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Accounting questions




Question;1.McCarty Pointers Corporation expects to begin operations on January 1, 2012, it will operate as a specialty sales company that sells laser pointers over the Internet. McCarty expects sales in January 2012 to total $200,000 and to increase 10 percent per month in February and March. All sales are on account. McCarty expects to collect 70 percent of accounts receivable in the month of sale, 20 percent in the month following the sale, and 10 percent in the second month following the sale.Required:a. Prepare a sales budget for the first quarter of 2012.b. Determine the amount of sales revenue McCarty will report on the first 2012 quarterly pro forma income statement.c. Prepare a cash receipts schedule for the first quarter of 2012.d. Determine the amount of accounts receivable as of March 31, 2012.2. Preparing pro form income statements with different assumptions. Top executive officers of Zottoli Company, a merchandising firm, are preparing the next year?s budget. The controller has provided everyone with the current year?s projected income statement. Sales revenue $2,000.000 Cost of goods sold 1,400,000 Gross profit 600,000 Net income 340,000 Cost of goods sold is usually 70 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales plus a fixed cost of $60,000. The president has announced that the company?s goal is to increase net income by 15 percent. Required a. What percentage increase in sales would enable the company to reach its goal? Support your answer with a pro forma income statement. b. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 2 percent. What else can the company do to reach its goal? Prepare a pro forma income statement illustrating your proposal. c. The company decides to escalate its advertising campaign to boost consumer recognition, which will increase selling and administrative expenses to $340,000. With the increased advertising, the company expects sales revenue to increase by 15 percent. Assume that cost of goods sold remains a constant proportion of sales. Can the company reach its goal?3. P14-20 Kinnion Medical Clinic has budgeted the following cash flows. January February March Cash receipts$ 100,000 $106,000 $126,000 Cash payments For inventory purchases 90,000 72,000 85,000 For S&A expenses 31,000 32,000 27,000 Kinnion Medical had a cash balance of $8,000 on January 1. The company desires to maintain a cash cushion of $5,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month, the interest rate is 1 percent per month. Kinnion pays its vendor on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this year?s quarterly results. Required Prepare a cash budget. (Round all computations to the nearest whole dollar.)


Paper#44063 | Written in 18-Jul-2015

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