Income Statement
An inexperienced accountant for Prestwick Company prepared the following income statement for the month of August, current year.
| PRESTWICK COMPANY AUGUST 31, CURRENT YEAR |
|||
| Revenues: | |||
| Services provided to customers | $17,000 | ||
| Investment by stockholders | 5,000 | ||
| Loan from bank | 15,000 | $37,000 | |
|
Expenses: |
|||
| Payments to long-term creditors | $11,700 | ||
| Expenses required to provide services to customers | 7,800 | ||
| Purchase of land | 16,000 | 35,500 | |
|
Net income |
$ 1,500 | ||
Statement of Cash Flows
Prepare a revised income statement in accordance with generally accepted accounting principles.
On the basis of the information for Prestwick Company in Exercise 2.13, prepare a statement of cash flows in a form consistent with generally accepted accounting principles. You may assume all transactions were in cash and that the beginning cash balance was $7,200.
In: Accounting
For the year ended December 31, 2021, Pearl Enterprises Ltd. had
the following revenues and expenses: Sales, $740,000; Cost of Goods
Sold, $425,000; Operating Expenses, $130,000; and Income Tax
Expense, $33,500. The company also declared $25,000 of dividends to
the common shareholders on December 27 to be paid on January 15,
2022.
Prepare closing entries for Pearl on December 31, 2021.
(Credit account titles are automatically indented when
the amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter 0 for
the amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
Dec. 31 |
enter an account title to close revenue account on December 31 | enter a debit amount | enter a credit amount |
| enter an account title to close revenue account on December 31 | enter a debit amount | enter a credit amount | |
|
(To close revenue account.) |
|||
|
Dec. 31 |
enter an account title to close expense accounts on December 31 | enter a debit amount | enter a credit amount |
| enter an account title to close expense accounts on December 31 | enter a debit amount | enter a credit amount | |
| enter an account title to close expense accounts on December 31 | enter a debit amount | enter a credit amount | |
| enter an account title to close expense accounts on December 31 | enter a debit amount | enter a credit amount | |
|
(To close expense accounts.) |
|||
|
Dec. 31 |
enter an account title to close Income Summary on December 31 | enter a debit amount | enter a credit amount |
| enter an account title to close Income Summary on December 31 | enter a debit amount | enter a credit amount | |
|
(To close Income Summary.) |
|||
|
Dec. 31 |
enter an account title to close dividends on December 31 | enter a debit amount | enter a credit amount |
| enter an account title to close dividends on December 31 | enter a debit amount | enter a credit amount | |
|
(To close dividends.) |
In: Accounting
1. What is an economic argument for public funding of education? Does this mean that schools should be publicly establishment/managed? What benefits would result if the government simply provided parents/students money for education and allowed parents/students to use this money to buy their education at whatever school they wished?
In: Economics
As socialist economies transition toward capitalist systems, the government commonly sells publicly controlled companies and privatizes these state-owned enterprises. Which type of economy is expected to generate higher values for the privatized assets, a planned socialist economy or a market socialist economy? Please explain your response.
In: Economics
In: Operations Management
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
| Alpha | Beta | |||||||
| Direct materials | $ | 42 | $ | 24 | ||||
| Direct labor | 42 | 32 | ||||||
| Variable manufacturing overhead | 26 | 24 | ||||||
| Traceable fixed manufacturing overhead | 34 | 37 | ||||||
| Variable selling expenses | 31 | 27 | ||||||
| Common fixed expenses | 34 | 29 | ||||||
| Total cost per unit | $ | 209 | $ | 173 | ||||
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.
1. What is the total amount of traceable fixed manufacturing overhead for each of the two products, Alpha and Beta? and What is the company’s total amount of common fixed expenses?
2. Assume that Cane expects to produce and sell 99,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 29,000 additional Alphas for a price of $156 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
3. Assume that Cane expects to produce and sell 109,000 Betas during the current year. One of Cane’s sales representatives has found a new customer who is willing to buy 5,000 additional Betas for a price of $82 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
4. Assume that Cane expects to produce and sell 114,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 29,000 additional Alphas for a price of $156 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 13,000 units. What is the financial advantage (disadvantage) of accepting the new customer’s order?
In: Accounting
According to statistics reported on CNBC, a surprising number of motor vehicles are not covered by insurance (CNBC, February 23, 2006). Sample results, consistent with the 6 of 200 vehicles were not covered by insurance.
a. What is the point estimate of the proportion of vehicles not covered by insurance?
b. Develop a 95% confidence interval for the population proportion.
In: Statistics and Probability
|
Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .65. It’s considering building a new $74 million manufacturing facility. This new plant is expected to generate aftertax cash flows of $8.9 million in perpetuity. The company raises all equity from outside financing. There are three financing options: |
| 1. |
A new issue of common stock: The flotation costs of the new common stock would be 6.5 percent of the amount raised. The required return on the company’s new equity is 14 percent. |
| 2. |
A new issue of 20-year bonds: The flotation costs of the new bonds would be 2.8 percent of the proceeds. If the company issues these new bonds at an annual coupon rate of 7 percent, they will sell at par. |
| 3. |
Increased use of accounts payable financing: Because this financing is part of the company’s ongoing daily business, it has no flotation costs, and the company assigns it a cost that is the same as the overall firm WACC. Management has a target ratio of accounts payable to long-term debt of .15. (Assume there is no difference between the pretax and aftertax accounts payable cost.) |
|
What is the NPV of the new plant? Assume that PC has a 22 percent tax rate. (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole dollar amount, e.g., 1,234,567.) |
In: Finance
Customer A B C D E F
Contracted amount (tons) 1 2 6 2 3 4
Rockbottom has five trucks that may be used to make these deliveries. With the use of dividers, a truck can deliver to multiple customers, as long as it does not exceed the truck’s capacity. However, a customer’s order cannot be broken up and delivered by multiple trucks. The available trucks and their capacities are:
Truck # 1 2 3 4 5
Capacity (tons) 4 8 4 8 6
The costs, in $000s, for each truck to deliver the required load to each customer are:
Customer
Truck A B C D E F
1 17 19 21 20 20 21
2 15 18 20 18 19 23
3 18 19 22 22 21 22
4 15 16 19 18 18 20
5 16 15 20 22 19 20
Develop a linear program to determine the delivery plan that will allow Rockbottom to minimize the cost of fulfilling their contracts.
In: Operations Management
The following transactions occurred during the month of June
2018 for the Stridewell Corporation. The company owns and operates
a retail shoe store.
1.Issued 140,000 shares of common stock in exchange for $700,000 cash.
2.Purchased furniture and fixtures at a cost of $113,750. $45,500 was paid in cash and a note payable was signed for the balance owed.
3.Purchased inventory on account at a cost of $280,000. The company uses the perpetual inventory system.
4.Credit sales for the month totaled $476,000. The cost of the goods sold was $238,000.
5.Paid $6,500 in rent on the store building for the month of June.
6.Paid $3,360 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018.
7.Paid $202,300 on account for the merchandise purchased in 3.
8.Collected $95,200 from customers on account.
9.Paid shareholders a cash dividend of $7,000.
10.Recorded depreciation expense of $2,275 for the month on the furniture and fixtures.
11.Recorded the amount of prepaid insurance that expired for the month.
In: Accounting