1.A company borrowed $50,000 cash from the bank and signed a 6-year note at 7%.

Question

1.A company borrowed $50,000 cash from the bank and signed a 6-year note at 7%. The present value of an annuity for 6 years at 7% is 4.7665. The annual annuity payments equal (closest to):

The amount that the total stockholders' will increase (decrease) as a result of recording this stock dividend is:

$10,489.88. $11,004.88. $45,500.00. $11,739.88. $47,550.00.


2. A corporation declared and issued a 15% stock dividend on November 1. The following information was available immediately prior to the dividend:

  Retained earnings $750,000   Shares issued and outstanding 60,000   Market value per share $15   Par value per share $5

The amount that the total stockholders' will increase (decrease) as a result of recording this stock dividend is:

$45,000. $135,000. $(45,000). $(135,000). $0.




3.A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the sales trend percent for Year 2 is: 87%. 100%. 115%. 15%. 13%.









4.A company uses the weighted average method for inventory costing. During a period, a production department had 20,000 units in beginning goods in process inventory which were 40% complete; the department completed and transferred 165,000 units. At the end of the period, 22,000 units were in the ending goods in process inventory and are 75% complete. All of these are with respect to labor. The production department had labor costs in the beginning goods is process inventory of $99,000 and total labor costs added during the period are $726,825. Compute the equivalent cost per unit for labor. $4.40. $4.76. $4.19. $4.55. $4.61.




5.A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in units is: 2,292. 573. 764. 327. 840.



6.Stritch Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. How many units must be purchased in September? 14,000. 20,000. 22,000. 24,000. 28,000.


7.A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual cash inflows from this investment are $36,000 (year 1), $30,000 (year 2), $18,000 (year 3), $12,000 (year 4) and $6,000 (year 5). The payback period is: 4.50 years. 4.25 years. 3.50 years. 3.00 years. 2.50 years.

Explanation / Answer

Hi,

Please find the answers as follows;

Part 1

Annual Annuity Payments= 50000/4.7665 = 10489.88

Part 2

Impact on Total Stockholders = 0 (stock dividend has no impact on stockholder's value)

Part 3

Sales trend percent for Year 2 = (287500 - 250000)/250000*100 = 15%

Part 4

Total Equivalent Units = 165000*100 + 22000*0.75 = 181500

Labor Cost Per Equivalent Unit = 99000+726825/181500 = 4.55

Part 5

Break Even Point = Fixed Cost/Contribution = =68760/(120-90) = 2292 units

Part 6

September = 20000 (Sales) + .20*40000 (Ending Inventory) - .20*20000 (Opening Inventory) = 24000

Part 7

Amount of 90000 will get recovered in = 36000 (Year 1) + 30000 (Year 2) + 18000 (Year 3) and balance amount of 6000 will be recovered between Year 3 and Year 4

Payback Period = 3 + (90000 - 36000 - 30000 - 18000)/12000 = 3.5 Years

Thanks.

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