A14. (Cost of trade credit) Calculate the cost of skipping the discount and paying at the end of the net period for each of the following credit terms. Calculate the APR and the APY.
a. 5/10, net 50
b. 3/15, net 30
c. 2/10, net 20
Click here for the solution: Calculate the cost of skipping the discount and paying at the end of the net period for each of the following credit terms
Showing posts with label net. Show all posts
Showing posts with label net. Show all posts
Wednesday, April 13, 2016
Tuesday, September 8, 2015
You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets
You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets of a product line of Midge Company, a competitor enterprises. The projected acquisition cost is expected to exceed substantially the current fair value of the identifiable net assets to be acquired, which the competitor has agreed to sell because of its substantial net losses of recent years. The board of directors of Software asks if the excess acquisition costs may appropriately be recognized as goodwill.
Prepare a memorandum to the board of directors in answer to the question
Click here for the solution: You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets
Prepare a memorandum to the board of directors in answer to the question
Click here for the solution: You are the controller of Software Company, a distributor of computer software, which is planning to acquire a portion of the net assets
In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
1. In a business combination, the appropriate accounting for an excess
of current fair values the combinee's identifiable net assets over the
combinor's cost is to: (Points : 1)
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
2. Which of the following is not included in the combinor's cost of a combinee in a business combination? (Points : 1)
3. Slocum Corporation and Merton Company, both publicly owned companies, are planning a merger, with Slocum being the survivor. Which of the following is a requirement of the merger? (Points : 1)
4. On January 31, 2006, the home office of Wall Company collected a trade account receivable of Doris Branch. The accounting for this transaction by Wall Company should include a: (Points : 1)
5. Both a home office and a branch use the periodic inventory system. If at the end of an accounting period the balance of the branch's Home Office ledger account does not agree with the balance of the home office's Investment in Branch account because of a shipment of merchandise in transit from the home office to the branch: (Points : 1)
6. If both the home office and the branch of a business enterprise use the periodic inventory system, the home office's Shipments to Branch ledger account: (Points : 1)
7. The Income: Branch ledger account is maintained in the accounting records of: (Points : 1)
8. Among the journal entries (explanation omitted) in the accounting records of the home office of Price Company was the following:
Office Equipment: Lang Branch 12,500
Investment in Lang Branch 12,500
This journal entry indicates that: (Points : 1)
9. The Home Office ledger account in the accounting records of a branch is best described as: (Points : 1)
10. The following journal entry (explanation omitted) appeared in the accounting records of Marty Corporation's only branch:
Operating Expenses 600,000
Home Office 600,000
The journal entry indicates that: (Points : 1)
Click here for the solution: In a business combination, the appropriate accounting for an excess of current fair values the combinee's identifiable net assets over the combinor's cost is to
Sunday, September 6, 2015
Alciatore Company earned a net income of $150,000 in 2011
P 19-16 Alciatore Company earned a net income of $150,000 in 2011. The weighted-average number of common shares outstanding for 2011 was 40,000. The average stock price for 2011 was $33. Assume an income tax rate of 40%.
Required:
For each of the following independent situations, indicate whether the effect of the security is antidilutive for diluted EPS.
1. 10,000 shares of 7.7% of $100 par convertible, cumulative preferred stock. Each share may be converted into two common shares.
2. 8% convertible 10-year, $500,000 of bonds, issued at face value. The bonds are convertible to 5,000 shares of common stock.
3. Stock options exercisable at $30 per share after January 1, 2013.
4. Warrants for 1,000 common shares with an exercise price of $35 per share.
5. A contingent agreement to issue 5,000 shares of stock to the company president if net income is at least $125,000 in 2012.
Click here for the solution: Alciatore Company earned a net income of $150,000 in 2011
Required:
For each of the following independent situations, indicate whether the effect of the security is antidilutive for diluted EPS.
1. 10,000 shares of 7.7% of $100 par convertible, cumulative preferred stock. Each share may be converted into two common shares.
2. 8% convertible 10-year, $500,000 of bonds, issued at face value. The bonds are convertible to 5,000 shares of common stock.
3. Stock options exercisable at $30 per share after January 1, 2013.
4. Warrants for 1,000 common shares with an exercise price of $35 per share.
5. A contingent agreement to issue 5,000 shares of stock to the company president if net income is at least $125,000 in 2012.
Click here for the solution: Alciatore Company earned a net income of $150,000 in 2011
Friday, August 14, 2015
During its first year of operations, Filippi’s Plumbing Supply Co. had net sales of $4,800,000
EX 9-15 Effect of doubtful accounts on net income
During its first year of operations, Filippi’s Plumbing Supply Co. had net sales of $4,800,000, wrote off $65,000 of accounts as uncollectible using the direct write-off method, and reported net income of $375,000. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1½% of net sales would be uncollectible.
Click here for the solution: During its first year of operations, Filippi’s Plumbing Supply Co. had net sales of $4,800,000
During its first year of operations, Filippi’s Plumbing Supply Co. had net sales of $4,800,000, wrote off $65,000 of accounts as uncollectible using the direct write-off method, and reported net income of $375,000. Determine what the net income would have been if the allowance method had been used, and the company estimated that 1½% of net sales would be uncollectible.
Click here for the solution: During its first year of operations, Filippi’s Plumbing Supply Co. had net sales of $4,800,000
Using the data in Exercise 9-15, assume that during the second year of operations Filippi’s Plumbing Supply Co. had net sales of $5,500,000
EX 9-16 Effect of doubtful accounts on net income
Using the data in Exercise 9-15, assume that during the second year of operations Filippi’s Plumbing Supply Co. had net sales of $5,500,000, wrote off $70,000 of accounts as uncollectible using the direct write-off method, and reported net income of $450,000.
a. Determine what net income would have been in the second year if the allowance method (using 1½% of net sales) had been used in both the first and second years.
b. Determine what the balance of the allowance for doubtful accounts would have been at the end of the second year if the allowance method had been used in both the first and second years.
Click here for the solution: Using the data in Exercise 9-15, assume that during the second year of operations Filippi’s Plumbing Supply Co. had net sales of $5,500,000
Using the data in Exercise 9-15, assume that during the second year of operations Filippi’s Plumbing Supply Co. had net sales of $5,500,000, wrote off $70,000 of accounts as uncollectible using the direct write-off method, and reported net income of $450,000.
a. Determine what net income would have been in the second year if the allowance method (using 1½% of net sales) had been used in both the first and second years.
b. Determine what the balance of the allowance for doubtful accounts would have been at the end of the second year if the allowance method had been used in both the first and second years.
Click here for the solution: Using the data in Exercise 9-15, assume that during the second year of operations Filippi’s Plumbing Supply Co. had net sales of $5,500,000
Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40
Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40. If the firm chooses to pay on time but does not take the discount, assuming a 365 day-year, what is the
a. nominal interest cost for passing up (not taking) the credit
b. effective annual percentage cost of its non-free trade credit
Click here for the solution: Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40
a. nominal interest cost for passing up (not taking) the credit
b. effective annual percentage cost of its non-free trade credit
Click here for the solution: Bumper Enterprises purchases $4,562,500 in goods per year from its sole supplier on terms of 1.5/15, net 40
Sunday, July 19, 2015
The net changes in the balance sheet accounts of Barney Corporation for the year 2010 are shown below
The net changes in the balance sheet accounts of Barney Corporation for the year 2010 are shown below.
Account Debit Credit
Cash $ 82,000
Short-term investments $121,000
Accounts receivable 83,200
Allowance for doubtful accounts 13,300
Inventory 74,200
Prepaid expenses 17,800
Investment in subsidiary (equity method) 20,000
Plant and equipment 210,000
Accumulated depreciation 130,000
Accounts payable 80,700
Accrued liabilities 21,500
Deferred tax liability 15,500
8% serial bonds 80,000
Common stock, $10 par 90,000
Additional paid-in capital 150,000
Retained earnings—Appropriation for
bonded indebtedness 60,000
Retained earnings—Unappropriated 38,000
$643,600 $643,600
An analysis of the Retained Earnings—Unappropriated account follows:
Retained earnings unappropriated, December 31, 2009 $1,300,000
Add: Net income 327,000
Transfer from appropriation for bonded indebtedness 60,000
Total $1,687,000
Deduct: Cash dividends $185,000
Stock dividend 240,000 425,000
Retained earnings unappropriated, December 31, 2010 $1,262,000
1. On January 2, 2010 short-term investments (classified as available-for-sale) costing $121,000 were sold for $155,000.
2. The company paid a cash dividend on February 1, 2010.
3. Accounts receivable of $16,200 and $19,400 were considered uncollectible and written off in 2010 and 2009, respectively.
4. Major repairs of $33,000 to the equipment were debited to the Accumulated Depreciation account during the year. No assets were retired during 2010.
5. The wholly owned subsidiary reported a net loss for the year of $20,000. The loss was recorded by the parent.
6. At January 1, 2010, the cash balance was $166,000.
Instructions
Prepare a statement of cash flows (indirect method) for the year ended December 31, 2010. Barney Corporation has no securities which are classified as cash equivalents.
Click here for the solution: The net changes in the balance sheet accounts of Barney Corporation for the year 2010 are shown below
Account Debit Credit
Cash $ 82,000
Short-term investments $121,000
Accounts receivable 83,200
Allowance for doubtful accounts 13,300
Inventory 74,200
Prepaid expenses 17,800
Investment in subsidiary (equity method) 20,000
Plant and equipment 210,000
Accumulated depreciation 130,000
Accounts payable 80,700
Accrued liabilities 21,500
Deferred tax liability 15,500
8% serial bonds 80,000
Common stock, $10 par 90,000
Additional paid-in capital 150,000
Retained earnings—Appropriation for
bonded indebtedness 60,000
Retained earnings—Unappropriated 38,000
$643,600 $643,600
An analysis of the Retained Earnings—Unappropriated account follows:
Retained earnings unappropriated, December 31, 2009 $1,300,000
Add: Net income 327,000
Transfer from appropriation for bonded indebtedness 60,000
Total $1,687,000
Deduct: Cash dividends $185,000
Stock dividend 240,000 425,000
Retained earnings unappropriated, December 31, 2010 $1,262,000
1. On January 2, 2010 short-term investments (classified as available-for-sale) costing $121,000 were sold for $155,000.
2. The company paid a cash dividend on February 1, 2010.
3. Accounts receivable of $16,200 and $19,400 were considered uncollectible and written off in 2010 and 2009, respectively.
4. Major repairs of $33,000 to the equipment were debited to the Accumulated Depreciation account during the year. No assets were retired during 2010.
5. The wholly owned subsidiary reported a net loss for the year of $20,000. The loss was recorded by the parent.
6. At January 1, 2010, the cash balance was $166,000.
Instructions
Prepare a statement of cash flows (indirect method) for the year ended December 31, 2010. Barney Corporation has no securities which are classified as cash equivalents.
Click here for the solution: The net changes in the balance sheet accounts of Barney Corporation for the year 2010 are shown below
During the year, Xero, Inc., experienced an increase in net fixed assets of $300,000 and had depreciation of $200,000
During the year, Xero, Inc., experienced an increase in net fixed assets of $300,000 and had depreciation of $200,000. It also experienced an increase in current assets of $150,000 and an increase in accounts payable and accruals of $75,000. If operating cash flow (OCF) for the year was $700,000, calculate the firm’s free cash flow (FCF) for the year.
Click here for the solution: During the year, Xero, Inc., experienced an increase in net fixed assets of $300,000 and had depreciation of $200,000
Click here for the solution: During the year, Xero, Inc., experienced an increase in net fixed assets of $300,000 and had depreciation of $200,000
Monday, July 6, 2015
Palmer, Inc. has a net operating loss carryforward of $100,000
Palmer, Inc. has a net operating loss carryforward of $100,000. If Palmer continues its business with no changes, it will have $50,000 of taxable income (before the NOL) in both 2013 and 2014. If Palmer decides to invest in a new product line instead, it expects to have taxable income of $70,000 in 2013 and 2014. What marginal tax rate does the new product line face in 2013 and in 2014?
Click here for the solution: Palmer, Inc. has a net operating loss carryforward of $100,000
Click here for the solution: Palmer, Inc. has a net operating loss carryforward of $100,000
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