Answer and Explanation:
The journal entries are shown below:
a. On Jan 31
Warranty expense Dr ($173,000 × 6%) $10,380
To Product Warranty payable $10,380
(Being the warranty expense is recorded)
For recording this we debited the warranty expense as it increased the expenses and credited the product warranty payable as it also increased the liabilities
b. On Aug 15
Product Warranty payable $397
To Supplies $230
To wages payable $167
(Being the product warranty payable is recorded)
For recording this we debited the product warranty payable as it decreased the liabilities and the supplies and wages payable is credited as it decreased the assets and increased the liabilities
Civil engineering consulting fi rms that provide services to outlying communities are vulnerable to a number of factors that affect the fi nancial condition of the communities, such as bond issues and real estate developments. A small consulting fi rm entered into a fi xed-price contract with a large developer, resulting in a stable income of $260,000 per year in years 1 through 3. At the end of that time, a mild recession slowed the development, so the parties signed another contract for $190,000 per year for 2 more years. Determine the present worth of the two contracts at an interest rate of 10% per year.
Answer:
$894,336
Explanation:
The computation of the present worth of two contracts is shown below:
= (Stable income × PVIFA at 3 years for 10%) + (Signed amount × PVIFA at 2 years for 10%) × PVF at 3 years for 10%
= ($260,000 × 2.4869 ) + ($190,000 × 1.7355 ) × 0.751314801
= $646,594 + $329,745 × 0.751314801
= $894,336
Refer to the PVIFA table and the discount factor table so that the correct amount could come
Assume that the following balance sheet portrays the state of the banking system. the banks currently have no excess reserves.
Assets Liabilities and Net worth
(Billions of Dollars)
Total reserves 4 Chekable 20
Loans 11
Securities 5
Total 20 Total 20
What is the required reserve ratio?
a. 25%
b. 5%
c. 10%
d. 20%
Answer:
20%
Explanation:
The total reserves of banks is $4 billion
Since the banks have no excess reserves then, the total amount of required reserves is $4 billion
The checkabke deposits is $20 billion
Therefore, the required reserve ratio can be calculated as follows
Required reserve ratio= $4 billion/$20 billion
= 0.20×100
= 20%
Hence the required reserve ratio is 20%
Suppose Capital One is advertising a 60-month, 5.04 % APR motorcycle loan. If you need to borrow $ 8 comma 100 to purchase your dream Harley-Davidson, what will be your monthly payment? (Note: Be careful not to round any intermediate steps less than six decimal places.)
Answer:
$153.01
Explanation:
For computing the monthly payment we need to apply the PMT formula i.e to be shown in the attachment
Given that,
Present value = $8,100
Future value or Face value = $0
RATE = 60 months = 5 years × 12 months
NPER = 5.04% ÷ 12 months = 0.42%
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the monthly payment is $153.01
Calculating credit card interest. Ryan Gray, a student at State College, has a balance of $380 on his retail charge card; if the store levies a finance charge of 21 percent per year, how much monthly interest will be added to his account?
Answer:
$6.65
Explanation:
Annual Interest = 21%
Monthly Interest = 21%/12 = 1.75%
So the monthly interest that will be added to Ryan's account would be
Monthly Interest = $380 x 1.75%
Monthly Interest = $6.65
Beth Corbin's regular hourly wage rate is $14, and she receives an hourly rate of $21 for work in excess of 40 hours. During a January pay period, Beth works 50 hours. Beth's federal income tax withholding is $98, she has no voluntary deductions, and the FICA tax rate is 7.65%. Use January 15 for the end of the pay period and the payment date.
Prepare the journal entries to record:
a. Beth's pay for the period.
b. The payment of Beth's wages.
Answer:
a.
Jan 15
DR Salaries and Wages $770
CR Federal Income tax payable $98
CR FICA taxes payable $58.91
CR Salaries and wages payable $613.09
Working.
Beth's gross pay = (14 * 40 hours) + (21 * 10 extra hours above the 40)
= 560 + 210
= $770
FICA Taxes = 770 * 7.65%
= $58.91
b.
Jan 15
DR Salaries and Wages payable $613.09
CR Cash $613.09
Sunland Company applied FIFO to its inventory and got the following results for its ending inventory. Cameras 115 units at a cost per unit of $69 Blu-ray players 171 units at a cost per unit of $75 iPods 125 units at a cost per unit of $81 The net realizable value of each of these products at year-end was cameras $75, Blu-ray players $51, and iPods $78. Determine the amount of ending inventory at lower-of-cost-or-net realizable value.
Answer:
The amount of ending inventory at lower-of-cost-or-net realizable value is $27,096.
Explanation:
According to IAS 2, Inventory is measured at the lower of Cost or Net Realizable Value.
For each individual category of Inventory, determine if the valuation should be the Cost or Net Realizable value, then sum up the to totals.
Camera at net realizable value (115 units × $75) = $8,625
Blu-ray players at net realizable value (171 units × $51) = $8,721
iPods at net realizable value (125 units × $78) = $9,750
Total Value of Ending Inventory = $27,096
Conclusion :
The amount of ending inventory at lower-of-cost-or-net realizable value is $27,096.
Marie and Ethan form Roundtree Corporation with the transfer of the following:
Marie performs personal services for the corporation with a fair market value of $80,000 in exchange for 400 shares of stock.
Ethan contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $100,000; fair market value $120,000) in exchange for 1,600 shares.
Determine Marie and Ethan's current income, gain or loss. Calculate the basis that each takes in the Roundtree stock.
Answer: Please see the expl;anation column
Explanation:
Current Income of Marie =$80,000 due to services done for the corporation
Basis of Marie =$80,000 basis in her 400 shares of stock
b)Current income of Ethan =$0, due to no service done for the corporation.
basis of Ethan =$175,000 basis in his 1,600 shares of stock. This is accrued from
Note Receivable 25,000
land 50, 000
Inventory 100,000
Total basis of Ethan $175,000
c) No gain or loss recognized this is because according to Section 351
When there is a transfer of property to corporation in exchange for stock and transferors take control of the corporation then No gain or loss will be recognized.
Prepare journal entries for each of the following. For a compound transaction, if an amount box does not require an entry, leave it blank. a. Issued a check to establish a petty cash fund of $500. b. The amount of cash in the petty cash fund is $160. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $199 and miscellaneous selling expense, $126. Record any missing funds in the cash short and over account. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answer:
A.Dr Petty cash $500
Cr To Cash Account $500
B. Dr Store supplies $199
Dr Miscellaneous expenses $126
Dr Cash over and short $15
Cr To Cash Account $340
Explanation:
Petty cash can be defined to a small or little amount of currency and coins which a company tend to use to pay small amounts without writing a cheque.
a)The Journal entry to create a petty cash fund with $500 will be recorded as:
Dr Petty cash $500
Cr To Cash Account$500
b) Preparation of the Journal entry to record any missing funds in the cash short and over account.
The total expenses as per receipts will be:
199+126=325
The balance of petty cash will have:
500-325=$175
The balance available in the petty cash fund is given as $160, which is short by $15 (175-160).
Therefore we need to replenish the fund with $ 340 which is Available fund of $160 -Original fund $500
Hence, the difference in the fund due to error will be treated just like an expense in which debit will be given to an account called ''cash over and short"
Thus, the debit is given to the expenses and credit to cash account.
The entry to record replenishing the fund would not credit the Petty Cash account.
The entry will be
Dr Store supplies $199
Dr Miscellaneous expenses $126
Dr Cash over and short $15
Cr To Cash Account $340
On November 1, 2018, Arch Services issued $ 331 comma 000of eightminusyearbonds with a stated rate of 14%at par. Interest payments occur each April 30 and October 31. On December 31, 2018, Arch made an adjusting entry to accrue interest at yearminusend.What is the amount of Interest Expense that will be recorded on December 31, 2018? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
Answer:
Arch ServicesInterest Expense as at December 31:
Explanation:
a) Computation of Interest Expense:
Interest per annum = $331,000 x 14% = $46,340
Interest per month = $3,861.66667 ($46,340/12)
Interest for two months = $7,723 ($46,340/12) x 2
b) Interest on bonds is usually paid monthly, quarterly, semi-annually, or yearly. In this example, the interest is payable every six months, on April 30 and October 31. However, as the year ends on December 31, there is need to accrue interest expense for the period, in line with the accrual concept and matching principle of generally accepted accounting principles. These require that expenses are accrued for the period for which they are incurred and matched to the revenue that they produced whether payment was made or not for them.
The Cash account of First on AlertSecurity Systems reported a balance of $ 2 comma 430at December31,2018.There were outstanding checks totaling $ 1 comma 000and a December31 deposit in transit of $ 200.The bank statement, which came from ParkCities Bank, listed the December31balance of $ 3 comma 910.Included in the bank balance was a collection of $ 690on account from Jane Lindsey,a First on Alertcustomer who pays the bank directly. The bank statement also shows a $ 20service charge and $ 10of interest revenue that First on Alertearned on its bank balance. Prepare First on Alert'sbank reconciliation at December31.
Answer:
First on Alert's bank reconciliation at December 31, 2018
Cash Account First on Alert Security Systems
Balance , December 31,2018 $2,430
Add: Collection from Jane Lindsey $690
Add: Interest revenue $10
Less:-Service charges $20.00
Adjusted Cash Account balance December 31, 2018 $3,110.00
Bank Account at Park Cities
Balance , December 31,2018 $3,910
Add: Deposit in transit $200
Less: Outstanding cheque $1,000
Adjusted bank balance December 31, 2018 $3,110.00
Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as _____________ new entry.
Answer:
Imitative new entry
Explanation:
This is called imitative new entry. There are business imitators who are interested in capitalizing on existing and proven success in the business venture they want to enter.
It is used by entrepreneurs who have seen business success in a particular business line and then they go ahead to introduce the same service or product in a different segment of the market. Entrepreneurs use this when they think are better equipped to do a job than the already existing competitor.
Seeking products or services that have been successful in one market and introducing the same basic product or service in another segment of the market is referred to as _____________ new entry
you need to have $32000 in 7 years. you can earn an annual interest rate of 3 percent for the first 4 years, and 3.6 percent for the next 3 years. How much do you have to deposit today?
Answer:
$22,569.48 is amount i must have to deposit today
Explanation:
FV = Future Value , PV = Present Value , r = rate of interest , n= no of period
PV = FV / (1 + r )n
PV = 32000 / (1 + 3%)^4*(1+3.6%)^3
PV= $32,000/ (1 + 0.03)^4*(1+0.036%)^3
PV= $32,000/ (1.03)^4*(1.036%)^3
PV= $32,000/ (1.03)^4*(1.036)^3
PV= $32,000/ 1.12550881 * 1.111934656
PV= $32,000/ 1.251492251
PV = $22,569.47514
PV = $22,569.48
$22,569.48 is amount i must have to deposit today
Fields Cutlery, a manufacturer of gourmet knife sets, produced 20,000 sets and sold 23,000 units during the current year. Beginning inventory under absorption costing consisted of 3,000 units valued at $66,000 (Direct materials $12 per unit; Direct labor, $3 per unit; Variable Overhead, $2 per unit, and Fixed overhead, $5 per unit.) All manufacturing costs have remained constant over the 2-year period. At year-end, the company reported the following income statement using absorption costing: Sales (23,000 × $45) $ 1,035,000 Cost of goods sold (23,000 × $22) 506,000 Gross margin $ 529,000 Selling and administrative expenses 115,000 Net income $ 414,000 60% of total selling and administrative expenses are variable. Compute net income under variable costing:
Sales (23,000 × $45) $1,035,000
Cost of goods sold (23,000 × $22) 506,000
Gross margin $529,000
Selling and administrative expenses 115,000000
Net income $414,000
60% of total selling and administrative expenses are variable. Compute net income under variable costing.
a. $414,000
b. $399,000
c. $529,000
d. $429,000
e. $644,000
Answer:
d. $429,000
Explanation:
This can be obtained by preparing an income statement under variable costing. The income statement under variable costing deduct variable costs from the sales revenue to obtain contribution margin firs before deducting fixed costs in order to obtain net income. The income statement under variable costing can therefore be prepared as follows:
Fields Cutlery
Income Statement (Variable Costing)
For the Year End
Particulars $
Sales (23,000 × $45) 1,035,000
Variable cost:
Direct materials ($12 * 23,000) (276,000)
Direct labor ($3 * 23,000) (69,000)
Variable Overhead ($2 * 23,000) (46,000)
Selling $ admin exp (60% * $115,000) (69,000)
Contribution margin 575,000
Fixed cost:
Fixed overhead ($5 * 20,000) (100,000)
Selling $ admin exp (40% * $115,000) (46,000)
Net income 429,000
Note:
1. The variable cost is computed using the 23,000 units sold because the variable cost of the opening 3,000 units from the previous year has to be added to the variable cost of the 20,000 units produced this year. This is to obtain the total variable costs for the 23,000 units sold since variable cost varies with units.
2. The Fixed overhead is computed using the 20,000 units produced this year. This is because the total fixed cost does not change as units of production changes. The Fixed overhead of $5 per unit was actually arrived at by dividing $100,000 by 20,000 units. This Fixed overhead was also $100,000 previous year as it remains constant every year.
An investment, which is worth 26,800 dollars and has an expected return of 4.28 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 4 years from today
Answer:
Present Value = $22,663.69
Explanation:
The present value of a sum expected in the future is the worth today given an opportunity cost interest rate. In another words ,it is amount receivable today that would make the investor to be indifferent between the amount receivable today and the future sum.
The present value of a lump sum can be worked out as follows:
PV = FV × (1+r)^(-n)
PV - Present value - ?
FV - Future value - 26,800
r- Interest rate per period - 4.28%
n- number of periods- 4
PV = 26,800 × (1.0428)^(-4)=22,663.69
PV = $22,663.69
Apple computer users tend to like the company and love its products. Apple has nurtured this ________ component of its customers' attitudes. Group of answer choices
The question is incomplete:
Apple computer users tend to like the company and love its products. Apple has nurtured this ________ component of its customers' attitudes. Group of answer choices
a.cognitive
b.physiological
c.affective
d.social
e.psychological
Answer:
c.affective
Explanation:
-The cognitive component refers to knowledge and ideas you have about something.
-The physiological component refers to how the body reacts when people are faced with an object.
-The affective component refers to emotions that people have about something.
-The social component refers to the behavior people show when they are faced with an object.
-The psychological component refers to the beliefs people have about something.
According to this, the answer is that Apple has nurtured this affective component of its customers' attitudes because the statement mentions that users like and love which refers to the emotions they have towards the company and the products.
No Edges Left Behind Enterprises has book income of $1,200,000 which consist of income tax expense of $380,000, municipal bond interest income of $10,000 and business meals expense of $150,000. Using only these items, what is the cmpany's taxable income
Answer:
$1,645,000
Explanation:
The computation of the taxable income is shown below:
Taxable income is
= Book income + income tax expenses - muncipal bond interest + (50% × meal expenses)
= $1,200,000 + $380,000 - $10,000 + ($150,000 × 50%)
= $1,645,000
We simply recognized only 50% of meal expenses and with the help of above items we calculated the taxable income
In the Italian company FormFit Inc., all the important positions in its foreign subsidiaries are held by Italian nationals. According to this information, what staffing policy is pursued by the company
Answer:
Ethnocentric staffing
Explanation:
The staffing policy persued by the company is ethnocentric staffing because this is when a multinational hires people from the home country for the management positions in the subsidiaries as in this case in which the Italian company FormFit Inc hires Italian nationals for all the important positions in its foreign subsidiaries.
Consumers have become more selective and better informed about their purchases. This macro-environmental force strongly impacts this industry.
a. True
b. False
Answer:
a. True
Explanation:
The macro-enviromental forces that impact an industry are: demographic, economic, political, ecological, socio-cultural, and technological.
In this case, we can see the socio-cultural macro-enviromental force at play, and perhaps also the demographic macro-enviromental force.
If consumers have become more selective and better informed about their purchases, it is most likely because they have change their culture or social status. Such a change in consumer behaviour can have great impact on an industry: it can boost some goods, while make other decline or disappear.
Such a change can also respond to demographic shift: for example, as consumers age, they tend to become more selective, so a good that used to be favored by a young population, might not be so anymore when that young population grows older.
You deposit $12,000 today into an account that pays you 12% annual interest, compounded daily. How much do you have in 40 years
Answer:
$1,456,975.19
Explanation:
FV = P (1 + r / m)^nm
FV = Future value
P = Present value
R = interest rate
N = number of years
M = number of compounding per year
$12,000 ( 1 + 0.12/365)^14600 = $1,456,975.19
I hope my answer helps you
"Hindi Co. started 3,000 units during the period. Its beginning inventory is 500 units one-fourth complete as to conversion costs and 100% complete as to materials costs. Its ending inventory is 300 units one-fifth complete as to conversion costs and 100% complete as to materials costs. How many units were transferred out this period
Answer: 3,200 units
Explanation:
The Units transferred out during the year will be those that were inherited from the previous period as well as those started during the year less the closing inventory still in progress.
The formula to calculate the units is therefore;
= Opening inventory + Started during the year - Closing Inventory
= 500 + 3,000 - 300
= 3,200 units
Describe the purposes of the General Journal, General Ledger, Trial Balance, and Financial Statements, and how they "flow into" each other.
Business Communication
Why should you respond when you receive a congratulatory note or some other written pat on the back and how?
Answer and Explanation:
It is good to respond to These congratulatory notes or Pat's at the back because are attempts made by others to connect with you personally; people reach out to you through these efforts and professional or personal bonds can be formed because of these.
How should you respond?
You can respond by showing gratitude or by being appreciative of the gestures. You can say you are grateful for the kindness you received regarding your award.
A Scrum Master is extremely busy and getting overwhelmed with a large number of tasks that are waiting for his attention. Can you help the Scrum Master prioritize among the following tasks, that is, which one should he do first?
1. Complete amendments to the definition of done as discussed in the last Sprint retrospective
2. Contact a technical expert with a request to help out a team member who is stuck on a particular
3. Produce a Sprint completion report that is already delayed by 2 days
4. Schedule the next Sprint planning meeting
Explanation:
The Scrum Master has many responsibilities but the most important one is to help the team members who are blocked
Answer:
2.
Explanation:
Based on the information provided within the question it can be said that the first thing that he should do would be to contact a technical expert with a request to help out a team member who is stuck on a particular. Helping team members is always a top priority for the Scrum master as they need to make sure that everyone is able to properly handle the tasks that are presented, otherwise, everything begins to get backed up and will ultimately crash.
the ____________ represents the title company and facilitates the final transaction
Answer:
closing agent
Explanation:
The closing agent represents the title company and facilitates the final transaction.
The closing agent represents the title company and is critical in enabling the final completion of a real estate transaction. The closing agent works with the buyer, seller, lenders, and other parties to facilitate a smooth and successful closing.
They serve as a neutral third party responsible for ensuring that all essential paperwork, transaction or finances, and legal obligations are handled properly during the closing process.
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Suppose Congress approves a proposed "temporary worker" program and American firms find
out that they are able to hire workers while paying lower wages. This happens because workers
become "less scarce'. How would this economic shock impact the market for lettuce?
Answer:
The market for lettuce would be impacted in three ways: labor supply would increase, meaning that lettuce producers can now hire more workers for a lower price.
This cheaper labor would likely increase supply, because more producers would try to enter the market to take advantage of the cheap workers.
Finally, the lower labor costs, and the higer supply, would reduce the price of lettuce, meaning that consumers will be able to buy more lettuce for less money.
The officers of an oil refiner, trader, and hedger based in New York were arrested by the FBI for committing massive financial statement fraud. The executives used many schemes to perpetuate the fraud, one of which was to hide a $30 million accounts payable from the auditors and show it as a payable arising in the following year. To conceal the fraud, they altered purchasing records, using correction fluid, and provided only photocopies of the records to the auditors. The Big 4 firm that audited this company was later sued for audit negligence in not finding this fraud.
Required:
In your opinion, were the auditors negligent for accepting photocopies of purchasing records and not detecting this accounts payable understatement?
Answer:
Yes. The auditors were negligent for accepting photocopies of purchasing records as these are not sufficient audit evidence to base a opinion on.
Explanation:
As part of their professional skepticism, auditors must obtain sufficient audit evidence.
Audit Evidence must be reliable and relevant to be considered sufficient for the auditor to base their opinion.
Photocopies were not reliable as they do not contain the original signatures responsible personnel and may be altered.
In each of the following independent situations, indicate the effect on taxable income and E & P, stating the amount of any increase (or decrease) in each as a result of the transaction. Assume that E & P has already been increased by taxable income.
Transaction
Taxable Income Increase (Decrease)
E & P Increase (Decrease)
a. Realized gain of $80,000 on involuntary conversion of building ($10,000 of gain is recognized).
___________
___________
b. Mining exploration costs incurred on May 1 of current year; $24,000 is deductible from current-year taxable income.
___________
___________
c. Sale of equipment to unrelated third party for $240,000; basis is $120,000 (no election out of installment method; no payments are received in current year).
___________
___________
d. Dividends of $20,000 received from 5% owned corporation, together with dividends received deduction (assume that taxable income limit does not apply).
___________
___________
e. Domestic production activities deduction of $45,000 claimed in current year.
___________
___________
f. Section 179 expense deduction of $100,000 in current year.
___________
___________
g. Impact of current-year � 179 expense deduction in succeeding year.
___________
___________
h. MACRS depreciation of $80,000. ADS depreciation would have been $90,000.
___________
___________
i. Federal income taxes of $80,000 paid in current year.
___________
___________
Answer:
a. Realized gain of $80,000 on involuntary conversion of building ($10,000 of gain is recognized).
Taxable Income INCREASE BY $10,000E & P Increase NO EFFECTb. Mining exploration costs incurred on May 1 of current year; $24,000 is deductible from current-year taxable income.
Taxable Income DECREASE BY $20,000E & P Increase INCREASE BY $24,000c. Sale of equipment to unrelated third party for $240,000; basis is $120,000 (no election out of installment method; no payments are received in current year).
Taxable Income NO EFFECTE & P INCREASE BY $120,000d. Dividends of $20,000 received from 5% owned corporation, together with dividends received deduction (assume that taxable income limit does not apply).
Taxable Income INCREASE BY $6,000E & P INCREASE BY $14,000e. Domestic production activities deduction of $45,000 claimed in current year.
Taxable Income DECREASE BY $45,000E & P INCREASE BY $45,000f. Section 179 expense deduction of $100,000 in current year.
Taxable Income DECREASE BY $100,000E & P INCREASE BY $80,000g. Impact of current-year section 179 expense deduction in succeeding year.
Taxable Income NO EFFECTE & P DECREASE BY $20,000h. MACRS depreciation of $80,000. ADS depreciation would have been $90,000.
Taxable Income DECREASE BY $10,000E & P INCREASE BY $10,000i. Federal income taxes of $80,000 paid in current year.
Taxable Income NO EFFECTE & P Increase NO EFFECTWhich of the following is a creative form of signage?
A. Billboards
B. Scented magazine advertisements
C. Distributing flyers by hand
D. Plane banners
Answer:
D. Plane banners
Explanation:
A signage is the design or use of signs and symbols to communicate a message.
A billboard can be a signage but a more creative form would be a plane banner.
The following is a creative form of signage Plane banners. Hence, option (D) is correct.
What are plane banners?The term banners are a highly-visible commercial enterprise. A tool that allows a large book or number of people and potential customers to view an ad at one time, salvaging both time and resources, while still representing the attention of thousands or even millions.
As the signage is referred to, given to the public, the commercial signs in it as we see there are many as there are different advertisements are being also there in it the signs and symbols to communicate a message. Signage also means signs, collectively or being considered as a group.
Therefore, option(D) is correct.
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Hodgkiss Mfg., Inc., is currently operating at only 80 percent of fixed asset capacity. Fixed assets are $462,000. Current sales are $550,000 and projected to grow to $790,625. How much in new fixed assets are required to support this growth in sales
Answer:
New Fixed assets required = $69300
Explanation:
To calculate the amount of new fixed assets required to support project sales, we first need to determine the amount of fixed assets required to support $1 of sale.
The sales value at full capacity is,
Full capacity sales = 550000 / 0.8
Full capacity sales = $687500
To calculate the $ amount of fixed asset required to support $1 in sales, we need to calculate the ratio of fixed assets to sales. The ratio is,
Fixed assets to sales = 462000 / 687500
Fixed assets to sales = 0.672
Thus, to support a sales level of $790625, the total amount of fixed assets needed will be,
Total fixed assets needed = 790625 * 0.672 = $531300
New Fixed assets required = 531300 - 462000 = $69300
The following is a listing of all of the income statement accounts for Mulberry Street Sportswear as they appear on the adjusted trial balance as of December 31:
Advertising Expense $10,200
Cost of Goods Sold 87,900
Delivery Expense 4,300
Insurance Expense 1,400
Income Tax Expense 5,960
Rent Expense 10,700
Interest Expense 1,900
Sales Revenue 160,400
Sales Discounts 10,800
Sales Returns and Allowances 18,300
Required:
Prepare a multi-step income statement.
Answer:
Mulberry Street Sportswear multi-step income statement for the year ended December 31.
Sales Revenue 160,400
Less Sales Returns and Allowances (18,300)
Net Sales 142,100
Less Cost of Goods Sold (87,900)
Gross Profit 54,200
Less Operating Expenses
Sales Discounts 10,800
Advertising Expense 10,200
Delivery Expense 4,300
Insurance Expense 1,400
Rent Expense 10,700 (37,400)
Operating Income 16,800
Less Non - Operating Expenses
Interest Expense 1,900
Income Tax Expense 5,960 (7,860)
Net Income / (Loss) 8,940
Explanation:
A multi-step income statement shows separately profit earned from primary activities of the company (Operating Income) from that which includes secondary activities of the Company (Net Income).