publicly traded company 3 customers 27% 74% revenue 2004 2005 2006 questions

Questions

The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the...

The Bensington Glass Company entered into a loan agreement with the firm's bank to finance the firm's working capital. The loan called for a floating rate that was 27 basis points (0.27

percent) over an index based on LIBOR. In addition, the loan adjusted weekly based on the closing value of the index for the previous week and had a maximum annual rate of 2.25

percent and a minimum of 1.74 percent. Calculate the rate of interest for weeks 2 through 10.

Week 1	1.91%
Week 2	1.66%
Week 3	1.51%
Week 4	1.37%
Week 5	1.56%
Week 6	1.67%
Week 7	1.67%
Week 8	1.89%
Week 9	1.92%

In: Finance

The following income statement was prepared by Walters Corporation a seller of equipment for the year...

The following income statement was prepared by Walters Corporation a seller of equipment for the year ended Dec-31, 2013 Walters Corporation Comprehensive Income Statement For the year ended Dec-31, 2013 Sales revenue (Note: 1)……………………………………………………………………………………... $310,000

Cost of goods sold…………………………………………………………………………………………………………..…(140,000)

Gross profit………………………………………………………………………………………………………………………. 170,000

Less: Operating Expenses. Selling and administrative expenses…………………………………………50,000

Loss on sale of Investment……………………………………………………… 15,000 (65,000)

Other income and expense Gain on sale of plant assets…………….………………………………....... 40,000

Depreciation expense……………………………………………….……..….. (15,000)

Rent Expense………………………………………………………….……..…….. (6,000)

Dividend revenue…………………………………………………………….…… 50,000

Gain on disposal of a business division (net of tax)…………………. 30,000

Loss due to earthquake (Note-2) ………………………………...………… (5,000) 94,000

Income from operations…………………………………………………………………………………..……………….. 199,000

Interest expense………………………………………………………………………………………………………………. (6,000)

Income before tax..……………………………………………………………………………………….………………….….193,000 Tax Expense………………………………………………………………………………………………………………………….(15,000)

Net Income ………………………………………………………………………………………………….………………….…..178,000

Discontinued operations Loss on operation of discontinued division (Note-3)..………………………………………………………… (10,000)

Net Income before extraordinary Item…………………………………………………………………………….168,000

Extra ordinary item Loss on Impairment of Equipment………………………………………….…2,000

Restructuring Cost…………………………………………………………………….4,000 (6,000)

Net Income after extraordinary item …………………………………………………………………………………. 162,000

Basic EPS ……………………………………………………………………….…………………………………………… $13.5/share

Diluted EPS……………………………………………………………………………………………………………..……….$ 15/share

Attributable to Non-controlling interest…………………………………..……………………………………………………….………. 40,500

Shareholders of Walters………………………………………….…………………………………………….…….…. 121,500

Explanation of Notes

Note 1: Including in the Sales

a. $ 50,000 is related to goods sent on consignment

b. $ 15,000 is related to goods sold with a buy back arrangement with restriction on the use of this equipment by Walter.

c. $ 20,000 in respect of layaway sales representing initial deposit made by customers.

d. $ 60,000 to a customer whom title has been transferred but goods are not delivered on customers ‘request.

Note 2: The loss is unexpected as this place has never experienced earthquake in past 30 years

Note-3 The tax in respect of loss on operations of discontinued division is amounting $ 2,000

Required:

i. Comment on the above Notes i.e whether things are treated properly or not;

ii. Highlight any weakness regarding the presentation or treatment of any item in the presented Comprehensive Income statement not covered in notes.

In: Accounting

Case 2 (Special Order) While Jurassic World is filled to capacity with tourists most of the...

Case 2 (Special Order)

While Jurassic World is filled to capacity with tourists most of the year, the theme park experiences a lower number of customers during September and October. This is due to the fact that September and October are “rainy season” in Jurassic World’s location—the island of Isla Nublar, off the coast of Costa Rica.

To celebrate their sponsorship of the Pepsisaurus and the Tostidodon, PepsiCo is interested in holding a 3-day, 2-night corporate retreat for 5,000 of its employees at Jurassic world during September. PepsiCo has told Claire that they would pay Jurassic World $200 per employee. This would provide each employee with three days of park admission, three days of meal and drink vouchers, and two nights of lodging. Additionally, PepsiCo wants Jurassic World to treat its employees to behind-the-scenes tours of the park, which would cost a total of $50,000 to plan and facilitate. Due to the timing of the retreat, Jurassic World has ample capacity to host PepsiCo’s employees.

Claire knows that Jurassic World normally charges $850 per person for a 3-day, 2-night admission, lodging, and meal/drink vacation package. The per person cost for this package is 670, as shown below:

	Per Person
Food and drink	$95
Direct labor	30
Overhead	545

Most of the overhead is the fixed cost of running the theme park, and goes towards marketing, administration, dinosaur bioengineering, customer service, grounds keeping and maintenance, dinosaur food, raptor training, and disaster control. However, $35 is variable with respect to the number of customers in the theme park.

4. Determine the incremental revenue to Jurassic World if Claire accepts PepsiCo’s request. (1 point for the correct answer in the shaded box)

Total incremental revenue=

5. Determine the incremental cost to Jurassic World if Claire accepts PepsiCo’s request. (1 point for the correct answer in the shaded box)

Cost Label	Cost Per Employee	Total Cost




Total incremental cost =

6. Should Claire accept PepsiCo’s offer? Circle One. (1 point for the correct answer)

YES NO

In: Accounting

John Exchanging Integrated (JEI), is a subsidiary of Elegance. JEI is a securities trading firm specializing...

John Exchanging Integrated (JEI), is a subsidiary of Elegance. JEI is a securities trading firm specializing in debt and equity securities transactions mostly traded on the NASDAQ. JEI is listed on NASDAQ. Also, at the request of their customers, JEI will charge a fee to receive or place money transfers from or to accounts all over the world. The minimum fee is $10 for buying or selling stock and $25 for money transfers. The maximum fee is $500,000 for stock transactions and 2% for money transfers. A minimum fee of $100 is also charged for redemptions. To become a customer, simply complete an on-line application and deposit a minimum of $10,000. Customers begin trading immediately.

Yong Wei is the CEO of JEI. Yong does not serve on the audit committee of JEI. In January of 2015, Crystal Lee, Director of JEI’s internal audit department, completed an audit of various functions of the company. Part of the audit involved a review of internal controls for the sales, payable and payroll functions including the controls over the authorization of transactions, accounting for transactions, and the protection of assets. The director reported the following issues to Yong Wei:

1. To facilitate working from home, an employee installed a modem on his office workstation. An attacker successfully penetrated the company’s system by dialing into that modem. Again, due to the diligent efforts of Tommy Lew, sensitive customer information was not compromised, according to internal sources.

2. An attacker gained access to the company’s internal network by installing a wireless access point in a wiring closet located next to the elevators on the fourth floor of a high-rise office building that the company shared with seven other companies.

3. A fictitious invoice was received and a check was issued to pay for small supplies that were never ordered or delivered.

4. On the job, Yong Wei got a call from the local police asking why she was sending a caller multiple adult text messages and sexually explicit emails per day. After further inveJEIgation, Yong’s account records proved the calls were not coming from her phone or email. Neither she nor her mobile company could explain how the messages were sent. After finding no way to block the unsavory messages, she changed her mobile number and quit JEI to avoid further embarrassment by association.

5. Based on total 2015 trading commissions of $4,000,000, JEI management has forecasted the following monthly growth in trading commissions and monthly cash collection measures for 2016:

• Create a 12-month cash flow budget in Excel using the following assumptions:

• Annual 2015 commissions of $4,000,000 with forecasted monthly growth of 2%

• 45% of each month’s sales for cash; 25% collected the following month; 20% collected 2 months later; 8% collected 3 months later; and 2% never collected

• Initial cash balance of $300,000 Assuming an initial cash balance of $300,000, management has concluded that they will achieve an ending cash balance of $41,000,000.

Requirements#2: Review the issues identified by the Director of JEI’s internal audit department. For each issue listed above explain why it is a weakness and recommend a way or ways to correct the weakness. Document any assumptions to support your conclusions. For issue #5, evaluate management’s conclusion but show calculations to support your decision. Your response should be addressed to: Director of Internal Audit – John Exchanging Integrated Inc.

In: Accounting

Introduction Lori Patrick’s conversation earlier that day with Mike Lowe, the company’s CEO, kept running through...

Introduction

Lori Patrick’s conversation earlier that day with Mike Lowe, the company’s

CEO, kept running through Lori’s head during her 45-minute rush-hour

commute home. “What a great opportunity Mike’s given me,” she thought.

“The CEO of this organization believes in the value of HR and asked me to

tell him how HR can help the company meet its strategic goals. When I was

studying for my master’s in HR, we kept reading and talking about how HR

needs to position itself as a strategic business partner; but I didn’t think I

would get the opportunity so soon in my career.” Lori had been the director

of Human Resources with Reyes Fitness Centers, Inc. (R FC) for only a couple

of months. She had been attracted to the position in part because it offered her

first opportunity to oversee all of HR, and because of her interview with Mike

Lowe. Lowe was fairly new to the company (just less than two years) and was

highly regarded by the founder and chairman, John Reyes, and the rest of the

board of directors as a strategic thinker and someone with proven ability to

inspire and motivate staff. Lori knew from the interview with Lowe that when

he said employees were the key to RFC’s future, he meant it.

RFC background

Reyes Fitness Centers, Inc. was launched in May of 1999 by John Reyes with

$150,000 of his own funding and some investment capital from three college

friends from the University of North Carolina, Chapel Hill, where they were

business majors attending the university in the mid-1990s. The first center

was located in Raleigh, NC, and was an immediate success. The center offered

a full range of workout equipment, exercise classes, personal trainers, an

outdoor pool, on-site daycare, and even a small restaurant. Additional private

investment was secured and R FC expanded rapidly from 1999 to 2007, opening

approximately three new centers a year throughout the Southeast. By the end of

2007, RFC operated 28 fitness centers, grossing $51 million in revenues and $1

million in net income. Figure 1.0 below provides the financial performance of

RFC and its comparison to competitors.

By 2005, John Reyes had general managers overseeing each center and had

gradually removed himself from day-to-day oversight of the company. He

had become interested in other business ventures and, as a result, his board

encouraged hiring a CEO and other senior management team members to

oversee the growing enterprise. He hired 48-year-old Mike Lowe as the

new CEO of RFC in late 2005, and Reyes assumed the role of chairman.

This CEO position was the second in Lowe’s career. He had more than 20

years’ experience in the fitness equipment industry; before coming to RFC

he had been the CEO of a smaller fitness center company in California that

had been acquired. Lowe’s transition as CEO had gone quite well in Reyes’,

the board’s and in Lowe’s view. Lowe had been somewhat concerned about

being micromanaged by Reyes, but he was given complete autonomy over

the operations of the company and was expected to involve the board only in

strategic leadership issues

The Fitness center industry

While the fitness center industry grew dramatically in the mid to late 1990s

(more than 20 percent annually), overall industry growth had slowed

considerably, as most towns now had two to three fitness centers within

close proximity.

As shown in Figure 1.0, RFC is considered a medium-sized fitness center

enterprise. While some competitors (Day Spa and Constant Fitness in

particular) continue to focus on large-scale, either through acquisitions of

smaller fitness clubs or by opening new fitness centers, many others (including

RFC) have reduced the number of new clubs being opened.

There is as much emphasis on health and recreation as ever in the U.S. Industry

reports suggest that the outlook for fitness centers in general is quite positive,

although some consolidation may occur because certain markets have been

saturated with too many clubs to remain profitable. However, the market in the

Southeast (where RFC operates) is still growing and market saturation is not

anticipated for at least five years.

Fitness centers hire a variety of professional and support staff. Some focus on

personal training and employ a large number of certified professional trainers

who work with members during club hours (typically 5-6am until 10pm,

although the more body-building oriented gyms have recently started offering

24-hour service). In addition to housekeeping and front desk staff, fitness

centers employ customer service representatives who can assist existing members

with questions and also act as sales representatives, giving tours of the facility to

prospective members.

RFC strategy

During Lowe’s tenure, RFC opened just one new fitness center (just outside

of Atlanta, GA). This modest club expansion is consistent with the three-

year financial strategy the RFC board has agreed on, where the focus is on

growing the profitability of existing clubs by increasing member enrollment and

retention. The company is privately held by a small group of investors and the

board wants it to stay that way. The board has discussed positioning itself for

acquisition by one of the larger fitness club chains at some point in the future. It

is agreed that improving the bottom-line (i.e., net income) performance of RFC

will only help in this regard.

Within Porter’s classic framework of various business strategies, RFC’s strategy

most closely aligns with Porter’s “focus” strategy, where a company focuses

on serving the needs of a particular market segment to achieve a competitive

advantage. RFC has positioned itself as a place where the whole family can

enjoy fitness and social activities. RFC has deliberately chosen not to compete

with gyms that cater to body builders with large free weight workout areas,

24-hour access, onsite training supplement sales, and “no-frills” amenities.

RFC’s strategy is to attract families by offering a wide variety of fitness offerings

including cardio equipment; free weights and circuit training weight machines;

personal training; and exercise classes (such as Pilates, yoga, stationary cycling,

etc.). Most RFC fitness centers have a snack bar where nutritional smoothies

and other healthy snacks can be purchased. All RFC centers offer extensive

locker room facilities and on-site daycare. Newer RFC fitness centers have small

indoor basketball courts and TV lounges to appeal to the 10- to 16-year-old

age group.

From his first day on the job, Lowe has stressed to the staff that he wants them

to be strategic in how they approach their daily, weekly, and annual activities

and projects. By that he means that they should consider how their jobs

contribute to RFC being able to provide a fitness club experience to couples and

families that is superior to any of the competition. He has worked diligently

with his senior management team and the board to understand how RFC

creates value for its customers, employees and investors. The business model

for how fitness centers make money is fairly straightforward: profitable firms

grow by recurring monthly member revenue (via new member recruitment and

existing member renewal) while maintaining relatively stable fixed costs and

low variable costs. Lowe has worked to identify both financial and nonfinancial

variables that drive RFC performance. By locating RFC fitness centers in upper-

middle-class locations and focusing marketing efforts on couples and families,

RFC has been successful recruiting new members. Research data shows that

members typically do not have issues with the RFC monthly dues. Member

feedback indicates that having a friendly place for the whole family to stay fit is a

driver of member value.

RFC Strategic Challenges

As with most start-ups, the early strategy for RFC focused on growing

revenue. They did this by opening several clubs each year and offering new

club promotions to attract members. RFC experienced rapid revenue growth

(more than 20 percent annually) through 2004. However, several of the RFC

centers are not reaching their profit goals. Mike Lowe tried to address this by

implementing operational efficiencies when he first came on board at RFC,

but he soon realized that the profit challenges were driven in large part by a

customer retention problem. While a certain amount of turnover is expected in

the industry (due to competing clubs, families moving out of the area, etc.), the

best industry data RFC can find relating to member retention shows that their

member retention is approximately 20 percent lower than industry average.

An analysis of member records shows that members often join during a special

promotion (where the initiation fee is waived) but then rarely use the center

and fail to renew. A telephone survey of members (lapsed and current) reveals

that “non-use” was one of the reasons for members not renewing or stating

they were unlikely to renew. An analysis of member-visit frequency shows that

more than 50 percent of members in 2006 hadn’t even visited their RFC fitness

center two times per week. The hypothesis is that members who aren’t going

to their RFC fitness center frequently are far less likely to see sufficient value to

renew. Another concern is member feedback that RFC staff members do not

provide very good or excellent customer service. Lowe, senior management, and

the board have had extensive discussions about the member retention problem.

While part of Lowe’s strategy to increase profits is to enroll more members in

existing fitness centers, those profits will be short-lived if members stay only one

year. Data also shows that membership cost, quality of offerings, amenities, etc.,

are all rated highly.

Lori thinks about these strategic issues and how HR might affect them.

“There’s no question that problems with customer service and member

retention come down to people issues. It is affected by the type of people we

bring on board, how they’re trained and how their performance is managed

and rewarded.”

Questions:

1. Identify and prioritize a set of tasks for Lori. Provide a rationale for your prioritization. Link your responses to the key concepts to one of the examples in the The HR Scorecard.

2. Based on your understanding of RFC and its business strategy, how can HR add strategic value to RFC?

3. What challenges do you anticipate Lori will encounter as she develops the HR scorecard for RFC?

4. Anticipate potential outcomes for the plan that is proposed for RFC?

Thanks for your help!

In: Operations Management

Problems 8-1 Determining balance sheet presentation and preparing journal entries for various receivables transactions (LO 8-1,...

Problems 8-1 Determining balance sheet presentation and preparing journal entries for various receivables transactions (LO 8-1, LO 8-4, LO 8-6)

Aardvark, Inc., began 2017 with the following receivables-related account balances:

Accounts receivable	$	575,000
Allowance for uncollectibles		43,250

Aardvark’s transactions during 2017 include the following:

On April 1, 2017, Aardvark accepted an 8%, 12-month note from Smith Bros. in settlement of a $17,775 past due account.

Aardvark finally ceased all efforts to collect $23,200 from various customers and wrote off their accounts.

Total sales for the year (80% on credit) were $1,765,000. Cash receipts from customers as reported on Aardvark’s cash flow statement were $1,925,000.

Sales for 2017 as reported included $100,000 of merchandise that Jensen, Inc., ordered from Aardvark. Unfortunately, a shipping department error resulted in items valued at $150,000 being shipped to Jensen. Because Jensen believed that it could eventually use the unordered items, it agreed to keep them in exchange for a 10% reduction in their price to cover storage costs. Neither the sales nor the receivable for the extra $50,000 of merchandise were recorded.

On February 1, 2017, Aardvark borrowed $65,000 from Sun Bank and pledged receivables in that amount as collateral for the loan. Interest of 5% was deducted from the cash proceeds. In June, Aardvark repaid the loan.

Aardvark estimates uncollectible accounts using the sales revenue approach. In past years, the bad debt provision was estimated at 1% of gross sales revenue, but a weaker economy in 2017 led management to increase the estimate to 1.5% of gross sales revenue.

On July 1, 2017, Aardvark sold equipment to Zebra Company and received a $100,000 noninterest-bearing note receivable due in three years. The equipment normally sells for $79,383. Assume that the appropriate rate of interest for this transaction is 8%.

Required:1

Prepare journal entries for each of the preceding events. Also prepare any needed entries to accrue interest on the notes at December 31, 2017.

Show the ending balance for the notes receivable, accounts receivable, and allowance for uncollectible accounts at December 31, 2017.

Prepapre Journal entry worksheet

1-Prepare the entry to accept the note in settlement of a past due account.

2-Prepare the entry to accrue interest on the note.

3-Prepare the entry to write-off customer accounts.

4-Prepare the entry for cash sales and credit sales.

5-Prepare the entry for collection of cash from credit sales to customers.

6-Prepare the entry for the additional shipment to Jensen, Inc. and the allowance for a reduced price.

7-Prepare the entry to borrow cash from Sun Bank.

8-Prepare the entry for the payment to settle the loan from Sun Bank.

9-Prepare the entry for the interest incurred on the loan from Sun Bank.

10-Prepare the entry for the sale of equipment for a non-interest bearing note.

11-Prepare the entry to accrue interest income on the note receivable.

Required 2

Complete this question by entering your answers in the tabs below.

Show the ending balance for the notes receivable, accounts receivable, and allowance for uncollectible accounts at December 31, 2017.


Notes receivable
Accounts receivable
Allowance for uncollectibles

In: Accounting

The 160th Ohio State Fair in 2013 had an estimated 903,824 visitors during the twelve days...

The 160th Ohio State Fair in 2013 had an estimated 903,824 visitors during the twelve days of the fair, which was record-breaking attendance. The high attendance led to a record-breaking profit of about $400,000 for the fair. Among the sources of revenue for The Ohio State Fair are the revenues generated from the food vendors. A number of food vendors offer a wide variety of fair foods to attendees, including funnel cakes, gyros, cotton candy, milkshakes, and corn dogs. The Ohio State Fair fee schedule for food vendors for 2014 is as follows: $10 per linear foot for ground service fees (front footage x depth) 10% of concessions (food sales) $40 per 12-day parking permit $290 for 100-amp electrical service $50 per 12-day fair admittance pass (one included with basic rental agreement) Questions Of the fees listed in the schedule, which fees are variable with respect to the number of customers at the booth? Which fees are fixed? Assume that Star Concessions has a food booth that requires 15’ of frontage and is 12’ deep. Star expects to have sales averaging $3,600 per day for each of the 12 days of the fair. It has a total of four employees who will work the fair throughout the entire 12-day period. Star pays for each employee’s fair admission and parking. What is the projected total fee that Star will need to pay to The Ohio State Fair? Assume that variable costs are 40% of sales revenue. This 40% includes the 10% charged by The Ohio State Fair. What total sales revenue is needed for Star Concessions to breakeven? What is the average daily sales revenue needed to breakeven? Using your answers from #2 and #3 above, calculate Star’s margin of safety in dollars and percentage.

In: Accounting

Sanford Company 4. Develop a balance sheet in good form as of March 31, 20x3 for...

Sanford Company

4. Develop a balance sheet in good form as of March 31, 20x3 for Sanford Company.

The Sanford Company had the following balance sheet as of December 31, 20x2. The transactions for the first three months of 20x3 are also presented along with other information about specific accounts.

Sanford Company

Balance Sheet

December 31, 20x2

ASSETS		LIABILITIES
Cash	$ 57,000	Accounts Payable	$ 34,000
Marketable Securities	8,000	Wages Payable	11,500
Accounts Receivable	73,000	Taxes Payable	8,000
Uncollectible Accounts	-2,000	Short-Term Notes Payable	12,000
Inventory	84,000	Interest Payable	500
Supplies	9,000	Unearned Revenue	13,000
Prepaid Insurance	6,000
Total Current Assets	$235,000	Total Current Liabilities	$ 79,000

Land	$114,000	Long-Term Notes Payable	$ 20,000
Equipment	227,000	Bonds Payable	100,000
Accumulated Depreciation	-87,000	Mortgage Payable	320,000
Building	560,000	Total Long-Term Liabilities	$440,000
Accumulated Depreciation	-130,000
Intangible Assets	70,000	STOCKHOLDER EQUITY
Total Long-Term Assets	$754,000	Capital Stock	$100,000
		Paid in Capital	250,000
		Retained Earnings	120,000
		Total Stockholders Equity	$470,000
Total Assets	$989,000	Total Liabilities & Equity	$989,000

Additional Information

Accounts Receivable

The following table indicates the historical breakout of accounts receivable

Days	Current	30 to 60	60 to 90	Over 90
Percent of Balance	50%	30%	15%	5%
Percent Collectible	95%	90%	80%	60%

The company uses the gross method of recording all sales on accounts.

Marketable Securities

The interest rate earned on marketable securities is 6.0%.

Inventory

In 20x2, the company had used the gross method to record inventory purchases on account. As of January 1, 20x3, the company is using the net method to record inventory purchases on account.

Prepaid Insurance

A three-year insurance policy in the amount of $7,200 was purchased on July 1, 20x2.

Equipment

Equipment is depreciated at an average amount of $3,000 per month.

Building

The current building was purchased on January 1, ten years ago and has an expected 40-year life at which time its salvage value will be $40,000.

Intangible Assets

Intangible assets were initially valued at $80,000 and are being depreciated over 40 years at $2,000 per year.

Short-Term Notes Payable

The one-year short-term notes payable are due on March 1, 20x3. The interest rate is 5.0% which is payable at maturity.

Long-Term Notes Payable

The long-term notes payable are due in ten years. The interest rate on the notes is 4.5%.

Bonds Payable

The bonds payable mature in twenty years. The interest rate on the bonds is 4.0%.

Mortgage Payable

The following amortization schedule can be used for the January, 20x3 mortgage payment on the 7.0%, 30- year mortgage.

Month

Payment

Interest

Principal

Balance

January

$3,500

$1,867

$1,633

$320,000

$318,367

Capital Stock

The capital stock is common stock at $10 par value with 50,000 shares authorized, and 10,000 shares issued and outstanding.

Journal Entries

Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000

Jan 2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300.

Jan 2 Sanford Company borrowed $24,000 on a short-term discounted 90 day, 3.0% noninterest-bearing note payable.

Jan 3 Sanford Company paid $18,000 in advance for the 6 month rental of a warehouse.

Jan 3 Equipment with a historical cost of $50,000 and an accumulated depreciation of $35,000 was traded for new similar equipment valued at $75,000. Sanford Company received $14,500 as a trade in for the old equipment, paid $7,500 and established a 4.5% long-term note payable for the balance due.

Jan 4 Equipment with a historical cost of $35,000 and an accumulated depreciation of $20,000 was traded for new dissimilar equipment valued at $60,000. The salvage value of the old equipment was $5,000 and the trade in value was $7,000. Sanford paid $4,000 for the equipment and established a 4.5% long-term note payable for the balance due.

Jan 5 Sanford Company declared a dividend of $2.00 per share payable on February 10, 20x3 to all shareholders of record on January 20, 20x3.

Jan 6 The amount in wages payable and taxes payable was paid in full.

Jan 8 Sanford Company paid a total of $18,000 on accounts payable and was able to take advantage of $1,500 in purchase discounts for early payment. The original inventory purchase was recorded at the full amount (gross method).

Jan 15 Cash sales for two weeks equaled $22,000. The cost of inventory sold equaled $12,000.

Jan 20 Supplies in the amount of $4,200 were purchased for cash.

Jan 21 A customer who owed $10,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 6.0%. The interest earned on the note will be paid at the maturity date of the note receivable.

Jan 29 The balance of $14,500 in accounts payable was paid.

Jan 30 The company purchased $45,000 of inventory on account with the terms 2/10, net 30. The company has decided to switch to the net method for all inventory purchases on account beginning in 20x3.

Jan 31 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $13,000.

Jan 31 Sales on account for the month of January totaled $55,000 with the terms 2/10, net 30. The cost of inventory sold equaled $26,000.

Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January.

Jan 31 Collected cash of $48,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables within the ten day discount period.

Jan 31 Salary expenses in the amount of $14,000 and tax expenses in the amount of $8,000 were paid.

Jan 31 The utility bill of $2,500 was paid.

Jan 31 A bill in the amount of $3,600 for advertising expenses incurred during the month of January was received.

Jan 31 The monthly payment for January of the mortgage payable was made.

Feb 1 The Sanford Company made a new issue of 5,000 shares of common stock for cash. The market price of the stock was $40 per share.

Feb 2 A petty cash fund in the amount of $500 was established.

Feb 3 The Sanford Company bought back 1,000 shares of its own common stock for $40 per share.

Feb 8 The purchase of inventory on account on Jan 30th was paid in full.

Feb 10 Sanford Company sold the note receivable from Jan 21st to the bank, which discounted the note at 8.0%.

Feb 15 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Feb 20 The company purchases $20,000 of inventory on account with the terms 2/10, net 30.

Feb 27 The company paid an advertising bill for $5,600 which included the February advertising expense of $2,000 plus the balance due from January.

Feb 28 Cash sales for two weeks equaled $25,000. The cost of inventory sold equaled $14,000.

Feb 28 The monthly payment for February of the mortgage payable was made.

Feb 28 The company collected cash of $59,000 from the accounts receivable, plus there was a total sales discount of $1,100 for the payment of receivables within the ten day discount period.

Feb 28 Salary expenses in the amount of $21,000 and tax expenses in the amount of $9,000 were paid.

Feb 28 The utility bill of $2,100 was paid.

Feb 28 Sales on account for the month of February totaled $60,000 with the terms 2/10, net 30. The cost of inventory sold equaled $30,000.

Mar 1 The short-term note payable that was due on March 1st plus all appropriate interest was paid.

Mar 3 The amount of the petty cash fund was increased by $200.

Mar 10 Supplies in the amount of $2,700 were purchased for cash.

Mar 15 Cash sales for two weeks equaled $27,000. The cost of inventory sold equaled $15,000.

Mar 20 Sanford Company reissued 300 shares of its own stock for $42 per share.

Mar 21 The bank notified Sanford Company that the note receivable from January 21st had not been paid. The bank collected the amount of the note plus the interest due and a $20 protest fee from Sanford Company. Sanford Company charged the full amount of the note receivable plus related fees against the customer’s account receivable balance.

Mar 25 The company purchased $50,000 of inventory on account with the terms 2/10, net 30.

Mar 28 The purchase of inventory on account on Feb 20th was paid in full.

Mar 29 The petty cash fund had $150 in cash and receipts in total amounts for the following expense categories: entertainment$160, travel $170, postage $90, and supplies $115. The petty cash fund was replenished.

Mar 30 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $9,000 of the revenue was earned in March.

Mar 31 Sales on account for the month of March totaled $67,000 with the terms 2/10, net 30. The cost of inventory sold equaled $36,000.

Mar 31 Salary expenses in the amount of $16,000 and tax expenses in the amount of $7,000 were paid.

Mar 31 Collected cash of $70,000 from the accounts receivable, plus there was a total sales discount of $1,200 for the payment of receivables within the ten day discount period.

Mar 31 A warehouse building was acquired for $250,000. Closing costs on the acquisition equaled $7,000, and there were costs of $10,300 to get the building into an operational condition to be used by Sanford Company. Employee salaries specifically related to the building renovation were an additional $5,400. This salary expense was part of the normal monthly expenses and would have been incurred regardless of whether the employees worked on the warehouse or did other activities within the company. Sanford Company paid $100,000 in cash as a down payment with the balance due being added to the mortgage payable account.

Mar 31 The utility bill of $3,000 was paid.

Mar 31 Sanford Company repaid the 90 day discounted note payable from January 2nd in full.

Mar 31 The equipment depreciation entry for the three months of 20x3 was completed.

Mar 31 The depreciation entry for the building for the months of January, February, and March was entered.

Mar 31 The amortization of intangible assets for the three months of 20x3 was completed.

Mar 31 The bad debt expense based on the aging schedule for accounts receivable was determined for the three month period.

Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $8,400 and tax expenses equaled $2,800.

Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand.

Mar 31 A customer sent an advance payment of $10,000 for the use of special equipment in April and May.

Mar 31 The amount of rent expense for the warehouse for the first three months of 20x3 was recognized.

Mar 31 Sanford Company provided services to a customer in the amount of $3,000 during March but a bill has not been sent.

Mar 31 The amount of insurance expense for the first three months of 20x3 was recognized.

Mar 31 The amount of interest earned on marketable securities for the three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the total long-term notes payable for the first three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the bonds payable for the three months of 20x3 was recognized.

Mar 31 The monthly payment for March of the mortgage payable was made.

In: Accounting

Develop an income statement in good form for Sanford Company for the first three months of...

Develop an income statement in good form for Sanford Company for the first three months of 20x3.

Sanford Company

The Sanford Company had the following balance sheet as of December 31, 20x2. The transactions for the first three months of 20x3 are also presented along with other information about specific accounts.

Sanford Company

Balance Sheet

December 31, 20x2

ASSETS		LIABILITIES
Cash	$ 57,000	Accounts Payable	$ 34,000
Marketable Securities	8,000	Wages Payable	11,500
Accounts Receivable	73,000	Taxes Payable	8,000
Uncollectible Accounts	-2,000	Short-Term Notes Payable	12,000
Inventory	84,000	Interest Payable	500
Supplies	9,000	Unearned Revenue	13,000
Prepaid Insurance	6,000
Total Current Assets	$235,000	Total Current Liabilities	$ 79,000

Land	$114,000	Long-Term Notes Payable	$ 20,000
Equipment	227,000	Bonds Payable	100,000
Accumulated Depreciation	-87,000	Mortgage Payable	320,000
Building	560,000	Total Long-Term Liabilities	$440,000
Accumulated Depreciation	-130,000
Intangible Assets	70,000	STOCKHOLDER EQUITY
Total Long-Term Assets	$754,000	Capital Stock	$100,000
		Paid in Capital	250,000
		Retained Earnings	120,000
		Total Stockholders Equity	$470,000
Total Assets	$989,000	Total Liabilities & Equity	$989,000

Additional Information

Accounts Receivable

The following table indicates the historical breakout of accounts receivable

Days	Current	30 to 60	60 to 90	Over 90
Percent of Balance	50%	30%	15%	5%
Percent Collectible	95%	90%	80%	60%