Answer:
Debit to Employee Benefits Expense $21,140
Explanation:
Preparation of Athena Company entry to record the accrued benefits for the month
Using this formula
Accrued Expenses = Gross salary ×Percentage of the amount contributed+ Insurance cost
Let plug in the formula
Accrued Expenses= $151,000 × 0.04
= $6,040 + $15,100
= $21,140
Debit to Employee Benefits Expense $21,140.
Therefore the entry to record the accrued benefits for the month would include a: Debit to Employee Benefits Expense $21,140.
Today is your 20th birthday, and your parents just gave you $5,000 that you plan to use to open a stock brokerage account. You plan to add $500 to the account each year on your birthday. Your first $500 contribution will come one year from now on your 21st birthday. Your 45th and final $500 contribution will occur on your 65th birthday. You plan to withdraw $5,000 from the account five years from now on your 25th birthday to take a trip to Europe. You also anticipate that you will need to withdraw $10,000 from the account 10 years from now on your 30th birthday to take a trip to Asia. You expect that the account will have an average annual return of 12%. How much money do you anticipate that you will have in the account on your 65th birthday, following your final contribution
Answer:
You anticipate that you will have $432,522 in the account on your 65th birthday, following your final contribution.
Explanation:
To calculate this, we use the formula for calculating the future value (FV) and FV of ordinary annuity as appropriate as given below:
FVd = D * (1 + r)^n ......................................................................... (1)
FVo = P * {[(1 + r)^n - 1] ÷ r} ...................... (2)
Where,
FVd = Future value of initial deposit or balance amount as the case may be = ?
FVo = FV of ordinary annuity starting from a particular year = ?
D = Initial deposit = $5,000
P = Annual deposit =s $500
r = Average annual return = 12%, or 0.12
n = number years = to be determined as necessary
a) FV in five years from now
n = 5 for FVd
n = 4 for FVo
Substituting the values into equations (1) and (2), we have:
FVd = $5,000 * (1 + 0.12)^5 = $8,812
FVo = $500 * {[(1 + 0.12)^4 - 1] ÷ 0.12} = $2,390
FV5 = Total FV five years from now = $8,812 + $2,390 = $11,201
FVB5 = Balance after $5,000 withdrawal in year 5 = $11,201 - $5,000 = $6,201.
b) FV in 10 years from now
n = 10 - 5 = 5 for both FVd and FVo
Using equations (1) and (2), we have:
FV of FVB5 = $6,201 * (1 + 0.12)^5 = $10,928
FVo = $500 * {[(1 + 0.12)^5 - 1] ÷ 0.12} = $3,176
FV10 = Total FV 10 years from now = $10,928 + $3,176 = $14,104
FVB10 = Balance after $10,000 withdrawal in year 10 = $14,104 - $10,000 = $4,104
c) FV in 45 years from now
n = 45 - 10 = 35 for both FVd and FVo
Using equations (1) and (2), we have:
FV of FVB10 = $4,104 * (1 + 0.12)^35 = $216,690
FVo = $500 * {[(1 + 0.12)^35 - 1] ÷ 0.12} = $215,832
FV45 = Total FV 45 years from now = $216,690 + $215,832 = $432,522
Conclusion
Therefore, you anticipate that you will have $432,522 in the account on your 65th birthday, following your final contribution.
A consumer household cleaning products company, the Klean Kompany, has multiple products. Each is labeled with the Klean Kompany name, including Klean Kompany Disinfecting Wipes, Klean Kompany Kitchen Shine, and Klean Kompany Toilet Bowl Scrub.Which branding strategy is Klean Kompany using to build its brand?
Answer:
brand extension
Explanation:
Based on the information provided within the question it can be said that Klean Kompany is using the branding strategy known as brand extension. This is the process of using the same brand name that has already been established and is well known, for a variety of different product lines, including new products entering the market. Which is exactly what Klean Kompany is doing by adding their brand name on every single product they release into the market. This is done in order to let people know that the product is from that brand and convince them to buy it.
Dominion Bank also pays 3.25% annual interest, compounded daily. If you had the following deposits and withdrawals, calculate the amount of interest you would have earned at Dominion bank during the month of March. (March has 31 days)
DATE ACCOUNT ACTIVITY BALANCE
March 1 beginning balance $6,500
March 16 withdraw $1,500 ????
March 28 deposit $700 ????
a. $8.69
b. $5.35
c. $33.36
d. $16.08
Answer:
Option D. $16.08
Explanation:
The balance $6,500, $5,000 ($6500-$1500) and $5,700 ($5000+$700) was outstanding for 15, 12 and 4 days.
So now we will calculate the interest earned during the outstanding period for each monetary amount. The formula to compute interest is given as under:
Effective interest = Amount * [(1 + Annual Interest rate / 365)^Days - 1]
Here,
Amount is $6500
Annual Interest rate is 3.25% and Days are 15.
So by putting values, we have:
Effective interest = $6,500 * [(1 + 3.25% / 365)^15 - 1] = $8.69
Similarly for $5,000 and $5,700, we have:
Effective interest = $5,000 * [(1 + 3.25% / 365)^12 - 1] = $5.35
Effective interest = $5,700 * [(1 + 3.25% / 365)^4 - 1] = $2.03
Now,
Total Interest = $8.69 + $5.35 + $2.03 = $16.07 which is close to $16.08 and the difference is because of rounding off.
Hence, the correct option is D.
The Tinslow Co. has 125,000 shares of stock outstanding at a market price of $93 a share. The company has just announced a 5-for-2 stock split. How many shares of stock will be outstanding after the split
Answer:
312,500
Explanation:
A stock split increases the number of outstanding shares and decreases the value of shares.
A stock split is a form of returns given to shareholders in a corporation.
In a 5-for-2 split, for every 2 shares owned, shares would increase by 5 .
(125,000 × 5 ) / 2 = 312,500
I hope my answer helps you
An accountant has debited an asset account for $700 and credited a liability account for $620. Which of the following would be an incorrect way to complete the recording of the transaction?
A) Credit an asset account for $80
B) Credit another liability account for $80.
C) Credit a stockholders' equity account for $80.
D) Debit a stockholders' equity account for $80
Answer:
Debit a stockholder equity
Explanation:
The error in the entry here is that the either the asset asset is over debited with $80 or the liability account under credited with $80 (700-620)
While the asset account should have debit balances , The liability account and the stockholders equity should have credit balances.
A credit of $80 to the asset account means that the excess has been removed while a credit of $80 to another liability account provides for the shortage in the initial entry.
A credit of $80 to the stockholders account means that the shortage as a result of the error in the initial entries also been addressed.
Therefore the incorrect option is a debit entry of $80 to the stockholders equity account .
The following data are available for Cole Company. Increase in accounts payable $120,000 Increase in bonds payable 300,000 Sale of investments 150,000 Issuance of common stock 180,000 Payment of cash dividends 90,000 Net cash provided by financing activities is:
Answer:
Net Cash=$390,000
Explanation:
Net Cash provided by financing activities = Increase in bond payable + Issuance of common stock - Payment of cash dividends
Net Cash= $300,000+$180,000-$90,000
Net Cash=$390,000
Net cash also refers to the amount of cash remaining after a transaction has been completed and all associated charges and deductions have been subtracted
Based on the data available, the cash provided by financing activities is $300,000
Cash from financing includes loans and capital related to the financing of the business.
Cash from financing is therefore:
= Increase in bonds payable + Issuance of common stock - Payment of dividends
= 300,000 + 180,000 - 90,000
= $390,000
In conclusion, cash from financing is $390,000
Find out more about cash from financing at https://brainly.com/question/25948084.
Mr. Zeplin wants to make a cash gift to each of his five children, to each of their five spouses, and to each of his 13 grandchildren. Assume the taxable year is 2019. How much total wealth can he transfer to his descendants without making a taxable gift if he is an unmarried individual
Answer:
Total wealth transfer is $345000.
Explanation:
Given the number of children = 5
Total number of spouses = 5
Total number of grandchildren = 13
If the individual is unmarried then below is the calculation of wealth transfer to the descendants with the taxable gifts.
In 2018, an individual unmarried person can transfer wealth without tax or free of gift tax is $15000 per person. So the total number of persons to whom the wealth is to be transferred 5 + 5 + 13 = 23 persons.
Total wealth Mr. Zeplin transfer without tax = 15000 × 23 persons = $345000
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows:
Year 1
1. Sold $1,348,100 of merchandise (that had cost $981,200) on credit, terms n/30.
2. Wrote off $20,700 of uncollectible accounts receivable.
3. Received $667,100 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 1.60% of accounts receivable would be uncollectible.
Year 2
1. Sold $1,557,000 of merchandise (that had cost $1,347,300) on credit, terms n/30.
2. Wrote off $28,600 of uncollectible accounts receivable.
3. Received $1,241,900 cash in payment of accounts receivable.
4. In adjusting the accounts on December 31, the company estimated that 1.60% of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang’s Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts expense.
Answer and Explanation:
The journal entries are shown below;
For the year 1
1. Accounts receivable $1,348,100
To Sales $1,348,100
(Being the sale of merchandise is recorded)
Cost of good sold $981,200
To Merchandise inventory $981,200
(Being the cost of merchandise is recorded)
2. Allowance for doubtful accounts $20,700
To Accounts receivable $20,700
(Being the written off amount is recorded)
3. Cash $6,67,100
To Accounts receivable $6,67,100
(Being the cash received is recorded)
d. Bad debts expense $31,264.80
To Allowance for doubtful accounts $31,264.80
(Being the bad debt expense is recorded)
The computation is shown below for bad debts
Sales $1,348,100
Less: cash collection -$667,100
Less: written off amount -$20,700
Ending balance of account receivable $660,300
1.60% of account receivable $10,564.80
Add: debit balance $20,700
bad debt expense $31,264.80
For the year 2
1. Accounts receivable $1,557,000
To Sales $1,557,000
(Being the sale of merchandise is recorded)
Cost of good sold $1,347,300
To Merchandise inventory $1,347,300
(Being the cost of merchandise is recorded)
2. Allowance for doubtful accounts $28,600
To Accounts receivable $28,600
(Being the written off amount is recorded)
3. Cash $1,241,900
To Accounts receivable $1,241,900
(Being the cash received is recorded)
d. Bad debts expense $33,184
To Allowance for doubtful accounts $33,184
(Being the bad debt expense is recorded)
The computation of the bad debt expense is shown below;
beginning balance of account receivable $660,300
Add: Sales $1,557,000
Less: cash collection -$1,241,900
Less: written off amount -$28,600
Ending balance of account receivable $948,600
1.60% of account receivable $15,148.80
Add: debit balance ($28,600 - $10,564.80) $18,035.20
Year end adjustment $33,184
Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $120,500 and $124,100, respectively. During the year, actual overhead was $106,500 and actual direct labor cost was $110,800. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include
Answer:
Under/over applied overhead= $1,164.48 overapplied
Explanation:
Giving the following information:
Estimated overhead and direct labor costs for the year were $120,500 and $124,100, respectively. During the year, actual overhead was $106,500 and actual direct labor cost was $110,800.
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 120,500/124,100
Predetermined manufacturing overhead rate= $0.971
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 0.971*110,880= $107,664.48
Finally, we determine the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 106,500 - 107,664.48
Under/over applied overhead= $1,164.48 overapplied
Earleton Manufacturing Company has $3 billion in sales and $600,000,000 in fixed assets. Currently, the company's fixed assets are operating at 85% of capacity. What level of sales could Earleton have obtained if it had been operating at full capacity
Answer:
$3,529 million
Explanation:
current sales level $3 billion at 85% of fixed assets operating capacity
if assets operate at full capacity, 100%, then total seals could be:
$3 billion / 0.85 = $3,529 million
Generally very few facilities operate at 100% of their capacity, since the operating capacity is determined before the facility starts to operate and must include the estimated future sales for several years, not just one year. Also, if everything works well, sales levels should increase on a yearly basis, so a little spare capacity is not such a bad thing.
The vice-president of marketing of G Street Fabrics has been told to invest the company's advertising dollars wisely. Which of the following measures could be used to compare the financial effectiveness of its advertising expenditures for different media?
a.reach
b.rating
c.GRPs
d.CPM
e.frequency
Answer:
The correct answer is the option D: CPM
Explanation:
To begin with, the term of "Cost Per Mille" or CPM is used in the business world and in the marketing area to refer to the measurement commonly used in the marketing campaigns in order to establish the price that one advertiser will have to pay for one thousand views or clicks of an advertisement. All of the impacts that the advertisement will have can be masured in all of the different medias that the advertisement will be, for example radio, TV, internet, etc. That is why, this is one of the most common measurements that is used in the campaigns that the companies have, due to its efectiveness.
Suppose a Monopsony facing the following labor supply given by curve L = 10W, where L is the number of workers and W = hourly wage. a) Express the hourly wage in terms of the number of workers (L). b) Provide an expression of total labor cost in terms of the number of workers (L) c) Express the marginal expense of labor (MEL) in terms of the number of workers. d) Suppose the marginal revenue product of labor ((MRPL) = 7 – L. What is the level of workers that maximizes the monophony’s profit? What is the wage paid by the monopsony at the profit maximizing level of labor?
Answer: The answer is given below
Explanation:
a. Express the hourly wage in terms of the number of workers (L).
From the question, the labor supply given by L = 10W, where,
L = number of workers
W = hourly wage
Since L = 10W
Divide both side by 10
L/10 = 10W/10
W = L/10
The hourly wage(W) expressed in terms of the number of workers(L) is L/10.
b. Provide an expression of total labor cost in terms of the number of workers (L).
Total labor cost = L × W
Since W = L/10,
Total labor cost = L × L/10
= L²/10
c. Express the marginal expense of labor (MEL) in terms of the number of workers.
Marginal expense of labor will be gotten when we find the derivative of the total labor cost.
Total labor cost = L²/10
MEL = 2L/10
We can reduce to lowest term
MEL = L/5
d. Suppose the marginal revenue product of labor ((MRPL) = 7 – L. What is the level of workers that maximizes the monophony’s profit? What is the wage paid by the monopsony at the profit maximizing level of labor?
Marginal revenue product of labor (MRPL) = 7 – L
At equilibrium, the marginal revenue product of labor (MRPL) will be equal to the marginal expense of labor(MEL)
MRPL = MEL
7 - L = L/5
Cross multiply
5(7 - L) = L
35 - 5L = L
35 = L + 5L
35 = 6L
L = 35/6
L = 5.83 = 6 Approximately
The level of workers that maximizes the monophony’s profit will be approximately 6.
Wages paid = L/10
= 6/10
= 0.6
The wage paid by the monopsony at the profit maximizing level of labor will be 0.6.
Billy Bob runs a seafood restaurant. Last year, he earned $70000 in revenue. He had explicit costs of $15000. Billy Bob could have made $30,000 working for the county, and he could have received an additional $20,000 if he had rented out his building and equipment.Calculate Billy Bob’s accounting profit.
Answer:
Accounting profit= $55,000
Explanation:
Giving the following information:
Last year, he earned $70000 in revenue. He had explicit costs of $15000.
The accounting profit doesn't take into account the opportunity cost of other income options.
Accounting profit= 70,000 - 15,000= $55,000
Other dividend policy issues
Several factors affect a firm's ability to pay a dividend. Three such factors are described in the table: profitability (an increase in net income),
investment opportunities, and capital structure (an increase in the debt ratio). Use the table to indicate how a firm's ability to pay a dividend is affected by the factors described.
(Hint: Consider each factor in isolation, with everything else held the same.)
Ability to Pay Dividends The ability to pay dividends The ability to pay dividends The ability to pay dividends Factors Affecting Dividend Payment Net income increases. More profitable investment opportunities are available. The firm increases its debt ratio. Dernham Burnham Inc. is a typical company that is very concerned with meeting investors’ expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Dernham Burnham Inc.’s dividend policy?
A. Despite the fact that Dernham Burnham Inc.'s earnings tend to fluctuate from year to year, the company most likely pays a predictable, stable dividend each year.
B. Dernham Burnham Inc. most likely pays very large dividends in years with high earnings and small dividends in the years with low earnings. Grade It Now Save & Continue Continue without save in
Answer:
1.
Net income increases. - Ability to pay Dividends increases.
Dividends are paid from Retained Earnings which are derived from Net Income. If Net income increases therefore, so does the ability to pay Dividends.
More profitable investment opportunities are available - Decreases Ability to pay Dividends.
If there are more profitable opportunities for investment available, the business will invest in those opportunities. By doing so they will reduce the amount of cash that they have which is cash that could have been paid as dividends.
The firm increases its debt ratio. - Ability to pay Dividends Increase
As a result of the company borrowing more money, there will be more money left to pay out dividends so more dividends will be paid.
2. A. Despite the fact that Dernham Burnham Inc.'s earnings tend to fluctuate from year to year, the company most likely pays a predictable, stable dividend each year.
Companies like Dernham that aim to please investors usually adopt a predictable, stable dividend policy every year so that the investors will have more faith in them and be sure of earnings every year. This will give them a higher rating with the investors.
How does risk pooling affect inventory levels when a company uses fewer and centralized warehouses? Please explain.
Answer:
In simple words, Inventory risk pooling is the concept that the variability in demand for raw materials is reduced by aggregating demand across multiple products. When properly employed, a business can use risk pooling to maintain lower inventory levels while still avoiding stock out conditions. Although for preventing stock out situation a company need warehouses where they can keep supply sufficient for emergency conditions.
For each of the following, journalize the necessary adjusting entry:
(a) A business pays weekly salaries of $22,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the fiscal period, assuming that the fiscal period ends (1) on Tuesday, (2) on Wednesday.
(b) The balance in the prepaid insurance account before adjustment at the end of the year is $18,000. Journalize the adjusting entry required under each of the following alternatives:(1) the amount of insurance expired during the year is $5, 300, (2) the amount of unexpired insurance applicable to a future period is $2, 700.
(c) On July 1 of the current year, a business pays $54,000 to the city for license taxes for the coming fiscal year. The same business is also required to pay an annual property tax at the end of the year. The estimated amount of the current year's property tax allocable to July is $4, 800. (1) Journalize the two adjusting entries required to bring the accounts affected by the taxes up to date as of July 31. (2) What is the amount of tax expense for July?
(d) The estimated depreciation on equipment for the year is $32,000.
Answer: Please see explanation column for answer
Explanation:
1.Journal to record the necessary adjusting entry at the end of the fiscal period on Tuesday,
Account Debit Credit
Salaries expense $8,800
Salaries payable $8,800
Calculation for for a five-day week ending tuesday
22,000 x 2/5 = $8,800
2.Journal to record the necessary adjusting entry at the end of the fiscal period on wednesday
Account Debit Credit
Salaries expense $13,200
Salaries payable $13,200
Calculation for for a five-day week ending Wednesday
22,000 x 3/5 = $13,200
b1.Journal to record the amount of insurance expired during the year
Account Debit Credit
Insurance expense $5,300
Prepaid Insurance $5,300
b2Journal to record the amount of insurance expired during the year
Account Debit Credit
Insurance expense $15,300
Prepaid Insurance $15,300
Calculation: Insurance expired = balance - unexpired insurance = 18,000 - 2,700=$15,300
c1)Journal to record the licence taxes expired for the year
Account Debit Credit
License tax expense $4500
Prepaid tax $4500
Calculations= license tax per year = $54,000/12= $4500
c2)Journal to record the Property taxes allocable to july at $4,800
Account Debit Credit
Property tax expense $4800
Property tax payable $4800
d)Journal to record the estimated depreciation on equipment for the year at $32,000.
Account Debit Credit
depreciation expense $32,000
Accumulated depreciation $32,000
In its employee handbook, an employer stated that it would do "everything possible to maintain the company"s union-free status for the benefit of both our employees and [the Company]." Is this an unfair labor practice under the NLRB? Aluminum Casting & Engineering Co. v. NLRB, 328 NLRB No. 2 (Apr. 9, 1999). Yes. True False
Answer:
That is an unequal labour practise, because it is the right of the employee to join the union of his choosing. The decision in this case relates to Titanium Casting & Technology Co. v. NLRB, 328 NLRB No. 2 (Apr. 9, 1999).] where even the NLRB explicitly states in its Directive that employers can not prevent their workers from forming a union of their choosing and that no organisation can declare itself free of union.
There really is no such position as reiterated in the scenario. Neither can businesses compel staff to contribute the federation, and neither can they refuse staff members from forming a union. When they do, it is named an unlawful employment practise.
Cute Camel Woodcraft Company pays an annual dividend rate of 11.00% on its preferred stock that currently returns 14.74% and has a par value of $100.00 per share. The preferred stock issue does not mature, and computes its annual dividend as the product of its dividend rate and its par value. What is the current market value of Cute Camel’s preferred stock?
Answer: $74.63
Explanation:
From the question, we are told that Cute Camel Woodcraft Company pays an annual dividend rate of 11.00% on its preferred stock which currently returns 14.74% and also has a par value of $100.00 per share. We are further informed that the preferred stock issue does not mature, and computes its annual dividend as the product of its dividend rate and its par value.
To calculate the current market value of Cute Camel’s preferred stock will be the annual preferred dividend divided by the required rate of return
The annual dividend will be:
= Par Value x Preferred Dividend Rate
= $100 x 11%
= $100 × (11/100)
= $100 × 0.11
= $11.00 per share
The Current market Value of the Preferred stock will be:
= Annual Preferred Dividend ÷ Required rate of return
= $11.00/14.74%
= $11.00/(14.74/100)
= $11.00/0.1474
= $74.63 per share
When the cost method is used to account for an investment, the carrying value of the investment is affected by a.the earnings and dividend distributions of the investee b.the periodic net income of the investee c.the dividend distributions of the investee d.neither the earnings nor the dividends of the investee
PortaCom manufactures notebook computers and related equipment. PortaCom's product design group developed a prototype for a new high-quality portable printer. The new printer features an innovative design and has the potential to capture a significant share of the portable printer market. Preliminary marketing and financial analyses provided the following selling price, first-year administrative cost, and first-year advertising cost:
Selling Price $284 per unit
Administrative Cost $500,000
Advertising Cost $700,000
In the simulation model for the PortaCom problem, the preceding values are constants and are referred to as parameters of the model.
(a) An engineer on the product development team believes that first-year sales for the new printer will be 18,500 units. Using estimates of $50 per unit for the direct labor cost and $88 per unit for the parts cost, what is the first-year profit using the engineer's sales estimate?
(b) The financial analyst on the product development team is more conservative, indicating that parts cost may well be $101 per unit. In addition, the analyst suggests that a sales volume of 9,500 units is more realistic. Using the most likely value of $50 per unit for the direct labor cost, what is the first-year profit using the financial analyst's estimates?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling Price $284 per unit
Administrative Cost $500,000
Advertising Cost $700,000
(a) Units= 18,500
Direct labor= $50
Direct material= $88
Sales= 18,500*284= 5,254,000
Variable costs= (50 + 88)*18,500= (2,553,000)
Contribution margin= 2,701,000
Administrative Cost= (500,000)
Advertising Cost= (700,000)
Net operating income= 1,501,000
B)Units= 9,500
Direct labor= $51
Direct material= $101
Sales= 9,500*284= 2,698,000
Variable costs= (51 + 101)*9,500= (1,444,000)
Contribution margin= 1,254,000
Administrative Cost= (500,000)
Advertising Cost= (700,000)
Net operating income= 54,000
You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below.
The company sells many styles of earrings, but all are sold for the same price- $13 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):
January (actual)... 20,800 June (budget)... 50,800
February (actual)... 26,800 July (budget)... 30,800
March (actual)... 40,800 August (budget ... 28,800
April (budget)... 65,800 September (budget) 25,800
May (budget)... 100,800
The concentration of sales before and during May is due to Mother's Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.
Suppliers are paid $7 for a pair of earrings. One-half of a month's purchases are paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month's sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.
Monthly operating expenses for the company are given below:
Variable:
Sales commissions..................6% of sales
Fixed:
Advertising.....................$199,200
Rent................................17,200
Salaries........................105,200
Utilities.........................6,200
Insurance......................2,200
depreciation.................13,200
Insurance is paid on an annual basis, in November of each year.
The company plans to purchase $15,400 in new equipment during May and $39,200 in new equipment during June; both purchases will be for cash. The company declares dividends of $11,000 each quarter, payable in the first month of the following quarter.
A listing of the company's ledger accounts as of March 31 is given below:
Assets
Cash.............................................................................$ 130,400
Accounts Receivable($34,840 February sales; $424,320
March Sales)................................. 459,1600
Inventory...................................................................... 184,240
Prepaid insurance......................................................... 21,800
Property and equipment(net)....................................... 861,200
Total Assets................................................................. $1,656,800
Liabilities and Stockholders Equity
Accounts Payable......................................................... $177,800
Dividends Payable......................................................... 11,000
Capital stock................................................................. 880,000
Retained Earnings......................................................... 588,000
Total liabilities and stockholders equity $1,656,800
The company maintains a minimum cash balance of $55,000. All borrowing is done at the beginning of a month; any repayments are made at the end of a month.
The company has an agreement with a bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $55,000 in cash.
Required
Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:
a. A sales budget, by month and in total
b. A schedule of expected cash collections from sales, by month and in total.
c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.
d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.
2. A cash budget. Show the budget by month and in total.
Answer:
Earrings Unlimited1a. Sales Budget
April May June Total
Credit Sales in unit 65,800 100,800 50,800 217,400
Selling Price $13 $13 $13 $13
Sales Value $855,400 $1,310,400 $660,400 $2,826,200
April May June Total
Sales Commission 6% $51,324 $78,624 $39,624 $169,572
1b. Expected Cash Collections:
April May June Total
20% month of sale $171,080 $262,080 $132,080 $565,240
70% following month 371,280 598,780 917,280 1,887,340
10% second month 34,840 53,040 85,540 173,420
Total $577,200 $913,900$1,134,900$2,626,000
1c. Merchandise Purchase Budget
April May June Total
Ending Inventory 40,320 20,320 12,320 12,320
Units Sold 65,800 100,800 50,800 217,400
Units available 106,120 121,120 63,120 229,720
Beginning Inventory 26,320 40,320 20,320 26,320
Purchases (units) 79,800 80,800 42,800 203,400
Beginning Inventory $184,240 $282,240 $142,240 $184,240
Purchase ($) $558,600 $565,600 $299,600 $1,423,800
Cost (goods available)$742,840 $847,840 $441,840 $1,608,040
Less Ending Inventory$282,240 $142,240 $86,240 $86,240
Cost of goods sold $460,600$705,600 $355,600 $1,521,800
1d. Expected Cash Disbursements for Merchandise Purchases:
April May June Total
Purchase ($) $558,600 $565,600 $299,600
50% 1st month $279,300 $282,800 $149,800 $711,900
50% 2nd month $177,870 $279,300 $282,800 $739,970
Total Disbursements$457,170 $562,100 $432,600 $1,451,870
2d. Cash Budget
April May June Total
Beginning Balance $130,400 $55,306 $55,282 $130,400
Cash Collections $577,200 $913,900 $1,134,900 $2,626,000
Cash Disbursements:
Merchandise ($457,170) ($562,100) ($432,600) ($1,451,870)
Sales Commission ($51,324) ($78,624) ($39,624) ($169,572)
Other fixed costs($327,800) ($327,800) ($327,800) ($983,400)*
Equipment purchase ($15,400) ($39,200) ($54,600)
Dividends paid ($11,000) ($11,000)
Bank Loan $195,000 $70,000 ($265,000) $0
Loan Interest ($2,650) ($2,650)
Minimum balance $55,306 $55,282 $83,308 $83,308
Earrings Unlimited INCOME STATEMENT for the quarter to June 30:
Sales $2,826,200
Cost of goods sold 1,521,800
Gross Profit $1,304,400
Less: Expenses:
Sales Commission 169,572
Other fixed costs 983,400
Insurance Expenses 6,600
Bank Loan Interest 2,650
Depreciation 39,600 $1,201,822
Net Income $102,578
Retained Earnings b/f $588,000
Dividends ($11,000)
Retained Earnings c/f $679,578
Earrings Unlimited BALANCE SHEET as of June 30:
Assets:
Current Assets:
Cash $83,308
Accounts Receivable $659,360
Inventory $86,240
Prepaid Insurance $15,200 $844,108
Noncurrent Assets:
Property & Equipment $915,800
Depreciation $39,600 $876,200
Total Assets $1,720,308
Liabilities + Equity:
Liabilities:
Accounts Payable $149,730
Dividends Payable $11,000 $160,730
Capital Stock $880,000
Retained Earnings $679,578 $1,559,578
Total Liabilities + Equity $1,720,308
Explanation:
a) March Purchases:
Ending Inventory in units = 26,320(65,800 x 40%)
Units sold = 40,820
Units available for sale = 67,140 (26,320 + 40,820)
Less Beginning Inventory = 16,320 (40,800 x 40%)
Purchases = 50,820 units
Beginning Inventory = $114,240 (40,800 x $7 x 40%)
Purchases = $355,740 (50,820 x $7)
Cost of goods available $469,980
Less Closing Inventory 184,240 (26,320 x $7)
Cost of goods sold $285,740
b) Accounts Receivable
Beginning Balance $459,160
Sales $2,826,200
Cash Receipts ($2,626,000)
Ending Balance $659,360
c) Accounts Payable
Beginning Balance $177,800
Purchases $1,423,800
Cash Disbursements ($1,451,870)
Ending Balance $149,730
d) Sales Budget January February March
Credit sales in unit 20,800 26,800 40,800
Selling price $13 $13 $13
Sales Value $270,400 $348,400 $530,400
e) A master budget combines other smaller budgets within the business and turns them into one overall budget, which gives a comprehensive overview of the entity's finances. The master budget includes the HR, marketing, and all other departmental budgets to produce an overall single budget.
Carl purchased an apartment complex for $2.6 million on March 17 of year 1. of the purchase price, $1,050,000 was attributable to the land the complex sits on. He also installed new furniture into half of the units at a cost of $75,000. What is Carl's allowable depreciation deduction for his real property for years 1 and 2? (Round your final answers to the nearest whole dollar amount.)
Answer:
total depreciation year 1 = $71,358
total depreciation year 2 = $80,358
Explanation:
Land cannot be depreciated, therefore Carl can only depreciate the building's cost = $2,600,000 - $1,050,000 = $1,550,000
Rental property can be depreciated at a fixed rate of 3.636% per year during 27.5 years. Depreciation per year for the building = $56,358
Furniture on rental property can be depreciated on a 5 year basis using a MACRS table and half year convention:
depreciation year 1 = 20% x $75,000 = $15,000
depreciation year 2 = 32% x $75,000 = $24,000
total depreciation year 1 = $56,358 + $15,000 = $71,358
total depreciation year 2 = $56,358 + $24,000 = $80,358
A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, what level of sales tax will result in unconsummated transaction
Answer:
Dear user,
Answer to your query is provided below
$4000 sales tax
Explanation:
In question, a consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, then the transaction will generate:
$6,000 worth of buyer surplus and $4,000 of seller surplus.
$4000 sales tax will result in unconsummated transaction.
With respect to the unearned income from services, which of the following is true? a.An accrual basis taxpayer can spread the income over the period services are to be provided if all of the services will be completed within three years following the year of receipt. b.The treatment of unearned income is the same for tax and financial accounting for both cash and accrual basis taxpayers. c.A cash basis taxpayer must report all of the income in the year received. d.An accrual basis taxpayer can spread the income over the period services are to be provided on a contract for three years or less. e.None of these choices are correct.
Answer:
c. A cash basis taxpayer must report all of the income in the year received.
Explanation:
As a standard, all individuals and business entities are required by law to pay their taxes to the government at a specific period of time.
With respect to the unearned income from services, a cash basis taxpayer must report all of the income in the year received, whether as property or in cash. This simply means that, a cash basis taxpayer can neither deduct promissory notes or checks as payments nor report receivables as income because all of the expenses and income must be reported in the year they were received or paid.
However, not all taxpayers are permitted to use the cash basis method of reporting, these include C corporations, tax shelter, partnership with a C corporation etc.
Suppose Clampett, Inc., terminated its S election on August 28, 2019. At the end of the S corporation's short tax year ending on August 28, J.D.'s stock basis and at-risk amounts were both zero (he has never had debt basis), and he had a suspended loss of $20,350. In 2020, J.D. made additional capital contributions of $5,350 on March 15 and $13,050 on September 20. How much loss may J.D. deduct in 2020
Answer:
$5,000
Explanation:
Since Suppose Clampett, Inc., terminated its S election on August 28, 2019, it implies that the ending date for post transition termination period is September 15, 2019. This date is the extended due dat for S corporation to file final tax return.
As J.D. made additional capital contributions of $5,350 on March 15 and $13,050 on September 20, only the $5,350 contribution made on March 15 falls within the post transition termination period of September 15, while the $13,050 contribution made on September 20 falls outside the post transition termination period.
Therefore, J.D. May only deduct $5,000 in 2020.
Grays Company has inventory of 20 units at a cost of $8 each on August 1. On August 3, it purchased 30 units at $10 each. 22 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 22 units that were sold
Answer:
$180
Explanation:
Under the perpetual inventory method, Inventory balance is adjusted for every purchase or issue.
With FIFO, the system is such that items purchased first are issued out first.
As such, the cost of goods sold for the 22 units issued out will be
= $8 * 20 + $10 * 2
= $160 + $20
= $180
Since FIFO is the method used, 20 items would be sold from the opening inventory balance and then 2 from the items purchased on August 3.
All of the following are examples of final goods and services that would be included in GDP except:_________
a) the computer you use to do your Macro homework.
b) car you drive to your after-school job.
c) sandwich you pack in your lunch.
d) sugar used to bake the donuts you eat for breakfast.
e) notebook you take notes in for math class.
Answer:
notebook you take notes in for math class.
Bill and Ralph both work as cashiers for fast food restaurants. They are paid minimum wage. They are attending a black-tie party in an upper-class neighborhood. They drove there from the same part of town and they don't know each other. While they feel out of place there, they feel an understanding with one another. From what we know, what best explains why
Since, the options have not been given the question is incomplete. The complete question is as follows:
Bill and Ralph both work as cashiers for fast food restaurants. They are paid minimum wage. They are attending a black-tie party in an upper-class neighborhood. They drove there from the same part of town and they don't know each other. While they feel out of place there, they feel an understanding with one another. From what we know, what best explains why
a. Ethnicity and race
b. Region
c. Socioeconomic status
Answer: c. Socioeconomic status
Explanation:
Socioeconomic status can be defined as social standing of a person in society. It is based on education, occupation, and income that a person has. The comparison of socioeconomic status may raise inequalities in the society.
Bill and Rslph can be related to each based on the same socioeconomic status. They are paid with minimum wage thus their socioeconomic status is low. They have an upper class neighborhood which is also creating a great difference in comparison with the neighborhood socioeconomic status.
Due to low economic and social help they feel out of place and they are on the same situations thus they can understand one another.
Cameron has a small graphics design business that specializes in customizing social websites. The business is growing; however, in order to expand, he realizes he must restructure. As his business consultant, you explain that he will need to consider EXCEPT:________
Answer: Introducing mass production methods into his business.
Explanation:
As the given information suggests that Cameron has a small graphic design business. He is responsible for customizing social websites which is a creative and time consuming task. This also require a lot of thinking and innovation skills. At the verge of expanding his business he should avoid mass production as this will likely to reduce his quality of production and limit his creativity.
The problem with bank runs is not that ____________will fail; they are, after all, bankrupt and need to be shut down. The problem is that bank runs can cause __________ to fail and spread to the rest of the financial system.
Answer:
Insolvent banks;Solvent banks.
Explanation:
A bank run can be defined as a situation where bank clients or depositors make withdrawals of their money simultaneously from banks as a result of being scared or afraid the depository institution will run out of cash (bankruptcy) and become insolvent.
The problem with bank runs is not that insolvent banks will fail; they are, after all, bankrupt and need to be shut down. The problem is that bank runs can cause solvent banks to fail and spread to the rest of the financial system.
In order to counter the problem with bank runs, the Federal Deposit Insurance Corporation (FDIC) was established on the 16th of June, 1933.
Furthermore, to avoid bank runs or other financial institutions from being insolvent, the Federal Reserve (Fed) and Central banks (lender of last resort) are readily accessible and available to give monetary funds to these institutions when they're running out of money and as well as regulate their activities.