Reference no: EM131157834
1) A company reported the following information for a financial year:
Profit from ordinary activities before income tax expense 72 000
Income tax expense 20 000
Depreciation expense 8 000
Issue of shares 40 000
Loan made to another company 6 000
Increase in accounts receivable 1 000
Decrease in inventories 2 000
Cash received from loans receivable 4 000
Dividends paid 2 000
What is the net cash inflow (outflow) from investing activities?
2)The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015:
Quest
ZIGBY MANUFACTURING
Estimated Balance Sheet
31-Mar-15
Assets
Cash $ 54,000
Accounts receivable 354,375
Raw materials inventory 100,495
Finished goods inventory 333,000
Total current assets 841,870
Equipment, gross 628,000
Accumulated depreciation (164,000)
Equipment, net 464,000
Total assets $ 1,305,870
Liabilities and Equity
Accounts payable 212,195
Short-term notes payable 26,000
Total current liabilities $ 238,195
Long-term note payable 514,000
Total liabilities 752,195
Common stock 349,000
Retained earnings 204,675
Total stockholders' equity 553,675
Total liabilities and equity $ 1,305,870
To prepare a master budget for April, May, and June of 2015, management gathers the following information.
a.Sales for March total 22,500 units. Forecasted sales in units are as follows: April, 22,500; May, 19,500; June, 21,700; July, 22,500. Sales of 254,000 units are forecasted for the entire year. The product’s selling price is $22.50 per unit and its total product cost is $18.50 per unit.
b.Company policy calls for a given month’s ending raw materials inventory to equal 50% of the next month’s materials requirements. The March 31 raw materials inventory is 5,025 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,400 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.
c.Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s expected unit sales. The March 31 finished goods inventory is 18,000 units, which complies with the policy.
d.Each finished unit requires 0.50 hours of direct labor at a rate of $10 per hour.
e.Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,790 per month is treated as fixed factory overhead.
f.Sales representatives’ commissions are 6% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $4,400.
g.Monthly general and administrative expenses include $26,000 administrative salaries and 0.5% monthly interest on the long-term note payable.
h.The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale).
i.All raw materials purchases are on credit, and no payables arise from any other transactions. One month’s raw materials purchases are fully paid in the next month.
j.The minimum ending cash balance for all months is $54,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
k.Dividends of $24,000 are to be declared and paid in May.
l.No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter.
m.Equipment purchases of $144,000 are budgeted for the last day of June
3)Blair is a retailer of assorted baby products. The sales forecast for the coming months is:
Revenues
April (actual) $ 176,000
May (actual) $ 206,000
June $ 219,000
July $ 243,000
August $ 234,000
All sales are credit sales. The cash collection pattern is 20% in the month of sale, 65% in the month following the sale, and the remainder in the second month following the sale. Accounts receivable on June 1 were $191,200.
a.Prepare a cash receipts schedule for the period June through August (by month).
b.What will the Accounts Receivable balance be on August 31?
4) XYZ Company's comparative balance sheet and income statement for the most recent year are shown below:
XYZ Company
Comparative Balance Sheet
As of December 31
Ending Beginning
Assets Balance Balance
Cash 1,400,000 1,000,000
Accounts Receivable 2,100,000 1,500,000
Inventory 5,000,000 4,300,000
Prepaid Expenses 200,000 600,000
Plant and Equipment 19,000,000 14,000,000
Less: Accumulated Depreciation (6,500,000) (5,400,000)
Long-term Investments 7,000,000 9,000,000
Total Assets 28,200,000 25,000,000
Liabilities and Stockholders' Equity
Accounts Payable 2,600,000 2,500,000
Accrued Liabilities 1,000,000 1,200,000
Taxes Payable 4,900,000 4,900,000
Mortgage Payable 5,000,000 4,000,000
Common Stock 8,000,000 7,000,000
Retained Earnings 6,700,000 5,400,000
Total Liabilities and Stockholders' Equity 28,200,000 25,000,000
XYZ Company
Income Statement For the year ending,
December 31, 20xx
Sales 23,000,000
Less: Cost of Goods Sold (12,000,000)
Gross Margin 11,000,000
Less: Operating Expenses (7,000,000)
Operating Income 4,000,000
Gain on Sale of Long-term Investments 500,000
Income Before Taxes 4,500,000
Less: Income Taxes (1,400,000)
Net Income 3,100,000
Notes: Dividends of P18 Million were declared and paid during the year. The gain on sale of long-term investments was from the sale of investments for P25 Million in cash. These investments had an original cost of P20 Million. There were no retirements or disposals of plant or equipment during the year.
Required: 1. Prepare a cash flow statement using the indirect method of computing cash flow from operations.
5 ) ariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches
Gladys Company provided the following information:
| Standard variable overhead rate (SVOR) per direct labor hour |
$3.30 |
| Actual variable overhead rate (AVOR) per direct labor hour |
$3.63 |
| Actual direct labor hours worked (AH) |
56,500 |
| Actual production in units |
10,000 |
| Standard hours (SH) allowed for actual units produced |
54,000 |
Required:
1. Using the columnar approach, calculate the variable overhead spending and efficiency variances.
| Spending |
$ |
Favorable |
| Efficiency |
$ |
Favorable |
2. Using the formula approach, calculate the variable overhead spending variance.
3. Using the formula approach, calculate the variable overhead efficiency variance.
4. Calculate the total variable overhead variance.