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 assets and liabilities of Thompson Computer Services at March 31, the end of the current year, and its revenue and expenses for the year are listed below.
Accounts payable $2,000 Miscellaneous expense $1,030
Accounts receivable 10,340 Office expense 1,240
Cash 21,420 Supplies 1,670
Fees earned 73,450 Wages expense 23,550
Land 47,000 Dividends 16,570
Building 157,630
The common stock was $120,000 and the retained earnings were $60,000 at April 1, the beginning of the current year. During the year, shareholders purchased an additional $25,000 in stock. Use this information to answer the questions that follow.
a. Prepare an income statement for the current year ended March 31.
b. Prepare a statement of retained earnings for the current year ended March 31.
c. Prepare a balance sheet for Thompson's Computer Service.
Answer: Please see explanation column for answers
Explanation: Given Revenue and expenses
Accounts payable $2,000 Miscellaneous expense $1,030, Accounts receivable 10,340 Office expense 1,240
Cash 21,420, Wagesexpense 23,550 Supplies 1,670 Land 47,000, Building 157,630, Dividends 16,570, Fees earned 73,450
a. income statement for the current year ended March 31.
Fees earned = Revenue
Fees earned 73, 450
Expenses Incurred
Wages expense -$23,550
Miscellaneous expense - $1,030
Office expense -$1,240
Total Expenses 25,820
Net income $47,630
Working : Net income = fees earned ( Revenue )- Total expenses =
$73,450 - $25,820 = $47,630
2.statement of retained earnings for the current year ended March 31.
Retained earning at April 1ST $60,000
Net income $47,630
Dividend $16,570
Retained earnings $91,060
Working
Retained earning = Retained earning from april 1st + Net income -- Dividend
$60,000 + $47,630) - $16,570 = $91,060
3.
A balance sheet is a company's financial statement that shows its assets, liabilities and shareholders' equity to illustrate the financial position of the company showing what the company has as its assets, n is owing , and the amount liable to shareholders.at a particular time. In a balance sheet, Assets must equal Liabilities and Shareholders’ Equity..
Balance sheet for Thompson's Computer Service.
Current assets
Cash $21,420
Account receivables $10,340
Supplies $1,670
Total current assets $33,430
Property land and equipment
Land $47,000
Building $ 157,630
Total Property land and equipment $204,630
Total assets $238,060
Liabilities and equity
Accounts payable $2,000
Stock holder's equity
Common stock $145,000
Retained earnings $91,060
Stock holder's equity $236,000
Total Stock holder's equity and Liabilities $ 238,060
we can see in the balance sheet that Stock holder's equity and Liabilities = Total Assets
In what ways could prisoners of war earn a profit? What would motivate a prisoner to want profit?In what ways could prisoners of war earn a profit? What would motivate a prisoner to want profit?
Answer:
By working to produce goods for manufacturing companies
By working on prison farms.
Other ways may also include working in construction projects in or outside the prison yard.
Explanation:
In this modern day, prisoners of war are sometimes employed to manufacture good while in prison. They are usually utilized as a cheap labor source in which they are paid less than the normal wage of freemen. Some of the manufacturing jobs done are usually contracted to the prison by outside manufacturing firms, or sometimes by the prison itself; in order to generate additional income. These works keep the prisoners busy and also earn them profit.
In some cases, some of the prisoners are are made to work on the prison farm. The prisoners are paid minimal wages for their services. This types of jobs keep the prisoners occupied and fit and helps feed the prisoners too. The excess income generated fro the sales of the farm products can be used to pay the prisoners. Also, prisoners can participate in construction projects in and outside the prison yard.
One of the biggest motivator for prisoners wanting profit is the fact that they have hope that they will be out some day. This profit is needed as a boost for these prisoners when they come out, prior to being employed. Also, some of these prisoners sometimes need this profit to provide themselves with some necessary stuffs not provided by the prison system.
3. If the average price of an airline ticket on a certain route rises from $200 to $250, the number of tickets sold drop from 800 to 600. Calculate the price elasticity of demand. Is the demand elastic or inelastic?
Answer:
-Price elasticity of demand=0.77
-The demand is inelastic because the elasticity is 0.77 and this number is less than 1.
Explanation:
The formula to calculate the price elasticity of demand is:
Price elasticity of demand=% change in the quantity demanded/% change in the price
To use this formula you have to calculate the % change in the quantity demanded and % change in the price:
% change in the quantity demanded=(Q2-Q1/((Q2+Q1)/2))*100
% change in the quantity demanded=(250-200/((250+200)/2))*100
% change in the quantity demanded=(50/(450/2))*100
% change in the quantity demanded=(50/225)*100
% change in the quantity demanded=22.22%
% change in the price=(P2-P1/((P2+P1)/2))*100
% change in the price=(600-800/((600+800)/2))*100
% change in the price=(-200/(1400/2))*100
% change in the price=(-200/700)*100
% change in the price=-28.57%
Now, you can replace the values in the formula to to calculate the price elasticity of demand:
Price elasticity of demand= 22.22%/-28.57%
Price elasticity of demand=0.77
The price elasticity of the demand is 0.77. An elastic demand is when the elasticity is greater than 1 and an inelastic demand is when the elasticity is less than one. So, according to this, the demand is inelastic because the elasticity is 0.77 and this number is less than 1.
Eastern University had the following transactions at the beginning of its academic year: Student tuition and fees were billed in the amount of $7,150,000. Of that amount $4,620,000 was collected in cash. Pell Grants in the amount of $2,012,000 were received by the university. The Pell Grants were applied to student accounts. Student scholarships, for which no services were required, amounted to $570,000. These were applied to student tuition bills at the beginning of each semester. Required: Prepare journal entries to record the above transactions assuming: a. Eastern University is a public university. b. Eastern University is a private university.
Answer:
100
Explanation:
hope this helps
Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 2016. In January, the company spent $600,000 to develop a late-night advertising infomercial for the new product. During 2016, the company spent $1,400,000 promoting the product through these infomercials, and $800,000 in legal costs. The knives were ready for manufacture on January 1, 2016.
Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is:
Hardened steel blanks
(used for knife shaft and blade) $4.00
Wood (for handle) 1.50
Packaging 0.50
The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 250 knives.
After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife into a decorative box. The direct labor cost is $0.50 per unit.
The knives are sold to stores. Each store is given promotional materials, such as posters and aisle displays. Promotional materials cost $60 per store. In addition, shipping costs average $0.20 per knife.
Total completed production was 1,200,000 units during the year. Other information is as follows:
Number of customers (stores) 60,000
Number of knives sold 1,120,000
Wholesale price (to store) per knife $16
Factory overhead cost is applied to jobs at the rate of $800 per stamping machine hour after the knife blanks are stamped. There were an additional 25,000 stamped knives, handles, and cases waiting to be assembled on December 31, 2016.
Required:
A. Prepare an annual income statement for the Kitchen Ninja knife series, including supporting calculations, from the information provided. Refer to the list of Amount Descriptions for exact wording of the answer choices for text entries.
Ginocera Inc.
Income Statement
For the Year Ended December 31, 2016
1
2
3
4 Selling expenses:
5
6
7
8
9 Administrative expenses:
10
11
12
B. Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 2016.
Amount Descriptions
Amount Descriptions
Cost of goods sold
Factory overhead
Gross profit
Income from operations
Infomercial campaign
Legal expenses
Loss from operations
Promotional materials
Sales
Shipping expenses
Total selling and administrative expenses
Total selling expenses
Work in process
Answer:
1. $432,000
2. Finished goods $776,000
Work in progress $230,000
Explanation:
GINOCERAINC. IncomeStatement For the Year Ended December31, 2016
Sales$17,920,000
(1,120,000 units × $16 )
Less Cost of goods sold10,864,000
(1,120,000 units × $9.70)
Grossprofit$7,056,000
Sellingexpenses:
Infomercial campaign $2,000,000
Promotional materials3,600,000.
(60,000 stores × $60)
Shipping expenses 224,000
(1,120,000 units × $0.20)
Total selling expenses$5,824,000
Administrativeexpenses:
Legal expenses 800,000
Total operating expenses 6,624,000
($5,824,000+800,000)
Income from operations $432,000
($7,056,000-6,624,000)
Calculation of the Manufacturing cost per unit of Knife is:
Direct materials:
Hardened Steel Blanks $4.00
Wood for handle $1.50
Packaging $0.50
Total direct materials $6.00
Direct labor $0.50
Factory overhead $3.20
($800÷250 knives perhour)
Total manufacturing cost per knife $9.70
2. The Finished Goods balance for year end December 31, 2016 will be:
(1,200,000 units – 1,120,000 units) × $9.70 =
=80,000×$9.70
=$776,000
Work in Process, for the year ended December 31, 2016 will be:
25,000 units × ($6.00 + $3.20)
25,000 units × $9.2
= $230,000.
Note that materials, stamping as well as factory overhead have been applied to the 25,000 units, but direct assembly labor has not been applied for these units.
How much do I need to retire? Here are your assumptions. You are 30. You will retire when you are 65. You want $40,000 a year when you retire. You will be an aggressive investor today and have an average market return of 9%. When you retire, you will be conservative in your investing and get into bonds that have a market return of 4.5%. You expect that inflation will be 3%. You currently have $20,000 you put into the market this morning. You are expecting to live until 85. How much do you need to have saved when you turn 65? (Hint: if you want to work out how much you need to save every year, under PMT, it will be 36 years)
Answer:
The amount to be saved at the age of 65 is $1940755.74
Explanation:
To calculate the amount needed at 65 including inflation = 40000 * 1.0336 = 115931.13
Present Value of Growing Annuity = PMT / (r-g) [ 1 - {(1+g)/(1+r)}n ]
= 115931.13 / (0.045 - 0.03) [ 1 - (1.03/1.045)20 ]
= 7728742.2 * 0.2511089
= 1940755.74
g On January 1, our company purchased a truck for $95,000. The estimated useful life of the truck is 5 years. The residual value at the end of 5 years is estimated to be $15,000. What is the depreciation expense for the second year of use if we use the double-declining balance method
Answer:
The depreciation expense for the second year is $22800
Explanation:
The double declining balance method is an accelerated form of allocating the depreciation expense to the asset. This method charges a high depreciation expense in the initial years of the estimated useful life of the asset and lower depreciation in the later years.
The formula to calculate the depreciation expense per year under this method is,
Depreciation expense = 2 * [ (Cost - Accumulated depreciation) / estimated useful life of the asset]
Double Declining Balance Method - Depreciation expense:
Year 1 = 2 * [ (95000 - 0) / 5]
Year 1 = $38000
Year 2 = 2 * [ (95000 - 38000) / 5]
Year 2 = $22800
Vernon is a cash basis taxpayer with a calendar tax year. On October 1, 2019, Vernon entered into a lease to rent a building for use in his business at $3,000 a month. On that day Vernon paid 18 months' rent on the building, a total of $54,000 ($3,000 × 18 months). How much may Vernon deduct for rent expense on his 2019 tax return?
Answer:
$9,000
Explanation:
Calculation of the amount Vernon deduct for rent expense on his 2019 tax return will be :
Rent(lease)×Numbers of months used
Where:
Rent (lease)= 3,000
Numbers of months=3
Hence:
3,000×3=$9,000
Therefore the amount Vernon deduct for rent expense on his 2019 tax return is $9,000 which is 3000×3 month.
The 3 months is from 1st October to 31st December.
1. A contract calls for a total payment of $800,000 with a guarantee. Essentially the contractor is guaranteed to make at least $200,000 above his costs. If the contractor can demonstrate his costs exceed $600,000, the project will pay the difference, with a $50,000 ceiling on the overage. The contractor demonstrates he spent $623,000. How much (gross) must the project remit to the contractor?
Answer:
The gross which the project has to remit to the contractor is $823,000
Explanation:
There are two things that must be fulfilled for the project to remit to the contractor is the amount .
1) First is the guaranteed payment of $800,000.
2) Second, the contractor's expense is more than $600,000, with a payment cap of up to $ 50,000.
The contractor has demonstrated that the cost incurred is $623,000 which is $23,000 above the limit of $600,000.
As this gap is still below $50,000, this will be handed over to the contractor by the client.
The gross which the project has to remit to the contractor = $800,000 + $23,000 = $823,000
An economy consists of three workers: Kevin, Rajiv, and Yakov. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Kevin can either mow 2 lawns or wash 1 car; Rajiv can either mow 1 lawn or wash 1 car; and Yakov can either mow 1 lawn or wash 2 cars.
For each of the scenarios listed below, determine how many lawns will be mowed and how many cars will be washed per day and enter these values into the corresponding row?
a. All three spend all their time mowing lawns. (A)
b. All three spend all their time washing cars. (B)
c. All three spend half their time on each activity. (C)
d. Kevin spends half his time on each activity, while Rajiv only washes cars and Yakov only mows lawns. (D)
Answer:
1. 40 lawns
2. 40 washed cars
3. 20 lawns, 20 washed cars
4. 25 lawns mowed, 25 washed cars
Explanation:
In the given question,
A) When all three spend all their time mowing lawns that is
Kevin= 2 X 10 hrs = 20
Rajiv = 1 x 10 hrs = 10
Yakov = 1 x10 hrs = 10
Total mowed lawns will be= 20 +10 + 10 = 40 lawns.
B) When all three spend their time washing cars
Kevin = 1 x 10 hrs = 10
Rajiv = 1 x 10 hrs =10
Yakov = 2 x 10 hrs = 20
Total cars washed= 20 +10 + 10
C) when all three people spend their half time on each activity
Kevin = 2 x 5 hours = 10
Rajiv = 1 x 5 hrs = 5
Yakov1 x 5 hrs = 5
Total lawn mowed will be= 10 + 5 + 5 = 20 therefore time spent on car washing will be 20 hrs.
D) Time on the mowing of the lawn will be =
Kevin = 2 x 5 hrs = 10
Rajiv = 0
Yakov = 1 x 10 hours = 10
Time on the washing of the car will be 20 hrs
Kevin = 1 x 5
Rajiv = 1 x 10
Yakov = 0
Total time = 15 hrs
Wilturner Company incurs $74,000 of labor related directly to the product in the Assembly Department, $23,000 of labor not directly related to the product but related to the Assembly Department as a whole, and $10,000 of labor for services that help production in both the Assembly and Finishing departments. The journal entries to record the labor would include:
Answer:
Dr Work in Process Inventory 97,000 and Dr Factory Overhead 10,000
Explanation:
Wilturner Company journal entries to record the labor will be to Debit work in process inventory with 97,000 because the company incurs $74,000 of labor which was related directly to the product in the Assembly Department and the $23,000 of labor was not directly related to the product and then Debit Factory Overhead with 10,000.
Dr Work in Process Inventory 97,000
($74,000+$23,000)
Debit Factory Overhead 10,000
During December, Far West Services makes a $3,200 credit sale. The state sales tax rate is 6% and the local sales tax rate is 2.5%. (Note: the sales tax amount is in addition to the credit sale amount.) Record sales and sales tax payable. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Dr Accounts receivable 3,472
Cr Sales 3,20
Cr Sales tax payable 272
Explanation:
Since $3,200 is the credit sale and the state sales tax rate is 6% while the local sales tax rate is 2.5% which means we have to calculate for 6% of 3,200 as well as 2.5% of 3,200 which is: Sales tax payable
6%×3,200=192
2.5%×3,200=80
192+80= 272
The last step is to Debit Accounts receivable with 3,472 (3,200+272) , Credit Sales 3,200 and Credit Sales tax payable with 272
Far West Services Journal entry
Dr Accounts receivable 3,472
(3,200+272)
Cr Sales 3,200
Cr Sales tax payable 272
Merck & Company reported the following from its 2016 financial statements. $ millions 2013 2014 2015 2016 Accounts receivable, net $7,184 $6,626 $6,484 $7,018 Allowance for doubtful accounts 146 153 165 195 a. Compute accounts receivable gross for each year. $ millions 2013 2014 2015 2016 Accounts receivable, gross b. Determine the percentage of allowance to gross account receivables for each year. Round answers to two decimal places (ex: 0.02345 = 2.35%). 2013 2014 2015 2016 % allowance c. Assume that we want to reformulate the balance sheet and income statement to reflect a constant percentage of allowance to gross accounts receivables for each year. Compute the four-year average and then reformulate the balance sheet and income statements for each of the four years. Follow the process shown in Analyst Adjustments 5.2 and assume a tax rate of 35%. Four- year average of percentage of allowance to gross accounts receivables. Round answer to two decimal places (ex: 0.02345 = 2.35%)
Answer:
a. Compute accounts receivable gross for each year.
2013 $7,3302014 $6,7792015 $6,6492016 $7,213b. Determine the percentage of allowance to gross account receivables for each year.
2013 1.99%2014 2.26%2015 2.48%2016 2.70%c. 2013 2014 2015 2016
adjusted allowance for $173 $160 $157 $170
doubtful accounts
Balance sheet adjustments:
allowance for doubtful accounts $27 $7 -$8 -$25
accounts receivable net $7,157 $6,633 $6,476 $6,993
deferred tax liability -$9.45 -$2.45 $2.8 $8.75
retained earnings $9.45 $2.45 -$2.8 -$8.75
Income statement adjustments:
bad debt expense $27 $7 -$8 -$25
income tax expense -$9.45 -$2.45 $2.8 $8.75
net income $9.45 $2.45 -$2.8 -$8.75
Explanation:
2013 2014 2015 2016
Accounts receivable, net $7,184 $6,626 $6,484 $7,018
Allowance for doubtful accounts $146 $153 $165 $195
four year average of allowance for doubtful accounts = (1.99 + 2.26 + 2.48 + 2.7) / 4 = 2.36%
Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000. This includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. If Tom bought Bob's LLC interest for $11,000, what would Tom's outside basis be in Freedom, LLC
Answer: $12,900
Explanation:
From the question, we are told that Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about buying his LLC interest. Bob's outside basis in Freedom, LLC, is $7,000 which includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. We are further told that Tom bought Bob's LLC interest for $11,000.
Tom's outside basis be in Freedom, LLC will be the amount that he paid for Bob's LLC interest plus the share of LLC’s debt. This will be:
= $11,000 + $1,900
= $12,900
Scenario 5.1 Suppose that personal income is $250 billion. Furthermore, assume that retained corporate earnings are $2 billion, social security taxes are $15 billion, social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion. Refer to Scenario 5.1. Gross national product of this nation will be:
Answer:
Gross national product of this nation will be $323 billion
Explanation:
In order to calculate the Gross national product of this nation we would have to calculate the following formula:
Gross national product of this nation=personal income+retained corporate earnings+social security taxes+corporate taxes+capital consumption allowance-social security benefits
Gross national product of this nation=$250 billion+$2 billion+$15 billion+$40 billion+$32 billion-$16 billion
Gross national product of this nation=$323 billion
Gross national product of this nation will be $323 billion
Super Carpeting Inc. just paid a dividend of $2.64 and its dividend is expected to grow at a constant rate of 5.50% per year. If the required return on Super's stock is 13.75% what is the intristic value of Super's shares?
A- $48.00 per share
B- $32.00 per share
C- $33.76 per share
D- $38.40 per share
Which of the following statements is true about the constant growth model?
A- the constant growth model can be used if a stock's expected constant growth rate is more than its required return
B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
Use the constant growth model to calculate the appropriate values to complete the following statements about Super Carpeting Inc.
If Super stock is equilibrium, the current expected dividend yield on the stock will be ______ per share
Super's expected stock price one year from today will be ____ per share
If Super's stock is in equilibrium, the current expected capital gains yield on Supers stock will be _____
Answer:
1. C. $33.76 per share
2. B- The constant growth model can be used if a stock's expected constant growth rateis less than its required return
3. 8.25% ; $35.62 ; 5.5%
Explanation:
1. Using the Constant Growth Model to calculate the intrinsic value would be best given the above values.
The formula is;
Value = Next Dividend / (Required Return - Growth rate)
Value = (2.64 * ( 1 + 5.5%)) / ( 13.75% - 5.5%)
Value = 2.7852/8.25%
Value = $33.76
2. Going by the formula, if the expected growth rate is more than the required return, the intrinsic value would be a negative number and a stock's price cannot go below 0. The growth rate has to be less than the required return for this to work.
3. At Equilibrium, the stock dividend is growing as it should.
Dividend Yield should therefore be;
= Next Dividend / Stock Value * 100
= (2.7852 / 33.76) * 100
= 8.25%
Stock Price should grow at the growth rate so;
= 33.76 * ( 1 + 0.055)
= $35.62
Gains yield refers to what rate the stock will change in value. Growth rate is 5.5% so that will be the answer.
In general, the better candidates for shortening are: Early tasks opposed to later tasks. Later tasks opposed to early tasks. Burst tasks opposed to merge tasks. Merge tasks opposed to burst tasks.
Answer:
Early tasks opposed to later tasks.
Explanation:
Shortening is a strategic procedure used by project managers to reduce or shorten a project's duration by cutting the duration of critical path tasks.
The rationale behind shortening of a project is basically to have a competitive advantage or edge in the market. In order to compete successfully, project managers are always expected to be spontaneous in bringing their company's goods and services to the market in a flash.
There are two important ways of shortening a particular project, these are;
1. Crashing.
2. Task splitting.
In project management, the longest task is considered to be the most effective and efficient candidate activities to shorten a project's duration.
In general, the better candidates for shortening are early tasks opposed to later tasks. The early start of tasks represents one of the primary date used in project scheduling and it's the earliest date a project manager commences an activity, with respect to all its predecessors and successors.
Early tasks usually involves the use of an easy approach to project kickoff while later tasks uses the difficult approach.
Carmel Corporation is considering the purchase of a machine costing $36,000 with a 6-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment
Answer: $18,000
Explanation:
From the question, we are told that Carmel Corporation is considering buying a machine that cost $36,000 with a 6-year useful life and no salvage value and the straight-line depreciation was used on the assumption that the annual cash inflow from the machine will be received uniformly throughout each year.
Accounting rate of return will be the average profit divided by the average investment
The average investment is made of up of the cost of the asset, its salvage value and working capital. Average investment will be the machines and cost divided by 2.
= $36000/2
= $18000.
The average investment is $18,000
Midyear on July 31st, the Baldwin Corporation's balance sheet reported: Total Liabilities of $101.255 million Cash of $8.040 million Total Assets of $163.111 million Retained Earnings of $34.226 million. What was the Baldwin Corporation's common stock
Answer:
Stock = 27.629 million
Explanation:
Baldwin Corporation
Balance Sheets
Assets
Cash of $8.040 million
Total Assets $163.111 million
Liabilities and Owner's Equity $163.111 million
Stock 27.629 million
Total Liabilities $101.255 million
Retained Earnings $34.226 million
According to Balance sheet approach total assets must equal total liabilities and Owner's Equity.
Total assets including cash are given which are equal to $163.111 million and when we subtract total liabilities and retained earning from it we get the value of stock.
Stock = Total Assets- Total Liabilities - Retained Earnings
Stock = $163.111 million - $101.255 million-$34.226 million
Stock = 27.629 million
The fiscal year-end unadjusted trial balance for Collins Company is found on the trial balance tab. Collins Company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: depreciation expense—store equipment, sales salaries expense, rent expense—selling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative.
Descriptions of items that require adjusting entries on January 31 follow.
A) Store supplies still available at fiscal year-end amount to $2,950.
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Missing information:
Cash 1,000
Merchandise inventory 12,500
Store supplies 5,800
Prepaid insurance 2,400
Store equipment 42,900
Accumulated depreciation - Store equip. 15,250
Accounts payable 10,000
Common stock 5,000
Dividends 2,200
Retained earnings 27,000
Sales 111,950
Sales discounts 2,000
Sales returns and allowances 2,200
Cost of goods sold 38,400
Salaries expense 35,000
Rent expense 15,000
Advertising expense 9,800
Total 169,200 169,200
Answer:
the closing entries should be:
Dr Sales revenues 107,750
Cr Income summary 107,750
Dr Income summary 110,270
Cr Cost of goods sold 39,340
Cr Salaries expense 35,000
Cr Rent expense 15,000
Cr Advertising expense $9,800
Cr Supplies expense 2,950
Cr Insurance expense 1,880
Cr Depreciation expense 6,300
Dr Retained earnings 2,520
Cr Income summary 2,520
Dr Retained earnings 2,200
Cr Dividends 2,200
Explanation:
A) Store supplies still available at fiscal year-end amount to $2,950.
Dr Supplies expense 2,950
Cr Supplies 2,950
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
Dr Insurance expense 1,880
Cr Prepaid insurance 1,880
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
Dr Depreciation expense 6,300
Cr Accumulated depreciation - Store equip. 6,300
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Dr Shrinkage expense or COGS (I prefer to use COGS) 940
Cr Merchandise inventory 940
the adjusted income statement:
Revenues:
Sales $111,950 Sales discounts ($2,000) Sales returns and allowances ($2,200) $107,750Cost of goods sold ($39,340)
Gross profit $68,410
Operating expenses:
Salaries expense ($35,000) Rent expense ($15,000) Advertising expense ($9,800) Supplies expense ($2,950)Insurance expense ($1,880)Depreciation expense ($6,300) ($70,930)Net loss ($2,520)
For each separate case below, follow the three-step process for adjusting the Accumulated Depreciation account at December 31.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step 2.
Assume no other adjusting entries are made during the year.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to be valuedd at the end of the seven years.
1. Determine what the current account balance equals.
2. Determine what the current account balance should equal.
3. Record the December 31 adjusting entry to get from step 1 to step.
Answer:
The three-step process for adjusting the Accumulated Depreciation account at December 31.
A. The Krug Company's Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that $14,600 of depreciation expense must be recorded for the year Accumulated depreciation
Steps:
1. Determine what the current account balance equals.
The Accumulated Depreciation account has $13,500 credit balance.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account should equal $28,100 ($13,500 + $14,600) = balance + depreciation charge for the year.
3. Record the December 31 adjusting entry to get from step 1 to step 2
Debit Depreciation Expenses $14,600
Credit Accumulated Depreciation $14,600
To record the depreciation charge for the period.
B. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years.
1. Determine what the current account balance equals.
Accumulated Depreciation account should equal zero.
2. Determine what the current account balance should equal.
The Accumulated Depreciation account, credit balance should equal $8,800.
3. Record the December 31 adjusting entry to get from step 1 to step.
Debit Depreciation Expenses $8,800
Credit Accumulated Depreciation $8,800
To record depreciation charge for the period.
Explanation:
Adjusting entries are prepared at the end of an accounting period to being the accounts to the accrual basis from the state of the cash basis. The purpose is to reflect on transactions that took place instead of emphasizing the receipt and payment of cash. These entries, therefore, agree with the accrual concept which requires that transactions be recognized based on the period to which the expense or revenue is incurred or earned instead of when cash payment or receipt takes place.
Pizza is a normal good if the demand Group of answer choices
a. for pizza rises when income rises.
b. for pizza rises when the price of pizza falls.
c. curve for pizza slopes upward.
d. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.
Answer:
Option A, For Pizza rise when income rises.
Explanation:
Option A is correct because the income of the consumer and the demand for normal goods are positively related. So when consumer's income increases then the demand for normal goods also increases. If the income falls then the demand for normal goods also falls. Therefore, the movement in the same direction shows that there is a direct relationship between normal goods and the income of the consumer.
Ernesto owns a house painting company. Total sales for the past year were $75,000. His bills for running the business were $30,000. Stan, who owns a furniture-making company, previously asked Ernesto to come work for him at a salary of $40,000. Ernesto's accounting profit is______ and his economic profit is ________$
Answer:
Accounting profit = $45,000
Economic profit = $5,000
Explanation:
The computation of accounting profit and economic profit is shown below:-
Accounting profit = Sales - External expenses
= $75,000 - $30,000
= $45,000
Economic profit = Accounting profit - Implicit cost
= $45,000 - $40,000
= $5,000
Therefore for computing the accounting profit and economic profit we simply applied the above formula so that each one could arrive
On January​ 1, 2018, the Prepaid Insurance account of​ Dogwood, Inc. had a beginning balance of $ 1,800. Three months of insurance premiums remain in this beginning balance. On February​ 21, 2018, the company paid an annual insurance premium in the amount of $ 4,100 for the period beginning March 1. On February​ 28, 2018, the balance in Prepaid Insurance is $ 1,200.A. TrueB. False
Answer:
B. False
Explanation:
Beginning balance
-Period of policy= expired 2 months
-Period of unexpired insurance = 1 month (Out of 3 month, Insurance premium for period "Jan 1 to Feb 28" is expired)
Amount in prepaid insurance insurance= $1800 * 1/3 = $600
Current balance
Period = "0" since period of coverage will start from 1 march
Period of unexpired insurance = 12
Amount in prepaid insurance = 4,100
Thus, Total amount in prepaid insurance for the beginning and Current period= $600 + $4,100 = $4,700
The amount in prepaid insurance is $4700, hence the balance as stipulated as Prepaid Insurance = $ 1,200 is false
Which of the following events would cause the supply curve to decrease from Upper S 1 to Upper S 2? A. Lower expected future prices. B. An increase in the price of inputs. C. Upper A decrease in the price of inputs. D. An increase in the number of firms in the market.
An increase in the price of inputs supply curve to decrease from Upper to upper and law of supply.
Thus, The cost of production inputs is a significant component in addition to the product price, which is the primary factor according to the Law of Supply.
The cheapest price at which a business may sell a good without going bankrupt is the sum of money required to make it. Taking inputs and applying a procedure to them to produce an inputs constitutes the process of producing a good or service.
The finished good or service is the output, and the inputs are things like raw materials, labor, utilities, licensing costs, and even other goods. These materials are sometimes referred to as production factors. The cost of producing the good rises when input prices rise. And as a result, companies must sell their products at each price.
Thus, An increase in the price of inputs supply curve to decrease from Upper to upper and law of supply.
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Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for the Bank of Skidoo.
Bank of Skidoo
Assets Liabilities
Reserves$ Deposits $
The Bank of Skidoo has no excess reserves and is subject to a 6 percent required reserve ratio. Assume the Bank of Skidoo makes the maximum loan possible from Ginger's deposit to Thurston. Show this transaction in a new T-account for the Bank of Skidoo.
Bank of Skidoo
Assets Liabilities
Reserves$ Deposits $
Thurston decides to use the money he borrowed to purchase a sail boat. He writes a check for the entire loan amount to âGilligan's Seagoingâ Vessels, which deposits the check in itsâ bank, the Paradise Bank ofâ Kona, Hawaii. When the checkâ clears, the Bank of Skidoo transfers the funds to the Paradise Bank. Show these transactions in a newâ T-account for the Bank of Skidoo.
The maximum amounts of deposits that can be created from Ginger's initial deposit is $_____
The maximum amounts of loans that can be created from Ginger's initial deposit is $_____
Answer:
1) Suppose Ginger deposits $5,000 in cash into her checking account at the Bank of Skidoo. Show this transaction in a T-account for the Bank of Skidoo.
Reserves Checkable deposits
debit credit debit credit
5,000 5,000
2) The Bank of Skidoo has no excess reserves and is subject to a 6 percent required reserve ratio. Assume the Bank of Skidoo makes the maximum loan possible from Ginger's deposit to Thurston. Show this transaction in a new T-account for the Bank of Skidoo.
Reserves Loans
debit credit debit credit
5,000 4,700
4,700
300
3) Thurston decides to use the money he borrowed to purchase a sail boat. He writes a check for the entire loan amount to Gilligan's Seagoing Vessels, which deposits the check in its bank, the Paradise Bank of Kona, Hawaii. When the check clears, the Bank of Skidoo transfers the funds to the Paradise Bank. Show these transactions in a new T-account for the Bank of Skidoo.
Reserves Checkable deposits
debit credit debit credit
5,000 5,000
4,700 4,700
300 300
4,700
4,400
4) The maximum amounts of deposits that can be created from Ginger's initial deposit is $_____
Increase in checkable deposits = change in bank reserves / required reserves = $5,000 / 6% = $83,333.33
The maximum amounts of loans that can be created from Ginger's initial deposit is $_____
the maximum amount of loans that can be created in Ginger's bank is $4,700, but the maximum amount that loans can be created in the whole banking system = $83,333.33 - $5,000 = $78,333.33
Required information [The following information applies to the questions displayed below.] Following are the transactions of a new company called Pose-for-Pics. Aug. 1 Madison Harris, the owner, invested $8,200 cash and $35,200 of photography equipment in the company in exchange for common stock. 2 The company paid $3,800 cash for an insurance policy covering the next 24 months. 5 The company purchased office supplies for $1,050 cash. 20 The company received $5,031 cash in photography fees earned. 31 The company paid $845 cash for August utilities. Prepare general journal entries for the above transactions.
Answer:
Pose-for-Pics
General Journal Entries:
Aug. 1:
Debit Cash $8,200
Debit Equipment $35,200
Credit Common Stock $43,400
To record the issue of common stock for cash and equipment.
Aug. 2:
Debit Prepaid Insurance $3,800
Credit Cash Account $3,800
To record the payment of insurance covering 24 months.
Aug. 5:
Debit Office Supplies $1,050
Credit Cash Account $1,050
To record the payment for office supplies.
Aug. 20:
Debit Cash Account $5,031
Credit Photography Fees $5,031
To record fees earned.
Aug. 31:
Debit Utilities $845
Credit Cash Account $845
To record payment for August Utilities.
Explanation:
General Journal entries are made to record business transactions as they occur on a daily basis. Journal entries show the General Ledger accounts to be debited and the ones to be credited. They form the initial records of any business transactions.
A retail dealer in garments is currently selling 24,000 shirts annually. He supplies the following details for the year ended 31st March 2007. Selling price per shirt: P800 Variable cost per shirt: P600 Fixed Cost: Staff salaries: P2 400 000 General Office Cost: P800, 000 Advertising Cost: P800, 000 REQUIRED: a) Calculate Break-even Point in sales revenue and number of shirts sold. b) What is the margin of safety of the dealer expressed as a percentage . c) Assume that 30, 000 shirts were sold during the year, find out the net profit of the firm. d) Assuming that in the coming year, an additional staff salary of P1,000, 000 is anticipated, and price of shirt is likely to be increased by 15%, what should be the break-even point in number of shirts and sales? e) If taxation rate is 12.5%, and fixed cost increase to 6 000 000 what is the level of sales that must be achieved to a targeted profit of P8 000 000.
Answer:
a) Calculate Break-even Point in sales revenue and number of shirts sold.
20,000 shirts $16,000,000b) What is the margin of safety of the dealer expressed as a percentage .
16.67%c) Assume that 30, 000 shirts were sold during the year, find out the net profit of the firm.
$2,000,000d) Assuming that in the coming year, an additional staff salary of P1,000, 000 is anticipated, and price of shirt is likely to be increased by 15%, what should be the break-even point in number of shirts and sales?
15,625 shirts $14,375,000e) If taxation rate is 12.5%, and fixed cost increase to 6 000 000 what is the level of sales that must be achieved to a targeted profit of P8 000 000.
47,322 shirts$43,536,240Explanation:
selling price per shirt $800 x 24,000 = $19,200,000
variable cost per shirt $600 x 24,000 = $14,400,000
total fixed costs $4,000,000
net income $800,000
contribution margin per unit = $800 - $600 = $200
break even point = $4,000,000 / $200 = 20,000 shirts x $800 = $16,000,000
margin of safety = (current sales - break even point) / current sales = ($19,200,000 - $16,000,000) / $19,200,000 = 16.67%
if 30,000 shirts were sold:
contribution margin 30,000 x $200 = $6,000,000
fixed costs $4,000,000
net income $2,000,000
if sales price increases to $920, contribution margin = $320
fixed costs increase to $5,000,000
break even point = $5,000,000 / 320 = 15,625 shirts x $920 = $14,375,000
fixed costs increase to %6,000,000
targeted profit $8,000,000 + tax rate = $9,142,857
sales target = ($6,000,000 + $9,142,857) / $320 = 47,321.43 ≈ 47,322 shirts
Cold Goose Metal Works Inc. is a small firm, and several of its managers are worried about how soon the firm will be m, able to recover its initial investment from Project Alpha's expected future cash flows. To answer this question, Cold Goose's CFO has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash flows are received even throughout each year. Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. The conventional payback period ignores the time value of money, and this concerns Cold Goose's CFO He has now asked you to compute Alpha's discounted payback period, assuming the company has a 9% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to the nearest two decimal places. For full credit, complete the entire table. Which version of a project's payback period should the CFO use when evaluating Project Alpha, given its theoretical superiority? a) The discounted payback period b) The regular payback period One theoretical disadvantage of both payback methods-compared to the net present value method s that they fail to consider the value of the cash flows beyond the point in time equal to the payback period. How much value does the discounted payback period method fail to recognize due to this theoretical deficiency? a) $3, 504, 802 b) $1, 939, 656 c) $1 486, 453 d) $5, 421, 307
Answer:
the answer is $3,504,802.
A trucking company sold its fleet of trucks for $55,400. The trucks originally cost $1,426,000 and had Accumulated Depreciation of $1,273,000 recorded through the date of disposal. What gain or loss did the trucking company record when it sold the fleet of trucks
Answer:
Loss of $97,600
Explanation:
From the question above a trucking company sold its fleet for $55,400
The truck original cost is $1,426,000
The depreciation is $1,273,000
The first step is to calculate the book value
Book value= cost-accumulated depreciation
= $1,426,000-$1,273,000
= $153,000
The next step is to subtract the book value from the cost to determine if it a gain or loss
= $55,400-$153,000
= -97,600
Since the value is negative then, the trucking company is at a loss of $97,600