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In: Accounting
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.
K
Capital 83,887
Sales 259,870
Trade accounts payable 19,840
Returns outwards 13,407
Allowance for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Inventory as at 1st April 2019 15,654
Trade accounts receivable 24,500
Fixtures and fittings - at cost 120,740
Prov. for depreciation on fixtures and fittings – 31/03/2020 63,020
Depreciation 12,074
The following additional information as at 31st March, 2020 is available:
(a) Inventory at the close of business was valued at K17,750
(b) Insurances have been prepaid by K1,120
(c) Heating and lighting is accrued by K1,360
(d) Rates have been prepaid by K5,435
(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.
Required:
For the year 2020, prepare Mr Kumar’s:
[10 Marks]
[10 Marks]
[10 Marks]
[10 Marks]
[Total: 40 Marks]
In: Accounting
Question 4 [27]
The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.
|
Bank overdraft as per bank statement |
R35 000 |
|
Outstanding deposit on 10 January 2020 |
R12 900 |
|
28 January 2020 |
R10 000 |
|
Outstanding deposit: Cheque received from B Brother dated 24 February 2020 |
R1 800 |
|
Outstanding cheques: |
|
|
R7 000 |
|
R9 800 |
|
R4 800 |
|
Bank charges |
R570 |
|
Balance as per bank account in the General Ledger |
? |
Required:
Complete question 4.3 and 4.4 specifically in format below
4.3
|
Amount |
Error |
Corrective action |
(9)
4.4
|
Debit |
Credit |
|
(7)
In: Accounting
Question 4 [27]
The following bank reconciliation statement was prepared by the bookkeeper of Veggie Stores for January 2020. The financial year of the business ends in January each year.
|
Bank overdraft as per bank statement |
R35 000 |
|
Outstanding deposit on 10 January 2020 |
R12 900 |
|
28 January 2020 |
R10 000 |
|
Outstanding deposit: Cheque received from B Brother dated 24 February 2020 |
R1 800 |
|
Outstanding cheques: |
|
|
R7 000 |
|
R9 800 |
|
R4 800 |
|
Bank charges |
R570 |
|
Balance as per bank account in the General Ledger |
? |
Required:
Complete question 4.3 and 4.4 specifically in format below
4.3
|
Amount |
Error |
Corrective action |
(9)
4.4
|
Debit |
Credit |
|
(7)
In: Accounting
The following information is available about Ancora Co. (Ancora): 1. Ancora's cash balance on December 31, 2019, was $70,000. 2. Actual sales for November and December 2019, and expected sales for January and February 2020, are as follows: November 2019 December 2019 January 2020 February 2020 (actual) (actual) (estimate) (estimate) Cash sales $ 75,000 $ 90,000 $ 60,000 $ 50,000 Credit sales 560.000 650,000 480,000 430,000 Sales on account are collected over a three-month period at the following rate: 30% collected in the month of sale, 50% collected in the month following sale and 17% collected in the second month following sale. The remaining 3% is uncollectable and is written off 3. Ancora's gross profit on sales is 35%. 4. Ancora's policy is to hold inventory at the end of the month equal to 40% of next month's budgeted sales. Inventory purchases in a given month are paid for as follows: 30% are paid in the month of purchase and 70% in the month following 5. Selling and administrative expenses are budgeted at $400,000 for January 2020. This amount includes $120,000 for depreciation 6 Equipment costing $150 000 was expected to be purchased for cash during January 2020 7 On December 15, 2019. Ancora declared a $100.000 dividend to be paid on January 15, 2020 8 Ancora must maintain a minimum cash balance of $50.000 An open line of credit is available from Ancora's bank. REQUIRED: Prepare Ancora's cash budget for the month of Jan 2020 and calculate Ancora's budgeted account receivable and accts payable closing balance at Jan 31, 20.
PLEASE PROVIDE TYPE WRITTEN ANSWER AND NOT HAND-WRITTEN SINCE IT'S HARD TO UNDERSTAND HAND WRITING.
In: Accounting
Mr Ahmed Kumar runs a snack distribution business located in the Light Industrial area in Lusaka. The following list of balances was extracted from his ledger as at 31 March, 2020; the end of his most recent financial year.
K
Capital 83,887
Sales 259,870
Trade accounts payable 19,840
Returns outwards 13,407
Allowance for doubtful debts 512
Discounts allowed 2,306
Discounts received 1,750
Purchases 135,680
Returns inwards 5,624
Carriage outwards 4,562
Drawings 18,440
Carriage inwards 11,830
Rent, rates and insurance 25,973
Heating and lighting 11,010
Postage, stationery and telephone 2,410
Advertising 5,980
Salaries and wages 38,521
Bad debts 2,008
Cash in hand 534
Cash at bank 4,440
Inventory as at 1st April 2019 15,654
Trade accounts receivable 24,500
Fixtures and fittings - at cost 120,740
Prov. for depreciation on fixtures and fittings – 31/03/2020 63,020
Depreciation 12,074
The following additional information as at 31st March, 2020 is available:
(a) Inventory at the close of business was valued at K17,750
(b) Insurances have been prepaid by K1,120
(c) Heating and lighting is accrued by K1,360
(d) Rates have been prepaid by K5,435
(e) The allowance for doubtful debts is to be adjusted so that it is 3% of trade accounts receivable.
Required:
For the year 2020, prepare Mr Kumar’s:
[10 Marks]
[10 Marks]
[10 Marks]
[10 Marks]
[Total: 40 Marks]
In: Accounting
A firm wants to finance an investment that would produce an annual EBIT of $415,000 by issuing 850 ten-year zero-coupon bonds (each with $1,000 face value) that will be charged a market interest rate of 8%. Suppose the bonds will be issued on January 1, 2020 and will mature on December 31, 2029.
Assume EBIT is constant over time at $415,000 and the tax rate is 35%. Shown below are income statement templates for the years 2020 and 2029. You do not have to fill these in for credit on the exam, however, feel free to use them as guides for determining how the choice of financing will affect the firm's tax liability for these years. Specifically, determine
a) How much the firm saves in taxes in 2020 and how much the firm saves in taxes in 2029 by having this 10-year bond on its books (relative to the case without any borrowing)? (Don't worry about discounting these tax savings back to the present, just consider the nominal dollar amounts.)
b) How much the firm saves in taxes in 2020 and 2029 in present value terms by having this 10-year bond on its books (again, relative to the case without any borrowing). Assume that January 1, 2020 is the "present," the discount rate is 8%, and the taxes would be paid on December 31 of the statement year.
Income statement for 2020 (Jan 1 - Dec 31, 2020)
| With the bond | Without the bond | |
| EBIT | $415,000.00 | $415,000.00 |
| Interest | ||
| Pre-tax Income | ||
| Taxes at 35% | ||
| Net Income |
Income statement for 2029 (Jan 1 - Dec 31, 2029)
| With the bond | Without the bond | |
| EBIT | $415,000.00 | $415,000.00 |
| Interest | ||
| Pre-tax Income | ||
| Taxes at 35% | ||
| Net Income |
In: Finance
Below are info on one of the firm's client. Your Senior Manager has asked you to draft an internal memo discussing the implications of the client. Make sure to discuss Issue, Conclusion, Analysis. The manager has also provided you with some sources to start your research for the client.
John Patrick was hired six years ago by the XOEye Corporation to
serve as the CEO for the company. As part of his employment
contract, the corporation had agreed to purchase his residence at
FMV in event the company decided to fire him. Last year, XOEye,
unsatisfied with Patrick’s performance, fired him and purchased the
residence for $350,000. XOEye immediately listed the house with a
real estate agency. Soon after the purchase the real estate market
in the area experienced a serious decline, especially in
higher-priced homes. XOEye sold the house this year for $270,000
and paid selling expenses of $12,000. How should the XOEye
Corporation treat the $92,000 loss?
A partial list of sources is:
• § 1221
• Rev. Rul. 82-204, 1982-2 C.B. 192
• Azar Nut Co. v. CIR, 67 AFTR 2d 91-987, 91-1 USTC ¶50,257 (5th
Cir. 1991)
In: Accounting
For all the following, consider the company, XYZ Inc.
a. It’s preferred stock pays a dividend of $1.00. If you require a return of 10 percent, what is the most you would pay for their preferred stock today?
b. Preferred stock is ok, but you really want common stock because of the growth potential. Consider that XYZ just paid a regular dividend of $4. If the required return on equity is 20 percent, what is the most you’d pay for their common stock if you expect the dividend to grow at 10 percent per year?
c. After the market closed today, XYZ announced that it will reduce its dividend next year by 75% and by 50% the following year (based on the $4 just paid). Growth is expected to bounce back 50% in the third year, then resume its 10% annual growth rate indefinitely. What is the most you would pay for XYZ common stock when the market opens tomorrow morning?
d. Closely examine the model you are using to calculate the stock value. List five (5) major factors that the company can control that directly influence the value of its stock in this model. That is, as CEO what can you control?
In: Finance
You are a pricing analyst for QuantCrunch Corporation, a company that recently spent $15,000 to develop a statistical software package. To date, you only have one client. A recent internal study revealed that this client’s demand for your software is Qd = 300 – 0.2P and that it would cost you $1,000 per unit to install and maintain software at this client’s site. The CEO of your company recently asked you to construct a report that compares (1) the profit that results from charging this client a single (profit-maximizing) per-unit price with (2) the profit that results from charging $1,450 for the first 10 units and $1,225 for each additional unit of software purchased.
What type of pricing strategy is (1)? Third-degree pricing strategy Per-unit pricing strategy First-degree pricing strategy Second-degree pricing strategy
What type of pricing strategy is (2)? First-degree pricing strategy Third-degree pricing strategy Per-unit pricing strategy Second-degree pricing strategy
Between pricing strategy (1) and (2), which is more profitable? Strategy (2) Strategy (1)
True or False: You could earn more profits using a two-part pricing strategy.
In: Economics