Answer:
Meet the client and gather information
Explanation:
The first step in the client onboarding workflow is to meet the client and gather information about him or her. This is done by using new client engagement check lists to ask all the required questions in other to gather all necessary information about the client. This is to ensure that the client set objectives and expectations are properly planned for in the onboarding process.
Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $5000000; and assembling, $2500000. Information on the two products is: Regular Supreme Direct labor hours 10000 15000 Machine hours 10000 30000 Number of parts 90000 160000 Overhead applied to Supreme using activity-based costing is
Answer:
$5,350,000
Explanation:
The computation of the overhead applied to supreme using activity based costing is shown below:
= Machine hours × machine hour rate + number of parts × cost per part
= 30,000 × ($5,000,000 ÷ (10,000 + 30,000)) + 160,000 × ($2,500,000 ÷ (90,000 + 160,000))
= 30,000 × $125 + 160,000 × $10
= $3,750,000 + $1,600,000
= $5,350,000
Hence, the overhead applied to supreme is $5,350,000
Kotrick Company has beginning inventory of units and expected sales of units. If the desired ending inventory is units, how many units should be produced?
Answer: $26,000
Explanation:
Ending Inventory = Beginning Inventory + Units to be produced - Sales
18,000 = 15,000 + Units to be produced - 23,000
Units to be produced = 18,000 + 23,000 - 15,000
Units to be produced = $26,000
Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 20 .30 Moderate response 35 .20 High response 50 .20 Very high response 90 .30
a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)
b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer:
a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)
Possible Market Reaction Sales Units Probability Expected sales
Low response 20 .30 6
Moderate response 35 .20 7
High response 50 .20 10
Very high response 90 .30 27
Total 50 units
b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
mean = (6 + 7 + 10 + 27) / 4 = 12.5
variance = {[0.30 x (20 - 50)²] + [0.20 x (35 - 50)²] + [0.20 x (50 - 50)²] + [0.30 x (90 - 50)²]} / 4 = (270 + 45 + 0 + 480) / 4 = 795 / 4 = 198.75
standard deviation = √198.75 = 14.10 units
Which two accounts are used to reconcile from "Cash Paid to Vendors" to Cost of Goods Sold?
Answer:
The two accounts used to reconcile from "Cash Paid to Vendors" to Cost of Goods Sold are the Cash Account and The Accounts Payable account.
Explanation:
The transaction "Cash Paid to Vendors" is credited in the Cash Account and debited to the Accounts Payable account. Based on the amount being owed at the beginning and at the end of the period, and after making adjustment for the "Cash Paid to Vendors, it becomes possible to compute the "Cost of Goods Sold," using the beginning and ending inventory balances. The cash paid to vendors reduces the amount being amount.
Suppose you save for a down payment on a house by investing $1200 each quarter into an account that gives 3.6% annual interest, compounded quarterly (four times a year). How much will you have after 5 years?
Answer:
FV= $26,167.17
Explanation:
Giving the following information:
Quarterly deposit= $1,200
i= 0.036/4= 0.009
n= 5*4= 20
To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= quarterly deposit
FV= {1,200*[(1.009^20) - 1]} / 0.009
FV= $26,167.17
Given the following data, what is cost of goods sold as determined by the FIFO method?
Sales 280 units
Beginning inventory 250 units at $6 per unit
Purchases 128 units at $11 per unit
A. $3,080
B. $1,680
C. $2,320
D, $1,830
Answer:
The answer is D. $1,830
Explanation:
FIFO means First in First out.
It is one of the inventory methods along with LIFO(Last in First out), average weighted cost and specific identification.
FIFO literally means the inventory bought first will be the first to be sold. Leaving the last inventories bought as the ending inventory.
In this question, Cost of Sales according to FIFO is:
250 units x $6 = $1,500
30 units at $11 = $330
Total =. $1,830
Therefore, the cost of sales under this method is $1,830
What are the arithmetic and geometric average time-weighted rates of return for the investor?(Round your year-by-year rates of return and final answer to 2 decimal places. Do not round other calculations.)
Financial statements prepared by a voluntary health and welfare nongovernmental not-for-profit organization must report expenses by the following classification(s):Functional NaturalA. YES YES ï¼ B. Yes NoC. No Yes D. No No
Answer:
A. YES YES
Explanation:
In accordance with Financial Accounting Standards Board guidelines, all nonprofit organizations in the United States are now compelled to report their expenses in accordance with their functional classification and by the natural classification.
Hence, it is true that Financial statements prepared by voluntary health and welfare nongovernmental not-for-profit organization must report expenses both by both functional and natural class.
Carlson Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $300,000 and has an estimated useful life of 8 years with zero salvage value. Management estimates that the new bottling machine will provide net annual cash flows of $52,500. Management also believes that the new bottling machine will save the company money because it is expected to be more reliable than other machines, and thus will reduce downtime. (a) What is the net present value of the project? Assume a discount rate of 9%. (b) How much would the reduction in downtime have to be worth in order for the project to be acceptable?
Answer:
a) initial outlay = -$300,000
net cash flows years 1 - 8 = $52,500
discount rate = 9%
using a financial calculator, NPV = -$9,422, this means that the project should be rejected
b) In order for the project to be accepted, its NPV ≥ 0, therefore, the reduction in downtime should be worth at least $9,422 (at present day dollars).
If we analyze it on a yearly basis, the reduction in downtime should be worth $9,422 / 5.5348 (PV annuity, 9%, 8 periods) = $1,702.32
Ragas, Inc. sold goods with a selling price of $50,000 in the 2017 and estimated 5% warranty expense for the year. Customers complained of defects, and goods with a cost of $1,500 had to be replaced. Which of the following is the correct journal entry for honoring the warranties with goods?
A. Estimated Warranty Payable 1,500
Cash 1,500
B. Estimated Warranty Payable 1,500
Warranty Expense 1,500
C. Warranty Expense 1,500
Merchandise Inventory 1,500
D. Estimated Warranty Payable 1,500
Merchandise Inventory 1,500
Answer:
D. Estimated Warranty Payable 1,500
Merchandise Inventory 1,500
When the Warranty is honored, the Estimated Warranty account is debited to show the claiming of the expense.
The relevant asset account which in this case is Merchandise inventory is credited to show that it's reduction.
Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of $22 in perpetuity, beginning 11 years from now. If the market requires a return of 3.6 percent on this investment, how much does a share of preferred stock cost today
Answer:
$429.06
Explanation:
The computation of the cost of today preferred stock share is shown below:
But before that first determine the preferred stock value of 11 years from now which is
= Annual dividend ÷ rate of return
= $22 ÷ 0.036
= $611.11
Now the current value is
= $611.11 × Present value of discount factor at 3.6% in 10 years
= $611.11 ÷ 1.036^10
= $429.06
A monopolist can sell 200 units of output for $36 per unit. Alternatively, it can sell 201 units of output for $35.80 per unit. The marginal revenue of the 201st unit of output is
Answer:
There is a negative marginal revenue from the sale of 201st units of - $4.2
Explanation:
The marginal revenue is the revenue of the additional unit of output sold. Thus, the marginal revenue is the revenue earned from the 201st unit of the output sold. To calculate the marginal revenue of the 201st unit, we will calculate the total revenue for 200 units and deduct it from the total revenue for 201 units.
Total revenue - 200 Units = 200 * 36 = $7200
Total revenue - 201 Units = 201 * 35.8 = $7195.8
Marginal revenue - 201st unit = 7195.8 - 7200 = - $4.2
There is a negative marginal revenue from the sale of 201st units of - $4.2
describe the efforts that local governments should make to increase local revenue from the tax sector!
Answer:
I need help too, I'm about to fail this
Courier Logistics Corp. will issue $2,400,000 in 8-year bonds that pay 5% annually. The market rate for bonds of similar riskiness and maturity is 4%. How much cash will Courier Logistics Corp. receive from this bond issuance?
a. $2,529,241.
b. $2,374,124.
c. $2,561,585.
d. $2,400,000.
Answer:
Courier Logistics Corp will receive c. $2,561,585 from this bond issuance
Explanation:
Note that the Yield to Maturity is less than the Coupon Rate, therefore the bond is trading at a Premium (price will be greater than the par value)
The price of the bond, PV is calculated as follows :
PMT = $2,400,000 × 5% = $120,000
P/YR = 1
N = 8
FV = $2,400,000
YTM = 4%
PV= ?
Using a Financial Calculator, the price of the bond, PV is $2,561,585.87 or $2,561,585.
The next three questions refer to Jimmy Choo shoes, who sells 100,000 pairs of shoes to boutiques across the country:
The following cost information pertains to the shoes
Leather and metals: $25/pair
Shoe boxes: $1/pair
Shoemaker wages: $10/pair
Advertising & promotion: $200,000
Executive Salaries $300,000
Selling price to boutique: $100.00
a. What is the per unit gross marketing contribution?
1. 100%
2. 62%
3. 64%
4. None of the above
b. If they decided they wanted to invest in a $75,000 advertising campaign in the hopes of generating more sales, how many more pairs of shoes would they have to sell to maintain their current contribution to the organization?
1. 1,210
2. 925
3. 1,172
4. None of the above
c. By what percent does this change in sales represent?
1. 0.93%
2. 1.21%
3. 1.17%
4. None of the above
Answer:
Jimmy Choo
a. 4. None of the above
b. 3. 1,172
c. 4. None of the above
Explanation:
1) Data and Calculations:
Leather and metals: $25/pair
Shoe boxes: $1/pair
Shoemaker wages: $10/pair
Variable costs = $36/pair
Selling price to boutique: $100.00
Contribution = $64/pair
2) Fixed Costs and Profit:
Advertising & promotion: $200,000
Executive Salaries $300,000
Total fixed costs = $500,000
Net profit = $140,000
3) Per unit gross marketing contribution:
Marketing cost per unit = $2 ($200,000/100,000 units)
Gross marketing contribution = $64/$2 = 3200%
4) Increase fixed costs by $75,000 to $575,000
Sales unit to sell = Fixed costs + profit/contribution margin per unit
= $575,000 + 140,000 /$64
= 1,172
5) Change in sales:
Change = 1,172 - 1,000 = 172
Percentage change = 172/1,000 x 100 = 17.2%
Jimmy Choo is the most famous designer and famed for his handcrafted shoes.
Given data:
Leather and metals = $25/pairShoe-boxes = $1/pair Wage of shoemaker = $10/pairVariable pricing= $36/pairSelling price = $100.00Contribution = $64/paira. Option 4. None of the above
Per unit gross marketing contribution can be explained by:
Marketing cost per unit = [tex]\dfrac{\$200,000}{100,000 \text{units}} = \$ 2[/tex]Gross marketing contribution = [tex]\dfrac{\$64}{\$2} \times 100\% = 3200\%[/tex]b. Option 3. 1,172
Advertising & promotion: $200,000Executive Salaries = $300,000Total fixed costs = $500,000Net profit = $140,000Fixed cost increased by $75,000 to $575,000
[tex]\text{Sales unit to sell} & = \text{Fixed costs} +\dfrac{\text{profit}}{\text{contribution margin per unit}}[/tex]
[tex]\text{Sales unit to sell} & = \text{\$575,000} +\dfrac{\text{140,000}}{\text{\$ 64}}[/tex]
= 1,172 units
c. Option 4. None of the above
Change in sales can be estimated by:
Change = 1,172 - 1,000 = 172
[tex]\text{Percentage change} = \dfrac{172}{1,000 } \times 100 = 17.2 \; \%[/tex]
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On January 1, 2016, Legion Company sold $200,000 of 10% ten-year bonds. Interest is payable semiannually on June 30 and December 31. The bonds were sold for $177,000, priced to yield 12%. Legion records interest at the effective rate. Legion should report bond interest expense for the six months ended June 30, 2016, in the amount of:_________.A. $8,850B. $10,000C. $10,620D. $12,000
Answer:
C. $10,620
Explanation:
January 1, 2016
Dr Cash 177,000
Dr Discount on bonds payable 23,000
Cr Bonds payable 200,000
discount amortization = ($177,000 x 6%) - $10,000 = $10,620 - $10,000 = $620
June 30, 2016, first coupon payment
Dr Interest expense 10,620
Cr Cash 10,000
Cr Discount on bonds payable 620
Broker James has had his license suspended for two years. The licenses of all the broker-associates and salespersons who work for James are
Available Options Are:
A. Revoked, subject to reinstatement after 30 days.
B. Not affected by the suspension
C. Automatically suspended
D. Placed on inactive status
Answer:
D. Placed on inactive status
Explanation:
The reason is that James was jointly responsible for the actions of his broker-associates and salesperson because they were working under his supervision and that's why now as the license of James has been suspended for 2 years, James is no more jointly accountable for the actions of his associates and salesperson. Hence the licenses of associates and salesperson will be placed on inactive status. To reactive they will have to affiliate themselves to a broker who possesses an active license.
On January 1, 2011, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were to mature on January 1, 2021, but were callable at 101 any time after December 31, 2013. Interest was payable semiannually on July 1 and January 1. On July 1, 2016, Fox called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Fox's gain or loss in 2016 on this early extinguishment of debt was
Answer:
$8,000 gain
Explanation:
the carrying value of the bonds at the time of the redemption:
10 coupon payments were made, so amortization of bond premium = ($40,000 / 20) x 11 = $22,000
carrying value = $1,040,000 - $22,000 = $1,018,000
redemption price = $1,000,000 x 1.01 = $1,010,000
Fox's gain = carrying value - redemption price = $1,018,000 - $1,010,000 = $8,000
Since the carrying value was higher than the redemption value, Fox must report a gain.
True or False: Price equals marginal cost is a sufficient condition for profit maximization.
Answer:
False
Explanation:
The profit maximizing rule is the rule in which the Marginal cost is equivalent to the Marginal revenue
i.e.
Marginal revenue = Marginal cost
MR = MC
In the case of perfect competition,
P = MC
Price = Marginal cost
For the firms that are price maker, in this the demand is downward and the marginal revenue is below to the demand curve
So
in this,
The price > MR = MC
Therefore this is not a sufficient condition
Hence, the given statement is false
On January 1, 1997, Brian’s stock portfolio is worth $100,000. On September 30, 1997, $5,000 is withdrawn from the portfolio, and immediately after this withdrawal the portfolio has a value of $105,000. Twelve months later, the value of the portfolio is $108,000, and Brian adds $3,000 worth of stock to his portfolio. On December 31, 1998, the portfolio is worth $100,000. What is the two-year time-weighted rate of return for Brian’s stock portfolio?
Answer:
1.93%
Explanation:
Time weighed rate can be calculated by using the formula below
TWR = [(1+HPR1)+(1+HPR2)+(1+HPR3) ...(1+HPRn)
TWR = [(1+HPR1)+(1+HPR2)+(1+HPR3) ...(1+HPRn)HPR = (End value - initial value)/end value
For HPR1:
End value = 110000
Initial value = 100000
(110000-100000)/100000
= 10000/100000
= 0.1
1 + 0.1 = 1.1
For HPR2
End value = 108000
Initial value = 105000
3000/105000
= 0.0286
1 + 0.0286
= 1.0286
For HPR3
End value = 100000
Initial value = 108000 + 3000 that was added to make it 111000
(100000-111000)/111000
= -0.0991
1-0.0991
= 0.9009
TWR = (1.1*1.0286*0.9009)-1
= 0.01933
0.0193 x 100
= 1.93%
The payments you make on your automobile loan are given in terms of dollars. As prices rise you notice you give up fewer goods to make your payments. _____________
Answer:
Explanation:
The scenario in this question happens because the dollar amount you pay for the loan is a nominal value, meaning the face value of when it was issued and not its market value. While the number of goods you give up is a real value. In other words, the goods you give up have a real value which is adjusted for inflation and is measured based on the value of other items. Which is why you notice giving up fewer goods because they are worth more every time.
You have observed that your organization is not getting any incoming messages. What would be the most likely problem
Answer:
Port 25 is not open on the firewall
Explanation:
Ports can be open or closed on a computer for security reasons. Usually this is done to block public access to processes running on the computer for example by a malicious software.
If an organisation notice they are not getting incoming mail it is most likely due to port 25 being closed in the firewall.
Port 25 controls sending of mails. So it will need to be opened to allow mails to be sent.
The following procedure can be used to open port 25.
- Open control panel
- Right click on Inbound rule. Select New Rule
- Select the port option
- Click on TCP and Local Ports
- Select action to be taken (Allow connection if it is secure).
- Select the type of connection. That is Private or Public
- Assign a name and click Finish
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $5.6 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.8 million to build, and the site requires $800,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Answer:
$18.9 million
Explanation:
The computation of the proper cash flow amount to use as the initial investment in fixed assets is shown below:
= Land + building + grading
= $5.3 million + $12.8 million + $800,000
= $18.9 million
We simply added the land, building and grading cost so that the proper cash flow i.e to be used for the initial investment could come
Leonora Whatley is the head of the marketing research department for a cosmetics manufacturer. Whatley delegates as much authority as possible to her fourteen subordinates although she still retains ultimate responsibility. Whatley manages a _____ department.
Answer:
Decentralized
Explanation:
From the above description of Leonora Whatley, it is evident that Whatley manages a decentralized department.
Having delegated authority to her fourteen subordinates and retaining her ultimate responsibility, this means that she has decentralized the department making the department into smaller units.
Decentralization can be defined as the process by which the central activities of an organization are distributed or delegated to low-level group members or subordinates for execution. Decentralization fosters growth and development.
The expected average rate of return for a proposed investment of $5,910,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $17,730,000 over the 20 years is:________ (round to two decimal points).
a. 30.00%
b. 60.00%
c. 1.50%
d. 15.00%
Answer:
Option A, 30.00%, is the correct answer.
Explanation:
The investment amount = $5910000
Useful life = 20 years
Residual value = 0
Expected net income = $17730000
Use the below formula to find the average rate of return by using the given values.
The average rate of return = Average Annual Net Income / Average investment
Now insert all the given values in the formula in order to compute the average rate of return.
[ ( 17730000 / 20 ) / ( 5910000 / 2 ) ] * 100
[ 886500 / 2955000 ] * 100 =30 %
The oversupply of hospitals and in-patient beds in the U.S. produced by the Hill-Burton legislation is the result of: A. The advent of managed care B. Change in the focus of medical education C. Technological advances D. Clinical guidelines E. A and C
Answer:
The oversupply of hospitals and in-patient beds in the U.S. produced by the Hill-Burton legislation is the result of:
E. A and C
(A. The advent of managed care and C. Technological advances).
Explanation:
Affordable Care Act produced a managed care system that aligns financial incentives to better care at lower costs. This has eliminated the need for in-patient admissions. This is because the Affordable Care Act also created Accountable Care Organizations (ACOs) which in turn are focused on boosting preventive efforts in order to attain quality goals. With preventive healthcare, there is reduced need for in-patient admissions to utilize the hospital beds.
Another factor that has reduced in-patient admissions is the prevailing technological advances, especially in the areas of telehealth and telemedicine. These have also drastically reduced the need for in-patients at hospitals, thus freeing more hospital beds as patients can now receive healthcare services from even remote locations.
Select the correct answers from the drop-down menus,
The workplace is busy with many conflicting priorities. When communicating with a coworker face-to-face,
it is important to
When communicating with supervisors, it is recommended to
A good rule for communicating with anyone in the workplace is to
When communicating in writing, it is important to be focused, brief, and
POINT
Answer:
Communication Skills
The workplace is busy with many conflicting priorities. When communicating with a coworker face-to-face, be clear and get to the point.
it is important to maintain eye contact.
When communicating with supervisors, it is recommended to be more formal.
A good rule for communicating with anyone in the workplace is to treat others as you want to be treated by them.
When communicating in writing, it is important to be focused, brief, and factually accurate or correct.
Explanation:
Martin Kissey, a busy executive, does not have time for beating about the bush. Therefore, it is important to communicate without wasting his time. Time is very precious for him. And courtesy demands that you do not waste this precious resource.
Oditexo likes to maintain eye to eye contact with the person she is conversing with because she has learned that it delivers a message about being honest. It shows that she is not hiding a skeleton in her cupboard. When you are dishonest, it is very difficult to maintain eye contact. It shows on your face.
Jane's supervisors may be friendly with her. But, Jane should not take it too seriously and allow informal mannerism to seep into communication with her supervisors. She should maintain a formal decorum. There is always time for everything.
I also understand that you want others to respect you and your time, and recognize that you have got your brief to take care of. Show them the same respect and recognition, while communicating within your workplace.
Conciseness is important in all written communications. Deliver the message succinctly without decorating the facts. Others will appreciate you for doing this. Do not allow verbosity to ruin your message.
Answer:
Be clear and get to the point quickly
Be more formal
Treat people as you want to be treated
Factually accurate
Explanation:
Bond prices are _______ sensitive to changes in yield when the bond is selling at a _______ initial yield to maturity.
Answer: more; lower
Explanation:
The yield to maturity is the annual rate of return for a bond which has been estimated as long as the bind is being held by the investor till it matures.
It should be noted that Bond prices are more sensitive to changes in yield when the bond is selling at a lower initial yield to maturity.
Assume a project has earnings before depreciation and taxes of $15,000, depreciation of $25,000, and that the firm has a 30% tax bracket. What are the after-tax cash flows for the project
Answer: $12,000
Explanation:
The following information can be gotten from the question:
Earnings before depreciation and taxes = $15,000
Less: depreciation = $25,000
The earnings before tax = -$10,000
Less: taxes at 30% = -$3,000
Earnings after tax = -$13,000
Add: depreciation = $25,000
Cash flow = $25,000 - $13,000
= $12,000
Moorcroft Company’s budgeted sales and direct materials purchases are as follows:
April May June
Budgeted Sales $300,000 320,000 370,000
Budgeted D.M. Purchases $45,000 54,000 60,000
Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 30% in the month of
sale, 40% in the month following sale, and 26% in the second month following sale; 4% are
uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on
account are paid 40% in the month following the purchase and 60% in the second month
following the purchase.
Instructions
(a) Prepare a schedule of expected collections from customers for June.
Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Challenge Exercises (For Instructor Use Only)
(b) Prepare a schedule of expected payments for direct materials for June.
(c) Moorcroft’s assistant controller suggested that Moorcroft hire a part time collector to
encourage customers to pay more promptly and to reduce the amount of uncollectible
accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted
that this would cause credit sales to be collected 30% in the month of the sale, 50% in
the month following sale, and 18% in the second month following sale; 2% are
uncollectible.
Prepare a schedule of expected collections from customers for June.
How did these changes impact cash collections? Would it be worth
paying the collector $1,000 per month?
(d) The assistant controller also suggested that the company switch their purchases to 40%
cash and 60% on account to help stretch out their cash payments. There is no
additional interest charge to do this and Moorcroft is still paying their bills on time. There
is no change to the company’s payment pattern.
Prepare a schedule of expected payments for direct materials for June.
How did these changes impact the cash payments for June? Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Challenge Exercises (For Instructor Use Only)
Answer:
a) Month Sales
April $300,000
May $320,000
June $370,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 30% = $66,600
Collection from May's credit sales = $192,000 x 40% = $76,800
Collection from April's credit sales = $180,000 x 26% = $46,800
Total cash collections during June = $338,200
b) Month DM purchases
April $45,000
May $54,000
June $60,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $60,000 x 50% = $30,000
Cash payments for May's purchases = $27,000 x 40% = $10,800
Cash payments for April's purchases = $22,500 x 60% = $13,500
Total cash payments during June = $54,300
c) Month Sales
April $299,000
May $337,000
June $387,000
Schedule of expected collections
For the month of June, 202x
Cash sales during June = $370,000 x 40% = $148,000
Collection from June's credit sales = $222,000 x 30% = $66,600
Collection from May's credit sales = $192,000 x 50% = $96,000
Collection from April's credit sales = $180,000 x 18% = $32,400
Total cash collections during June = $343,000
It would be worth to pay the collector since the 2% reduction in uncollectible accounts is worth much more than the $1,000 that he/she earns.
d) Month DM purchases
April $45,000
May $54,000
June $60,000
Schedule of expected cash payments for direct materials purchases
For the month of June, 202x
Cash purchases during June = $60,000 x 40% = $24,000
Cash payments for May's purchases = $32,400 x 40% = $12,960
Cash payments for April's purchases = $27,000 x 60% = $16,200
Total cash payments during June = $53,160