Question 3: (CLO 4 and 5)   

The adjusted trial balance of Miracle Company contained the following information:

                                                                                               Debit                       Credit   

Sales                                                                                                                $1,420,000

Interest Revenue                                                                                                    100,000

Sales Returns and Allowances                                                 $40,000                             

Sales Discounts                                                                         14,000                              

Cost of Goods Sold                                                                 872,000                              

Freight-out                                                                                  4,000                              

Advertising Expense                                                                 30,000                              

Interest Expense                                                                        36,000                              

Store Salaries Expense                                                             110,000                              

Utilities Expense                                                                       56,000                              

Depreciation Expense                                                                14,000                              

Dividends                                                                                 50,000

Instructions:

1. Use the above information to prepare an income statement for the year ended December 31, 2019.
2. Prepare the closing entries for Miracle Company at December 31, 2019.

The Hamilton Company manufactures two products: X and Y.  Contribution margin per unit is determined as follows:

                                                       Product X       Product Y

Revenue........................................... $130................. $80

Variable Costs................................... .$70................. $38

Contribution margin............................ $60................. $42

Total demand for X is 16,000 units and for Y is 8,000 units. Machine hours are a scarce resource. 42,000 machine hours are available during the year. Product X requires 6 machine hours per unit, while Product Y requires 3 machine hours per unit. How many units of X and Y should Hamilton Company produce?

Classic Manufacturers invests $200,000 in a piece of equipment. The company’s management has estimated that the equipment will generate revenue of $50,000 in Year 1, $60,000 in Year 2, and $80,000 in Year 3 to Year 5. At the end of Year 5 the equipment will have zero salvage value. Given that the company depreciates the equipment on a straight-line basis and that there are no other revenues and expenses, the average accounting rate of return is closest to:

Consider the following situations and determine (1) which type of liability should be recognized (specific account), and (2) how much should be recognized in the current period (year).

1. A business sets up a line of credit with a supplier. The company purchases $10,000 worth of equipment on credit. Terms of purchase are 5/10, n/30.
2. A customer purchases a watering hose for $25. The sales tax rate is 5%.
3. Customers pay in advance for season tickets to a soccer game. There are fourteen customers, each paying $250 per season ticket. Each customer purchased two season tickets.
4. A company issues 2,000 shares of its common stock with a price per share of $15.

Please answer the 3 question below about the Miller Corporation

Miller Corporation ‐ Year 20X3  During the year, you paid the amounts owed for Motorcycles at the end of year 20X2 and collected all  the amounts owed by customers for 20X2.  You purchased 25 more Motorcycles for $6,000 each and at  the same terms as in 20X2.  During the year, you sold 22 Motorcycles for $11,000 each at the same  terms as 20X2.  You paid the money owed to suppliers (Accounts Payable) at the beginning of the year  and collected all money due you at the beginning of the year (Accounts Receivable).  You use the FIFO  inventory system.     On January 1, 20X3, you purchased furniture and fixtures for $55,000.  You put $15,000 down and  financed the remaining amount at 10%.  You will make annual payments on December 31st for four years  that include the interest accrued to date plus $10,000 on the principal each year.  You estimate that you  will use them for 10 years and then they will be worth $5,000.      On June 30th, you paid $3,600 for a two‐year insurance policy; office expenses of $12,000; $4,500 for  advertising in The Post; utilities of $6,000; and Supplies of $1,500.  You also paid $26,000 for 13 months  of rent.  You paid your worker $18,000 (includes amount owed from prior year) and owed her $2,000  more at the end of the year.      On December 31st, you paid the first payment on the furniture and fixtures loan.  Paid Uncle Mike his  interest and paid the principal balance owed on December 31st.    This year you declared and paid a dividend of $4,000 to your shareholders.  On October 1st you issued 30  shares of common stock for $3,000.      You paid the 20X2 taxes.  The 20X3 taxes will be paid in 20X4.  The tax rate is 21%.      Prepare the Journal Entries (including the closing entry), T‐accounts, and all four Financial Statements  (in good form).      Miller Corporation ‐ Year 20X4  During the year, you bought 31 more Motorcycles for $6,500 each and sold 29 for $12,000 each, same  terms as last year.  You paid the money owed to suppliers (Accounts Payable) at the beginning of the  year and collected all money due you at the beginning of the year (Accounts Receivable).      On January 1st, you purchased a delivery truck for $41,000.  You made a down payment of $10,000 and  financed the balance at 7%.  You will make four equal payments that include interest @ 7%.  You make  the first payment on December 31st of this year.  You estimate the truck will last about 6 years and then  be worth $5,000.     
You paid your worker $17,000 (includes amount owed from prior year) and owed her $2,000 more at  

One part of financial analysis is analyzing the same company over many years using a trend analysis. Using the information you prepared for Assignment #3 (the Accounting Cycle Problem) for Miller Corp., answer the following questions:

Assignment 3 Answer below:

Miller Corporation has shown good financial performance year on year basis. In third year of operations, the company has generated net income $28,835 and gross profit is $114,000. The revenue of the company is $242,000 during third year of operations. The gross profit margin of the company is 47.10% and net profit margin is 11.92%. The revenue of the company is growing year on year basis, but the net profit margin and gross margin have slightly reduced in third year. The company should try to improve its gross profit margin and net profit margin to grow at speedy rate.

The company has generated $40,656 from operations which has been utilized for investing and financing activities. The net changes in cash flows have slightly reduced which shows that the company has utilized its cash balance $10,944 to pay finance obligations during the third year of operations. The total assets of the company are $345,732 as on year 20X3 and the assets partly financed from liability and equity i.e. $152,165 from liability and $193,567 from equity. It shows that the majority assets are financed from equity and the company has reduced its debt obligations during the year.

During fourth year of operations, the revenue, gross profit and net profit of the company are $348,000, $162,000 and $56,114 respectively. The gross margin of the company is 46.55% and net profit margin is 16.12%. The gross margin I fourth year is equivalent to third year of operations and the net profit margin o the company has increase in comparison to third operations and the net profit margin of the company has increased in comparison to third year. It shows that the company has improved its profitability and has utilized its resources more effectively and efficiently. The company has generated $64,060 from operations and the amount has been utilized for investing activities. Further the total asset base of the company has also increased, and the financial position and financial performance of the company has improved year on year basis which is a healthy indicator for the company.

1. How is Miller’s liquidity trending from one year to the next?

2. How is Miller’s solvency trending from one year to the next?

3. How has Miller’s asset base changed over time? Will this allow the company to meet consumer demand for their product? Why or why not?

Write a C++ program that will output the multiplication table as show below:

1*1=1          2*1=2                   3*1=3         ……  9*1=1
1+2=2         2*2=4                   3*2=6          ……  9*2=18
…….           …….                   …….           ……  …….
1*9=9         2*8=18                 3*9=27         ……  9*9=81

1. A company purchased a building at the beginning of the year for $200,000 and is using straight-line depreciation to depreciate it over 20 years. The salvage value of the building is $50,000. Prepare the adjusting entry to record the depreciation expense for the current year.
   1. DEBIT: Accumulated Depreciation for $5,000; CREDIT: Depreciation Expense for $5,000
   2. DEBIT: Accumulated Depreciation for $7,500; CREDIT: Depreciation Expense for $7,500
   3. DEBIT: Depreciation Expense for $5,000; CREDIT: Accumulated Depreciation for $5,000
   4. DEBIT: Depreciation Expense for $7,500; CREDIT: Accumulated Depreciation for $7,500

2. A company paid cash for equipment in the amount of $17,000. Prepare the general journal entry.
   1. DEBIT: Cash for $17,000; CREDIT: Equipment for $17,000
   2. DEBIT: Equipment for $17,000; CREDIT: Depreciation expense for $17,000
   3. DEBIT: Equipment for $17,000; CREDIT: Note Payable for $17,000
   4. DEBIT: Equipment for $17,000; CREDIT: Cash for $17,000

3. To increase a revenue account, you need to ____________ the account.
   1. Debit
   2. Credit

4. A company collected a $500 receivable related to a previously recorded sale. Prepare the general journal entry.
   1. DEBIT: Cash for $500; CREDIT: Revenue for $500
   2. DEBIT: Revenue for $500; CREDIT: Cash for $500
   3. DEBIT: Cash for $500; CREDIT: Accounts Receivable for $500
   4. DEBIT: Accounts Receivable for $500; CREDIT: Cash for $500

5. A four-year insurance policy in the amount of $40,000 was purchased one year ago. What is the adjusting entry to record insurance expense for the current year?
   1. DEBIT: Prepaid Insurance for $40,000; CREDIT: Insurance Expense for $40,000
   2. DEBIT: Prepaid Insurance for $10,000; CREDIT: Insurance Expense for $10,000
   3. DEBIT: Insurance Expense for $40,000; CREDIT: Prepaid Insurance for $40,000
   4. DEBIT: Insurance Expense for $10,000; CREDIT: Prepaid Insurance for $10,000

6. A company received $18,000 from a customer on December 1, 20X1 for future work to be performed and recorded the receipt of cash and the liability to complete the work (credit to unearned revenue). As of the year ended December 31, 20X1, one-third of the work has been completed. Record the necessary adjusting journal entry.
   1. DEBIT: Unearned Revenue for $6,000; CREDIT: Revenue for $6,000
   2. DEBIT: Unearned Revenue for $12,000; CREDIT: Revenue for $12,000
   3. DEBIT: Revenue for $6,000; CREDIT: Unearned Revenue for $6,000
   4. DEBIT: Revenue for $12,000; CREDIT: Unearned Revenue for $12,000

7. To decrease an asset account, you need to ____________ the account.
   1. Debit
   2. Credit

8. A company declared dividends of $1.50/share when there were 8,000 shares of stock outstanding. The dividends will be paid one month from now. Prepare the general journal entry to record the declaration of the dividends.
   1. DEBIT: Cash for $12,000; CREDIT: Dividends for $12,000
   2. DEBIT: Dividends for $12,000; CREDIT: Cash for $12,000
   3. DEBIT: Dividends for $12,000; CREDIT: Dividends Payable for $12,000
   4. DEBIT: Dividends Payable for $12,000; CREDIT: Cash for $12,000

9. A company pays a $2,000 cash dividend that was declared and initially recorded last month. Prepare the general journal entry.
   1. DEBIT: Cash for $2,000; CREDIT: Dividends for $2,000
   2. DEBIT: Dividends for $2,000; CREDIT: Cash for $2,000
   3. DEBIT: Dividends for $2,000; CREDIT: Dividends Payable for $2,000
   4. DEBIT: Dividends Payable for $2,000; CREDIT: Cash for $2,000

10. At the end of the year, there is $6,800 worth of employee wages that have been earned by the employees, but not yet paid. Record the adjusting journal entry.
    1. DEBIT: Wages Payable for $6,800; CREDIT: Wage Expense for $6,800
    2. DEBIT: Cash for $6,800; CREDIT: Wage Expense for $6,800
    3. DEBIT: Wage Expense for $6,800; CREDIT: Cash for $6,800
    4. DEBIT: Wage Expense for $6,800; CREDIT: Wages Payable for $6,800

A random group of thirty customers at a local theater was interviewed regarding their movie viewing habits. The following responses were obtained for the question, “How many times during the past month did you go to the movies?” Number of movies attended 0 1 2 3 4 Number of customers 3 10 8 6 3 a. b. Find the probability that a customer selected at random went to the movies:

1) more than one time, 2) two times, 3) at least two times, 4) no more than three times.

A company wants to know how job performance relates to IQ. They collect data on 30 employees, resulting in the following table. Enter the data into SPSS OR EXCEL with appropriate variable labels. Show all syntax and output. (5pts)

1. 1. Find the equation that best represents the linear relationship between X and Y.
   2. Determine the strength of this relationship.
   3. Test the null hypothesis that, in the population from which the sample was drawn, the slope of the prediction line is zero.

Parker Hannifin Corporation is a leading manufacturer of component parts used in aerospace, transportation, and manufacturing equipment. The company makes several hundred thousand parts—from heat-resistant seals for jet engines and components used in the space shuttle to steel valves that hoist buckets on cherry pickers. Parker Hannifin’s motor and control products are integral components in global manufacturing and very few rivals have the same product breadth and clout with customers (original-equipment manufacturers) as the firm.² When Donald Washkewicz took over as chief executive, he came to an unnerving conclusion: the pricing approach that the company had followed for years was downright crazy.

For as long as anyone at the company could recall, the firm used this simple approach to determine the prices for its thousands of parts: Company managers would calculate how much it cost to make and deliver each product and then add a flat percentage on top, usually aiming for around a 35 percent margin. Across divisions, many managers liked this cost-plus approach because it was straightforward and gave them broad authority to negotiate prices with customers.

But the chief executive feels that the firm, which generates over 13 billion in annual revenues, may be severely restricting its profit growth. No matter how much a particular product is improved, the company often ends up charging the same premium that it would for a standard product. And if the company finds a way to make a product less expensively, it ultimately cuts the product’s price as well. “I was actually losing sleep,” recalls Donald Washkewicz, who believes that the company should stop thinking like a widget maker or a cost-plus price setter and start thinking like a retailer by determining prices by what customers are willing to pay.

Changing the firm’s pricing approach, however, is a complex task. The company has tens of thousands of products— (1) some are high-volume commodities and there are large, formidable competitors; (2) some have unique features, fill niches in the market, and have limited competition; and (3) many are custom-designed for a single customer.

Describe the process that you would follow in performing an audit of the firm's product line to identify those products that represent the best and worst candidates for profit-margin expansion.

Provide a set of specific pricing guidelines that managers should apply as the traditional cost-plus approach is phased out and a value-based approach to pricing is implemented.