Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Part One

Grace’s Rugs are holding a two-week carpet sale at Will’s Club, a local warehouse store. Grace’s Rugs plan to sell carpets for $500 each. The company will buy the carpets from a local distributor for $350 each, with the privilege of returning any un-sold units for a full refund. Will’s Club has offered Grace’s Rugs two payment alternatives for use of space.

Option One: A fixed payment of $5,000 for the sale period

Option Two: 10% of total revenues earned during the sale period

Assume Grace’s Rugs will incur no other costs.

Required:

A. Compute the breakeven point in units for (a) option 1 and (b) option 2.

B. At what level of revenues will Grace’s Rugs earn the same operating income under either option.

a) What range of unit sales will Grace’s rugs prefer option 1.

b) What range of unit sales will Grace’s rugs prefer option 2.

C. Briefly elucidate and interpret your answer to requirement 2.

D. Grace’s Rugs predict that 30 carpets each day will be sold on the first three days of the two week sale. The sale starts on a Sunday. On the subsequent 11 days of the sale, sales of carpets will diminish by 10% each day. Prepare a sales budget showing the sales of carpets each day in units and dollars. (Note that Grace’s Rugsis conservative and will round down if the percentage calculation results in a fraction.)

E. To meet these sales projections customers have been offered a ‘purchases now pay later’ scheme. Under this scheme it is estimated that 70% of customers will pay in full on the day of purchase for a 10% discount, 20% will pay half instantly and the remaining amount on last day of the sale for a 5% discount (given on the last day for the total amount), 8% will delay any payment instantly and will pay fully on the last day of the sale and 2% will be bad debts. These bad debts will be sold to a debt collection agency for 50% of the debt value on last day of sale. You are needed to present the cash collections schedule for the duration of sale.

F. A friend has contacted Grace’s Rugs and asked if they could use some of the local warehouse space throughout the same two week period to sell their household decorator items. The warehouse store is 200 square meters and they would like to rent 50 square meters from Grace’s Rugs. The cost of the local warehouse space for the two week period is $10,000.

a) Outline what issues Grace’s Rugs should consider in deciding whether to let 50 square meters to her friend.

b) If the warehouse space cost is allocated based on square meters what cost Will be charged to Grace’s Rugs and to her friend.

G. Compute the budgeted profit/loss for Grace’s Rugs assuming that the 50 square meters was left to her friend and that the expected sales as outlined above was not affected.

Part Two

1. Provide for a general definition of income statement, its purpose as well as its relation to Balance Sheet and Cash Flow statements?

2. What is an accumulation principle and what is the most common alternative to one?

3. Under which conditions (e.g. for whom/why/and so forth.) would you generate a deal-based Profit & Loss vs. periodical Profit & Loss?

4. What is the differentiation between a Debit Note and a Credit Note?

5. What are the Inco terms and how do they relate to the issues of accounting?

6. What is an open sales order?

7. Can you tell if a sales order can be considered open if delivery has happened but payment has not been done yet?

8. What is a back order and how would you link the concepts of a “backorder” and a “customer service”?

9. How would you measure the customer value?

10. What is the life time value of a customer? What advice would you give to a sales person based on the list of such values for a given sample of our customers?

11. How would you compute the amount of VAT that is owed to (by) the Tax Office by (to) the Company?

12. Give a number of exs for Payment terms as well as describe their meaning? Under which conditions would you make use of which terms?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91624

Have any Question? 


Related Questions in Accounting Basics

Question 1the company you work for has a large amount of

Question 1 The company you work for has a large amount of disposable cash and very little debt on its books. The board of directors has expressed an interest in taking this money and investing in equity and debt securiti ...

Company name bhp billiton - report 2000-2200

Company Name BHP Billiton - Report (2000-2200) words Introduction Approach of research study What they have done wrong which results in the crisis Issues in sustainability report Issues in what they claim of doing but th ...

Selected t-accounts of moore company are given below for

Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Manufacturing Overhead ________________________________________ Bal. 1/1 29,800 ________________________________________ Cre ...

Assignment lasa ipo presentation amp myaccountinglab

Assignment: LASA: IPO Presentation & MyAccountingLab Post-Tests This assignment will consist of two parts. Part I: IPO Presentation: You work for a medium sized privately held electronics firm which is considering transi ...

Ics manufacturing company produces plastic parts for the

ICS Manufacturing Company produces plastic parts for the automotive industry. Here is their Income Statement for 2015 - ICS Manufacturing Company Income Statement for 2015 Sales Revenue $35,500,000 Cost of Goods Sold 12, ...

1 identify an industry to focus on it is suggested that you

1) Identify an industry to focus on (It is suggested that you use an industry that is expanding rather than consolidating, but the choice is yours to make). Explain why you chose this industry and its environment. 2) Ide ...

Key information for the plant city divisionkey information

Key Information For The Plant City Division Key information for the Plant City Division (PCD) of Barkley Industries for 2015 are as follows: Revenues $15,000,000 Operating Income 1,800,000 Total Assets 10,000,000 PCD man ...

Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "free cash-flow valuations" please respond to the following: • Create an argument that use of the ...

Accounting essaywrite a 700- to 1050-word summary of the

Accounting Essay Write a 700- to 1,050-word summary of the team's discussion about IFRS versus GAAP, based on your team collaborative discussions. The summary should be structured in a subject-by-subject format. An intro ...

Assessment - written report - individual assessment purpose

Assessment - Written Report - individual assessment Purpose: This assessment is designed to reinforce the subject content and develop students' skills and application of knowledge of the subject content to business situa ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro