ABCCompany, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: Debit Credit Cash $48,000 Accounts receivable 224,000 Inventory 60,000 Buildings and equipment (net) 370,000 Accounts payable $93,000 Capital shares 500,000 Retained earnings 109,000 $702,000 $702,000 b. Actual sales for December and budgeted sales for the next four months are as follows: December (actual) $280,000 January 400,000 February 600,000 March 300,000 April 200,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. d. The company's gross margin is 40% of sales. e. Monthly expenses are budgeted as follows: salaries and wages, $27,000 per month; advertising, $70,000 per month; shipping, 5% of sales; depreciation, $14,000 per month; other expenses, 3% of sales. f. At the end of each month, inventory is to be on hand equal to 25% of the following month's sales needs, stated at cost. g. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. h. During February, the company will purchase a new copy machine for $1,700 cash. During March, other equipment will be purchased for cash at a cost of $84,500. i. During January, the company will declare and pay $45,000 in cash dividends. j. The company must maintain a minimum cash balance of $30,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) Required: Using the above data, complete the following statements and schedules for the first quarter: 1. Schedule of expected cash collections. 2. Inventory purchases budget. 3. Schedule of cash disbursements for purchases. 4. Schedule of cash disbursements for expenses. 5. Cash budget. 6. Income statement for the quarter ending March 31 7. .Balance sheet as of March 31.
In: Accounting
|
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: |
| a. |
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: |
| Debits | Credits | |||||
| Cash | $ | 50,000 | ||||
| Accounts receivable | 216,000 | |||||
| Inventory | 57,000 | |||||
| Buildings and equipment (net) | 371,000 | |||||
| Accounts payable | $ | 91,000 | ||||
| Capital shares | 500,000 | |||||
| Retained earnings | 103,000 | |||||
| $ | 694,000 | $ | 694,000 | |||
| b. | Actual sales for December and budgeted sales for the next four months are as follows: |
| December (actual) | $ | 270,000 | |
| January | 380,000 | ||
| February | 570,000 | ||
| March | 240,000 | ||
| April | 220,000 | ||
| c. |
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. |
| d. | The company’s gross margin is 40% of sales. |
| e. |
Monthly expenses are budgeted as follows: salaries and wages, $26,000 per month; advertising, $70,000 per month; shipping, 5% of sales; depreciation, $14,000 per month; other expenses, 3% of sales. |
| f. |
At the end of each month, inventory is to be on hand equal to 25% of the following month’s sales needs, stated at cost. |
| g. |
One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. |
| h. |
During February, the company will purchase a new copy machine for $1,500 cash. During March, other equipment will be purchased for cash at a cost of $85,500. |
| i. | During January, the company will declare and pay $46,000 in cash dividends. |
| j. |
The company must maintain a minimum cash balance of $30,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) |
| Required: |
| Using the preceding data, complete the following statements and schedules for the first quarter: |
| 1. | Schedule of expected cash collections. |
| 2-a. | Inventory purchases budget. |
| 2-b. | Schedule of cash disbursements for purchases. |
| 3. | Schedule of cash disbursements for expenses. |
| 4. |
Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) |
| 5. | Prepare an income statement for the quarter ending March 31. |
| 6. | Prepare a balance sheet as of March 31. |
In: Accounting
|
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: |
| a. |
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: |
| Debits | Credits | |||||
| Cash | $ | 49,000 | ||||
| Accounts receivable | 224,000 | |||||
| Inventory | 63,000 | |||||
| Buildings and equipment (net) | 369,000 | |||||
| Accounts payable | $ | 95,000 | ||||
| Capital shares | 500,000 | |||||
| Retained earnings | 110,000 | |||||
| $ | 705,000 | $ | 705,000 | |||
| b. | Actual sales for December and budgeted sales for the next four months are as follows: |
| December (actual) | $ | 280,000 | |
| January | 420,000 | ||
| February | 680,000 | ||
| March | 310,000 | ||
| April | 220,000 | ||
| c. |
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. |
| d. | The company’s gross margin is 40% of sales. |
| e. |
Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $68,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. |
| f. |
At the end of each month, inventory is to be on hand equal to 25% of the following month’s sales needs, stated at cost. |
| g. |
One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. |
| h. |
During February, the company will purchase a new copy machine for $1,500 cash. During March, other equipment will be purchased for cash at a cost of $81,500. |
| i. | During January, the company will declare and pay $45,000 in cash dividends. |
| j. |
The company must maintain a minimum cash balance of $31,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) |
| Required: |
| Using the preceding data, complete the following statements and schedules for the first quarter: |
| 1. | Schedule of expected cash collections. |
| 2-a. | Inventory purchases budget. |
| 2-b. | Schedule of cash disbursements for purchases. |
| 3. | Schedule of cash disbursements for expenses. |
| 4. |
Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) |
| 5. | Prepare an income statement for the quarter ending March 31. |
| 6. | Prepare a balance sheet as of March 31. |
In: Accounting
|
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the first quarter: |
| a. |
As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: |
| Debits | Credits | |||||
| Cash | $ | 47,000 | ||||
| Accounts receivable | 232,000 | |||||
| Inventory | 63,000 | |||||
| Buildings and equipment (net) | 366,000 | |||||
| Accounts payable | $ | 95,000 | ||||
| Capital shares | 500,000 | |||||
| Retained earnings | 113,000 | |||||
| $ | 708,000 | $ | 708,000 | |||
| b. | Actual sales for December and budgeted sales for the next four months are as follows: |
| December (actual) | $ | 290,000 | |
| January | 420,000 | ||
| February | 670,000 | ||
| March | 310,000 | ||
| April | 180,000 | ||
| c. |
Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales. |
| d. | The company’s gross margin is 40% of sales. |
| e. |
Monthly expenses are budgeted as follows: salaries and wages, $25,000 per month; advertising, $69,000 per month; shipping, 5% of sales; depreciation, $15,000 per month; other expenses, 3% of sales. |
| f. |
At the end of each month, inventory is to be on hand equal to 25% of the following month’s sales needs, stated at cost. |
| g. |
One-half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the following month. |
| h. |
During February, the company will purchase a new copy machine for $3,000 cash. During March, other equipment will be purchased for cash at a cost of $83,000. |
| i. | During January, the company will declare and pay $43,000 in cash dividends. |
| j. |
The company must maintain a minimum cash balance of $28,000. An open line of credit is available at a local bank for any borrowing that may be needed during the quarter. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of payment of principal. The annual interest rate is 12%. (Figure interest on whole months, e.g., 1/12, 2/12.) |
| Required: |
| Using the preceding data, complete the following statements and schedules for the first quarter: |
| 4. |
Cash budget. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) |
| 5. | Prepare an income statement for the quarter ending March 31. |
| 6. | Prepare a balance sheet as of March 31. |
References
eBook & Resources
In: Accounting
Advise what the following terms mean: Leakages from spending. Injections into spending. What happens when leakages equal injections? What does equilibrium mean in macroeconomics?
In: Economics
laissee-faire, Keynesian economics, mandatory spending vs. discretionary spending. Define each of these terms but also discuss and paint a picture of what these terms actually meant for our country.
In: Economics
DATA:
Spending by Men Spending by Women
85 90
102 79
139 71
90 119
89 90
52 180
49 88
140 56
90 110
64 82
96 64
132 129
117 28
88 13
92 140
105 62
95 32
119 220
118 72
124 90
131 80
113 56
124 82
71 56
115 88
95 104
102 54
94 108
111 86
85 88
87 38
92 66
92 100
72 57
97 59
83 89
118 95
108 37
104 86
110 62
66
129
119
76
75
101
85
68
67
36
90
99
64
54
86
79
82
65
110
69
A consumer research firm believe that men and women shop at malls for different reasons, and spend different amounts of money when they shop. While women shop more frequently and for longer amounts of time, men shop less frequently, but tend to spend more each time when they do shop. The research firm has collected spending data for 40 men and 60 women at a local mall and wish to analyze if men spend more when they shop then women based on this data.
NOTE: For this data set, we are assuming UNEQUAL VARIANCES.
a. Specify the competing Null and Alternate hypotheses that you will use to test the economist’s claim.
Null Hypothesis:
Alternative Hypothesis:
b. Is this a one-tailed test or a two-tailed test? Explain why.
Is this test of “independent samples” or “dependent samples”? Explain why.
c. Calculate the value of the t statistic and the appropriate p-value. Provide mean values, and provide the values for the following variables from the output: Mean Spending by Men: Mean Spending by Women: Test Statistic: p-value:
d. At the 99% confidence level (alpha = 0.01), does the data support the researchers claim? Explain how you came to this conclusion.
In: Statistics and Probability
DATA:
Spending by Men Spending by Women
85 90
102 79
139 71
90 119
89 90
52 180
49 88
140 56
90 110
64 82
96 64
132 129
117 28
88 13
92 140
105 62
95 32
119 220
118 72
124 90
131 80
113 56
124 82
71 56
115 88
95 104
102 54
94 108
111 86
85 88
87 38
92 66
92 100
72 57
97 59
83 89
118 95
108 37
104 86
110 62
0 66
0 129
0 119
0 76
0 75
0 101
0 85
0 68
0 67
0 36
0 90
0 99
0 64
0 54
0 86
0 79
0 82
0 65
0 110
0 69
A consumer research firm believe that men and women shop at malls for different reasons, and spend different amounts of money when they shop. While women shop more frequently and for longer amounts of time, men shop less frequently, but tend to spend more each time when they do shop. The research firm has collected spending data for 40 men and 60 women at a local mall and wish to analyze if men spend more when they shop then women based on this data.
NOTE: For this data set, we are assuming UNEQUAL VARIANCES.
a. Specify the competing Null and Alternate hypotheses that you will use to test the economist’s claim.
Null Hypothesis:
Alternative Hypothesis:
b. Is this a one-tailed test or a two-tailed test? Explain why.
Is this test of “independent samples” or “dependent samples”? Explain why.
c. Calculate the value of the t statistic and the appropriate p-value. Provide mean values, and provide the values for the following variables from the output: Mean Spending by Men: Mean Spending by Women: Test Statistic: p-value:
d. At the 99% confidence level (alpha = 0.01), does the data support the researchers claim? Explain how you came to this conclusion.
In: Statistics and Probability
Perpetual Inventory Using FIFO
The following units of a particular item were available for sale during the calendar year:
| Jan. 1 | Inventory | 4,000 units at $40 |
| Apr. 19 | Sale | 2,500 units |
| June 30 | Purchase | 4,500 units at $44 |
| Sept. 2 | Sale | 5,000 units |
| Nov. 15 | Purchase | 2,000 units at $46 |
The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.
| Schedule of Cost of Goods Sold FIFO Method |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Purchases | Cost of Goods Sold | Inventory | |||||||
| Date | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost | Quantity | Unit Cost | Total Cost |
| Jan. 1 | ? | ? | ? | ||||||
| Apr. 19 | 2500 | 40 | 100,000 | ? | ? | ? | |||
| June 30 | 4500 | 44 | 198000 | ? | ? | ? | |||
| ? | ? | ? | |||||||
| Sept. 2 | 1500 | ? | ? | ? | ? | ? | |||
| 3500 | ? | ? | |||||||
| Nov. 15 | 2000 | 46 | 92000 | ? | ? | ? | |||
| ? | ? | ? | |||||||
| Dec. 31 | Balances | ? | ? | ||||||
In: Accounting
Your firm is considering expanding its operations which represent the same risk as your current operations. It’s expected to return additional cash flows of $10,000,000 at the end of each of the first five years and $7,000,000 at the end of each of the subsequent five years and a salvage value of $20,000,000 at the end of its 10-year use. Your firm is financed with $80,000,000 in $1,000 par bonds paying semi-annual coupons for an annual coupon rate of 6%, due in 20 years. They currently sell @105. Additionally, your firm is financed with $20,000,000 in common equity currently selling for $10/share which shareholders expect to continue to receive $0.25/share per quarter for the foreseeable future. You may annualize the coupons and dividends for this capital budgeting problem and assume negligible changes in the current expectations of inflation and risk. Your firm pays 40% in taxes. Remember to diagram the cf/time line where applicable.
1.)What is the most you would pay for this expansion? Would you pay more, less, or the same if immediately (a) share prices increase, (b) corporate income tax rates decrease, or (c) your bonds sell at par?
In: Finance