Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Shanice works in finance for a small manufacturing company and is working on next year’s budget. She has been doing research to compare the cost of outsourcing some upcoming jobs versus the cost of purchasing the equipment to keep the jobs in-house. In what step in financial planning is Shanice involved?
Multiple Choice
developing financial statements for outside investors
forecasting short-term financial needs
establishing financial controls and tax policy
forecasting long-term financial needs
Suppose that Demont has been given a summer job as an intern at Isaac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan.
Classify each cost listed below as either product costs or period costs for the purpose of preparing the financial statements for the bank.
Costs Product Cost/Period Cost
1. Depreciated on salesperson's cars
2. Rent on equipment used in the factory
3. Lubricants used for machine maintenance
4. Salaries of personnel who work in the finished goods warehouse
5. Soap and paper towels used by factory workers at the end of a shift
Suppose that Demont has been given a summer job as an intern at Isaac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before approving such a loan.
Classify each cost listed below as either product costs or period costs for the purpose of preparing the financial statements for the bank.
Cost Product Cost/Period Cost
1. Factory supervisors' salaries
2. Heat, water, and power consumed in the factory
3. Materials used for boxing products for shipment overseas. Units are normally boxed.
4. Advertising costs
5. Workers' compensation insurance for factory employee
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- “We really need to get this new material – handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at Metro bank”. This Statement by Beth Davies –Lowry president of Global Electronics Company, concluded a meeting she had called with the firm ‘s top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Maria Wilcox, Global Electronics general manager of marketing has recently completed a sales forecast. She believes the company’s sales during the first quarter of 2021 will increase by 10% each month over the previous month s’ sales. Than Wilcox expects sales to remain constant for several months. Global ‘s projected balance sheet as of Dec 31 2020 is as follow: Cash…arrow_forwardSuppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. Costs Product Cost / Period Cost 1. Depreciation on salespersons’ cars. 2. Rent on equipment used in the factory. 3. Lubricants used for machine maintenance. 4. Salaries of personnel who work in the finished goods warehouse. 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors’ salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are…arrow_forwardWe really need to get this new material – handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short term loan down at Metro bank”. This Statement by Beth Davies –Lowry president of Global Electronics Company, concluded a meeting she had called with the firm ‘s top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firm’s main product lines are small kitchen appliances and power tools. Maria Wilcox, Global Electronics general manager of marketing has recently completed a sales forecast. She believes the company’s sales during the first quarter of 2021 will increase by 10% each month over the previous month s’ sales. Than Wilcox expects sales to remain constant for several months. Global ‘s projected balance sheet as of Dec 31 2020 is as follow: Cash 70,000 A/c receivable 540,000 Marketable…arrow_forward
- Gregg’s Shipping Supplies Ltd (GSSL) trades in the buying and selling of ship spares and has several branches within the Caribbean. Recently the company has seen a rapid increase in demand of its products across all branches and is therefore in need of additional financing to adequately boost its supply inventory. The corporate banking head of Bankers Choice Bank is requesting a full set of financial statements to ensure that granting the loan to GSSL would be financially feasible during a period when many businesses are facing financial challenges. The company financial year ends on June 30 each year and you have been tasked with the responsibility to prepare the financial information for the branch that is linked to your first name initial. Trinidad Branch Required:a) Prepare the necessary adjusting journal entries on June 30, 2022 b) Prepare the Adjusted Trial balance at June 30, 2022. c) Prepare the company’s multiple-step income statement for the period ending June 30, 2022 d)…arrow_forwardGregg’s Shipping Supplies Ltd (GSSL) trades in the buying and selling of ship spares and has several branches within the Caribbean. Recently the company has seen a rapid increase in demand of its products across all branches and is therefore in need of additional financing to adequately boost its supply inventory. The corporate banking head of Bankers Choice Bank is requesting a full set of financial statements to ensure that granting the loan to GSSL would be financially feasible during a period when many businesses are facing financial challenges. The company financial year ends on June 30 each year and you have been tasked with the responsibility to prepare the financial information for the St. Kitts branch. 1. Prepare the Adjusted Trial balance at June 30, 2022.arrow_forwardSuppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 8 00-45-49 Costs Product Cost / Period Cost 1. Depreciation on salespersons' cars. 2. Rent on equipment used in the factory. 3 lubricants used for machine maintenance Salaries of personnel who work in the finished goods warehouse 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors' salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9. Advertising…arrow_forward
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