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    Accounting problems for MBI, Inc, Pelkey Co and Spenser Co.

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    Calculate gross profit, cost of goods sold and selling price: MBI, Inc. had sales of $141.6million for fiscal 2009. The company' gross profit ratio for that yr was 31.6%.

    a. Calculate the gross profit and cost of goods sold for MBI, Inc., for fiscal 2009.
    b. Assume that a new product is developed and that it will cost $1,860 to manufacture. Calculate the selling price that must be set for this new product it its gross profit ratio is to be the same as the average achieved for all products for fiscal 2009.
    c. From a management view, what would you do with this information?

    Cash flows to accrual: for each of the following items, calculate the amount of revenue or expense that should be recognized on the income statement for Pelkey Co. for the yr ended December 31, 2009:

    a. Cash collected from customers during the yr amounted to $365,000 and accounts receivable increased by $30,000. How much were sales on account for the yr ended December 31, 2009?
    b. Cash payments for income taxes during the yr were $232,000 and income taxes payable increased by $36,000. How much was income tax expense?
    c. Cash paid to suppliers during the yr amounted to $164,000, accounts payable decreased by $23,500 and inventories decreased by $10,000. How much was cost of goods sold?
    d. The net book value of buildings increased by $125,000. No buildings were sold, and a new building costing $210,000 was purchased during the yr. how much was depreciation expense?

    Calculate operating income and net income: the following information is available from the accounting records of Spenser Co. for the yr ended December 31, 2009:

    Selling, general and administrative expenses $51,000
    Accounts payable 85,000
    Extraordinary gain from lawsuit, net of tax expense of $28,000 104,000
    Research and development expenses 37,000
    Loss from discounted operations net of tax savings of $5,000 16,000
    Provisions for income taxes 74,000
    Net sales 579,000
    Interest expense 64,000
    Net cash provided by operations 148,000
    Cost of goods sold 272,000

    a. calculate the operating income for Spenser Co. for the yr ended December 31, 2009
    b. Calculate the company's net income for 2009.

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    Solution Preview

    Please see the attached file

    Sales 141.6
    Gross Profit Ratio 31.60%
    Gross Profit 44.75 Sales X Gross Profit Ratio
    Cost of goods sold 96.85 Sales - Gross Profit
    Cost 1,860.00
    Gross Profit Ratio 31.6%
    Selling Price 2,719.30 Cost/(1-Gross Profit Ratio)
    Gross Profit 859.30
    Gross Profit Ratio 31.60%
    The management can use the calculated selling price to see its aceptability
    in the market and the number of units that can be sold at this price
    This would help is making the production ...

    Solution Summary

    The solution has various accounting problems relating to MBI, Inc, Pelkey Co and Spenser Co.