Departmental Income Statement
Elgin Flooring Company sells floor coverings through two
departments, carpeting and hard covering (tile and linoleum).
Operating information for 2016 appears below.
| Carpeting Department | Hard Covering Department | ||||
|---|---|---|---|---|---|
| Inventory, January 1, 2016 | $71,000 | $37,000 | |||
| Inventory, December 31, 2016 | 39,000 | 19,000 | |||
| Net sales | 780,000 | 480,000 | |||
| Purchases | 484,000 | 362,000 | |||
| Purchases returns | 28,000 | 8,000 | |||
| Purchases discounts | 16,000 | 4,000 | |||
| Transporation in | 18,000 | 14,000 | |||
| Traceable departmental expenses | 96,000 | 44,000 | |||
Common operating expenses of the firm were $120,000.
a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 35%. Elgin uses a periodic inventory system.
Do not use negative signs with any of your answers below.
| Elgin Flooring Company Departmental Income Statement For the Year Ended December 31, 2016 |
||||||
|---|---|---|---|---|---|---|
| Carpeting Department | Hard Covering Department | Total | ||||
| Net sales | Answer | Answer | Answer | |||
| Cost of goods sold: | ||||||
| Inventory, January 1, 2016 | Answer | Answer | Answer | |||
| Purchases | Answer | Answer | Answer | |||
| Purchases returns | Answer | Answer | Answer | |||
| Purchases discounts | Answer | Answer | Answer | |||
| Transportation in | Answer | Answer | Answer | |||
| Cost of goods available for sale | Answer | Answer | Answer | |||
| Inventory, December 31, 2016 | Answer | Answer | Answer | |||
| Cost of goods sold | Answer | Answer | Answer | |||
| Gross Profit | Answer | Answer | Answer | |||
| Traceable department expenses | Answer | Answer | Answer | |||
| Contribution to common expenses | Answer | Answer | Answer | |||
| Common expenses | Answer | |||||
| Income before tax | Answer | |||||
| Income tax expense | Answer | |||||
| Net income | Answer | |||||
b. Calculate the gross profit percentage for each department.
Round to the nearest whole percentage.
Carpeting department
Answer%
Hard Covering department
Answer%
c. If the common expenses were allocated 70% to the carpeting department and 30% to the hard covering department, what would the net income be for each department?
Do not use negative signs with any of your answers below.
| Carpeting Department | Hard Covering Department | Total | ||||
|---|---|---|---|---|---|---|
| Contribution to common expenses | Answer | Answer | Answer | |||
| Common expenses | Answer | Answer | Answer | |||
| Income before tax | Answer | Answer | Answer | |||
| Income tax expense | Answer | Answer | Answer | |||
| Net income | Answer | Answer | Answer | |||
In: Accounting
|
Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2015, with payment of 27,000 korunas to be received on March 1, 2016. Brandlin enters into a forward contract on December 1, 2015, to sell 27,000 korunas on March 1, 2016. Relevant exchange rates for the koruna on various dates are as follows: |
| Date | Spot Rate | Forward Rate (to March 1, 2016) |
||
| December 1, 2015 | $ | 3.80 | $ | 3.875 |
| December 31, 2015 | 3.90 | 4.000 | ||
| March 1, 2016 | 4.05 | N/A | ||
|
Brandlin’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31. |
| a-1. |
Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| a-2. |
What is the impact on 2015 net income? (Do not round intermediate calculations.) |
| a-3. |
What is the impact on 2016 net income? (Do not round intermediate calculations.) |
| a-4. |
What is the impact on net income over the two accounting periods? (Do not round intermediate calculations.) |
| b-1. |
Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
|
| b-2. |
What is the impact on 2015 net income? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| b-3. |
What is the impact on 2016 net income? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) |
| b-4. |
What is the impact on net income over the two accounting periods? (Do not round intermediate calculations.) |
In: Accounting
| Joshua & White Technologies: December 31 Balance Sheets | ||||
| (Thousands of Dollars) | ||||
| Assets | 2016 | 2015 | ||
| Cash and cash equivalents | $21,000 | $20,000 | ||
| Short-term investments | 3,759 | 3,240 | ||
| Accounts Receivable | 52,500 | 48,000 | ||
| Inventories | 84,000 | 56,000 | ||
| Total current assets | $161,259 | $127,240 | ||
| Net fixed assets | 218,400 | 200,000 | ||
| Total assets | $379,659 | $327,240 | ||
| Liabilities and equity | ||||
| Accounts payable | $33,600 | $32,000 | ||
| Accruals | 12,600 | 12,000 | ||
| Notes payable | 19,929 | 6,480 | ||
| Total current liabilities | $66,129 | $50,480 | ||
| Long-term debt | 67,662 | 58,320 | ||
| Total liabilities | $133,791 | $108,800 | ||
| Common stock | 183,793 | 178,440 | ||
| Retained Earnings | 62,075 | 40,000 | ||
| Total common equity | $245,868 | $218,440 | ||
| Total liabilities and equity | $379,659 | $327,240 | ||
| Joshua & White Technologies December 31 Income Statements | ||||
| (Thousands of Dollars) | ||||
| 2016 | 2015 | |||
| Sales | $420,000 | $400,000 | ||
| COGS except excluding depr. and amort. | 300,000 | 298,000 | ||
| Depreciation and Amortization | 19,660 | 18,000 | ||
| Other operating expenses | 27,600 | 22,000 | ||
| EBIT | $72,740 | $62,000 | ||
| Interest Expense | 5,740 | 4,460 | ||
| EBT | $67,000 | $57,540 | ||
| Taxes (40%) | 26,800 | 23,016 | ||
| Net Income | $40,200 | $34,524 | ||
| Common dividends | $18,125 | $17,262 | ||
| Addition to retained earnings | $22,075 | $17,262 | ||
| Other Data | 2016 | 2015 | ||
| Year-end Stock Price | $90.00 | $96.00 | ||
| # of shares (Thousands) | 4,052 | 4,000 | ||
| Lease payment (Thousands of Dollars) | $20,000 | $20,000 | ||
| Sinking fund payment (Thousands of Dollars) | $5,000 | $5,000 | ||
| f. Perform a percent change analysis. What does this tell you about the change in profitability | ||||||
| and asset utilization? | ||||||
| Percent Change Balance Sheets | Base | |||||
| Assets | 2016 | 2015 | ||||
| Cash and cash equivalents | ||||||
| Short-term investments | ||||||
| Accounts Receivable | ||||||
| Inventories | ||||||
| Total current assets | ||||||
| Net fixed assets | ||||||
| Total assets | ||||||
| Base | ||||||
| Liabilities and equity | 2016 | 2015 | ||||
| Accounts payable | ||||||
| Accruals | ||||||
| Notes payable | ||||||
| Total current liabilities | ||||||
| Long-term debt | ||||||
| Total liabilities | ||||||
| Common stock | ||||||
| Retained Earnings | ||||||
| Total common equity | ||||||
| Total liabilities and equity | ||||||
| Base | ||||||
| Percent Change Income Statements | 2016 | 2015 | ||||
| Sales | ||||||
| COGS except excluding depr. and amort. | ||||||
| Depreciation and Amortization | ||||||
| Other operating expenses | ||||||
| EBIT | ||||||
| Interest Expense | ||||||
| EBT | ||||||
| Taxes (40%) | ||||||
| Net Income | ||||||
In: Finance
A South African mathematician, John Kerrich, was visiting Copenhagen in 1940 when Germany invaded Denmark. Kerrich was forced to spend the next five years in an internment camp, and to pass the time, he carried out a series of experiments. One such experiment involved flipping a coin 10,000 times and keeping track how many heads he obtained. Of all the 10,000 coin flips, 5067 came up heads.
a.Use the normal approximation to calculate a 95% confidence interval for the true probability of heads for Kerrich’s coin, and interpret your result.
b.Use an exact method to calculate a 95% confidence interval for the true probability of heads for Kerrich’s coin (you will need a computer), and interpret your result.
c.Compare your results from a and b. Why do the results look so similar? What would have to happen in order for these results to look substantially different?
d.Do you think the coin he used in this experiment was fair? Explain.
In: Statistics and Probability
Document 2: Lucretius On the Nature of the Universe 4.660-690 (1st C. BC)
“The sight of a rooster ... is intolerable to lions. At the first glimpse they think only of running away. The reason, of course, is that the rooster's body contains certain atoms which, when they get into the lion's eyes, prick the eyeballs and cause acute pain, so that even their bold spirits cannot long endure it. But these atoms have no power to hurt our own eyes, either because they never get in at all or because, once in, they have a clear way out, so that they do not hurt the eyeball by meeting obstruction at any point.”
13. What experiment could someone in antiquity have performed to test this theory about the cause of lions running away from roosters? (400 words maximum. Keep in mind what we learned last term about the technologies that were available in antiquity. Assume that the person performing the experiment is quite wealthy so cost is not an issue.)
In: Biology
A lady claimed that she is able to tell whether the tea was added first or the milk was added first to a cup. To test this idea, a statistician proposed to give her ten cups of tea, each made in random order (tea first or milk first) without telling her which is which. Assume each cup is independent. Let X equal to the number of cups that the lady identified correctly.
(a) Suppose that she is just randomly guessing, with a 50-50 percent chance. Find P(X = 7) .
(b) Suppose again that she is randomly guessing, with a 50-50 percent chance. This experiment will be stopped early if she cannot correctly identify at least one cup among the first three cups. What is the probability that this experiment continues beyond three cups?
(c) Suppose she is indeed able to tell 9% of the time. Find the probability she correctly identifies at least 7 cups.
In: Statistics and Probability
Psychologists have studied the effect of the working environment or surroundings on the quality and quantity of work done. Many businesses have music piped into the work area to improve the environment. An experiment is performed to determine which type of music is best suited for a particular company. Three types of music, country, rock, and classical, are tried, each on four randomly selected workdays. The productivity is measured by recording the number of items produced on each of the four days. The results are shown in the table.
| Country | Rock | Classical |
|---|---|---|
| 857 | 791 | 824 |
| 801 | 753 | 847 |
| 795 | 781 | 881 |
| 842 | 842 | 842 |
SST=18056.250SST=18056.250
(a) State the assumptions required to analyze this data using ANOVA.
(b) Construct an ANOVA table for this experiment.
(c) Can we conclude that the mean number of items produced differ for three types of music? State appropriate null and alternative hypotheses and test at α=0.05α=0.05.
In: Statistics and Probability
A math class consists of 28 students, 13 female and 15 male. Three students are selected at random, one at a time, to participate in a probability experiment (selected in order without replacement). (a) What is the probability that a male is selected, then two females? (b) What is the probability that a female is selected, then two males? (c) What is the probability that two females are selected, then one male? (d) What is the probability that three males are selected? (e) What is the probability that three females are selected? A math class consists of 28 students, 13 female and 15 male. Three students are selected at random, one at a time, to participate in a probability experiment (selected in order without replacement). (a) What is the probability that a male is selected, then two females? (b) What is the probability that a female is selected, then two males? (c) What is the probability that two females are selected, then one male? (d) What is the probability that three males are selected? (e) What is the probability that three females are selected?
In: Statistics and Probability
A large company is conducting an experiment to determine if a new mental training program will benefit worker productivity. Because the company has a large number of employees it is more cost effective to randomly select employees to participate in the training program. Thirty-six employees are randomly se- lected for the experiment, with twenty employees assigned to the new program and the remainder assigned to the placebo. The company determine the scores for each group and notices there are no outliers within either group. The group receiving the new training has a mean productivity time of 72.26 minutes with a standard deviation of 20.80 minutes while the placebo group has a mean pro- ductivity time of 86.44 minutes with a standard deviation of 26.20 minutes. Due to the cost of retraining all employees, the company would like to be certain the program is working; therefore they are only willing to risk being wrong 1% of the time. Is the program working? Construct a 98% estimate for the difference in the two programs.
In: Statistics and Probability
A large company is conducting an experiment to determine if a new mental training program will benefit worker productivity. Because the company has a large number of employees it is more cost effective to randomly select employees to participate in the training program. Thirty-six employees are randomly se- lected for the experiment, with twenty employees assigned to the new program and the remainder assigned to the placebo. The company determine the scores for each group and notices there are no outliers within either group. The group receiving the new training has a mean productivity time of 72.26 minutes with a standard deviation of 20.80 minutes while the placebo group has a mean pro- ductivity time of 86.44 minutes with a standard deviation of 26.20 minutes. Due to the cost of retraining all employees, the company would like to be certain the program is working; therefore they are only willing to risk being wrong 1% of the time. Is the program working? Construct a 98% estimate for the difference in the two programs.
In: Statistics and Probability