BUS 630 Week 4 Assignment Chester & Wayne

Case: Chester & Wayne

Chester & Wayne is a regional food distribution company. Mr. Chester, CEO, has asked your assistance in preparing cash-flow information for the last three months of this year. Selected accounts from an interim balance sheet dated September 30, have the following balances:

Cash	$142,100	Accounts payable	$354,155
Marketable securities	200,000	Other payables	53,200
Accounts receivable	1,012,500
Inventories	150,388

Mr. Wayne, CFO, provides you with the following information based on experience and management policy. All sales are credit sales and are billed the last day of the month of sale. Customers paying within 10 days of the billing date may take a 2 percent cash discount. Forty percent of the sales is paid within the discount period in the month following billing. An additional 25 percent pays in the same month but does not receive the cash discount. Thirty percent is collected in the second month after billing; the remainder is uncollectible. Additional cash of $24,000 is expected in October from renting unused warehouse space.

Sixty percent of all purchases, selling and administrative expenses, and advertising expenses is paid in the month incurred. The remainder is paid in the following month. Ending inventory is set at 25 percent of the next month’s budgeted cost of goods sold. The company’s gross profit averages 30 percent of sales for the month. Selling and administrative expenses follow the formula of 5 percent of the current month’s sales plus $75,000, which includes depreciation of $5,000. Advertising expenses are budgeted at 3 percent of sales.

Actual and budgeted sales information is as follows:

Actual:		Budgeted:
August	$750,000	October	$826,800
September	787,500	November	868,200
		December	911,600
		January	930,000

The company will acquire equipment costing $250,000 cash in November. Dividends of $45,000 will be paid in December.

The company would like to maintain a minimum cash balance at the end of each month of $120,000. Any excess amounts go first to repayment of short-term borrowings and then to investment in marketable securities. When cash is needed to reach the minimum balance, the company policy is to sell marketable securities before borrowing.

Questions (use of spreadsheet software is recommended):

1. Prepare a cash budget for each month of the fourth quarter and for the quarter in total. Prepare supporting schedules as needed. (Round all budget schedule amounts to the nearest dollar.)
2. You meet with Mr. Chester and Mr. Wayne to present your findings and happen to bring along your PC with the budget model software. They are worried about your findings in Part 1. They have obviously been arguing over certain assumptions you were given.
3. Mr. Wayne thinks that the gross margin may shrink to 27.5 percent because of higher purchase prices. He is concerned about what impact this will have on borrowings. Comment.
4. Mr. Chester thinks that “stock outs” occur too frequently and wants to see the impact of increasing inventory levels to 30 and 40 percent of next quarter’s sales on their total investment. Comment on these changes.

3. Mr. Wayne wants to discontinue the cash discount for prompt payment. He thinks that maybe collections of an additional 20 percent of sales will be delayed from the month of billing to the next month. Mr. Chester says “That’s ridiculous! We should increase the discount to 3 percent. Twenty percent more would be collected in the current month to get the higher discount.” Comment on the cash-flow impacts.

Marquoya College (MC) is a medim sized private school locate in the Midwest

Part I

Marquoya College (MC) is a medim sized private school locate in the Midwest.  In the past, MC Adminstrators established a budget for the next academic year by adding a specific percentage (e.g. 6%, 8%) to the tutition revenue and operating expenses.  This year MC has asked for your asssistance in developing its budget for the next academic year.   You are supplied with the following data for the current year.:

Enrollment:                        4,900 students

Tutition                                                3,300  year

Fulltime Faculty               250  (72% Tenured)

Fees                                      280/year

Average Faculty Salary                          $36,000/year

Fulltime only Students           400 students

For the next Academic year, enrollment is expected to increase by 300 students, with each student taking an of 32 credit hours.  Tuition will increase by 100/year.

Prepare a schedule computing the next academic years  tuition and fee revuenue budget.  Expliclitly Show the effect of scholarships.

Part II

The additional students will require MC to hire 20 adjunct faculty members.  Each adjunct will teach 18 credit hours and will be paid at the rate of $750/credit hr.  Full-time faculty members will receive a 5% pay increase.  Additional merit increases to be awarded to individual faculty members will amount to $280,000.

Prepare a schedule computing the next academic year’s budget for faculty salaries.  The payroll budget should reflect payroll taxes using  a rate of 10%

 

Part III

The current budget is $1,200,000 for operations and maintenance of plant and equipment, including $190,000 for salaries and wages.  Experience of the past 3 months suggest that the current budget is realistic.  However expected increase for next year are $10,000 in salaries and $50,000 in other expenditures for maintenance of plant and equipment.  The IRS has determined that MC has unrelated business income.  In the year just past, MC paid $48,000 of federal income taxes and penalty of $2,000.

MC administrators feel that proper allocation of cost and timely payments to the IRS will result in A total tax liability of $39,000.

Estimates for other cost include:

Mortgage Payments:    $264,000 (reducing principal by $100,000)

Administrative and general   1,440,000 (Including salaries of $1,200,000)

Library                                       1,800,000 (Including Salaries of $1,000,000)

Health and Recreation:           750,000     (Including salaries of #300,000)

Athletics                                     320,000   (Including salaries of $60,000)

Insurance and Retirement benefits          548,000

Capital Improvements                  1,300,000

Where applicable, use a Payroll Tax of 10% .

Anticipated revenues, other than tuition for the Next Academic year, as follows:

Endowment Receipts:                            $514,000

Net Income from Auxiliary Services:    $538,000

Athletics                                                       $1,580,000

MC’s remaining source of revenue is an annual alumni support campaign.  Last year, the alums were very generous (MC’s basketball team was ranked high throughout the cage Campaign) and contributed over $600,000.

MC borrowed $200,000 from the Golden Dome Bank for summer Operation on June 15.  The principal plus interest (at an annual rate of 12%) is to be paid on September 15.  On the basis of the tuition and fee revenue budget and faculty salaries budget computed in parts I and II, prepare a schedule computing the amount that must be raised during the annual support campaign to cover the expenditures budgeted

Part IV

Using the anticipated alumni support of $750,000, prepare a cash busget for the first quarter (September, October, November) of the MC fiscal year. (Round all Calculations to the nearest hundred dollars.)

The following patterns of cash flows are anticipated:

MC must maintain a cash balance of $3,000. Financing can be arranged at the Golden Dome Bank at a rate of 8 percent.  Borrowing occurs in $1,000 increments.  All loans are repaid as soon as possible, but a minimum of 1 month’s interest is charged.  Estimated cash on September 1 is $3,700.

ETH/557 Independence

Assume you are a senior partner in an accounting firm and you are asked to prepare a presentation for a group of new recruits.

Create  the following slides that includes detailed speaker notes discussing each slide that does the following:

Cite your research from the text and any additional professional or regulatory guidance and format your response consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

Assume you are a senior partner in an accounting firm and you are asked to prepare a presentation for a group of new recruits.

Create  the following slides that includes detailed speaker notes discussing each slide that does the following:

Cite your research from the text and any additional professional or regulatory guidance and format your response consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment.

ETH 557 week 3 Am I Ethical

Review the “Am I Ethical” section in Chapter 9. 

Formulate your response to the question.

Review the author’s solution to the question on page 192.

Write a 525- to 700-word paper between that accomplishes the following:

• Explain the answer to the question of whether or not you should call the hotline to report your concerns and the reason supporting your decision, identifying any professional guidance that is relevant.
• Discusses any differences between your response and the author’s answer or reasons.
• Identifies what the confidential information in the scenario is.
• Analyzes why the client would want the information to remain undisclosed and what the potential issues could be if the information was disclosed.

Cite your research from the text and any additional professional or regulatory guidance and format your response consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment as a Microsoft® Word document

Your client is an advertising agency that pays inexperienced new models $20 per hour during a photo shoot, but does not compensate them for preparation time spent in wardrobe fittings, hair styling or applying makeup. Thus, after counting all hours worked, you are concerned that these models are being paid less than the minimum wage.

The Wage and Labor Protection Board in your state maintains a hotline for anonymous callers to report labor law violations. Informants receive a reward equal to 20% of the penalties collected from violators. If granted such a reward, you will donate it to charity.

Should you contact this hotline to report your concerns?

A CPA may never disclose confidential information without first obtaining the client’s specific consent. Information concerning the client’s possible violation of minimum wage laws was nonpublic, and its disclosure could cause substantial harm to the client. As a result, the client had a reasonable expectation that this confidential information would remain undisclosed. The accountant’s potential receipt of a reward is irrelevant.

Benchmark Assignment-Cash Control

Write a 750- to 1,050-word paper in which you: Explain the principles of internal control. Explain the use of cash and internal controls to prevent fraud. Explain why corporations invest in stocks and debt securities. Explain how debt and stock investments are reported in financial statements.  Format your paper according to APA guidelines. Cite 3 peer-reviewed, scholarly, or similar references to support your paperWrite a 750- to 1,050-word paper in which you: Explain the principles of internal control. Explain the use of cash and internal controls to prevent fraud. Explain why corporations invest in stocks and debt securities. Explain how debt and stock investments are reported in financial statements.  Format your paper according to APA guidelines. Cite 3 peer-reviewed, scholarly, or similar references to support your paper