IBS2201 International Business and FIN3302 Corporate Finance

Published: 1 year ago

IBS2201 International Business and FIN3302 Corporate Finance

30. Dexter Company applies the direct write-off method in accounting for uncollectible accounts. Mar...

Show transcribed image text Dexter Company applies the direct write-off method in accounting for uncollectible accounts. March 11 Dexter determines that it cannot collect $45,000 of its accounts receivable from its customer Leer Company. 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above selected transactions of Dexter.

31. The audit fee paid by a manufacturing company would be classified by that company as:A. A production

The audit fee paid by a manufacturing company would be classified by that company as:A. A production overhead costB. A selling and distribution costC. A research and development

32. Assume the current Treasury yield curve shows that the spot

Assume the current Treasury yield curve shows that the spot rates for 6 months, 1 year, and 1 1/2 years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a $1000 par, 4% coupon bond maturing in 11/2 years (the next coupon is exactly 6 months from now)?

33. Mr. Ramu has the following transactions in the month of July. Record them into the journal and ...

Mr. Ramu has the following transactions in the month of July. Record them into the journal and show postings in the ledger and balance the accounts. July 1^st: Ramu started business with a capital of 75,000 1^st: Purchased goods from Manu on credit 25,000 2^nd: Sold goods to Sonu 20,000 3^rd: Purchased goods from Meenu for cash 15,000 4^th: Sold goods to Tanu for cash 16,000 5^th: Goods retuned to Manu 2.000 6^th: Bought furniture for 15,000 7^th: Bought goods from Zenu 12,000 8^th: Cash paid to Manu 10,000 9^th: Sold goods to Jane 13, 500 10^th: Goods returned from Sonu 3,000 11^th: Cash received from Jane 5, 500 12^th: Goods taken by Ramu for domestic use 3,000 13^th: Returned Goods to Zenu 1,000 14th: Cash received from Sonu 12,000 15^th: Bought machinery for 18,000 16^th: Sold part of the furniture for 1,000 17^th: Cash paid for the purchase of bicycle for Ramu's son 1, 500 19^th: Cash sales 15,000 20^th: Cash purchases 13, 500

34. I need help soliving this question. I need to do a general journal, Income statement, Statement o...

I need help soliving this question. I need to do a general journal, Income statement, Statement of Retained earnings, Balance sheet and assess the impact on income. I would greatly appreciate any help in solving this. Thanks!

Jenna Aracel opened a business called Aracel Engineering and recorded the following transactions In its first month of operations. Jun. 1 Jennêµ? Aracel, the owner, inve ted $100,000 cêµ?í??h, office equipment with êµ? vêµ?1ue of $5,000, and $60,000 of drêµ?fting Jun. 2 The company purchased land worth $49,000 for an office by paying $6,300 cash and signing êµ? long-term note payable for equipment to launch the company in exchange for common stock $42,700 Jun 2 The company purchased êµ? portable building with $55,000 cash and moved it onto the land acquired on June 2 un 2 The company paid $3,000 cash for the premium on a 15-month insurance policy Jun- 7 The company completed and delivered êµ? et of plan, for êµ? client and collected $6,200 cêµ?í??h- Ju. 12 The company purchased $20,000 of additional drafting equipment by paying 9,500 cash and igning a long-term note payable for $10,500 Jun. 14 The company completed $14,000 of engineering services for êµ? client. This amount is to be received in 30 dêµ?ya Jun 15 The company purchased $1,150 of additional office equipment on credit Jun 17 The company completed engineering services for $22,000 on credit Jun- 18 The company received bill for rent of equipment that was used on êµ? recently completed job. The $1,333 rent cost must be paid within 30 days Jun-20 The company collected $7,000 cash in pêµ?rtial payment from the client billed on June 14 Jun- 21 The company paid $1,200 cash for wages to êµ? drafting assistant Jun 23 The company paid $1,150 cash to settle the account payable created on June 15 Jun. 24 The company paid $925 cash for minor maintenance of its drafting equipment Jun. 26 The company paid $9, 480 cash in dividends Jun- 28 The company paid $1,200 cash for wages to êµ? drafting assistant Jun 30 The company paid $2,500 cash for adrertisements on the web during June Descriptions of items that require adjusting entries on June 30, 2017, follow. a) The company has completed, but not yet billed, $6,000 of engineering services for a client. b) Stralght-line depreclation on the office equipment, assuming a 5-year life and a $150 salvage value, Is $100 per month. c) Straight-line depreclation on the drafting equlpment, assuming a 5-year life and a $2,000 salvage value, Is $1,300 per month. d) Straight-line depreclation on the bullding, assuming a 25-year life and a $1,000 salvage value, Is $180 per month. e) The balance In prepald Insurance represents a 15-month policy that went Into effect on June 1. f) Accrued Interest on the long-term note payable Is $75 g) The drafting assistant is pald $1,200 for a 5-day work week. 2 days' wages have been Incurred but are unpald as of month-end. General Journal GeneraTrial Balance Statement Ledger Income St Retained Balance Earnings Impact on Income Requirement Sheet For transactions a-g, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. Each adjustment is posted automatically to the general ledger and trial balance as soon as you click "record entry". Show less View transaction list View journal entry worksheet No Account Title Debit Credit Jun 30 Office equipment Drafting equipment Common stoc 100,000 5,000 8,000 165,000 Jun 30 Land 49,000 8,300 Long-term notes payable 42,700 Jun 30 ing 55,000 Cash 55,000 Jun 30 No Transaction Recorded

35. Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following.

Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $ 152,070). $ 275,000 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $ 800). 1,600 c. Sold merchandise (costing $ 9,000) to a customer on account with terms 2/10, n/30. 20,000 d. Collected half of the balance owed by the customer in (c) within the discount period. 9,800 e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid. 1,800 Required: 1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop. 2. Compute the gross profit percentage (using the formula shown in this chapter and rounding to one decimal place). 3. Prepare journal entries to record transactions (a)–(e). 4. Campus Stop is considering a contract to sell merchandise to a campus organization for $ 15,000. This merchandise will cost Campus Stop $ 12,000. Would this contract increase (or decrease) Campus Stop’s gross profit and gross profit percentage (round to one decimal place)?

36. Single plantwide and multiple production department factory overhead rate methods and product...

Single plantwide and multiple production department factory overhead rate methods and product cost distortion

The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs ac- curate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department fac- tory overhead rate method. The following factory overhead was budgeted for Firebolt:

Fabrication  Department  factory overhead      $550,000 Assembly  Department  factory overhead                                                                   250,000 Total          $800,000

Direct labor hours were estimated as    follows:

Fabrication Department                                           5,000 hours

Assembly  Department                                              5,000

Total                                                                                 10,000 hours

In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from engineering records, as follows:

Production  Departments                                       Gasoline Engine                           Diesel Engine

Fabrication Department                                                    3.0 dlh                                             2.0 dlh

Assembly  Department                                                      2.0                                                       3.0

Direct labor hours per unit                                            5.0 dlh                                             5.0 dlh

a.     Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base.

b.     Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department.

c.     Recommend to management a product costing approach, based on your analy- ses in (a) and (b). Support your recommendation.

37. 9.16 The manager of a paint supply store wants to determine whether the mean amount of paint...

9.16 The manager of a paint supply store wants to determine whether the mean amount of paint contained in 1-gallon cans purchased from a nationally known manufacturer is actually 1 gallon. You know from the manufacturer’s specifications that the standard deviation of the amount of paint is 0.02 gallon. You select a random sample of 50 cans, and the mean amount of paint per 1-gallon can is 0.995 gallon. a. Is there evidence that the mean amount is different from 1.0 gallon? (Use ) b. Compute the p-value and interpret its meaning. a = 0.01. SELF Test H1 H . 0, 338 CHAPTER 9 Fundamentals of Hypothesis Testing: One-Sample Tests c. Construct a 99% confidence interval estimate of the population mean amount of paint. d. Compare the results of (a) and (c). What conclusions do you reach?

38. University Car Wash built a deluxe car wash across the street from campus. The new

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000 including installation. The company estimates that the equipment will have a residual value of $30,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year Hours used 1 2,600 2 2,100 3 2,200 4 1,800 5 1,600 6 1,700 Prepare a depreciation schedule for six years using the straight-line method Prepare a depreciation schedule for six years using the double-declining-balance method Prepare a depreciation schedule for six years using the activity-based method.

39. Mighty Muffler Inc., operates an automobile service facility. The table below shows

Mighty Muffler Inc., operates an automobile service facility. The table below shows that cost incurred during a month when 600 mufflers were replaced. Number of Mufflers Replaced Total costs : 500 600 700 Fixed costs A $8,400 C Variable costs B 24,000 D Total costs E $32,400 F === ====== === Cost per muffler replacement : Fixed cost G H I Variable cost J K L Total cost per muffler replacement M N O == == == Required : Fill in the missing amounts, labeled A through O, in the table.

40. A furniture-making business manufactures quality furniture to customers' orders.

Overhead analysis and calculation of product costs

A furniture-making business manufactures quality furniture to customers' orders. It has three production departments and two service departments. Budgeted overhead costs for the coming year are as follows:

The three production departments — A, B and C, and the two service departments — X and Y, are housed in the new premises, the details of which, together with other statistics and information, are given below.

Required:

Prepare a statement showing the overhead cost budgeted for each department, showing the basis of apportionment use-a-Al so calculate suitable overhead absorption rates.

Two pieces of furniture are to be manufac­tured for customers. Direct costs are as follows:

Calculate the total costs of each job.

(c) If the firm quotes prices to customers that reflect a required profit of 25% on selling Trice, calculate the quoted selling price for each job.

41. In 1989 Robert Smith opened a small fruit and vegetable market in Bethlehem, Pennsylvania.

Smith’s Market (Small Business Cash Sales Accounting System)

In 1989 Robert Smith opened a small fruit and vegetable market in Bethlehem, Pennsylvania. Originally Smith sold only produce grown on his family farm and orchard. As the market’s popularity grew, however, he added bread, canned goods, fresh meats, and a limited supply of frozen goods. Today Smith’s Market is a full-range farmers’ market with a strong local customer base. Indeed, the market’s reputation for low prices and high quality draws customers from other Pennsylvania cities and even from the neighboring state of New Jersey. Currently Smith’s has 40 employees. These include sales staff, shelf stockers, farm laborers, shift supervisors, and clerical staff. Recently Smith has noticed a decline in profits and sales, while his purchases of products for resale have continued to rise. Although the company does not prepare audited financial statements, Robert Smith has commissioned your public accounting firm to assess his company’s sales procedures and internal controls. Smith’s Market expenditure cycle procedures are described below: Expenditure Cycle The expenditure cycle begins in the warehouse adjacent to the market where Smith’s keeps their inventory of nonperishable goods such as canned goods and paper products. They also maintain a one-day inventory of produce and other perishable products in the warehouse where they can quickly restock the shelves when necessary. At close of business each evening the warehouse clerk reviews the market shelves for items that need to be replenished. The clerk restocks the shelves and adjusts the digital stock records accordingly from the warehouse PC. At this time the clerk takes note of what needs to be reordered from the suppliers and prints purchase orders from the PC. Depending upon the nature of the product and urgency of the need, the clerk either mails the purchase order to the supplier or orders by phone. Phone orders are followed up by faxing the purchase order to the supplier. When the goods arrive from the vendor the warehouse clerk reviews the packing slip, restocks the warehouse shelves, and updates the stock records from the PC. At the end of the day the clerk prepares a hard-copy purchases summary from the PC and sends it to the treasury clerk for posting to general ledger. The vendor’s invoice is sent to the accounting clerk. She examines it for correctness and files it in a temporary file until it is due to be paid. The clerk reviews the temporary file daily looking for invoices to be paid. Using the accounting department PC, the clerk prints a check and records it in the digital check register. She then files the invoice and mails the check to the supplier. At the end of the day she prints a hard-copy journal voucher from the PC, which summarizes the day’s cash disbursements, and sends it to the treasury clerk for posting to the general ledger. Using the department PC, the treasury clerk posts the journal voucher and purchases summary information to the appropriate general ledger accounts. Required

a. Create a data flow diagram of the current system.

b. Create a system flowchart of the current system.

c. Analyze the internal control weaknesses in the system. Model your response according to the six categories of physical control activities specified in SAS 78/COSO.

42. Linton Company purchased a delivery truck for $34,000 on January 1, 2015. The truck has an expect...

Linton Company purchased a delivery truck for $34,000 on January 1, 2015. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2015 and 12,000 in 2016.

A. Compute depreciation expense for 2015 and 2016 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.

B. Assume that Linton uses the straight-line method. Prepare the journal entry to record 2015 depreciation. Show how the truck would be reported in the December 31, 2015, balance sheet.

43. 1.Which of the following statements is TRUE regarding a statement of cash flows? A. A statement o...

1.Which of the following statements is TRUE regarding a statement of cash flows?

A. A statement of cash flows measures the profitability of a company using the cash basis of accounting.

B. Two different methods may be used to compute the net cash flows from operating, investing, and financing activities.

C. Noncash investing and financing activities need to be disclosed under “other activities.”

D. The statement of cash flows reports the changes in cash and cash equivalents.

2.Which of the following is a cash equivalent?

A. Accounts receivable

B. Certificates of deposit that mature in less than three months

C. Certificates of deposit that mature in one year or less

D. Prepaid expenses

3.Which of the following activities is an operating activity?

A. Payment on the principal portion of a bank loan

B. Collection of cash from issuing stock

C. Payment of interest on a bank loan

D. Payment of cash dividends

4.Which of the following activities would NOT be considered an investing activity?

A. Issuance of common stock

B. Purchase of used equipment

C. Sale of land

D. Sale of a long-term investment

5.Which of the following activities is a financing activity?

A. Purchase of land by issuing stock

B. Payment of cash dividends

C. Purchase of land for cash

D. Purchase of inventory for cash

6.On a statement of cash flows, the net increase in cash was $24,000. Cash provided from operations was $30,000. If the net cash outflow from investing activities was $7,000, then what was the net cash flow from financing activities?

A. net inflow of $1,000

B. net outflow of $1,000

C. net inflow of $13,000

D. net outflow of $13,000 ? ?

7.Using the following information for Stewart Auto, Inc., calculate the net cash flow from operating activities using the indirect method. ? ?

Net income $150,000 ?

Depreciation expense 10,000 ?

Increase in accounts receivable 4,000 ?

Decrease in inventory 5,000 ?

Increase in accounts payable 8,000 ?

Loss on sale of equipment 7,000 ? ?

The net cash provided by