Tony and Suzie purchased land costing $500,000 for a new camp in January 2020. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 7%, $10 par preferred, and $1 par value common.
When the company began on July 1, 2018, Tony and Suzie each purchased 15,000 shares of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during 2020, its third year of operations:
July 2 Issue an additional 110,000 shares of common stock for $13 per share.
September 10 Repurchase 11,000 shares of its own common stock (i.e., treasury stock) for $16 per share.
November 15 Reissue 5,500 shares of treasury stock at $17 per share.
December 1 Declare a cash dividend on its common stock of $134,500 ($1 per share) to all stockholders of record on December 15.
December 31 Pay the cash dividend declared on December 1.
1. Record each of these transactions.
2. Great Adventures has net income of $158,000 in 2020. Retained earnings at the beginning of 2020 was $148,000. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2020.
In: Accounting
The BCJ Company needs a master budget for the three months beginning April 1, 2020. The company retails widgets. The 2020 budget should be based on the following information. An ending minimum cash balance of $10,000 each month is required. Sales are forecasted at an average selling price of $8 per widget. Merchandise costs are $4 per widget. Currently, the company maintains an ending inventory balance equal to 20% of the next month’s projected cost of goods sold. Purchases during any given month are paid half in the month of purchase and half during the following month. Sales are 20% cash and 80% on credit (payable within 30 days), but experience has shown that 60% of monthly credit sales is collected in the current month, 40% in the next month.
Monthly operating expenses are as follows:
Wages and salaries $15,000
Insurance expired 150
Depreciation 1,200
Utilities 1,000
Advertising 300
Miscellaneous 500
Rent 400 per month+ 10% of monthly sales.
All operating expenses are paid as incurred, except insurance, depreciation, and rent. Rent of $400 is paid at the beginning of each month, and the additional 10% of sales is paid in the month following the sales. The company plans to buy some new equipment for $5,000 cash in June. Cash dividends of $1,500 are to be paid quarterly, beginning April 15. Dividends are declared on the 15th of the last month in the calendar quarter.
BCJ has an established line of credit with its bank, Third Fifth National. Money can be borrowed and repaid in multiples of $1,000, at an interest rate of 6% per annum. Management wants to minimize borrowing and repay rapidly. Interest is computed and paid when the principal is repaid. Assume that borrowing occurs at the beginning and repayments at the end of the months in question. Money is never borrowed at the beginning and repaid at the end of the same month. Compute interest to the nearest dollar.
Balance Sheet
March 31, 2020
Assets Liabilities
Cash $16,300 Accounts payable (inventory) $13,750
Accounts receivable (net) 19,200 Dividends payable 1,500
Inventory 4,000 Rent payable 6,000
Prepaid insurance 1,800 Total 21,250
Land, Building, Equipment (net) 75,000
Stockholders' Equity
Capital stock ($1 par value) 54,400
Retained earnings 40,650
Total assets $116,300 Total Liabilities & Stockholders' Equity $116,300
Recent and forecasted sales:
January $45,000 February $50,000 March $60,000 April $40,000
May $50,000 June $70,000 July $60,000
Required: 1. Prepare a master budget, using Excel, and all supporting schedules (including sales) for the months April, 2020 through June, 2020.
2. Prepare the budgeted Income Statement and Statement of Cash Flows for the quarter ended June 30, 2020 and the budgeted Balance Sheet at June 30, 2020.
In: Accounting
In: Finance
In: Finance
In: Accounting
You are a senior manager of a firm in Florida that manufactures a range of toys locally only. Your revenues come from two products- plastic toys with no moving parts, requiring simple assembly, and electric toys with moving parts, requiring precision & skilled assembly. Your CEO has made a recent trip to Asia and has discovered the wonderful world of low labor cost South East Asian countries. She concludes that the company should shift production of part of their products at least to some of these countries, reckoning that the company could cut production costs substantially. After further research, she discovered that labor costs in Pakistan are Rs.100 per hour compared to $9 in Florida. When she learnt that the current exchange rate is Rs.20/$, she was convinced that she should move all production to Pakistan.
You, however, have had the benefit of attending the international business course at Nova, and so investigate further before carrying out the CEO's bidding. You determine that your CEO was right about the labor cost differences being the single most important determinant of your costs. Since you are buying components and only assembling them, the raw material costs did not vary depending on where you manufactured. Therefore, she seemed to be on the right track in arguing that Pakistan would be the cheaper location. Nevertheless, you dig deeper and find the following data (assume no quality differences, zero transportation costs, etc.):
Toys produced /unit of labor
Plastic - Pakistan 3 , USA 6
Electric - Pakistan 2, USA 6
a) What are the opportunity costs of producing each of these goods in each country? (1 point)
b) Based ONLY on the data in the table (i.e. ignoring wage rates), would you move ALL production to Pakistan? If so, why? If not, would you move one product to Pakistan? If so, which one, and why? (1 point)
c) Now include the wage rates in your analysis. What would you recommend to the CEO? If you recommended moving any production to Pakistan, justify your decision. If you recommend not moving any production to Pakistan, justify your decision to the CEO by determining (3 points)
i. The wage level at which it would be optimal to move some production to Pakistan
ii. The wage level at which it would be optimal to move all production to
d) What are the limits to the exchange rate at which it makes sense to produce at least something in both countries? (3 points)
In: Economics
Accounts receivable transactions are provided below
for J Crane Co.
Dec. 31, 2020
The company estimated that 3% of its accounts receivable would become uncollectible. The balances in the Accounts Receivable account and Allowance for Doubtful Accounts were $684,000 and $3,000 (debit), respectively.
Mar. 5, 2021
The company determined that R. Mirza’s $3,100 account and D. Wight’s $6,900 account were uncollectible. The company’s accounts receivable were $719,000 before the accounts were written off.
June 6, 2021
Wight paid the amount that had been written off on March 5. The company’s accounts receivable were $674,000prior to recording the cash receipt for Wight.
(a)
Correct answer iconYour answer is correct.
Prepare the journal entries on December 31, 2020,
March 5, 2021, and June 6, 2021. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Record journal entries
in the order presented in the problem.)
Date
Account Titles and Explanation
Debit
Credit
[Dec. 31, 2020 \/]
[Bad Debts Expense \/]
[ ]
[ ]
[Bad Debts Expense \/]
[ ]
[ ]
(To record estimate of uncollectible accounts.)
[Dec. 31, 2020 \/]
[Bad Debts Expense \/]
[ ]
[ ]
[Allowance for Doubtful Accounts \/]
[ ]
[ ]
(To record write off of accounts receivable.)
[Dec. 31, 2020 \/]
[Cash \/]
[ ]
[ ]
[No Entry \/]
[ ]
[ ]
(To record write off of accounts receivable.)
[Dec. 31, 2020 \/]
[Allowance for Doubtful Accounts \/]
[ ]
[ ]
[No Entry \/]
[ ]
[ ]
(To reverse write off.)
[Dec. 31, 2020 \/]
[Accounts Receivable - Mirza \/]
[ ]
[ ]
[Accounts Receivable - Wight \/]
[ ]
[ ]
(Collection of account that was previously written off.)
eTextbook and Media
List of Accounts
Attempts: 3 of 5 used
(b)
Your Answer
Correct Answer
Correct answer iconYour answer is correct.
Post the journal entries to Allowance for Doubtful
Accounts and calculate the new balance after each
entry.
Allowance for Doubtful Accounts
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31, 2020
Balance unadjusted Debit
[ ]
Dec. 31, 2020
AJE
[ ]
[ ]
[ ]
Mar. 5, 2021
Write off Mirza
[ ]
[ ]
[ ]
Mar. 5, 2021
Write off Wight
[ ]
[ ]
[ ]
June 6, 2021
Reverse write off
[ ]
[ ]
[ ]
eTextbook and Media
List of Accounts
Attempts: 5 of 5 used
(c)
Incorrect answer iconYour answer is incorrect.
Calculate the carrying amount of the accounts
receivable both before and after recording the cash receipt from
Wight on June 6, 2021.
Carrying amount before recovery
$ [ ]
Carrying amount after recovery
$ [ ]
In: Accounting
The December 31, Year 4, balance sheet for Deen Company showed total stockholders’ equity of $156,000. Total stockholders’ equity increased by $65,000 between December 31, Year 4, and December 31, Year 5. During Year 5, Deen Company acquired $20,000 cash from the issue of common stock. The Company paid a $5,000 cash dividend to the stockholders during Year 5.
Required
Determine the amount of net income or loss Deen reported on its Year 5 income statement. (Hint: Remember that stock issues, net income, and dividends all change total stockholders’ equity.)
In: Accounting
On July 1, 2016, Gissel Corporation purchased Mills Company by paying $525,000 cash. At July 1, 2016, the balance sheet of Mills Company was as follows.
Cash $50,000 Accounts Payable $200,000
Accounts Receivable $90,000 Stockholder’s Equity $225,000
Inventory $100,000
Land $40,000
Buildiings 75,000
Equipment $70,000
Total $425,000 Total $425,000
The recorded amounts all approximate current values except for land (fair value of $60,000) and inventory (fair value of $110,000). They also acquired a patent from Mills company with a fair value of $15,000. What amount of goodwill should be recognized by Gissel Corporation?
In: Accounting
Last week, you performed a trend analysis for the manufacturing company you selected in week 2. For this week, refer back to that company and assess the financial statements using the ratio tools you have acquired in the course. Select at least one profitability, liquidity, solvency, and market valuation ratio and evaluate the results. Based on your findings, post an initial response to the following:
In: Accounting