activity usage for the two products are as follows: B-13 F-32 Direct materials $ 164.50 $ 75.60 Number of parts 160 120 Machine hours 7.90 4.20 Inspection time 1.70 0.80 Packaging time 0.90 0.50 Setups 3 2 If the market price for B-13 and F-32 are reduced to $1,695 and $1,095 respectively, and Lens Care wants to maintain market share and profitability, what is the target cost for B-13 and F-32 (round to nearest whole dollar)? B-13 F-32 A) $ 80 $ 120 B) $ 1,378 $ 125 C) $ 318 $ 856 D) $ 1,378 $ 856 E) $ 318 $ 422
In: Accounting