ACC 206 Complete Class Week 1 – 5 All Assignments – Exercise Problems and  Discussion Questions – A+ Graded Course Material - Ashford - *Latest*

Week 1 Assignment Chapter 1 Problems

Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

Ch 1 Critical Thinking Question 5:

Answer the following questions: Why are noncash transactions, such as the exchange of common stock for a building, included on a statement of cash flows? How are these noncash transactions disclosed?

Chapter 1 Exercise 1:
1. Classification of activities Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity.
a. ________ Received $80,000 from the sale of land.
b. ________ Received $3,200 from cash sales.
c. ________ Paid a $5,000 dividend.
d. ________ Purchased $8,800 of merchandise for cash.
e. ________ Received $100,000 from the issuance of common stock.
f. ________ Paid $1,200 of interest on a note payable.
g. ________ Acquired a new laser printer by paying $650.
h. ________ Acquired a $400,000 building by signing a $400,000 mortgage note.

Chapter 1 Exercise 4:
4. Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow from operating activities.
b. Depreciation expense is added back to net income when the indirect method is used.
c. One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported.
d. The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed.
e. The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement preparation is used.

Chapter 1 Exercise 6:
6. Equipment transaction and cash flow reporting

Dec. 31, 19X4
Dec. 31, 19X3
Land
$94,000
$94,000
Equipment
652,000
527,000
Less: Accumulated depreciation
-316,000
-341,000

Chapter 1 Problem 3:

3. Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accounts:
19X5
19X4
Increase / Decrease)
Current assets
Cash
$55,400
$35,200
$20,200
Accounts receivable (net)
83,800
88,000
-4,200
Inventory
243,400
233,800
9,600
Prepaid expenses
25,400
24,200
1,200
Current liabilities
Accounts payable
$123,600
$140,600
($17,000)
Taxes payable
43,600
49,200
-5,600
Interest payable
9,000
6,400
2,600
Accrued liabilities
38,800
60,400
-21,600
Note payable
44,000

44,000
The accounts payable were for the purchase of merchandise. Prepaid expenses and accrued liabilities related to the firm's selling and administrative expenses. The company's condensed income statement follows.

SIGN GRAPHICS, INC.
Income Statement
For the Year Ended December 31, 19X5
Sales
$713,800
Less:
Cost of goods sold
323,000
= Gross profit
$390,800
Less:
Selling & administrative expenses
$186,000
Depreciation expense
17,000
Interest expense
27,000
Total operating expenses:
230,000
$160,800
Add:
Gain on sale of land
21,800
Income before taxes Income taxes
$182,600
36,800
Net income
$145,800
Other data:
1. Long-term investments were purchased for cash at a cost of $74,600.
2. Cash proceeds from the sale of land totaled $76,200.
3. Store equipment of $44,000 was purchased by signing a short-term note payable. Also, a $150,000 telecommunications system was acquired by issuing 3,000 shares of preferred stock.
4. A long-term note of $49,400 was repaid.
5. Twenty thousand shares of common stock were issued at $5.19 per share.
6. The company paid cash dividends amounting to $128,600.

Week 1 Discussion Questions

Cash Flows Information

What information does the cash flow statement provide that you cannot see in the other financial statements (income statement, balance sheet, owner’s equity)? What elements of the cash flow statement do you think are most important for company management to monitor and why? Is this different for investors?

Apple’s Cash Flow

Go to http://finance.yahoo.com. Enter in “AAPL” and click on the “get quote” button, and it will bring up information on Apple. On the left hand side you’ll see a section on Financials. Within that section, click on the cash flow. Review the cash flow statement for Apple. How would you summarize Apple’s cash flow position and what does this statement tell you about where the money is coming from and where it’s going? What would you suggest Apple’s do to improve its cash position and why?

Week 2 Assignment Chapter 2 and 3 Problems

Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

Chapter 2 Exercise 1
1. Issuance of stock
Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases:
a. Jackson Corporation has common stock with a par value of $1 per share.
b. Royal Corporation has no-par common with a stated value of $5 per share.
c. French Corporation has no-par common; no stated value has been assigned.

Chapter 2 Exercise 3
3. Analysis of stockholders' equity
Star Corporation issued both common and preferred stock during 19X6. The stockholders' equity sections of the company's balance sheets at the end of 19X6 and 19X5 follow.
19X6
19X5

Preferred stock, $100 par value, 10%
$580,000
$500,000
Common stock, $10 par value
2,350,000
1,750,000
Paid-in capital in excess of par value
Preferred
24,000

Chapter 2 Problem 1

1. Bond computations: Straight-line amortization
Southlake Corporation issued $900,000 of 8% bonds on March 1, 19X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow. Case A—The bonds are issued at 100. Case B—The bonds are issued at 96. Case C—The bonds are issued at 105.
Southlake uses the straight-line method of amortization.
Instructions:
Complete the following table:
Case A
Case B
Case C
a. Cash inflow on the issuance date
_______
_______
_______
b. Total cash outflow through maturity
_______
_______
_______
c. Total borrowing cost over the life of the bond issue
_______
_______
_______
d. Interest expense for the year ended December 31, 19X1
_______
_______
_______
e. Amortization for the year ended December 31, 19X1
_______
_______
_______

f. Unamortized premium as of December 31, 19X1
_______
_______
_______
g. Unamortized discount as of December 31, 19X1
_______
_______
_______
h. Bond carrying value as of December 31, 19X1
_______
_______
_______
Chapter 3 Exercise 1
1. Product costs and period costs
The costs that follow were extracted from the accounting records of several different manufacturers:
1. Weekly wages of an equipment maintenance worker
2. Marketing costs of a soft drink bottler
3. Cost of sheet metal in a Honda automobile
4. Cost of president's subscription to Fortune magazine
5. Monthly operating costs of pollution control equipment used in a steel mill
6. Weekly wages of a seamstress employed by a jeans maker
7. Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams
a. Determine which of these costs are product costs and which are period costs.
b. For the product costs only, determine those that are easily traced to the finished product and those that are not.
Chapter 3 Exercise 2
2. Definitions of manufacturing concepts Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:
Materials and supplies used
Brass $75,000
Repair parts 16,000
Machine lubricants 9,000
Wages and salaries Machine operators 128,000
Production supervisors 64,000
Maintenance personnel 41,000
Other factory overhead Variable 35,000
Fixed 46,000
Sales commissions 20,000

Production and sales totaled 20,000 rolls and 17,000 rolls, respectively There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production.

Week 2 Discussion Questions

Stock Features

What is callable preferred stock? Why do corporations issue such stock? Given the different features that are associated with stock (callable, cumulative, preferred, etc.), what type of stock would you want to buy personally and why?

Role of Management Accounting

Review the roles of management accounting within a company. What is the most important role of management accounting? How is that different than financial accounting?

Week 3 Assignment Chapter 4 and 5 Problems

Please complete the following 7 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

Chapter 4 Exercise 3

3. Cost flows and overhead application

Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost. Data pertaining to recent operations follow.

Compute the total cost of the work in process inventory on January 31. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job completion.

Chapter 4 Exercise 7

7. Overhead application: Working backward

The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The following divisional information is presented for your review:

Chapter 4 Problem 2

2. Computations using a job order system

General Corporation employs a job order cost system. On May 1 the following balances were extracted from the general ledger;

Work in process   $ 35,200

Finished goods   86,900

Cost of goods sold   128,700

Chapter 5 Exercise 1

1. High-low method
The following cost data pertain to 19X6 operations of Heritage Products:

The company uses the high-low method to analyze costs.

Determine the variable cost per order shipped. Determine the fixed shipping costs per quarter. If present cost behavior patterns continue, determine total shipping costs for 19X7 if activity amounts to 570 orders.

Chapter 5 Exercise 2
The treasurer anticipates the following costs for the event, which will be held at the Regency Hotel: 
Room rental   $300 
Dinner cost (per person)   25 
Chartered buses   500 
Favors and souvenirs (per person)   5 
Band   900

Chapter 5 Exercise 3

3. Break-even and other CVP relationships

Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year.

How many patient days does the hospital need to break even? What level of revenue is needed to earn a target income of $540,000? If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?

Chapter 5 Problem 6

6. Direct and absorption costing

The information that follows pertains to Consumer Products for the year ended December 31, 19X6.

Week 3 Discussion Questions

Issues in Costing

Describe three issues/problems that a company could encounter when trying to determine the actual cost of a good or service to be used in the cost of goods sold. For each of your issues, provide an example of a company or industry where these issues could be present.

CVP and the Airline Industry

We’ve all experienced (or heard about) the challenges that the airlines have been facing. Read the Zacks Investment Research article, “Airline Industry Stock Outlook – August 2012” Identify three factors that are affecting airline company’s ability to break even. For each of your factors, discuss how these have an impact on the breakeven (contribution margin, fixed costs, variable costs, a combination, etc.), and what happens if these factors increase or decrease.

Week 4 Assignment Chapter 6 and 7 Problems

Please complete the following 8 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

Chapter 6 Exercise 2

2. Schedule of cash collections
Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the current year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern: Collected in the month of sale 60%

Chapter 6 Exercise 4

4. Production and cash-outlay computations

RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.

Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices that account for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company to a 2% cash discount.

Determine the number of units of product K to be manufactured in May. Compute the May cash outlay for purchases of raw material A.  

Chapter 6 Exercise 5

5. Abbreviated cash budget; financing emphasis
An abbreviated cash budget for Big Chuck Enterprises follows.

Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available (and retired) in $1,000 multiples at a 12% interest rate. Assume that borrowings take place at the beginning of the month; retirements, in contrast, occur at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid.

Find the unknowns in Big Chuck's abbreviated cash budget. Determine the outstanding loan balance as of September 30, after any repayments have been made.

Chapter 6 Problem 3
3. Comprehensive budgeting

The balance sheet of Watson Company as of December 31, 19X1, follows.

WATSON COMPANY

Balance Sheet

December 31, 19X1

Chapter 7 Exercise 3

3. Variances for direct materials and direct labor

Banner Company manufactures flags of various countries. Each flag has a standard of eight square feet of fabric and three hours of direct labor time. Information about recent production activity follows.

Compute the materials price variance and the materials quantity variance. Compute the labor rate variance and the labor efficiency variance.

Chapter 7 Exercise 5

5. Overhead variances

Nova Manufacturing applies factory overhead to products on the basis of direct labor hours. At the beginning of the current year, the company's accountant made the following estimates for the forthcoming period:

Estimated variable overhead: $500,000 Estimated fixed overhead: $400,000 Estimated direct labor hours: 40,000

It is now 12 months later. Actual total overhead incurred in the manufacture of 7,900 units amounted to $895,100. Actual labor hours totaled 39,800. Assuming a direct labor standard of five hours per finished unit, calculate the following:

Variable overhead efficiency variance Fixed overhead volume variance Overhead spending variance 

Chapter 7 Problem 1

1. P26-A1 Basic flexible budgeting (L.O. 2)
Centron, Inc., has the following budgeted production costs:

Chapter 7 Problem 5

5. P26-B3 Straightforward variance analysis (L.O. 5)

Week 4 Discussion Questions

Issues in Standard Costs and Budgeting

Review the Standard costs: wake up and smell the coffee.article. When evaluating performance, many organizations compare current results with the actual results of previous accounting periods. Is an organization that follows this approach likely to encounter any problems? Explain.

Flexible Budgets

Flexible budgets provide different information than static budgets. Discuss some of these differences. Is a flexible budget always better? Are there times when you’d recommend using a static budget over a flexible budget?

Week 5 Assignment Chapter 8 Problems

Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

Chapter 8 Exercise 1:

1. Basic present value calculations

Calculate the present value of the following cash flows, rounding to the nearest dollar:

A single cash inflow of $12,000 in five years, discounted at a 12% rate of return. An annual receipt of $16,000 over the next 12 years, discounted at a 14% rate of return. A single receipt of $15,000 at the end of Year 1 followed by a single receipt of $10,000 at the end of Year 3. The company has a 10% rate of return. An annual receipt of $8,000 for three years followed by a single receipt of $10,000 at the end of Year 4. The company has a 16% rate of return.

Chapter 8 Exercise 4:

4. Cash flow calculationsand net present value

On January 2, 19X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 19X1 and 19X2; the dividend was raised to $3.10 per share in 19X3. On December 31, 19X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments.

Prepare a chronological list of the investment's cash flows. Note: Greene is entitled to the 19X3 dividend. Compute the investment's net present value, rounding calculations to the nearest dollar. Given the results of part (b), should Greene have acquired the Heartland stock? Briefly explain.

Chapter 8 exercise 5:

5. Straightforwardnet present value and internal rate of return

The City of Bedford is studying a 600-acre site on Route 356 for a new landfill. The startup cost has been calculated as follows:

Purchase cost: $450 per acre

Site preparation: $175,000

The site can be used for 20 years before it reaches capacity. Bedford, which shares a facility in Bath Township with other municipalities, estimates that the new location will save $40,000 in annual operating costs.

Should the landfill be acquired if Bedford desires an 8% return on its investment? Use the net-present-value method to determine your answer. Compute the internal rate of return on this project.

Chapter 8 Problem 1:

1. Straightforward net-present-value and payback computations

STL Entertainment is considering the acquisition of a sight-seeing boat for summer tours along the Mississippi River. The following information is available:

Cost of boat

$500,000

Service life

10 summer seasons

Disposal value at the end of 10 seasons

$100,000

Capacity per trip

300 passengers

Fixed operating costs per season (including straight-line depreciation)

$160,000

Variable operating costs per trip

$1,000

Ticket price

$5 per passenger

All operating costs, except depreciation, require cash outlays. On the basis of similar operations in other parts of the country, management anticipates that each trip will be sold out and that 120,000 passengers will be carried each season. Ignore income taxes.

Instructions:

By using the net-present-value method, determine whether STL Entertainment should acquire the boat. Assume a 14% desired return on all investments,- round calculations to the nearest dollar.

Chapter 8 Problem 4:

4. Equipment replacement decision

Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years. Annual cash operating costs total $27,200. Columbia can sell the equipment now for $36,000; the estimated residual value in six years is $5,000.

New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with either the existing or the new equipment. Columbia has a minimum desired return of 12% and depreciates all equipment by the straight-line method.

Week 5 Discussion Questions

Long-term Decision Making

List a few of the issues and considerations businesses should have when it comes to the selection of long-term investments and how those issues impact the various financial statements. 

Responsibilities in Management Accounting

Review the rights and responsibilities of Certified Management Accountants:
 
http://www.imanet.org/PDFs/Public/CMA/RIghts_Responsibility_CMA.pdf

What are some of the ethical responsibilities and obligations that management accountants have within an organization? Provide some examples. Are these responsibilities different than the obligations for financial accountants? 

Week 5 Final Paper

Focus of the Final Paper

You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find additional products that can leverage the current ABC employee skillset as well as the manufacturing facilities. 

As the controller of ABC Company, the CEO has come to you with a new opportunity that he’s been working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses. While this new product line would add additional raw materials and be more time-intensive to manufacture than the cedar shingles, this new product line will be able to leverage ABC’s existing manufacturing facilities as well as the current staff. Although this product line will require added expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO is relying on you to help decide how this project can be afforded  Provide details about the estimated product costs, what is needed to break even on the project, and what level of return this product is expected to provide.

In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the following information (including exhibits, but excluding your references and title page). Refer to the accompanying Excel spreadsheet (available through your online course) for some specific cost and profit information to complete the calculations.

Final Paper Spreadsheet

I. An overall risk profile of the company based on current economic and industry issues that it may be facing. 

II. Current company cash flow

a. You need to complete a cash flow statement for the company using the direct method.
b. Once you’ve completed the cash flow statement, answer the following questions:
i. What does this statement of cash flow tell you about the sources and uses of the company?
ii. Is there anything ABC Company can do to improve the cash flow?
iii. Can this project be financed with current cash flow from the company? Why or why not?
iv. If the company needs additional financing beyond what ABC Company can provide internally (either now or sometime throughout the life of the project), how would you suggest the company obtain the additional financing, equity or corporate debt, and why?

III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed factory overhead, and units sold to allocate the fixed sales expenses. ABC Company expects that it will take twice as long to produce the expansion product as it currently takes to produce its existing product.
a. What is the product cost for the expansion product?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set for the expansion product? 
d. Assuming the same sales mix of these two products, what are the contribution margins and break-even points by product?
IV. Potential investments to accelerate profit: ABC company has the option to purchase additional equipment that will cost about $42,000, and this new equipment will produce the following savings in factory overhead costs over the next five years: 

Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000

ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of return of 12% on the equipment.
a. What is the net present value of the proposed investment ignore income taxes and depreciation?
b. Assuming a 5-year straight-line depreciation, how will this impact the factory’s fixed costs for each of the 5 years (and the implied product costs)? What about cash flow?
c. Considering the cash flow impact of the equipment as well as the time-value of money, would you recommend that ABC Company purchases the equipment? Why or why not? 
V. Conclusion:
a. What are the major risk factors that you see in this project?
b. As the controller and a management accountant, what is your responsibility to this project?
c. What do you recommend the CEO do?

Writing the Final Paper

1.   Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.
2.   Must include a title page with the following:
a.   Title of paper
b.   Student’s name
c.   Course name and number
d.   Instructor’s name
e.   Date submitted
3.   Must begin with an introductory paragraph that has a succinct thesis statement.
4.   Must address the topic of the paper with critical thought.
5.   Must end with a conclusion that reaffirms your thesis.
6.   Must document all sources in APA style, as outlined in the Ashford Writing Center.
7.   Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.

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