Answer:
C.$2,996.06 per unit
Explanation:
Calculation to determine what The unit product cost of Product N0 under activity-based costing is closest to:
First step is to Compute the activity rates
Activity Cost (a)Estimated Overhead cost (b)Total Expected Activity (a) ÷(b)Activity Rate
Labor-related $39,636÷2,700DLHs=$14.68per DLH
Production orders $57,421÷ 1,300orders =$44.17per order
Order size $432,075 ÷7,500MHs =$57.61per MH
Second step is to Compute the overhead cost per unit under activity-based costing
Using this formula
Overhead cost per unit=Activity Cost Pools and Activity Rates*Expected Activity=Amount
Let plug in the formula
Product N0
Labor-related, at $14.68 per DLH *1,100 =$16,148
Production orders, at $44.17 per order *700 =$30,919
Order size, $57.61 per MH *3,900 =$224,679
Total overhead costs assigned (a)$271,746
($16,148+$30,919+$224,679)
Number of units produced (b)100
Overhead cost per unit (a) ÷ (b)$2,717.46
($271,746÷100)
Third step is to Compute the unit product costs under activity-based costing
Product N0
Direct materials $104.80
Direct labor $173.80
(11.0 DLHs × $15.80 per DLH)
Overhead $2,717.46
Unit product cost $2,996.06
($104.80+$173.80+$2,717.46)
Therefore The unit product cost of Product N0 under activity-based costing is closest to: $2,996.06
The Sanding Department of Quik Furniture Company has the following production and manufacturing cost data for March 2017, the first month of operation.
Production:
10,000 units started which is comprised of 7,000 units finished and transferred out and 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs:
Materials $33,000
Labor $21,000
Overhead $36,000
Required:
Prepare a production cost report.
Answer:
Quick Furniture Company
The Sanding Department
Production Report
For the month of March 2017:
Production Cost Report:
Materials Conversion Total
Manufacturing costs $33,000 $57,000 $90,000
Cost per equivalent unit:
Manufacturing costs $33,000 $57,000
Equivalent units 10,000 7,600
Cost per equivalent unit $3.30 $7.50
Cost assigned to:
Units transferred out $23,100 $52,500 $75,600
Ending Work in Process $9,900 $4,500 14,400
Total costs assigned $33,000 $57,000 $90,000
Explanation:
a) Data and Calculations:
Materials Conversion
Units started 10,000
Units completed 7,000 7,000 7,000
Ending WIP 3,000 3,000 600
Equivalent units 10,000 7,600
Production Cost Report:
Materials Conversion Total
Manufacturing costs $33,000 $57,000 $90,000
Cost per equivalent unit:
Manufacturing costs $33,000 $57,000
Equivalent units 10,000 7,600
Cost per equivalent unit $3.30 $7.50
Cost assigned to:
Units transferred out $23,100 $52,500 $75,600
($3.30 * 7,000) ($7.50 * 7,000)
Ending Work in Process $9,900 $4,500 14,400
($3.30 * 3,000) ($7.50 * 600)
Total costs assigned $33,000 $57,000 $90,000
Sunland purchased the license for distribution of a popular consumer product on January 1, 2020, for $158,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Sunland can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2020
Answer:
No amount should be amortized since the license can be renewed indefinitely for successive 5-year terms.
Instead, the license should be tested for impairment annually to determine impairment loss.
Explanation:
An intangible asset that can be used indefinitely is treated like purchased Goodwill. It should never be amortized. Annually, the asset should be tested for impairment. The test is to compare the market value of the license with the book value.
The multiplier effect occurs when an initial increase (or decrease) in autonomous expenditure produces a greater increase (or decrease) in real GDP than the initial change. In which type of discretionary fiscal policy does the multiplier play a role? tax changes only neither government spending changes nor tax changes government spending changes only both government spending changes and tax changes Assume a marginal propensity to consume (MPC) of 0.5. Which discretionary fiscal policy would have a more pronounced impact on the economy? A 800 billion dollar increase in government spending, or a 800 billion dollar tax cut, would both have an equal impact on the economy. A 800 billion dollar increase in government spending would have a more pronounced impact on the economy. A 800 billion dollar tax cut would have a more pronounced impact on the economy.
Answer:
The answer is "Choice d and Choice b".
Explanation:
In question 1:
The multiplier effect is produced whenever an initial rise (or decrease) of self-employed market capitalization (or decreases) GDP Growth higher than the original change. Where both increases in public spending or adjustments in taxes are produced by a budgetary monetary strategy, a multiplier mostly on the economy plays a major role in public spending and new taxes.
In question 2:
This marginal demand risk of 0.5 would have a more noticeable influence on financial spending, via an 800 billion dollar increase in government expenditure. This will have more major economic effects on fiscal policy. More noticeable effects of increased spending will have on the aggregate throughout the economy.
The use of government budget funding policies to impact economic factors, particularly macroeconomic variables such as aggregate consumer spending, employment, inflation, and economic growth, is referred to as fiscal policy.
How is a fiscal policy that is discretionarily chosen?The multiplier impact occurs anytime an initial increase (or drop) in self-employed market capitalization (or reduces) GDP Growth that is greater than the original change.
When a fiscal monetary strategy produces both increases in public expenditure and tax adjustments, a multiplier based primarily on the economy plays a significant role in both public spending and new taxes.
This marginal demand risk of 0.5 would have a greater impact on financial expenditures, resulting in an 800 billion dollar rise in government spending.
This will have a greater impact on budgetary policy. The aggregate consequences of higher expenditure will be more visible throughout the economy.
Thus, Options B and D are correct.
For more information about discretionary fiscal policy refer to the link:
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Item4 3 points eBookHintPrintReferencesItem 4 Spotter Corporation reported the following for June in its periodic inventory records. Date Description Units Unit Cost Total Cost June 1 Beginning 12 $ 8 $ 96 11 Purchase 38 9 342 24 Purchase 20 11 220 30 Ending 24 Required: Calculate the cost of ending inventory and the cost of goods sold under the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.
Answer:
a. FIFO
cost of ending inventory = $256
cost of goods sold = $402
b. LIFO
cost of ending inventory = $204
cost of goods sold = $454
c. Weighted average cost
cost of ending inventory = $225.60
cost of goods sold = $432.40
Explanation:
Periodic method means cost of sales and inventory balance are determined at the end of the period.
Step 1 : Units Sold
Units Sold = Units available for Sale - Units in Inventory
= (12 + 38 + 20) - 24
= 46
Step 2 : FIFO
FIFO assumes that the units to arrive first, will be sold first.
cost of ending inventory = 20 x $11 + 4 x $9 = $256
cost of goods sold = 12 x $8 x 34 x $9 = $402
Step 3 : LIFO
LIFO assumes that the units to arrive last, will be sold first.
cost of ending inventory = 12 x $9 + 12 x $8 = $204
cost of goods sold = 20 x $11 x 26 x $9 = $454
Step 4 : Weighted average cost
Weighted average cost method calculates a new unit cost with every purchase made. this unit cost is then used to calculated cost of sale and ending inventory.
Unit Cost = Total Costs ÷ Units available for sale
= (12 x $8 + 38 x $9 + 20 x $11 ) ÷ (12 + 38 + 20)
= $9.40
cost of ending inventory = Units in Inventory x Unit Cost
= 24 x $9.40
= $225.60
cost of goods sold = Units Sold x Unit Cost
= 46 x $9.40
= $432.40
The prepaid insurance account had a balance of $11,300 at the beginning of the year. The account was debited for $12,500 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment:
a. The amount of unexpired insurance applicable to future periods is $2,100.
b. The amount of insurance expired during the year is $14,400
Answer:
A. Dr Insurance expense $21,700
Cr Prepaid insurance $21,700
B. Dr Insurance expense $14,400
Cr Prepaid insurance $14,400
Explanation:
A. Preparation of the adjusting entry if the
amount of unexpired insurance applicable to future periods is $2,100.
Dr Insurance expense $21,700
Cr Prepaid insurance $21,700
($11,300 + $12,500 - $2,100 = $21,700)
B. Preparation of the adjusting entry if The amount of insurance expired during the year is $14,400
Dr Insurance expense $14,400
Cr Prepaid insurance $14,400
According to the rule of 70, if a country's real GDP per capita grows at a rate of 2% instead of at a rate of 3%, it would take _____ for that country to double its level of real GDP per capita. a. 35 additional years b. 11.67 additional years c. 23.3 additional years d. 30 additional years e. 15 additional years.
Answer:
b. 11.67 additional years
Explanation:
Hot Wok Cuisine is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Chinese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Hot Wok Cuisine is most likely operating in a(n)
Answer: monopolistically competitive industry
Explanation:
Based on the above information, Hot Wok Cuisine is most likely operating a monopolistically competitive industry.
This is a type of industry whereby the firm's make their own pricing and output decisions. There are large number of competitors, but the products that they sell are slightly different from one another. Also, there some entry barriers.
We can infer that the restaurant differentiates itself from a large number of competitors by providing exclusively organic Chinese cusine and there are entry barriers.
Please Help~!!!!
Name one thing you're afraid of when you think of college and career.
Suppose you are the money manager of a $5.21 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 320,000 1.50 B 780,000 (0.50) C 1,260,000 1.25 D 2,850,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 5%, what is the fund's required rate of return
Answer: 8.65%
Explanation:
First find the weights of the stocks:
Total = 320,000 + 780,000 + 1,260,000 + 2,850,000
= $5,210,000
Stock A:
= 320,000 / 5,210,000
= 6.14%
Stock B:
= 780,000 / 5,210,000
= 14.97%
Stock C:
= 1,260,000 / 5,210,000
= 24.18%
Stock D:
= 2,850,000 / 5,210,000
= 54.70%
Then calculate Portfolio Beta.
Portfolio beta = (6.14% * 1.50) + (14.97% * - 0.5) + (24.18% * 1.25) + (54.72% * 0.75)
= 0.7299
Required rate of return using Capital Asset Pricing Model (CAPM)
= Risk free rate + Beta * (Market return - risk free rate)
= 5% + 0.7299 * (10% - 5%)
= 8.65%
Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $21,525. Clayborn's May bank statement shows $19,400 on deposit in the bank. Determine the adjusted cash balance using the following information:
Deposit in transit $6,550
Outstanding checks $5,500
Bank service fees, not yet recorded by company $70
A NSF check from a customer, not yet recorded by the company $1,005
The adjusted cash balance should be:
Answer:
$20,450
Explanation:
With regard to the above, the adjusted cash balance would be computer as;
= Bank balance + deposits in transit - outstanding checks
= $19,400 + $6,550 - $5,500
= $20,450
or
= Bank balance - service fees - NSF checks
= $21,525 - $70 - $1,005
= $20,450
On May 1, 2020, Richardson Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $900 in advance on May 15, 2020. Kickapoo pays Richardson on May 15, 2020, and Richardson delivers the mower (with cost of $575) on May 31, 2020.
Required:
a. Prepare the journal entry on May 1, 2020, for Richardson.
b. Prepare the journal entry on May 15, 2020, for Richardson.
c. Prepare the journal entry on May 31, 2020, for Richardson.
Answer:
A. No entry
B. Dr Cash $900
Cr Unearned sales Revenue $900
C. Dr Unearned sales Revenue $900
Dr Cost of goods sold $575
Cr Sales Revenue $900
Cr Inventory $575
Explanation:
A. Preparation of the journal entry on May 1, 2020, for Richardson.
May 1, 2020
No entry
B. Preparation of the journal entry on May 15, 2020, for Richardson.
May 15, 2020
Dr Cash $900
Cr Unearned sales Revenue $900
C Preparation of the journal entry on May 31, 2020, for Richardson.
May 31, 2020
Dr Unearned sales Revenue $900
Dr Cost of goods sold $575
Cr Sales Revenue $900
Cr Inventory $575
Determine Cost of Land Four Corners Delivery Company acquired an adjacent lot to construct a new warehouse, paying $200,000 and giving a short-term note for $375,000. Legal fees paid were $6,000, delinquent taxes assumed were $4,100, and fees paid to remove an old building from the land were $15,500. Materials salvaged from the demolition of the building were sold for $2,600. A contractor was paid $900,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.
Answer:
$598,000
Explanation:
Calculation of the Cost of Land
Cash $200,000
Note Payable $375,000
Legal fees $6,000
Delinquent taxes $4,100
Fees to Remove Old Building $15,500
Proceeds from Savages ($2,600)
Total $598,000
Therefore,
The cost of the land to be reported on the balance sheet is $598,000
Nantor Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Total Company Southern Northern Sales $ 5,600,000 $ 3,460,000 $ 2,140,000 Contribution margin $ 2,450,000 $ 1,530,000 $ 920,000 Divisional segment margin $ 1,330,000 $ 1,020,000 $ 310,000 Net operating income last year for Nantor Corporation was $560,000. In last year's income statement segmented by division, what were Nantor's total common fixed expenses
Answer:
the total common fixed expense is $770,000
Explanation:
The computation of the total common fixed expense is shown below:
= Total company divisional segment margin - net operating income last year
= $1,330,000 - $560,000
= $770,000
Hence, the total common fixed expense is $770,000
We simply applied the above formula
Elizabeth reports the following items for the current year: Nonbusiness capital gains $ 5,000 Nonbusiness capital losses (3,000) Interest income 3,000 Itemized deductions (including a $20,000 casualty loss in a Federal disaster area) (27,000) In calculating Elizabeth's net operating loss and with respect to these amounts only, what amount must be added back to taxable income (loss)
Answer: $2000
Explanation:
In calculating Elizabeth's net operating loss and with respect to these amounts only, the amount that must be added back to taxable income (loss) will be the difference between the nonbusiness capital gains and the nonbusiness capital losses. This will be:
= $5000 - $3000
= $2000
Provide an example of two companies that have built in effective co-opetition. Briefly explain the benefit of the relationship describe one job that once existed but today is obsolete or slowly becoming obsolete because of technology provide an exampled of two companies that have built a strategic alliance. Briefly explain the benefits of the relationship.
Answer:
Microsoft and Apple, Samsung and sony.
Explanation:
Samsung electronics and sony formed an agreement in 2004 for use of shared knowledge and resources in designing flat television screens. A strategic alliance is a collaboration or a synergy where each partner gets the benefits of the alliance. Jobs such as travel agencies, cashiers, textile workers. A strategic alliance consists of healthy behavior, long terms goals, and better customer satisfaction.The purpose of charging different prices to different groups of customers is to multiple choice decrease costs and in turn increase profits. Student discounts are an example of this type of pricing. increase revenue, but not profits. Higher holiday airfares are an example of this type of pricing. increase revenue and in turn costs. Senior citizen discounts are an example of this type of pricing. increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
Answer:
increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
Explanation:
Price discrimination is defined as the situation where the same product is being sold to different customers at different prices.
This is mostly based in the ability of the customers to pay at the varying amounts.
In the given instance when afternoon movie tickets are sold at lower prices, that rational is that there is lower demand for movies in the afternoon.
As such the price will need to be lowered to encourage people to buy tickets.
However at night people are less busy and demand for movies will be high. Tickets can now be sold at higher prices with the assurance that people will buy
Student discounts are an example of this type of pricing of increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
The following information should be considered;
Price discrimination is defined as the situation where the same product is being sold to different customers at different prices. This is mostly based in the ability of the customers to pay at the varying amounts.Learn more: brainly.com/question/16911495
Scrimshander, Inc. is a shipping company, transporting goods using cargo ships. On January 1, 2017, the company purchases and puts into service a cargo ship costing $10,000,000. The expected useful life of the ship is 25 years, and the salvage value is $1,000,000. Enter your answers below in whole dollar amounts without a $ sign. Calculate the annual depreciation expense that Scrimshander must recognize on the cargo ship over the next 25 years. Calculate the net book value of the cargo ship as of December 31, 2019. Calculate the net book value of the cargo ship as of December 31, 2041. Assume that Scrimshander continues using this cargo ship throughout 2042. How much depreciation expense should Scrimshander recognize for that year
Answer:
Scrimshander, Inc.
a) Annual depreciation expense = $360,000
b) Net book value of the cargo ship as of December 31, 2019 = $9,280,000
c) Net book value of the cargo ship as of December 31, 2041 = $1,360,000
d) Depreciation expense for 2042 = $360,000
Explanation:
a) Data and Calculations:
Purchase price of a cargo ship = $10,000,000
Expected useful life of the ship = 25 years
Salvage value = $1,000,000
Depreciable amount = $9,000,000 ($10,000,000 - $1,000,000)
Annual depreciation expense = $360,000 ($9,000,000/25)
Net book value as of December 31, 2019 = $9,280,000 ($10,000,000 - $720,000)
Accumulated depreciation = $720,000 ($360,000 * 2)
Net book value as of December 31, 2041 = $1,360,000 ($10,000,000 - 8,640,000)
Accumulated depreciation = $8,640,000 ($360,000 * 24)
The following data relate to Department no. 3 of Winslett Corporation: Segment contribution margin$540,000 Profit margin controllable by the segment manager 310,000 Segment profit margin 150,000 On the basis of this information, Department no. 3's variable operating expenses are: Multiple Choice Not determinable. $160,000. $80,000. $390,000. $230,000.
Answer:
$230,000
Explanation:
The Profit margin controllable by the segment manager contains only items directly controllable by the manager and this consists of variable costs. So deduct the profit margin controllable by the segment manager from segment contribution margin to arrive at Variable operating expenses.
Calculation of Variable operating expenses
Segment contribution margin $540,000
Less Profit margin controllable by the segment manager ($310,000)
Variable operating expenses $230,000
At May 31, Metlock, Inc. has net sales of $340,000 and cost of goods available for sale of $278,500. Compute the estimated cost of the ending inventory, assuming the gross profit rate is 36%. Estimated cost of ending inventory
Answer:
$60,900
Explanation:
The computation of the closing inventory is shown below:
As we know that
Gross profit = Sales - cost of goods sold
($340,000 × 36%) = $340,000 - cost of goods sold
$122,400 = $340,000 - cost of goods sold
So, the cost of goods sold is
= $217,600
Now the ending inventory is
= Cost of goods sold available for sale - cost of goods sold
= $278,500 - $217,600
= $60,900
Multipoint pricing occurs when a company buys products at a cheaper rate in one country to sell at a higher price in another country. allows markets to determine the pricing of a product. aggressively prices in one market to elicit a competitive response from a rival in another market. prices its products at a loss in order to drive out competitors from the market. prices two similar products at low and high prices in order to boost sales of the lower priced products.
Answer:
aggressively prices in one market to elicit a competitive response from a rival in another market.
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
One of the importance associated with the pricing of products is that, it improves the image of a business firm.
Multipoint pricing occurs when a company aggressively prices in one market to elicit a competitive response from a rival in another market.
This ultimately implies that, a company's pricing strategy in one market is likely to impact the pricing strategy of its rival in another market.
Materials used by Square Yard Products Inc. in producing Division 3's product are currently purchased from outside suppliers at a cost of $5.00 per unit. However, the same materials are available from Division 6. Division 6 has unused capacity and can produce the materials needed by Division 3 at a variable cost of $3.00 per unit. A transfer price of $3.20 per unit is established, and 40,000 units of material are transferred, with no reduction in Division 6's current sales. Square Yard Products Inc.'s total operating income will increase by
Answer: $80,000
Explanation:
First, we'll need to calculate division 3's income from the increase in operations and this will be:
= (40000 × $5) - ($40000 × $3.20)
= $200,000 - $128,000
= $72000
Division 6 income from operation increase will be:
= 40000 × ($3.20 - $3.00)
= 40000 × 0.2
= $8000
Therefore, Square Yard Products Inc.'s total operating income will increase by:
= $72000 + $8000
= $80000
eight business functions
A guidance counselor at a high school is working on a project to get more girls interested in the Science, Technology, Engineering, and Mathematics career cluster, which students would be best prepared to enter this career cluster?
A)Those who are strong in art and creative writing.
B)Those who are strong in algebra and computer design.
C) Those who are strong in leadership and communication,
D) Those who are strong in foreign language and history
Answer:
its either b or c, im more confident about b though
Explanation
Answer:
b
Explanation:
As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs.
Job 102 Job 103 Job 104
Direct materials $ 37,000 $ 48,000 $ 57,000
Direct labor 20,000 28,700 43,000
Overhead 8,200 11,767 17,630
Job 102 was started in production in May, and the following costs were assigned to it in May: direct materials, $9,000; direct labor, $3,500; and overhead, $1,505. Jobs 103 and 104 were started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 102 and 103 were finished in June, and Job 104 is expected to be finished in July. No raw materials were used indirectly in June. Using this information, answer the following questions. (Assume this company’s predetermined overhead rate did not change across these months.)
Question Completion:
1. What is the cost of the raw materials requisitioned in June for each of the three jobs?
2. How much direct labor cost is incurred during June for each of the three jobs?
3. What predetermined overhead rate is used during June?
4. How much total cost is transferred to finished goods during June?
Answer:
Racing Wheels, Inc.
Job 102 Job 103 Job 104
1. Direct materials $ 37,000 $ 48,000 $ 57,000
2. Direct labor 20,000 28,700 43,000
3. The predetermined overhead rate = $0.41 per direct labor cost.
4. The total cost transferred to Finished Goods Inventory in June
= $167,672
Explanation:
a) Data and Calculations:
The total costs accumulated on three custom jobs.
Job 102 Job 103 Job 104 Total
Beginning WIP: $14,005
Direct materials $9,000
Direct labor 3,500
Overhead 1,505
Direct materials $ 37,000 $ 48,000 $ 57,000 $ 142,000
Direct labor 20,000 28,700 43,000 91,700
Overhead 8,200 11,767 17,630 37,597
Total costs $ 79,205 $ 88,467 $ 117,630 $285,302
Predetermined overhead rate = total overhead/total direct labor
= $37,597/$91,700
= $0.41
Finished goods in June:
Job 102 $ 79,205
Job 103 $ 88,467
Total cost $167,672
Suppose your company sells services of $370 in exchange for $205 cash and $165 on account. Required: Prepare the journal entry to record this transaction. Identify the amount that should be reported as net cash flow from operating activities. Identify the amount that would be included in net income. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).
Answer:
1. Journal Entry
Date Particulars Debit Credit
Cash $205
Debtors/Party A/c $165
To Service revenue $370
(Being service income recorded)
2. Net cash Flow = $370 - $165
Net cash Flow = $205
3. Calculation of Net Income
Net Income = Service Income - Expenses
Net Income = $370 - $0
Net Income = $370
4. Computation of how the indirect method convert the net income to net cash flow from operating activities
Particulars Amount
Net Income $370
Increase in accounts receivable ($165)
Net cash flow from operating activities $205
larry Nelson holds 1,000 shares of General Electric (GE) common stock. As a stockholder, he has the right to be involved in the election of its directors, who are responsible for managing the company and achieving the company’s objectives. True or False: Larry will receive dividends before preferred stockholders.
Answer:
False
Explanation:
Preferred shareholders are category of shareholders of company that have priority over the income of the company. This implies that whenever dividend is declared, preferred shareholders are paid first before common shareholders are paid.
This means that common shareholders are paid dividends whatever is left out of dividends declared after preferred shareholders have been paid.
Therefore, Larry will NOT receive dividends before preferred stockholders.
In late 2020, the Nicklaus Corporation was formed. The corporate charter authorizes the issuance of 6,000,000 shares of common stock carrying a $1 par value, and 2,000,000 shares of $5 par value, noncumulative, nonparticipating preferred stock. On January 2, 2021, 4,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also on January 2, all 2,000,000 shares of preferred stock are issued at $20 per share. Required: 1. Prepare journal entries to record these transactions. 2. Prepare the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2021. (Assume net income for the first quarter 2021 was $1,600,000.)
Answer:
1. Jan-02
Dr Cash $ 40,000,000.00
Cr Common stock $ 4,000,000.00
Cr Paid-in capital – excess of par, common $ 36,000,000.00
Jan 02
Dr Cash $ 40,000,000.00
Cr Preferred stock $ 10,000,000.00
Cr Paid-in capital – excess of par, preferred $ 30,000,000.00
2. $81,600,000.00
Explanation:
1. Preparation of the journal entries to record these transactions
Jan-02
Dr Cash (4,000,000 x $10) $ 40,000,000.00
Cr Common stock ($1 par x 4,000,000 shares) $ 4,000,000.00
Cr Paid-in capital – excess of par, common $ 36,000,000.00
Jan 02 Cash (amount received) (2,000,000 x $20) $ 40,000,000.00
Preferred stock ($5 par x 2,000,000 shares) $ 10,000,000.00
Paid-in capital – excess of par, preferred (difference) $ 30,000,000.00
2. Preparation of the shareholders' equity section of the Nicklaus balance sheet as of March 31, 2021.
Nicklaus Corporation
Balance Sheet-Shareholders' Equity Section
September 30, 2018
Shareholders' equity
Preferred stock, $5 par, authorized 2,000,000 shares, issued and outstanding 2,000,000 shares$ 10,000,000
Common stock, $1 par, authorized 6,000,000 shares, issued and outstanding 4,000,000 shares $ 4,000,000.00
Paid-in capital – excess of par $ 66,000,000.00
Retained earnings $ 1,600,000.00
Total shareholders' equity$ 81,600,000.00
Marigold Corp. incurs the following costs to produce 10100 units of a subcomponent: Direct materials $8484 Direct labor 11413 Variable overhead 12726 Fixed overhead 16200 An outside supplier has offered to sell Marigold the subcomponent for $2.85 a unit. If Marigold could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by $838. $(3364). $6838. $(5929).
Answer:
The effect on net income is an increase by $6838.
Explanation:
Analysis of Accepting Special Offer
Savings :
Direct materials $8,484
Direct labor $11,413
Variable overhead $12,726
Fixed Overheads $3,000 $35,623
Total Savings
Costs :
Purchase Price ( $2.85 x 10,100 units) ($28,785)
Effect on Net Income $6,838
Note : We have considered the avoidable component of fixed costs in this calculation. Ignore common fixed costs (unavoidable) since they are irrelevant for decision making.
Conclusion :
The effect on net income is an increase by $6838.
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $93,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $31,000 or will be entitled to an additional $31,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $31,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $31,000. At the end of the contract, Velocity receives the additional consideration of $29,000.
Required:
a. Prepare the journal entry to record revenue each month for the first four months of the contract.
b. Prepare the journal entry that the Velocity Company would record after four months to recognize the change in estimate associated with the reduced likelihood that the bonus will be received.
c. Prepare the journal entry to record the revenue each month for the second four months of the contract.
d. Prepare the journal entry after eight months to record receipt of the cash bonus.
Answer:
a. Accounts Receivable (Dr.) $93,000
Bonus Receivable (Dr.) $2,325
Service Revenue (Cr.) $95,325
b. Service Revenue (Dr.) $9,300
Bonus receivable (Cr.) $9,300
c. Accounts Receivable (Dr.) $93,775
Bonus Receivable (Dr.) $775
Service Revenue (Cr.) $93,000
d. Cash (Dr.) $29,000
Bonus Receivable (Cr.) $29,000
Explanation:
The contract between Burger Boy and Velocity is for eight months.
Expected value of the contract on 1st month is :
80% * [ $93,000 * 8 months + $31,000 ] + 20% [ $93,000 * 8 months - $31,000] = $762,600
The expected value per month is $762,600 / 8 months = $95,325 per month
Expected value of the contract 5th month with revised probability is :
60% * [ $93,000 * 8 months + $31,000 ] + 40% [ $93,000 * 8 months - $31,000] = $750,200
The expected value per month is $750,200 / 8 months = $93,775 per month.
Portfolio Returns i. stock has mean of 8% and stdev of 20%; ii bond has mean of 6% and stdev of 15%; iii correlation b/w stock and bond of -0.3; iv. Risk free rate for cash lending and borrowing is at 1%. a. What is the mean and stdev of a portfolio of that is 60% in stock and 40% in bond (3 points)
Answer:
Portfolio Mean = 7.2%
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%
Explanation:
The mean return of a portfolio consisting of two securities can be calculated by multiplying the weight of each security in the portfolio by the mean return of that security and adding the products for each security. The formula for two asset or security portfolio return (mean) can be written as follows,
Portfolio Mean = wA * rA + wB * rB
Where,
w represents the weight of each securityr represents the mean return of each securityPortfolio Mean = 60% * 8% + 40% * 6%
Portfolio Mean = 7.2%
The standard deviation is a measure of the total risk. The standard deviation of a portfolio consisting of two securities can be calculated using the attached formula.
Portfolio Stdev = √(0.6)² (0.2)² + (0.4)² (0.15)² + 2(0.6) (0.4) (-0.3) (0.2) (0.15)
Portfolio Stdev = 0.1169615 or 11.69615% rounded off to 11.70%