Please construct a Profit & Loss Statement for the first six months of the year 2015, on Jeff's Auto Repair with the following information:
   Purchase of spare parts                                                                   $65,000
   Salary paid to mechanics                                                                $127,000
   Commission paid to marketing agents                                        $18,000
   Money received for cars repaired                                                  $245,000
   Money received for storage of cars                                              $45,000
   Sales of tires                                                                                       $84,000
   Rent of shop paid to landlord                                                          $28,000
   Other expenses paid out                                                                   $23,000
   Tax bracket                                                                                             30%

Consider an investment that costs $100,000 and has a cash inflow of $25,000 every year for 5 years. The required return is 9%, and the required payback is 4 years.
What is the payback period?
What is the discounted payback period?
What is the NPV?
What is the AAR?
What is the IRR?
What is the MIRR?
What is the PI?
Should we accept the project?
What decision rule should be the primary decision method?
When is the IRR rule unreliable?

In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered productivity improvement courses. The effort was completed in the last quarter of the current year. The controller’s office has gathered the following year-end data to assess the results of this effort:

Required

1. Prepare a summary contribution income statement for each of the 2 years, and calculate the change in operating income.

2. Compute the partial operational productivity ratios for each production factor in each year.

3. Compute the partial financial productivity ratios for each production factor in each year.

A lift fork truck is available at a cost of $28,000. The engineer estimates a 5-year life with a $2,000 salvage value at the end. The operating cost has been estimated to be $2,000 per month and the cost due to energy consumption is $90 per day. Estimate the fixed and variable costs for this lift fork truck in a period of one month. Company policy sets an 8% internal rate of return per year for such calculation and assumes that there are 26 working days in a month.

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company’s present selling price is $98 per unit, and variable expenses are $68 per unit. Fixed expenses are $831,600 per year. The present annual sales volume (at the $98 selling price) is 25,000 units. Required: 1. What is the present yearly net operating income or loss? 2. What is the present break-even point in unit sales and in dollar sales? 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)?

What is the present yearly net operating income or loss?

What is the present break-even point in unit sales and in dollar sales? (Do not round intermediate calculations.)

Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?

What would be the break-even point in unit sales and in dollar sales using the selling price you determined in Required (3) (e.g., the selling price at the level of maximum profits)? (Do not round intermediate calculations.)

Fuzzy Button Clothing Company reported sales of $720,000 at the end of last year; but this year, sales are expected to grow by 9%. Fuzzy Button expects to maintain its current profit margin of 21% and dividend payout ratio of 15%. The firm’s total assets equaled $500,000 and were operated at full capacity. Fuzzy Button’s balance sheet shows the following current liabilities: accounts payable of $75,000, notes payable of $25,000, and accrued liabilities of $70,000. Based on the AFN (Additional Funds Needed) equation, what is the firm’s AFN for the coming year?

-$129,764

-$118,951

-$124,358

-$108,137

A negatively-signed AFN value represents:

A. A shortage of internally generated funds that must be raised outside the company to finance the company’s forecasted future growth

B. A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends

C. A point at which the funds generated within the firm equal the demands for funds to finance the firm’s future expected sales requirements

Because of its excess funds, Fuzzy Button is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Fuzzy Button pay to shareholders without needing to raise any external capital? (Hint: What can Fuzzy Button increase its dividend payout ratio to before the AFN becomes positive?)

60.5

72.5

56.4

80.6

Company X is in its first year of operations and has decided to use the percentage of sales method for estimating uncollectible accounts. Sales for the year totaled $112,000. Company X has assessed uncollectible accounts at 10% of sales. The company recorded $11,200 of bad debt expense. Write-offs for the period were $3,000. What is the effect of this transaction?

Select one:

a. Net income is overstated by 3,000

b. Cost of Goods sold is understated by 3,000

c. Bad debt expense is overstated by 3,000

d. None of the these

Max is an auditor on the low end limited engagement for the year
ended 30 June 2012. Jordan has performed a number of tests in relation to accounts
payable.
Selected a number of suppliers' invoices and checked that the pricing and discount
terms have been reviewed and authorized by the purchase manager. Three out of 20
invoices tested had not been authorized and incorrect discounts were recorded for
these invoices. A follow-up of the three samples with deviations did not highlight a
pattern of specific reason for the errors. Jordan accepted the result as the errors in
discounts claimed were immaterial. Identify whether this is a test of control or substantive test of detail and discuss why
the conclusion reached is appropriate or inappropriate.

At the end of the year, Randy’s Parts Co. had the following items in inventory:

Required
a. Determine the amount of ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item.
b. Provide the adjustment necessary to write down the inventory based on Requirement a. Assume that Randy’s Parts Co. uses the perpetual inventory system.
c. Determine the amount of ending inventory, assuming that the lower-of-cost-or-market rule is applied to the total inventory in aggregate.
d. Provide the adjustment necessary to write down the inventory based on Requirement c. Assume that Randy’s Parts Co. uses the perpetual inventory system.