QUESTION 3 REQUIRED Use the information provided below to prepare the following for Electroman Limited for August and September 2020 (using separate monetary columns for each month):

3.1 Debtors Collection Schedule

3.2 Cash Budget. Note: Where applicable, round off amounts to the nearest Rand. INFORMATION Electroman Limited sells appliances.

The following forecasts were made:

1. The bank balance on 31 July 2020 is expected to be R50 000 (favourable).

2. Sixty percent (60%) of all sales are for cash; the balance is on credit. Credit sales for June and July 2020 are expected to be R320 000 and R360 000 respectively. Sales are expected to increase by 10% each month. Twenty percent (20%) of the credit sales are expected to be settled during the month of the sale for a discount of 5%. The remaining customers usually pay in the month after the sale.

3. All appliances are purchased on credit and the creditors are paid in the month after the purchase. Purchases are expected to be as follows: July R420 000 August R460 000 September R510 000

4. Salaries and wages are expected to cost R85 800 for September 2020, after a 10% increase takes effect on 01 September 2020.

5. Advertising expenses are expected to be 6% of the total monthly sales, and are paid one month later. 6. Equipment that cost R300 000 is expected to be purchased during August 2020.

6. A deposit of 10% will be paid in August and the balance plus finance charges of R20 000 is payable in 5 equal instalments commencing September 2020.

7. A long-term loan of R250 000 at 12% per annum interest is to be raised on 01 August 2020. Interest on loan and a loan repayment of R5 000 is payable monthly on the last day of each month, commencing 31 August 2020.

8. Other cash expenses are expected to amount to R80 000 for July 2020. These expenses are expected to increase by 5% each month.

9. An interim dividend of 8 cents per share is expected to be paid to shareholders on 31 August 2020. The issued share capital of Electroman Li

mited consists of 500 000 ordinary shares

Interdependence among states suggests that power only harms multiple interests of states and other actors

                          
       TFAC4001 Assessment 2020                  
Question 1                          
                          
Classic Dining Ltd. is considering opening a new restaurant in a rented facility.                          
It wishes to evaluate this investment over the five-year leasing period, on the assumption                           
that the equipment would be sold and the working capital recovered at the end of the 5th .                          
year                          
The following estimates in respect of the new restaurant have been prepared.                          
                          
                   €'000      
Premium on lease (capital expenditure)                    600      
Equipment and furnishing investment                   850      
Estimated disposal value of equipment at end of year 5                   100      
                          
Weighted average cost of capital                   11%      
                          
Estimates / Year           Year 1   Year 2   Year 3   Year 4   Year 5
                          
Numbers of customers           32,000   36,000   40,000   42,000   45,000
                          
Average revenue per customer           € 75   € 75   € 78   € 80   € 82
                          
Food & bev. costs per customer           € 23   € 24   € 25   € 26   € 27
Variable wages cost per cust.           € 19   € 20   € 21   € 22   € 23
                          
Fixed Costs           €'000   €'000   €'000   €'000   €'000
Annual rent (lease) of premises           425   425   425   425   425
Marketing and admin. expenses           225   200   180   180   180
Depreciation of equipment           150   150   150   150   150
Salaries           150   160   170   180   200
Apport. head office overheads           75   75   80   85   100
           1,025   1,010   1,005   1,020   1,055
                          
Profits lost in other restaur. €000           60   70   80   90   100
Working capital as % of turnover           4%   4%   4%   4%   4%
                          
Required:                          
                          
(a)   Evaluate the above project using the following methods:                      
                          
       Net present value                  
       Internal rate of return                  
       Nominal payback period                  
                          
(b)   Comment on the proposed investment                       (5.33 marks)
                           (33.33 marks)

persuade to wear a mask in 2020

                          
       TFAC4001 Assessment 2020                  
Question 1                          
                          
Classic Dining Ltd. is considering opening a new restaurant in a rented facility.                          
It wishes to evaluate this investment over the five-year leasing period, on the assumption                           
that the equipment would be sold and the working capital recovered at the end of the 5th .                          
year                          
The following estimates in respect of the new restaurant have been prepared.                          
                          
                   €'000      
Premium on lease (capital expenditure)                    600      
Equipment and furnishing investment                   850      
Estimated disposal value of equipment at end of year 5                   100      
                          
Weighted average cost of capital                   11%      
                          
Estimates / Year           Year 1   Year 2   Year 3   Year 4   Year 5
                          
Numbers of customers           32,000   36,000   40,000   42,000   45,000
                          
Average revenue per customer           € 75   € 75   € 78   € 80   € 82
                          
Food & bev. costs per customer           € 23   € 24   € 25   € 26   € 27
Variable wages cost per cust.           € 19   € 20   € 21   € 22   € 23
                          
Fixed Costs           €'000   €'000   €'000   €'000   €'000
Annual rent (lease) of premises           425   425   425   425   425
Marketing and admin. expenses           225   200   180   180   180
Depreciation of equipment           150   150   150   150   150
Salaries           150   160   170   180   200
Apport. head office overheads           75   75   80   85   100
           1,025   1,010   1,005   1,020   1,055
                          
Profits lost in other restaur. €000           60   70   80   90   100
Working capital as % of turnover           4%   4%   4%   4%   4%
                          
Required:                          
                          
(a)   Evaluate the above project using the following methods:                      
                          
       Net present value                  
       Internal rate of return                  
       Nominal payback period                  
                          
(b)   Comment on the proposed investment                       (5.33 marks)
                           (33.33 marks)

Now assume that you are given an N-state Markov chain, in which each state has bi-directional connections with its two neighboring states (i.e., the neighboring states of S1 are S2 and SN; the neighboring states of S2 are S1 and S3, ..., and the neighboring states of SN−1 are SN−2 and SN ). Identify under what conditions (i.e., what values of N) will this N-state Markov chain have a periodic recurrent class, and justify your answer

Andy’s Co. is a manufacturing firm of a computer hardware device. Its sales forecasts for the year 2020 is as follows:

The company will start its business this year with $30,000 of cash balance. As of Q4 of the fiscal year 2019, it does not have any material, work in progress, or finished goods inventories. The company currently has no debt and entirely owned by shareholders. The balance sheet of Andy’s Co. as of the end of the year 2019 is as follows:

Direct material costs per unit are $150. Each unit requires three direct labor hours to be completed. The hourly wage is $40. For the year 2020, the company expects the variable overhead to be $136,000. The company allocates variable overhead by direct labor hours. Fixed overhead is expected to be $204,000, including the depreciation of the equipment ($47,500). The company will evenly allocate the fixed overhead for each quarter.

At the beginning of the year 2020, the company will invest in $95,000 for the equipment.

The company supplies products with no material selling and administrative expenses. Their products are immediately picked up by other manufacturers in the complex for cash. Due to the highly efficient just-in-time inventory management system, the company does not hold materials inventories. All materials are purchased just enough to be used in production each quarter. The company also does not hold work in progress inventories. However, they keep 10% of next quarter’s sales as ending inventories of finished goods.

The company also engages in flexible cash management. They require a minimum balance of zero. Whenever they run short of cash, they can borrow from a partnered venture capital at the quarterly interest rate of 2%. They obtain the short-term loan at the beginning of the quarter, and they repay both principal and interest at the end of the quarter if they have enough cash.

The company will incur 20% of taxable income (operating income less interest expenses) as tax expenses but will pay the income taxes in the year 2021.

5) Complete the overhead budget including the cash disbursement for Andy’s Co. for the fiscal year 2020

6) Complete the cost of goods manufactured budget for Andy’s Co. for the fiscal year 2020

7) Complete the cost of goods sold budget for Andy’s Co. for the fiscal year 2020

8) Complete the cash budget for Andy’s Co. for the fiscal year 2020

9) Complete the income statement for Andy’s Co. for the fiscal year 2020

10) Complete the balance sheet for Andy’s Co. for the fiscal year 2020

11) An alternative plan for operation requires more investment in the equipment. If the company can invest $210,000 instead of $95,000 in the equipment at the beginning of the year 2020, the company can reduce direct labor hours required for each unit to 2 hours. The depreciation of the equipment will be $105,000 for the year 2020. Calculate the impacts of the additional investment on net income and operating cash flows for the year 2020. You can present an alternative income statement, cash budget, and balance sheet.

12) The executives of Andy’s Co. are debating over whether to invest $95,000 or $210,000. The market analysts suggest that the demand for the products will be at a similar level over the next few years. Based on the sales forecasts of the market analysts, provide advice to the executives. Support your advice quantitatively.

Study the following items related to transactions during the year to September 30, 2020 for Thompson’s Tours’ Inc. All transactions are reported on the financial statements in $XCD.

I. A bank overdraft of $200,000 in a chequing account at St Kitts National Bank.

II. A saving account with a balance of $400,000 at Open Campus Bank and chequing account with an overdraft of $100,000 at the same bank repayable on demand.

III. The Operation Manager was given a salary advance of $2,000 on August 24, 2020 and this amount was deducted from his October salary.

IV. CAD$3,045 on hand from tips up to March 31, 2020, its pre-COVID operations when the exchange rate was CAD$1 = $2.01 XCD. On September 30, 2020, the exchange rate was CAD$1 = $1.95 XCD

V. Special Edition Independence postage stamps on hand valued at $200.

VI. Cash holdings of US$100,000, the exchange rate on September 30, 2020 is $2.70.

VII. Petty cash on hand valued at $1,500.

VIII. A cheque in the amount of $5,000 and dated October 23, 2020 was received from a customer on September 27, 2020.

IX. Short term 60 days treasury bill valued at $35,000.

X. Thompson’s Tours’ Inc. invested $1,000,000 in a money market fund with Mona Campus Bank on July 10, 2020 which will mature on October 9, 2020.

Required:

a. List all items from above that would NOT be classified as cash or cash equivalents in the current asset section of Thompson’s Tours’ Inc. Statement of Financial Position as at September 30, 2020? State how each of these items would then be classified in the financials.

b. Prepare the necessary journal entry at September 30, 2020 to account for Item IV.

C. Using the information in B above, calculate the cash and cash equivalent value that would appear in Thompson’s Tours’ Inc. Statement of Financial Position on September 30,2020.

Question 2 .

A. List two (2) policies a company may adopt to lessen the risk of uncollectible accounts and improve its cashflows. (1 mark)

B. Joseph Corporation a mobile phone wholesaler sells mobile phones to PhoneTech Ltd, a mobile phone retailer on August 1, 2020 for $500 each, the value of the sale is $50,000, with credit terms of 3/10, n/30. Assume the company uses the net method to record accounts receivables.

Required:

a. Prepare the journal entry to record the sale.

b. On August 8, 2020, collection on $15,000 of the sales was received from PhoneTech. Record the necessary journal entry for the cash received.

c. The remaining $35,000 of the sales was collected on August 28, 2020 from Phone Tech. Record the necessary journal entry for the transaction on this date.

Question 3

A. J & B Company uses the percentage of sales approach to estimate its uncollectible accounts. The company’s annual sales for its first financial year of operations ending July 31, 2020 was $500,000, cash sales contributed to 2% of the overall sales and the 3 accounts receivable balance at year end was $75,000. Based on industry expectations, it estimated that 3% of its credit sales would be uncollectible.

Required:

a. Calculate the bad debt expense at July 31, 2020.

b. Calculate the net receivable balance that would be reported in the Statement of Financial Position as at July 31, 2020.

B. Tosh and Sons Inc. uses the percentage of receivables approach to estimate its uncollectible accounts. The company had sales of $100,000 at the end of its financial year on June 30, 2020. The allowance for doubtful debts account had a debit balance of $400, the accounts receivable balance was $30,000at year end and the company estimates the uncollectible percentages as follows:

Current (1 - 30 days) $15,000 0.5%

31 - 60 days $10,000 2.0%

61 - 90 days $3,000 10.0%

Over 90 days $2000 60.0%

Required:

a. Calculate the bad debt expense at June 30, 2020.

b. Prepare the necessary journal entry to record the bad debt expense for the year.

C. During the financial year ending May 31, 2020 the Board of Directors of Chung Sa Corporation authorised the write off of a $3,000 two-year debt belonging to a previous customer Jap Inc. On July 2, 2020 Chung Sa Corporation received an electronic funds transfer from Jap Inc. in the amount of $3,000.

Required: Prepare all necessary journal entries to record this transaction.