The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 7% $1,800,000 Preferred $10 stock, $50 par 141,500 Common stock, $15 par 2,759,250.00 Income before income tax was $466,200, and income taxes were $70,000 for the current year. Cash dividends paid on common stock during the current year totaled $101,173. The common stock was selling for $22 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest earned ratio times b. Earnings per share on common stock $ c. Price-earnings ratio d. Dividends per share of common stock $ e. Dividend yield
In: Accounting
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared by the Accounting Department of Regina Soap Co.:
| Cash | $107,900 | ||
| Accounts Receivable | 200,700 | ||
| Finished Goods | 42,100 | ||
| Work in Process | 28,100 | ||
| Materials | 46,200 | ||
| Prepaid Expenses | 3,400 | ||
| Plant and Equipment | 486,600 | ||
| Accumulated Depreciation—Plant and Equipment | $209,200 | ||
| Accounts Payable | 138,800 | ||
| Common Stock, $10 par | 350,000 | ||
| Retained Earnings | 217,000 | ||
| $915,000 | $915,000 |
Factory output and sales for 20Y9 are expected to total 25,000 units of product, which are to be sold at $100 per unit. The quantities and costs of the inventories at December 31, 20Y9, are expected to remain unchanged from the balances at the beginning of the year.
Budget estimates of manufacturing costs and operating expenses for the year are summarized as follows:
| Estimated Costs and Expenses | ||||
| Fixed (Total for Year) |
Variable (Per Unit Sold) |
|||
| Cost of goods manufactured and sold: | ||||
| Direct materials | _ | $25 | ||
| Direct labor | _ | 8 | ||
| Factory overhead: | ||||
| Depreciation of plant and equipment | $25,000 | _ | ||
| Other factory overhead | 7,800 | 4.5 | ||
| Selling expenses: | ||||
| Sales salaries and commissions | 89,800 | 12.5 | ||
| Advertising | 75,000 | _ | ||
| Miscellaneous selling expense | 6,500 | 2 | ||
| Administrative expenses: | ||||
| Office and officers salaries | 59,000 | 6.5 | ||
| Supplies | 3,000 | 1 | ||
| Miscellaneous administrative expense | 1,600 | 1.5 | ||
Balances of accounts receivable, prepaid expenses, and accounts payable at the end of the year are not expected to differ significantly from the beginning balances. Federal income tax of $212,200 on 20Y9 taxable income will be paid during 20Y9. Regular quarterly cash dividends of $1 per share are expected to be declared and paid in March, June, September, and December on 35,000 shares of common stock outstanding. It is anticipated that fixed assets will be purchased for $131,000 cash in May.
Required:
1. Prepare a budgeted income statement for 20Y9.
| Regina Soap Co. | |||
| Budgeted Income Statement | |||
| For the Year Ending December 31, 20Y9 | |||
| Sales | $ | ||
| Cost of goods sold: | |||
| Direct materials | $ | ||
| Direct labor | |||
| Factory overhead | |||
| Cost of goods sold | |||
| Gross profit | $ | ||
| Operating expenses: | |||
| Selling expenses: | |||
| Sales salaries and commissions | $ | ||
| Advertising | |||
| Miscellaneous selling expense | |||
| Total selling expenses | $ | ||
| Administrative expenses: | |||
| Office and officers salaries | $ | ||
| Supplies | |||
| Miscellaneous administrative expense | |||
| Total administrative expenses | |||
| Total operating expenses | |||
| Income before income tax | $ | ||
| Income tax expense | |||
| Net income | $ | ||
Feedback
Use information from the expected sales, cost of goods manufactured and sold, and selling and administrative expenses.
2. Prepare a budgeted balance sheet as of December 31, 20Y9.
| Regina Soap Co. Budgeted Balance Sheet December 31, 20Y9 |
|||
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Cash | $ | ||
| Accounts receivable | |||
| Inventories: | |||
| Finished goods | $ | ||
| Work in process | |||
| Materials | |||
| Prepaid expenses | |||
| Total current assets | $ | ||
| Property, plant, and equipment: | |||
| Plant and equipment | $ | ||
| Accumulated depreciation | |||
| Total property, plant, and equipment | |||
| Total assets | $ | ||
| Liabilities | |||
| Current liabilities: | |||
| Accounts payable | $ | ||
| Stockholders' Equity | |||
| Common stock | $ | ||
| Retained earnings | |||
| Total stockholders’ equity | |||
| Total liabilities and stockholders’ equity | |||
In: Accounting
In a survey of
2231
adults in a recent year,
1438
say they have made a New Year's resolution.
Construct 90% and 95% confidence intervals for the population proportion. Interpret the results and compare the widths of the confidence intervals.
The 90% confidence interval for the population proportion p is
left parenthesis nothing comma nothing right parenthesis,.
(Round to three decimal places as needed.)
In: Statistics and Probability
Aramark is considering a 3-year project with an initial cost of $570,000. The project will not directly produce any sales but will reduce operating costs by $147,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $295,000. The tax rate is 25 percent and the required return is 12 percent. An extra $41,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3? $459,738.50 $465,546.17 $476,218.44 $481,983.20 $488,549.26
In: Finance
$2,000 are deposited into a fund at the beginning of each year for 20 years. Starting from the beginning of the 26th year, the balance can support annual payment D lasting forever. Find D if the nominal interest rate compounded continuously is 8%.
In: Finance
A new edition of a
very popular textbook will be published a year from now. The
publisher currently has 1,000 copies on hand and is deciding
whether to do another printing before the new edition comes out.
The publisher estimates that demand for the book during the next
year is governed by the probability distribution in the file
P10_31.xlsx. (See Demand and Probability Table
Below)A production run incurs a fixed cost of $15,000 plus
a variable cost of $20 per book printed. Books are sold for $190
per book. Any demand that cannot be met incurs a penalty cost of
$30 per book, due to loss of goodwill. Up to 1,000 of any leftover
books can be sold to Barnes and Noble for $45 per book. The
publisher is interested in maximizing expected profit. The
following print-run sizes are under consideration: 0 (no production
run) to 16,000 in increments of 2,000. What decision would you
recommend? Use simulation with 1,000 replications.
Select02,0004,0006,0008,00010,00012,00014,00016,000
For your optimal
decision, the publisher can be 90% certain that the actual profit
associated with remaining sales of the current edition will be
between what two values? If needed, round your answers to whole
dollar amounts.
$ and $
| Demand | Probability |
| 3000 | 0.20 |
| 4000 | 0.35 |
| 5000 | 0.25 |
| 6000 | 0.10 |
| 8000 | 0.05 |
| 10000 | 0.05 |
In: Statistics and Probability
Erica is considering a project that will produce cash inflows of $2,999 a year for 3 years. The required rate of return is 15 percent and the initial cost is $6,800. What is the discounted payback period?
In: Finance
1) The condensed income statement for a business for the past year is presented as follows:
|
Product |
||||
|
F |
G |
H |
Total |
|
|
Sales |
$200,000 |
$180,000 |
$320,000 |
$700,000 |
|
Less variable costs |
120,000 |
160,000 |
200,000 |
480,000 |
|
Contribution margin |
$ 80,000 |
$ 20,000 |
$120,000 |
$220,00 |
|
Less fixed costs |
25,000 |
30,000 |
40,000 |
95,000 |
|
Income (Loss) from Operations |
55,000 |
10,000 |
80,000 |
125,000 |
Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?
a) $10,000 increase
b) $20,000 increase
c) $10,000 decrease
*d) $20,000 decrease (correct answer)
2) Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit. The unit cost for Frank Co. to make the part is $30, which includes $3 of fixed costs. If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?
a) $60,000 decrease
b) $40,000 decrease
*c) $40,000 increase (correct answer)
d) $60,000 increase
In: Accounting
Extracts of the Statement of Comprehensive Income for the year
ended 31 December 2018 and
the Statement of Financial Position as at 31 December 2018 are
given below for two companies
viz. Amazon Limited and Gibson
Extract of the Statement of Comprehensive Income for the year ended 31 December 2018:
|
Amazon Limited R |
Gibson Limited R |
|
|
Sales |
6 600 000 |
2 160 000 |
|
Cost of Sales |
4 620 000 |
864 000 |
|
Gross profit |
1 980 000 |
1 296 000 |
|
Depreciation |
270 000 |
12 000 |
|
Other expenses |
240 000 |
45 000 |
|
Operating profit |
1 470 000 |
1 239 000 |
|
Interest on loan |
174 000 |
75 000 |
|
Profit before tax |
1 296 000 |
1 164 000 |
|
Income tax |
388 800 |
349 200 |
|
Profit after tax |
907 200 |
814 800 |
Extract of the Statement of Financial Position as at 31 December 2018:
|
Amazon Limited R |
Gibson Limited R |
|
|
Assets |
|
|
|
Non-current assets |
1 980 000 |
1 260 000 |
|
Inventories |
695 000 |
190 000 |
|
Accounts receivable |
1 000 000 |
180 000 |
|
Bank |
0 |
20 000 |
|
3 675 000 |
1 650 000 |
|
|
Equity and Liabilities |
|
|
|
Ordinary share capital |
2 000 000 |
1 000 000 |
|
Retained earnings |
250 000 |
80 000 |
|
Non-current liabilities (18% p.a) |
1 020 000 |
480 000 |
|
Accounts payable |
360 000 |
90 000 |
|
Bank overdraft |
45 000 |
0 |
|
3 675 000 |
1 650 000 |
Additional Information:
Amazon Limited R800 000
Gibson Limited R230 000
Required:
Compare the performance of Amazon Limited and Gibson Limited (both in same industry) with regard to the following ratios and in each case state your observations:
4.1. The ability of each company to repay its short term debts without relying on sale of its inventories. (6)
4.2. The return earned by shareholders on their investment. (6)
4.3. The operational effectiveness of each company before considering interest income, interest expense and income tax. (6)
4.4. The effectiveness with which the goods for sale have been managed. (6)
4.5. An evaluation of each company’s performance with regard to the management of its trade creditors.
In: Accounting
The draft accounts for the year ended 30 June 2019 and a balance sheet as at that date for W. Willow are submitted to you. Towards the end of the financial year, her accountant resigned and she had completed the records herself. She thinks that errors have occurred and asks for your help. An examination of the accounting records reveals the following. W. Willow is registered for GST.
Required:
(a) Show the journal entries required to make the necessary
adjustments.
1. Interest of $1920 on the investments held by the business was due, but has not been received.
Type your answers in the Table included in the Response
Template below.
2. A payment of $4160 for new office furniture has been incorrectly debited to the Sundry Expenses account. The furniture had been purchased 30th of June 2019.
Type your answers in the Table included in the Response
Template below.
3. Rent due from customers Raggatt and Petney amounting to $2560, plus GST, is not included in the accounts.
Type your answers in the Table included in the Response
Template below.
4. Repairs to Willow’s private motor vehicle, $1700, plus GST, have been debited to the Vehicle Expenses account and GST Receivable account.
Type your answers in the Table included in the Response
Template below.
5. Commission due to sales representatives for the month of June, $4480, has been overlooked.
Type your answers in the Table included in the Response
Template below.
6. An insurance policy covering contents and buildings was taken out on 1 March 2019, the annual premium of $2400 being paid in advance on this date and debited to the Prepaid Insurance account.
Type your answers in the Table included in the Response
Template below.
7. A payment of $35 000 which occurred on 1 July 2018 for additions to buildings has been debited to Repairs and Maintenance.
Type your answers in the Table included in the Response
Template below.
8. No depreciation has been recognised for the year ending 30
June 2019. The draft balance sheet shows the following.
Depreciation is to be calculated as follows.
(b) Buildings: 2% on cost
Type your answers in the Table included in the Response Template below.
(c) Office furniture and equipment: 20% on cost
Type your answers in the Table included in the Response Template below.
(d) Calculate the effect (increase or decrease) of each of the adjustments on the profit figure of $64 900 as shown in the draft accounts.
In: Accounting