Published:
7 months ago
Fall Semester Accounting Help
categories:
Online course help
31. "I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings.."I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for the most recent year are given below: Office Products Division Sales $20,280,000 Variable expenses 12,865,340 Contribution margin 7,414,660 Fixed expenses 5,690,860 Net operating income $1,723,800 Divisional operating assets $5,200,000 The company had an overall return on investment (ROI) of 15% last year (considering all divisions). The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $3,390,000. The cost and revenue characteristics of the new product line per year would be: Sales $10,170,000 Variable expenses 60% of sales Fixed expenses $3,274,740 Requirement 1: Compute the Office Products Division's ROI for the most recent year; also compute the ROI as it would appear if the new product line is added.(Round interim calculations and final answers to 2 decimal places. Omit the "%" sign in your response.) ROI Present % New Line % Total for company % Requirement 4: Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income. (a) Compute the Office Products Division's residual income for the most recent year; also compute the residual income as it would appear if the new product line is added. (Omit the "$" sign in your response.) Residual income Present $ New Line $ Total for company $
32. Problem 6-1A Perpetual: Alternative cost flows LO P1 [The following information applies to the qu...
Problem 6-1A Perpetual: Alternative cost flows LO P1
[The following information applies to the questions displayed below.]
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date Activities Units Acquired at Cost Units Sold at Retail
Mar. 1 Beginning inventory 170 units @ $52.40/unit
Mar. 5 Purchase 260 units @ $57.40/unit
Mar. 9 Sales 330 units @ $87.40/unit
Mar. 18 Purchase 120 units @ $62.40/unit
Mar. 25 Purchase 220 units @ $64.40/unit
Mar. 29 Sales 200 units @ $97.40/unit
Totals 770 units 530 units
rev: 03_21_2013_QC_27089, 04_17_2013_QC_29162, 11_25_2013_QC_41127, 09_20_2014_QC_54306
References
Section BreakProblem 6-1A Perpetual: Alternative cost flows LO P1
1.
value:
1.25 points
Required information
Problem 6-1A Part 1
Required:
1. Compute cost of goods available for sale and the number of units available for sale.
References
eBook & Resources
Expanded tableDifficulty: Hard
Problem 6-1A Part 1Learning Objective: 06-P1 Compute inventory in a perpetual system using the methods of specific identification, FIFO, LIFO, and weighted average.
Check my work
2.
value:
1.25 points
Required information
Problem 6-1A Part 2
2. Compute the number of units in ending inventory.
References
eBook & Resources
WorksheetDifficulty: Hard
Problem 6-1A Part 2Learning Objective: 06-P1 Compute inventory in a perpetual system using the methods of specific identification, FIFO, LIFO, and weighted average.
Check my work
3.
value:
1.25 points
Required information
Problem 6-1A Part 3
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 100 units from beginning inventory and 230 units from the March 5 purchase; the March 29 sale consisted of 80 units from the March 18 purchase and 120 units from the March 25 purchase. (Round your average cost per unit to 2 decimal places.)
rev: 03_20_2013_QC_27089, 04_17_2013_QC_29162, 09_20_2014_QC_54306
References
eBook & Resources
Expanded tableDifficulty: Hard
Problem 6-1A Part 3Learning Objective: 06-P1 Compute inventory in a perpetual system using the methods of specific identification, FIFO, LIFO, and weighted average.
Check my work
4.
value:
1.25 points
Required information
Problem 6-1A Part 4
4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 100 units from beginning inventory and 230 units from the March 5 purchase; the March 29 sale consisted of 80 units from the March 18 purchase and 120 units from the March 25 purchase. (Round your final answers to two decimal places.)
rev: 11_25_2013_QC_41127
References
eBook & Resources
Expanded tableDifficulty: Hard
Problem 6-1A Part 4Learning Objective: 06-P1 Compute inventory in a perpetual system using the methods of specific identification, FIFO, LIFO, and weighted average.
Check my work
©2017 McGraw-Hill Education. All rights reserved.
33. Adjusting entries problem Pastina Company sells various types of pasta to grocery chains as p...
adjusting entries problem
Pastina Company sells various types of pasta to grocery chains as private label brands.
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2016, appears below. Account Title Debits Credits 30,000 Cash 40,000 Accounts receivable Supplies 1,500 Inventory 60,000 Note receivable 20,000 Interest receivable 2,000 Prepaid rent Prepaid insurance Office equipment 80,000 Accumulated depreciation-office equipment 30,000 Accounts payable 31,000 Salaries and wages payable Note payable 50.000 Interest payable Deferred revenue Common stock 60,000 Retained earnings 24.500 Sales revenue 148,000 Interest revenue Cost of goods sold 70,000 18,900 Salaries and wages expense Rent expense 11,000 Depreciation expense Interest expense Supplies expense 1,100 Insurance expense 6.000 Advertising expense 3.000 Totals 343.500 343.500
34. Multiple Choice 1 North Bank is analyzing Belle Corp‘s financial statements for a possible extension
Multiple Choice
1 North Bank is analyzing Belle Corp‘s financial statements for a possible extension of credit Belle’s quick ratio is
significantly better than the industry average Which of the following factors should North consider as a
possible limitation of using this ratio when evaluating Belle’s creditworthiness?
a Fluctuating market prices of short-term investments may adversely affect the ratio
b Increasing market prices for Belle’s inventory may adversely affect the ratio
c Belle may need to sell its available-for-sale investments to meet its current obligations
d Belle may need to liquidate its inventory to meet its long-term obligations
2 What effect would the sale of a company’s trading securities at their carrying amounts for cash have on each
of the following ratios?
Current ratio Quick ratio
a No effect No effect
b Increase Increase
C No effect Increase
d Increase No effect
3 In analyzing a company’s financial statement, which financial statements would a potential investor primarily
use to assess the company’s liquidity and financial flexibility?
a Balance sheet
b Income statement
c Statement of retained earnings
d Statement of cash flows
4 Are the following ratios useful in assessing the liquidity position of a company?
Defensive
interval ratio
Return on
stockholders’ equity
a Yes Yes
b Yes No
C No Yes
d No No
5 The following information pertains to Ali Corp as of and for the current year ended December 31;
Liabilities
Stockholders’ equity
Shares of common stock issued and outstanding
Net income
$60,000
500,000
10,000
30,000
During the year, Ali’s officers exercised stock options for 1,000 shares of stock at an option price of $8 per
share What was the effect of exercising the stock options?
a Debt-to-equity ratio decreased to 12%
b Earnings per share increased by $033
c Asset turnover increased to 54%
d No ratios were affected
Item 6 and 7 are based on the following data:
Apex Corporation
SELECTED FINANCIAL DATA
Year Ended December 31, Current Year
Operating income $900,000
Interest expense (100,000)
Income before income tax 800,000
Income tax expense (320,000)
Net income 480,000
Preferred stock dividends (200,000)
Net income available to common stockholders $280,000
6 The times interest earned ratio is
a 28 to 1
b 48 to 1
c 80 to 1
d 90 to 1
7 The times preferred dividend earned ratio is
a 14 to 1
b 17 to 1
c 24 to 1
d 40 to 1
Items 8 and 9 are based on the following:
At December 31 of the current year, Curry Co had the following balances in selected asset accounts:
Current
year
Increase over
previous year
Cash $300 $100
Accounts receivables, net 1,200 400
Inventory 500 200
Prepaid expenses 100 40
Other assets 400 150
Total assets $2,500 $890
Curry also had current liabilities of $1,000 at December 31 and net credit sales of $7,200 for the year
8 What is Curry’s acid-test ratio at December 31 of the current year?
a 15
b 16
c 20
d 21
9 What was the average number of days to collect Curry’s accounts receivable during the year?
a 304
b 406
c 507
d 608
10 Which of the following ratios should be used in evaluating the effectiveness with which the company uses its
assets?
Receivables turnover Dividend payout ratio
a Yes Yes
b No No
C Yes No
d No Yes
11 The following computations were made from Clay Co‘s current year end books:
Number of days’ sales in inventory 61
Number of days’ sales in trade accounts receivable 33
What was the number of days in Clay’s current year operating cycle?
a 33
b 47
c 61
d 94
12 The following financial ratios and calculations were based on information for Kohl Co‘s financial statements for
the current year:
Accounts receivable turnover
Ten times during the year
Total assets turnover
Two times during the year
Average receivables during the year
$200,000
What was Kohl’s average total assets for the year?
a $2,000,000
b $1,000,000
c $400,000
d $200,000
Item 13 to 15 are based on the following:
Selected data pertaining to Lore Co for the calendar year is as follows:
Net cash sales
Cost of goods sold
Inventory at the beginning of year
Purchases
Accounts receivables at beginning of year
Accounts receivables at end of year
$3,000
18,000
6,000
24,000
20,000
22,000
13 The accounts receivables turnover for the year was 50 times What were Lore’s net credit sales?
a $105,000
b $107,000
c $110,000
d $210,000
14 What was the inventory turnover for the year?
a 12 times
b 15 times
c 20 times
d 30 times
15 Lore would use which of the following to determine the average days’ sales in inventory?
Numerator Denominator
a 365 Average inventory
b 365 Inventory turnover
C Average inventory Sales dividend by 365
d Sales divided by 365 Inventory turnover
16 Kline Co had the following sales and accounts receivable balances at the end of the current year:
Cash sales
Net credit sales
Net accounts receivable, 1/1
Net accounts receivable, 12/31
$1,000,000
3,000,000
100,000
400,000
What is Kline’s average collection period for its accounts receivables?
a 480 days
b 300 days
c 225 days
d 120 days
17 Frey Inc was organized on January 2 of the current year with following capital structure
? 10% cumulative preferred stock, par value $100 and liquidation value
$105; authorized, issued and outstanding 1,000 shares
? Common stock, par value $25; authorized 100,000 shares, issues and
outstanding 10,000 shares
$100,000
250,000
Frey’s net income for the year ended December 31 was $450,000, but no dividends were declared How much
was Frey’s book value per preferred share at December 31?
a $100
b $105
c $110
d $115
