Reference no: EM13574215

1.Carter Company earned net income of $350,000 last year. This year it wants to earn net income of $450,000. The company's fixed costs are expected to be $300,000, and variable costs are expected to be 70% of sales.

Instructions

(a) Determine the required sales to meet the target net income of $450,000 using the mathematical equation.

(b) Using a CVP income statement format, prove your answer.

2. Logan Company's budgeted sales and direct materials purchases are as follows.

                               Budgeted Sales           Budgeted D.M. Purchases

January                    $300,000                            $60,000

February                    330,000                             70,000

March                         350,000                             80,000

Logan's sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Hagen's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.

Instructions

(a) Prepare a schedule of expected collections from customers for March.

(b) Prepare a schedule of expected payments for direct materials for March.

3. Jack Birch invested his inheritance at 4% annual interest and left the money invested without withdrawing any of the interest for 10 years. At the end of the 10 years, Jack withdrew the accumulated amount of money plus the accumulated interest of $35,000. What amount had Jack invested, assuming the investment earned simple interest?

4. The amount you must deposit now in your savings account, paying 6% compound interest, in order to accumulate $15,000 for your first tuition payment when you start college in 4 years is____?

5. Davis Company is about to issue $900,000 of 8-year bonds paying a 12% interest rate with interest payable semiannually. The discount rate for such securities is 10%. Below are available time value of money factors that Davis uses to calculate compound interest.

To the closest dollar, how much can Davis expect to receive for the sale of these bonds?

6. Striegel Company has purchased equipment that requires annual payments of $60,000 to be paid at the end of each of the next 6 years. The appropriate discount rate is 12%. What amount will be used to record the equipment?

7. When determining the proceeds received when issuing a bond, the factor applied to the amount of the interest payments is determined from the table for the
1. present value of 1.
2. present value of an annuity of 1.

8. If a single future amount of $6,000 is to be received in 5 years and discounted at 6%, its present value is ____?

9. The amount you must deposit now in your savings account, paying 4% interest compounded annually, in order to accumulate $20,000 for a down payment 3 years from now on a new car is ____?

10. The amount you must deposit now in your savings account, paying 4% compound interest, in order to accumulate $5,000 for a down payment 4 years from now on a new car is ____?

11. Sturm Corporation earns 8% on an investment that will return $600,000, 5 years from now. Below is some of the time value of money information that Sturm has compiled that might help in planning compound interest decisions.

To the closest dollar, what is the amount Sturm should invest now to earn this rate of return?

12. Which of the following discount rates will produce the largest present value?

13. When determining the proceeds received when issuing a bond, the factor applied to the amount of the bond principal is determined from the table for the