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

Additional Information

Accounts Receivable

The following table indicates the historical breakout of accounts receivable

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.

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.

Required

1.   Supply journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar.

I recently bought a restaurant in Chicago.  It is pretty small, but well-located.  We are open every day, but Mondays, from 4 PM until 11 PM.  Our menu is basically Italian.  We offer individual pizzas, pastas, salads, and a special of the day. We also have really good desserts. We offer cookies, ice cream and superb cakes.  Last month we had 800 customers.  Our salads are considered a whole meal, so people don’t usually order another entrée with them.  Last month, we sold 400 pizzas, 200 pasta dishes, 130 salads, and 70 specials of the day. Not everyone orders a dessert, but last month we sold 200 cookies, 100 ice creams, and 250 cakes.  Next week we are expecting 250 to 300 customers.  I need to know how many of each of the entrees and how many of each of the desserts I can expect to sell.

I would also like to know how much money I can expect to make.  Perhaps you could also let me know how much the average customer spends. Let me tell you the prices.  The pizzas are $7.95.  The pastas are sold for $8.95.  The salads are $6.95.  The special of the day is $9.95.  As for the desserts, the cookies are $1.00, the ice cream is $1.50, and the cakes are $3.00

Thanks a lot for your help, I am not very good at math, but perhaps you could try to explain your answers in such a way that I could estimate them for myself next time.

Yours sincerely,

Chris Smith

Pizza Plus

`~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Put the results of your calculations here and the explanation of your calculations o the back of this sheet.

Estimates for 250 customers

Average customer spends: $________________

Estimates for 300 customers

Average customer spends: $________________

Explanation of Calculations:

Subject: innovation and technology mangement

Case 2 – Mobile Ads

According to eMarketer, mobile ads will top 100 and it accounts for about 16.5 percent of total advertising spending in 2016. The top five spenders of mobile ads are the United States, China, the United Kingdom, Japan and Germany. This number is expected to increase as the worldwide adoption of smartphones continue to grow. In 2015, there were about 2.6 billion smartphone users. This number is expected to top 6.1 billion globally by 2020.

Businesses are increasingly using mobile ads. Location data from mobile devices is the key element for a successful mobile ad campaign. Facebook and Google are two biggest players that generate the highest revenue from mobile ads. PlaceIQ, a technology form headquartered in New York city collects billions of data points from mobile devices and other sources and is able tract potential customers as they move from one retail location to another retail location – such as from one car dealership to another. PlaceIQ is also able to help businesses find out if the ads can translate to an actual visit by a customer. In addition to its huge data set for business, PlaceIQ also offers location data and analytics tools to businesses and allows them to do their own advertising.

Audi is using the Place IQ data to measure how many potential customers will visit its dealerships before and after they have seen ads. They also want to target potential customers who are visiting their competitors’ showrooms. Stacom Media Group is using PlaceIQ in order to find out how mobile location data can be helpful and eventually attract more customers to a business.

Questions:

a)     By 2020 how many smartphones will be existing globally?

b)    Who are the two leading companies that generate the biggest revenue from mobile ads?

c)     How PlaceIQ impact businesses?

d)    Why is Audi using the services offered by PlaceIQ?

e)    Your overall observation and learning from the above case study.

B. With a critical analysis of the micro environmental forces which are forces close to the
company that affects its ability to serve its customers; all those factors that are closely
associated with the operations of the business and influences its functioning including
suppliers, customers, marketing intermediaries, competitors and publics; discuss the
effects of COVID-19 on Five (5) micro environmental forces within the financial
service sector in Ghana today.

Cellphone Prices:

Analyzing Cost and Revenue

INTRODUCTION

Cost, revenue and profit functions may take parabolic forms. In many business and economics applications, our most important goal is to maximize revenue, profit or minimize cost. We may be able to find the price or the quantity of goods and services that maximizes profit, revenue and minimizes cost by using the quadratic formula and vertex formula.

The goal of this project is to enhance the understanding quadratic functions and how to find the maximum/minimum.

Question 1: If you have the chance to start a business, what business would you choose? Why?

Question 2: Starting and running a business requires time, effort, hard work and in particular money. What kind of costs do you expect to have to pay in order to start and run your business? Please list them and explain why you need them.

Question 3: Some costs are fixed, which are called fixed costs, such as equipments and buildings. Some cost are variable, which are called variable costs, such as labor and material. Please explain what costs in the Question 2 are fixed costs, and what are variable costs.

In general, the total cost consists of variable costs and fixed costs.

Question 4: In order to keep your business running, you need to make revenue. Revenue is the money that comes into the business from customers. Suppose you know the number of products your business sold and the price you sold them at, how can you calculate the revenue? What strategies could you use in order to increase your business’ revenue?

The revenue of a business may go up and down depending on many factors. For example a business that sells ice cream will likely make more money during hot summer months. The profit of your business is the difference of the revenue and the cost. That is,

Profit = Revenue - Cost.

If the profit is the positive, your business makes money. If the profit is negative, your business unfortunately makes a loss. If the profit is zero, that is the revenue is equal to the cost, it is called the break-even point.  

Suppose that you were the CEO of a giant high technology corporation, Strawberry, Inc, manufacturer of the Strawberry Phone.

Question 5:

This month, you have estimated the demand for the Strawberry Phone to be:

Q = 220 - 4P

where Q is the quantity demanded, and P is the price of a Strawberry Phone.

The cost of producing a phone is constant at $12, which is called marginal cost. The fixed cost that includes the cost spent on the factory, the equipment, among others is $1525. As a result, you have a linear cost function,

C = FC + (MC Q),

Where C is the total cost, FC is the fixed cost, and the MC is the marginal cost, and Q is the quantity as before.

Answer the following questions.

1. What is the price that maximizes the corporation’s profit? (Hint: Profit = Revenue - Cost)

2. At what price does the corporation break even?

Question 6: From the two questions above, create a strategy to lower your cost and maximize your profit for the business you chose in question 1.

Essay: Write an essay that discusses the answers to the questions above include a detailed description of your business ideas and how it is possible to use maximization of quadratic functions to find the maximum profit.

Misusing

the percent of sales

method​)

The Caraway Seed Company has grown rapidly over the last decade and is trying to forecast the​ firm's inventory requirements for the next 5 years. Historical sales and inventories for the last 10 years are found in the popup​ window,

​, along with projected sales for the next 5 years.

a. Use the percent of sales method for forecasting​ Caraway's inventories for the next 5 years if the percent of sales is equal to the average of the percent of sales for the last 10 years.

b. The following​ graph, includes a plot of the historical relationship between inventories and sales along with a line representing the percent of sales forecast. Analyze the forecast line compared to the plot of inventory and sales to see if you see any problems with the percent of sales forecast. Discuss.

a. Using the average of the percent of sales for the last 10​ years, what are the projected inventories for​ 2015?

​$nothing

​ (Round to the nearest​ dollar.)

Using the average of the percent of sales for the last 10​ years, what are the projected inventories for​ 2016?

​$nothing

​ (Round to the nearest​ dollar.)

Using the average of the percent of sales for the last 10​ years, what are the projected inventories for​ 2017?

​$nothing

​ (Round to the nearest​ dollar.)

Using the average of the percent of sales for the last 10​ years, what are the projected inventories for​ 2018?

​$nothing

​ (Round to the nearest​ dollar.)

Using the average of the percent of sales for the last 10​ years, what are the projected inventories for​ 2019?

​ (Round to the nearest​ dollar.)

b. The following graph includes a plot of the historical relationship between inventories and sales along with a line representing the percent of sales forecast.

Analyzing the forecast line compared to the plot of​ inventory, did you see any problems with the percent of sales​ forecast?  ​(Select the best choice​ below.)

A.

​No, the percent of sales line perfectly forecasts inventory levels becuase the relationship between the two variables is very nearly linear.

B.

​Yes, the percent of sales line under forecasts inventory levels for low levels of sales and begins to over predict them for higher levels.

Internal Controls are extremely important with any accounting system, especially a computerized system. It is a huge part of creating and maintaining an accurate set of accounting records. I’m sure you all have heard of The Enron, WorldCom, Global Crossings, Tyco or Arthur Anderson scandals. These scandals cost their stockholders billions of dollars. Any company that trades stock publicly is required to file their financial statements and other important financial information with the SEC (The Securities Exchange Commission). Obviously, false information was filed from these companies and as a result, The Sarbanes Oxley Act of 2002 was passed into law.

Describe this act?

Discuss what it means for stockholders?

Explain the ramifications for accountants?

Provide some ethical solutions that would prevent employees from putting companies in this type of situation.

Ferntree Experiences has two operating divisions, Winery and Restaurant. The two divisions have a marketing agreement to provide incentives to customers. The Winery division offers coupons good for meals at the restaurant and the restaurant division offers coupons good for wine tasting and purchases. Annual profits are $12 million. The two divisions meet the requirements for segment disclosures.

Before the transactions are considered, revenues and costs (in thousands of dollars) for the two divisions are as follows.

After adjusting appropriately for the effect of the marketing agreement, the revenues and costs are as follows.

The value of the coupons issued by the Restaurant Division was double the value of the coupons issued by the Winery Division.

What was the value of the coupons issued by the Winery Division? What was the value of the coupons issued by the Restaurant Division?

1. The U.S. Department of Transportation reported that during November, 83.4% of Southwest
Airlines’ flights, 75.1% of US Airways’ flights, and 70.1% of JetBlue’s flights arrived on time (USA
Today, January 4, 2007). Assume that this on-time performance is applicable for flights arriving at
concourse A of the Rochester International Airport, and that 40% of the arrivals at concourse Aare
Southwest Airlines flights, 35% are US Airways flights, and 25% are JetBlue flights.
a. An announcement has just been made that Flight 1424 will be arriving at gate in concourse A.
What is the most likely airline for this arrival?
c. What is the probability that Flight 1424 will arrive on time?
d. Suppose that an announcement is made saying that Flight 1424 will be arriving late. What is the
most likely airline for this arrival? What is the least likely airline?

2. In San Francisco, 30% of workers take public transportation daily (USA Today, December 21, 2005).
a. In a sample of 10 workers, what is the probability that exactly three workers take public
transportation daily?
b. In a sample of 10 workers, what is the probability that at least three workers take public
transportation daily?

3. Auniversity found that 20% of its students withdraw without completing the introductory statistics
course. Assume that 20 students registered for the course.
a. Compute the probability that two or fewer will withdraw.
b. Compute the probability that exactly four will withdraw.
c. Compute the probability that more than three will withdraw.
d. Compute the expected number of withdrawals.

4. Phone calls arrive at the rate of 48 per hour at the reservation desk for Regional Airways.
a. Compute the probability of receiving three calls in a 5-minute interval of time.
b. Compute the probability of receiving exactly 10 calls in 15 minutes

.
5. More than 50 million guests stay at bed and breakfasts (B&Bs) each year. The website for the Bed
and Breakfast Inns of North America, which averages seven visitors per minute, enables many
B&Bs to attract guests (Time, September 2001).
a. Compute the probability of no website visitors in a one-minute period.
b. Compute the probability of two or more website visitors in a one-minute period.

6. In a survey conducted by the Gallup Organization, respondents were asked, “What is your favorite
sport to watch?” Football and basketball ranked number one and two in terms of preference
(Gallup website, January 3, 2004). Assume that in a group of 10 individuals, seven prefer football
and three prefer basketball. A random sample of three of these individuals is selected.
a. What is the probability that exactly two prefer football?
b. What is the probability that the majority (either two or three) prefer football?