[The following information applies to the questions displayed below.]

Execusmart Consultants has provided business consulting services for several years. The company has been using the percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging of accounts receivable method. The company entered into the following partial list of transactions.

1. During January, the company provided services for $230,000 on credit.
2. On January 31, the company estimated bad debts using 1 percent of credit sales.
3. On February 4, the company collected $115,000 of accounts receivable.
4. On February 15, the company wrote off a $650 account receivable.
5. During February, the company provided services for $180,000 on credit.
6. On February 28, the company estimated bad debts using 1 percent of credit sales.
7. On March 1, the company loaned $15,000 to an employee, who signed a 10% note due in 3 months.
8. On March 15, the company collected $650 on the account written off one month earlier.
9. On March 31, the company accrued interest earned on the note.
10. On March 31, the company adjusted for uncollectible accounts, based on the following aging analysis, which includes the preceding transactions (as well as others not listed). Prior to the adjustment, Allowance for Doubtful Accounts had an unadjusted credit balance of $6,600.

Required:

1. For items (a)–(j), analyze the amount and direction (+ or –) of effects on specific financial statement accounts and the overall accounting equation. TIP: In item (j), you must first calculate the desired ending balance before adjusting the Allowance for Doubtful Accounts. (Do not round intermediate calculations. Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.)

2. Prepare the journal entries for items (a)–(j). (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations.)

3. Show how Accounts Receivable, Notes Receivable, and their related accounts would be reported in the current assets section of a classified balance sheet at the end of the quarter on March 31.

4. Sales Revenue and Service Revenue are two income statement accounts that relate to Accounts Receivable. Name two other accounts related to Accounts Receivable and Notes Receivable that would be reported on the income statement and indicate whether each would appear before, or after, Income from Operations.

Bakul Mala Manufacturing, which uses the First-In, First-Out costing method, produces a product that passes through two departments: A and B. In the Department A, all materials are added at the beginning of the process and all other manufacturing inputs are added uniformly.

The following information relates to Department A for the month of July:  

a.       Beginning Work-In-Process, 1 July: 400,000 units (20% complete with respect to conversion costs). The costs assigned to this work are as follows:

• Direct Materials = $80,000
• Conversion costs = $40,000

b.      Ending Work-In-Process, 31 July: 100,000 units (80% complete with respect to conversion costs).   

c.      Units completed and transferred out: 500,000 units.

The following costs were added during July:

• Direct Materials = $200,000
• Conversion Costs = $100,000

Required:  

SHOW CALCULATION FOR EACH QUESTION IN THE RESPONSE BOX.  

1. Prepare a physical flow schedule.   

2. Prepare a schedule of equivalent units.   

3. Calculate the cost per equivalent unit.   

4. Calculate the cost of goods transferred out and the cost of Ending Work-In-Process.

5. Would you recommend Bakul Mala Manufacturing to continue to employ the First-In, First-Out costing method, or should it consider alternative costing methods (i.e. the weighted average method)? Briefly explain and justify your recommendation.  

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) 20,000 June (budget) 50,000 February (actual) 26,000 July (budget) 30,000 March (actual) 40,000 August (budget) 28,000 April (budget) 65,000 September (budget) 25,000 May (budget) 100,000 The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month. Suppliers are paid $4 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit. Only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible. Monthly operating expenses for the company are given below: Variable: Sales commissions 4 % of sales Fixed: Advertising $ 200,000 Rent $ 18,000 Salaries $ 106,000 Utilities $ 7,000 Insurance $ 3,000 Depreciation $ 14,000 Insurance is paid on an annual basis, in November of each year. The company plans to purchase $16,000 in new equipment during May and $40,000 in new equipment during June; both purchases will be for cash. The company declares dividends of $15,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet as of March 31 is given below: Assets Cash $ 74,000 Accounts receivable ($26,000 February sales; $320,000 March sales) 346,000 Inventory 104,000 Prepaid insurance 21,000 Property and equipment (net) 950,000 Total assets $ 1,495,000 Liabilities and Stockholders’ Equity Accounts payable $ 100,000 Dividends payable 15,000 Common stock 800,000 Retained earnings 580,000 Total liabilities and stockholders’ equity $ 1,495,000 The company maintains a minimum cash balance of $50,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month. The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $50,000 in cash.

Required:

Prepare a master budget for the three-month period ending June 30. Include the following detailed schedules:

1. a. A sales budget, by month and in total.

    b. A schedule of expected cash collections, by month and in total.

    c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.

    d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

(I already answered the first required questions 1A-D, just need Required 2-4)

2. A cash budget. Show the budget by month and in total. Determine any borrowing that would be needed to maintain the minimum cash balance of $50,000.

3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.

4. A budgeted balance sheet as of June 30.

A pig weighing 200 pounds gains 5 pounds per day and costs 45 cents a day to keep. The market price for pigs is 65 cents per pound, but is falling 1 cent per day. Do a sensitivity analysis of the time to wait to sell (denoted by t) to the keeping cost k. Derive a general expression of S ( t , k ) and evaluate it at k = 0.45 keeping all other constants the same, g = 5 , r = 0.01. Use words to explain .

P(t) for Profit

p(t) for price

w(t) for the weight of the pig

R(t) for the revenue from the sale

c(t) for the cost to keep the pig

g = 5 is the growth rate and r = 0.01 is the one cent each day

A flask of water rests on a scale that reads 100 NN. Then, a small block of unknown material is held completely submerged in the water. The block does not touch any part of the flask, and the person holding the block will not tell you whether the block is being pulled up (keeping it from falling further) or pushed down (keeping it from bobbing back up). Assume that no water spills out of the flask. (Figure 1)

Rank these blocks on the basis of the scale reading when the blocks are completely submerged.

Rank from largest to smallest. To rank items as equivalent, overlap them.

A, B, C, D, E, F

If the blocks were released while submerged, which, if any, would sink to the bottom of the flask?

Enter the correct letters from the table in alphabetical order without commas or spaces (e.g., ABC).

Suppose that a Big Mac costs $5.00 in New York and SF30 in Geneva. Suppose further exchange rate is $/ = $0.20/1SF.

a.Calculate the purchasing power parity exchange rate between the Swiss franc and the dollar.

b. Based on your calculation, is the SF overvalued or undervalued? Explain.

c. Suppose now that a Big Mac costs 1.25 pounds in London while the spot rate exchange rate is $2.50. Is the pound overvalued or undervalued? Explain.

d. Is the Big Mac a good basis for PPP calculations across the three countries? Why or why not?

e. Suppose that domestic money demand is falling at 2% per year while the money supply is rising at 6% per year. What is happening to the domestic price level? Explain in one sentence.

A retail firm is examining its inventory costing methods and considering the use of FIFO and Average Cost.

The following transactions occurred in April:

Beginning inventory was 20 units @ $100 each;

Purchased 8 units @ $150 each;

Sold 15 units @ $400 each.

Required:

(a)     Calculate the Cost of Sales for April for each of the two inventory costing methods being considered by the retail firm (GST effects can be ignored).                                                                                                                                                  

FIFO

______________________________________________________________________________

______________________________________________________________________________

AVERAGE COST (round average cost per unit to the nearest whole dollar)

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

(b)    Which inventory costing method will give the highest profit for April and why?                  

______________________________________________________________________________

______________________________________________________________________________

(c)     If inventory prices were falling which inventory costing method would produce the highest profit and why?         

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

(Total marks for Question 3 = 6 marks)

Medieval soliders build a counterweight trebuchet, a device that rotates about a fulcrum to launch a small projectile of mass m₁ = 1 kg from one arm of length L₁ = 8 m when a large weight of mass m₂ = 300 kg is placed on the other arm of length L₂ = 1 m. The arms of the trebuchet are approximately massless.

a) At the moment m₁ is launched, the arms of the trebuchet are parallel to the vertical direction. What is the angular velocity of the rotation of the trebuchet at this point?

b) What is the angular momentum of the trebuchet at the same moment as part a?

c ) What is the (linear) speed of m₁ at the moment it is launched?

d) The axis of rotation of the trebuchet is elevated a height H = 10 m above the horizontal surface of the ground. How much horizontal distance does the projectile travel before falling to the ground?

The law of diminishing marginal returns starts: *

a) Before minimum marginal cost

b) After minimum marginal cost

c) After minimum MPP

d) When capital is a variable input

Which of the following statement is not correct: Average variable costs of production

a) Will fall than rise as more is produced.

b) has a minimum

c) graphs as a U-shaped curve.

d) falls as long as output is increased.

If marginal cost is above average total cost, then: *

a) Average total cost is falling

b) Average total cost is rising

c) Average total cost is constant

d) Marginal cost is rising

Which of the following cost will not change as output changes? *

a) average variable cost.

b) total variable cost.

c) total fixed cost

d) marginal cost.

Discs A and B each have a rotational inertia about the central axis of 0.300 kg m, a radius of 20.0 cm, and can freely rotate around the center rods passing through these two discs, in the same direction around the rods. Each was rolled up to turn and pulled for 10.0 s. (The string falls off the end) The magnitude of the force pulling the string is 30.0 N for Disc A and 20.0 N for Disc B. After falling off, the disks collide and have the same final angular velocity at 6.00 s due to the friction between them. (a) What is the average amount of friction torque that caused the final angular velocity to be reached? (b) What is the loss of kinetic energy when torque acts on these plates? (c) Where did "Lost Energy" go?