Moorcroft Company’s budgeted sales and direct materials purchases are as follows:Budgeted Sales Budgeted D.M. Purchases
April $327,000 $42,000
May 292,000 51,000
June 407,000 61,000
Moorcroft’s sales are 40% cash and 60% credit. Credit sales are collected 20% in the month of sale, 50% in the month following sale, and 26% in the second month following sale; 4% are uncollectible. Moorcroft’s purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month following the purchase and 60% in the second month following the purchase.
Instructions:
(a) Prepare a schedule of expected collections from customers for June.
(b) Prepare a schedule of expected payments for direct materials for June.
(c) Moorcroft's assistant controller suggested that Moorcroft hire a part-time collector to encourage customers to pay more promptly and to reduce the amount of uncollectible accounts. Sales are still 40% cash and 60% credit but the assistant controller predicted that this would cause credit sales to be collected 30% in the month of the sale, 50% in the month following sale, and 18% in the second month following sale; 2% are uncollectible.
Prepare a schedule of expected collections from customers for June How did these changes impact cash collections? Would it be worth paying the collector $1,000 per month?
(d) The assistant controller also suggested that the company switch their purchases to 40% cash and 60% on account to help stretch out their cash payments. There is no additional interest charge to do this and Moorcroft is still paying their bills on time. There is no change to the company's payment pattern.
Prepare a schedule of expected payments for direct materials for June. How did these changes impact the cash payments for June?
Answers
Answer:
Moorcroft Company
a) A Schedule of Expected Collections from Customers for June:
June Sales - 40% of $407,000 cash = $1,628,000
June Sales - 20% of 60% of $407,000 = $48,840
May Sales - 50% of 60% of $292,000 = $87,600
April Sales - 26% of 60% of $327,000 = $51,012
Total = $1,815,452
b) A Schedule of Expected Payments for Direct Materials for June:
June Purchases - 50% of $61,000 cash = $30,500
May Purchases - 40% of 50% of $51,000 = $10,200
April Purchases - 60% of 50% of $42,000 = $12,600
Total = $53,300
c- i)A Schedule of Expected Collections from Customers for June:
June Sales - 40% of $407,000 cash = $1,628,000
June Sales - 30% of 60% of $407,000 = $73,260
May Sales - 50% of 60% of $292,000 = $87,600
April Sales - 18% of 60% of $327,000 = $35,316
Total = $1,824,176
ii) These changes increased cash collections from $1,815,452 to $1,824,176, an increase of $8,724.00
iii) The uncollectible of credit sales was halved, reducing from $9,768 (4% of 60% of $407,000) to $4,884 (2% of 60% of $407,000) for June sales for example.
iv) It is certainly worth paying the collector $1,000 or more per month.
d-i) A Schedule of Expected Payments for Direct Materials for June:
June Purchases - 40% of $61,000 cash = $24,400
May Purchases - 40% of 60% of $51,000 = $12,240
April Purchases - 60% of 60% of $42,000 = $15,120
Total = $51,760
ii) The changes reduced the cash payments for June from $53,300 to $51,760, a difference of $1,540.
Explanation:
a) When sales are made on credit, the finances of the entity will be impacted. While credit sales encourage more sales, there is the risk of uncollectible debts and short-term funding crisis due to non-receipt of payment from customers.
b) To manage this, companies introduce some incentives to encourage early payment, like cash discount. They may also formalize the debt with a note receivable. The note can also be sold for immediate cash.
c) Employing a collector to pursue receivables may be in the best interest of a company. The collector intensifies pressure on the customers to pay.
Final answer:
To prepare schedules of expected collections and payments for Moorcroft Company in June, you need to consider the cash and credit aspects of sales and purchases, as well as collection and payment patterns. The potential changes suggested by the assistant controller requires further financial analysis for the decision of hiring a part-time collector and adjusting purchase patterns.
Explanation:
Firstly, to calculate the expected collections from customers for June, you will have to consider both the cash and credit aspects of sales. For Moorcroft Company, 40% of sales are cash, so in June that would be 0.4*407000 = $162800. 60% of sales are on credit, which would be 0.6*407000 = $244200. Regarding the credit collections, assuming the question refers to June sales, 20% is collected in the same month of sale ($48840), 50% in the following month of sale ($122100) and 26% in the second month following the sale ($63520), summing up to total collections of $385260. For the uncollectable 4%, this amounts to $9768.
Secondly, for the expected payments for direct materials for June, 50% of these purchases are paid in cash ($30500), and if the pattern from the question holds, 40% of the purchases on account are paid in the month following the purchase and 60% in the second month following the purchase. As this is June, you would need the April and May data for this part of the calculation.
Concerning the changes suggested by the assistant controller, the impact on cash collections and payments would need to be recalculated using the proposed figures. If it results in greater collection figures and less payments, or positive cash flows, hiring a part-time collector could be worth the $1000 per month. However, the final decision should also weigh the extra cost against company's financial status and future plans.
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One way that teams can be broadly classified as either ____.
Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following information: Work-In-Process Inventory, April 30 $275 Direct material purchased during April 250 Work-In-Process Inventory, April 1 300 Direct labor costs incurred 400 Manufacturing overhead costs 350 Direct materials used in production 225
Rates on fixed, floating, installment and mortgage loans were reduced by 0.3 percent (from 9.3% to 9.0% etc.). Which were impacted the most
Answers
Answer:
RWV
Ending Account Balances:
Account Details Debit Credit
Notes Payable $1,100,000
Cash $30,500
Land 250,000
Building 750,000
Supplies (Food) 2,500
Accounts Receivable 95,000
Service Revenue 95,000
Salaries Expense 45,000
Supplies (Food) Exp. 5,000
G 17,000
Totals $1,195,000 $1,195,000
Explanation:
a) Notes Payable
Account Details Debit Credit
Cash $1,100,000
a) Cash Account
Account Details Debit Credit
Notes Payable $1,100,000
Land (b) $250,000
Building (c) 750,000
Salaries (f) 45,000
Supplies (Food) (g) 7,500
G (i) 17,000
Balance c/d $30,500
b) Land
Account Details Debit Credit
Cash $250,000
c) Building
Account Details Debit Credit
Cash $750,000
d) Supplies (Food)
Account Details Debit Credit
Accounts Payable $7,500
Supplies (Food) Expense (h) $5,000
Balance c/d $2,500
Accounts Payable
Account Details Debit Credit
Supplies (d) $7,500
Cash (g) $7,500
e) Accounts Receivable
Account Details Debit Credit
Service Revenue $95,000
Service Revenue
Account Details Debit Credit
Accounts Receivable (e) $95,000
f) Salaries Expense
Account Details Debit Credit
Cash $45,000
h) Supplies (Food) Expense
Account Details Debit Credit
Supplies (Food) $5,000
i) G
Account Details Debit Credit
Cash $17,000
Answers
Answer:
a) 8 dollars
b) 1,640,000
2.- It should be rejected as decreases operating income to 410,000 from 1,640,000
contribution margin: $14
operating income: $ 410,000
Explanation:
68 - 60 = 8
b)
units sold x $8 contribution less fixed cost
410,000 x 8 - 1,640,000 = 1,640,000
2 contribution margin:
68 - 54 = 14
410,000 x 14 - 5,330,000 = 410,000
Answers
Answer:
Number of years = 7.54 or 8 years
Explanation:
We know,
YTM =
Here,
I = Coupon payment
M = Par value
V = Market price
Given,
M = Par value = $1,000
V = Market price = $1,119.34
I = Coupon Payment = Par value × Coupon rate = $1,000 × 6.4% = $64
Since, it is a semi-annual payment = $64/2 = $32
YTM = 4.6%
Therefore, putting the value into the above formula, we can get
YTM =
or, 0.046 =
or, 0.046 =
or, 47.82988 = [Multiplying both the sides by 1,039.78]
or, 47.82988n = 32n - 119.34 [Multiplying both the sides by n]
or, 47.82988n - 32n = -119.34
or, -15.82988n = -119.34
or, n = (-119.34) ÷ (-15.82988)
Therefore, n = 7.54 years or almost 8 years.
Answers
Answer:
Overhead volume balance= $29,400 unfavorable
Explanation:
Giving the following information:
From the following data, calculate the fixed overhead volume variance.
-Actual fixed overhead $40,000
-Budgeted fixed overhead $21,000
-Standard overhead allocation rate $6
-Standard direct labor hours per unit 4 DLHr
-Actual output 2,100.
Overhead volume variance= budgeted fixed overhead - fixed overhead applied= 21,000 - 50,400= 29,400 unfavorable
Answers
Answer: a. Investors
In a enviroment where there are investors, there will always be the possibility of companies arising because investors want to grow their profits and they do it through participations bought in companies, they also invest in loans made in companies and this propitiates the figure of the investor that means a person or an entity that places a value that belongs to him, to finance or to acquire a good.
For example, an investment fund acquires a company to grow it and then sell it at a higher price. This is a typical transaction of an investment fund and encourages the creation of new companies or their expansion.
Favorable temporary differences
Unfavorable temporary differences
Favorable permanent differences
Taxable income
Tax rate%
Answers
Answer:
The company’s current income tax expense or benefit is $350,880.
Explanation:
Pre-tax book income $ 1417500
Favorable temporary differences -$300000
Unfavorable temporary differences $106500
Favorable permanent differences -$192000
Taxable income $1032000
Current income tax expense ($1032000 x 34%) $350880
Therefore, The company’s current income tax expense or benefit is $350,880.