Easy Finance 3

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General Instructions

Instructions for the Microsoft Excel Templates by Rex A Schildhouse
Be advised, the template workbooks and worksheets are not protected. Overtyping any data may remove it.
Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text.
You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be printed on the top of each page if the template requires more than one page.
Each template is set to print with File Name, tab name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages.
If more than one page is required by the template, manual page breaks have been set to provide consistent presentation.
All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells.
In general, the yellow highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions.
And information or data which may be required by the solution will be entered in cells with borders to help identify them.
Where a yellow highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2010, in the format set in the template.
Where a yellow highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered.
Where a yellow highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it.
Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable.
Where a yellow highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by any password, you may change any of the formatting found in the templates to meet your desires.
Where a yellow highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel.
Where a yellow highlighted cell shows "Text" enter the appropriate text for that step of the challenge. This may be a memorandum entry for a journal entry or a lengthy text answer discussing the results of an analysis of a company's financials. These titles can simply be typed over.
Where a yellow highlighted cell shows titles such as "Journal Number" or "Journ #" you should enter the appropriate number provided in the template and in the text for that step of the challenge. In general this will appear in instances such as "Record the following events in General Journal number six."
The print area is defined to fit onto 8 1/2" × 11" sheets in portrait or landscape mode as required. Margins are generally set to no less than 1/2" so most printers can print them without a problem. If you printer cannot accept margins less than 1" you may have to reformat the margins through Page Setup.
The display may have "Freeze Pane" invoked so column titles remain visible during data entry. This can be removed by utilizing the View menu and selecting "Unfreeze Panes" under "Freeze Panes."
When negative values are required, enter them by starting with a minus sign, "-". Negative values may be shown as ($400) or -$400. Negative values in formulas can be created by putting a minus sign in front of the cell reference - "=E10*-E11" will return a negative value if both cells E10 and E11 contain positive values.
Microsoft Office and Microsoft Excel are products of, and copyrighted by, Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399

Exercise E23-4

Name: Date:
Instructor: Course:
Accounting, Fourth Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
E23-4, Make incremental analysis for make-or-buy decision.
Winters Inc. has been manufacturing its own shades for its table lamps. The company is currently operating at 100%
of capacity. Variable manufacturing overhead is charged to production at the rate of 50% of direct labor cost. The
direct materials and direct labor cost per unit to make the lamp shades are $4.00 and $6.00
, respectively. Normal production is 40,000 table lamps per year.
A supplier offers to make the lamp shades at a price of $13.50 per unit. If Winters Inc. accepts the supplier's offer, all
variable manufacturing costs will be eliminated, but the $40,000 of fixed manufacturing overhead currently being charged
to the lamp shades will have to be absorbed by other products.
Instructions:
(a) Prepare the incremental analysis for the decision to make or buy the lamp shades.
Net Income Increase (Decrease)
Make Buy
Title Amount Amount Formula
Title Amount Amount Formula
Title Amount Amount Formula
Title Amount Amount Formula
Total annual cost Amount Amount Formula
Total annual cost Formula Formula Formula
(b) Should Winters Inc. buy the lamp shades?
Enter text answer here.
(c) Would your answer be different in (b) if the productive capacity released by not making the lamp shades could be used to
produce income of $35,000 ?
Enter text answer here.
Net Income Increase (Decrease)
Make Buy
Total annual cost (above) Amount Amount Formula
Opportunity cost Amount Amount Formula
Total cost Formula Formula Formula

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Exercise E23-8

Name: Date:
Instructor: Course:
Accounting, Fourth Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
E23-8, Make incremental analysis for elimination of division.
Sara Casper, a recent graduate of Rolling’s accounting program, evaluated the operating performance of Klumpe Company’s six divisions. Sara made the following presentation to the Klumpe board of directors and suggested the Western Division be eliminated. “If the Western Division is eliminated,” she said, “our total profits would increase by $16,870.”
The Other Five Divisions Western Division Total
Sales $1,664,200 $98,200 $1,762,400
Cost of goods sold 978,520 76,470 $1,054,990
Gross profit 685,680 21,730 $707,410
Operating expenses 527,940 38,600 $566,540
Net income $157,740 ($16,870) $140,870
In the Western Division, cost of goods sold is $56,000 variable and $20,470 fixed, and operating
expenses are $12,000 variable and $26,600 fixed. None of the Western Division's fixed costs will be
eliminated if the division is discontinued.
Instructions:
Is Sara right about eliminating the Western Division? Prepare a schedule to support your answer.
Continue Eliminate Net Income Increase (Decrease)
Sales Amount Amount Formula
Variable expenses
Title Amount Amount Formula
Title Amount Amount Formula
Title Formula Formula Formula
Contribution margin Formula Formula Formula
Fixed expenses
Title Amount Amount Formula
Title Amount Amount Formula
Total fixed Formula Formula Formula
Net income (loss) Formula Formula Formula
Enter text answer here.

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Problem P23-4A

Name: Date:
Instructor: Course:
Accounting, Fourth Edition by Kimmel, Weygandt, and Kieso
Primer on Using Excel in Accounting by Rex A Schildhouse
P23-4A, Compute annual rate of return, cash payback, and net present value.
Sanchez Corporation is considering three long-term capital investment proposals. Relevant data on each project are as follows.
(These projects have a useful life of 5 )
Project Brown Project Red Project Yellow
Capital investment: $190,000 $220,000 $250,000
Salvage value: $0 $0 $0
Annual net income:
Year 1 25,000 20,000 26,000
2 16,000 20,000 24,000
3 13,000 20,000 23,000
4 10,000 20,000 17,000
5 8,000 20,000 20,000
Total: $72,000 $100,000 $110,000
Salvage value is expected to be zero at the end of each project. Depreciation is computed by the straight-line method. The
company’s minimum rate of return is the company’s cost of capital which is 12%
Instructions:
(a) Compute the annual rate of return for each project. (Round to one decimal.)
Project Brown Formula or Percentage
Project Red Formula or Percentage
Project Yellow Formula or Percentage
(b) Compute the cash payback period for each project. (Round to two decimals.)
Project Red
Depreciation = Formula or Amount
Cash payback period = Formula or Amount
Project Brown Project Yellow
Depreciation = Depreciation =
Formula or Amount Formula or Amount
Year Annual Cash Inflow: Depreciation Value: Cumulative Net Cash Inflow: Year Annual Cash Inflow: Depreciation Value: Cumulative Net Cash Inflow:
1 Amount Amount Formula 1 Amount Amount Formula
2 Amount Amount Formula 2 Amount Amount Formula
3 Amount Amount Formula 3 Amount Amount Formula
4 Amount Amount Formula 4 Amount Amount Formula
5 Amount Amount Formula 5 Amount Amount Formula
Area for formula Area for formula
Area for formula Area for formula
Area for formula Area for formula
(c) Compute the net present value for each project. (Round to nearest dollar.)
Project Red Project Brown Project Yellow
Year Discount Factor Net Annual Cash Inflow Present Value Net Annual Cash Inflow Present Value Net Annual Cash Inflow Present Value
1 Formula Amount Formula Amount Formula Amount Formula
2 Formula Amount Formula Amount Formula Amount Formula
3 Formula Amount Formula Amount Formula Amount Formula
4 Formula Amount Formula Amount Formula Amount Formula
5 Formula Amount Formula Amount Formula Amount Formula
Total Formula Formula Formula Formula Formula Formula
Capital investment: Amount Amount Amount
Positive (negative) net present value: Formula Formula Formula
Project Red
Item Amount Years PV Factor Present Value
Net Annual cash flows Amount Number Formula Formula
Capital investment Amount
Negative net present value Formula
(d) Rank the projects on each of the foregoing bases. Which project would you recommend?
Project Annual Rate of Return Cash Payback Net Present Value
Project Red Number Number Number
Project Brown Number Number Number
Project Yellow Number Number Number
Enter text answer here.

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