1) Indicate how the event affects the elements of the financial statements. If the
transaction affects a given element of the financial statements, enter the dollar amount
below that financial statement element with a plus to indicate an increase or a minus for
a decrease. If the item affects cash flow, indicate whether it is an operating activity,
investing activity, or financing activity.
Dune Corporation acquired $20,000 cash by issuing common stock to investors.
2) What is benchmarking? How is it used to improve a company’s operations?
3) What are typical cash outflows associated with capital investments?
4) How are indirect costs assigned to products?
5) Go-Smart Company is considering a three-year capital investment that will return
$120,000 per year. The present value of this annuity at the company’s required rate of
return of 10% is $298,422.
Required:
Complete the table that has been started below to show the return on investment at 10%
and the amount of investment recovered each year. Remember that the investment
balance should be zero at the end of the three years.
6) Company E has a contribution margin of $32 per unit and fixed costs of $300,000,
and it desires to earn a profit of $100,000. How would you calculate the volume of sales
to achieve this profit, and what is the result when you do this calculation?
7) The Furniture Division of Waverly Company reports the following results for 2012:
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture
Division.
Based on the information provided for Furniture, calculate its margin and turnover for
2012, and then use these amounts to calculate ROI.
8) The following items appeared on the financial statements of Moore, Inc. on
December 31, 2012:
On September 10, 2012, when the market value of the Moore stock was $150, the
company declared and distributed a 10% stock dividend. Indicate whether each of the
following statements is true or false.
1>Total equity would not be affected by the stock dividend
2>Total paid-in capital would be $115,000 after the dividend had been distributed
3>Cash flow from financing activities would decrease by $15,000 as a result of the
stock dividend
4>A stock dividend is an asset use transaction
5>Retained earnings would increase by $15,000 as a result of the stock dividend