 Problem 11-5

Operating Activities :
Cash received from customers ...................................................... 62.100
(cash sales + collections of A/R)
Interest on saving accounts (received)................................................ 345
Operating Cash Payments............................................................. (54.165)
(Payment on vendor + cash purchase of supplies +
Cash purchase of inventory + Rent payments + Utilities +
Other miscellaneous expenses + part-time help)
Interest Payment.............................................................................. (1.035)
Net cash provided by operations....................................................... 7.245

Investing Activities :
Sale of old machine........................................................................... 3.105
Down payment on new truck........................................................... (3.450)
Net cash used in investing activities................................................... (345)

Financing Activities :
Payment on debt.............................................................................. (3.450)
Net cash used in financing activities............................................... (3.450)
 Beginning cash.................................................................................. 3.450
Increase in cash................................................................................. 3.450
(Operating + Investing + Financing Activities)
Ending Cash...................................................................................... 6.900

 Chapter 12 – Acquisitions and Consolidated Statements

 Problem 12-1
 January 1 : Company P purchase 40% of the voting stock of Company S for 600.000
cash.
Net Income Company S : 300.000, declared and paid dividends of 100.000.

a. Company P should use the equity method (amount of ownership : 20 – 50%)

b. Investment on January 1 of Company P
dr. Investment 600.000
cr. Cash 600.000

Net Income
dr. Investment
(40% * Net Income company S) 120.000
cr. Equity Income 120.000

Dividend
dr. Retained Earnings 100.000
cr. Dividends Payable 100.000
dr. Dividends Payable 100.000
cr. Cash 100.000
dr. Cash
(40% * Dividends Payable) 40.000
cr. Investment 40.000

c. On December 31, the investment in Company P would be reported as (600.000 +

120.000 – 40.000 = 680.000)

 Problem 12-2
 Company P purchase 50.000 shares of voting stock of Company S for 1.000.000
Company S has 312.500 shares of voting stock outstanding.
Company S had profit 156.250.
Company S paid dividends of 0,50 per share.
a. Company P should use the fair value or cost method because amount of ownership
less than 20% (50.000 shares / 312.500 shares * 100% = 16%)
b. Original Investment
dr. Investment 1.000.000
cr. Cash 1.000.000

Dividend and Payment Received

dr. Cash (0,5 * 50.000 shares = 25.000) 25.000
cr. Dividend Income 25.000

 Problem 12-3
 Year 1
1. dr. Investment 700.000
cr. Cash 700.000
2. Net Income :
dr. Investment (35% * 70.000) 24.500
cr. Equity Income 24.500
3. Dividend :
dr. Dividend Payable 60.000
cr. Cash 60.000
dr. Cash (35% * 60.000) 21.000
cr. Investment 21.000

Year 2
1. dr. Investment 75.000
cr. Cash 75.000
2. No Entry
3. Net Income :
dr. Investments (40% * 150.000 – Net Income) 60.000
cr. Equity Income 60.000
4. Dividend :
dr. Dividend Payable 100.000
cr. Cash 100.000
dr. Cash (40% * 100.000) 40.000
cr. Investment 40.000

 Problem 12-4
Elder Co. acquired (memperoleh) all of the outstanding stock of BaBe Co. for cash for
870.000.

Goodwill Calculation :
BaBe
Current Assets 150.000 (Appraised Value)
Net Fixed Assets 555.600 (Appraised Value)
Other Assets 134.400 (Appraised Value)
Total Assets 840.000
Liabilities (192.000) (CL + Long-term debt)
Net Assets 648.000
Purchase Price 870.000
Goodwill 222.000 (Positive goodwill)

Consolidate Balance Sheet

Elder BaBe Consolidated (Elder + BaBe)
Current Assets 1.104.000 150.000 1.254.000
 (1.974 – 870)
Net Fixed Assets 32.814.000 555.600 33.369.600
Other Assets 14.412.000 134.400 14.546.400
Goodwill --------- --------- 222.000
Total Assets 49.392.000

Current Liabilities 3.600.000 42.000 3.642.000

Long-term debt 15.582.000 150.000 15.732.000
Common Stock 24.000.000 ---------- 24.000.000
Paid in Capital 5.418.000 ---------- 5.418.000
Retained Earnigs 600.000 ---------- 600.000
Total Liability & Equity 49.392.000

 Problem 12-5
 1. dr. Sales (Subsidiary) 337.000
cr. Cost of Goods Sold 337.000

2. dr. A/P (Parent) 73.000

cr. A/R (Subsidiary) 73.000

3. dr. Loan Payable (Subsidiary) 396.000

cr. Loan Receivable (Parent) 396.000

4. Capital Stock (Subsidiary) X

Retained Earning (Subsidiary) 3.1 million – X
Investment in Sandvel (Parent) 3.1 million

 Problem 12-6
 a. Pooling of Interests (PoI)

Comp. A Comp. B PoI (A+B)

Current Assets 500.000 150.000 650.000
Fixed Assets 700.000 250.000 950.000
Totals 1.200.000 400.000 1.600.000

Current Liabilities 250.000 75.000 325.000

Long-term liabilities 175.000 50.000 225.000
Capital Stock, 20 par 400.000 -------- 660.000
[400.000 + (650.000/50 *
20)
Capital Stock, 10 par --------- 170.000
--------
Additional paid in capital 175.000 60.000 145.000
[175.000+60.000+170.000+(660.000-400.000)]
Retained Earnings 200.000 45.000 245.000
Totals 1.200.000 400.000 1.600.000

b. Purchase Accounting
 Comp. A Comp. B Purchase
(Market Value)
Current Assets 500.000 175.000 675.000
Fixed Assets 700.000 325.000 1.025.000
Totals 1.200.000 500.000 1.875.000

Current Liabilities 250.000 75.000 325.000

Long-term liabilities 175.000 50.000 775.000
(500.000+100.000+175.000)
Capital Stock, 20 par 400.000 -------- 400.000
Capital Stock, 10 par --------- --------
--------
Additional paid in capital 175.000 -------- 175.000
Totals 1.200.000 125.000 1.875.000

 Chapter 13 – Financial Statement Analysis

 Problem 13-1
 a. Profit Margin
M : Net Income / Sales = 54 / 1.080 = 0,05 (5%)
N : Net Income / Sales = 122 / 1.215 = 0,10 (10%)
N has the higher profit margin

b. Investment Turnover
M : Sales / Investment = 1.080 / 180 = 6 x
N : Sales / Investment = 1.215 / 405 = 3 x
M has the higher investment turnover

c. Return on Investment (RoI)

M : Pofit margin * Investment turnover = 0,05 * 6 = 0,30 (30%)
N : Profit margin * Investment turnover = 0,10 * 3 = 0,30 (30%)
Both firms have similiar RoI, Both investments are equally attractive.

 Problem 13-2
 ROI = Net Income excluding Interest Expense / Average Total Asset
= 54.000 + (30% * 4.200) / [(400.000 + 525.000) / 2]
= 0,123 (12,3%)

 Problem 13-3
 Current Year
Day’s Cash = 5.479.296 / (83.138.408 / 365)
= 24 days

Preceding Year
Day’s Cash = 6.123.704 / (99.748.943 / 365)
= 22,4 days

The new controller hold more cash relative to the company’s expense than did the old
controller. The higher level mau be safer.

 Problem 13-4
 Current Year
A/R days = 1.392.790 / (13.035.085 / 365)
= 39 days

Preceding Year
A/R days = 1.207.393 / (11.597.327 / 365)
= 38 days

The new policy has not changed the payment practices of customers in any material way.

 Problem 13-5
 Average Inventory = (58.160 + 62.880) / 2
= 60.520

Days’ Inventory = 60.520 / (300.000 / 365)

= 74 days

Inventory Turnover = 300.000 / 60.520

=5x

Ms. Whitney’s utilization of her investment in inventory is lower than for similiar
companies.

 Problem 13-6
 a. Price/Earnings Ratio = 82 / (20.000.000 / 2.000.000 shares)
= 8,2 times

b. Dividend Yield = 5,74 / 82

= 0,07 (7%)

c. Dividend Payout = (5,74 * 2.000.000 shares) / 20.000.000

= 57,4%

 Problem 13-7
 a. Working Capital Turnover = 1.750.000.000 / 250.000.000
= 7 times

b. Capital Asset Intensity = 1.750.000.000 / 525.000.000

= 3,33 times

c. Equity Turnover = 1.750.000.000 / 1.500.000.000

= 1,17 times

 Chapter 16 – The Behavior of Cost

 Problem 16-1
 a dan b.
A. Fixed Costs : (2) Depreciation
B. Variable Costs : (1) Raw Materials
C. Semivariable Costs : (4) Utilities and maintenance
D. Semivariable Costs : (3) Blueprints

 Problems 16-2
 a. Break-even volume = Fixed costs / Unit Contribution
= 1.056.000 / (9,60 – 5,76)
= 1.056.000 / 3,84
= 275.000 boxes of candy

b. Current contribution margin percentage = 3,84 / 9,60 = 40%.

CMP = (UR – UVC) / UR,
UR = UVC / (1 – CMP)
= 6,48 / (1 – 0,40)
= 10,80

c. Projected income statement :

Revenues (390.000 * 9,60) 3.744.000
Variable Costs (390.000 * 5,76) 2.246.400
Contribution 1.497.600
Fixed Costs 1.056.000
Income before tax 441.600
Taxes (40%) 176.640
Net income after tax 264.960

 Problem 16-3
a. Assuming that cost of food sold is the only item of variable expense, then :
Break-even volume = Fixed costs / Unit contribution
= (241.360 – 92.400) / (8,50 – 2,55*)
= 25.035 pizzas
* = 308.000 / 8,50 = 36.235 pizzas; 92.400/36.235 = 2,55 per pizza variable costs
 Chapter 17 – Full Costs and Their Uses

 Problem 17-1
 Problem 17-2

 Problem 17-3
 Problem 17-4
 Chapter 18 – Additional Aspects of Product Costing Systems

 Problem 18-1

 Problem 18-2
 Problem 18-3
 Problem 18-4
 Problem 18-5
 Chapter 26 – Short-Run Alternative Choice Decisions

 Problem 26-1
 Problem 26-2
 Problem 26-3
 Problem 26-4
 Problem 26-5