AP9-11A (Various current liabilities)
Joan’s Golf Shop Ltd. had the following transactions involving current liabilities in its fi first year of operations:
1. The company ordered golf equipment from suppliers for $546,000, on credit. It paid $505,000 to suppliers during the year.
2. The shop has seven employees, who earn gross wages of $230,000 for the year. From this, the company deducted 22% for income taxes, $11,400 in CPP premiums, and $3,750 in EI premiums before distributing the cheques to the staff. As an employer, Joan was also required to match the employees’ CPP premiums and pay $5,250 in EI premiums. Eleven-twelfths of the amounts due to the government (all except the last month) were paid before the end of the year.
3. The company gives customers a one-year warranty against defects on golf clubs. Management estimated that warranty costs would total 2% of sales. Sales of golf clubs for the year were $1.1 million. During the year, the company spent $13,000 on refunds under the warranty.
4. Some customers order very expensive, custom-made golf clubs. In these cases, the company requires them to pay a deposit of 50% of the selling price when the order is placed. During the year, deposits totaling $20,000 were received for custom orders. None of these orders have been delivered yet.
Required
a. Prepare journal entries to record the transactions.
b. Prepare the current liabilities section of the statement of fi financial position as it would appear at the end of the year.
In: Accounting
Justin Barlow, wearing a white lab coat with FOY emblazoned on the left side, smiled broadly as he rang the bell to begin the day’s trading on NASDAQ. In a few hours, FOY (ticker: FOY) would commence trading, and he would be the CEO of a publicly traded firm. He would also be a multi-millionaire, at least on paper. Looking back over the five years, Justin realized that he knew a lot more about biochemistry than business and finance. Thankfully, ITM had recruited seasoned professionals to serve as COO and CFO. Justin knew that he could never have gotten this far without Joe Init’s help and the support of his staff. Sure, Joe took a little more ownership at every financing stage (Justin now owned about 22% of the company), but Justin supposed that was just the cost of playing the game. One thing still puzzled him, however. For the last three weeks, he had been traveling around the country with staff from ITM and the investment banker, Platinum Baggs, to meet prospective investors. Demand for the stock was very high and every institutional investor that they visited made strong commitments to purchase shares at the IPO. Based in this information, they raised the offer price by $4 per share compared to the midpoint of the initial estimated price range ($17.50 - $19.50). Still, the investment banker estimated that the stock price would increase 30-35% on the first day of trading. Justin suggested that they further increase the price or the number of shares offered to raise more capital (and further increase his personal wealth), but Platinum argued strongly that they should not raise the price even higher. Justin did not understand why they insisted that he leave so much money on the table, but Joe Init did not seem to mind too much so. In the end, Justin decided that the investment bankers knew more about the IPO process than he did, so he agreed to an offer price of $22.50. The price of the stock at the close of first-day trading was $30.75.
Why would Platinum Baggs insist that FOY underprice the offer and leave money on the table?
In: Finance
The bank portion of the bank reconciliation for the Fixar Company at January 31,2018 is as follows:
FIXAR COMPANY
Bank Reconciliation
January 31, 2018
Cash balance per bank $13,581.90
Add: Deposits in transit 1,432.80
15,014.70
Less: Outstanding checks
Check Number Check Amount
3351 $1,089.20
3370 930.40
3371 844.50
3372 734.90
3374 1,050.00
3375 1,396.60 6,045.60
Adjusted cash balance per bank $8,969.10
The adjusted cash balance per bank agreed with the cash balance per books at January 31st.
The February bank statement showed the following checks and deposits.
Bank Statement
Checks Deposit
Date Number Amount Date Amount
2-1 3370 $ 930.40 2-1 $1,432.80
2-2 3371 844.50 2-4 1,451.50
2-4 3374 1,050.00 2-8 890.10
2-6 3376 2,830.00 2-13 2,575.00
2-7 3377 600.00 2-18 1,472.70
2-10 3379 1,740.00 2-20 2,836.00
2-15 3380 1,330.00 2-25 2,567.30
2-18 3381 695.40 2-27 2,350.00
. 2-27 3383 425.75 2-28 1,186.00
2-28 3386 750.00 Total $16,761.40
2-28 3389 1,210.45
2-28 3392 542.00
Total $12,948.50
The cash records per books for February show the following information:
Cash Payments Journal Cash Receipts Journal
Date Number Amount Date Number Amount Date Amount
2-1 3376 $2,830.00 2-20 3384 730.75 2-3 $1,451.50
2-2 3377 600.00 2-22 3385 882.30 2-7 890.10
2-2 3378 538.20 2-23 3386 750.00 2-12 2,575.00
2-4 3379 1,470.00 2-24 3387 526.70 2-17 1,472.70
2-8 3380 1,330.00 2-25 3388 750.00 2-19 2,863.00
2-10 3381 695.40 2-26 3389 1,210.45 2-24 2,567.30
2-15 3382 547.00 2-27 3392 542.00 2-26 2,350.00
2-18 3383 425.75 Total $13,828.55 2-27 1,186.00
2-28 2,456.00
Total $17,811.60
The bank statement contained two bank memoranda:
1. A credit of $1,895.00 for the collection of a $1,800 note for Fixar Company plus interest of $115 and less a collection fee of $20.
Fixar Company accrued interest to the maturity of the note.
2. A debit for the printing of additional company checks, $75.00.
At February 28 the cash balance per books was $11,118.80 and the cash balance per the bank statement was $17,381.45.
The bank did not make any errors but two errors were made by Fixar Company.
Instructions:
(a) Prepare the bank reconciliation at February 28, 2018
(b) Prepare the adjusting entries based on the reconciliation. (Note. The correction of any errors pertaining to recording checks should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable.)
In: Accounting
2 Section 7.4 INFERENCE FOR MEANS
1) Example: The World Health Organization (WHO) monitors many
variables to
assess a population's overall health. One of these variables is
birth weight. A low
birth weight is defined as 2500 grams or less.
Suppose that babies in a town had a mean birth weight of 3,500
grams with a
standard deviation of 500 grams in 2005. This year, a random sample
of 25
babies has a mean weight of 3,400 grams. Obviously, this sample
weighs less on
average than the population of babies in the town in 2005. A
decrease in the
town's mean birth weight could indicate a decline in overall health
of the town.
Are differences this large expected in random sampling from a
population with a
mean birth weight of 3,500 grams? What is the probability that a
random sample
of 25 babies will have a mean birth weight of 3,400 grams or
less?
We assume that the variability in individual birth weights is the
same this year
as it was in 2005. In general, body measurements in a large
population can be
modeled by a normal curve.
Section 7.4 DISTRIBUTION OF SAMPLE MEANS
Here are the two normal models drawn
on the same scale. Which is the
population and which is the sampling
distribution? How do you know?
d) What is the z-score for a baby that weighs 3400 grams? What is
the z-score
for a sample of babies with a mean birth weight of 3400 grams? Why
do your
answers make sense when you look at the normal curves in (c)?
e) What is the probability that a random sample of 25 babies weighs
3,400
grams or less? (Shade the area representing the probability in
the
appropriate normal curve in (c) and give your estimate.)
f) Is the difference between 3,400g and 3,500g statistically
significant? Or is
this difference what we expect to see in random sampling when
the
population has a mean of 3,500g? How do you know?
3
WOULD YOU BE ABLE TO HELP ME WITH f) Is the difference between
3,400g and 3,500g statistically significant? Or is
this difference what we expect to see in random sampling when
the
population has a mean of 3,500g? How do you know?
In: Statistics and Probability
We assume that our wages will increase as we gain experience and become more valuable to our employers. Wages also increase because of inflation. By examining a sample of employees at a given point in time, we can look at part of the picture. How does length of service (LOS) relate to wages? The data here (data1.dat) is the LOS in months and wages for 60 women who work in Indiana banks. Wages are yearly total income divided by the number of weeks worked. We have multiplied wages by a constant for reasons of confidentiality.
(a) Plot wages versus LOS. Consider the relationship and whether or not linear regression might be appropriate. (Do this on paper. Your instructor may ask you to turn in this graph.) (b) Find the least-squares line. Summarize the significance test for the slope. What do you conclude?
Wages = + LOS
t =
P =
(c) State carefully what the slope tells you about the relationship between wages and length of service. This answer has not been graded yet.
(d) Give a 95% confidence interval for the slope. ( , )
worker wages los size 1 40.3113 27 Large 2 55.107 27 Small 3 38.1058 74 Small 4 57.7219 83 Small 5 46.6771 27 Large 6 64.063 58 Small 7 65.6169 87 Large 8 73.3311 42 Large 9 61.8764 62 Large 10 52.0509 92 Small 11 78.268 134 Large 12 58.1432 59 Small 13 51.496 68 Small 14 55.2003 72 Large 15 52.1955 128 Large 16 42.2665 113 Large 17 48.5818 96 Large 18 49.8846 51 Small 19 39.0531 56 Large 20 40.1526 117 Large 21 74.4147 76 Large 22 45.492 22 Small 23 39.3931 57 Large 24 37.4409 25 Small 25 66.5625 60 Large 26 38.8955 75 Small 27 70.8136 55 Small 28 39.0265 51 Large 29 78.9962 37 Large 30 44.2759 26 Large 31 39.0486 96 Small 32 79.9377 22 Large 33 38.7287 19 Large 34 42.7196 58 Small 35 51.7346 173 Large 36 50.1328 51 Large 37 52.5434 60 Large 38 72.3328 60 Small 39 37.8399 17 Large 40 79.01 98 Small 41 39.8978 93 Small 42 37.1881 61 Small 43 63.8586 21 Large 44 40.4427 128 Small 45 46.6364 53 Large 46 48.2918 46 Small 47 81.2156 140 Large 48 72.4205 20 Large 49 62.0451 125 Small 50 39.365 99 Large 51 69.575 43 Large 52 44.5857 70 Large 53 45.8328 99 Large 54 57.3187 89 Small 55 46.0313 28 Small 56 65.1028 68 Large 57 37.0506 129 Small 58 70.767 80 Large 59 50.7659 112 Small 60 61.0656 103 Large
In: Statistics and Probability
In: Finance
Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis. Chapter 5 Activity-Based Costing and Management 225hiL6956X_ch05_168-229.indd 225 06/17/16 08:10 PMRequired: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000. Refer to the information given in the preceding problem for Fresno Fiber Optics and two of its custom-ers, Trace Telecom and Caltex Computer. Additional information for six of Fresno’s other customers for the most recent year follows:■ Problem 5–66Customer-Profitability Profile; Continuation of Preceding Problem (LO 5-9)Tele-Install, operating profit: $(18,000)Customer-Related ActivitiesCost Driver BaseCost Driver RateSales activity .................................................Sales visits .................................................$1,000Order taking .................................................Purchase orders ........................................200Special handling ...........................................Units handled ............................................50Special shipping ...........................................Shipments ..................................................500Cost-driver data for two of Fresno’s customers for the most recent year areCustomer-Related ActivitiesTrace TelecomCaltex ComputerSales activity .................................................. 8 visits ...................................................... 6 visitsOrder taking .................................................. 15 orders .................................................... 20 ordersSpecial handling ............................................800 units handled ........................................600 units handledSpecial shipping ............................................ 18 shipments ............................................. 20 shipmentsThe following additional information has been compiled for Fresno Fiber Optics for two of its cus-tomers, Trace Telecom and Caltex Computer, for the most recent year:Trace TelecomCaltex ComputerSales revenue ...............................................$190,000 ...............................................$123,800Cost of goods sold ....................................... 80,000 ...............................................62,000General selling costs .................................... 24,000 ...............................................18,000General administrative costs ....................... 19,000 ...............................................16,000
Required: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom’s sales revenue was $185,000 and Caltex Computer’s cost of goods sold was $59,000.
In: Accounting
In: Accounting
1. Safety Dentistry stock trades at $30 per share. The company is contemplating a 3 for 2 split. Assuming that the split will have no effect on the market value of its equity, what will be the company's stock price following the stock split? (express answer in dollars)
_______________
2. Marie Company is considering three independent projects, each of which requires a $4 million investment. The WAC is 11%. The estimated internal rate of return (IRR) is presented below:
| Project D | IRR = 14% |
| Project E | IRR = 12% |
| Project F | IRR = 10% |
The company's optimal capital structure calls for 40% debt and 60% equity. Net income is expected to be $7,500,000. If Marie establishes its dividends from the residual model, what will be its payout ratio?
a. 18%
b. 27%
c. 45%
d. 36%
Thank you in advance for your help with these two
questions...!!
In: Finance
If the government imposes a minimum wage that increases wages for workers employed by the firms participating in the market, what happens to the inverse supply function?
what happens to the equilibrium price of products traded in this market?
In: Economics