Assignment
1. The following information is available for Mergenthaler Corporation for the year ended December 31, 2017:
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Collection of principal on long-term loan to a supplier
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$16,000
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Acquisition of equipment for cash
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10,000
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Proceeds from the sale of long-term investment at book value
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22,000
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Issuance of common stock for cash
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20,000
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Depreciation expense
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25,000
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Redemption of bonds payable at carrying (book) value
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34,000
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Payment of cash dividends
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6,000
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Net income
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30,000
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Purchase of land by issuing bonds payable
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40,000
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In addition, the following information is available from the comparative balance sheet for Mergenthaler at the end of 2017 and 2016:
2017 2016
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2017
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2016
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Cash
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$148,000
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$91,000
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Accounts receivable (net)
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25,000
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15,000
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Prepaid insurance
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19.000
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13.000
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Total current assets
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$192.000
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$119.000
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Accountspayable
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$ 30,000
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$19,000
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Salaries and wages payable
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6.000
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7.000
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Totalcurrent liabilities
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$ 36.000
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$26.000
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REQUIREMENTS:
Prepare Mergenthaler's statement of cash flows for the year ended December 31, 2017, using the indirect method.
2. Here is financial information for Valdez Express Inc.
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December 31.2017
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December 31.2016
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Current assets
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$114,000
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$80,000
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Plant assets (net)
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414,000
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360,000
|
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Current liabilities
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91,000
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65,000
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Long-term liabilities
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134,500
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90,000
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Common stock, $1par
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149,500
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115,000
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Retained earnings
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153,000
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170,000
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REQUIREMENTS:
Prepare ascheduleshowing ahorizontal analysis for 2017 using 2016 asthe base year.
3. Kwik Delivery Service reports the following costs and expenses in June 2016.
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Indirect materials
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$ 8,400
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Driver's salaries
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$17,000
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Depreciation on equipment delivery
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11,200
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Advertising
|
5,100
|
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Dispatcher's salary
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5,000
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Delivery equipment repairs
|
300
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Property taxes on office building
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870
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Office supplies
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650
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CEO's salary
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12,000
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Office utilities
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2,490
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Gas and oil for delivery trucks
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3,200
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Repairs on office equipment
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180
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REQUIREMENTS:
Determine the total amount of (a) delivery service (product) costs and (b) period costs.
4. Erickson, Inc. makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $225,000.Variable costs are $14 per unit.
REQUIREMENTS:
(a) Compute break-even sales in dollars using the mathematical equation.
(b) Compute break-even sales using the contribution margin ratio.
(c) Compute margin of safety ratio assuming actual sales are $937,500.
(d) Compute the sales required to earn net income of $150,000, using the mathematical equation.