Prelim_II_A - ORIE 350 Name (please print) NI MERE Prelim...

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Unformatted text preview: ORIE 350 Name (please print) NI MERE Prelim 11 Fall 2005 Grid for TA Scoring 1. Cash Cycle Payables Turnover = W Inventory Turnover = W V Average A/P Average Inventory Receivables Turnover = M Age (days) = mig— Average A/R Turnover x Net Sales Cash Used =fl3—9—g-S— Cash Supplied = L———— 365 365 E91 part of the cash cycle but used to assess collections: Receivables Collection Turnover = ————-———-———-—-—-Net cram sales Average A/R 2. Time Value of Money APR : [1+ 1w“ j —1 i = 1”“ FV = PV(1+i)n c c _ 1 3. Bonds PV 2 + FV The “bond equation” 1 (1 + i)n The annual yield for a bond is 2 X i for bonds that pay interest semi—annually. Using the effective interest method, the interest expense is found by multiplying the carrying value and the periodic interest rate. MM 4. Earnings Per Share Net Income - Preferred Stock Dividends EPS = Average Number of Shares Outstanding WM 5. Inventory Net Realizable Value (NRV) = Selling Price 9— Cost of Preparation and Repair Net Adjusted Cost = NRV —— Normal Profit Margin RC = Replacement Cost l. The following information was taken from the financial records for Acme Trucking Company for the years 2003 and 2004. The balance sheet items were recorded at the end of the respective years, and the income statement items are for the specified year. 2912‘. 2.9.13. Machinery $570,000 $430,000 Accumulated Depreciation (190,000) (230,000) Machinery (net of depreciation) 380,000 200,000 Depreciation Expense, Machinery 70,000 60,000 Loss on Sale of Machinery 24,000 16,000 Machinery with a historical cost of $180,000 was sold for cash during 2004. a) How much machinery (dollar value) was purchased during 2004? b) How much cash was collected on the disposal of the machinery during 2004? mam, i562 QQG 2. Hilbert Industries has a truck that cost $35,000, purchased on January 1, 2001. It was depreciated using straight—line depreciation with a $5000 salvage value and a 5 year useful live. Record the journal entries for Hilbert’s financial accounting records to record the following scenarios: a. The truck was sold on July 1, 2003 for $18,000 cash. b. The truck was sold on January 1, 2011 for $3,000 cash. 6%) 9,1103 Wee, Expim W ATV $624236? (196%! / 8cm? +2, W Deprea, 153%; ‘4‘! Le§$ mo ‘Etsfiesm, 23cm? are; Tm“ 35‘ we 10) (liken Cats}! 2 mg a”, mam/30 36? 036362 a“? L669 cm Di$i9€39RL 2 03656:? W 3. Alex Trabeck opens a savings account at CFCU. The advertised APR is 3.3%, compounded monthly. If he makes a single deposit of $20,000 today, what will the balance be in the account 24 months from now, assuming no other deposits or withdrawals? r , Vi; , w (APRH) ~i i‘= (2.602.705? H w m § N ha a 3 as «Q \J 4. An investment pays you $10,000 per year for 15 years, with the first payment occurring 6 years from now. If the annual nominal interest rate is 9%, then what is the value of the investment today? Assume annual compounding. , , Jr .. I - (ML) Vvi ” A .t J, i ~i§ 5"“ {owe} [Rafi—W §J§Ci W3 2 $86?! (amass fi’lG va. , SL2 “MASS R , S. N 0%) (tea)? ll PM; $ szi 333199 + {e 5. Becky worked all the way through high school . She deposited $500 per month in the bank at the end of each month for 4 years. She earned interest with an APR of 4%, compounded monthly. a. How much does Becky have in her bank account at the end of four years? b. What single amount, deposited today at the same interest rate, would have the same future value as the answer to part (a), assuming no other deposits or withdrawls? i 3: Meme)": 4 : 0.003‘1'7‘!‘ \G a) 4 . ‘3 ‘ * “V's i 3’74 wi FV 9-”: A (I i 5" 9w (WIW L ) 2i 0.9%3‘7‘! 440 b) pv : ‘FV . _ 236N256? 79V: $22) i798} Pv 6. Alico Corporation bonds have a face interest rate of 8%, a face value of $100,000 and will mature in 20 years. Interest is paid semi-annually. If you require an annual yield of 9.4%, what price would you be willing to pay for the bond? , i.~(ui)"“ + R! PV ' A ,i (HUR A r- 979 iOGiGC?{;7 :: qufia $1? to e W? fifiwti’ a v 5“ : q‘gf’ :- 457% w ’qg' J: (105:6; i“ (LOH7) + L (at? (jag $873qu 9% 2% H0 ’ self/:04 V A, _ W/ i- (In) "’ FV - A /-- Jr "" a a W ' ,; 0+0 #2? Q !~ (1037835) + WWW w ; (Egg f G C} @gjggg’ PV “'2 1,030,900 V’ aim/:— l 030 (2620 WWW ; , / A: ;: 5:2 vases W @46va r: ((,0;§IQQO)(0,0§”783§) z: 38,970,.03 madam; 3» {never aw 3337a 4‘5 a?“ waim+. I, 039 4’2 M554 4&,30Q 7. Cruiser Industries issues a lO—year $1 million bond at 103. The face interest rate is 8%. The annual yield is calculated to be 7.567%. The issue date is June 30, 2004. The bond pays interest semi-annually on Dec. 31 and June 30. Show the journal entry! thatCruiser Industries needs to make on December 31, 2004, to record the payment of interest and interest expense for the year, using the effective interest method. 8. GMI Industries plans to lease ten new Dell computers. The terms for the three-year lease are 36 monthly payments of $1,100 at the end of each month, $2,000 due at lease signing, an APR of 25.00% (that is not a misprintl), and the option to purchase I each computer at lease end for $1 each. , a. Explain whether GMI should record the lease as a capital lease or an operating lease. b. Based on your answer to part (a), show the journal entry that GMI needs to make to record acquisition of the computers on November 1, 2005. reiéi 2% cpfiafiZ7 5) k V]; __ at: (WWI) "' " Gamma £~ (H?th Pv : A . A «za‘ *1: f (=— (iJNSVb‘Ci) I W &.ai€7efi : $23,363,473 “{3ng gag; Cfiefl 2§a$ 9. During 2004, Heath Corporation had net income of $5,500,000. The corporation has only one class of stock, common stock. On January 1, 2004, the start of Heath’s fiscal year, the corporation had 1,720,000 shares of common stock outstanding. On April 1, 2004, the corporation purchased 440,000 shares of common stock and recorded these shares as treasure stock. On October 1, 2004, the corporation sold 280,000 shares of the treasury stock for $32 per share. The company did not participate in any other stock transactions during the year. Determine the earnings per share the company reported on its income statement for fiscal 2004. mm; i,”72€2,ec§@ W +72 (p WWI/4L5 l, 2812 , 00(7) MW 4?; 3 W (gee (firm W+V 3((720) ~+ $02863) + 30520) ,7 U " it fiqw, C3360 S Sec; 4? 0 g *3 EP5 2 i (Q a: /’ 4m: we 3 7?/5/[‘m 10. Jaffe Caps Inc. makes baseball caps with snappy slogans for colleges and universities. It finds that one of its most recent caps, including one of Vice President Cheney’s favorite words and the word “Harvard,” did not sell well at Cornell University since students were prohibited from wearing them at sports venues, or , _ perhaps because they were regarded to be unseemly. However, Bob J affe, the owner, thinks that he could sell the caps in New Haven if he were to dye the caps a different color. This process will cost $1 per cap. The historical cost of the caps was $9.50 each. The normal profit margin on caps is $5. The estimated selling price in New Haven is expected to be $14. Due to advances in cap production technology, the replacement cost of the caps is estimated to be $7.00 each. Provide the adjusting journal entry that Bob must make to revalue his inventory of 435 caps, which is currently recorded at historical cost. Assume that any correction in excess of $500 represents a material difference to Jaffe Caps Inc. 80 z 7 +L 1:: 7-: l5 4’2” NAG .-..— Is- 5‘ : 8 ’3'?“ 0% “AG LG'%% 6/6 “AC err Mhflé‘aj 2 [kg/QC Cast =— $§3 , Wad, $Q.’S‘G 11. Roberta Lerner, accountant at Wilson Industries, is performing an assessment of the accounts receivables at the end of the 2004 fiscal year. First, Lerner finds that the existing credit balance in Allowance for Uncollectible Accounts is $45,000. Next, she finds that the Accounts Receivable balance is $1,381,000. Through past experience, Lerner has found that accounts not yet due proved uncollectible 0.4% of the time, accounts past due less than 30 days proved uncollectible 3% of the time, accounts 30 days to 59 days past due proved uncollectible 12% of the time. For accounts 60 to 89 days past due, the figure was 60%, and for accounts 90 days or more past due, the uncollectible fraction was estimated to be 90%. Lerner looks over the entire Accounts Receivable record and finds the following amounts in each category: it? WW EXW Aixiaww FW 5% uwfigwfia W 3?: , 5c 0 ME Perform an aging of the accounts receivable and provide the adjusting journal entry that must be made to account for Bad Debt Expense during 2004. {I \\;?7 \ $636) \\ \3‘:< \\ 2? 3726? \E + s Neg/y} 12. To purchase a house, you must borrow $300,000 from the bank at 6.00% APR. Assuming the payment occurs at the end of each month (an ordinary annuity), find the I monthly payment for a 15-year mortgage. ,1, = 0.009853 +7 n = 160 +7 ’ $00,000 ( V finowfiw) ’80 /""““\.» 5.904%:8 A 2; $3,505. ...
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Prelim_II_A - ORIE 350 Name (please print) NI MERE Prelim...

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