Alice Shoemaker is the advertising manager for Value Shoe Store

ACC 560 Week 4 Assignment

P5-4A Alice Shoemaker is the advertising manager for Value Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $34,000 in fixed costs to the $270,000 currently spent. In addition, Alice is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $22 per pair of shoes. Management is impressed with Alice's ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety.

Instructions:
a) Compute the current break-even point in units, and compare it to the break-even point in units if Alice’s ideas are used.
b) Compute the margin of safety ratio for current operations and after Alice’s changes are introduced. (Round to nearest full percent)
c) Prepare a CVP income statement for current operations and after Alice’s changes are introduced. Would you make the changes suggested.

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Boutique Ads Co. produces advertising videos

PR 9-4A Boutique Ads Co. produces advertising videos. During the last 6 months of the current fiscal year, Boutique Ads Co. received the following notes:

1. May 9 -- $19,200 -- 45 days -- 9%
2. July 15 -- 11,250 -- 60 days -- 8%
3. Aug 1 -- 43,200 -- 90 days -- 7%
4. Sept 4 -- 20,000 -- 90 days -- 6%
5. Nov 26 -- 13,500 -- 60 days -- 8%
6. Dec 16 -- 21,600 -- 60 days -- 13%

Instructions:
1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number.
2. Journalize the entry to record the dishonor of note #3 on its due date.
3. Journalize the adjusting entry to record the accrued interest on notes 5 and 6 on December 31.
4. Journalize the entries to record the receipt of the amounts due on notes 5 and 6 in January and February

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