1) What are the key elements of total quality management?
2) Martha Hanson operates a small gift shop that sells various antiques, such as
glassware. She employs two clerks who make sales to customers, accept returns when a
customer is dissatisfied with merchandise, and put new merchandise on display. One of
the clerks, Jill Hays, was hired recently. Martha had always done all the accounting for
the store and had made bank deposits. However, Jill has offered to do the accounting for
the store during slow periods when there are no customers in the store; she also has
begun making bank deposits as she leaves for the day. Having Jill take these
responsibilities allows Martha more time for acquiring merchandise for the store and
for personal errands. What potential risks for the success of Martha’s business are
present in this situation?
3) Present value factors
The present value of an annuity of $1 at 8% has a factor for 3 periods of 2.577097; for 5
periods at 8% the factor is 3.992710 . For 10% at 5 periods the factor is 3.790787. For
12% at 5 periods the factor is 3.604776 .
Denver Company is considering purchasing a capital investment that is expected to
provide annual cash inflows of $10,000 per year for 3 years. Assuming that Denver’s
required rate of return is 8%, what is the present value of these cash inflows? Round to
the nearest dollar.
4) Describe the difference between temporary and permanent accounts and indicate
which accounts are closed.
5) A management accountant was working on a cash budget for Barcelona Company
when he accidentally spilled his coffee. Some of the liquid splattered on his working
papers rendering a few of the amounts illegible. The budget with missing amounts
indicated is provided below:
The company desires a cash cushion of $5,000 to start each month. In any month in
which there is cash shortage the company’s bank will extend it a loan equal to the
shortage amount. The loan is assumed to have been made on the last day of the month.
Any time the company has a cash surplus it must repay as much of any outstanding
loans as possible. The bank charges monthly interest of 1% on any outstanding loan
balance.
Required:
Compute the missing amounts and enter them in the following table:
6) Stevenson’s Electronics is a relatively small company that provides
computer-assisted technology to manufacturing companies. During the last few years,
the company has begun to take budgeting seriously. Each year, the budget is developed
during a two-day retreat of the company’s top management. Lower-level employees say
that the budget reflects unrealistic targets that they cannot meet even with their best
efforts. What problems are there with Stevenson’s budgeting process, and what can be
done about them?
7) Indicate how the event affects the elements of the financial statements. Use the
following letters to record your answer in the box shown below each element:
You do not need to enter amounts.
Liu Corporation received $105,000 cash from earning revenue.