Consider the case of Cranked Coffee Company:
Cranked Coffee Company is a mature firm that has a stable flow of business. The following data was taken from its financial statements last year:
Annual sales $10,200,000
Cost of goods sold $6,630,000
Inventory $3,200,000
Accounts receivable $2,200,000
Accounts payable $2,400,000
Cranked Coffee’s CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)
Value
Inventory conversion period 46.93; 41.71; 176.71; or 39.11
Average collection period 27.25; 78.73; 24.38; or 22.94
Payables deferral period 32.50; 41.07; 33.24; or 132.13
Cash conversion cycle 39.62; 122.77; 37.54; 45.88
B: Both the inventory conversion period and payables deferral period use the average daily COGS in their denominators, whereas the average collection period uses average daily sales in its denominator. Why do these measures use different inputs?
Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold.
Current assets should be divided by sales, but current liabilities should be divided by the COGS.
C. Is there generally a positive or negative relationship between net working capital and the cash conversion cycle?(In other words, if a firm has a high level of net working capital, is it likely to have a high or low cash conversion cycle?)
There is a positive relationship between net working capital and the cash conversion cycle.
There is a negative relationship between net working capital and the cash conversion cycle.
D. What are the four key factors in a firm’s credit policy?
Credit terms, discounts, credit standards, and collection policy
Credit period, discounts, credit standards, and collection policy
E. If the credit terms as published by a firm were 2/15, net 60, this means the firm will:
allow a 2% discount if payment is received within 15 days of the purchase, and if the discount is not taken the full amount is due in 60 days.
allow a 15% discount if payment is received within 2 days of the purchase, and if the discount is not taken the full amount is due in 60 days.
F. The management at Cranked Coffee Company wants to continue its internal discussions related to its cash management. One of the finance team members presents the following case to his cohorts:
Case in Discussion
Cranked Coffee Company’s management plans to finance its operations with bank loans that will be repaid as soon as cash is available. The company’s management expects that it will take 40 days to manufacture and sell its products and 35 days to receive payment from its customers. Cranked Coffee’s CFO has told the rest of the management team that they should expect the length of the bank loans to be approximately 75 days.
Which of the following responses to the CFO’s statement is most accurate?
The CFO is not taking into account the amount of time the company has to pay its suppliers. Generally, there is a certain length of time between the purchase of materials and labor and the payment of cash for them. The CFO can reduce the estimated length of the bank loan by this amount of time.
The CFO’s approximation of the length of the bank loans should be accurate, because it will take 75 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank.
Setting and implementing a credit policy is important for three main reasons:
It has a minor effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.
It has a major effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.

Answer:

Cranked Coffee Company

A. Cash conversion cycle = 122.77 days.

B. The measures use different inputs because:

Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold.

C. There is a negative relationship between net working capital and the cash conversion cycle.

D. Credit period, discounts, credit standards, and collection policy

E. If the credit terms as published by a firm were 2/15, net 60, this means the firm will:

allow a 2% discount if payment is received within 15 days of the purchase, and if the discount is not taken the full amount is due in 60 days.

F. The most accurate response to the CFO's statement is:

The CFO’s approximation of the length of the bank loans should be accurate, because it will take 75 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank.

G. Setting and implementing a credit policy is important for three main reasons:

It has a major effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.

Explanation:

a) Data and Calculations:

Annual sales             $10,200,000

Cost of goods sold    $6,630,000

Inventory                    $3,200,000

Accounts receivable $2,200,000

Accounts payable     $2,400,000

Inventory conversion period = Inventory ÷ (Cost of sales ÷ 365)

= $3,200,000/$6,630,000 * 365

= 176.17 days

Average collection period = Accounts receivable/Sales * 365

= $2,200,000/$10,200,000 * 365

= 78.73 days

Payables deferral period = Accounts payable/Cost of goods sold * 365

= $2,400,000/$6,630,000 * 365

= 132.13 days

Cash conversion cycle = Inventory conversion period + Average collection - Payables deferral period

= 176.17 + 78.73 - 132.13

= 122.77

On 1/1, Florida Power and Light Energy bought a single piece of equipment by paying $7,000 cash. They also incurred freight charges and taxes of $224 on 1/1 and paid for these items with cash, also. The market value of this equipment is $13,000. What amount should be recorded in Florida Power and Light's Equipment Account on 1/1?

a mixed economy combines features of other economic system by

I need help with Accounting homework. I am not understanding it

Nếu GDP = $1000, tiêu dùng = $600, thuế = $100, và chi tiêu chính phủ = $200, thì:

A. Tiết kiệm = $0, đầu tư =$0
B. Tiết kiệm = $300, đầu tư =$300
C. Tiết kiệm = $200, đầu tư =$200
D. Tiết kiệm = $200, đầu tư =$100

A company started the year with $1,500 of supplies on hand. During the year the company purchased additional supplies of $800 and recorded them as increase to the supplies asset. At the end of the year the company determined that only $300 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period

The mean of a set of data is 5.07 and its standard deviation is 3.39.
Find the z-score for a value of 9.65.

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A company purchases land and a building for $300,000. The appraisal attributes a fair market value (FMV) to the land of $180,000 and to the building of $220,000. As a result, the building’s cost will be booked at:____________

On December 31, the trial balance indicates that the supplies account has a balance, prior to the adjusting entry, of $269. A physical count of the supplies inventory shows that $102 of supplies remain. Analyze this adjustment for supplies using T accounts, and then formally enter this adjustment in the general journal.

Haier has achieved great success in becoming a global leader in the appliance industry and is doing so with these beneficial strategies.

a. True
b. False

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the indirect method.

a. True
b. False

Corner Store posts on its website an offer of a reward for information leading to the apprehension of a certain criminal. This offer could normally be terminated by:______.
A) a post on the website.
B) a notice in the local newspaper.
C) a sign in the brick and mortar store.
D) a sign posted in a police station.

Economic goals for sustainable development can be formulated ________. Group of answer choices by disentangling them from social goals only if we include environmental and social goals in the planning only if there is a complete overlap with social and environmental goals on their own terms without reference to environmental goals only if we exclude environmental goals

The Real Option Inc. is considering a new project. It believes that each year it would be able to sell 15 units at a $300,000 per-unit after-tax profit (i.e., per-unit operating cash flow) for the next five years. A $14.8 million initial investment will be required at the beginning of the project. The appropriate discount rate is 16 percent.

Required:
Calculate the base-case NPV of this project.

Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem’s expenses that are deductible for AGI this year (if any) under the following independent circumstances:___________a) Clem is self-employed and this year he incurred $525 in expenses for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of $3,600 to provide coverage for herself and Clem (not through an exchange).b) Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred expenses of $1,250 in utilities and $780 in depreciation.c) Clem paid self-employment tax of $15,300 (the employer portion is $7,650), and Wanda had $3,000 of Social Security taxes withheld from her pay.d) Clem paid $45 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires.

A stock has a market price of $25 and a standard deviation of returns of 24 percent. The $25 call option matures in 4 months and the risk-free rate is 2.89 percent. N(d1) is .555198 and N(d2) is .500096. What is the value of the call option per share of stock

Emily and Betsey are economists. Emily thinks that the wealthiest 10 percent of the U.S. population should be taxed a rate higher than the rest of society because they can better afford it. Betsey thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Emily and Betsey:______

What are the purchase goods for cash Rs. 12,000 and for credit Rs. 8,000 (journal entries)?

GHI Corporation, a California corporation, has a six-person board. At a regular board meeting, only two directors attend. No notice was sent to any of the directors. The two attending call directors Alice and Bob and put them on a conference call. The four talk about the corporation buying Blackacre and then all agree to a resolution for GHI to buy Blackacre from Third Party. The Bylaws of GHI state that an action of the board requires the consent of a majority of the directors present at a meeting, and that a quorum is a majority of the authorized directors.
Select one:
a. the purchase is authorized because a quorum was present and a majority of those present approved the action.
b. the purchase is not authorized, since all real estate transactions require shareholder approval
c. the purchase is not authorized because prior written notice must be sent to each director
d. the purchase is not authorized because a quorum was not present at the board meeting
e. Two of the above are correct.

Which of the following tasks is not required when using a two-stage activity-based costing model?A. Determining the cost per unit of activityB. Determining how much direct labor each cost object consumesC. Identifying activitiesD. Assigning costs to activities

Juanita worked hard all year so that she could go to nursing school the following year. She put her savings into a mutual fund that paid a nominal interest rate of 4 percent a year. The CPI was 252 at the beginning of the year and 257 at the end of the year. What was the real interest rate that Juanita earned?

Listed below are five technical accounting terms. Each of the following statements describes one of these technical terms. For each statement, indicate the term described.

Opportunity cost
Out-of-pocket cost
Joint products
Incremental analysis
Sunk cost
Split-off point
Relevant information

Each of the following statements may (or may not) describe one of these terms. For each statement, indicate the accounting term or terms described, or answer "none" if the statement does not correctly describe any of these terms.

a. Examination of differences between costs to be incurred and revenue to be earned under different courses of action.
b. A cost incurred in the past that cannot be changed as a result of future actions.
c. Costs and revenue that are expected to vary, depending on the course of action decided on.
d. The benefit foregone by not pursuing an alternative course of action.
e. Products made from common raw materials and shared production processes.
f. A cost yet to be incurred that will require future payment and may vary among alternative courses of action.
g. The point at which manufacturing costs are split equally between ending inventory and cost of goods sold.

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Assuming purchase costs are rising, determine which of the statements below are correct regarding the cost of goods sold under FIFO, LIFO and weighted average cost flow methods.A. Companies using FIFO will report the highest gross profit and net income. B. Companies using FIFO will pay higher taxes than companies using LIFO, assuming all else
being equal. C. Weighted average cost of goods sold will be between FIFO and LIFO costs of goods sold. D. Companies using FIFO will report the smallest cost of goods sold.E. Companies using LIFO will report the smallest cost of goods sold.

Link Co. purchased machinery that cost $3,000,000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a nine-year life and a $200,000 residual value. The error was discovered on December 20, 2021. Before the correction was made, and before the books were closed on December 31, 2018, retained earnings was understated by:__________

a. $3,000,000.
b. $2,066,667.
c. $2,377,778
d. $2,333,333.

'Economies of scale refers to Select one:
A. The notion that small firms are less bureaucratic and, therefore, more efficient than corporations
B. Public investments in highways, schools, utilities, etc.
C. The fact that large producers may be able to use more efficient technologies
D. The reallocation of labor from less productive to more productive uses.

According to the growth accounting studies, if you lived in a country where illiteracy was high and 40% of the children left school early and did not complete their education what would probably be the results for that country?
a. Average income in the country will see significant increases.
b. There would be both a human and economic loss.
c. The economic status of the country would continue to rise.
d. More technological breakthroughs would happen in this country.

Tỉnh nào ở Việt Nam nhiều cao su nhất

Maplewood Co. uses process costing to account for the production of canned energy drinks. Direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Cost per equivalent unit has been calculated to be $4.00 for conversion costs and $3.00 for materials. 2,000 units were in beginning inventory (100% complete for materials, 80% for conversion). 8,000 units were started and completed during the period. Ending inventory still in process was 4,000 units (100% complete for materials, 40% forconversion). The value of ending inventory using the FIFO method would be:______.
A. $18,400.00B. $23,133.20C. $31,933.20D. $65,000.00

Luker Corporation uses a process costing system The company had $ 172,500 of beginning Finished Goods Inventory on October 1. It transferred in $ 849,000 of units completed during the period . The ending Finished Goods Inventory balance on October 31 was $ 170,200 . The entry to account for the cost of goods sold in October is