Chapter 28, Problem 1MC

We really need to get this new material – handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short term loan down at Metro bank”. This Statement by Beth Davies –Lowry president of Global Electronics Company, concluded a meeting she had called with the firm ‘s top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Maria Wilcox, Global Electronics general manager of marketing has recently completed a sales forecast. She believes the company’s sales during the first quarter of 2021 will increase by 10% each month over the previous month s’ sales. Than Wilcox expects sales to remain constant for several months. Global ‘s projected balance sheet as of Dec 31 2020 is as follow: Cash    70,000 A/c receivable                                      540,000 Marketable…

Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan.  Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank.     Costs Product Cost / Period Cost 1. Depreciation on salespersons’ cars.   2. Rent on equipment used in the factory.   3. Lubricants used for machine maintenance.   4. Salaries of personnel who work in the finished goods warehouse.   5. Soap and paper towels used by factory workers at the end of a shift.   6. Factory supervisors’ salaries.   7. Heat, water, and power consumed in the factory.   8. Materials used for boxing products for shipment overseas. (Units are…

Gregg’s Shipping Supplies Ltd (GSSL) trades in the buying and selling of ship spares and has several branches within the Caribbean. Recently the company has seen a rapid increase in demand of its products across all branches and is therefore in need of additional financing to adequately boost its supply inventory. The corporate banking head of Bankers Choice Bank is requesting a full set of financial statements to ensure that granting the loan to GSSL would be financially feasible during a period when many businesses are facing financial challenges. The company financial year ends on June 30 each year and you have been tasked with the responsibility to prepare the financial information for the St. Kitts branch. 1. Prepare the Adjusted Trial balance at June 30, 2022.

Gregg’s Shipping Supplies Ltd (GSSL) trades in the buying and selling of ship spares and has several branches within the Caribbean. Recently the company has seen a rapid increase in demand of its products across all branches and is therefore in need of additional financing to adequately boost its supply inventory. The corporate banking head of Bankers Choice Bank is requesting a full set of financial statements to ensure that granting the loan to GSSL would be financially feasible during a period when many businesses are facing financial challenges. The company financial year ends on June 30 each year and you have been tasked with the responsibility to prepare the financial information for the branch that is linked to your first name initial. Trinidad Branch Required:a) Prepare the necessary adjusting journal entries on June 30, 2022 b) Prepare the Adjusted Trial balance at June 30, 2022. c) Prepare the company’s multiple-step income statement for the period ending June 30, 2022 d)…

Suppose you are the marketing manager of the credit card department of a financial institution. After examining current market conditions, the objective is to support the company’s growth through a market penetration strategy. How would you apply this strategy to increase the profitability of the credit card?

Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 8 00-45-49 Costs Product Cost / Period Cost 1. Depreciation on salespersons' cars. 2. Rent on equipment used in the factory. 3 lubricants used for machine maintenance Salaries of personnel who work in the finished goods warehouse 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors' salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9. Advertising…

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase. Required What are Harriet’s ethical responsibilities, if any, with respect to the information she has learned through her duties as an accountant for New World Pharmaceuticals? What are the implications of her planned purchase of New World shares?

Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed.   Sales $ 660,000 Cost of merchandise sold 462,000 Contribution margin 198,000 Operating costs 89,400 Operating profit $ 108,600   Required: 1-a. What is Harold’s margin of safety (MOS) in dollars? (Do not round intermediate calculations.) 1-b. What is the margin of safety (MOS)…

Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed. Sales Cost of merchandise sold Contribution margin Operating costs Operating profit. Required: 1-a. What is Harold's margin of safety (MOS) in dollars? (Do not round intermediate calculations.) 1-b. What is the margin of safety (MOS) ratio? (Input your answer as a percentage rounded to 2 decimal…