1.

Listed below are several transactions that took place during the second and third years of operations for RPG Consulting.

	Year 2			Year 3
Amounts billed to customers for services rendered	$	340,000		$	440,000
Cash collected from credit customers		250,000			390,000
Cash disbursements:
Payment of rent		79,000			0
Salaries paid to employees for services rendered during the year		139,000			159,000
Travel and entertainment		29,000			39,000
Advertising		14,500			34,000

In addition, you learn that the company incurred advertising costs of $24,000 in year 2, owed the advertising agency $4,900 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.

Required:

1.

Calculate accrual net income for both years.

	Year 2	Year 3
Revenues	$340,000	$440,000
Expenses:
Rent
Salaries
Travel and entertainment
Advertising
Net income

2.	Determine the amount due the advertising agency that would be shown as a liability on RPGs balance sheet at the end of year 2.
Advertising liability at end of Year 2

2.

The following information applies to the questions displayed below.]

The balance sheet for Altoid Co. is shown below.

ALTOID CO.
Balance Sheet
At December 31, 2016
Assets:
Cash	$	350
Short-term investments		1,200
Accounts receivable (net)		1,300
Inventories		1,450
Property, plant, and equipment (net)		1,200
Total assets	$	5,500
Liabilities and shareholders' equity:
Current liabilities	$	1,450
Long-term liabilities		1,600
Paid-in capital		1,150
Retained earnings		1,300
Total liabilities and shareholders' equity	$	5,500

Selected 2016 income statement information for Altoid Co. includes:

Net Sales	$	9,700
Operating expenses		8,650
Income before interest and taxes		1,050
Interest expense		100
Income tax expense		285
Net income	$	665

Required:

Compute the following financial statement ratios for 2016:

Altoid Co.'s debt to equity ratio. (Round your answer to two decimal places.)

Debt to equity ratio: ?

3.

Plano Co. 12/31/16
Partial Trial Balance Data	Debits		Credits
Sales revenue			660,000
Interest revenue			72,000
Gain on sale of investments			122,000
Cost of goods sold	480,000
Selling expenses	138,000
Restructuring costs	38,000
Interest expense	28,000
General and administrative expenses	58,000

Plano had 50,000 shares of stock outstanding throughout the year. Income tax expense has not yet been accrued. The effective tax rate is 30%.

Required:

Prepare a multiple-step income statement with earnings per share disclosure. (Amounts to be deducted should be indicated with a minus sign. Round EPS answer to 2 decimal places.)

4.

Berry Farm produces organic tomatoes and strawberries. In June 2016, it transported 110 boxes of strawberries with a price of $16 per box to the Bay Farmers Market. Berry Farm paid an upfront fee of $120 to present its products at the market for one week, and the market earns a 25% profit margin on each item sold, but Berry Farm is responsible for any items that remain unsold at the end of the week.

Required:

The market was able to sell 65 boxes of strawberries to customers. How much revenue should Berry Farm recognize with respect to this transaction?

REVENUE: ?

5.

The following partial income statement and balance sheet information (in $ millions) comes from the Annual Report of Saratoga Springs Co. for the year ending 12/31/2016:

	Year ended 12/31/2016
Net sales		12,389
Total operating revenue		12,389
Cost of goods sold		5,767
Sales, general & administrative		2,269
Interest expense		616
Income before tax		867
Net income		642

	12/31/2016			12/31/2015
Cash and cash equivalents		1,175			104
Receivables, net		2,130			784
Inventories		1,495			799
Land, buildings and equipment at cost, net		17,740			6,168
Total assets		22,540			7,855
Accounts payable		8,942			3,631
Total current liabilities		8,942			3,631
Long-term debt		7,631			3,541
Deferred income taxes		591			623
Total liabilities		17,164			7,795
Minority interest		768			0
Retained earnings		4,608			60
Total stockholders' equity		5,376			60

Required:

Compute the profit margin on sales for 2016 of Saratoga Springs Co. (Round your answer to 1 decimal place.) PROFIT MARGIN: ?%

Required:

Compute the return on stockholders' equity for 2016 of Saratoga Springs Co. (Round your answer to 1 decimal place.) Return on stockholders equity: ? %

7.

Bill OBrien would like to take his wife, Mary, on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $24,500 inheritance from an uncle and intends to invest it for the trip. Bill estimates the trip will cost $31,000 and he believes he can earn 7% interest, compounded annually, on his investment. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Complete the following table to calculate the future value.

Table or calculator function:
Present Value:
n =
i =
Future Value:

Will he be able to pay for the trip with the accumulated investment amount?

	Yes
	No

8.

John has an investment opportunity that promises to pay him $17,000 in four years. He could earn a 7% annual return investing his money elsewhere. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

What is the maximum amount he would be willing to invest in this opportunity?

Amount: ?

9.

Leslie McCormack is in the spring quarter of her freshman year of college. She and her friends already are planning a trip to Europe after graduation in a little over three years. Leslie would like to contribute to a savings account over the next three years in order to accumulate enough money to take the trip. Assume an interest rate of 6%, compounded quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

How much will Leslie accumulate in three years by depositing $660 at the beginning of each of the next 12 quarters?

Table or calculator function:
Payment:
n =
i =
Future Value:

10.

10.

Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $13,500 beginning one year from today. The interest rate on the note is 6%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

What amount did Canliss borrow?

Table or calculator function:
Payment:
n =
i =
Present Value:

11.

The following information is taken from the 2013 annual report to shareholders of Hewlett-Packard (HP) Co.

	For Fiscal 2013			For Fiscal 2012
Provision for doubtful accounts	$	29	million	$	106	million
	At Fiscal Year-end 2013			At Fiscal Year-end 2012
Accounts receivable, net		15,906	million		16,437	million
Accounts receivable, gross		16,268	million		16,931	million

During Burns Company's first year of operations, credit sales totaled $152,000 and collections on credit sales totaled $111,000. Burns estimates that bad debt losses will be 1.5% of credit sales. By year-end, Burns had written off $360 of specific accounts as uncollectible.

Required:
1.	Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the entry to write-off specific accounts: ?

Record the bad debt expense: ?

2.	Show the year-end balance sheet presentation for accounts receivable.

Partial Balance Sheet

12.

A summary of Klugman Company's December 31, 2016, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:

Age Group	Amount		%
060 days	$52,000		.5
6190 days	18,000		1.0
91120 days	2,200		10.0
Over 120 days	1,000		50.0

The allowance for uncollectible accounts had a balance of $1,320 on January 1, 2016. During the year, bad debts of $670 were written off.

Required:

Prepare all journal entries for 2016 with respect to bad debts and the allowance for uncollectible accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the entry to write off specific accounts: ?

Record the entry to adjust allowance for collectible end?

General Journal Debit Credit

Transcation

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