Universal Foods issued 14% bonds, dated January 1, with a face
amount of $145 million on January 1, 2018 to Wang Communications.
The bonds mature on December 31, 2032 (15 years). The market rate
of interest for similar issues was 16%. Interest is paid
semiannually on June 30 and December 31. Universal uses the
straight-line method. Universal Foods sold the entire bond issue to
Wang Communications. (FV of $1, PV of $1, FVA of $1, PVA of $1,
FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from
the tables provided.)
Required:
1-3. Prepare the journal entry to record the
purchase of the bonds by Wang Communications on January 1, 2018,
interest revenue on June 30, 2018 and interest revenue on December
31, 2025. (Enter your answers in whole dollars. If no entry
is required for a transaction/event, select "No journal entry
required" in the first account field.)
In: Accounting
A stock is expected to pay a constant dividend of $3/share every quarter (every 3 months) and the first dividend is expected in exactly 1 year. If the market's required return on this stock is 11% PER YEAR, what is the market value of the stock today? [Express your final answer in dollars and cents (rounded to 2 decimal places)]
Market Value = $ per share
In: Finance
Depoul'' financial company purchased a call option on thr S&P 500 index expiring in one year permuim is quoted at 20. the exercise price of the option is 1300 and the current price of the assume the index declines by 5% in the first quarter , then increase by 3 % in each of the follwing , what is the net gain or loss of this transaction ? hint: multiply index by 250$ to find the contract).
In: Finance
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:
Budgeted monthly absorption costing income statements for April–July are:
| April | May | June | July | |||||
| Sales | $ | 730,000 | $ | 1,190,000 | $ | 650,000 | $ | 560,000 |
| Cost of goods sold | 511,000 | 833,000 | 455,000 | 392,000 | ||||
| Gross margin | 219,000 | 357,000 | 195,000 | 168,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 129,000 | 114,000 | 76,000 | 56,000 | ||||
| Administrative expense* | 55,500 | 74,200 | 47,000 | 53,000 | ||||
| Total selling and administrative expenses | 184,500 | 188,200 | 123,000 | 109,000 | ||||
| Net operating income | $ | 34,500 | $ | 168,800 | $ | 72,000 | $ | 59,000 |
*Includes $37,000 of depreciation each month.
Sales are 20% for cash and 80% on account.
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $305,000, and March’s sales totaled $320,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $140,700.
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $102,200.
Dividends of $44,000 will be declared and paid in April.
Land costing $56,000 will be purchased for cash in May.
The cash balance at March 31 is $66,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.
The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $102,200 and accounts payable for inventory purchases at March 31 remains $140,700.
Required:
1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president’s new assumptions, prepare a cash budget
for April, May, and June, and
for the quarter in total.
In: Accounting
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:
Budgeted monthly absorption costing income statements for April–July are:
| April | May | June | July | |||||
| Sales | $ | 640,000 | $ | 1,140,000 | $ | 600,000 | $ | 500,000 |
| Cost of goods sold | 448,000 | 798,000 | 420,000 | 350,000 | ||||
| Gross margin | 192,000 | 342,000 | 180,000 | 150,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 119,000 | 109,000 | 71,000 | 50,000 | ||||
| Administrative expense* | 50,000 | 68,000 | 44,000 | 48,000 | ||||
| Total selling and administrative expenses | 169,000 | 177,000 | 115,000 | 98,000 | ||||
| Net operating income | $ | 23,000 | $ | 165,000 | $ | 65,000 | $ | 52,000 |
*Includes $32,000 of depreciation each month.
Sales are 20% for cash and 80% on account.
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $280,000, and March’s sales totaled $295,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $127,400.
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $89,600.
Dividends of $39,000 will be declared and paid in April.
Land costing $47,000 will be purchased for cash in May.
The cash balance at March 31 is $61,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.
The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $89,600 and accounts payable for inventory purchases at March 31 remains $127,400.
Required:
1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president’s new assumptions, prepare a cash budget
for April, May, and June, and
for the quarter in total.
In: Finance
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:
Budgeted monthly absorption costing income statements for April–July are:
| April | May | June | July | |||||
| Sales | $ | 640,000 | $ | 1,140,000 | $ | 600,000 | $ | 500,000 |
| Cost of goods sold | 448,000 | 798,000 | 420,000 | 350,000 | ||||
| Gross margin | 192,000 | 342,000 | 180,000 | 150,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 119,000 | 109,000 | 71,000 | 50,000 | ||||
| Administrative expense* | 50,000 | 68,000 | 44,000 | 48,000 | ||||
| Total selling and administrative expenses | 169,000 | 177,000 | 115,000 | 98,000 | ||||
| Net operating income | $ | 23,000 | $ | 165,000 | $ | 65,000 | $ | 52,000 |
*Includes $32,000 of depreciation each month.
Sales are 20% for cash and 80% on account.
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $280,000, and March’s sales totaled $295,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $127,400.
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $89,600.
Dividends of $39,000 will be declared and paid in April.
Land costing $47,000 will be purchased for cash in May.
The cash balance at March 31 is $61,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.
The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $89,600 and accounts payable for inventory purchases at March 31 remains $127,400.
Required:
1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president’s new assumptions, prepare a cash budget
for April, May, and June, and
for the quarter in total
In: Accounting
Problem 8-25 Cash Budget with Supporting Schedules; Changing Assumptions [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 540,000 $ 1,060,000 $ 520,000 $ 420,000 Cost of goods sold 378,000 742,000 364,000 294,000 Gross margin 162,000 318,000 156,000 126,000 Selling and administrative expenses: Selling expense 103,000 101,000 63,000 42,000 Administrative expense* 46,000 61,600 38,600 40,000 Total selling and administrative expenses 149,000 162,600 101,600 82,000 Net operating income $ 13,000 $ 155,400 $ 54,400 $ 44,000 *Includes $24,000 of depreciation each month. Sales are 20% for cash and 80% on account. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $230,000, and March’s sales totaled $255,000. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $109,200. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $75,600. Dividends of $31,000 will be declared and paid in April. Land costing $39,000 will be purchased for cash in May. The cash balance at March 31 is $53,000; the company must maintain a cash balance of at least $40,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $75,600 and accounts payable for inventory purchases at March 31 remains $109,200. Required: 1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total. 2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president’s new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total.
In: Accounting
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter: Budgeted monthly absorption costing income statements for April–July are: April May June July Sales $ 570,000 $ 1,070,000 $ 530,000 $ 430,000 Cost of goods sold 399,000 749,000 371,000 301,000 Gross margin 171,000 321,000 159,000 129,000 Selling and administrative expenses: Selling expense 105,000 102,000 64,000 43,000 Administrative expense* 46,500 62,400 39,200 41,000 Total selling and administrative expenses 151,500 164,400 103,200 84,000 Net operating income $ 19,500 $ 156,600 $ 55,800 $ 45,000 *Includes $25,000 of depreciation each month. Sales are 20% for cash and 80% on account. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $245,000, and March’s sales totaled $260,000. Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $112,700. Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $79,800. Dividends of $32,000 will be declared and paid in April. Land costing $40,000 will be purchased for cash in May. The cash balance at March 31 is $54,000; the company must maintain a cash balance of at least $40,000 at the end of each month. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows: Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $79,800 and accounts payable for inventory purchases at March 31 remains $112,700. Required: 1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total. 2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory: a. A merchandise purchases budget for April, May, and June. b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total. 3. Using the president’s new assumptions, prepare a cash budget for April, May, and June, and for the quarter in total.
In: Accounting
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:
Budgeted monthly absorption costing income statements for April–July are:
| April | May | June | July | |||||
| Sales | $ | 630,000 | $ | 1,130,000 | $ | 590,000 | $ | 490,000 |
| Cost of goods sold | 441,000 | 791,000 | 413,000 | 343,000 | ||||
| Gross margin | 189,000 | 339,000 | 177,000 | 147,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 117,000 | 108,000 | 70,000 | 49,000 | ||||
| Administrative expense* | 49,500 | 67,200 | 43,400 | 47,000 | ||||
| Total selling and administrative expenses | 166,500 | 175,200 | 113,400 | 96,000 | ||||
| Net operating income | $ | 22,500 | $ | 163,800 | $ | 63,600 | $ | 51,000 |
*Includes $31,000 of depreciation each month.
Sales are 20% for cash and 80% on account.
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $275,000, and March’s sales totaled $290,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $125,300.
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $88,200.
Dividends of $38,000 will be declared and paid in April.
Land costing $46,000 will be purchased for cash in May.
The cash balance at March 31 is $60,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
a. Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.
b. The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $88,200 and accounts payable for inventory purchases at March 31 remains $125,300.
Required:
1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president’s new assumptions, prepare a cash budget
for April, May, and June, and
for the quarter in total.
In: Accounting
Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist in preparing a cash budget for the quarter:
Budgeted monthly absorption costing income statements for April–July are:
| April | May | June | July | |||||
| Sales | $ | 580,000 | $ | 1,080,000 | $ | 540,000 | $ | 440,000 |
| Cost of goods sold | 406,000 | 756,000 | 378,000 | 308,000 | ||||
| Gross margin | 174,000 | 324,000 | 162,000 | 132,000 | ||||
| Selling and administrative expenses: | ||||||||
| Selling expense | 107,000 | 103,000 | 65,000 | 44,000 | ||||
| Administrative expense* | 47,000 | 63,200 | 39,800 | 42,000 | ||||
| Total selling and administrative expenses | 154,000 | 166,200 | 104,800 | 86,000 | ||||
| Net operating income | $ | 20,000 | $ | 157,800 | $ | 57,200 | $ | 46,000 |
*Includes $26,000 of depreciation each month.
Sales are 20% for cash and 80% on account.
Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February’s sales totaled $250,000, and March’s sales totaled $265,000.
Inventory purchases are paid for within 15 days. Therefore, 50% of a month’s inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $114,800.
Each month’s ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $81,200.
Dividends of $33,000 will be declared and paid in April.
Land costing $41,000 will be purchased for cash in May.
The cash balance at March 31 is $55,000; the company must maintain a cash balance of at least $40,000 at the end of each month.
The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter
The company’s president is interested in knowing how reducing inventory levels and collecting accounts receivable sooner will impact the cash budget. He revises the cash collection and ending inventory assumptions as follows:
Sales continue to be 20% for cash and 80% on credit. However, credit sales from April, May, and June are collected over a three-month period with 25% collected in the month of sale, 65% collected in the month following sale, and 10% in the second month following sale. Credit sales from February and March are collected during the second quarter using the collection percentages specified in the main section.
The company maintains its ending inventory levels for April, May, and June at 15% of the cost of merchandise to be sold in the following month. The merchandise inventory at March 31 remains $81,200 and accounts payable for inventory purchases at March 31 remains $114,800.
Required:
1. Using the president’s new assumptions in (a) above, prepare a schedule of expected cash collections for April, May, and June and for the quarter in total.
2. Using the president’s new assumptions in (b) above, prepare the following for merchandise inventory:
a. A merchandise purchases budget for April, May, and June.
b. A schedule of expected cash disbursements for merchandise purchases for April, May, and June and for the quarter in total.
3. Using the president’s new assumptions, prepare a cash budget
for April, May, and June, and
for the quarter in total.
In: Accounting