Company A is preparing its budget for the third quarter. The following information has been compiled:

Cash collections $50,000 $40,000 $48,000

Cash payments

Purchases of

inventory 31,000 22,000 18,000

Operating

expenses 12,000 9,000 11,600

Capital

expenditures 13,000 25,000 0

The cash balance at the end of the second quarter is projected to be $4,000. The company is required to maintain cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000. All financing transactions are assumed to take place at the end of the month. Loan balances should be repaid in increments of $5,000 when there is surplus of cash.

What amount of principle should the company repay to the bank at the end of September?

Problem 1
A subsidiary of J & J Products is in the process of preparing interim financial statements. Since they take physical inventory on an annual basis they use the Conventional Retail Inventory Method to estimate inventory. Fortunately, J & J Products keeps very detailed inventory records at both cost and retail. The following information for containers, as of the end of the third quarter, 2015, is provided.

Using the conventional retail inventory method calculate ending inventory at cost (for the third quarter of 2015).

Please show all calculations in detail. thanks!!!

5. Eastern Engineering Company is trying to decide which of 6 projects to perform during the next quarter. The net present value, the estimated cost, and the number of engineers and staff personnel required for each project are given in the following table.

Eastern has a $550,000 budget and 30 engineers and 15 staff available. Which projects should Eastern perform during the quarter?

Question 3 (October 2018)

Dyson Company Malaysia manufactures the cyclonic vacuum cleaner which us to be sold in Asia for RM2,000 per vacuum. The following information is in relation to the budgeted production and sales of cyclonic vacuum cleaners for the last quarter of 2017.

1. Budgeted sales in units:

July 10,000

August 12,000

September 14,000

October 13,500

November 13,800

December 14,500

60% of the sales will be collected one month after sales.

30% of the sales will be collected two months after sales.

10% of the sales will be collected three months after sales.

2. Variable production cost per vacuum:

RM

Direct materials 30.00

Direct labour 21.00

Overhead 16.00

3. Budgeted production in units:

August 12,000

September 14,000

October 13,500

November 13,800

December 14,500

4. It is the company policy to pay creditors for material two months after purchases are made.

5. Wages and variable overhead are paid within the month they are incurred.

6. Sales commission are 8% on sales and are to be paid one month after sales are made.

7. Fixed overhead is RM210,000 per month, which includes depreciation of RM65,000.

8.Fixed selling and administration is RM72,000 per month which is payable in the month

it is incurred.

9. One of the old machines will be sold for RM12,000 in the month of November and a new machine will be replace it in the same month at a cost of RM78,000.

10. The company will pay dividends which was declared at RM100,000 at the end of December.

11. It is expected that the cash balance on 30th September will be RM80,000.

Required:

(a) Prepare a schedule of expected cash collections from customer for the last quarter of 2017.

(b) Prepare schedule for payment of materials for the last quarter of 2017.

(c) Prepare a cash budget for the last quarter of 2017.

Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below:

From past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $360,000, and March sales totaled $390,000.

Required:

1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

2. What is the accounts receivable balance on June 30th?

Silver Company makes a product that is very popular as a Mother’s Day gift. Thus, peak sales occur in May of each year, as shown in the company’s sales budget for the second quarter given below:

From past experience, the company has learned that 25% of a month’s sales are collected in the month of sale, another 60% are collected in the month following sale, and the remaining 15% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $360,000, and March sales totaled $390,000.

Required:

1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter.

2. What is the accounts receivable balance on June 30th?

Schedule of Expected Cash

April May June Total

February sales

March sales

April sales

May sales

June sales

Total cash collections

Question 3 (October 2018)

Dyson Company Malaysia manufactures the cyclonic vacuum cleaner which us to be sold in Asia for RM2,000 per vacuum. The following information is in relation to the budgeted production and sales of cyclonic vacuum cleaners for the last quarter of 2017.

1. Budgeted sales in units:

July 10,000
August 12,000
September 14,000
October 13,500
November 13,800
December 14,500

60% of the sales will be collected one month after sales.
30% of the sales will be collected two months after sales.
10% of the sales will be collected three months after sales.

2. Variable production cost per vacuum:
RM
Direct materials 30.00
Direct labour 21.00
Overhead 16.00

3. Budgeted production in units:

August 12,000
September 14,000
October 13,500
November 13,800
December 14,500

4. It is the company policy to pay creditors for material two months after purchases are made.

5. Wages and variable overhead are paid within the month they are incurred.

6. Sales commission are 8% on sales and are to be paid one month after sales are made.

7. Fixed overhead is RM210,000 per month, which includes depreciation of RM65,000.

8. Fixed selling and administration is RM72,000 per month which is payable in the month it is incurred.

9. One of the old machines will be sold for RM12,000 in the month of November and a new machine will be replace it in the same month at a cost of RM78,000.

10. The company will pay dividends which was declared at RM100,000 at the end of December.

11. It is expected that the cash balance on 30th September will be RM80,000.



Required:
a) Prepare a schedule of expected cash collections from customer for the last quarter of 2017.                                                                                                         

b) Prepare schedule for payment of materials for the last quarter of 2017.            

c) Prepare a cash budget for the last quarter of 2017.                                        
(Total: 30 Marks)

A food company has recently introduced a new line of fruit pies in 6 US cities: Atlanta, Baltimore, Chicago, Denver, St. Louis, and Fort Lauderdale. Based on the pie’s apparent success, the company is considering a nationwide launch. Before doing so, it has decided to use data collected during a two-year market test to guide it in setting prices and forecasting future demand.

            For each of the 6 markets, the firm has collected eight quarters of data for a total of 48 observations. Each observation consists of data on quantity demanded (number f pies purchased per week), price per pie, a competitor’s average price per pie, income, and population. The company has also included a time-trend variable. A value of 1 denotes the 1^st quarter observation, 2 the 2^nd quarter, and so on, up to 8 for the 8^th and last quarter.

            A company forecaster has run a regression on the data, obtaining the results displayed in the accompanying table.

C.) Other things equal, how much do we expect sales to grow (or fall) over the next year?

D.) How much accurate is the regression equation in predicting sales new quarter? Two years from now? Why might these answers differ?

E.) How confident are you about applying these test-market results to decisions concerning national pricing strategies for pies?

The Regal Cycle Company manufactures three types of bicycles—a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:

*Allocated on the basis of sales dollars.

Management is concerned about the continued losses shown by the racing bikes and wants a recommendation as to whether or not the line should be discontinued. The special equipment used to produce racing bikes has no resale value and does not wear out.

What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes?

Financial disadvantage per quarter or financial advantage per quarter?

Should the production and sale of racing bikes be discontinued? Yes or no

Prepare a properly formatted segmented income statement that would be more useful to management in assessing the long-run profitability of the various product lines.

FASB Codification Project Value:

Read the case below and answer the 3 questions.

Jordan Corp is a US manufacturer of auto parts with branch operations in France. On December 31, 2016 wishes to use a foreign currency option to hedge a 10,000,000 euro denominated accounts receivable that is due in two years. Jordan plans to use fair value hedge accounting. Over the subsequent 4 quarters the following are the changes in the fair value of the receivable and the foreign currency option hedge.

Quarter ended March 31, 2017:

Euro receivable increases by $ 400,000

Option hedge declines by $350,000

Quarter ended June 30, 2017:

Euro receivable decreases by $500,000

Option hedge increases by $ 400,000

Quarter ended Sept. 30, 2017:

Euro receivable decreases by $800,000

Option hedge increases by $700,000

Quarter ended Dec. 31, 2017:

Euro receivable increases by $ 200,000

Option hedge decreases by $ 100,000

Answer the following questions:

1 . Structure the appropriate fair value hedge using an FX option. Your answer must state whether Jordan is purchasing or selling a call option or a put option, what is the maturity date of the option as well as whether it is an option to purchase euros and sell US dollars or an option to purchase US dollars and sell euros. (1 point).

2 . Identify by codification reference, e.g., xxx-xx-xx-xx, and attach AND HIGHLIGHT the appropriate section(s) of the FASB codification that describe the alternate criteria that can be used to determine at December 31, 2017 whether or not this has been an effective fair value hedge (2 points ).

3. Using one of the alternate criteria in your answer to #2 above, state your conclusion as to whether this is an effective hedge, meeting the FASB criteria. You must include a computation to support your conclusion. (2 points ).

The data contained in <professional> are the number of males employed full time in a professional occupation in Australia from August quarter 1996 to August quarter 2008.

a) Plot the series of data.

b) Calculate linear trend equation and plot the trend line.

c) What are your forecasts of male full-time professional employment in November quarter 2008 and February quarter 2009?

d) Do you think it is reasonable to try to forecast employment in this way? Explain.