|
Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: |
| Q1 | Q2 | Q3 | Q4 | |||||||||
| Sales | $ | 115 | $ | 135 | $ | 155 | $ | 185 | ||||
|
Sales for the first quarter of the year after this one are projected at $130 million. Accounts receivable at the beginning of the year were $51 million. Wildcat has a 45-day collection period. |
|
Wildcat’s purchases from suppliers in a quarter are equal to 45 percent of the next quarter’s forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $11 million per quarter. |
|
Wildcat plans a major capital outlay in the second quarter of $70 million. Finally, the company started the year with a $68 million cash balance and wishes to maintain a $40 million minimum balance. |
| a-1. |
Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 4 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 3 percent per quarter. Complete the following short-term financial plan for Wildcat. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| WILDCAT, INC. Short-Term Financial Plan (in millions) |
|||||||||
| Q1 | Q2 | Q3 | Q4 | ||||||
| Target cash balance | $ 40.00 | $ 40.00 | $ 40.00 | $ 40.00 | |||||
| Net cash inflow | |||||||||
| New short-term investments | |||||||||
| Income on short-term investments | |||||||||
| Short-term investments sold | |||||||||
| New short-term borrowing | |||||||||
| Interest on short-term borrowing | |||||||||
| Short-term borrowing repaid | |||||||||
| Ending cash balance | $ | $ | $ | $ | |||||
| Minimum cash balance | |||||||||
| Cumulative surplus (deficit) | $ | $ | $ | $ | |||||
| Beginning short-term investments | $ | $ | $ | $ | |||||
| Ending short-term investments | $ | $ | $ | $ | |||||
| Beginning short-term debt | $ | $ | $ | $ | |||||
| Ending short-term debt | $ | $ | $ | $ | |||||
| a-2. |
What is the net cash cost for the year under this target cash balance? (Negative amount should be indicated by a minus sign. Enter your answers in millions. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| Net cash cost | $ |
| b-1. |
Complete the following short-term financial plan assuming that Wildcat maintains a minimum cash balance of $20 million. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| WILDCAT, INC. Short-Term Financial Plan (in millions) |
|||||||||
| Q1 | Q2 | Q3 | Q4 | ||||||
| Target cash balance | $ 20.00 | $ 20.00 | $ 20.00 | $ 20.00 | |||||
| Net cash inflow | |||||||||
| New short-term investments | |||||||||
| Income on short-term investments | |||||||||
| Short-term investments sold | |||||||||
| New short-term borrowing | |||||||||
| Interest on short-term borrowing | |||||||||
| Short-term borrowing repaid | |||||||||
| Ending cash balance | $ | $ | $ | $ | |||||
| Minimum cash balance | |||||||||
| Cumulative surplus (deficit) | $ | $ | $ | $ | |||||
| Beginning short-term investments | $ | $ | $ | $ | |||||
| Ending short-term investments | $ | $ | $ | $ | |||||
| Beginning short-term debt | $ | $ | $ | $ | |||||
| Ending short-term debt | $ | $ | $ | $ | |||||
| b-2. |
What is the net cash cost for the year under this target cash balance? (Enter your answers in millions. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
| Net cash cost | $ |
In: Accounting
Construction activities for Oneida County for 2020 are as follows:
|
1. |
A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund. |
|
2. |
The general fund transfers $2,000,000 to the capital projects fund. |
|
3. |
$3,500,000 of the federal grant is received in cash. |
|
4. |
The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest. |
|
5. |
A contract for $14,800,000 is awarded to a contractor. |
|
6. |
Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash. |
|
7. |
The county's spending policy is to use restricted resources first. |
The county uses the GAAP budgetary basis for end-of-year
encumbrances.
What is the 2020 increase in total fund balances for the capital
projects fund?
Select one:
A. $6,900,000
B. $7,400,000
C. $6,500,000
D. $7,000,000
Question 14
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Construction activities for Oneida County for 2020 are as follows:
|
1. |
A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund. |
|
2. |
The general fund transfers $2,000,000 to the capital projects fund. |
|
3. |
$3,500,000 of the federal grant is received in cash. |
|
4. |
The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest. |
|
5. |
A contract for $14,800,000 is awarded to a contractor. |
|
6. |
Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash. |
|
7. |
The county's spending policy is to use restricted resources first. |
The county uses the GAAP budgetary basis for end-of-year
encumbrances.
What is the end-of-2020 balance in fund balance–restricted for the
capital projects fund?
Select one:
A. $6,500,000
B. $5,000,000
C. $7,000,000
D. $5,400,000
Question 15
Not yet answered
Marked out of 3.00
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Question text
Construction activities for Oneida County for 2020 are as follows:
|
1. |
A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund. |
|
2. |
The general fund transfers $2,000,000 to the capital projects fund. |
|
3. |
$3,500,000 of the federal grant is received in cash. |
|
4. |
The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest. |
|
5. |
A contract for $14,800,000 is awarded to a contractor. |
|
6. |
Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash. |
|
7. |
The county's spending policy is to use restricted resources first. |
The county uses the GAAP budgetary basis for end-of-year
encumbrances.
What is the cash balance for the capital projects fund at the 2020
year-end?
Select one:
A. $7,400,000
B. $6,900,000
C. $6,902,000
D. $7,300,000
Question 16
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Marked out of 3.00
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Question text
Construction activities for Oneida County for 2020 are as follows:
|
1. |
A capital projects fund is established for the construction of a recreation center. The total project is estimated to cost $15,000,000, with funding to come from a $9,000,000 general obligation bond issue, a $4,000,000 federal grant, and a $2,000,000 transfer from the general fund. |
|
2. |
The general fund transfers $2,000,000 to the capital projects fund. |
|
3. |
$3,500,000 of the federal grant is received in cash. |
|
4. |
The bond issue with a par value of $9,000,000 yields $9,002,000. The premium is transferred to the debt service fund to finance payment of bond principal and interest. |
|
5. |
A contract for $14,800,000 is awarded to a contractor. |
|
6. |
Invoices for $8,000,000 are received for work performed by the contractor. The town has a 5% retainage policy and pays the contractor $7,600,000 in cash. |
|
7. |
The county's spending policy is to use restricted resources first. |
The county uses the GAAP budgetary basis for end-of-year
encumbrances.
What is the total for other financing sources for 2020, reported on
the capital projects fund operating statement?
Select one:
A. $ 2,000,000
B. $13,000,000
C. $11,000,000
D. $ 9,000,000
In: Accounting
olvency Analysis
The following information is available from the balance sheets
at the ends of the two most recent years and the income statement
for the most recent year of Impact Company:
| December 31 | ||||||
| 2017 | 2016 | |||||
| Accounts payable | $ 65,000 | $ 50,000 | ||||
| Accrued liabilities | 25,000 | 35,000 | ||||
| Taxes payable | 60,000 | 45,000 | ||||
| Short-term notes payable | 0 | 75,000 | ||||
| Bonds payable due within next year | 200,000 | 200,000 | ||||
| Total current liabilities | $ 350,000 | $ 405,000 | ||||
| Bonds payable | $ 600,000 | $ 800,000 | ||||
| Common stock, $10 par | $1,000,000 | $1,000,000 | ||||
| Retained earnings | 650,000 | 500,000 | ||||
| Total stockholders’ equity | $1,650,000 | $1,500,000 | ||||
| Total liabilities and stockholders’ equity | $2,600,000 | $2,705,000 | ||||
| 2017 | ||
| Sales revenue | $1,600,000 | |
| Cost of goods sold | 950,000 | |
| Gross profit | $ 650,000 | |
| Selling and administrative expense | 300,000 | |
| Operating income | $ 350,000 | |
| Interest expense | 89,000 | |
| Income before tax | $ 261,000 | |
| Income tax expense | 111,000 | |
| Net income | $ 150,000 |
Other Information:
Required:
1. Compute the following for Impact Company. Round your answers to two decimal places.
| 2017 | 2016 | |||
| a. The debt-to-equity ratio at December 31, 2017, and December 31, 2016 | to 1 | to 1 | ||
| b. The times interest earned ratio for 2017 | to 1 | |||
| c. The debt service coverage ratio for 2017 | times | |||
In: Accounting
A family friend, Mr. Burn Out availed of the early retirement scheme offered by his employer. He said that he was already tired of the same routine of spending eight full hours in an office doing the same thing for the last twenty years.
Mr. Burn Out plans to get into the field of entrepreneurship. He would invest part of his retirement pay in a business that would deal with the sale of medical supplies to local clinics and hospitals.
When Mr. Burn Out learned that you are an accountant, he confessed that he is excited with his planned investment project, but very much afraid because he cannot afford to fail and lose his hard-earned retirement pay.
You advised that a Feasibility Study be prepared for his planned investment project. The study, you said, would determine the viability of his proposed business undertaking. it would cover key areas, such as marketing, production or purchasing, and finance, among others. You emphasized that the financial aspect is the most critical of them all.
Mr. Burn Out requested you to prepare a feasibility study for his proposed business. You immediately started and gathered the following relevant data.
1. Projected sales for the first year of operations are $288,000, spread evenly during the year. All sales will be on account with an average collection period of one month.
2. The cost ratio will be 60% of sales.
3. At the end of the first year, the acid-test ratio will be 1:1, while the current ratio will be 2:1.
4. Once the business is underway, purchases will replace the stock sold each month. The average payment period for accounts payable arising from the purchases of merchandise will be two (2) months.
5. Mr. Burn Out will open an account with the nearest bank and deposit $260,000 to start the business.
6. Various fixed assets will be acquired for cash at a total cost of $240,000. These fixed assets will be depreciated at the rate of 10% per year using the straight-line method.
7. Operating expenses, other than depreciation, are estimated at $70,000 per year. There will be no accruals and prepayment at year-end.
8. Mr. Burn Out will make drawings in excess of the amount necessary to meet the above plans.
Question: The projected income before tax is?
In: Accounting
At the end of 2018, RQM, Ltd. issued zero-coupon bonds that mature in 2038. The face value of the bonds was $1,801 million, and they sold for $1,099 million on the issue date. The effective market interest rate was 2.5% on that date. At the end of 2025, RQM repurchased $257 million in face value of the bonds for a purchase price of $174 million, resulting in a gain on the early extinguishment of debt.Review what you have learned about bonds as well as the explanation of zero coupon bonds on p. 537 of your text, and answer the following questions, expressing all numbers in millions (for example, the face amount of the bonds is $1,801). Please answer in complete sentences and show your calculations for numerical answers and journal entries. Please do not use decimals in any of your answers. Round to millions.
1A. Name the two accounts and balances from the Balance Sheet that combine to determine the book value.
1B. Prepare the journal entry to record the repurchase of some of the debt at the end of 2025. [Repurchasing some of the bonds before the maturity date is called “early extinguishment” of the debt. The company makes a payment to the bondholders, who relinquish the bonds and their right to collect the face value at maturity, and the debt is removed from the books. To record the early extinguishment, the company makes a journal entry to remove the appropriate book value and decrease cash by the amount paid to the bondholders. If those two amounts are not equal, a gain or loss is recorded to balance the journal entry. The journal entry is analogous to the entry you would use to remove a long-term asset from the books when it is sold.]
1C. Why might company managers choose to issue zero-coupon bonds instead of interest-bearing bonds?
1D. Why might they decide to repurchase some of the bonds before the maturity date? Be sure to consider whether management may chose to repurchase when interest rate are increasing or decreasing and explain why.
In: Accounting
Francon Construction Inc, is an international company situated in Quebec City and uses IFRS. It is engaged in the construction of very high scale buildings in many countries for commercial and residential uses. On January 1, 2011, it issued 15-year redeemable bonds. These bonds could be redeemed at any time five years following the date of issue, at the option of the company. If these bonds were to be redeemed earlier than their maturity date, the company would have to pay a redemption premium of 3% of the face value of the bonds redeemed (ie: at 103). Interest was paid annually on December 31.
The company showed a credit unamortized balance (ie: book value) of $777,507.12 in the Bonds Payable account on December 31, 2014. On December 31, 2015, the company prepared the following journal entry related to this bond issue:
Interest Expense $69,975.64
Cash $63,000.00
Bonds Payable $ 6,975.64
On January 1, 2016, the company redeemed all the outstanding bonds. The cash payment was equal to the unamortized balance of the bonds plus a redemption premium of $27,000.
Required:
1. With the information given above, determine
a] The coupon rate of the bond;
b] The effective rate of the bonds;
c] The face value of the bonds.
2. Prepare the journal entry required to record the redemption of the bonds.
3. Show in good format, how the company would report the bonds on their balance sheet on December 31, 2015.
4. For this part only, now assume that the above redemption of bonds by Francon Construction Inc. did not occur and that the bonds have a face value (and book value) of $800,000 due on June 30, 2026. On March 30, 2026, it issued $600,000 in common shares and used the proceeds of this against the total payment required on June 30, 2026. The financial statements for the year ended December 31, 2025 were released on April 10, 2026.
How would they classify the bond payable on the December 31, 2025 statement of financial position if they used:
-IFRS?
-ASPE?
In: Accounting
Nash Corporation purchased an asset at a cost of $40,000 on
March 1, 2020. The asset has a useful life of 8 years and a salvage
value of $3,200. For tax purposes, the MACRS class life is 5
years.
| MACRS Depreciation Rates by Class of Property | ||||||||||||
|
Recovery |
3-year |
5-year |
7-year |
10-year |
15-year |
20-year |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
1 |
33.33 | 20.00 | 14.29 | 10.00 | 5.00 | 3.750 | ||||||
|
2 |
44.45 | 32.00 | 24.29 | 18.00 | 9.50 | 7.219 | ||||||
|
3 |
14.81* | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 | ||||||
|
4 |
7.41 | 11.52* | 12.49 | 11.52 | 7.70 | 6.177 | ||||||
|
5 |
11.52 | 8.93* | 9.22 | 6.93 | 5.713 | |||||||
|
6 |
5.76 | 8.92 | 7.37 | 6.23 | 5.285 | |||||||
|
7 |
8.93 | 6.55* | 5.90* | 4.888 | ||||||||
|
8 |
4.46 | 6.55 | 5.90 | 4.522 | ||||||||
|
9 |
6.56 | 5.91 | 4.462* | |||||||||
|
10 |
6.55 | 5.90 | 4.461 | |||||||||
|
11 |
3.28 | 5.91 | 4.462 | |||||||||
|
12 |
5.90 | 4.461 | ||||||||||
|
13 |
5.91 | 4.462 | ||||||||||
|
14 |
5.90 | 4.461 | ||||||||||
|
15 |
5.91 | 4.462 | ||||||||||
|
16 |
2.95 | 4.461 | ||||||||||
|
17 |
4.462 | |||||||||||
|
18 |
4.461 | |||||||||||
|
19 |
4.462 | |||||||||||
|
20 |
4.461 | |||||||||||
|
21 |
2.231 | |||||||||||
|
*Switchover to straight-line depreciation. |
||||||||||||
Compute tax depreciation for each year 2020–2025.
(Round answers to 0 decimal places, e.g.
45,892.)
|
Tax depreciation for 2020 |
$enter a dollar amount rounded to 0 decimal places |
|
|---|---|---|
|
Tax depreciation for 2021 |
$enter a dollar amount rounded to 0 decimal places |
|
|
Tax depreciation for 2022 |
$enter a dollar amount rounded to 0 decimal places |
|
|
Tax depreciation for 2023 |
$enter a dollar amount rounded to 0 decimal places |
|
|
Tax depreciation for 2024 |
$enter a dollar amount rounded to 0 decimal places |
|
|
Tax depreciation for 2025 |
$enter a dollar amount rounded to 0 decimal places |
In: Accounting
SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 12 million of the company’s $1 par common shares for $11 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $13 per share. The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2021, 2022, and 2023. Record the exercise of the options if all of the options are exercised on May 11, 2025, when the market price is $14 per share. SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 12 million of the company’s $1 par common shares for $11 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $13 per share. The fair value of the 12 million options, estimated by an appropriate option pricing model, is $3 per option. Required: 1. Determine the total compensation cost pertaining to the incentive stock option plan. 2. & 3. Prepare the appropriate journal entries to record compensation expense on December 31, 2021, 2022, and 2023. Record the exercise of the options if all of the options are exercised on May 11, 2025, when the market price is $14 per share.
In: Accounting
16. The formal documents that quantify a company’s plans for achieving its goals are called
A. variance reports.
B. budgets.
C. exception logs.
D. cost of production reports.
17. Which of the following
costs does not change when the level of business
activity changes?
A. total fixed
costs
B. total variable
costs
C. total direct materials
costs
D. fixed costs per
unit
18. When work is completed on a job, costs for the completed job are found in which of the following accounts?
19. In a process costing
system, when raw materials are put into process, the cost of the
items is moved from
A. Work in Process to
Finished Goods.
20. Conversion costs are
A. often assumed to be
added at the beginning of the production process in
each department.
B. the sum of the direct
materials and direct labor costs.
C. impossible to measure
for any particular department.
D. often assumed to be
added evenly throughout the process within the
department.
21. Which of the following
is a direct cost of a specific department in a retail store?
A. company president’s
salary
B. rent on the
store
C. utilities for the
store
D. cost of the
department’s inventory
22. You have tickets to go to Mexico (Cancun specifically) over spring break. Just this week your best friend informs you that s/he is getting married over spring break and would like you to be in the wedding as an attendant. Which of the following is a sunk cost that should not be relevant to your decision as to whether be in the wedding or go on the trip to Mexico?
23. If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 360,000 pounds are required for January production, how many pounds of raw materials should be purchased in January?
a. 300,000 pounds
b. 480,000 pounds
c. 240,000 pounds
d. 420,000 pounds
24. In a production budget, total required production units are the budgeted sales units plus
a. beginning finished goods units.
b. desired ending finished goods units.
c. desired ending finished goods units plus beginning finished goods units.
d. desired ending finished goods units minus beginning finished goods units.
25. In most cases, prices are set by the
a. customers.
b. competitive market.
c. largest competitor.
d. selling company.
In: Accounting
In a recent survey concerning company sales and net earnings, 15 companies responded with the following information.
| Company | Sales ($ thousands) |
Net Earnings ($ thousands) |
|---|---|---|
| The Party Place | 53.3 | 4.0 |
| JenStar | 39.5 | 3.3 |
| Universal Maintenance Co. | 47.9 | 4.0 |
| JenCo | 27.7 | 1.6 |
| The Grayson Group | 48.8 | 4.0 |
| Apex Consulting | 47.2 | 3.5 |
| XYZ Co. | 23.7 | 1.3 |
| SouthCo | 40.4 | 2.8 |
| Southwest Consulting | 59.8 | 3.9 |
| Biotech Co | 43.4 | 3.5 |
| NorthCo | 20.0 | 1.9 |
| EastCo | 53.9 | 3.5 |
| Cantu Excavating | 29.0 | 1.8 |
| Classic Coverings | 42.5 | 2.6 |
| Second Time Around Clothing | 49.0 | 3.8 |
a) Using a statistical computing tool, find the
equation of the regression line.
For full marks your answer should be accurate to at least three
decimal places.
ŷ = ? + ?x
b) Use the regression line from part a to estimate
the net earnings for a company with sales of $21.6 thousand.
For full marks your answer should be accurate to at least one
decimal place.
Earnings: $? thousand
| c) | Given the regression equation from part a, which of the
following statements is most appropriate regarding company sales
and earnings?
|
In: Statistics and Probability