Crane, LLC is a small company that sells decorative picture frames from local artisans. John, the chief financial officer (CFO), is in the process of compiling a Budgeted Income Statement for 2024 so that the company can apply for a loan at the local bank. John has budgeted for sales of 6,300 mugs at a sales price of $15.00 per mug. The company originally paid $5.00 per mug when it acquired them. The company has selling, general & admin (SG&A) expenses of $47,600 and an existing loan of $7,500 with an annual percentage rate (APR) of 3.0%. The tax rate is a flat 21%.
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- You are the manager of Synlait. Your accountant has indicated that one of the milking machines worth $1m needs to be replaced. You as the manager are required to agree to and sign off the purchase of a replacement machine priced at $25m. Before you make the decision, you need to understand the impact of the purchase and its financing on the financial statements. The milking machine will be financed by paying 20% in cash and the balance as a signed note agreeing to pay the balance at the end of the year. Interest of 5% p.a. will start accruing in the month following the purchase. The old machine will be sold for cash of $1m. Indicate, using the accounting equation, the impact of this transaction on the Balance Sheet and Income Statement. That is, the impact of the sale of the old machine, the purchase of the replacement machine and the first month of interest, but you can ignore depreciation.Wilson Bryant Air Conditioning, a Middle Georgia HVAC company, wanted to build a web-based project tracking for all small HVAC companies in Middle Georgia. Wilson Bryant Air Conditioning asked SunTrust Bank for a loan of $5 million presenting their idea. They had an agreement with the SunTrust that they will repay the loan by allocating 80% of the company's profits each year for the first 4 years to SunTrust. In the fifth year, the company will pay the remaining balance on the loan in cash. The company assumes that it will not earn any profit in the first year. Also, the company anticipates that the profits will be $1.5 million per year in years 2 through 4. If the SunTrust accepts the deal at an interest rate of 14% per year, and the company's plan will work to perfection, what is the projected amount of the last loan payment (in year 5)? Draw the cash flow diagram.MARYJANE, IN., a grocery business, operates a customer loyalty program. MARYJANE grants its program members points when they spend a specified amount of purchases. The points have no expiry date, and they can use the points for further purchases. During 2021, the customers earned 80,000 points, but management expects that 75% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at Php 20. The sales during 2021 amounted to Php 6,800,000 on stand-alone selling price. On December 31, 2021, 28,800 points have been redeemed. In 2022, the management revised its expectations and now expects 85% of the points to be redeemed. In 2022, the 12,000 points were redeemed. a. 1,367,481 b. 1,200,000 c. 1,020,000 d. 1,295,238 What amount of the transaction price should be allocated to the groceries?
- The Hub is a business dedicated to providing rentable work spaces for local companies or self-employed individuals. As they begin to expand their business, they need to acquire a set of computers for an in-house computer lab. IBM offers the computers for a single payment of $55,000 due at the end of four years. Dell offers similar computers, but requires four annual payments of $13,000 due at the end of each year. The Hub could borrow the funds at 5%. Using discounted cash flows, determine which computers The Hub should purchase. Select one: a. IBM O b. DelA young entrepreneur founded a packaged beverage company in early 2022. Based on information gathered from consumers, the young entrepreneur plans to increase sales of packaged drinks in 2023, by producing packaged drinks with new flavors.Revenue in 2022 is $500,000 and is expected to reach $1,500,000 in 2023. Each bottled beverage will sell for $5, and the bottled beverage costs $2 per bottle to produce. Administrative costs including the young entrepreneur’s salary, salary of one accountant and three clerks, are estimated at $200,000 and marketing costs such as posters, advertisements in local newspapers, are estimated at $350,000 in 2023. Then, investment in special equipment and renovation of Warehouses accounts for $562,500 and $62,500 in inventory, which was done in 2022. Moreover, an additional $150,000 in equipment investment is expected to be needed in early 2023 to increase the production volume of their bottled beverage. Currently, the old machine is still capable of…b. Al Huda enterprises supplies small water coolants to various government and private sector entities. The price for each coolant is 75 OMR and the cost is 55 OMR. On 01/01/2015, AI Huda signed a contract with SQU to supply 350 water coolants. Al Huda offers a 5% volume discount if an entity purchases 300 or more units. On 20/05/2015, Al Huda delivered 270 coolants to SQU. From past experience, Al Huda believes that SQU will meet the discount volume threshold. Required For Al Huda Enterprises: DISTR a. Prepare the journal entry, if any, on 01/01/2015 b. Prepare the journal entry on 20/05/2015
- Dillip Lachgar is the president and majority shareholder of Argon Inc., a small retail chain store. Recently, Dillip submitted a loan application for Argon Inc. to Compound Bank. It called for a $600,000, 9%, 10-year loan to help finance the construction of a building and the purchase of store equipment, costing a total of $750,000. This will enable Argon Inc. to open a store in the town of Compound. Land for this purpose was acquired lastyear. The bank’s loan officer requested a statement of cash flows in addition to the most recent income statement, balance sheet, and retained earnings statement that Dillip had submitted with the loan application.As a close family friend, Dillip asked you to prepare a statement of cash flows. From the records provided, you prepared the following statement: Please see the attachment for details: After reviewing the statement, Dillip telephoned you and commented, “Are you sure this statement is right?” Dillip then raised the following questions:1.…Delicious Dinners (DD) is a business entity which offers online cooking classes. Customers pay an annual fee to participate in weekly cooking classes. In early 2021 DD made the decision that their existing customer relationship management database could no longer support their business. DD developed a design and plan to create their own CRM software system. During the application and development stage of the new CRM system DD correctly followed GAAP and capitalized $2,000,000. DD completed the project in July 2021. The CRM system worked very well for DD after the completion of the project. In January 2022 DD the CEO of DD proposed that the CRM system the company developed also could be marketed to other online companies. The company has developed a plan to sell annual licenses to other companies for the CRM system for $24,000 per year. In February 2022 DD sold 4 annual licenses for the CRM system that the company developed to other companies. The 4 businesses all paid DD…Bill Braddock is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $8,800, Depreciation on equipment $7,000, Wages $16,400, Motor oil $12.00 per oil change. Oil filters will cost $5.00 per oil change. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.20 per oil change, since he will operate the business as a franchise. In addition, utility costs are expected to behave in relation to the number of oil changes as follows: Number of Oil Changes Instructions 4,000 6,000 9,000 12,000 14,000 Format answers with $ signs, commas, or % when appropriate. (a) Using the high-low method, determine variable costs per unit $15,000 Bill Braddock anticipates that he can provide the oil change service with a filter at $25 each. for the utility costs. Utility Costs lyr $7,000 $ 8,300 $ 10,600 $13,000 and fixed costs
- A new book publishing and sales project estimates that the first year 7,000 printed units and 2,000 digital units will be sold.The printer will charge them $5 for each book.The publisher will sell the books for $12 each.The virtual books will be sold for $6 through a platform and the publisher receives $3.The authors of the books receive 5% of the sales made by the publisher, whether online or in print, which is recorded as an expense. The market study suggests that sales of printed books can increase at 20% per year and those of digital format at 30% per year.The initial equipment will be reduced, since they work with the subcontracting of printed material. Basically, they include computer equipment, software and furniture that have a value of 20,000; In addition, a vehicle will be purchased for a value of 15,000. Computer equipment, software and furniture are depreciated instraight line in 5 years. In year 6, these equipments must be bought again for the same value.The vehicle is…A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000 Year 2: $50,000 Year 3: $50,000 Year 4: $60,000 The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. Based on your above calculations, should they purchase the new piece of equipment? Why? 2. Carl and Melissa have monthly income of $6000. They want to buy a house for $200,000 and make a down payment of $40,000. The monthly payment on a 15-year mortgage will be $2,000 and a 30- year mortgage, the monthly payment will be $1,350. Which of the following would you recommend? Why? A. 15 year option B. 30 year option C. They cannot afford to buy a house at this pointTo keep up with sales trends, Sunland Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of purchases. Each point is redeemable for a $1 discount on any purchases of Sunland merchandise in the next two years. Following the implementation of the program, during 2023, customers purchased products for $315,000 and earned 10,500 points redeemable for future purchases. (All products are sold to provide a 40% gross profit.) The stand-alone selling price of the purchased products is $315,000. Based on prior experience with incentive programs like this, Sunland expects 9,000 points to be redeemed related to these sales. (a) Measure the separate performance obligations in the Sunland bonus point program. (Round percentage allocations to 2 decimal ploces, e.g. 25.55 and final answers to O decimal places, eg. 25,000.) Products Bonus points