Saturday 21 September 2013

Fran Powers created the following budget and reported the actual spending listed. Calculate the variance for each of these categories, and indicate whether it was a deficit or a surplus. (Input all amounts as positive values.) Item Budgeted Actual Variance Deficit/Surplus Food $ 360 $ 298 $ 62 correct surplus correct Transportation $ 320 $ 334 $ 14 correct deficit correct Housing $ 950 $ 982 $ 32 correct deficit correct Clothing $ 110 $ 134 $ 24 correct deficit correct Personal $ 275 $ 231 $ 44 correct surplus correct

Fran Powers created the following budget and reported the actual spending listed. Calculate the variance for each of these categories, and indicate whether it was a deficit or a surplus. (Input all amounts as positive values.)

  Item Budgeted Actual         Variance  Deficit/Surplus     
  Food $ 360      $ 298   $ 62 correct   surplus correct
  Transportation $ 320      $ 334   $ 14 correct   deficit correct
  Housing $ 950      $ 982   $ 32 correct   deficit correct
  Clothing $ 110      $ 134   $ 24 correct   deficit correct
  Personal $ 275      $ 231   $ 44 correct   surplus correct

For the following situations, calculate the cash surplus or deficit: (Input all amounts as positive values.) Cash Inflows Cash Outflows Difference Surplus/Deficit $ 3,540 $ 3,238 $ 302 correct surplus correct $ 4,788 $ 4,855 $ 67 correct deficit correct $ 4,387 $ 4,198 $ 189 correct surplus correct

For the following situations, calculate the cash surplus or deficit: (Input all amounts as positive values.)

Cash Inflows Cash Outflows           Difference Surplus/Deficit   
$ 3,540        $ 3,238        $ 302 correct    surplus correct
$ 4,788        $ 4,855        67 correct    deficit correct
$ 4,387        $ 4,198        $ 189 correct    surplus correct

Based on this financial data, calculate the ratios requested: (Round your answers to 4 decimal places.) Liabilities $ 9,400 Net worth $ 65,500 Liquid assets $ 7,800 Current liabilities $ 1,700 Monthly credit payments $ 800 Take-home pay $ 2,775 Monthly savings $ 290 Gross income $ 3,250 a. Debt ratio 0.1435 correct b. Current ratio 4.5882 correct c. Debt-payments ratio 0.2883 correct d. Savings ratio 0.0892 correct

Based on this financial data, calculate the ratios requested: (Round your answers to 4 decimal places.)

           
  Liabilities $ 9,400     Net worth $ 65,500  
  Liquid assets $ 7,800     Current liabilities $ 1,700  
  Monthly credit payments $ 800     Take-home pay $ 2,775  
  Monthly savings $ 290     Gross income $ 3,250  


     
 a.   Debt ratio 0.1435 correct  
 b.   Current ratio 4.5882 correct  
 c.   Debt-payments ratio 0.2883 correct  
 d.   Savings ratio 0.0892 correct

Based on the following data, determine the amount of total assets, total liabilities, and net worth. Liquid assets $ 4,520 Investment assets $ 8,990 Current liabilities $ 2,320 Household assets $ 94,390 Long-term liabilities $ 82,730 a. Total assets $ 107,900 correct b. Total liabilities $ 85,050 correct c. Net worth $ 22,850 correct

Based on the following data, determine the amount of total assets, total liabilities, and net worth.

 Liquid assets $ 4,520    Investment assets $ 8,990  
 Current liabilities $ 2,320    Household assets $ 94,390  
 Long-term liabilities $ 82,730   


 a.  Total assets 107,900 correct  
 b.  Total liabilities 85,050 correct  
 c.  Net worth 22,850 correct  

If you borrow $15,500 with a 5 percent interest rate to be repaid in seven equal payments at the end of the next 7 years, what would be the amount of each payment? (Note: Use the present value of an annuity table in the Exhibit 1-3.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.) Amount per payment $ rev: 07_16_2013_QC_32729, 07_29_2013_QC_33022 Explanation: $15,500/5.786 = $2,679

If you borrow $15,500 with a 5 percent interest rate to be repaid in seven equal payments at the end of the next 7 years, what would be the amount of each payment? (Note: Use the present value of an annuity table in the Exhibit 1-3.) (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.)
  
  Amount per payment $  
 rev: 07_16_2013_QC_32729, 07_29_2013_QC_33022

Explanation: $15,500/5.786 = $2,679

http://lectures.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-3.jpg

If a person spends $10 a week on coffee (assume $500 a year), what would be the future value of that amount over 5 years if the funds were deposited in an account earning 5 percent? Use Exhibit 1-B. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.) Future value $ Explanation: $500 × 5.526 = $2,763 (Exhibit 1-B)

If a person spends $10 a week on coffee (assume $500 a year), what would be the future value of that amount over 5 years if the funds were deposited in an account earning 5 percent? Use Exhibit 1-B. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.)
  
  Future value $  

 http://lectures.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-b.jpg

Explanation:

If you desire to have $23,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 3 percent. Use Exhibit 1-C. (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.) Deposit $ Explanation: $23,000 × 0.837 = $19,251 (Exhibit 1-C)

If you desire to have $23,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 3 percent. Use Exhibit 1-C. (Round your PV factor to 3 decimal places and final answer to the nearest dollar amount.)
  
  Deposit $  


Explanation: $23,000 × 0.837 = $19,251 (Exhibit 1-C)

http://lectures.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-c.jpg

Ben Collins plans to buy a house for $160,000. If the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be six years from now? Use Exhibit 1-A. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.) Value of the house $ Explanation: Using Exhibit 1-A: $160,000 × 1.126 = $180,160

Ben Collins plans to buy a house for $160,000. If the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be six years from now? Use Exhibit 1-A. (Round your FV factor to 3 decimal places and final answer to the nearest dollar amount.)
  
  Value of the house $  


Explanation:

Using the rule of 72, approximate the following amounts. a. If the value of land in an area is increasing 7.5 percent a year, how long will it take for property values to double? (Round your answer to 1 decimal place.) Time period years b. If you earn 9 percent on your investments, how long will it take for your money to double? (Round your answer to 1 decimal place.) Time period years c. At an annual interest rate of 4.5 percent, how long will it take for your savings to double? (Round your answer to 1 decimal place.) Time period years Explanation: a. About 9.6 years (72/7.5) b. About 8 years (72/9) c. About 16 years (72/4.5)

Using the rule of 72, approximate the following amounts.   
a.
If the value of land in an area is increasing 7.5 percent a year, how long will it take for property values to double? (Round your answer to 1 decimal place.)
  
  Time period   years
  
b.
If you earn 9 percent on your investments, how long will it take for your money to double? (Round your answer to 1 decimal place.)
  
  Time period   years
  
c.
At an annual interest rate of 4.5 percent, how long will it take for your savings to double? (Round your answer to 1 decimal place.)
  
  Time period   years


Explanation:

Account Title Debit Credit Cash $ 7,100 Accounts receivable 29,000 Office supplies 6,270 Trucks 176,000 Accumulated depreciation—Trucks $ 36,256 Land 45,000 Accounts payable 11,100 Interest payable 19,000 Long-term notes payable 45,000 Common stock 17,000 Retained earnings 158,669 Dividends 46,000 Trucking fees earned 123,000 Depreciation expense—Trucks 23,385 Salaries expense 53,466 Office supplies expense 14,000 Repairs expense—Trucks 9,804 Totals $ 410,025 $ 410,025 Use the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011.




  Account Title Debit Credit
  Cash $ 7,100      
  Accounts receivable   29,000      
  Office supplies   6,270      
  Trucks   176,000      
  Accumulated depreciation—Trucks     $ 36,256  
  Land   45,000      
  Accounts payable       11,100  
  Interest payable       19,000  
  Long-term notes payable       45,000  
  Common stock       17,000  
  Retained earnings       158,669  
  Dividends   46,000      
  Trucking fees earned       123,000  
  Depreciation expense—Trucks   23,385      
  Salaries expense   53,466      
  Office supplies expense   14,000      
  Repairs expense—Trucks   9,804      
  



  Totals $ 410,025   $ 410,025  
  








  
Use the above adjusted trial balance to prepare Webb Trucking Company’s classified balance sheet as of December 31, 2011.

Explanation:
  Retained earnings  is computed as:
          
  Beginning balance $ 175,669    
  Plus: Net income ($123,000 – $23,385 – $53,466 – $14,000 – $9,804)   22,345    
  Less: Dividends   (46,000 )  
  


 
  Ending balance $ 152,014    
  

Following are two income statements for Kendall Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. KENDALL CO. Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned $ 24,000 $ 31,200 Commissions earned 42,500 42,500 Total revenues 66,500 73,700 Expenses Depreciation expense—Computers 0 1,800 Depreciation expense—Office furniture 0 2,100 Salaries expense 12,500 15,440 Insurance expense 0 1,560 Rent expense 4,500 4,500 Office supplies expense 0 576 Advertising expense 3,000 3,000 Utilities expense 1,250 1,334 Total expenses 21,250 30,310 Net income $ 45,250 $ 43,390 Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $7,200 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)

Following are two income statements for Kendall Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts.
  
KENDALL CO.
Income Statements
For Year Ended December 31
  Unadjusted Adjusted
  Revenues        
     Fees earned $ 24,000   $ 31,200  
     Commissions earned   42,500     42,500  
  



     Total revenues   66,500     73,700  
  Expenses        
     Depreciation expense—Computers   0     1,800  
     Depreciation expense—Office furniture   0     2,100  
     Salaries expense   12,500     15,440  
     Insurance expense   0     1,560  
     Rent expense   4,500     4,500  
     Office supplies expense   0     576  
     Advertising expense   3,000     3,000  
     Utilities expense   1,250     1,334  
  



     Total expenses   21,250     30,310  
  



  Net income $ 45,250   $ 43,390  
  








  
Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $7,200 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)
 Explanation:
Dec. 31 To record earned but unbilled fees.
  Fees Earned = (30% × $7,200) = $2,160
    
  To record earned fees collected in advance.
  Fees Earned = (70% × $7,200) = $5,040