McEwan Industries sells on terms of 3/10, net 20. Total sales for the year are $1,409,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 66 days after their purchases. Assume 365 days in year for your calculations.
A. What is the days sales outstanding? Round your answer to two
decimal places.
_______days
B. What is the average amount of receivables? Round your answer
to the nearest cent. Do not round intermediate calculations.
$________
C. What is the percentage cost of trade credit to customers who
take the discount? Round your answers to two decimal places.
________%
D. What is the percentage cost of trade credit to customers who do
not take the discount and pay in 66 days? Round your answers to two
decimal places. Do not round intermediate calculations.
| Nominal cost: | ________% |
| Effective cost: | ________% |
E. What would happen to McEwan’s accounts receivable if it
toughened up on its collection policy with the result that all
nondiscount customers paid on the 20thday? Round your answers to
two decimal places. Do not round intermediate calculations.
Days sales outstanding (DSO) = ________ days
Average receivables = $________
In: Accounting
Case D. Stewart Company reports the following inventory records for November:
| INVENTORY | ||||
| Date | Activity | # of Units | Cost/Unit | |
| November 1 | Beginning balance | 125 | $ | 16 |
| November 4 | Purchase | 330 | 17 | |
| November 7 | Sale (@ $57 per unit) | 210 | ||
| November 13 | Purchase | 510 | 19 | |
| November 22 | Sale (@ $57 per unit) | 505 | ||
Selling, administrative, and depreciation expenses for the month were $15,500. Stewart’s tax rate is 30 percent.
1. Calculate the cost of ending inventory and the cost of goods sold under each of the following methods using periodic inventory system: (Do not round intermediate calculations.)
2-a. What is the gross profit percentage under the
FIFO method? (Round your percentage answer to 2 decimal
places (i.e. 0.1234 should be entered as 12.34).)
2-b. What is net income under the LIFO method?
3. Stewart applied the lower of cost or market method to value its inventory for reporting purposes at the end of the month. Assuming Stewart used the FIFO method and that inventory had a market replacement value of $18.10 per unit, what would Stewart report on the balance sheet for inventory?
In: Accounting
McEwan Industries sells on terms of 3/10, net 40. Total sales for the year are $952,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 74 days after their purchases. Assume 365 days in year for your calculations.
a. What is the days sales outstanding? Round your answer to two decimal places. days
b. What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate calculations.
c. What is the percentage cost of trade credit to customers who take the discount? Round your answers to two decimal places. %
d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 74 days? Round your answers to two decimal places. Do not round intermediate calculations. Nominal cost? Effective cost?
e.What would happen to McEwan’s accounts receivable if it toughened up on its collection policy with the result that all nondiscount customers paid on the 40th day? Round your answers to two decimal places. Do not round intermediate calculations. Days sales outstanding (DSO) = ? days Average receivables =?$
In: Finance
Greenwood Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Y and Z:
| Activity Cost Pool | Activity Measure | Estimated Overhead Cost | Expected Activity |
||||
| Machining | Machine-hours | $ | 200,000 | 10,000 | MHs | ||
| Machine setups | Number of setups | $ | 100,000 | 200 | setups | ||
| Production design | Number of products | $ | 84,000 | 2 | products | ||
| General factory | Direct labor-hours | $ | 300,000 | 12,000 | DLHs | ||
| Activity Measure | Product Y | Product Z | ||||
| Machining | 8,000 | 2,000 | ||||
| Number of setups | 40 | 160 | ||||
| Number of products | 1 | 1 | ||||
| Direct labor-hours | 9,000 | 3,000 | ||||
~Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to Product Y and Product Z?
~Using the ABC system, what percentage of the Machining, Machine Setups, Product Design, and General Factory costs are assigned to Product Y and Product Z?
In: Accounting
Raleigh Department Store uses the conventional retail method for the year ended December 31, 2019. Available information follows:
| Cost | Retail | |||||
| Gross purchases | $ | 154,950 | $ | 390,000 | ||
| Purchase returns | 5,500 | 30,000 | ||||
| Purchase discounts | 4,000 | |||||
| Gross sales | 341,000 | |||||
| Sales returns | 5,000 | |||||
| Employee discounts | 4,000 | |||||
| Freight-in | 30,500 | |||||
| Net markups | 15,000 | |||||
| Net markdowns | 30,000 | |||||
Sales to employees are recorded net of discounts.
Question: Assume Raleigh Department Store adopts the dollar-value LIFO retail method on January 1, 2020. Estimating ending inventory for 2020 and 2021.
In: Accounting
Year 1 2 3 4 5__
Cash flows now for canidate 90 85 205 165 180
Additional cash flows with merger 60 90 100 225 250
Total cash flows with synergy 150 175 305 390 430
Risk free rate of return 3.0%
Beta for this project (the company after merging) 1.5
Market risk premium 5.5%
Pre-tax cost of debt 3.8%
Marginal tax rate 25%
Number of shares outstanding for the target company (millions) 85
Current market price per share for the target company $48
Percentage of the acquisition financed with debt 50%
Percentage of the acquisition financed with common equity 50%
What is the after tax cost of debt?
What is the after tax cost of common equity
What is the weighted average cost of capital for this acquisition candidate?
What is the maximum price per share you are willing to pay for this candidate?
Based on the numbers above, would you pursue this candidate?
In: Finance
Bruzzone industries decided to construct a new plant and began construction on January 1, 2010 and complete construction on January 1, 2012, Assume bruzzone has a weighted average interest rate on their debt of 14% and that total actually interest paid on all existing debt each December 31 is $700,000. Bruzzone had the following expenditures related to the construction.
January 1, 2010 $2,600,000
July 1, 2010 $1,000,000
April 1, 2011 $800,000
What amount of interest will be capitalized for the year 2010?
a) $112,000
b) $434,000
c)$504,000
d) $588,000
e)616,000
f) $658,000
g) 700,000
Assume the amount of interest capitilized during 2010 was $500,000. What amount of interest will be capitalized for the year 2011?
a) $112,000
b) $434,000
c)$504,000
d) $588,000
e)616,000
f) $658,000
g) 700,000
In: Accounting
On 1 July 2019, CRX Construction Ltd paid $150,000 cash to acquire an item of plant equipment. On this date it was estimated that the item of plant equipment had a useful life of ten years and a residual value of $20,000. CRX Construction Ltd uses the revaluation model to measure items of property, plant and equipment and the straight-line method of depreciation. CRX Construction Ltd has a 30 June reporting date.
An independent valuer provided the following fair values for the item of plant equipment:
Reporting date Fair value
30 June 2020 $110,000
30 June 2021 116,000
30 June 2022 118,000
On 30 September 2022, the item of plant equipment was sold for $120,500 cash.
Required
Prepare the journal entries to account for the events and transactions in relation to the item of plant equipment between 1 July 2019 and 30 September 2022.
In: Accounting
On 1 July 2019, CRX Construction Ltd paid $150,000 cash to acquire an item of plant equipment. On this date it was estimated that the item of plant equipment had a useful life of ten years and a residual value of $20,000. CRX Construction Ltd uses the revaluation model to measure items of property, plant and equipment and the straight-line method of depreciation. CRX Construction Ltd has a 30 June reporting date.
An independent valuer provided the following fair values for the item of plant equipment:
Reporting date Fair value
30 June 2020 $110,000
30 June 2021 116,000
30 June 2022 118,000
On 30 September 2022, the item of plant equipment was sold for $120,500 cash.
Required
Prepare the journal entries to account for the events and transactions in relation to the item of plant equipment between 1 July 2019 and 30 September 2022.
In: Accounting
The Scenario: A construction company has been awarded the contract to build a pipeline in Alaska. The project timeline is of the highest priority because work can only be completed during summer months due to adverse weather conditions. One of the suppliers of a key component has longer lead time than is required to complete the pipeline, but may be able to deliver if the construction company will pay fees to expedite. There are other suppliers, but these suppliers are not on the construction company’s approved suppler list and it would take time to get them approved. There is a huge penalty in the contract if the project is not completed on time.
In: Operations Management