Estimates that total cash flows to be generated by selling

Assignment Help Cost Accounting
Reference no: EM13499106

Balance Sheet as of December 3

 

Assets                                                                                          2011                                    2010

 

Cash                                                                          $                    785,000     $                     675,000

Short-term  investments in cash equivalents                      $                    75,000      $                       15,000

Accounts Rec.                                                              $                    455,000      $                     525,000

Allowance for Bad Debt                                                   $                     (25,000)    $                    (105,000)

Inventory                                                                     $                     975,000     $                     775,000

Current Assets                                                            $                  2,265,000       $                   1,885,000

 

Equipment                                                                       $                  5,000,000       $                  5,000,000

Accum. Depreciation                                                         $                 (2,000,000)    $                 (1,500,000)

LT Notes Receivable                                                         $                     285,000     $                           -

Land                                                                              $                   1,450,000     $                  1,450,000  

Non-Current Assets                                                            $                  4,735,000      $                  4,950,000

 

Total Assets                                                                         $                7,000,000       $                6,835,000  

 

Liabilities

 

Accounts Payable

$                    450,000

$                    570,000

Wages Payable

$                     150,000

$                     185,000

Dividends Payable                                                             $                     155,000     $                     135,000

 

Current Liabilities

$                     755,000

$                     890,000

 

LT Notes Payable

 

 

$                  1,250,000

 

$                  1,250,000

 

Total Li

 

abilities

 

$                  2,005,000

 

$                  2,140,000

 

Stockholders Equity

Contributed Capital

 

 

 

$                  3,000,000

 

 

$                  3,000,000

Retained Earnings                                   $                   1,995,000       $                   1,695,000  

 

Total Liabilities and Equity                         $               7,000,000       $               6,835,000                                                                                                  2

 

Prior Year's income statement account balances

 

                                                          2011                   2010

 

Sales, net                                          $2,435,000             $2,500,000                                         

 

COGS                                               $   850,000             $780,000

 

Wages Expense                                  $   565,000             $785,000

 

Interest Income                                  $  52,000                $56,000

 

Interest Expense                                 $ 56,250                $56,250

 

Bad Debt Expense                               $ 60,750                 $45,000

 

Depreciation Expense                           $ 500,000               $500,000

 

 

2012 information (the following events occurred during 2012)

 

1.     The company sells '/2  of its land for $2,000,000.

2.     The company collected $425,000 from customers related to last year's credit sales.

3.     The company  paid the outstanding  accounts payable balance.

4.      The company  purchased additional inventory at a cost of $1,000,000 with terms 2/10,  n/30. Subsequently,  the company paid half within the discount period and the remainder was outstanding  as the end of the year (12/31/2012). The company accounts for discounts using the gross method.

5.     Customers  purchased your products throughout the year. Total sales for the year were $2,950,000. This cost of this inventory,  was $1,500,000 and you use a perpetual inventory system.

i.   Customers  paid you 45% in cash and the remainder was on account.

ii.  The credit sales were sold with term 2/10/, n/30 and payment was received within the discount period for

50 percent of these credit sales. The remainder was outstanding as of the end of the year. The company accounts for discounts using the gross method.

6.     Wage expenses for the year, thru Dec. 15th were $550,000. This amount  was paid in full as was the outstanding Wages

Payable balance from the beginning of the year.

7.      Wages earned between Dec. l5t and Dec 31st were $75,000. The company wifi pay this amount on Jan 7t,h ,2013.

8.     A customer that previously bought your product on account has filed for bankruptcy. He owed you $10,000. You expect to collect $0.

9.     To calculate depreciation  expense for the year, assume that the equipment was purchased 5 years ago (i.e., this is the fifth year that your company  has used the equipment).  Your company uses straight-line depreciation.  Calculate and record Depreciation Expense. (hint: you can figure out the amount even without the salvage value).

10.  The company purchased a new manufacturing plant (property) for $650,000 cash. Management estimates the salvage value to be $20,000 and that the plant will have a useful life of 10 years. During acquisition and disposition years the company takes 1/2 year's depreciation.

11.  Outstanding dividends payable from the beginning of the year were paid with cash.

12.  A customer pays you $1,250,000 for work that you will start in Jan '13.

13.  The long-term Notes Receivable of $285,000 pays 8 percent interest annually on 12/31.

14.  You declare dividends of$100,000 to be paid next year.

15.  You pay the interest owed for the long-term note payable (hint: you can figure out the amount).

16.  On April 1, 2012, you contract with Built In a Hurry, Inc. to have new headquarters  constructed  (a building for your own use, not for resale). Construction begins on May 1, 2012 and it is estimated that the project would be completed on April 1,

2013.  The building will be constructed on land you already own. The estimated cost of construction  of the new building is

$4,500,000 and Built In A Hurry, Inc. requires payments on the following dates:

 


May 1, 2012
August 1, 2012

November 1, 2012Ajjril 1, 2013

Date Payment Amount
$450,000
800,000
1,500,000
1,750,000

In order to finance the project, on April 1, 2012, you sign a 2-year construction loan for $2,000,000 at 12% interest paid annu3lly on April 1S The loan is issued at par (no discount or premium). (hint: this is an interest capitalization problem).

17. During 2012, you made $100,000 of installment  sales, which are appropriately accounted for using the installment sales method. The cost of the installment sales was $75,000. During 2012, you collected $20,000 related to these installment sales (this is in addition to amount collected from customers indicated in items 2 and 4 from above).

18. Your company signs a 3-year, $4,000,000 contract with a customer to build a supper widget! The CFO of the company estimates that the total costs of building the widget will be $3,200,000 and determines that the percentage of completion method is appropriate  for this transaction.  Details of the contract for 2012 are provided below.

 

2012

Costs incurred during the year

$800,000

Customer Billings during the year

$750,000

Payments from customer

$500,000

Estimited costs to complete

$2,400,000

 

19.At the end of the year, the executive team is concerned that the plant purchased early in the year for $650,000 might be impaired. At the time the plant was purchased management  thought that the products produced in the plant would be in high demand. Subsequently it was learned that the products themselves cause bizarre mood swings and result in uncontrollable laughter, which has severely decreased the demand for the products. The executive team now estimates that total cash flows to be generated by selling the products manufactured in the plant(not discounted to present value) are $350,000 and the fair value of the plant is $200,000.

Reference no: EM13499106

Questions Cloud

Evaluate the work done in joules by the reaction : Calculate the work done in Joules by the reaction 2 Na + 2 H2O>>> 2NaOH + H2 when 0.23g of Na reacts with excess water in a container to form hydrogen gas at 300. K and 1.0 atm.
How much work does the force of gravity do on the ball : Your car has stalled and you need to push it. You notice as the car gets going that you need less and less force to keep it going. How much work does the force of gravity do on the ball
The water and solids are drawn from the bottom of the tank : A 100,000 gal tank is 75% full of liquid containing 60,000 lb of solid in suspension. Water flows into the tank at a rate of 20,000 gal/hr. Water and solids are drawn from the bottom of the tank at a rate of 14,000 gal/hr.
Determine how much work do the students do on the car : Together, two students exert a force of 640 N in pushing a car a distance of 30 m. How much work do the students do on the car
Estimates that total cash flows to be generated by selling : Customers  purchased your products throughout the year. Total sales for the year were $2,950,000. This cost of this inventory,  was $1,500,000 and you use a perpetual inventory system.
The payroll manager for your employer : You are the Payroll Manager for your employer. Your payroll clerk has submitted the worksheet displayed here. All employees earn their regular pay rate times the hours worked plus an overtime bonus of 50% of the hours worked in excess of 40 hou..
Case study of incident : Case study of incident where arc flash is an hazard cause problems, damage in NON oil gas industry what is learnt from the incident,
Explain four numbers are estimates of the mass of an object : The following four numbers are estimates of the mass of an object: 5.20 g, 5.66 g, 6.10 g, and 5.35 g. What is the standard deviation to 2 significant figures
What is its velocity at the end of this time interval : A bas traveling at 25.0 m/s applies the brakes and decelerates uniformly at a rate of 1.2 m/s ? What is its velocity at the end of this time interval

Reviews

Write a Review

 

Cost Accounting Questions & Answers

  Comprehensive variance analysis sol electronics a

comprehensive variance analysis. sol electronics a fast-growing electronic device producer uses a standard costing

  Prepare a statement of cash flows on the direct method

Prepare  a Statement of Cash Flows on the direct method (do not include the  indirect method of calculating operating cash flows). The Statement of Cash Flows should  automatically change when any assumption is changed.

  Analyzing activity in inventory accounts

Analyzing Activity in Inventory Accounts and select data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:

  Which inventory cost-flow method is most appropriate

Place yourself in the position of an upper-level manager in the corporate office of The Home Depot.

  What is the investing cash flow

What are the differences in the cash flow concepts and procedures between the direct and indirect methods and what is the operational cash flow, what is the investing cash flow?

  Determined overhead rate for the year

actual manufacturing overhead was $181,500. The pre - determined overhead rate for the year must have been

  Testing and evaluation of internal control

Why is a code of conduct important? What should it contain and in the long run, many agencies will adopt an automated tool to assist in the documentation, testing and evaluation of internal control. Why is that?

  Compute employers payroll taxes

Recording the deposit of social security, Medicare, and income taxed - Compute employers payroll taxes

  Should the costs be considered variable or fixed

Do you agree with the controller's assumptions or do you feel that the plant manager has some genuine points? Should the costs be considered variable or fixed? Finally, how would you respond to the plant manager if you were the controller? Please ..

  Youngsborough products a supplier to the youngsborough

youngsborough products a supplier to the ... youngsborough products a supplier to the automotive industry had seen its

  Is love bugs profit performance better or worse

Love Bug Used Auto Sales asked for your help in comparing the company's profit performance and financial position with the average for the auto sales industry. The proprietor has given you the company's income statement and balance sheet as well a..

  Lemmon cos 31st march inventory of raw materials is 150000

lemmon co.s 31st march inventory of raw materials is 150000. raw materials buys in april are 410000 and factory payroll

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd