[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for BEC.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

That interest goes to the Factor (bank or financing institution that invests collecting receivables) they charge it for advancing the amount. And the fee is associated with the risk that they are assuming.with the collection of the receivables.

[monikernc]

I would much rather barge into a prometric and demand to take this exam tonight than figure out one more blasted time how many frikkin roller skate wheels that stupid company needs to purchase in january.
How is that for a writing sample?!!!

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

@moniker I am dying laughing. I know the stupid rollerskate problem that you are referring to and I absolute hate that one! Hang in there, we are all so close!

[monikernc]

oh Erika, i hate all these problems right now. so ready to just take this exam on and show it i am the boss. watching an AP macroeconomics video on youtube right now rather than do another mcq right now….
will do some foreign exchange videos next. woohoo!!

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

@moniker, if you find good youtube videos for foreign exchange please post them! that is one area I really need to nail down. I guess on a lot of those problems (and generally guess correctly) but I really need to learn the material once and for all.

[payaza2000]

@ErikaG28

@monikernc

LOL. I also saw, and hated that question.

Gotta learn the Eoq, and foreign currency translation, as well as master topics in Financial Management; I really struggle with the Asset Efficiency questions.

FAR 5/6/2015- 84
REG 8/3/2015 - 87
AUD 10/25/2015- 69 1/20/2016 -75
BEC 2/26/2016- 80

Thank you God

[monikernc]

Payaza, i am going to bed now but post a couple of questions that you struggle with and we will go through them tomorrow

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[JMCAPASSO]

Would anyone know how to do this question??? I don't recall the answer, but I remember seeing this somewhere

Variable Costs (40% fixed, 60% variable)—- 200,000
Fixed Costs (40% fixed, 60 % variable)——- 300,000

What are breakeven sales?

Thanks to everyone who posts here….really helps me a lot.

AUD - 49, 66, 72, 77!!
FAR - 72, 73, 78
BEC - 70, 74, 79, I'm DONE!!!!!!
REG - 70, 76!!!! FIRST PASS

Don’t faint in the day of adversity. Remember your ABCs—Adversity Builds Character!!! - Andy Andrews

[payaza2000]

@monikernc Will do

@JMCAPASSO

I think $500,000 are breakeven sales. The question is trying to trick us, but Variable Cost is all variable.

Sales:$500,000
Variable Cost (40%): $200,000

Contribution Margin: $300,000

Fixed Costs: <$300,000>

Net: 0 (Breakeven)

200,000 VC/ 200,000VC+ 300,000FC= .40 -> not sure if this is right process, maybe someone can confirm.

FAR 5/6/2015- 84
REG 8/3/2015 - 87
AUD 10/25/2015- 69 1/20/2016 -75
BEC 2/26/2016- 80

Thank you God

[jpowell31]

I have no idea on that above. Can someone help me with this:

Jackson Distributors sells to retail stores on credit terms of 2/10, net 30. Daily sales average 150 units at a price of $300 each. Assuming that all sales are on credit and 60% of customers take the discount and pay on Day 10 while the rest of the customers pay on Day 30, the amount of Jackson's accounts receivable is:

$810,000. I would've guessed this based on the answers provided but can anyone tell me why for the 10 day accounts receivable they aren't taking the discount into account? I.e. why the full $45,000 is being considered as receivable at the end of the 10 days? I feel like this is a stupid question.

10-Day Accounts Receivable:

Collection Ratio = 10 = Accounts receivable / Average daily sales
10 = Accounts receivable / ($45,000 x 60%)
solve for A/R: Accounts receivable = $270,000
30-Day Accounts Receivable:

30-day Accounts Receivable:
Collection ratio = 30 = Accounts receivable / Average daily sales
30 = Accounts receivable / ($45,000 x 40%)
solve for A/R: Accounts receivable $540,000

Total = $810,000

[jpowell31]

Hopefully this doesn't post too wonky….
This one is also confusing and I'll probably flag and run if I see something with so many steps on exam day but here it is:

McLean, Inc., is considering the purchase of a new machine that will cost $150,000. The machine has an estimated useful life of three years. Assume for simplicity that the equipment will be fully depreciated 30, 40, and 30% in each of the three years, respectively. The new machine will have a $10,000 resale value at the end of its estimated useful life. The machine is expected to save the company $85,000 per year in operating expenses. McLean uses a 40% estimated income tax rate and a 16% hurdle rate to evaluate capital projects.

Discount rates for a 16% rate are as follows.

_________________________ Present Value of an
_______ Present Value of $1—Ordinary Annuity of $1
Year 1 0.8621____________0.8621
Year 2 0.7432____________1.6052
Year 3 0.6407____________2.2459

What is the NPV for the project.

Answer:
___________________________Annual Annual Annual Annual
___________________________ Before Tax Tax Aftertax Aftertax
___________________________ Cash Flows Savings Cash Flow Net Income

Investment________Year 0___ (150,000)___0___(150,000)____ 0
Annual cash savings_Year 1-3 85,000 (34,000) 51,000 51,000
Depreciation effect __Year 1 18,000 18,000 (27,000)*
_________________Year 2 24,000 24,000 (36,000)**
_________________Year 3 18,000 18,000 (27,000)*
Gain on Disposal Year 3 10,000 (4,000) 6,000 6,000

These depreciation effects are calculated as follows:

Yr1 150,000 x .30 (depreciation) x .40 (tax rate) = 18,000
Yr2 150,000 x .40 (depreciation) x .40 (tax rate) = 24,000
Yr3 150,000 x .30 (depreciation) x .40 (tax rate) = 18,000

(this is where I'm getting confused…..what's going on here….)

* 18,000 – (150,000 x .30 depreciation) = (27,000)
** 24,000 – (150,000 x .40 depreciation) = (36,000)

Yr 0 (150,000) x 1.0000 = (150,000)
Yr 1 (51,000 + 18,000) x 0.8621 = 59,485
Yr 2 (51,000 + 24,000) x 0.7432 = 55,740
Yr 3 (51,000 + 18,000 + 6,000) x 0.6407 = 48,053
——-
Total 13,278

[jpowell31]

my attempt at the table on here….not so great 🙂

[payaza2000]

@jpowell31

“Yr 0 (150,000) x 1.0000 = (150,000)
Yr 1 (51,000 + 18,000) x 0.8621 = 59,485
Yr 2 (51,000 + 24,000) x 0.7432 = 55,740
Yr 3 (51,000 + 18,000 + 6,000) x 0.6407 = 48,053″

Since you have uneven cash inflows each year, you have to use the PV tables instead of the, ones for Annuities or Annuties due.

Your initial cash outflow was $150,000; the PV of the cash inflows you have $163,278 which gives you a NPV of $13,278. You should be making this investment decision if using the NPV solely to evaluate the project.

“* 18,000 – (150,000 x .30 depreciation) = (27,000)
** 24,000 – (150,000 x .40 depreciation) = (36,000)” -> I am actually not sure what this actually is, maybe someone else can chime in.

FAR 5/6/2015- 84
REG 8/3/2015 - 87
AUD 10/25/2015- 69 1/20/2016 -75
BEC 2/26/2016- 80

Thank you God

[jpowell31]

Okay, thanks. I thought I was going crazy… the tables/explanation doesn't really help because it's really that last sum by year (which you included in yours) that is useful. I was just wondering what that section you also highlighted was really trying to accomplish. I'll continue to ignore that then 🙂

[jpowell31]

Okay I'm going to keep throwing out more smaller issues as I drill through all the ninja questions I flagged (got right and understood but was scared they wouldn't come up again in review as they wouldn't have been determined to be trouble questions….

Tam Co. is negotiating for the purchase of equipment that would cost $100,000, with the expectation that $20,000 per year could be saved in after-tax cash costs if the equipment were acquired. The equipment's estimated useful life is 10 years, with no residual value, and would be depreciated by the straight-line method. Tam's predetermined minimum desired rate of return is 12%. Present value of an annuity of 1 at 12% for 10 periods is 5.65. Present value of 1 due in 10 periods at 12% is .322.

In estimating the internal rate of return, the factors in the table of present values of an annuity should be taken from the columns closest to:

Answer: 5 because the payback period is a good indicator….I'm assuming that 5.65 isn't used because that IS the factor, (not the column)?

[Author]

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