Journal entry worksheet

1. Record the closing of the revenue account to the income summary.

2. Record the closing of the expenses accounts to the income summary

3. Record the closing of the income summar to retained earnings.

4. Close the cash dividends account assuming Retained Earnings was not debited directly when dividends were declared.

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,620 pizzas at an average selling price of $17 per pizza and for 240 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made.

The pizzeria’s cost formulas appear below:

In November, the pizzeria budgeted for 1,860 pizzas at an average selling price of $17 per pizza and for 240 deliveries.

Data concerning the pizzeria’s actual results in November appear below:

Required:

1. Complete the flexible budget performance report that shows both revenue and spending variances and activity variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Question 3 Fastow Ltd, makers of plates, is considering also making spoons and has found a machine that would enable them to do so. This machine would be depreciated straight line, down to a book value of $20,000 over its entire useful life of ten years. Despite this, it is anticipated that the machine will be sold for $12,000 at the end of its useful life. Additional details of the project’s cash flows are tabulated below:

In addition to the cash flow information, you have also been provided with the following details:

• The corporate tax rate is 30%;
• All tax is payable annually in arrears (i.e. tax is paid on profits one year after it is earned);
• Renovation costs associated with preparing the factory floor for the machine are $20,000, expensed immediately;
• Market research, required to obtain the information and figures provided above, was conducted at a cost of $15,750;
• The required rate of return on the project is unknown. However, the project is considered to be 35% riskier than the market portfolio, the expected return on the market is 10% p.a. compounded fortnightly and the six-month risk-free rate is 2.5%.

Given this information, calculate the net present value and state whether you recommend Fastow Ltd to purchase the machine?

Teresa Greene owns and manages a craft and material shop called All Sewn Up. Most of the revenue of All Sewn Up is from the sale of craft materials, although some revenue is made by giving craft lessons to groups of six customers at a time. As Teresa’s shop relies on many suppliers of small amounts of different craft materials, she has difficulty keeping track of all her accounts payable. Teresa is not very well organised and so struggles to send out accounts to her customers or collect money from them. Teresa is considering implementing a computerised accounting system as she has been doing a computer course at a local TAFE and feels that it could help her to be more organised.

Required: (a) Discuss what source documents would be required in a manual accounting system in order to record the sales to customers and receipt of cash, and to ensure correct payment of money to suppliers? You should also discuss where the transactions should be recorded and the best way to manage the credit sales. Marks: 8

(b) In her computer course Teresa learnt that the focus in accounting should not be on bookkeeping but on the use of the information ‘inside the computer’ to make better decisions and to better manage the business. In what ways could a computerised accounting package such as Xero help Teresa make better decisions and manage her business better?

TechMedia, Inc. is a U.S. firm that is planning to build a new production facility in either the USA or China. The initial cost to build the facility will be $8.2 million if built in the USA or ¥45 million if built in China. In either location, the project will require an initial investment of $225,000 in net working capital. Net working capital at the end of each of years 1 through 4 will be $65,000. Net working capital will be $0 at the end of the fifth (final) year of the project. The current exchange rate between the two currencies is 6.75 ¥/$. The risk-free rate in the U.S. is 0.8% and the risk-free rate in China is 6.1%. TechMedia, Inc. pays a 35% tax rate on its taxable income. The firm’s current and target debt-equity ratio is 0.6. Its cost of debt is 6.5% and its cost of equity is 11.5%. The facility will be fully depreciated over five years (straight line) with no salvage value. The facility is expected to impact the firm’s operating revenues and expenses as shown below. USA Location China Location Year Additional Revenue ($) Additional Expense ($) Additional Revenue (¥) Additional Expense (¥) 1 $4,000,000 $1,500,000 ¥20,000,000 ¥7,000,000 2 $4,000,000 $1,500,000 ¥25,000,000 ¥8,000,000 3 $5,000,000 $1,750,000 ¥30,000,000 ¥9,000,000 4 $6,500,000 $2,000,000 ¥35,000,000 ¥9,000,000 5 $6,500,000 $2,000,000 ¥40,000,000 ¥8,000,000 Which location, if either, should TechMedia, Inc. choose?

Founded in 1906, Rayovac had become, over the course of the twentieth century, one of the best-known battery producers in the U.S. However in 1996, with its market share steadily eroding due to fierce competition from Duracell, Energizer, and Panasonic, it was purchased by the private equity firm Thomas H. Lee and Partners (THL). Over the next decade the firm embarked upon an ambitious acquisitions program which saw it grow from a $400 million annual revenue business in 1996 to an over $2.8 billion annual revenue business by 2005.

In 2003, the global battery market was worth about $24 billion in sales with the U.S. accounting for about one third of global consumption. About 73% of Rayovac’s revenues came from North America. Though the U.S. market was growing at an annual rate of 7.4%, fierce competition in the U.S. led to considerable price discounting and required significant advertising and promotional expenditures. Rayovac, as the number three player in market share behind Duracell (a division of Gillette) and Energizer, competed as a value brand rather than as a premium brand. It sold a high-quality product but at prices 10-15% below its main competitors. With the proliferation of personal electronic devices, Rayovac expected strong growth to continue, especially in emerging markets around the world as income grew there.

Q1: Do a SWOT analysis for Rayovac.

Strengths:

Weakness:

Opportunities:

Threats:

Anil is planning a birthday party at an amusement park for his younger daughter and her friends. The manager of the park is considering whether to use uniform pricing or two-part-pricing. Anil's willingness to pay for rides for the party is p = 25 - 0.5Q, where p is the ticket price per ride and Q is the number of rides. The amusement park has a marginal cost of $5 for each additional ride. Its fixed cost for handling the party is $20.

a. Create a spreadsheet with quantity, price, consumer surplus, revenue, marginal revenue, cost, marginal cost, and profit as column headings. Fill in the spreadsheets cells for Q = 5 to Q = 50 in increments of 5 units. If the manager uses uniform pricing, what is the profit maximizing ticket price per ride, the number of rides, and the profit earned by the park?

b. Suppose that the manager uses two-part pricing: an entry fee for the entire party of young girls and price per ride. Calculate the profit-maximizing entry fee if the price per ride is the same as the monopoly price that you determined in part a. Calculate the total profit earned by the park.

c. Now suppose the manager uses two-part-pricing with a per-ride price equal to marginal cost and a profit-maximizing entry fee. Determine the price per ride, the number of rides, and the total profit (including profit from ticket sales and the entry fee) in this case.

Entries for Stock Investments, Dividends, and Sale of Stock

Yerbury Corp. manufactures construction equipment.

Journalize the entries to record the following selected equity investment transactions completed by Yerbury during a recent year:

In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar. For a compound transaction, if an amount box does not require an entry, leave it blank.