Professional Accounting Paper Help-ACT 212 Principles of Accounting 2 Assignment # 2
Faculty of Management
ACT 212 Principles of Accounting 2
Assignment # 2 (15 marks)
Due Date: April 22, 2018
This assignment contains three questions. They are mapped to the Course Learning Outcomes as follows:
CLO
Question
Marks
3. Prepare operating budgets and discuss their processes for the purposes of planning and controlling company’s activities
Part 1
8 marks
4. Employ tools and methods to analyze the financial statement data to guide investment and lending decisions.
Part 2
7 marks
Total Marks
15
Part 1: CLO3 (8 marks)
A. (3 marks)
Sameer Company is a manufacturer and distributer of the product M-25. The Company prepared its estimates for future sales of finished units in the coming four months as follows:
June 2018
July 2018
August 2018
September 2018
Sales in units
50,000
60,000
40,000
45,000
The Company has a policy of maintaining ending inventory of finished goods for each month at 20% of the next month’s sales.
Required:
Prepare the production budget for the months of June, July and, August of 2018.
B. (5 marks)
Willy Company expects sales for the next three months to be as follows:
May 2018
June 2018
July 2018
August 2018
Sales in Dirhams
AED 500,000
AED 600,000
AED 800,000
AED 700,000
The Company’s experience suggests that 40% of sales are for cash and 60% are on credit for every month. The Company collects 50% of its credit sales in the month following the sale, 45% in the second month after sale, and 5% are uncollectible.
Expected cash payments during the same four months are as follows:
May 2018
June 2018
July 2018
August 2018
Cash payments to suppliers
AED 300,000
AED 278,000
AED 450,000
AED 400,000
Other Cash payments
AED 200,000
AED 122,000
AED 50,000
AED 100,000
Cash available on hand at the beginning of May 2018 is expected to be AED 15,000. The Company has a policy of keeping AED 15,000 cash on hand at the end of each month. If
necessary, loans from banks are to be transacted to meet the cash requirement policy. Interest rate is 4% monthlyas long as the loan is less than AED 400,000. Loans above AED 400,000 will be charged 5% per month. Interest is to be paid at the end of each month but the principal amount is to be paid from any excess cash available at the end of each month. The Company had no loans outstanding as of April 30, 2018. However, if there is excess cash in any month and no loans to be paid, the Company would invest this excess cash temporary to earn interest income at 3% per month.
Required:
Prepare the monthly cash budget for June, July, and August of 2018.
Part 2 (7 marks)
The National Cement Company is a major producer of cement in UAE. Download the financial statements for 2017 from the Company’s webpage or Dubai Financial Market. Read the financial statements and answer the following questions:
A. Calculate two ratios to judge the liquidity situation of the Company over two years.
B. Calculate two ratios to judge the solvency of the Company over two years
C. Calculate two ratios to judge the Company’s profitability over two years.
D. Calculate the dividend yield ratio and price to earnings ratio for 2017.
E. Comment on the profitability of the Company over the two year period
