Acc 305 final | Accounting homework help

1.The Higgins Company has just purchased a piece of equipment at a cost of $300,000. This equipment will reduce operating costs by $55,000 each year for the next eleven years. This equipment replaces old equipment which was sold for $14,000 cash. The new equipment has a payback period of: (Ignore income taxes.)  (Round your answer to 1 decimal place.)
A.16.2 Years
B.5.5 Years
C.5.2 Years
D.11.10
 
2.The management of Serpas Corporation is considering the purchase of a machine that would cost $170,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $41,000 per year. The company requires a minimum pretax return of 11% on all investment projects. (Ignore income taxes.)
 
Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
 
 
The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
A.-18,464
B. 35,000
C.-33,811
D. 27,384
3. Lett Corporation is investigating buying a small used aircraft for the use of its executives. The aircraft would have a useful life of 12 years. The company uses a discount rate of 17% in its capital budgeting. The net present value of the investment, excluding the salvage value of the aircraft, is -$578,526. (Ignore income taxes.)
 
Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables.
 
 
Management is having difficulty estimating the salvage value of the aircraft. How large would the salvage value of the aircraft have to be to make the investment in the aircraft financially attractive? (Round discount factor(s) to 3 decimal places and final answers to the nearest dollar amount.)
A.$3,806,092
B.$3,403,094
C.$98,349
D.$578,526
4.
The management of Londo Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 4 years. The company uses a discount rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is −$316,080. (Ignore income taxes.)
 
Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
 
 
How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)
 
$31,608 
 
$316,080 
 
$79,020 
 
$99,710 
 
5. 
The management of Melchiori Corporation is considering the purchase of a machine that would cost $360,000, would last for 6 years, and would have no salvage value. The machine would reduce labor and other costs by $116,000 per year. The company requires a minimum pretax return of 14% on all investment projects. (Ignore income taxes.)
 
Click here to view Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.
 
 
The present value of the annual cost savings of $116,000 is closest to: (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)
 
$451,124 
 
$175,448 
 
$1,091,462 
 
$696,000 
6. 
Gull Inc. is considering the acquisition of equipment that costs $550,000 and has a useful life of 6 years with no salvage value. The incremental net cash flows that would be generated by the equipment are: (Ignore income taxes.)
 
 Incremental net
cash flows
Year 1$145,000         
Year 2$195,000         
Year 3$156,000         
Year 4$165,000         
Year 5$155,000         
Year 6$135,000         
 
Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables.
 
 
If the discount rate is 13%, the net present value of the investment is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
 
 
$435,000 
 
$148,776 
 
$89,228 
 
$591,264 
7. 
Charley has a typing service. He estimates that a new computer will result in increased cash inflow $1,100 in Year 1, $1,500 in Year 2 and $2,500 in Year 3. (Ignore income taxes.)
 
Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables.
 
 
If Charley’s required rate of return is 12%, the most that Charley would be willing to pay for the new computer would be: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
 
$3,459 
 
$2,296 
 
$3,278 
 
$3,958 
8. 
Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.)
 
  Investment required in equipment$460,000     
  Annual cash inflows$77,000     
  Salvage value$0     
  Life of the investment16 years    
  Discount rate12%  
 
The simple rate of return on the investment is closest to: (Round your answer to the closest interest rate.)
 
5% 
 
10% 
 
15% 
 
11% 
 
9.
Sibble Corporation is considering the purchase of a machine that would cost $330,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $25,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $63,000. The company requires a minimum pretax return of 11% on all investment projects. (Ignore income taxes.)
 
Click here to view Exhibit 13B-1 and Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
 
The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
 
−$45,194 
 
−$33,144 
 
−$8,144 
 
−$21,094 
 
10. 
Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.)
 
  Investment required in equipment$470,000     
  Annual cash inflows$77,000     
  Salvage value$0     
  Life of the investment20 years     
  Discount rate14%  
 
Click here to view Exhibit 13B-2 to determine the appropriate discount factor(s) using tables.
 
 
The internal rate of return on the investment is closest to: (Round discount factor(s)  to 3 decimal places and final answer to the closest interest rate.)
 
12% 
 
14% 
 
16% 
 
18% 
 
11. 
Cezar Corporation’s comparative balance sheet appears below:
 
Cezar Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Current assets: 
  Cash and cash equivalents$ 84,000   $ 51,000   
  Accounts receivable33,900   41,000   
  Inventory76,200   71,000   
  Total current assets194,100   163,000   
  Property, plant, and equipment535,500   510,000   
  Less accumulated depreciation195,500   171,000   
  Net property, plant, equipment340,000   339,000   
  Total assets$534,100   $502,000   
  Liabilities and Stockholders’ Equity 
  Current liabilities: 
  Accounts payable$ 27,800   $ 31,000   
  Accrued liabilities61,800   71,000   
  Income taxes payable63,600   61,000   
  Total current liabilities153,200   163,000   
  Bonds payable96,200   91,000   
  Total liabilities249,400   254,000   
  Stockholders’ equity: 
  Common stock42,000   51,000   
  Retained earnings242,700   197,000   
  Total stockholders’ equity284,700   248,000   
  Total liabilities and stockholders’ equity$534,100   $502,000   
 
The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $48,400 and its cash dividends were $2,700. The company did not retire any bonds payable or issue any common stock during the year. Its net cash provided by operating activities and net cash used in financing activities are:
 
net cash provided by operating activities, $31,600; net cash used in financing activities,$7,900 
 
net cash provided by operating activities, $31,600; net cash used in financing activities,$6,500 
 
net cash provided by operating activities, $65,000; net cash used in financing activities,$6,500 
 
net cash provided by operating activities, $65,000; net cash used in financing activities,$7,900 
 
12. 
Nordquist Company’s net income last year was $31,000. The company did not sell or retire any property, plant, and equipment last year. Changes in selected balance sheet accounts for the year appear below:
 
 Increases
(Decreases)
  Asset and Contra-Asset Accounts: 
    Accounts receivable$15,500   
    Inventory$(4,000)  
    Prepaid expenses$11,000   
    Accumulated depreciation$28,000   
  Liability Accounts: 
    Accounts payable$15,000   
    Accrued liabilities$(8,500)  
    Income taxes payable$3,100   
 
Based solely on this information, the net cash provided by operating activities under the indirect method on the statement of cash flows would be:
 
$68,600 
 
$15,900 
 
$46,100 
 
$91,100 
 
13.  Last year Burford Company’s cash account decreased by $33,000. Net cash used in investing activities was $8,800. Net cash provided by financing activities was $29,500. On the statement of cash flows, the net cash flow provided by (used in) operating activities was:
 
$20,700 
 
$(53,700) 
 
$(33,000) 
 
$(12,300) 
 
 
 
14. 
Mccloe Corporation’s balance sheet and income statement appear below:
 
Mccloe Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Cash and cash equivalents$ 58      $ 43      
  Accounts receivable48      62      
  Inventory78      62      
  Property, plant and equipment535      520      
  Less: accumulated depreciation275      262      
  Total assets$444      $425      
  Liabilities and stockholders’ equity: 
  Accounts payable$ 71      $ 57      
  Accrued liabilities44      28      
  Income taxes payable57      57      
  Bonds payable77      144      
  Common stock47      42      
  Retained earnings148      97      
  Total liabilities and stockholders’ equity$444      $425      
 
  Income Statement
  Sales$568  
  Cost of goods sold360  
  Gross margin208  
  Selling and administrative expenses141  
  Net operating income67  
  Gain on sale of plant and equipment22  
  Income before taxes89  
  Income taxes32  
  Net income$ 57  
 
Cash dividends were $6. The company did not issue any bonds or repurchase any of its own common stock during the year. The net cash provided by (used in) financing activities for the year was:
 
rev: 05_24_2013_QC_31013 
 
$(67) 
 
$(68) 
 
$(6) 
 
$5 
 
15. 
Lueckenhoff Corporation’s most recent balance sheet appears below:
 
Lueckenhoff Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Cash and cash equivalents$ 44      $ 40      
  Accounts receivable59      52      
  Inventory86      80      
  Property, plant and equipment790      732      
  Less: accumulated depreciation289      206      
  Total assets$690      $698      
  Liabilities and stockholders’ equity: 
  Accounts payable$ 37      $ 34      
  Bonds payable460      668      
  Common stock72      64      
  Retained earnings121      (68)     
  Total liabilities and stockholders’ equity$690      $698      
 
The company’s net income for the year was $242 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $53. The net cash provided by (used in) operating activities for the year was:
 
$315 
 
$73 
 
$169 
 
$368 
 
16.
Hocking Corporation’s comparative balance sheet appears below:
 
Hocking Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Current assets: 
  Cash and cash equivalents$ 47,000   $ 27,000   
  Accounts receivable22,300   27,000   
  Inventory61,700   57,000   
  Prepaid expenses15,300   17,000   
  Total current assets146,300   128,000   
  Property, plant, and equipment356,000   337,000   
  Less accumulated depreciation176,000   144,000   
  Net property, plant, and equipment180,000   193,000   
  Total assets$326,300   $321,000   
  Liabilities and Stockholders’ Equity 
  Current liabilities: 
  Accounts payable$ 21,700   $ 18,000   
  Accrued liabilities65,700   57,000   
  Income taxes payable49,700   47,000   
  Total current liabilities137,100   122,000   
  Bonds payable64,500   77,000   
  Total liabilities201,600   199,000   
  Stockholders’ equity: 
  Common stock34,300   38,000   
  Retained earnings90,400   84,000   
  Total stockholders’ equity124,700   122,000   
  Total liabilities and stockholders’ equity$326,300   $321,000   
 
The company’s net income (loss) for the year was $8,800 and its cash dividends were $2,400. It did not sell or retire any property, plant, and equipment during the year.
 
The company’s net cash used in investing activities is:
 
$19,000 
 
$36,700 
 
$13,000 
 
$51,000 
 
 
17. Hocking Corporation’s comparative balance sheet appears below:
 
Hocking Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Current assets: 
  Cash and cash equivalents$ 57,000   $ 37,000   
  Accounts receivable31,300   37,000   
  Inventory72,700   67,000   
  Prepaid expenses24,300   27,000   
  Total current assets185,300   168,000   
  Property, plant, and equipment374,000   347,000   
  Less accumulated depreciation196,000   164,000   
  Net property, plant, and equipment178,000   183,000   
  Total assets$363,300   $351,000   
  Liabilities and stockholders’ equity 
  Current liabilities: 
  Accounts payable$ 32,700   $ 28,000   
  Accrued liabilities76,700   67,000   
  Income taxes payable60,700   57,000   
  Total current liabilities170,100   152,000   
  Bonds payable59,000   87,000   
  Total liabilities229,100   239,000   
  Stockholders’ equity: 
  Common stock45,400   48,000   
  Retained earnings88,800   64,000   
  Total stockholders’ equity134,200   112,000   
  Total liabilities and stockholders’ equity$363,300   $351,000   
 
The company’s net income (loss) for the year was $31,000 and its cash dividends were $6,200. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
 
The company’s net cash provided by operating activities is:
 
$89,500 
 
$78,100 
 
$83,800 
 
$51,800 
 
18. Boole Corporation’s net cash provided by operating activities was $125; its capital expenditures were $68; and its cash dividends were $27. The company’s free cash flow was:
 
$30 
 
$98 
 
$57 
 
$220 
 
19.
Financial statements of Ansbro Corporation follow: 
 
Ansbro Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Cash and cash equivalents$ 38      $ 35      
  Accounts receivable94      86      
  Inventory53      45      
  Property, plant and equipment738      620      
  Less: accumulated depreciation358      313      
  Total assets$565      $473      
  Liabilities and stockholders’ equity: 
  Accounts payable$ 71      $ 80      
  Bonds payable165      250      
  Common stock104      86      
  Retained earnings225      57      
  Total liabilities and stockholders’ equity$565      $473      
 
  Income Statement
  Sales$775  
  Cost of goods sold438  
  Gross margin337  
  Selling and administrative expenses104  
  Net operating income233  
  Income taxes40  
  Net income$ 193  
 
Cash dividends were $25. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company’s statement of cash flows.
 
The net cash provided by (used in) investing activities for the year was:
 $118 
 $(73) 
 $73 
 $(118) 
 
 
 
 
20. 
Schleich Corporation’s most recent balance sheet appears below:
 
Schleich Corporation
Comparative Balance Sheet
 Ending
BalanceBeginning
Balance
  Assets: 
  Cash and cash equivalents$ 42      $ 31      
  Accounts receivable40      27      
  Inventory52      67      
  Property, plant and equipment744      552      
  Less: accumulated depreciation286      264      
  Total assets$592      $413      
  Liabilities and stockholders’ equity: 
  Accounts payable$ 57      $ 74      
  Accrued liabilities22      20      
  Income taxes payable45      30      
  Bonds payable107      168      
  Common stock87      82      
  Retained earnings274      39      
  Total liabilities and stockholders’ equity$592      $413      
 
Net income for the year was $330. Cash dividends were $62. The company did not sell or retire any property, plant, and equipment during the year. The net cash provided by (used in) operating activities for the year was:
 
$306 
 
$24 
 
$465 
 
$354