1) A company reported the following information for a financial year:

Profit from ordinary activities before income tax expense 72 000
Income tax expense                                    20 000
Depreciation expense                                    8 000
Issue of shares                                            40 000
Loan made to another company                   6 000
Increase in accounts receivable                    1 000
Decrease in inventories                                 2 000
Cash received from loans receivable             4 000
Dividends paid                                              2 000

What is the net cash inflow (outflow) from investing activities?

2)The management of Zigby Manufacturing prepared the following estimated balance sheet for March, 2015:

Quest
   
ZIGBY MANUFACTURING
Estimated Balance Sheet
                                                     31-Mar-15
Assets
  Cash                                                        $                       54,000   
  Accounts receivable                                                        354,375   
  Raw materials inventory                                                  100,495   
  Finished goods inventory                                                 333,000   

  Total current assets                                                         841,870   
  Equipment, gross                                                             628,000   
  Accumulated depreciation                                              (164,000)  

  Equipment, net                                                                464,000   

  Total assets                                            $                     1,305,870   

  Liabilities and Equity
  Accounts payable                                                              212,195   
  Short-term notes payable                                                   26,000   

  Total current liabilities                          $                            238,195   
  Long-term note payable                                                    514,000   
  
  Total liabilities                                                                    752,195   
  Common stock                                                                  349,000   
  Retained earnings                                                              204,675   

  Total stockholders' equity                                                  553,675   

  Total liabilities and equity                      $                       1,305,870 

To prepare a master budget for April, May, and June of 2015, management gathers the following information.

a.Sales for March total 22,500 units. Forecasted sales in units are as follows: April, 22,500; May, 19,500; June, 21,700; July, 22,500. Sales of 254,000 units are forecasted for the entire year. The product’s selling price is $22.50 per unit and its total product cost is $18.50 per unit.

b.Company policy calls for a given month’s ending raw materials inventory to equal 50% of the next month’s materials requirements. The March 31 raw materials inventory is 5,025 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5,400 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.

c.Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s expected unit sales. The March 31 finished goods inventory is 18,000 units, which complies with the policy.

d.Each finished unit requires 0.50 hours of direct labor at a rate of $10 per hour.

e.Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.10 per direct labor hour. Depreciation of $30,790 per month is treated as fixed factory overhead.

f.Sales representatives’ commissions are 6% of sales and are paid in the month of the sales. The sales manager’s monthly salary is $4,400.

g.Monthly general and administrative expenses include $26,000 administrative salaries and 0.5% monthly interest on the long-term note payable.

h.The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of the sale).

i.All raw materials purchases are on credit, and no payables arise from any other transactions. One month’s raw materials purchases are fully paid in the next month.

j.The minimum ending cash balance for all months is $54,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.

k.Dividends of $24,000 are to be declared and paid in May.

l.No cash payments for income taxes are to be made during the second calendar quarter. Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter.

m.Equipment purchases of $144,000 are budgeted for the last day of June

3)Blair is a retailer of assorted baby products. The sales forecast for the coming months is:

                            Revenues
  April (actual)        $                  176,000
  May (actual)        $                   206,000
  June                     $                   219,000
  July                      $                   243,000
  August                $                   234,000

All sales are credit sales. The cash collection pattern is 20% in the month of sale, 65% in the month following the sale, and the remainder in the second month following the sale. Accounts receivable on June 1 were $191,200.

a.Prepare a cash receipts schedule for the period June through August (by month).

b.What will the Accounts Receivable balance be on August 31?

4) XYZ Company's comparative balance sheet and income statement for the most recent year are shown below:

XYZ Company
Comparative Balance Sheet
As of December 31
Ending Beginning
Assets Balance Balance
Cash                                                                 1,400,000                      1,000,000
Accounts Receivable                                         2,100,000                      1,500,000
Inventory                                                          5,000,000                      4,300,000
Prepaid Expenses                                                 200,000                          600,000
Plant and Equipment                                       19,000,000                      14,000,000
Less: Accumulated Depreciation                     (6,500,000)                     (5,400,000)
Long-term Investments                                    7,000,000                        9,000,000
Total Assets                                                   28,200,000                       25,000,000
Liabilities and Stockholders' Equity
Accounts Payable                                            2,600,000                           2,500,000
Accrued Liabilities                                            1,000,000                           1,200,000
Taxes Payable                                                  4,900,000                           4,900,000
Mortgage Payable                                             5,000,000                           4,000,000
Common Stock                                                 8,000,000                           7,000,000
Retained Earnings                                             6,700,000                           5,400,000
Total Liabilities and Stockholders' Equity         28,200,000                         25,000,000
XYZ Company
Income Statement For the year ending,
December 31, 20xx
Sales                                                                23,000,000
Less: Cost of Goods Sold                               (12,000,000)
Gross Margin                                                   11,000,000
Less: Operating Expenses                              (7,000,000)
Operating Income                                            4,000,000
Gain on Sale of Long-term Investments            500,000
Income Before Taxes                                       4,500,000
Less: Income Taxes                                      (1,400,000)
Net Income                                                     3,100,000

Notes: Dividends of P18 Million were declared and paid during the year. The gain on sale of long-term investments was from the sale of investments for P25 Million in cash. These investments had an original cost of P20 Million. There were no retirements or disposals of plant or equipment during the year.

Required: 1. Prepare a cash flow statement using the indirect method of computing cash flow from operations.

5 ) ariable Overhead Spending and Efficiency Variances, Columnar and Formula Approaches

Gladys Company provided the following information:

Required:

1. Using the columnar approach, calculate the variable overhead spending and efficiency variances.

2. Using the formula approach, calculate the variable overhead spending variance.

3. Using the formula approach, calculate the variable overhead efficiency variance.

4. Calculate the total variable overhead variance.