Answer:
$172,000
Explanation:
Calculation for what Andrea's 2020 gross income from the above is:
Using this formula
2020 gross income=Punitive damages+ Medical expenses deducted
2020 gross income=$160,000+$12,000
2020 gross income=$172,000
Therefore Andrea's 2020 gross income from the above is: $172,000
Practice Brief Exercise 02 Swifty Corporation has 44,000 shares of $10 par value common stock outstanding. It declares a 10% stock dividend on December 1 when the market price per share is $19. The dividend shares are issued on December 31. Prepare the entries for the declaration and issuance of the stock dividend.
Answer:
Dec-31
Dr Stock Dividend $83,600
Cr Stock Dividend Distributable $44,000
Cr Paid - in - capital in excess of Par (44,000 * m
Dec-31
Dr Stock Dividend Distributable $44,000
Cr Common stock $44,000
Explanation:
Preparation of the entries for the declaration and issuance of the stock dividend
Dec-31
Stock Dividend $83,600
(44,000* 10% * $19)
Cr Stock Dividend Distributable $44,000
($44,000 *10% *$10)
Cr Paid - in - capital in excess of Par (44,000 * 10% *$9) $39,600
($19+$10=$9)
(Being to record Stock dividend declared)
Dec-31
Dr Stock Dividend Distributable $44,000
Cr Common stock $44,000
(Being to record issuance of the stock dividend)
When adjusting accrual earnings to obtain cash flows from operations, A. an increase in Accounts Payable is added to determine cash flow from operations. B. it is not necessary to consider any changes to Accounts Payable. C. an increase in Accounts Payable is deducted to determine cash flows from operations. D. a decrease in Accounts Payable is added to determine cash flow from operations.
Answer: A. an increase in Accounts Payable is added to determine cash flow from operations.
Explanation:
We should note that accounts payable refer to the amounts that the company pays to its suppliers, therefore the sum of the the total amount that's owed to the suppliers will be shown on the balance sheet of the company as accounts payable.
Therefore, when adjusting accrual earnings to obtain cash flows from operations, an increase in accounts payable is added to determine cash flow from operations.
The differences in Beal Inc.’s balance sheet accounts at December 31, 2006 and 2005, are presented below.
align="let">
Increase (Decrease)
Assets
Cash and cash equivalents $ 120,000
Available-for-sale securities 300,000
Accounts receivable, net --
Inventory 80,000
Long-term investments (100,000)
Plant assets 700,000
Accumulated depreciation --
$1,100,000
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities $ (5,000)
Dividends payable 160,000
Short-term bank debt 325,000
Long-term debt 110,000
Common stock, $10 par 100,000
Additional paid-in capital 120,000
Retained earnings 290,000
$1,100,000
The following additional information relates to 2006:
a. Net income was $790,000.
b. Cash dividends of $500,000 were declared.
c. Building costing $600,000 and having a carrying amount of $350,000 was sold for $350,000.
d. Equipment costing $110,000 was acquired through issuance of long-term debt.
e. A long-term investment was sold for $135,000. There were no other transactions affecting long-term investments.
f. 10,000 shares of common stock were issued for $22 a share.
In Beal’s 2006 statement of cash flows,
1. Net cash provided by operating activities was
a. $1,160,000
b. $1,040,000
c. $ 920,000
d. $ 705,000
2. Net cash used in investing activities was
a. $1,005,000
b. $1,190,000
c. $1,275,000
d. $1,600,000
3. Net cash provided by financing activities was
a. $ 20,000
b. $ 45,000
c. $150,000
d. $205,000
Answer:
Part 1
Cash Provided by Operating Activities is $705,000
Part 2
Cash Used by Investing Activities is $405,000
Part 3
Cash Provided by Financing Activities is $205,000
Explanation:
Cash flow from Operating Activities
Net income $790,000
Adjustment for changes in working capital items :
Increase in Inventories ($80,000)
Decrease in Accounts Payable ($5,000)
Net Cash Provided by Operating Activities $705,000
Cash flow from Investing Activities
Proceeds From Sale of Building $350,000
Proceeds From Sale of long-term investments $135,000
Purchase of Available-for-sale securities ($300,000)
Purchase of Plant assets ($590,000)
Net Cash Used by Investing Activities ($405,000)
Cash flow from Financing Activities
Dividends Paid $500,000 - $160,000 ($340,000)
Increase in Short-term bank debt $325,000
Issue of Common Stock $220,000
Net Cash Provided by Financing Activities $205,000
A company retires its bonds at 105. The face value is $100,000 and the carrying value of the bonds at the retirement date is $103,745. The issuer's journal entry to record the retirement will include a: Group of answer choices Credit to Premium on Bonds. Credit to Bonds Payable. Debit to Premium on Bonds. Credit to Gain on Bond Retirement. Debit to Discount on Bonds.
Answer: Debit to Premium on Bonds.
Explanation:
Face value of bond = $100000
Carrying value of bond = $103745
The issuer's journal entry to record the retirement will include a Debit to Premium on Bonds which will be in the value of ($103745 - $100000) = $3745.
If a clothing manufacturer purchased a computerized sewing machine from an American company, then consumer spending and GDP both increase. investment and GDP both increase. consumer spending increases and GDP decreases. investment increases and GDP decreases. consumer spending and investment both increase.
Answer:
Investment and GDP both increase.
Explanation:
GDP(Gross Domestic Product)can be regarded as the overall value of goods/services that is been manufactured arround geographic boundaries of a particular country at a particular period of time ( year). It gives indication of economics performance. Invest can be regarded as item/asste gotten with hope of giving income to the owner. Hence, from the question, If a clothing manufacturer purchased a computerized sewing machine from an American company, then Investment and GDP both increase.
An equivalent unit is calculated by: Multiple Choice dividing the number of physical units by the percentage of completion. dividing the number of physical units into direct materials and conversion costs. subtracting the number of physical units in ending Work in Process Inventory from the total number of physical units. multiplying the number of physical units by the percentage of completion.
Answer:
multiplying the number of physical units by the percentage of completion.
Explanation:
Project management can be defined as the process of designing, planning, developing, leading and execution of a project plan or activities using a set of skills, tools, knowledge, techniques and experience to achieve the set goals and objectives of creating a unique product or service. Generally, projects are considered to be temporary because they usually have a start-time and an end-time to complete, execute or implement the project plan.
The fundamentals of Project Management includes;
1. Project initiation
2. Project planning
3. Project execution
4. Monitoring and controlling of the project
5. Adapting and closure of project.
It is very important and essential that project managers in various organizations, businesses and professions adopt the aforementioned fundamentals in order to successfully achieve their aim, objectives and goals set for a project.
An equivalent unit is calculated by multiplying the number of physical units by the percentage of completion.
Find the sum of the series 2 + 5 + 8 + ... + 182
Answer:
first term(a)=2
common diff.(d)=5-2=3
lqst term(l)=182
sum of terms (sn)=?
Explanation:
we have,
l=a+(n-1)d
182=2+(n-1)×3
182-2=3n-3
180=3n-3
180-3=3n
177=3n
177÷3=n
59=n
n=59
i hope this solve help you
Diz Co. is a U.S.-based MNC with net cash inflows of euros and net cash inflows of Swiss francs. These two currencies are highly correlated in their movements against the dollar. Yanta Co. is a U.S.-based MNC that has the same level of net cash flows in these currencies as Diz Co. except that its euros represent net cash outflows. Yanta Co has a higher exposure to exchange rate risk than Diz Co.
Required:
Which firm has a higher exposure to exchange rate risk? Why?
Answer:
Yanta Co. has a higher exposure to exchange rate risk than Diz Co.
The reason is that Yanta Co. does not have net inflows of euros. Instead, its euro transactions yield net outflows.
It will always be in need of euros to settle its foreign debts or obligations, unlike Diz Co. with foreign assets.
Explanation:
a) Data and Analysis:
Diz Co. has net cash inflows of euros and net cash inflows of swiss francs
Yanta Co. has net cash outflows of euros and net cash inflows of swiss francs
b) Exposure to exchange rate risk or currency risk is the financial risk arising from fluctuations in the value of the US dollars against the Euro or Swiss Francs in which Diz Co. has some foreign assets while Yanta Co. has foreign obligations.
For the current year temporary differences existed between the financial statement carrying amounts and the tax basis of the following:
Carrying Amount Tax Basis Future Taxable or (Deductible) Amount
Buildings and equipment $57,000,000 $42,300,000 $14,700,000
Prepaid insurance 2,300,000 0 2,300,000
Liability-loss contingency 11,300,000 0 (11,300,000 )
No temporary differences existed at the beginning of the year. Pretax accounting income was $270,000,000 and taxable income was $117,000,000 for the year and the tax rate is 40%. Permanent differences are the cause of any difference between pretax accounting income and taxable income that are not due to temporary differences.
Required:
Prepare one journal entry to record the tax provision for the current year.
Answer:
Income Tax Expense (Dr.) $49,080,000
Deferred Tax Liability (Cr.) $49,080,000
Explanation:
Income tax expense = ( Taxable Income for the year + building and equipment taxable amount + Prepaid Insurance - Liability or contingency Loss ) * Tax rate
Income Tax expense = ( $117,000,000 + $14,700,000 + $2,300,000 - $11,300,000) * 40%
Income Tax expense = $49,080,000
Main Street Ice Cream Company uses a plant-wide allocation method to allocate overhead based on direct labor-hours at a rate of $2 per labor-hour.
Strawberry and vanilla flavors are produced in Department SV.
Chocolate is produced in Department C.
Sven manages Department SV and Charlene manages Department C. The product costs (per 1,000 gallons) follow:
Strawberry Vanilla Chocolate
Direct labor $755 $830 $1,130
Raw materials 805 505 605
Required:
a) If the number of hours of labor per 1,000 gallons is 56 for strawberry, 66 for vanilla and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plant-wide allocation.
Total Cost
Strawberry
Vanilla
Chocolate
b) Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of- the-art machines.
After she requested that overhead costs be broken down by department, the following information was discovered:
Department SV Department C
Overhead $75,750 $14,274
Machine-hours 25,250 36,500
Labor-hours 25,250 18,300
Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each.
(Round your answers to 2 decimal places.)
Allocation Rate
Department SV per machine hour
Department C per labor hour
Answer:
Results are below.
Explanation:
A) Predetermined overhead rate= $2 per direct labor hour
The product costs (per 1,000 gallons) follow:
Strawberry Vanilla Chocolate
Direct labor $755 $830 $1,130
Raw materials $805 $505 $605
Direct labor hours:
56 for strawberry
66 for vanilla
100 for chocolate
We can calculate the total cost for 1,000 gallons for each flavor:
Strawberry:
Total cost= 755 + 805 + 56*2
Total cost= $1,672
Vanilla:
Total cost= 830 + 505 + 66*2
Total cost= $1,467
Chocolate:
Total cost= 1,130 + 605 + 100*2
Total cost= $1,935
b) To calculate the activities rates, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Department SV:
Activity rate= 75,570 / 25,250= $3 per machine hour
Department C:
Activity rate= 14,274 / 18,300= $0.78 per direct labor hour
Match the cause for the negatively sloped aggregate demand curve with the correct term.
1. As prices rise, the cost for businesses to finance new equipment increases, causing a drop in quantity demanded of real GDP.
2. The purchasing power of money held in savings accounts falls as prices rise.
3. As prices rise in the United States, foreigners purchase fewer U.S. goods.
OPTIONS:
a. The Aggregate Demand Effect
b. The Wealth Effect
c. The Interest Rate Effect
d. The Export Effect
Answer:
1. C
2. B
3. D
Explanation:
Gross Domestic Products (GDP) is a measure of the total market value of all finished goods and services made within a country during a specific period.
Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country.
Basically, the four (4) major expenditure categories of GDP are consumption (C), investment (I), government purchases (G), and net exports (N).
The various factors that have an effect on the GDP of a country's economy are;
1. The Interest Rate Effect: As prices rise, the cost for businesses to finance new equipment increases, causing a drop in quantity demanded of real GDP.
2. The Wealth Effect: The purchasing power of money held in savings accounts falls as prices rise.
3. The Export Effect: As prices rise in the United States, foreigners purchase fewer U.S. goods.
credit economical definition.
Answer:
The credit definition in economics is any agreement where one party borrows money from a second party with the promise to pay the amount back with interest. Credit ranges from consumer loans and credit cards to corporate bonds. I hope it helps. : )
Explanation:
The economical definition of credit is the allowance of one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately but promises either to repay or return those resources at a later date.
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Heather's Auto Body purchased new equipment with 90 days same as cash. What workflow would you recommend so she can set aside the money to pay it when it comes due
Answer:
1. To match your bank register with your bank statement; 2. the Deposit to account is Undeposited Funds
Answer:
Create Bill > Pay Bills
Explanation:
You have to create a bill for the transaction and also set in motion the payment when it is due.
Park Corporation is planning to issue bonds with a face value of $3,100,000 and a coupon rate of 7 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective-interest amortization method and also uses a premium account. Assume an annual market rate of interest of 6.0 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1)
1. Prepare the journal entry to record the issuance of the bonds.
2. Prepare the journal entry to record the interest payment on June 30 of this year. What bonds payable amount will Park report on its June 30 balance sheet?.
Answer:
PV of bonds:
PV of face value = $3,100,000 / (1 + 3%)²⁰ = $1,716,395
PV of coupon payments = $108,500 x 14.877 (PVIFA, 3%, 20 periods) = $1,614,155
market price = $3,330,550
1) January 1, year 1
Dr Cash 3,330,550
Cr Bonds payable 3,000,000
Cr Premium on bonds payable 330,550
2) June 30, year 1
Dr Interest expense 99,916
Dr Premium on bonds payable 8,584
Cr Cash 108,500
amortization of bond premium = ($3,330,550 x 6%) - $108,500 = -$8,584
Davis Florist has two employees, Anita and Jerome, and two tasks that need to be completed, floral arrangements and floral delivery. It takes Anita 30 minutes to finish one floral arrangement and 40 minutes to make a delivery. It takes Jerome 10 minutes to finish one floral arrangement and 30 minutes to make a delivery. Each worker works six hours per day.
Required:
Suppose that, initially, both Jerome and Anita spend four hours each day doing floral arrangements and two hours each day doing deliveries. Now suppose they change their tasks, so that each individual does nothing but the task in which she or he has a comparative advantage. How many more floral arrangements and deliveries could they produce each day?
Answer:
4 more floral arrangements, 2 more deliveries - with Jerome & Anita specialisation in comparative advantage (arrangements & deliveries) resp.
Explanation:
Time available = 6 hours, each worker, per day
Arrangement Delivery
Anita 30 mints (2 per hr) 40 mints (1.5 per hr)
Jerome 10 mints (6 per hr) 30 mints (2 per hr)
Jerome is comparatively more (by higher extent) productive in arrangement than Anita, relative to in case of packing. Jerome has comparative advantage in arrangement, Anita has comparative advantage in delivery.
Production before, each 4 hrs arrangement & 2 hrs delivery
Jerome = (6 x 4)A + (2 x 2)D = {24A, 4D} . Anita = (2 x 4)A + (2 x 1.5)D = {8A, 3D} Total = {32A, 7D}Production after Jerome specialisation in arrangement, Anita in packing
Jerome = 6 x 6 = 36A , Anita = 1.5 x 6 = 9DSo, increase in production = {4A, 2D}. Submit the names and phone numbers of the two people you spoke with. The people you speak with cannot be class members. a. Person 1: b. Person 2: 2. Ask your consumers what comes to mind and discuss the types of memories/images that are evoked. 3. Explain how these associations might be employed in the product’s promotional strategy. 4. Discuss the effect of perception on consumer purchasing behavior.
Answer:
Answer is explained in the explanation section below.
Explanation:
Person 1:
Name: John Smith,
Phone Number: 00(008)11113333
These are hypothetical numbers and names of the persons.
I've shown that person different photos of Nike's product – Shoes. The person knows several things from the images I've shown him, which are as follows:
Nike has developed shoes that can assist people in a variety of demanding roles, as our personality and behaviors are in many ways influenced by our feet. As a result, shoes play a diverse role in people's lives, and they should not be avoided.
Nike is promoting their brand value by offering shoes that are suitable for an athlete's game and lifestyle.
Nike also promotes a variety of athletes and sportspeople for marketing purposes.
Person 2:
Name: Lilly Wood,
Phone Number: 00(008)1915778
I've seen a variety of images of products synonymous with – Dresses such as Shirts, T-Shirts, Trousers, and Winter Coats, all of which are sold by the company H&M.
The individual can comprehend a variety of items that have been demonstrated to him, including the following:
H&M has a variety of items in the Apparel and Clothing sector that are highly recommended for lifestyle and everyday use.
People enjoy shopping at their store or outlets because they can find a wide variety of styles and collections with a distinct trendy approach.
These connections may be used in a product's advertising campaign, as seen below:
A brand or organization may conduct a survey to obtain feedback from consumers about how their goods are used and how well they are tailored to their needs.
Knowing both of these issues helps them to customize choices and meet consumer needs; however, businesses should appreciate differentiation strategy and create their own; they should also consider how consumers react to such strategies and what kind of customization or improvements can be made in the future.
Pricing plays an important role here; advertising strategies are influenced by pricing and people's purchasing power. A niche market approach may be used by a brand or business to analyze and consider the condition of consumers, and then set the best pricing, which will have a positive effect on revenue generation.
Perception's Influence on Consumer Buying Behavior:
Consumers' purchasing behavior is affected by perceptions of brand image and value such as product quality, whether such products have fulfilled customers' choices or not. Perception can be improved in many ways, for example, by fulfilling quality and fitting requirements, working on customization, and building more confidence in customers' minds.
Basic Assumptions, Principles, and Terminology in the Conceptual Framework For each description, select the correct key term. Description Term
a. Refers to whether or not a particular amount is large enough to affect a decision. Answer Verifiability
b. The activities of a business are considered to be independent and distinct from those of its owners or from other companies. Answer
c. Accounting information should enable users to identify similarities and differences between sets of economic phenomena. Answer
d. Financial reporting information must be available to decision makers before it loses its capacity to influence decisions. Answer
e. Information is useful if it has the ability to influence decisions. Answer
f. Consensus among measures assures that the information is free of error. Answer
g. Accounting information should reflect the underlying economic events that it purports to measure. Answer
h. The financial reports are presented in one consistent monetary unit, such as U.S. dollars. Answer
i. A business is expected to have continuity in that it is expected to continue to operate indefinitely. Answer
j. The life of a business can be divided into discrete accounting periods such as a year or quarter. Answer
Answer:
a. Refers to whether or not a particular amount is large enough to affect a decision
Answer: Verifiability
b. The activities of a business are considered to be independent and distinct from those of its owners or from other companies. Answer
Answer: Reporting entity concept / Business entity concept
c. Accounting information should enable users to identify similarities and differences between sets of economic phenomena. Answer
Answer: Comparability (quality of information)
d. Financial reporting information must be available to decision makers before it loses its capacity to influence decisions.
Answer: Timeliness
e. Information is useful if it has the ability to influence decisions. Answer
Answer: Relevance
f. Consensus among measures assures that the information is free of error. Answer
Answer: Verifiability
g. Accounting information should reflect the underlying economic events that it purports to measure.
Answer: Representational Faithfulness
h. The financial reports are presented in one consistent monetary unit, such as U.S. dollars.
Answer: Measuring Unit
i. A business is expected to have continuity in that it is expected to continue to operate indefinitely. Answer
Answer: Going Concern
j. The life of a business can be divided into discrete accounting periods such as a year or quarter.
Answer: Accounting Period
Lara uses the standard mileage method for determining auto expenses. During 2020, she used her car as follows: 14,400 miles for business, 2,880 miles for personal use, 4,320 miles for a move to a new job, 1,440 miles for charitable purposes, and 720 miles for medical visits. Presuming that all the mileage expenses are allowable (i.e., not subject to percentage limitations), what is Lara's deduction for:
A. Business?B. Chartible?C. Medical?
Answer:
A. $ 7876.8
B. $ 201.6
C. $ 122.4
Explanation:
As per the Internal revenue Service or the IRS, the standard rates of mileage for the year 2020 is :
Automobile -- 54.5
Charity ---- 14
Medical ---- 17
A. Lara's automobile deduction for business is = 14,400 miles x 0.547
= $ 7876.8
B. Lara's expenses for the charitable contribution deduction is
= 1,440 miles x 0.14
= $ 201.6
C. Lara's expenses for her medical deduction is = 720 miles x 0.17
= $ 122.4
organization (JETRO) Report (2008)
Required
Explain with justification the strategy Shoprite pursued for its business in the early
1990's,
[10 Marks)
(b)
Evaluate some problems that a business like Shoprite would encounter in
achieving success using the strategy discussed in part (a) above, [10 Marks]
Discuss the business model that Shoprite has adopted overtime and explain its
key strategic focus areas.
[15 Marks)
of the
(d)
Discuss major elements that you would consider in developing a corporate strategy
for Shoprite which is an investment holdings company whose combined
subsidiaries constitute the largest fast moving consumer goods (FMCG) retalls
operation on the African continent.
[15 Marks)
[TOTAL: 50 MARKS]
END OF ASSIGNMENT
|
Ok
Answer:
Explanation:
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A privately owned summer camp for youngsters has the following data for a 12-week session: Charge per camper Fixed costs Variable cost per camper Capacity $480 per week $192,000 per session $320 per week 200campers (a) Develop the mathematical relationships for total cost and total revenue. (b) What is the total number of campers that will allow the camp to just break even
Answer:
Results are below.
Explanation:
Giving the following information:
Fixed costs= $192,000
Unitary variable cost= $320 per week
Selling price per unit= $480 per week
To calculate the total cost, we need to use the following formula:
Total cost= fixed costs + unitary variable cost*number of units
Total cost= 192,000 + 320*number of weeks
Now, the total revenue:
Total revenue= selling price per week*Number of weeks
Total revenue= 480*x
Finally, the break-even point in units:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 192,000 / (480 - 320)
Break-even point in units= 1,200 campers
Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $3.00 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a return of 15.80 percent on your equity investments
Answer:
You are willing to pay $18.99 for one share of this stock.
Explanation:
This can be calculated using the following formula:
P = d / r .............................. (1)
Where;
P = price per share = ?
d = annual dividend per share = $3.00
r = equity investments return = 15.80%, or 0.1580
Substituting the values into equation (1), we have:
P = $3.00 / 0.1580
P = $18.99
Therefore, you willing to pay $18.99 for one share of this stock.
Please match each of the following terms to the description of best fit.
a. Risk associated with price fluctuations caused by interest rate changes B.
b. This is the risk that a firm's cost of debt will fall and as a result reinvested coupon payments will earn less yield moving forward.
c. Risk that the Borrower will not make payments on time or in full D.
d. Coupon Payments typically follow a benchmark market rate E.
e. All of the yield is determined by the difference in the price of the bond and the par value F.
f. Can be assessed using the perpetuity formula
1. Interest Rate Risk
2. Reinvestment Risk
3. Default Risk
4. Floating rate bond
5. Zero Coupon Bond
6. Consol Bond
Answer:
1. Interest Rate Risk ⇒ Risk associated with price fluctuations caused by interest rate changes.
2. Reinvestment Risk ⇒ This is the risk that a firm's cost of debt will fall and as a result reinvested coupon payments will earn less yield moving forward.
3. Default Risk ⇒ Risk that the Borrower will not make payments on time or in full.
4. Floating rate bond ⇒ Coupon Payments typically follow a benchmark market rate.
5. Zero Coupon Bond ⇒ All of the yield is determined by the difference in the price of the bond and the par value.
6. Consol Bond ⇒ Can be assessed using the perpetuity formula.
Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Units Unit Cost a. Inventory, Beginning 350 $ 14 For the year: b. Purchase, April 11 950 12 c. Purchase, June 1 700 15 d. Sale, May 1 (sold for $42 per unit) 350 e. Sale, July 3 (sold for $42 per unit) 610 f. Operating expenses (excluding income tax expense), $18,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an income statement that shows under the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes
Answer:
Part 1.
Number = 2,000 units and Cost = $26,800
Part 2.
1,040 units
Part 3.
a. FIFO
Ending Inventory = $14,580
Cost of Goods Sold = $12,220
b. LIFO
Ending Inventory = $13,180
Cost of Goods Sold = $13,620
c. Weighted Average Cost
Ending Inventory = $13,936
Cost of Goods Sold = $12,864
Part 4.
Orion Iron Corp.
Income Statement
FIFO LIFO Weighted Average
Sales (960 x $42) $40,320 $40,320 $40,320
Less Cost of Sales ($12,220) ($13,620) ($12,864)
Gross Profit $28,100 $26,700 $27,456
Less Expenses
Operating Expenses ($18,000) ($18,000) ($18,000)
Net Income $10,100 $8,700 $9,456
Part 6.
Weighted Average method minimizes Income taxes as it provides lowest profits than the rest of the methods.
Explanation:
Periodic Inventory method ensures that Cost of Sales and Inventory Value are determined at the end of the period.
Cost of Goods Available for Sale = Beginning Inventory + Purchases
therefore,
Number = 350 + 950 + 700 = 2,000 units
Cost = 350 x $14 + 950 x $12 + 700 x $15 = $26,800
Units in Ending Inventory = Units available for sale - Units sold
therefore,
Units in Ending Inventory = 2,000 - ( 350 + 610 ) = 1,040
FIFO
This method assumes that the units to arrive first, will be sold first.
Ending Inventory = 340 x $12 + 700 x $15 = $14,580
Cost of Goods Sold = 350 x $14 + 610 x $12 = $12,220
LIFO
This method assumes that the units to arrive last, will be sold first.
Ending Inventory = 690 x $12 + 350 x $14 = $13,180
Cost of Goods Sold = 700 x $15 + 260 x $12 = $13,620
Weighted Average Cost
This method calculates a new unit cost based on units available for sale after each and every purchase. This unit cost is then used to determine the cost of sales and inventory value.
Unit Cost = Total Cost ÷ Units available for sale
= $26,800 ÷ 2,000 units
= $13.40
Ending Inventory = Units in Inventory x Unit Cost
= 1,040 x $13.40
= $13,936
Cost of Goods Sold = Units Sold x Unit Cost
= 960 x $13.40
= $12,864
A company's income statement showed the following: net income, $131,000; depreciation expense, $38,500; and gain on sale of plant assets, $12,500. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,100; merchandise inventory increased $26,500; prepaid expenses increased $7,900; accounts payable increased $5,100. Calculate the net cash provided or used by operating activities. Multiple Choice $138,800. $152,600. $154,600. $180,600. $159,400.
A buyer purchased a house from a seller. It turned out that the concrete used to pour the foundation had been improperly mixed and the foundation was crumbling. The buyer discovered that the cost of repairing the defective foundation would be over $10,000. She filed suit against the seller for the cost of repairs. If the court rules in the buyer's favor, what is the likely reason
Answer:
The court will decide based on the structure report of the house. If it is found in the report that the foundation had been improperly mixed the repair cost can be recovered from the seller.
Explanation:
It is responsibility of a seller to clearly inform buyer about any defects in the item which is been sold. The seller did not disclosed that the foundation had been improperly mixed so he is responsible for any repair cost that is incurred to fix his fault.
Valiant Corp. is a C corporation that earned $4.6 per share before it paid any taxes. Valiant Corp. retained $1 of after-tax earnings for reinvestment and distributed what remained in dividend payments. Assume that the corporate tax rate was 35% and dividend earnings were taxed at 13.1%. The value of the dividend earnings received after-tax by a holder of 95,894 shares of Valiant Corp. is $_____.
a. $105,875.
b. $127,050.
c. $148,225.
d. $84,700.
Answer:
$ 165,830
Explanation:
Given :
Corporate tax rate = 35%
Before the tax EPS = $4.6
After the tax EPS = before tax x (1 - corporate tax rate )
= 4.6 x (1 - 35%)
= 2.99
The retained earnings = $ 1
So the dividends received = EPS after tax - retained earnings
= 2.99 - 1
= 1.99
Tax on dividend = 13.1%
Number of total shares hold = 95,894
Value of dividends received = dividend received x (1 - tax rate) x number of shares.
= 1.99 x (1 - 13.1%) x 95,894
= $ 165,830.45
So the value of the dividends received after tax is $ 165,830
Larry writes scripts for TV shows. The show he currently works for, Curb, required him to sign a contract prohibiting him from writing scripts for any other TV shows while working for Curb. Larry has run in to some trouble recently, after making it appear that he was responsible for a fire that burnt down the home of his friend, Jerry. Larry swears it was not his fault, but Jerry demands that Larry write the script of a competing TV show to compensate Jerry for the loss of the house. If Larry writes for this show while working for Curb, will a court likely enforce the non-compete agreement against Larry?
a. Yes, it is likely to be enforceable during Larryâs employment with Curb.
b. A court would bar this prohibition because it is exculpatory.
c. This prohibition against competing is enforceable only after Larry quits Curb.
d. No, the restriction is unenforceable as a restraint on trade and is against public policy.
Answer:
a. Yes, it is likely to be enforceable during Larry's employability with Curb.
Explanation:
Larry has signed a contract with Curb that he will not be writing script for any other show while he is working with him. If Larry writes the script for Jerry he will be held responsible for breach of contract terms, and the agreement is likely to be enforceable by court against Larry.
"Coffee Klatch is an espresso stand in a downton office building. The average selling price of a cup of coffee is $1.49 and the avergage variable expense per cup is $0.36. The avergage fixed expense per month is $1,300. How many cups of coffee would have to be sold to attain target profits of $2,500 per month?"
Answer:
3363 cups of coffee
Explanation:
Given that the average selling price of a cup of coffee is $1.49 and the avergage variable expense per cup is $0.36 and average fixed expense per month is $1,300
The target profit is the difference between the total selling price and the total cost.
Let the number of units to be sold to make a target profits of $2,500 be T
The total cost will be
= 0.36T + 1300
The total sales
= 1.49T
Hence
1.49T - 0.36T - 1300 = 2500
1.13T = 2500 + 1300
1.13T = 3800
T = 3800/1.13
= 3362.83
Hence the company must sell about 3363 cups of coffee to make the target profit
Information concerning a product produced by Ender Company appears here: Sales price per unit $ 164 Variable cost per unit $ 94 Total annual fixed manufacturing and operating costs $ 434,000 Required Determine the following: Contribution margin per unit. Number of units that Ender must sell to break even. Sales level in units that Ender must reach to earn a profit of $182,000. Determine the margin of safety in units, sales dollars, and as a percentage.
Answer:
Results are below.
Explanation:
To calculate the unitary contribution margin, we need to use the following formula:
Contribution margin= selling price - unitary variable cost
Contribution margin= 164 - 94
Contribution margin= $70
Now, to determine the break-even point in units and sales dollars, we need to use the following formulas:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 434,000 / 70
Break-even point in units= 6,200
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 434,000 / (70 / 164)
Break-even point (dollars)= $1,016,800
The desired profit is $182,000:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
Break-even point in units= (434,000 + 182,000) / 70
Break-even point in units= 8,800
Finally, the margin of safety in units, sales dollars, and as a percentage:
Margin of safety (units)= (current sales level - break-even point)
Margin of safety (units)= 8,800 - 6,200
Margin of safety (units)= 2,600
Margin of safety (dollars)= (8,800*164) - 1,016,800
Margin of safety (dollars)= $426,400
Margin of safety ratio= (current sales level - break-even point)/current sales level
Margin of safety ratio= 426,400 / 1,443,200
Margin of safety ratio= 0.295
During the annual Black Friday Sale, The OLX sold a pair of ski boots, regularly priced at $245.00, at a discount of 40%. The boots cost $96.00 and expenses are 26% of the regular selling price. For how much were the ski boots sold?
Answer: $147
Explanation:
First find what 40% of $245.00 is:
= 40% * 245
= $98.00
The boots are sold at a discount of 40%. This means that 40% - which is $98 - was deducted from the value.
The selling price is therefore:
= 245 - 98
= $147