Answer:
The answer is D. 10%
Explanation:
The coupon rate that must cause the bond to be issued at a premium must be greater than the Yield-to-maturity (YTM).
If it is issued at a coupon rate equals to the Yield-to-maturity (YTM), it is said to be issued at par.
And If it is issued at a coupon rate lower to the Yield-to-maturity (YTM), it is said to be at discounts
Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report only includes those costs that the particular department manager can control: raw materials, wages, supplies used, and equipment depreciation.
Snowmobile ATV Combined SnowmobileATV Combined
(Budget) (Budget) (Budget) (Actual) (Actual) (Actual)
Raw materials $19,990 $28,000 $47,990 $19,920 $29,320 $49,240
Employee wages10,900 21,000 31,900 11,210 21,740 32,950
Dept. manager 4,800 5,700 10,500 4,900 4,900 9,800
salary
Supplies used 3,850 1,400 5,250 3,670 1,420 5,090
Depreciation- Equip.6,500 13,000 19,500 6,500 13,000 19,500
Utilities 410 590 1,000 380 550 930
Rent 6,200 6,800 13,000 5,800 6,800 12,600
Totals $52,650 $76,490 $129,148 $52,380 $77,730$130,110
Prepare a responsibility accounting report for the snowmobile department.
Answer:
ArcticaSnowmobile DepartmentResponsibility Accounting Report
Budget Actual Variance
Raw materials $19,990 $19,920 $70 Favorable
Employee wages 10,900 11,210 310 Unfavorable
Dept. manager 4,800 4,900 100 Unfavorable
Supplies used 3,850 3,670 180 Favorable
Depreciation- Equip. 6,500 6,500 0 0
Utilities 410 380 30 Favorable
Rent 6,200 5,800 400 Favorable
Totals $52,650 $52,380 $270 Favorable
Explanation:
a) Data
Snowmobile ATV Combined Snowmobile ATV Combined
(Budget) (Budget) (Budget) (Actual) (Actual) (Actual)
Raw materials $19,990 $28,000 $47,990 $19,920 $29,320 $49,240
Employee wages 10,900 21,000 31,900 11,210 21,740 32,950
Dept. manager 4,800 5,700 10,500 4,900 4,900 9,800
salary
Supplies used 3,850 1,400 5,250 3,670 1,420 5,090
Depreciation- Equip.6,500 13,000 19,500 6,500 13,000 19,500
Utilities 410 590 1,000 380 550 930
Rent 6,200 6,800 13,000 5,800 6,800 12,600
Totals $52,650 $76,490 $129,148 $52,380 $77,730 $130,110
b) The responsibility accounting report is a performance report that presents a comparison of the actual and budgeted amounts of controllable costs for a department and its manager, showing the variances, and indicating whether each cost element is favorable or unfavorable.
The cash flow statement should be evaluated by examining the cash flow pattern suggested by the:__________
a) subtotals of each of the three main sections.
b) operating activities section since this section details the day to day operations of the business.
c) change in cash regardless of which section had the biggest impact on the change.
d) financing section since this section details how much debt the company has incurred
Answer:
a) subtotals of each of the three main sections.
Explanation:
A cash flow statement is a representation of the cash inflows and outflows from various activities in a business. The three main sources of cash flow are operating activities, investing activities, and financing activities.
Operating activities include daily production activities that a business usually engages in like manufacturing or selling.
Financing activities are those that affect the capital base of the organisation.
Investing activities are those that involve purchase or sale of assets, and investment in securities.
To get a better knowledge of the cash flow of the organisation we will need to evaluate subtotals of each of these three sections
EFT a.means effective funds transfer b.makes it easier to document purchase and sale transactions c.can process certain cash transactions at less cost than using the mail would incur d.means efficient funds transfer
Answer:
b. makes it easier to document purchase and sale transactions
Explanation:
EFT means Electronic Funds Transfer and it is when money is moved using computer systems between accounts that can be from one or more banks. EFT includes transactions like direct payments, deposits, transfers on ATMs, bill payments using online banking, among others. According to this, the answer is that EFT makes it easier to document purchase and sale transactions because these transactions are made electronically and you always have evidence of the actions made like deposits and transfers and it makes it possible to monitor the purchases and sales made.
The other options are not right because EFT means Electronic Funds Transfer and it doesn't involve cash transactions.
g "6. Financially, why would a company: (a) increase its dividend; (b) buy back some of its common stock shares; (c) pay down some of its debt; (d) increase its use of internal financing; (e) take the public firm private?"
Answer:
(a) increase its dividend;
dividends are increased for two reasons:
the company has excess cash and it doesn't have any possible investments on handthe board and upper management want to increase the stock price and higher dividends always result in higher stock prices, even if it is only in the short run.(b) buy back some of its common stock shares;
the company has excess cash and the board and upper management believe that the stock price is too low.(c) pay down some of its debt;
the company has excess cash and it considers that the cost of its debt is too high and it can get cheaper financing from other sources if needed.(d) increase its use of internal financing;
the board and upper management considers that the company needs to invest in new or existing projects and they consider that the financing costs are too high. Also, on the long run if things work well, the stock price should increase.(e) take the public firm private
the company has excess cash and the board and upper management believe that the stock price is too low. It is similar to (b) only on an extreme situation.What is the pro-forma as adjusted cash and cash equivalents amount on Twitter’s balance sheet as mentioned in the amended S-1 filed November 4, 2013
Answer:
The pro-forma as adjusted cash and cash equivalents amount on Twitter's balance sheet as mentioned in the amended S-1 filed November 4, 2013 is:
$1,777,009,000
Reference was made to sec.gov/Archives/edgar/data.htm.
Explanation:
Cash and cash equivalents are company's current assets that are cash or can be converted into cash immediately. They are the most liquid of current assets.
We are all familiar with cash. Cash equivalents are short-term investments and commitments which a company can enter into using "temporarily idle cash" and they can easily be converted into cash as needed. Included in cash equivalents are bank accounts and marketable debt securities with less than 90 days' maturity period. The expression means that they are equivalent to cash but are not cash because of their ease of convertibility.
Consolidated net income may include the parent's separate operating income plus the parent's share of the subsidiary's reported net income plus/ minus: ________
a. the unrealized profit on upstream intercompany sales of inventory made during the current year.
b. the profit realized this year from upstream intercompany sales of inventory made last year.
c. unrealized profit on downstream intercompany sales of inventory made during the current year.
d. the parent's share of profit realized this year from upstream intercompany sales of inventory made last year.
Answer:
b. the profit realized this year from upstream intercompany sales of inventory made last year
Explanation:
Consolidated net income can be defined as the amount of the net income of the parent company and it has well exclude any of the income from the subsidiaries that was recognized in its individual financial statements in addition with the net income of its subsidiaries that was determined after excluding unrealized gain in inventories as well as the income from the intra-group transactions which is why CONSOLIDATED NET INCOME is often reported on the consolidated income statement for periods after the acquisition has occured.
Therefore CONSOLIDATED NET INCOME may tend to include the parent's separate operating income in addition with the parent's share of the subsidiary's reported net income plus/ minus the profit that was realized this year from the upstream intercompany sales of the inventory that was made last year
Discuss the logic underlying the use of three-sigma limits on Shewhart control charts. How will the chart respond if narrower limits are chosen
Answer:
The Shewhart control charts are charts used to monitor processes and behaviours in businesses statistically to ensure they are under control. They have been known to produce superb results especially with the use of the 3-sigma limits. The use of narrower limits provides practicality in testing more scenarios, the investigation of more causes and detection of more false causes.
Explanation:
The use of the 3 sigma limits in the Shewhart control charts using narrow limits provides for better control of business enterprises by ensuring that more investigations and detection of false causes are conducted. Thes gives a much more specific range of results in practice compared to the wide range approach.
The use of three-sigma limits on Shewhart control charts is simply used as an economic guide to minimize economic loss.
It should be noted that three-sigma points are used as a rational and economic guide to minimum economic loss.
It typically sets a range for the process parameter at a control limit of 0.27%. The three-sigma control limits are used for checking data from a process. These are vital to monitor behaviors and processes in business.
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Why doesn’t the fact that the ‘’Inflation solution" is only a temporary solution to stop many developing countries from using it?
Explanation:
Remember, inflation is scenario in an economy in which there occurs a constant rise in the prices of commodities/services in the market, which may lead to a reduction of the money in circulation.
Although, developing countries could use alternative approaches such as taxation or cutting down government expenditure, they do not use this but prefer "inflation solution" because it appears to be the easy way out.
Since, taxes are always lesser than required to run the economies of developing countries they (the government) may not use this approach.
Elin owes Floyd $10,000. Floyd assigns the claim to Gary. Gary does not notify Elin of the assignment. A week later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has Group of answer choices priority to payment in all states. priority to payment in states that follow the English rule. no priority to payment. priority to payment in most states.
Answer: priority to payment in states that follow the English rule
Explanation:
From the question, we are told that Elin owes Floyd $10,000 but Floyd assigns the claim to Gary and that Gary does not notify Elin of the assignment.
A week later, Floyd assigns the same claim to Holly. Holly immediately notifies Elin of the assignment. Holly has priority to payment in states that follow the English rule.
Holly has priority claim because Holly has already notified Elin of the task before and therefore has priority to payment in states that follow the English rule.
Option B is correct
On January 15 of the current year, Henry sold stock with a basis of $7,000 to his grandson Isaac for $4,000, its fair market value on that date. On December 30 of the current year, Isaac sold the same stock for $8,000 to a friend in a bona fide, arms-length transaction. As a result of these transactions, A. Isaac has a recognized gain of $4,000. B. Isaac has a recognized gain of $1,000. C. Henry has a recognized loss of $3,000. D. Neither Henry nor Isaac has a recognized gain or loss.
Answer:
B. Isaac has a recognized gain of $1,000
Explanation:
Issac's basis in computing gain is $7,000
Therefore, Gain = Selling Price - Basis Price
Gain = $8000 - $7,000
= $1,000
Issac has a recognized gain of $1000
You expect to receive year-end bonuses of $8,000 at the end of this year, $16,000 at the end of year 4, $20,000 at the end of year 8, and $25,000 at the end of year 10. If your opportunity cost is 6%, what is the present value today of your expected future bonuses?
Answer:
Total PV= $46,728.79
Explanation:
Giving the following information:
Cash flow:
Cf1= $8,000
Cf4= $16,000
Cf8= $20,000
Cf10= $25,000
Discount rate= 6%
To calculate the present value, we need to use the following formula on each cash flow:
PV= FV/(1+i)^n
Cf1= 8,000/(1.06^1)= 7,547.17
Cf4= 16,000/(1.06^4)= 12,673.50
Cf8= 20,000/(1.06^8)= 12,548.25
Cf10= 25,000/(1.06^10)= 13,959.87
Total PV= $46,728.79
When the Fed acts as a "lender of last resort," like it did in the financial crisis of 2007-2008, it is performing its role of
Answer:
The answer is Banker's bank
Explanation:
The Fed is performing its role as a banker's bank. The Fed is the U.S or the central bank in most countries are referred to banker's bank. It acts a commercial bank for all banks in the country.
Commercial banks in all countries have an account with the central bank. Commercial banks also have access to very short-term loans when it is in the distress. Banker's bank(The Fed) has the sole authority for the money supply in the economy.
Aspin Corporation’s charter authorizes issuance of
2,000,000 shares of common stock. Currently, 1,400,000 shares are outstand-
ing, and 100,000 shares are being held as treasury stock. The firm wishes to
raise $48,000,000 for a plant expansion. Discussions with its investment bankers
indicate that the sale of new common stock will net the firm $60 per share.
Answer and Explanation:
The calculation of the sale of new common stock is shown below:-
a. Not issued = Authorized shares - Outstanding shares - Treasury stock
= 2,000,000 - 1,400,000 + 100,000
= 500,000
Now
Maximum shares = Not issued + Treasury stock
= 500,000 + 100,000
= 600,000
b. Since if we find out the number of shares that should be issued is
= $48,000,000 ÷ $60 per share
= 800,000
But the maximum shares is 600,000 so this shares would only be issued upto this limit only
Therefore the funds should not be raised
c. Now The firm could also develop extra 200,000 shares together it get amortized also.
Hence, it can sell 800,000 shares and the amount could rise to $48,000,000
Flippatech is a home furnishings manufacturer. It wants to form a merger with SleepzCorp, another home furnishings manufacturer. This would be a __________ merger.
Answer:
Horizontal merger
Explanation:
A horizontal merger is a merger or centralization of business that takes place between companies operating in the same industry. Rivalry generally higher between companies that operate in the same area, implying that synergies and potential market share are far stronger for companies that merge
Therefore for the given case since one same industry wants to merge with the same kind of industry that shows the horizontal merger
Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year:Work in Process, January 1 $53,000Work in Process, December 31 38,500Direct materials used 14,000Total Factory overhead 7,000Direct labor used 28,000a- $49,000.b- $95,000.c- $102,000.d- $63,500.e- $14,500.
Answer:
The correct answer is D.
Explanation:
Giving the following information:
Work in Process, January 1 $53,000
Work in Process, December 31 38,500
Direct materials used 14,000
Total Factory overhead 7,000
Direct labor used 28,000
To calculate the total manufacturing costs, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 53,000 + 14,000 + 28,000 + 7,000 - 38,500
cost of goods manufactured= $63,500
You purchased JNJ stock at $50 per share. The stock is currently selling at $65. Your gains may be protected by placing a
Answer:
A limit -sell order
Explanation:
A limit -sell order can be defined as an order to sell a stock at a particular price which is why a sell limit order can be executed at either the limit price or higher price .
Hence A limit order enables an individual to either make purchase or sell a security at a particular or specific price or much better price Although limit orders can often be made available for either buying or selling transaction.
Therefore based on the information given Your gains may be protected by placing a LIMIT -SELL ORDER.
Identifying time lags Advocates of active policy face several obstacles when implementing discretionary fiscal or monetary policy, such as identifying the economy's potential output level, the natural rate of unemployment, and the effects of a passive approach. Policymakers must also cope with a multitude of time lags that complicate the implementation of active policy. Identify the type of time lag illustrated in the following scenario:
Policymakers believe that the economy is experiencing a recession, and they have agreed on the need for expansionary monetary policy. However, some economists suggest dropping the federal funds rate by 0.25%, while others think it needs to be decreased by 0.75%.
a. Effectiveness lag
b. Recognition lag
c. Implementation lag
d. Decision-making lag
Answer: d. Decision-making lag
Explanation:
When policy makers have identified that there is a problem that needs fixing but cannot seem to agree on the way forward, this is known as a Decision - Making Lag or simply the Decision Lag. It is one of the 3 specific inside Policy Lags and can be devastating due to the uncertainty of time it might take.
For instance, the economists suggesting dropping the federal funds rate by 0.25% might have the backing of one half of the Fed and the other Economists, the other half. Arguments could therefore go on for weeks before a decision is made.
Weber Company purchases $50,300 of raw materials on account, and it incurs $63,900 of factory labor costs. Supporting records show that (a) the Assembly Department used $27,100 raw materials and $40,100 of the factory labor, and (b) the Finishing Department used the remainder. Manufacturing overhead is assigned to departments on the basis of 160% of labor costs.
Journalize the assignment of overhead to the Assembly and Finishing Departments. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles Debit Credit Mar.31
Answer:
Assembly Department
Work In Process $64,160 (debit)
Overheads $64,160 (credit)
Finishing Department
Work In Process $65,120 (debit)
Overheads $65,120 (credit)
Explanation:
Assembly Department
Use of raw materials
Work In Process $27,100 (debit)
Raw Materials $27,100 (credit)
Use of factory labor
Work In Process $40,100 (debit)
Salaries and Wages Payable $40,100 (credit)
Assignment of overheads
Note : basis of 160% of labor costs.
Work In Process $64,160 (debit)
Overheads $64,160 (credit)
Finishing Department
Use of raw materials
Work In Process $23,200 (debit)
Raw Materials $23,200 (credit)
Use of factory labor
Work In Process $40,700 (debit)
Salaries and Wages Payable $40,700 (credit)
Assignment of overheads
Note : basis of 160% of labor costs.
Work In Process $65,120 (debit)
Overheads $65,120 (credit)
Net present value ____________________. Group of answer choices compares project cost to the present value of the project benefits is equal to zero when the discount rate used is less than the IRR is equal to the initial investment in a project is simplified by the fact that future cash flows are easy to estimate requires the firm set an arbitrary cutoff point for determining whether an investment is a good one or not
Answer:
compares project cost to the present value of the project benefits
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
A good investment is an investment that has a positive NPV. When comparing two or more projects, the project with the higher NPV should be chosen.
Cold Chiller Corporation (CCC) has annual sales of $10 million, cost of goods sold of 60 percent, average age of inventory of 80 days, average collection period of 35 days, average payment period of 30 days, and purchases that are 60 percent of cost of goods sold. How much does CCC have invested in its cash conversion cycle assuming a 365-day year?
Answer:
Cold Chiller Corporation (CCC)
Investment in cash conversion cycle:
= $10 million x 60% = $6million
which is invested for 145 (80 + 35 + 30) days before being realized as cash.
Explanation:
The cash conversion cycle (CCC) is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. It gives us an indication as to how long it takes a company to collect cash from sales of inventory. Often a company will finance its inventory instead of paying for it with cash up front.
The formula for the Cash Conversion Cycle is:
CCC = Days of Sales Outstanding PLUS Days of Inventory Outstanding MINUS Days of Payables Outstanding.
CCC = DSO + DIO – DPO.
Days of Sales outstanding:
DSO = [(Beginning Accounts Receivable + Ending Account Receivable) / 2] / (Revenue / 365)
Days of Inventory Outstanding:
DIO = [(Beginning Inventory + Ending Inventory / 2)] / (COGS / 365)
Operating Cycle = DSO + DIO.
Days of Payables Outstanding:
DPO = [(Beginning Accounts Payable +Ending Accounts Payable) / 2] / (COGS / 365)
You own a portfolio of two stocks, A and B. Stock A is valued at $6,124 and has an expected return of 14.5 percent. Stock B has an expected return of 7.8 percent. What is the expected return (in percent) on the portfolio if the portfolio value is $10,375
Answer:
The expected return (in percent) on the portfolio is 11.8 percent.
Explanation:
The expected return on a portfolio refers to the addition of the products of weight in the portfolio and expected return of all the investment in the portfolio.
For this question, the expected return (in percent) on the portfolio can be calculated as follows:
Portfolio value = $10,375
Value of Stock A = $6,124
Value of stock B = Portfolio value - Value of stock A = $10,375 - $6,124 = $4,251
WA = Weight of stock A in the portfolio = Value of stock A / Portfolio value = $6,124 / $10,375 = 0.59, or 59%
WB = Weight of stock B in the portfolio = Value of stock B / Portfolio value = $4,251 / $10,375 = 0.41, or 41%
EA = Expected return of Stock A = 14.5%
EB = Expected return of Stock B = 7.8%
Therefore, we have:
Expected return on the portfolio = (WA * EA) + (WB * EB) = (59% * 14.5%) + (41% * 7.8%) = 11.8 percent
Therefore, the expected return (in percent) on the portfolio is 11.8 percent.
In 2019, Winn, Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?
a. 2021 net income is decreased.
b. Additional paid-in capital is decreased.
c. 2021 net income is increased.
d. Retained earnings is increased.
Answer:
b. Additional paid-in capital is decreased
Explanation:
The entry to record acquisition and retirement is:
Debit Credit
Common stock $1
Paid-in capital—excess of par $34
Paid-in capital—share repurchase $5
Cash $30
Conclusion: Additional paid-in capital is decreased.
Question 3 (2 points)
Which of the following is NOT a way to balance a project?
..
O At the Enterprise Level
At the Business Case Level
.
O At the Program Level
At the Project Level
Answer:
1
Explanation:
at the bisiness casel level
XYZ stock is trading at $25.75 and XYZ Jul 25 calls are trading at a premium of $2. What is the time value of the Jul 25 calls
Answer:
$125
Explanation:
Time value = Premium - Intrinsic value
Premium. = 2 or $200 i.e 2×100
Intrinsic value = 75
= $200 - $75
= $125
The time value of the Jul 25 calls will be $125.
It should be noted that the time value is simply the difference that exist between the premium and the intrinsic value. In this case, the time value will be:
= $200 - $75
= $125
The premium is gotten as 2 × 100 = $200.
Therefore, the time value of the Jul 25 calls will be $125.
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Corporation has the following data as of December 31, 2018:
Total Current Liabilities $38,420 Total Stockholders' Equity$ ?
Total Current Assets 62,100 Other Assets 36,800
Long-term Liabilities 179,530 Property, Plant, and Equipment, Net 264,350
Compute the debt to equity ratio at December 31, 2018. (Round your answer to two decimal places, X XX)
Total liabilities Total stockholders' equity Debt to equity ratio
Answer: 1.5
Explanation:
The debt to equity ratio will be calculated as total liabilities divided by the total equities.
The total liabilities is the sum of the total current liabilities and the long term liabilities. This will be:
= 38420 + 179,530
= $217950
Total equities will be the difference between the total assets and total liabilities. This will be:
Total asset = 264,350 + 36,800 + 62,100
= $363,250
Total equity = total asset - total liability
= $363,250 - $217,950
= $145,300
Debt to equity ratio = total liabilities/total equity
= 217950/145,300
= 1.5
To develop the sales budget, companies must estimate both unit sales and the production cost per unit. true or false
Answer:
False
Explanation:
The sales budget is a budget that indicates the amount of goods or services that the company expects to sell in a specific period of time. In order to make the sales budget, you have estimate the amount of units you plan to sell and multiply this for the selling price per unit to get the total sells. According to this, the statement that says that to develop the sales budget, companies must estimate both unit sales and the production cost per unit is false because to develop the sales budget, companies must estimate unit sales and selling price per unit.
A 10% coupon bond, $1,000 par value, annual payments, 10 years to maturity is callable in 3 years at a call price of $1,100. If the bond is selling today for $975, the yield to call is _________.
Answer:
13.98%.
FV = 1100, n = 3, PMT = 100, PV = -975, i = 13.98%.
The managers in Julio's company sponsor monthly brainstorming sessions and reward employees with gift cards and recognition when an out-of-the box idea leads to organizational improvements. Julio's company is an example of a(n) _______ organization.
Answer:
Learning.
Explanation:
In this scenario, the managers in Julio's company sponsor monthly brainstorming sessions and reward employees with gift cards and recognition when an out-of-the box idea leads to organizational improvements.
Hence, Julio's company is an example of a learning organization.
A learning organization is one which is typically characterized by creating an enabling environment for growth, training, and development of its employees. This opportunity and incentives help employees to engage in critical and creative thinking, research, and development. Consequently, employees would become more confident, brilliant, intelligent, knowledgeable and professionals in their assigned positions or roles, thus helping the organization to achieve its aim, goals and objectives.
In a nutshell, this ultimately implies that it's very important and necessary that organizations sponsor brainstorming sessions and reward employees awesomely, when an out-of-the box idea leads to organizational improvements.
Indirect labor includes: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)
Complete Question:
Options:
a) labor of employees working directly on the product
b) labor of the maintenance employees
c) labor of the clerical staff
Answer:
Indirect labor includes:
b) labor of the maintenance employees
c) labor of the clerical staff (factory)
Explanation:
Indirect labor is the cost of labor for all those who contribute to the production of a product, but indirectly. These include the labor costs of equipment and factory maintenance employees, factory clerical staff, supervisors, and managers, product inspectors and quality controllers, etc. The determining factor is the level of involvement: direct or indirect or outside production. If it is direct or outside production, it is not part of indirect labor.
The fiscal year-end unadjusted trial balance for Nelson Company is found on the trial balance tab. Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system. Descriptions of items that require adjusting entries on January 31, 2016, follow.
a. Store supplies still available at fiscal year-end amount to $1,750.
b. Expired insurance, an administrative expense, for the fiscal year is $1,400.
c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.
Multiple Step IS- Begin by selecting "Adjusted" from the drop-down below. Then, use the adjusted trial balance to prepare a multiple-step income statement. Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. For operating expenses, you must enter both the account title and the dollar amount.
Answer:
Nelson company
Income Statement
For the Month Ended January 31, 2016
Sales $111,950
- Sales discounts $2,000- Sales returns and allowances $2,200Net sales $107,750
- Cost of goods sold $40,000
Gross profit $67,750
Operating expenses:
Selling expenses:
Salaries expense $17,500Rent expense $7,500Advertising expense $9,800Depreciation expense $1,525Store supplies expense $4,050 $40,375Administrative expenses:
Salaries expense $17,500Rent expense $7,500Insurance expense $1,400 $26,400Total operating expenses $66,775
Net income ($975)
Explanation:
a. Store supplies still available at fiscal year-end amount to $1,750.
Dr Supplies expense 4,050
Cr Supplies 4,050
b. Expired insurance, an administrative expense, for the fiscal year is $1,400.
Dr Insurance expense 1,400
Cr Prepaid insurance 1,400
c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.
Dr Depreciation expense 1,525
Cr Accumulated depreciation - store equipment 1,525
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.
Dr Cost of goods sold 1,600
Cr Merchandise inventory 1,600