Income Statement (vertical) report with a run date of 12/31/-. Provide a narrative analysis of this report in a manner similar to that done in the chapter. Use your own words based on the information provided in this report.
| Casey Corporation | ||||
| Income Stmt. Vertical Analysis | ||||
| For Years Ended 12/31/17 and 12/31/18 | ||||
| Current | Current | Previous | Previous | |
| Amount | Percent | Amount | Percent | |
| Operating Revenue | ||||
| Sales | 869,695.50 | 101.91 | 836,490.00 | 101.16 |
| Sales Returns & Allow. | -9,150.00 | -1.07 | -6,000.00 | -0.73 |
| Sales Discounts | -7,154.01 | -0.84 | -3,595.00 | -0.43 |
| ------------- | ------------- | ------------- | ---------- | |
| Total Operating Revenue | 853,391.49 | 100 | 826,895.00 | 100 |
| Cost | ||||
| Cost of Merchandise Sold | 592,660.00 | 69.45 | 593,255.00 | 71.74 |
| ------------- | ------------- | ------------- | ---------- | |
| Total Cost | 592,660.00 | 69.45 | 593,255.00 | 71.74 |
| ------------- | ------------- | ------------- | ---------- | |
| Gross Profit | 260,731.49 | 30.55 | 233,640.00 | 28.26 |
| Operating Expenses | ||||
| Sales Salaries Expense | 74,368.94 | 8.71 | 63,873.10 | 7.72 |
| Advertising Expense | 13,750.00 | 1.61 | 11,500.00 | 1.39 |
| Depr. Exp. Store Eqpt. | 3,935.00 | 0.46 | 2,960.00 | 0.36 |
| Insurance Expense Selling | 4,595.00 | 0.54 | 3,350.00 | 0.41 |
| Store Supplies Expense | 820.32 | 0.1 | 1,729.30 | 0.21 |
| Misc. Selling Expense | 850 | 0.1 | 1,525.00 | 0.18 |
| ------------- | ------------- | ------------- | ---------- | |
| Selling Expenses | 98,319.26 | 11.52 | 84,937.40 | 10.27 |
| Office Salaries Expense | 20,386.61 | 2.39 | 20,377.00 | 2.46 |
| Utilities Expense | 8,991.47 | 1.05 | 8,776.72 | 1.06 |
| Depr. Exp. Building | 19,000.00 | 2.23 | 17,000.00 | 2.06 |
| Depr. Exp. Office Eqpt. | 2,020.00 | 0.24 | 1,135.00 | 0.14 |
| Insurance Expense General | 2,500.00 | 0.29 | 1,800.00 | 0.22 |
| Office Supplies Expense | 1,503.74 | 0.18 | 613.4 | 0.07 |
| Misc. General Expense | 400 | 0.05 | 415 | 0.05 |
| ------------- | ------------- | ------------- | ---------- | |
| Administrative Expenses | 54,801.82 | 6.42 | 50,117.12 | 6.06 |
| ------------- | ------------- | ------------- | ---------- | |
| Total Operating Expenses | 153,121.08 | 17.94 | 135,054.52 | 16.33 |
| ------------- | ------------- | ------------- | ---------- | |
| Net Income from Operations | 107,610.41 | 12.61 | 98,585.48 | 11.92 |
| Other Revenue | ||||
| Interest Income | 815.5 | 0.1 | 1,833.00 | 0.22 |
| Gain on Sale Office Eqpt. | 130 | 0.02 | ||
| Gain on Sale Store Eqpt. | 65 | 0.01 | ||
| Other Expense | ||||
| Interest Expense | 10,779.80 | 1.26 | 6,211.14 | 0.75 |
| ------------- | ------------- | ------------- | ---------- | |
| Net Income before Income Tax | 97,711.11 | 11.45 | 94,337.34 | 11.41 |
| Income Tax | ||||
| Corporate Income Tax | 26,800.00 | 3.14 | 24,872.00 | 3.01 |
| ------------- | ------------- | ------------- | ---------- | |
| Net Income after Income Tax | 70,911.11 | 8.31 | 69,465.34 | 8.4 |
| ============= | ============= | ============= | ========== | |
In: Accounting
Using the data provided in the ‘Data Task B’ worksheet, complete the flexible budget for T&K Solutions and calculate flexible budget variances using the proforma in ‘Schedule 2’. For each variance, indicate if it is U (unfavourable), F (favourable)
| 2018 BUDGETED DATA | Taxation | Bookkeeping | Advisory | Total | |
| Billable hours | 4400 | 1200 | 5200 | 10800 | |
| Professional labour hours | 4600 | 1320 | 5720 | 11640 | |
| Charge out rate per billable hour | $ 210.00 | $ 180.00 | $ 210.00 | ||
| Professional labour per worked hour | $ 90.00 | $ 75.00 | $ 90.00 | ||
| Variable overhead | $ 145,000 | Note 1 | |||
| Fixed overhead | $ 610,000 | Note 2 | |||
| 2018 ACTUAL COSTS | Taxation | Bookkeeping | Advisory | Total | |
| Billable hours | 4200 | 1400 | 5900 | 11500 | |
| Professional labour hours | 4400 | 1500 | 6400 | 12300 | |
| Charge out rate per billable hour | $ 210.00 | $ 185.00 | $ 210.00 | ||
| Professional salary paid | $ 386,000 | $ 112,500 | $ 586,000 | ||
| Actual variable overhead paid | $ 162,000 | Note 1 | |||
| Actual fixed overheads paid | $ 597,000 | Note 2 | |||
| Note 1: Variable overhead varies with the billable hours | |||||
| Note 2: The partners have decided a fair allocation of fixed overheads is as a percentage of floor space. | |||||
| Taxation | Bookkeeping | Advisory | Total | ||
| Floor Space by service | 130 | 55 | 195 | 380 | sqm |
| TASK B SCHEDULE 2: | Prepare the Flexible Budgets for each service department for the year 2018 | ||||||
| Allocation of variable overhead: | Budgeted | Actual | |||||
| Variable overhead rate: | per billable hour | ||||||
| TAXATION | |||||||
| Billable hours | Actual | Flexible budget variance | U/F | Flexible Budget | Volume variance | U/F | Static Budget |
| 4,200 | - | - | 4,200 | 200 | U | 4,400 | |
| Revenue | |||||||
| Professional salaries | |||||||
| Variable overhead | |||||||
| Fixed overheads | |||||||
| Profit / Loss | |||||||
| BOOKKEEPING | |||||||
| Billable hours | Actual | Flexible budget variance | U/F | Flexible Budget | Volume variance | U/F | Static Budget |
| Revenue | |||||||
| Professional salaries | |||||||
| Variable overhead | |||||||
| Fixed Overhead | |||||||
| Profit / Loss | |||||||
| ADVISORY | |||||||
| Billable hours | Actual | Flexible budget variance | U/F | Flexible Budget | Volume variance | U/F | Static Budget |
| Revenue | |||||||
| Professional salaries | |||||||
| Variable overhead | |||||||
| Fixed Overhead | |||||||
| Profit / Loss |
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pleases show me how to calculate and formula
In: Accounting
Santana Rey, owner of Business Solutions, decides to prepare a
statement of cash flows for her business using the following
financial data.
| BUSINESS SOLUTIONS | ||||||
| Income Statement | ||||||
| For Three Months Ended March 31, 2020 | ||||||
| Computer services revenue | $ | 25,107 | ||||
| Net sales | 17,793 | |||||
| Total revenue | 42,900 | |||||
| Cost of goods sold | $ | 14,152 | ||||
| Depreciation expense—Office equipment | 330 | |||||
| Depreciation expense—Computer equipment | 1,240 | |||||
| Wages expense | 2,450 | |||||
| Insurance expense | 525 | |||||
| Rent expense | 2,275 | |||||
| Computer supplies expense | 1,235 | |||||
| Advertising expense | 520 | |||||
| Mileage expense | 270 | |||||
| Repairs expense—Computer | 950 | |||||
| Total expenses | 23,947 | |||||
| Net income | $ | 18,953 | ||||
| BUSINESS SOLUTIONS | |||||||||||
| Comparative Balance Sheets | |||||||||||
| December 31, 2019, and March 31, 2020 | |||||||||||
| Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Assets | |||||||||||
| Cash | $ | 71,257 | $ | 51,752 | |||||||
| Accounts receivable | 24,067 | 4,868 | |||||||||
| Inventory | 664 | 0 | |||||||||
| Computer supplies | 2,025 | 510 | |||||||||
| Prepaid insurance | 1,110 | 1,615 | |||||||||
| Prepaid rent | 805 | 805 | |||||||||
| Total current assets | 99,928 | 59,550 | |||||||||
| Office equipment | 7,300 | 7,300 | |||||||||
| Accumulated depreciation—Office equipment | (660 | ) | (330 | ) | |||||||
| Computer equipment | 19,300 | 19,300 | |||||||||
| Accumulated depreciation—Computer equipment | (2,480 | ) | (1,240 | ) | |||||||
| Total assets | $ | 123,388 | $ | 84,580 | |||||||
| Liabilities and Equity | |||||||||||
| Accounts payable | $ | 0 | $ | 1,160 | |||||||
| Wages payable | 975 | 560 | |||||||||
| Unearned computer service revenue | 0 | 1,500 | |||||||||
| Total current liabilities | 975 | 3,220 | |||||||||
| Equity | |||||||||||
| Common stock | 99,000 | 73,000 | |||||||||
| Retained earnings | 23,413 | 8,360 | |||||||||
| Total liabilities and equity | $ | 123,388 | $ | 84,580 | |||||||
Required:
Prepare a statement of cash flows for Business Solutions using the
indirect method for the three months ended March 31, 2020.
Owner Santana Rey contributed $26,000 to the business in exchange
for additional stock in the first quarter of 2020 and has received
$3,900 in cash dividends. (Amounts to be deducted should be
indicated with a minus sign.)
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In: Accounting
On December 31, 2019, Sumner Company held Wall Company bonds in its portfolio of trading securities. The bonds have a par value of $40,000, carry a 10% annual interest rate, mature in 2026, and had originally been purchased at par. The market value of the bonds on December 31, 2019 was $38,000.
On January 1, 2020, Sumner acquired bonds of Doherty Company with a par value of $30,000 for $30,200. The Doherty Company bonds carry an annual interest rate of 12% and mature on December 31, 2024. Additionally, on the same date, Sumner acquired Maggio Company bonds with a face value of $20,000 for $19,500. The Maggio Company bonds carry an 8% annual interest rate and mature on December 31, 2029. At the end of 2020, the respective market values of the bonds were: Wall, $39,000; Doherty, $31,000; and Maggio, $21,000. Sumner classifies all of the debt securities as trading. Assume that Sumner uses the straight-line method to amortize any discounts or premiums.
Required:
| 1. | Prepare the journal entries necessary to record the purchase of the investments on January 1, 2020, the annual interest payments on December 31, 2020, and the adjusting entry needed on December 31, 2020. |
| 2. | What would Sumner disclose on its December 31, 2020, balance sheet related to these investments? |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sumner Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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In: Accounting
ack Hammer Company completed the following transactions. The annual accounting period ends December 31.
| Apr. | 30 | Received $660,000 from Commerce Bank after signing a 12-month, 8.50 percent, promissory note. | ||
| June | 6 | Purchased merchandise on account at a cost of $80,000. (Assume a perpetual inventory system.) | ||
| July | 15 | Paid for the June 6 purchase. | ||
| Aug. | 31 | Signed a contract to provide security service to a small apartment complex starting in September, and collected six months’ fees in advance, amounting to $26,500. | ||
| Dec. | 31 | Determined salary and wages of $45,000 were earned but not yet paid as of December 31 (ignore payroll taxes). | ||
| Dec. | 31 | Adjusted the accounts at year-end, relating to interest. | ||
| Dec. | 31 | Adjusted the accounts at year-end, relating to security service. |
Required:
For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Enter any decreases to assets, liabilities, or stockholders equity with a minus sign. Enter your answers in transaction order provided in the problem statement.)
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For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Jack Hammer’s debt-to-assets ratio is less than 1.0.) (Enter your answers in transaction order provided in the problem statement.)
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In: Accounting
Prepare an adjusted trial balance for the following:
You opened a new pet supplies store and named it Ozzie’s Pet Supply and Boarding on December 1, 2019. The following information about December’s transactions, accounts, and adjustment data is available.
Transactions:
Dec. 1 Family members contributed $50,000 cash to the business in
exchange for capital.
Dec. 2 Purchased $10,800 of equipment for the store paying cash.
Dec. 3 Paid $4,500 for a 9-month insurance policy starting on December 1.
Dec. 4 Paid $18,000 cash to purchase land to be used in operations.
Dec. 5 Purchased office supplies on account, $3,000.
Dec. 6 Borrowed $28,000 from the bank for business use. You signed a bank payable note for an interest rate of 5% APR.
Dec. 7Paid $800 for advertising expenses.
Dec. 8 Purchased inventory (dog food) for the store at a cost of $1,500
Dec. 9 Paid for office supplies $3,000
Dec 10 Received a bill for utilities to be paid in January,
$200.
Dec 31 Service Revenues earned during the month included $18,500 cash and $2,000 on account.
Dec. 31 Sold one hundred percent of the dog food purchased on Dec. 8th for $2,100 in cash.
Dec. 31 Paid employees' salaries $2,000 and building rent $800.
Dec. 31 Dividends of $200 were paid.
Dec. 31 Customer prepaid $1,000 for boarding services in January.
Accounts
Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation-Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Bank Notes Payable; Family, Capital; Service Revenue; Dog Food Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense-Equipment; Inventory; COGS; Dividends; Service Charge-Bank; Uncollectible Accounts Expense; Allowance for Doubtful Accounts.
Adjustment Data
In: Accounting
(a) The manufacturing firm Rebo is considering a new capital investment project. The project will last for five years. The anticipated sales revenue from the project is $3 million in year 1 and $4.2 million in each of years 2 – 5. The cost of materials and labour is 50% of sales revenue and other expenses are $1 million in each year. The project will require working capital investment equal to 20% of the expected sales revenue for each year. This investment must be in place at the start of each year. Working capital will be recovered at the end of the project’s life. The project will require $2.5 million to be spent now on new machinery which will have zero value at the end of the project and will be depreciated each year at 20% of the original cost. The tax rate is 25%. Rebo uses a discount rate of 11% to evaluate its capital investment projects.
(i) What is the net income in each year?
(ii) What is the free cash flow in each year and the net present value (NPV)?
(iii)You discover the following additional information: • The project will utilise a building that the firm leases. No other activities take place in it. If this project does not go ahead the firm will terminate the lease in one year’s time if no other use for it has been found. • Part of each year’s cash flows from the project will be used to increase the dividend payment to shareholders. For each of these items, explain briefly whether or not you would incorporate the information into your analysis of the project’s value.
(b) Zuti has a capital investment project that could start immediately. The project will require a machine costing $2.4 million. The total discounted value now of the cash inflows from the project will be either $2.6 million or $1.9 million with equal probability. The risk-free rate is 3%. Instead of starting immediately the project could be delayed until one year from now to gain more market information. Its total discounted cash inflows at that time will be known as either $2.6 million, or $1.9 million, with certainty.
(i) What is the present value of the option to delay? (ii) The supplier of the machine has offered to deliver it (if required) in one year’s time at a price of only $2 million, if Zuti pays a non-refundable deposit now. What is the maximum the firm should pay as a deposit now? What type of real option does this represent for Zuti? Identify the specific components of the option contract. (Total = 25 marks)
In: Accounting
(a) The manufacturing firm Rebo is considering a new capital investment project. The project will last for five years. The anticipated sales revenue from the project is $3 million in year 1 and $4.2 million in each of years 2 – 5. The cost of materials and labour is 50% of sales revenue and other expenses are $1 million in each year. The project will require working capital investment equal to 20% of the expected sales revenue for each year. This investment must be in place at the start of each year. Working capital will be recovered at the end of the project’s life.
The project will require $2.5 million to be spent now on new machinery which will have zero value at the end of the project and will be depreciated each year at 20% of the original cost. The tax rate is 25%. Rebo uses a discount rate of 11% to evaluate its capital investment projects.
(i) What is the net income in each year?
(ii) What is the free cash flow in each year and the net present value (NPV)?
(iii)You discover the following additional information:
• The project will utilise a building that the firm leases. No other activities take place in it. If this project does not go ahead the firm will terminate the lease in one year’s time if no other use for it has been found.
• Part of each year’s cash flows from the project will be used to increase the dividend payment to shareholders.
For each of these items, explain briefly whether or not you would incorporate the information into your analysis of the project’s value.
(b) Zuti has a capital investment project that could start immediately. The project will require a machine costing $2.4 million. The total discounted value now of the cash inflows from the project will be either $2.6 million or $1.9 million with equal probability. The risk-free rate is 3%.
Instead of starting immediately the project could be delayed until one year from now to gain more market information. Its total discounted cash inflows at that time will be known as either $2.6 million, or $1.9 million, with certainty.
(i) What is the present value of the option to delay?
(ii) The supplier of the machine has offered to deliver it (if required) in one year’s time at a price of only $2 million, if Zuti pays a non-refundable deposit now. What is the maximum the firm should pay as a deposit now? What type of real option does this represent for Zuti? Identify the specific components of the option contract.
In: Accounting
Question
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In: Accounting
8th State Bank prepares interim financial statements and follows an investment strategy of investing in trading securities. At the beginning of the third quarter of 2018, the bank held the following portfolio of trading securities:
| Security | Cost | June 30, 2018 Fair Value |
|---|---|---|
| 100 shares of Gordan Company common stock | $2,900 | $2,800 |
| 600 shares of Olivia Company common stock | 12,000 | 12,600 |
| Totals | $14,900 | $15,400 |
During the third quarter of 2018, the bank entered into the following trading securities transactions:
| July 2 | Received dividends of $1.50 per share on the Gordan Company common stock. |
| 14 | Sold 600 shares of Olivia Company common stock for $20 per share. |
| Aug. 9 | Purchased 300 shares of Porter Company common stock for $36 per share. |
| 24 | Sold 100 shares of Gordan Company common stock for $30 per share. |
| Sept. 17 | Purchased 500 shares of Union Company common stock for $22 per share. |
On September 30, 2018, the Porter Company common stock had a quoted market price of $36.50 per share and the Union Company common stock had a quoted market price of $21 per share.
Required:
| 1. | Prepare journal entries to record the preceding information. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | Show what the bank reports on its third quarter 2018 income statement for these trading securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. |
Show how the bank reports these trading securities on its September 30, 2018, balance sheet. CHART OF ACCOUNTS8th State BankGeneral Ledger
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In: Accounting