A customer of the bank, Raj Kami, wants to deposit $100,000 in a savings account that pays a nominal rate of 8%.
If the bank compounds interest annually, how much will the customer have in his account 3 years from now?
What would the balance be in 3 years from now if the bank used quarterly compounding rather than annual compounding?
If Raj Kami deposited the $100,000 in 4 equal payments of $25,000 each at the end of years 1, 2, 3, and 4. How much would he have in the savings account at the end of year 4, based on 8% annual compounding?
Raj Kami wants to know how long it will take his sum of money to double if the growth rate per year is 8%
Raj Kami wants to buy a car, and a local bank will lend him $20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment? What is the loan’s effective (or equivalent) rate EFF?
What is the present value of $100,000 to be received in 4 years if the appropriate interest rate is 5%?
Jackson Corporation’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. The bonds have a yield to maturity of 10%. What is the current market price of these bonds?
Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 10 years, have a face value of $1,000, and a yield to maturity of 9%. What is the price of the bonds?
Wilson Wonders’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $900. What is their yield to maturity?
What is the present value of a perpetuity that pays $1,000 per year if the appropriate interest rate is 5%?
Contact a financial executive (i.e. a corporate CFO or other high ranking accounting or finance executive such as theContact a financial executive (i.e. a corporate CFO or other high ranking accounting or finance executive such as the Controller, VP of Finance, etc.) to arrange a brief interview for the class. You can choose a financial executive to interview from your company, a company of interest, a contact from a business acquaintance, a contact from LinkedIn, etc.
Ask the following questions:
What is the nature of the organization (e.g. industry, products/services offered, markets served, types of customers)?
What are the steps to the company’s financial planning process?
How does the financial planning process align with the company’s strategic goals?
How does the process motivate or evaluate performance?
Write a summary of the interview experience and the responses to your questions.
Citation requirements: 2-3 scholarly sources that support the rationale for the organization’s financial planning process.
Word Count: 500 words
Introduction to Management AccountingFinance Assignment Help BSD110 ACCOUNTING
2 HOURS 30 MINUTES
This is just a sample of questions from topics 1 to 12 so please do not base this as your only form of revision for the final exam.
We recommend you look at our exam checklist; prepare your textbook with sticky notes; highlight your lecture notes/workshop materials; have all your completed class activities/homework questions and solutions ready.
Make sure you understand the content so that you can apply it: you need to know the material well because you need to be focussed on answering the questions, not wasting time looking up topics.
Remember that you will need a calculator and make sure you are using Firefox as your browser.
What do you think the impact of COVID-19 could have on business Cash Flow for a business like QANTAS?
Discuss which section/s on the Cash Flow Statement you believe would be affected and why.
Qantas has disclosed in their annual report the following key performance Safety figures.
Apply one of the 3 CSR theories explaining why you believe that theory applies.
A cash register is located in each department of Kirra’s Krazy Store.The register shows the amount of each sale, the cash received from the customer, and any change returned to the customer.The machine also produces a customer receipt but keeps no record of transactions.At the end of the day, the assistant counts the cash in the register and deposits it in the store’s bank account.
What are two internal control weaknesses over cash receipts in the above situation?
How can the internal controls be improved to overcome these weaknesses?
(a)Cameron Ltd purchased a new photocopier on 1 July, 2015 at a cost of $16,500.The machine has an estimated residual value of $1,500 and an estimated useful life of 5 years or 30,000 copies.Complete the table for each of the 5 years under each depreciation method.
Assume that actual production in each year was 5,000, 4,000, 8,000, 7,000 and 6,000 copies respectively.
For the Reducing Balance method use 35% as the rate.You are required to round your calculations to the nearest whole dollar.
Straight line Units of Use Reducing Balance (35% rate)
(b) According to the Australian Accounting Standards, what are the three factors, which contribute to the decline in service potential of a depreciable non- current asset?Briefly describe these three factors.Answer in point form.
(c) XYZ Company purchased a printing machine for $20,000 on 1 July, 2015.
This machine is a non-current asset and is depreciated using the straight-line basis.On 30 September, 2019, the machine was completely overhauled with a new motor at a cost of $5,000.This will extend the useful life by 5 years.
How should this $5,000 expenditure on the overhaul be treated in the books of XYZ Company?Give the criteria to support your decision.
The following information is relevant for sales and purchases of inventory during January. Assume the business uses the perpetual inventory method.
March1Beginning Inventory150 items at $3 each = $450
March 14Purchases450 items at $6 each = $2,700
March 25 Sales300 items at $10 each = $3,000
March 31Ending Inventory300 items
Calculate the cost of goods sold and the value of ending inventory for each of the methods indicated below given the information about purchases and sales during the month.
1.Cost of goods sold using average cost$__________
2.Cost of goods sold using FIFO $__________
3.Ending inventory using average cost$__________
4.Ending Inventory using FIFO $__________
Which method will give the highest profit for January and why?
(c)Explain the Lower of Cost or Net Realisable Value (NRV) rule.
(d)Prepare the journal entries required for the sale (assume it was a cash sale) on January 25 using the FIFO method above in Part (a).
Gala Greetings sells greeting card boxes for $5.00 per box.Variable costs are $2.00.The business expects to sell 1,500 boxes of greeting cards.Fixed costs are $2,350.
Round calculations to the nearest whole number.
What is the contribution margin per unit?
What is the breakeven point in units?
What is the breakeven point in sales dollars?
What is the profit if the business sells 1,500 boxes?
What Sales level in units and sales dollars is required to make a profit of $1,000?
(b)Prepare an Income Statement in Contribution Margin Format for Gala Greetings assuming that the business sells 1,500 boxes.
(c)In general, what is the effect on the breakeven point if variable costs increase?
The adjusted trial balance for King Enterprises for the year as at 30 June 2020 is below.
Adjusted Trial Balance
as at 30/6/2020
Cash at Bank
Accumulated Depreciation – Furniture
Accumulated Depreciation – Building
Unearned Service Revenue
Depreciation Expense – Furniture
Depreciation Expense – Building
Prepare the following financial reports for King Enterprises on the templates provided below:
i.The Income Statement
ii.Statement of Changes in Equity
Insert the correct headings for each financial statement.
Statement of Changes in Equity
CASH FLOW STATEMENT
The following information has been extracted from the books of Thomas Enterprises for the year ended 30 June 2020:
Details of cash account:
Cash balance at start of year29,000
Cash balance at end of year—overdraft (9,000)
Cash receipts during year
Capital contributed 4,000_____________
Cash payments during year
Accounts payable 185,000
Payment of mortgage20,000
Payment for office equipment22,500
Payment for land77,500_____________
Prepare a cash flow statement for the year ended 30 June 2020 for Thomas Enterprises on the following page.
Net Profit for Thomas Enterprises was $250,000, explain why this figure is different to the net cash provided from operating activities.
CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
McLeod Enterprises has calculated the following ratios for the past 2 years:
Average Collection Period
Rate of Return on Total Assets (ROA)
Fill in the table below for McLeod Enterprises based on the ratios given
What is the relevant category for this ratio?
Is the change in the ratio from 2019 to 2020 good news or bad news?
What is a guideline for this ratio for this business in Australia?
Average Collection Period
Rate of Return on Total Assets (ROA)
Indicate with a ü in the spaces below, the appropriate classification of the following items in the financial statements.
Non -Current Liability
Loan Payable (due 2030)
Colin and Jane form a partnership on 1 July 2019.
Colin’s contribution is $20,000 cash and $80,000 inventory.
Jane’s contribution is $16,000 cash and land that cost $125,000 but has a market value of $250,000 as well as a loan payable of $50,000.
Prepare the general journals to set up the partnership on 1 July 2019.
The trial Balance of Troy’s Terrific Tutoring as at the 30th June and the information for the month-end adjustments are as follows:
Troy’s Terrific Tutoring
Trial Balance 30/6/2020
Unearned service Revenue
Adjusting entry information:
Unearned service revenue earned during the month $500
Prepaid rent still remaining$1,000
Prepaid Insurance used $600
Depreciation for the month $900
Accrued advertising Expense $900
Accrued salary expense $1,100
Required: Prepare the adjusting entries for the month.
Prepare from the above question for Troy’s Terrific Tutoring, the Income statement, Statement of Changes in Equity and a classified Balance Sheet for the month ended 30th June.
Statement of Changes in Equity
Balance Sheet of
The bank reconciliation statement for Tashi Ltd at 30 November 2019 is shown below.
Bank reconciliation statement
30 November 2019
Cash balance per bank statement
$ 14 367.90
Add: Outstanding deposits
Less: Unpresented cheques
Cash balance as per ledger
The December bank statement showed the following cheques and deposits:
Information from bank statement
$ 2 260.40
$ 2 530.20
Total $15 438.70
Total $18 161.90
Tashi’s Ltd’s cash records for December showed the following:
Cash payments journal (Chq is the cheque number)
Cash receipts journal
$ 1 211.60
The bank statement contained two items not recorded yet in the cash journals:
Bank charges of $50
A debit of $647.10 for a dishonoured cheque written by A. Jordan, a customer.
At 31 December the cash general ledger balance per Tashi Ltd’s records was $12,944.30.
At 31 December the cash balance per bank statement was $16,394.00.
Required: Prepare a bank reconciliation at 31 December.
Name the ratio which matches the description given.
Name of Ratio (no formula needed)
Measures the portion of sales that represents net profit
Measures the entity’s ability to pay all of its current liabilities if they became due and payable immediately
Is depreciation expense included in a Cash Budget?Explain clearly.
END OF REVISION
Please show calculations/equations used to solve. Problem 5-22: Arnot International’s bonds have a current market price of $1,200. ThePlease show calculations/equations used to solve.
Problem 5-22: Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price 5 $1,090).
a. What is the yield to maturity?
b. What is the yield to call if they are called in 5 years?
c. Which yield might investors expect to earn on these bonds, and why?
d. The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Problem 7-17: What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 7% of par, and a current market price of (a) $30, (b) $40, (c) $50, and (d) $70? (Assume the market is in equilibrium with the required return equal to the expected return.)
Mini Case Study
During the last few years, Jana Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Jana’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task:
* The firm’s tax rate is 25%.
* The current price of Jana’s 12% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,153.72. There are 70,000 bonds. Jana does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost.
* The current price of the firm’s 10%, $100 par value, quarterly dividend, perpetual preferred stock is $116.95. There are 200,000 outstanding shares. Jana would incur flotation costs equal to 5% of the proceeds on a new issue.
* Jana’s common stock is currently selling at $50 per share. There are 3 million outstanding common shares. Its last dividend (D0) was $3.12, and dividends are expected to grow at a constant rate of 5.8% in the foreseeable future. Jana’s beta is 1.2, the yield on T-bonds is 5.6%, and the market risk premium is estimated to be 6%. For the own-bond-yield-plus-judgmental-risk-premium approach, the firm uses a 3.2% risk premium.
a. (1) What sources of capital should be included when you estimate Jana’s weighted average cost of capital?
(2) Should the component costs be figured on a before-tax or an after-tax basis?
(3) Should the costs be historical (embedded) costs or new (marginal) costs?
b. What is the market interest rate on Jana’s debt, and what is the component cost of this debt for WACC purposes?
d. (1) What are the two primary ways companies raise common equity?
(2) Why is there a cost associated with reinvested earnings?
(3) Jana doesn’t plan to issue new shares of common stock. Using the CAPM approach, what is Jana’s estimated cost of equity?
f. What is the cost of equity based on the own-bond-yield-plus-judgmental-risk-premium method?
m. Jana is interested in establishing a new division that will focus primarily on developing new Internet-based projects. In trying to determine the cost of capital for this new division, you discover that specialized firms involved in similar projects have, on average, the following characteristics: Their capital structure is 10% debt and 90% common equity; their cost of debt is typically 12%; and they have a beta of 1.7. Given this information, what would your estimate be for the new division’s cost of capital?
n. What are three types of project risk? How can each type of risk be considered when thinking about the new division’s cost of capital?
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