1.

(Cash Conversion Cycle with Reconstruction of Accounts) The following data are taken from the
records of Apple Corporation for the year ended December 31, 20x4: (Use 360-day year)

Sales 9,625,000
Merchandise Inventory 12/31/20x4 3,000,000
Merchandise Inventory 12/31/20x3 2,700,000
Accounts Receivable 12/31/20x3 2,875,000
Accounts Payable Turnover 2.5 times
Freight-In 540,000
Freight-Out 360,000
Selling and Administrative Expense 325,000
Interest Expense 225,000
Gross Profit Rate (based on cost) 66 2/3 %

Additional Information:

Accounts Receivable 12/31/20x4 is 33 1/3 % of collections

Purchase discounts amounted to 65,000
An income generated from rent amounted to 250,000
Finance cost amounted to 275,000
Tax rate is 20%
All sales and purchases were made on credit

Compute the ff:

1. Cash Conversion Cycle

2. Operating Cycle
3. Accounts Receivable Turnover
4. Collections
5. Purchases
6. COGAS
7. Accounts Payable 12/31/20x4
8. Net Income

2. (Installment Sales) Quick and Easy Company began operations on January 1, 20x4, appropriately
uses the installment sales method of accounting. The following data are available for 20x4:

Regular Sales 4,423,500

Down Payment 157,375
Installment Accounts Receivable, Dec. 31, 20x4 1,718,125
General and Administrative expenses 212,650
Realized Gross Profit is 66 2/3% of Recovered cost 202,950

Compute the ff:

1. Installment Sales
2. Unrecovered Cost
3. Deferred Gross Profit, Dec. 31, 20x4

3. (Ratio Analysis) ABC Enterprises

 Statement of Financial Position
as of December 31, 20x4

Assets: Liabilities and Shareholders Equity:

Cash 32,720 Accounts Payable 120,000

Marketable Securities 25,000 Notes Payable
Accounts Receivable Accrued Expense 20,000
Inventory Total Current Liabilities

Total Current Assets Long-term Debt

Shareholders Equity 600,000
Net Fixed Assets
Total Liabilities and
Total Assets Shareholders Equity

The following information for 20x4 are also available:

1. Sales totaled 1,800,000

2. The Gross Profit rate was 25%
3. Inventory turnover was 6.0
4. There are 365 days in the year
5. The average collection period was 40 days
6. The current ratio was 1.60
7. The total asset turnover ratio was 1.20
8. The debt ratio was 60%

Required: Complete the Statement of Financial Position using ratios.

4. (Franchisee Accounting) On September 1, 2014, Candy Company entered into franchise

agreements with two franchisees. The agreements required an initial fee payment of 700,000 plus
four 300,000 payments due every four months, the first payment due December 31, 2014. The
market interest rate is 12%. The initial deposit is refundable until substantial performance has been
completed. The following describes each agreement:

Franchisee Probability of Full Collection Services Performed Total Costs

Incurred
Dec. 31, 2014 to
Dec. 31, 2014
X Probable Substantially
700,000
Y Doubtful 25%
N/A

The present and future value tables at 4% for four periods were as follows:
Present value of 1 0.8548
Future value of an ordinary annuity of 1 4.2465
Future value of 1 1.1699
Present value of an ordinary annuity of 1 3.6299

*Assuming 1,000,000 was received from each franchisee during the year
(1) What amount of net income to be reported in 2014 by the franchisor from franchisee X?
(2) What amount of net income to be reported in 2014 by the franchisor from franchisee Y?
5. (Cost Flows) Brain-Tech was newly from early in 20x4. The following information relates to the
full year:

Raw materials purchased(net) 10,500,000

Direct Labor costs 7,000,000
Factory Overhead 5,250,000
Selling, General and Administrative 2,450,000

Additional Information:
75% of the available raw material was transferred into production.
60% of the work in process was completed.
80% of the finished goods were sold.
15% of factory overhead is related to depreciation
25% of Selling, General and Administrative is related to depreciation

Compute the ff:

1. Cost of Goods Sold
2. Selling, General and Administrative expense for the period.
3. Ending inventories of raw materials, work in process, and finished goods.