Decorative Concrete produces a concrete overlay for residential and commercial concrete flooring. Customers have complained that one of the products results in excessive cracking. The likelihood the company will incur a loss on this product is probable and the amount of the loss is estimated to be somewhere between $1.1 and $4 million.
1. Should this contingent liability be reported, disclosed in a note only, or both? To be reported To be disclosed Both2. What loss, if any, should Decorative Concrete report in its income statement?3. What liability, if any should Decorative Concrete report in its balance sheet?4. What entry, if any should be recorded in the journal?

Answers

Answer 1

Answer:

Decorative Concrete

1. This contingent liability should be disclosed in a note only.

2. Decorative Concrete should not report any loss in its income statement, yet.

3. Decorative Concrete should not report any liability in its balance sheet, yet.

4. No entry should be recorded in the journal.

Explanation:

a) Data and Calculations:

Estimated loss = $1.1 and $4 million

Loss is probable but the loss cannot be reasonably estimated

b) Decorative Concrete cannot reasonably estimate the loss that may arise from the contingent liability.  Therefore, it should only disclose the future event in a note to the financial statements.  Accounting rules specify that Decorative Concrete should record this event as a contingent liability in its accounts when it is probable that the future event will occur and the amount of the liability can be reasonably estimated. At that time, a specific amount of loss will be recorded (debit) and a specific liability established (credit) in advance of the settlement.  In this Decorative's case, only one condition is met.


Related Questions

An accounts payable program posted a payable to a vendor not included in the online vendor master file. A control that would prevent this error is a:___.
A. Validity check.
B. Parity check.
C. Range check.
D. Reasonableness test.

Answers

Answer:

Option A: Validity check

Explanation:

Data are commonly known as facts and figures or a set of values, measurements or records of transactions that are raw and unprocessed while Information are data which has undergone processing thereby giving it a new meaning.

Data entry controls includes Field check, sign check, limit check, range check, validity check e.t.c.

Validity Check is simply known as an edit test. It is one where the use of an identification number or transaction code is compared with a table of valid identification numbers or codes that is stored or maintained in computer memory.

Read the descriptions and identify which region each one describes.
1. Historically, this region has suffered from extreme poverty, which continues to this day. Growth has been effectively zero since the 1960s. Problems such as political instability, poor public health and a lack of effective institutions have all contributed to its stagnation.
2. Until the middle of the last century, these countries were relatively poor. Beginning in the mid 1970s, real GDP per capita growth has averaged 6% per year. The growth was achieved in part because of high levels of investment spending in the development of human and physical capital and rapid technological progress.
3. In the early 1990s, this region was in the middle of substantial social and economic reform. Countries in this region have experienced variable growth rates, depending on their ability to adapt to the modern market economy.
4. In the early 20th century, this region was reasonably prosperous. Since that time, however, growth has stagnated, owing to government instability, banking failures, and runaway inflation. Recently, some countries in the region have begun to grow more consistently, with one country becoming a powerhouse of world economic development.
A. European Transition Economies
B. North Africa
C. South Africa
D. Asian Tigers
E. North America
F. Western Europe
G. South America
H. Sub-Saharan Africa

Answers

Answer:

Identifying regions with appropriate descriptions:

Description  Region

1.                   H. Sub-Saharan Africa

2.                  D. Asian Tigers

3.                  A. European Transition Economies

4.                  G. South America

Explanation:

One factor which promotes negative economic growth is political instability.  There is also the lack of human and physical development and social and economic reforms, including inconsistencies in governmental policies.  For the economy of a region to grow out of poverty, governments must collaborate to pursue reforms on a large scale.

What is the proper factor notation for calculating the present worth of a gradient series, given a gradient amount of $500, an interest rate of 2%, and the number of periods equal to 10?
a) P-$500(PIF 290, 10)
b) P-$500(GIP 296, 10)
c) P-$500(PIA 296, 10)
d) P-$500(PIG 296, 10)

Answers

Answer:

Explanation:

d) P-$500(PIG 296, 10)

State Farm insurance company prints an ad in a national newspaper’s apartment rental section with a picture of a girl sitting on the edge of a tub full of water, blowdrying her hair while a plugged in toaster sits on the edge. The caption at the top of the ad reads, “Renting without State Farm is like...” Which need does this marketing ad emphasize for potential customers?

a. safety and security

b. physiological needs

c. esteem

Answers

Answer:

Safety and Security

Explanation:

Blow drying your hair over the tub isn't safe

The marketing ad emphasizes potential customers' need of safety and security.

An insurance company is a company that is responsible for selling insurance that protects our objects and even our lives in case they are affected.

For example, if I buy insurance for my car and someone steals it, the insurance company gives me a percentage of the value of the car so that my loss is not total.

In the case presenting the company, it presents an image of "risk" so that buyers understand the idea of danger and the need for safety and protection to have insurance that covers those possible accidents that occur.

So the correct answer is A. safety and security

Learn more in: https://brainly.com/question/23955188

What is a benefit of joining a professional organization for your chosen career path?

Answers

Answer: experience

Explanation: This will give the opportunity to show off your skills in the organization you have chosen plus it would be hands on and they can show you things to enhance your skills you learned.

MacGuffins have a demand function of QD = 70 – P and a supply function of QS = 2P + 10. Determine the price at equilibrium

Answers

Answer: 20

Explanation:

For us to calculate the equilibrium price, we must equate the quantity demanded with the quantity supplied. In this case, Qd = Qs where,

QD = 70 – P

QS = 2P + 10.

QD = QS

70 - P = 2P + 10

70 - 10 = 2P + P

60 = 3P

P = 60/3

P = 20

The equilibrium price is 20

Bi-Lo Traders is considering a project that will produce sales of $44,800 and have costs of $25,700. Taxes will be $4,500 and the depreciation expense will be $2,650. An initial cash outlay of $2,100 is required for net working capital. What is the project's operating cash flow?

Answers

Answer:

$10,700

Explanation:

Operating cash flow is computed as;

= Net income + non cash expenses - outlay in working capital

First, we'll determine the net income

Net income = Sales $44,800 - cost $27,500 depreciation expense $2,650 - Taxes $4,500

Net income = $10,150

Operating cash flow = $10,150 + $2,650 - $2,100 = $10,700

You're prepared to make monthly payments of $310, beginning at the end of this month, into an account that pays 4 percent interest compounded monthly. How many payments will you have made when your account balance reaches $20,175

Answers

Answer:

59 Payments

Explanation:

Future value = $20,175

Monthly payment= $310

Interest rate= 4%/12 = 0.3333% per month

How many payments will you have made when your account balance reaches $20,175?

Now we use Ms Excel to calculate the number of payment

Number of payment = N(FV, -PMT, I/Y)

Number of payment = N(20,175 , -310 , 0.3333%)

Number of payment = 58.9989

Number of payment = 59.

a. A ______ of accounts is a list of all accounts a company uses, not including account balances. b. The ______ is a record containing all accounts used by a company, including account balances. c. A(n) ______ describes transcations entering an accounting system, such as a purchase order. d. Increases and decreases in a specific asset, liability,

Answers

Answer:

a. A general ledger of accounts is a list of all accounts a company uses, not including account balances.

b. The Chart of accounts is a record containing all accounts used by a company, including account balances.

c. A source document describes transactions entering an accounting system, such as a purchase order.

d. An account contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity

Njal had been working as a chainsaw operator for the past 15 years when his company decided to upgrade its equipment from chainsaws to timber harvesters, which are large pieces of equipment that require a new set of skills. The company was unwilling to train existing workers on the new equipment, so Njal needed to find :_________

Answers

Answer: when annal company upgrades its operations it will no longer employ chainsaw operations like Neal.Najal is not trained to do what the company needs so he is laid off answer: structural.

After looking for work.....Answer: not in the labor force

Neal signs up for six month government.... Answer: not on the labor force

After completing a part time job..... answer: frictional unemployment

Njali takes a part time job with a computer repair......Answer:U-6

Njali starts his own computer repair company......Answer: part of the labor force

Explanation:

Record adjusting journal entries for each of the following for year ended December 31. Assume no other adjusting entries are made during the year.

Accounts Receivable. At year-end, the L. Cole Company has completed services of $20,500 for a client, but the client has not yet been billed for those services.
Interest Receivable. At year-end, the company has earned, but not yet recorded, $450 of interest earned from its investments in government bonds.
Accounts Receivable. A painting company bills customers when jobs are complete. The work for one job is now complete. The customer has not yet been billed for the $1,420 of work.

Answers

Answer:

1. Dr Account receivable $20,500

Cr Service revenue $20,500

2. Dr Interest receivable $450

Cr Interest revenue $450

3. Dr Account receivable $1,420

Cr Service revenue $1,420

Explanation:

Preparation of the adjusting journal entries for each of the following for year ended December 31.

Based on the information given the adjusting journal entries for each of the following for year ended December 31 will be :

1. Dr Account receivable $20,500

Cr Service revenue $20,500

(Being to record Accounts Receivable)

2. Dr Interest receivable $450

Cr Interest revenue $450

(Being to record Interest receivable)

3. Dr Account receivable $1,420

Cr Service revenue $1,420

(Being to record Accounts Receivable)

For each separate case below, follow the 3-step process for adjusting the accrued expense account: Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record an adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.

a. Salaries Payable. At year-end, salaries expense of $18,500 has been incurred by the company, but is not yet paid to employees. Interest Payable. At its December 31 year-end, the company owes $400 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.
b. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $1,025 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.
c. Interest Payable. At its December 31 year-end, the company holds a mortgage payable that has incurred $875 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.

Answers

Answer:

a. Salaries Expense (Dr.) $18,500

Salaries Payable (Cr.) $18,500

b. Interest Expense (Dr.) $85

Interest Payable (Cr.) $85

c.   Interest Expense (Dr.) $75

Interest Payable (Cr.) $75

Explanation:

The adjusting entries are made at the month or year end to adjust the transactions that were recorded. The adjustment is usually made for the transaction whose impact is changed at the month end. For the given case the interest amount recorded was for the annual but for monthly recording the interest expense will be divided by 12.

For each of the following accounts, indicate the effect of a debit or credit on the account and the normal balance.
Debit Effect Credit Effect Normal Balance
a. Bonds Payable.
b. Unearned Service Revenue.
c. Depreciation Expense.
d. Common Stock.
e. Buildings.
f. Rent Revenue.

Answers

Answer:

                                                   Debit effect   Credit effect  Normal balance

a.  Bonds payable                         Decrease        Increase           Credit

b.  Unearned service revenue     Decrease         Increase           Credit

c.  Depreciation expense             Increase           Decrease         Debit

d.  Common stock                         Decrease         Increase           Credit

e.  Building                                     Increase           Decrease         Debit

f.   Rent revenue                            Decrease          Increase          Credit

All assets, expenses increase with debits and decreases with credit and have a debit normal balance. All liabilities, revenue accounts and equity accounts (except dividends) have credit.

Tierney Company begins operations on April 1. Information from job cost sheets shows the following.
Manufacturing Costs Assigned
Job Number April May June Month Completed
10 $6,200 $4,900 May
11 5,000 4,700 $3,100 June
12 1,500 April
13 5,600 4,600 June
14 7,000 4,100 Not complete
Job 12 was completed in April. Job 10 was completed in May. Jobs 11 and 13 were completed in June. Each job was sold for 25% above its cost in the month following completion.
What is the balance in Work in Process Inventory at the end of each month?

Answers

Answer:

April 30 Work in Process Inventory $11,200

May 31 Work in Process Inventory $22,300

June 30 Work in Process Inventory $11,100

Explanation:

Calculation for the balance in Work in Process Inventory at the end of each month

April 30 Work in Process Inventory=$6,200+$5,000

April 30 Work in Process Inventory=$11,200

May 31 Work in Process Inventory =$5,000+$ 4,700+$5,600+$7,000

May 31 Work in Process Inventory =$22,300

June 30 Work in Process Inventory= $7,000 + $4,100

June 30 Work in Process Inventory= $11,100

Therefore the balance in Work in Process Inventory at the end of each month will be :

April 30 Work in Process Inventory $11,200

May 31 Work in Process Inventory $22,300

June 30 Work in Process Inventory $11,100

You are the manager of two plants (factories) in Mexico that manufacture shoes. The combined monthly output of both plants is to be 10,000 pairs of shoes. Explain, based on your understanding , how you would best divide this output of 10,000 pairs of shoes between the two plants.

Answers

Answer:

Given that both factories together produce 10,000 pairs of shoes, and both carry out the entire production process of the same in an identical way, if I were the manager of the same, I would distribute the benefits of what is produced by both factories in the following way: 50% of them equally, 25% for each one; and the other 50% in proportion to what each one has actually produced. Thus, it would guarantee that both receive income and, at the same time, it would encourage production by the one that generated the most income.

Jackson, Inc., manufactures two products that it sells to the same market. Excerpted below are its budgeted and actual operating results for the year just completed: Unit sales Budged Actual Product X 22,500 42,000 Product Y 90,000 80,000 Unit contribution margin Product X $4.80 $3.90 Product Y $13.00 $14.00 Unit selling price Product X $13.00 $14.00 Product Y $30.00 $29.00 Industry volume was estimated to be 1,875,000 units at the time the budget was prepared. Actual industry volume for the period was 2,440,000 units. Jackson measures variances using contribution margin. Total sales quantity variance is: $97,280 favorable. $95,190 favorable. $107,920 favorable. $84,500 favorable. $36,400 favorable.

Answers

Answer:

$46,500 unfavorable

Explanation:

The computation of the total sales quantity variance is as follows:

Total sales quantity variance    

Sales quantity variance is

= (Actual quantity sold - Budgeted quantity) × Budgeted price

For product X, it would be

= (42,000 - 22,500) × $13

= $253,500 favorable  

And, For product Y, it is

= (80,000 - 90,000) × $30

= $300,000 unfavorable

So, the total would be

= $300,000 - $253,500

= $46,500 unfavorable

This is the answer but the same would not be provided in the given options

Consider a firm with an EBIT of $11,400,000. The firm finances its assets with $51,800,000 debt (costing 7.4 percent) and 10,900,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $25,000,000, using the proceeds to buy back shares of stock. The firm is in the 30 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $11,400,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (Round your answers to 3 decimal places.)

Answers

Answer:

EPS Before the change in capital structure = $0.486 Per shares

EPS After the change in capital structure = $0.515 Per shares

Difference = $ 0.029

Explanation:

Calculation of EPS before the change in capital structure :

Particulars                                                                         Amount

EBIT                                                                           $ 11,400,000  

Interest Cost                                                                    $ 3,833,200 (51,800,000×7.4%)

Earning After Interest                                                    $ 7,566,800

Tax ( 30% )                                                                        $ 2,270,040

Net Profit after tax                                                            $ 5,296,760

Number of Shares outstanding                                     $ 10,900,000

Earning Per Shares                                                      $0.486

Calculation of EPS after the change in capital structure :

Particulars                                                                         Amount

EBIT                                                                             $ 11,400,000

Interest Cost                                                                     $ 5,683,200  

( $ 76,800,000×7.4%)

Earning After Interest                                                     $ 5,716,800

Tax ( 30%)                                                                     $ 1,715,040

Net Profit after tax                                                             $40,01,760

Number of Shares outstanding                                     77,75,000

Earning Per Shares                                                       $0.515

∴ we get

EPS Before the change in capital structure = $0.486 Per shares

EPS After the change in capital structure = $0.515 Per shares

Difference = $ 0.486 - 0.515 = $ 0.029

You have just been hired as the accountant for Fan-Tastic Sports Gear Inc., a wholesaler of sporting goods and apparel. The previous accountant left abruptly in late December, 20Y7, and an accounting intern has been drafting the journal entries since January. You are examining the accounting records before finalizing the journal entries for the first quarter of 20Y8. The following journal shows some of the accounts receivable transactions that you are reviewing.
JOURNAL
ACCOUNTING EQUATION
DATE DESCRIPTION POST. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1 Jan.
17 Sales 9,600.00
2 Bad Debt Expense 9,600.00
3 17 Bad Debt Expense 9,600.00
4 Accounts Receivable-
CJ’s Sports Corp. 9,600.00
5 21 Cash 10,700.00
6 Bad Debt Expense 2,200.00
7 Accounts Receivable-Four
Seasons Sportswear Co. 12,900.00
8 Feb.
15 Accounts Receivable-Healthy
Running Inc. 3,000.00
9 Bad Debt Expense 500.00
10 Sales 3,500.00
11 Mar.
4 Accounts Receivable-Four
Seasons Sportswear Co. 2,200.00
12 Bad Debt Expense 2,200.00
13 4 Cash 2,200.00
14 Bad Debt Expense 2,200.00
15 13 Cash 5,540.00
16 Accounts Receivable-
Barb’s Best Gear 5,540.00
17 31 Bad Debt Expense 20,970.00
18 Accounts Receivable-
Healthy Running Inc. 5,150.00
19 Accounts Receivable-
The Locker Room 4,100.00
20 Accounts Receivable-
CJ’s Sports Corp. 2,780.00
21 Accounts Receivable-
Get Your Gear Inc. 7,050.00
22 Accounts Receivable-
Ready-2-Go 1,890.00
CHART OF ACCOUNTS
Fan-Tastic Sports Gear Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable-Healthy Running Inc.
122 Accounts Receivable-The Locker Room
123 Accounts Receivable-CJ’s Sports Corp.
124 Accounts Receivable-Get Your Gear Inc.
125 Accounts Receivable-Four Seasons Sportswear Co.
126 Accounts Receivable-Ready-2-Go
127 Accounts Receivable-Barb’s Best Gear
132 Notes Receivable-Fast Feet Co.
136 Interest Receivable
141 Inventory
145 Office Supplies
151 Prepaid Insurance
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
211 Salaries Payable
212 Unearned Rent
213 Customer Refunds Payable
215 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
610 Rent Revenue
612 Interest Revenue
EXPENSES
510 Cost of Goods Sold
520 Sales Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Store Equipment
523 Delivery Expense
529 Miscellaneous Selling Expense
530 Office Salaries Expense
531 Rent Expense
532 Depreciation Expense-Office Equipment
533 Insurance Expense
534 Office Supplies Expense
536 Credit Card Expense
537 Cash Short and Over
538 Bad Debt Expense
539 Misc. Administrative Expense
710 Interest Expense
1. Finalize the journal entries shown on the Fan-Tastic Sports Gear Inc. panel and make any necessary changes.
2. Journalize the entry needed to record information about the note receivable from Fast Feet for the year 20Y7.
3. Journalize the entry needed to record collection of the note at maturity on March 19, 20Y8.

Answers

Answer:

Accounts Receivable (Dr.) $9,600

Sales (Cr.) $9,600

Bad debt expense (Dr.) $500

Accounts Receivable (Cr.) $500

Bad Debt Expense (Dr.) $2,200

Accounts Receivable (Cr.) $2,200

Notes Receivable - Fast Feet (Dr.) $3,600

Sales (Cr.) $3,600

Explanation:

Fan-Tastic Sports Gear Inc., has incurred business transactions. It has recorded sales to Sportswear Co on accounts. The money is not received and the accounts receivable are offset by recording bad debt expense.

Question 6 of 10

Match each business model with the type of business that commonly uses it.

Bricks and clicks

?

Grocery stores

Subscription

?

Magazines

Shopkeeper

Retail stores

?

Answers

Answer:

Bricks and Clicks - Retail Stores

Retail stores such as Walmart use a bricks and clicks model to ensure they sell as much as possible. Bricks and clicks refers to having both an online and an offline (physical location) presence where customers can come and buy in person if they want.

Grocery Stores - Shopkeeper

Grocery Stores are usually bricks and mortar which means that they are a physical location. This physical location is usually small and in need of being managed by a shopkeeper.

Subscription - Magazines

Magazines have found over the years that it is effective to offer their services as a subscription based one. That way they can be sure of a steady inflow of cash and people can be sure that they will receive magazines periodically.

At the beginning of the recent period, there were 1,230 units of product in a department, 35% completed. These units were finished and an additional 6,100 units were started and completed during the period. 1,240 units were still in process at the end of the period, 25% completed. Using the weighted average method, the equivalent units produced by the department were:

Answers

Answer:

7,640 units

Explanation:

Calculation for what the equivalent units produced by the department were Using the weighted average method

First step is to calculate the units Completed & transferred out

Completed & transferred out =6,100+1,230

Completed & transferred out=7,330

Second step is to calculate the EGIP

EGIP= (1,240*25%)

EGIP=310

Now let calculate the equivalent units produced by the department

Equivalent units produced=7,330+310

Equivalent units produced=7,640 units

Therefore Using the weighted average method, the equivalent units produced by the department were:7,640 units

The following information was taken from the records of Sheffield Inc. for the year 2020: Income tax applicable to income from continuing operations $209.440: income tax applicable to loss on discontinued operations $28,560. and unrealized holding gain on available-for-sale securities (net of tax) $16,800.
Gain on sale of equipment $106,400
Cash dividends declared $168,000
Loss on discontinued operations 84,000
Retained earnings January 1, 2020 2,400,000
Administrative expenses 268,800
Cost of goods sold 952,000
Rent revenuc 44,800
Selling expenscs 336,000 2,128,000
Loss on write-down
F inventory 67 200
Sales Revenue Shares outstanding during 2020 were 100,000.
Prepare a single-step income statement. (Kound eurmings pershre to 2 decimal paces, e 148 SHEFFIELD INC. Income Statement $ Prepare a comprehensive income statement for 2020, using the two statement format. SHEFFIELD INC. Comprehensive Income Statement Prepare a retained earnings statement for 2020. (tfst ltens tatheuse 1euhe enMhgs firsEj SHEFFIELD INC. Retained Earmings Statement

Answers

Answer:

a. Single-step Income Statement  for the year ended December 31, 2020:

Sales Revenue                                 $2,128,000

Rent revenue                                          44,800

Gain on sale of equipment                   106,400

Total Revenue                                $2,279,200

Cost of goods sold          952,000

Administrative expenses 268,800  

Selling expenses             336,000  

Loss on write-down

 of inventory                    67 200

Total expenses                               $1,624,000

                                                         $655,200

Income Tax                                        $209,440

Net Income                                        $445,760  

Comprehensive Income Statement  for the year ended December 31, 2020:

Net Income                                         $445,760

Loss on discontinued operations        (84,000)

Income Tax

 on discontinued operations              (28,560)

Unrealized holding gain (net of taxes) 16,800

Comprehensive Income                 $350,000

Statement of Retained Earnings for the year ended December 31, 2020:

Retained earnings January 1, 2020 $2,400,000

Comprehensive Income                         350,000

Cash dividends declared                       (168,000)

Retained earnings, December 31    $2,582,000

Explanation:

a) Data and Calculations:

Income tax applicable to income from continuing operations $209.440: income tax applicable to loss on discontinued operations $28,560, and unrealized holding gain on available-for-sale securities (net of tax) $16,800.

Gain on sale of equipment $106,400

Cash dividends declared $168,000

Loss on discontinued operations 84,000

b) Unrealized holding gain on available-for-sale securities and loss on discontinued operations are reported separately from the net income on continuing operations.  Therefore, they can be reported in the Comprehensive Income Statement.

Retained earnings January 1, 2020 2,400,000

Administrative expenses 268,800

Cost of goods sold 952,000

Rent revenue 44,800

Selling expenses 336,000  

Loss on write-down

F inventory 67 200

Sales Revenue 2,128,000

Shares outstanding during 2020 were 100,000

Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $49,750. Koch originally purchased Machine 1 for $75,500, and Machine 1's adjusted basis was $40,250 at the time of the exchange. Machine 2's seller purchased it for $64,750 and Machine 2's adjusted basis was $55,250 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange

Answers

Answer:

machine 2                   45,000

acc depreciation mchine 1         35,000

machine 1                                    75,000

The seller valuation are not relevant the important is the fair value. Which is 50,000.

If there was commercial substance we will recognize a gain for 5,000

(50,000 fair value - 45,000 book value)

However, we are not given with information of commercial substance, so we should not recognize any gain or loss in trade.

The machine 2 will enter the accounting for the same value as the previous machine net book.

Explanation:

During January, Luxury Cruise Lines incurs employee salaries of $3 million. Withholdings in January are $229,500 for the employee portion of FICA, $450,000 for federal income tax, $187,500 for state income tax, and $30,000 for the employee portion of health insurance (payable to Blue Cross Blue Shield). The company incurs an additional $186,000 for federal and state unemployment tax and $90,000 for the employer portion of health insurance.

Required:
a. Record the employee salary expense, withholdings, and salaries payable.
b. Record the employer-provided fringe benefits.
c. Record the employer payroll taxes.

Answers

Answer and Explanation:

The journal entries are shown below:

On Jan 31

Salaries Expense $3,000,000  

     To Income Tax Payable  ($450,000 + $187,500 ) $637,500

     To FICA taxes payable    $229,500

      To Accounts payable   $$30,000

      To Salaries payable    $2,103,000

(Being the employees Salaries Expense is recorded )  

On Jan 31

Salaries Expense $90,000  

       To Accounts payable  $90,000

(Being the employer-provided fringe benefits is recorded)

On Jan 31

Payroll tax expense    $415,500  

       To FICA taxes payable  $229,500

        To  Unemployment taxes payable $186,000

(Being the payroll taxes is recorded)  

Forming a joint venture with an existing foreign company offers all of the following advantages excepta.providing control over product attributes.b.joining an established firm.c.requiring less commitment from all parties involved in the joint venture.d.providing immediate marketing knowledge.e.providing reduced risk.

Answers

Answer:

The correct answer is the option C: Requiring less commitment from all parties involved in the joint venture.

Explanation:

To begin with, the name of "joint venture" in the field of business refers to the method and strategy whose process consists of incorporating two or more parties into one only form of company with the final purpose of increasing the sales of every party included in the agreement and doing that by different ways. Moreover, generally this strategy has its focus on the fact of entering a new market or acquiring new management that will come with more resources and more. So that is why that it brings a lot of advantages as stated in the case presented but absolutely not less commintment from every party involved in it.

The tangible assets of an organization include
A. Company reputation
B. Patents
C. Real estate
D. Technical knowledge

Answers

Answer:

a. company reputation

Explanation:

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Rossdale, Inc., had additions to retained earnings for the year just ended of $641,000. The firm paid out $50,000 in cash dividends, and it has ending total equity of $7.36 million.
1. If the company currently has 730,000 shares of common stock outstanding, what are:
a. Earnings per share?
b. Dividends per share?
c. Book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
2. lf he stock currently sells or $30.60 per share, what is:
a. the market-to-book ratio?
b. the price earnings ratio?
3. If total sales were $10.66 million, what is the price-sales ratio?

Answers

Answer:

1. a. Earnings per share:

= Total earnings / No. of shares

= (Addition to retained earnings + Dividends) / No. of shares

= (641,000 + 50,000) / 730,000

= $0.95

b. Dividends per share:

= Dividends / No. of shares

= 50,000 / 730,000

= $0.07

c. Book Value per share:

= Ending total equity / No. of shares

= 7,360,000 / 730,000

= $10.08

2. a. Market to book ratio

= Market price / Book value

= 30.60 / 10.08

= 3.06 times

b. Price - earnings ratio:

= Market price / Earnings per share

= 30.60 / 0.95

= 32.21 times

3. Price - sales ratio

= Market value of equity / Sales

= (30.60 * 730,000 shares) / 10,660,000

= 2.1 times

Fox Corporation has provided its contribution format income statement for June. The company produces and sells a single product: sales (2,700 units), $261,900; variable costs, $102,600; contribution margin, $159,300; fixed costs, $136,300; and operating profit, $23,000.If the company sells 3,000 units, its total contribution margin should be closest to _____.A. $25,556

Answers

Answer:

Total contribution margin= $177,000

Explanation:

First, we need to calculate the unitary contribution margin:

Unitary contribution margin= total contribution margin / number of units

Unitary contribution margin= 159,300 / 2,700

Unitary contribution margin= $59

Now, the total contribution margin for 3,000 units:

Total contribution margin= 3,000*59

Total contribution margin= $177,000

The following Information applies to the questions displayed below.) Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of It car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management belleves that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:
Month Rental Returns Car Wash Costs
January 2,380 $ 10,825
February 2,421 $ 11,865
March 2,586 $ 11,332
April 2725 $ 12422
May 2968 $ 13850
June 3281 $ 14419
July 3,353 $ 14,935
August 3,489 $ 15,738
September 3,057 $ 13,563
October 2,876 $ 11,889
November 2,735 $ 12,683
December 2,983 $ 13,796
Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost Incurred to wash cars. (Round Fixed cost to the nearest whole dollar amount and the Varlable cost per unit to 2 decimal places.)

Answers

Answer:

a. The variable cost per rental return is $4.04.

b. The monthly fixed cost Incurred to wash cars is $1,376.

Explanation:

Note: See the attached excel file for the calculations of Rental Returns (x), Car Wash Costs (y), xy, and x^2.

Since Σ = Total of or summation of, we can therefore obtain the following from the attached excel file:

Σx = 34,854

Σy = 157,317

Σxy = 462,541,971

Σx^2 = 102,623,516

N = Number of months = 12

a. calculation of variable cost per rental return

To calculate the variable cost per rental return, the following formula is used:

Variable cost per rental return = (NΣxy − ΣxΣy) /((NΣx²) − (Σx)²) ……………… (1)

Substituting the relevant values into equation (1), we have:

Variable cost per rental return = ((12 * 462,541,971) - (34,854 * 157,317)) / (((12 * 102,623,516) - 34,854^2)

Variable cost per rental return = 4.03917240317595

Rounding to 2 decimal places as required, we have:

Variable cost per rental return = $4.04

Therefore, the variable cost per rental return is $4.04.

b. Calculation of monthly fixed cost Incurred to wash cars

To calculate the monthly fixed cost Incurred to wash cars, the following formula is used:

Fixed Cost per month =  {Σy - (Variable cost per rental return * Σx) / N ....... (2)

Substituting the relevant values into equation (2), we have:

Fixed Cost per month = (157,317 - (4.04 * 34,854)) / 12

Fixed Cost per month = $1,375.57

Rounding to the nearest whole dollar amount as required, we have:

Fixed Cost per month = $1,376

Therefore, the monthly fixed cost Incurred to wash cars is $1,376.

The variable cost per rental return is $4.04 and the fixed cost per month is $1378.

The following can be depicted from the question

Σx = 34,854

Σy = 157,317

Σxy = 462,541,971

Σx² = 102,623,516

N = number of months = 12

Variable cost per rental return will be:

= ( N Σxy − Σx Σy)/{(N Σx²) − (Σx)²}

= {( 12 × 462,541,971) - (34,854 × 157,317) } / {(12 ×102,623,516) - (34,854)²}

= (5,550,503,652 - 5,483,126,718) / (1231482192 - 1214801316)

= 67,376,934 / 16680876

= $4.04

Fixed Cost per month will be:

=  {Σy - ( Variable cost per rental return × Σx )/N

= {157,317 - (4.04 × 34,854)} /12

= ( 157,317 - 140,810.16) /12

= $1378

Learn more about fixed cost on:

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Treasury Stock Facts Target Inc. arranged to purchase a large block of its common stock from a major shareholder. The total number of shares purchased is 10,000 and these shares are to be held as treasury shares. Target Inc. uses the cost method to account for treasury shares. This shareholder had a controlling interest before the transaction. After the transaction this shareholder no longer has a controlling interest. Given these facts, to induce the shareholder to sell the block of stock Target Inc. was forced to pay an amount in excess of the current market price of the stock. Target Inc. paid the shareholder $40 per share when the market price was $30 per share.Question How should Target Inc. account for the purchase of this treasury stock?a. Provide a brief written description of the proper accounting treatment, including how the extra $10 paid per share is recorded.b. Prepare a formal journal entry to record the treasury stock transaction.c. Identify the specific paragraph of the FASB Codification which addresses this issue.

Answers

Answer:

Target Inc.

a. Under the cost method, as adopted by Target Inc., the cost of acquiring the treasury stock is debited to the Treasury Stock account and credited to the Cash account.  This means that there is no differentiation of the extra $10 just as there is no differentiation between the par-value and the cost of acquiring each share.

b. Journal Entry:

Debit Treasury Stock $40,000

Credit Cash $40,000

To record the repurchase of 10,000 shares at $40 each.

c. The FASB Codification which addresses Treasury Stock accounting is called Codification Topic 505-30.  The cost of treasury stock is reported separately from the gain or loss.

Explanation:

a) Data and Calculations:

Total number of shares purchased = 10,000

Price paid for the purchase = $40

Market price of the share = $30

Extra cost paid = $10

b) Two methods are adopted for recording treasury stock.  There is the par-value method.  This method records the treasury stock at the par value multiplied by the number of treasury stock.  The difference in the purchase cost and the par-value is then recorded in the Additional Paid-in Capital account.  The other method is the cost method.  Here, the cost of acquiring the treasury stock (not the par-value) is recorded in the Treasury Stock account, with a credit entry to the Cash account. Treasury Stock account is a contrary account to the stockholders' equity, and as a result, is a deduction from the amounts in the Stockholders' Equity in the balance sheet, in both cases.

Joseph Thompson is president and sole shareholder of Jay Corporation (a cash method, calendar year C corporation). In December 2020, Joe asks your advice regarding a charitable contribution he plans to have the corporation make to the University of Maine, a qualified public charity. Joe is considering the following alternatives as charitable contributions in December 2020:_____.
Fair Market Value
(1) Cash donation $200,000
(2) Unimproved land held for six years ($110,000 basis) 200,000
(3) Maize Corporation stock held for eight months ($140,000 basis) 200,000
(4) Brown Corporation stock held for nine years ($360,000 basis) 200,000
Joe has asked you to help him decide which of these potential contributions will be most advantageous taxwise. Jay's taxable income is $3,500,000 before considering the contribution.
Rank the four alternatives, and complete the letter to Joe communicating your advice.
Note: The land and stock are "unrelated use property" but they are not "tangible personal property".
Hoffman, Maloney, Raabe, & Young, CPAs
5191 Natorp Boulevard
Mason, OH 45040
December 10, 2020
Mr. Joseph Thompson
Jay Corporation
1442 Main Street
Freeport, ME 04032
Dear Mr. Thompson:
I have evaluated the proposed alternatives for your 2020 year-end contribution to the University of Maine. I recommend that you sell the Brown Corporation stock and donate the proceeds to the University. The four alternatives are discussed below.
Donation of cash, the unimproved land, or the Brown Corporation stock each will result in a $ __________ charitable contribution deduction. Donation of the Maize Corporation stock will result in only a $ ______________charitable contribution deduction.
You will benefit in two ways if you sell the Brown Corporation stock and give the $ __________in proceeds to the University. Donation of the proceeds will result in a $ ___________charitable contribution deduction. In addition, sale of the stock will result in a $ _________ long-term capital ______________. If Jay Corporation had capital __________________of at least $ ___________ and paid corporate income tax in the past three years, the entire _______________could be ________________and Jay would receive tax refunds for the carryback years. If Jay Corporation _______________capital gains in the carryback years, the capital loss could be carried forward and offset against capital gains of the corporation for up to _______________years.
Jay Corporation ________________ make the donation in time for the ownership to change hands before the end of the year. Therefore, I recommend that you notify your broker immediately so that there will be no problem in completing the donation on a timely basis.
I will be pleased to discuss my recommendation in further detail if you wish. Please call me if you have questions. Thank you for consulting my firm on this matter. We look forward to serving you in the future.
Sincerely,
Richard Stinson, CPA

Answers

Answer:

Joseph Thompson of Jay Corporation

Hoffman, Maloney, Raabe, & Young, CPAs

5191 Natorp Boulevard

Mason, OH 45040

December 10, 2020

Mr. Joseph Thompson

Jay Corporation

1442 Main Street

Freeport, ME 04032

Dear Mr. Thompson,

I have evaluated the proposed alternatives for your 2020 year-end contribution to the University of Maine. I recommend that you sell the Brown Corporation stock and donate the proceeds to the University. The four alternatives are discussed below.

Donation of cash, the unimproved land, or the Brown Corporation stock each will result in a $ ___200,000_______ charitable contribution deduction. Donation of the Maize Corporation stock will result in only a $ ____140,000__________charitable contribution deduction.

You will benefit in two ways if you sell the Brown Corporation stock and give the $ __200,000________in proceeds to the University. Donation of the proceeds will result in a $ __200,000_________charitable contribution deduction. In addition, sale of the stock will result in a $ __160,000_______ long-term capital ___loss___________. If Jay Corporation had capital ____gain______________of at least $ ___160,000________ and paid corporate income tax in the past three years, the entire ____capital gain loss___________could be ____deducted____________and Jay would receive tax refunds for the carryback years. If Jay Corporation _____no__________capital gains in the carryback years, the capital loss could be carried forward and offset against capital gains of the corporation for up to ______twenty_________years.

Jay Corporation ______should__________ make the donation in time for the ownership to change hands before the end of the year. Therefore, I recommend that you notify your broker immediately so that there will be no problem in completing the donation on a timely basis.

I will be pleased to discuss my recommendation in further detail if you wish. Please call me if you have questions. Thank you for consulting my firm on this matter. We look forward to serving you in the future.

Sincerely,

Richard Stinson, CPA

Explanation:

1. Cash donation: $200,000 deduction

2. Unimproved land donation: $200,000 deduction, $90,000 long term capital gain forgiven (21% X $90,000 = 18,900 tax saving, or $90,000 could be used to offset otherwise non-deductible capital losses)

3. Maize Corporation stock held 8 months: $140,000 deduction

4. Brown Corporation stock held 9 years: $200,000 deduction, $160,000 loss not available

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