Golden Manufacturing Company started operations by acquiring $142,000 cash from the issue of common stock. On January 1, 2018, the company purchased equipment that cost $132,000 cash, had an expected useful life of five years, and had an estimated salvage value of $13,200. Golden Manufacturing earned $94,700 and $68,080 of cash revenue during 2018 and 2019, respectively. Golden Manufacturing uses double-declining-balance depreciation.

Required

1. Record the purchase in a horizontal statements model.

1. b-1. Prepare an income statements for 2018 and 2019. Use a vertical statements format.

1. b-2. Prepare a balance sheets for 2018 and 2019. Use a vertical statements format.

1. b-3. Prepare a statements of cash flows for 2018 and 2019. Use a vertical statements format.

QUESTION 3: CASE STUDY 3 (10%)

Cole Property Management Company

Cole Property Management Company received a bill for RM103, 500 with payment terms 3/20, n/30. Samantha Cole, the owner of the company, knows that she will not have enough money in her business checking account to pay the bill within 10 days and take the early payment discount. In fact, assume that she has nothing in her account, not a single penny. Samantha has a good credit, so her bank is willing to lend her all the money to pay the bill in 20 days. They charge an interest rate of 8% and they use ordinary simple interest.

1)Assume that on exactly the day that the bill is due (n/30), Samantha will have collected enough money from the renters and buyers in her apartment units to pay either the invoice or a loan.

2)What should she do, borrow the money from the bank or pay the invoice on the 30^th day when she has money in her account?

A perfectly competitive market can only make normal profits because there are many price taker firms in the industry and absence of barriers in on entry and exit of new firms and can maximizes its profits when the marginal revenue is equal to the marginal cost. Also a perfectly competitive firm will always produce till a output where marginal revenue equals to, marginal cost and the firm can only incur profit by producing fewer than the equilibrium quantity as marginal revenue and equilibrium price are greater than marginal cost. The firm can also focus on increasing efficiency and reduce costs so that it can produce a higher level of output at the marginal cost which equals price, (Principles of Managerial Economics, n.d). Product differentiation is a marketing process that has the objective of making customers perceive the product of a specific firm as unique or superior to any other product belonging to the same group, and so creating a sense of value. Several models have been developed to analyses these two strategies, the most famous being Hotelling’s linear city model and its extension, the Salop’s circular city model, for horizontal differentiation and the Shaked-Sutton’s model for vertical differentiation. As a product becomes more differentiated and unique for consumers, it will become more difficult to compare it to other products and it will move competition with other products to non-pricing factors, (Policonomics, 2017).

What can be done differently?

Alliance, Inc is a manufacturer & marketer of gas lamps for utilization in mining & natural resources operations. Total industry sales in this relevant market were $100 million, with Alliance,s market share representing 5%. Alliances's contribution margin is 25%. Alliance's sales force calls on the widespread distributor network to generate their revenue. These distributors in turn sell the products to the industrial customers. Distributors generate on average revenue of $10,000 per outlet for Alliance. Each sales rep earns $50,000 per annum. Alliance has a corporate advertising & promotions campaign worth $640,000 which has managed to effectively maintain their brand awareness & image in the resources industry.

(a.) Alliance wants to raise their advertising budget by $200,000 to highlight their green initiatives and bolster brand presence further among expanding players in the industry.

- What increase in dollar sales revenue would be needed to recoup this incremental advertising expenditure?

- What increase in Alliance's overall market share does this call for?

(b.) Alliance is seeking to hire 2 more sales reps to expand further territories in their network by gaining access to additional distributors.

- How many new distributors would be required to cover the cost of hiring these 2 new sales reps?

(c.) Alliance is considering a 10% reduction in the price of its offerings.

- What absolute increase in its topline would be justifiable to maintain the present level of total contribution in dollars?

PRACTICAL QUESTION   

Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:

Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.

Required

Determine the percentage of completion for 2019, 2020 and 2021.              

Calculate revenue and gross profit for 2019, 2020 and 2021.                          

Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.                                                                                                              

Chamberlain Enterprises Inc. reported the following receivables in its December 31, 2021, year-end balance sheet:

Additional Information:

1. The notes receivable account consists of two notes, a $100,000 note and a $270,000 note. The $100,000 note is dated October 31, 2021, with principal and interest payable on October 31, 2022. The $270,000 note is dated June 30, 2021, with principal and 6% interest payable on June 30, 2022.
2. During 2022, sales revenue totaled $1,450,000, $1,335,000 cash was collected from customers, and $33,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.
3. On March 31, 2022, the $270,000 note receivable was discounted at the Bank of Commerce. The bank's discount rate is 10%. Chamberlain accounts for the discounting as a sale.

Required:
In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Chamberlain’s 2022 income statement?
What amounts will appear in the 2022 year-end balance sheet for accounts receivable and Calculate the receivables turnover ratio for 2022.

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are independent of age (Newsweek, January 19, 2004). The following show the hours of sleep on weeknights for a sample of individuals age 49 and younger and for a sample of individuals age 50 and older. Hours of Sleep Age Fewer than 6 6 to 6.9 7 to 7.9 8 or more Total 49 or younger 30 63 78 69 240 50 or older 40 64 72 84 260

On 2002/4/1, Peter borrowed $2000, agreeing to pay interest at 6%/year compounded monthly. He paid $400 on 2004/9/1 and $500 on 2008/11/1. He will make two more payments on 2011/10/01 and 2013/7/01, with the payment on 2011/10/01 being 20% higher than that on 2013/7/01. What payment will he make on 2013/7/01? Remark: Dates are given in the format YYYY/MM/DD.

The following accounts and balances were drawn from the records of Barker Company at December 31, 2018:

Required

Use the accounts and balances from Barker Company to construct an income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows (show only totals for each activity on the statement of cash flows).

Use the accounts and balances from Barker Company to construct an income statement.

Use the accounts and balances from Barker Company to construct statement of changes in stockholders’ equity.

Use the accounts and balances from Barker Company to construct balance sheet.

Use the accounts and balances from Barker Company to construct statement of cash flows (show only totals for each activity on the statement of cash flows). (Amounts to be deducted and cash outflows should be indicated with a minus sign.)