Laura Falk, Swifty & Hill Fabricators' accounts receivable manager, has just received the company's sales budget for the first quarter.

The company makes all sales on credit. Laura recently reviewed the company's collection history and found that 70% of the sales are collected in the month of the sale, 26% of sales are collected in the month following the sale, and 4% of sales are uncollectible. The company expects to have an accounts receivable balance of $41,535 on January 1, and this amount represents the remaining receivables from December's sales.

Prepare Swifty & Hill's cash receipts budget for the first quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.)

Determine the Net Accounts Receivable at the end of the quarter. Assume that there are no outstanding accounts receivable and allowance for doubtful accounts balances at the beginning of December for the prior year.

1a. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

₁R₁ = 0.3%, E(₂r ₁) = 1.3%, E(₃r₁) = 10.4%, E(₄r₁) = 10.75%

Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 3 decimal places. (e.g., 32.161))

1b.The Wall Street Journal reports that the rate on four-year Treasury securities is 1.3 percent and the rate on five-year Treasury securities is 2.8 percent. According to the unbiased expectations hypotheses, what does the market expect the one-year Treasury rate to be four years from today, E(₅r₁)? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

1c.Assume the current interest rate on a one-year Treasury bond (₁R₁) is 1.69 percent, the current rate on a two-year Treasury bond (₁R₂) is 1.85 percent, and the current rate on a three-year Treasury bond (₁R₃) is 1.96 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on T-bills during year 3 (E(₃r₁) or ₃f₁)? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

1d.Calculate the future value of the following annuity streams:

a. $8,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually.
b. $8,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly.
c. $8,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually.
d. $8,000 received each quarter for 5 years on the first day of each quarter if your investments pay 6 percent compounded quarterly.
  
(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

a. Future Value:

b. Future Value:

c. Future Value:

d. Future Value:

KC Marketing (KC) makes the following specialized campaigns for its customers:

KC will prepare a TV commercial for $1.5M, an app for $500K, and a Facebook page for $500K. The TV commercial, the app, and the Facebook page are not interrelated. If a customer purchases all items, the total cost is $1.5M, which the customer will pay upon signing the contract. Furthermore, only and only if the app is downloaded more than 10,000 times in the first month, KC will receive a one-time bonus of $100K. The agreement creates enforceable rights and obligations. Before the end of the fiscal quarter, the app was actually downloaded more than 10,000 times in the first month. How much revenue will KC allocate to the TV commercial?

Blair has a 5-year personal loan with the bank. He currently makes an equal quarterly repayment at the end of each quarter at an interest rate of 7% p.a. compounded quarterly. Which of the following may reduce the total cost of the loan? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. To renegotiate the interest rate to 7% p.a. effective.

b. To delay the first repayment to the end of year 1 and repay the loan over the 4 remaining years.

c. To ask for an interest-only period of the first 2 years of the loan term.

d. To change the repayment plan to an equal monthly repayment at the end of each month.

e. To renegotiate the loan term to 10 years.

1. Carol's budget for the coming year estimates monthly sales in units for the first five months of the year as follows: April, 3K; May, 38K; June 40K; July, 39K; and August, 38K.

The ending inventory of finished units available for sale is to be maintained at 25% of the next month's estimated sales. On April 1, there were 12,000 units on hand. There is no work in process at the end of any month. Each unit of finished product requires the use of five units of materials. Materials are to be carried in inventory in an amount equal to one-third of the expected production of the coming month. Beginning inventory on April 1 of the current year was 54,167 units of material.

a.    Prepare a production budget (in units) for the first four months of the period.  

b.    Prepare a materials purchases budget (in units of materials) for the second quarter of the coming year.

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):

Inventory balances at the beginning and end of the year were as follows:

The total manufacturing costs for the year were $670,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $670,000; and the net operating income was $32,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

a.Prepare an income statement for the year.

b.Prepare a schedule of cost of goods sold

c.Prepare a schedule of cost of goods manufactured      

Problem 3-13 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO3-3]

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):

Inventory balances at the beginning and end of the year were as follows:

The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $662,000; and the net operating income was $37,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Problem 3-13 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO3-3]

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):

Inventory balances at the beginning and end of the year were as follows:

The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $730,000; the unadjusted cost of goods sold totaled $662,000; and the net operating income was $35,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

1.What role does Government spending play in GDP? What happens when it spends less?

2.The US decided to spend it's way out of the recession and England decided to cut spending. Compare and contrast the two ways to deal with the recession: austerity or spending, reducing interest rates and QE. Has there been a difference in GDP growth?

3. Is GDP really a good way to measure how well we are doing as a country? Yes or no and Why?