Answer:
Book value weight of equity is 0.2007
Book value weight of debt is 0.7993
Market value weight of equity is 0.6883
Market value weight of debt is 0.3117
Explanation:
The book value of the two bonds=$115 million+$100 million=$215 million
The book value of equity =6 million *$9=$54 million
weight of debt=$215/($215+$54)= 0.7993
weight of equity=$54/($215+$54)= 0.2007
Market value approach:
market value of equity=6 million*$78=$468 million
market of the first bond=$115 million*93%=$106.95 million
market value of the second bond=$100 million*105%=$105 million
total market value of bonds=$106.95 million+$105 million=$ 211.95 million
weight of debt=$211.95/($211.95+$468 )= 0.3117
weight of equity=$468/($211.95+$468 )= 0.6883
For each of the following transactions of JonesSpa Corporation, for the month of January, identify each as an investing activity or financing activity on the statement of cash flows for January. (If the activity does not affect the statement of cash flows, select No Effect.)
Answer:
1. Paid cash to purchase inventory
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
2. Purchased land by issuing common stock
NON CASH INVESTING AND FINANCING ACTIVITY, DOES NOT AFFECT CASH FLOW STATEMENT
3. Accounts receivable decreased in the year
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
4. Sold equipment for cash
INVESTING ACTIVITY, INCREASES CASH FLOW STATEMENT
5. Recorded depreciation expense
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
6. Income taxes payable increased in the year
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
7. Declared and paid a cash dividend
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
8. Accounts payable decreased in the year
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
9. Paid cash to settle notes payable
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
10. Prepaid expenses increased in the year
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
11. Sold inventory for cash
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
12. Paid cash to acquire treasury stock
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
13. Net income
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
14. Decrease in accrued liabilities
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
15. Increase in prepaid expenses
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
A sales associate moves from Jacksonville, Florida, to Atlanta, Georgia. The associate continues to be employed by the same broker, who has an office in Atlanta. Which statement is TRUE
Answer: The sales associate must notify the DBPR in writing within 60 days regarding her change in residency
Explanation:
The options are:
a. The states associate broker is required to file the change of address on her behalf.
b. The sales associate broker is not required to notify DBPR because she did not change employers.
c. The sales associate must notify the DBPR in writing within 60 days regarding her change in residency.
d. The sales associate must file an application for Georgia real estate license.
From the question, we are informed that a sales associate moves from Jacksonville, Florida, to Atlanta, Georgia. The associate continues to be employed by the same broker, who has an office in Atlanta.
Based on the scenario, the sales associate should let the DBPR be aware that he or she has moved from
Jacksonville, Florida, to Atlanta, Georgia by writing to them within 60 days regarding her change in residency.
Scorpion Company has net credit sales of $5,400,000 for the year and it estimates that doubtful accounts will be 2% of sales. If its Allowance for Doubtful Accounts has a credit balance of $18,000 prior to adjustment, its balance after adjustment will be a credit of:
Answer:
Balance after adjustment will be a credit of $90,000
Explanation:
Particulars Amount
Non-collectible accounts $108,000
Credit balance $18,000
Balance Adjustment $90,000
Balance after adjustment will be a credit of $90,000
Note: Non-collectible accounts = 2% * $5,400,000 =$108000
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity method in accounting for its investment in Side. Based on the preceding information, the increase in the fair value of patents held by Side is:
Answer:
$25,000
Explanation:
Plus corporation acquired 90% of Side Corporation for $180,000 cash.
Net income = $30,000
Dividend for 3 years = $10,000
Common stock outstanding = $100,000
Retained earnings = $60,000
Fair value = $20,000
Book value of land = $30,000
Market value of land = $35,000
Book value of equipment = $50,000
Market value of equipment = $60,000
Required:
Find the increase in the fair value of patents held by Side Corporation.
To find the increase in the fair value of patents, use:
Increase in fair value = Fair value of corporation - Total value without patent.
Where
Fair value = $180,000 + $20,000 = $200,000
Total value without patent = common stoc(100,000) + retained earnings(60,000) + equipment adjustment($60,000 - $50,000 = $10,000) + land adjustment($35,000 - $30,000= $5,000) =
$100,000 + $60,000 + $10,000 + $5,000 = $175,000
Therefore,
Increase = Fair value of corporation($200,000) - Total value without patent($175,000) = $25,000
The increase in the fair value of patents held by Side Corporation is $25,000
United Apparel has the following balances in its stockholders' equity accounts on December 31, 2021: Treasury Stock, $850,000; Common Stock, $600,000; Preferred Stock, $3,600,000; Retained Earnings, $2,200,000; and Additional Paid-in Capital, $8,800,000.
Required:
Prepare the stockholders' equity section of the balance sheet for United Apparel as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
The answer is $14,350,000
Explanation:
UNITED CAPITAL
BALANCE SHEET
(STOCKHOLDERS' EQUITY SECTION)
DECEMBER 31, 2021
Preferred Stock $3,600,000
Common Stock. $600,000
Additional Paid-in Capital $8,800,000
Total Paid-in Capital. $13,000,000
Retained Earnings $2,200,000
Treasury Stock,. -$850,000
Total Stockholders'equity $14,350,000
What is the opportunity cost of owning a business? I. The economic profits that the business earns II. The accounting profits that the business earns III. The profits that could be earned in another business using the same amount of resources
Answer:
III. The profits that could be earned in another business using the same amount of resources.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
Hence, the opportunity cost of owning a business is the profits that could be earned in another business using the same amount of resources.
For instance, if you decide to invest resources such as money in a food business (restaurant), your opportunity cost would be the profits you could have earned if you had invest the same amount of resources in a salon business or any other business as the case may be.
A supermarket displays featured items at the ends of aisles. These displays
are called
Answer:
These are the options for the question:
A. exteriors
B. endcaps
C. merchandisers
D. props.
And this is the correct answer:
B. endcaps
Explanation:
The small billboards that display items at the end of aisles are called endcaps.
They are usually used to display items that are on discount. Other times, they are simply used to sign the category of products that can be found in the respective aisle.
Answer:
endcaps
Explanation:
CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt
Answer:
$5,412,000
Explanation:
Given:
Long-term debt (bonds, at par):$10,000,000
Preferred stock :2,000,000
Common stock ($10 par): 10,000,000
Retained earnings: 4,000,000
Total debt and equity :$26,000,000
Coupon rate = 4%(semi annually)
Par value = $1000
YTM = 12%
Required:
Find the current market value of the firm's debt.
Find the bond price:
Bond price [tex] = (C * (\frac{1 - (\frac{1}{(1+i)^n})}{i}) + (\frac{m}{(1+i)^n}) [/tex]
[tex] = (C * (\frac{1 - (\frac{1}{(1+0.06)^2^0})}{0.06}) + (\frac{1000}{(1+0.06)^2^0}) [/tex]
[tex] = 541.20 [/tex]
Bond price = $541.20
Find number of bonds:
Number of bonds [tex] = \frac{10,000,000}{1,000} = 10,000[/tex]
Now, to find the current market value of the firm's debt, use:
Current market value of debt = number of bonds × bond price
= 10,000 × 541.20
= $5,412,000
Current market value of the firm's debt = $5,412,000
When a monopolistically competitive market opens up to international trade, each firm produces a greater quantity of output than it did before. Explain why this is
Answer:
The correct answer is the increase in the amount of buyers.
Explanation:
To begin with, due to the fact that the company is now selling internationally then the market is wide more open for them to increase the portfolio of clients and moreover to increase the amount of sales that the company is having. Therefore that when the company starts to trade internationally it will increase its amount of consumers that will be able to buy from them and also the amount of resellers that can buy from them to buy to final consumers. Primarily, the improvement in the increase of buyers will tend to increase the amount of production that the company is producing and so also the amount of sales so therefore that the company will produce a greater quantity of output than it did before.
On January 1 of the current year (Year 1), our company acquired a truck for $75,000. The estimated useful life of the truck is 5 years or 100,000 miles. The residual value at the end of 5 years is estimated to be $5,000. The actual mileage for the truck was 22,000 miles in Year 1 and 27,000 miles in Year 2. What is the depreciation expense for the second year of use (Year 2) if we use the units of production method
Answer:
The depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
Explanation:
Units of production method is depreciation method that considers the number of units that an asset produces more closely relevant than the number of economic useful life of the assets. The method therefore produces a greater depreciation expenses in years when the assets is heavily put into use.
Under the units of production method, the depreciation expenses for a particular is the original cost of the equipment minus its salvage value, and this is then multiplied by the ratio of the expected number of units the asset should produce in that year to the number of units the asset is expected to produce in its useful life. Mathematically, this can be stated as follows:
Depreciation expenses for a particular = (Cost - Salvage/Residual value) * (Units produced in the year / Total units expected to produce throughout useful life)
To calculate the depreciation expense for the second year of use (Year 2) in this question, use the above formula as follows:
Depreciation expenses in Year 2 = ($75,000 - $5,000) * (27,000 / 100,000) = $70,000 * 0.27 = $18,900
Therefore, the depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
NB - Extra Information that can assist your learning:
Although this is not part of the question, but we can also compute the depreciation expenses for Year 1 in order to compare it with Year 2 as follows:
Depreciation expenses in year 1 = ($75,000 - $5,000) * (22,000 / 100,000) = $70,000 * 0.22 = $15,400.
We can see that the depreciation expenses of $18,900 for Year 2 is greater than the depreciation expenses of $15,400 for Year 1. The reason is that the truck is more heavily used in Year 2 at 27,000 miles than in Year 1 at just 22,000 miles.
On April 1, the price of gas at Bob’s Corner Station was $3.40 per gallon. On May 1, the price was $3.90 per gallon. On June 1, it was back down to $3.40 per gallon.
Between April 1 and May 1, Bob's price increased by____________ or __________
Between May 1 and June 1, Bob's price decreased by ___________ or ___________
Suppose that at a gas station across the street, prices are always 20% higher than Bob’s. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is___________ when gas costs $3.90 than when gas costs $3.40.
Some economists blame high commodity prices (including the price of gas) on interest rates being too low.
Suppose the Fed raises the target for the federal funds rate from 2% to 2.5%. This change of _________ percentage points means that the Fed raised its target by approximately __________
Answer:
1. Bob's Corner Station:
Prices of Gas per gallon:
Between April 1 and May 1, Bob's price increased by___$0.50_________ or ____14.7%______
Between May 1 and June 1, Bob's price decreased by ___$0.50________ or ____12.82%_______.
2. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is___$0.02________ when gas costs $3.90 than when gas costs $3.40.
3. Suppose the Fed raises the target for the federal funds rate from 2% to 2.5%. This change of ___25______ percentage points means that the Fed raised its target by approximately ____25%______
Explanation:
a) Computation of Price Increases:
i) Gas at Bob's
Between April 1 and May 1, price increased by $0.50 ($3.90 - $3.40)
This is an increase of 14.7% ($0.50/$3.40 x 100).
Between May 1 and June 1, price decreased by $0.50 ($3,90 - $3.40)
This is a decrease of 12.82% ($0.50/$3.90 x 100)
ii) When gas costs $3.40 at Bob's, the price at the other gas station will be $4.08 ($3.40 x 1.2), a difference of $0.68 ($4.08 - $3.40).
iii) When gas costs $3.90 at Bob's, the price at the other gas station will be $4.68 ($3.90 x 1.2), a difference of $0.78 ($4.68 - $3.90).
iv) So in absolute terms, the dollar difference is $0.02 ($0.78 - $0.68) when gas costs $3.90 than when gas costs $3.40.
v) Percentage and percentage points describe the relationship between two sets of data. Percent refers to the rate of change, whereas percentage point measures the actual amount of change.
vi) The percent change in our case is calculated as follows:
Change in Rate divided by Former Rate = (2.5 - 2)/ 2 = 0.25 = 25%.
The percentage point of 25% = 25.
In 2010, the BowWow Company purchased 11,752 units from its supplier at a cost of $ 11.73 per unit. BowWow sold 18,971 units of its product in 2010 at a price of $ 24.86 per unit. BowWow began 2010 with $ 864,593 in inventory (inventory is carried at a cost of $ 11.73 per unit). Using this information, compute BowWow's 2010 ending inventory balance (in dollars).
Answer:
Ending inventory balance is $ 779,914.13
Explanation:
The cost of goods sold formula can be used to determine the ending inventory by rearranging the formula and making the ending inventory the subject of the formula:
cost of goods=beginning inventory+inventory purchased-ending inventory
ending inventory=beginning inventory+inventory purchased-costs of goods sold
ending inventory=$864,593+(11,752*$11.73)-(18971*$11.73)=$ 779,914.13
A company purchased equipment and signed a 5-year installment loan at 10% annual interest. The annual payments equal $11,600. The present value of an annuity factor for 5 years at 10% is 3.7908. The present value of a single sum factor for 5 years at 10% is .6209. The present value of the loan is:
Answer:
The present value of the loan is $43,973.98
Explanation:
In order to calculate the present value of the loan we would have to make the following calculation:
Present value of the loan=annual payments*present value of an annuity factor for 5 years at 10%
annual payments=$11,600
present value of an annuity factor for 5 years at 10%=3.7908
Therefore, Present value of the loan=$11,600*3.7908
Present value of the loan=$43,973.98
The present value of the loan is $43,973.98
Suppose that in the rice market demand shifts greatly due to a new rice diet that is being marketed heavily in the U.S. as a cure for cancer. Simultaneously the supply curve shifts slightly due to a healthy rainy season that positively affects the rice crop in California. What is the most likely outcome in this situation?
Answer:
the equilibrium price increases, albeit by a negligible amount
Explanation:
Here are the options to this question :
the supply curve will shift again after demand meets supply
the equilibrium price increases
the equilibrium price increases, albeit by a negligible amount
the demand curve will shift back to its original level
The new rice diet that is being marketed heavily in the U.S. as a cure for cancer would increase the demand for rice. This would shift the demand curve rightward. This shift of the demand curve would increase demand and price
The hw healthy rainy season that positively affects the rice crop in California woild increase the supply of rice and as a result the supply curve would shift to the right. The rightward shift of the supply curve would cause quantity to rise and price to fall.
This combined effect would lead to a rise in quantity and a rise in price by only a negligible amount.
I hope my answer helps you
Bolton Tire Manufacturing and the union came to an impasse during negotiation of the collective bargaining agreement. Specifically, they could not agree on the wage increase for the employees. The union representative reported this information to the employees, and they staged a strike without the union's authorization.
A. The employees have engaged in an unfair labor practice strike.
B. The employees have engaged in an economic strike.
C. The employees have engaged in a sitdown strike.
D. None of the choices are correct.
Answer:
The correct answer is the option A: the employees have engaged in an unfair labor practice strike.
Explanation:
To begin with, due to the fact that the union was already establishing the area for the negotiation and they might have planeed obviously to keep trying to increase the situation in their favour then the action taken by the employees was a bit hurry and was obvious that was not thought very well with calm minds and therefore that they engaged in an unfair labor practice strike because they had to be patience and wait for the union to improve the situation for them, because their are the representatives and if the company sees that the workers do not obey to the representatives then the union will lose negotiation power and the situation will get worse for them.
Carla Vista Electronics reported the following information at its annual meetings: The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,184,800, accounts receivables of $3,472,300, short-term notes payable worth $1,136,100, and other current assets of $121,455. What is the company's net working capital
Answer:
$6,718,553
Explanation:
Working capital is the net of current assets (Inventory, account receivables, Cash etc) and current liabilities (Accounts payable, short term notes payable etc).
It is a financial measure that gives insight into how liquid a company is. .
As such, the company's working capital
= $1,235,455 - $4,159,357 + $7,184,800 + $3,472,300 - $1,136,100 + $121,455
( the signs are positive for assets and negative for liabilities)
= $6,718,553
Deborah Lewis, general manager of the Northwest Division of Berkshire Co., has significant authority over pricing decisions as well as programs that involve cost reduction/control. The data that follow relate to upcoming divisional operations:
Average invested capital: $15,000,000
Annual total fixed costs: $3,900,000
Variable cost per unit: $80
Number of units expected to be sold: 120,000
Assume the unit selling price is $132 and that Berkshire has a 16% imputed interest charge.
Top management will promote Deborah to corporate headquarters if her division can generate $200,000 of residual income (RI). If Deborah desires to move to corporate, what adjustment must the division do to the amount of annual total fixed costs?
Answer:
The revised fixed costs = $3,640,000
Explanation:
Calculation of Residual Income:
Residual Income = Net income - (Invested capital * Minimum required rate of return)
Net Income = Sales - Variable costs - Fixed costs
Net Income = (120,000*132) - (120,000*80) - 3,900,000
Net Income = $2,340,000
Invested capital = $15,000,000
Minimum required rate of return = 16%
Therefore, residual income = $2,340,000 - ($15,000,000 * 16%)
= -$60,000
Hence, adjustment to be made to the amount of fixed costs so that residual income becomes $200,000 = $200,000+$60,000 = $260,000
Therefore, revised fixed costs = $3,900,000 - $260,000 = $3,640,000
A production department's output for the most recent month consisted of 16,500 units completed and transferred to the next stage of production and 16,500 units in ending Work in Process inventory. The units in ending Work in Process inventory were 60% complete with respect to both direct materials and conversion costs. There were 2,300 units in beginning Work in Process inventory, and they were 80% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.
Answer:
The equivalent units of production for the month, assuming the company uses the weighted average method is 26,400 units.
Explanation:
The equivalent units of production for the month when the company uses the weighted average method is the addition of the units completed and transferred to next stage and degree of completion of the units in ending Work in Process inventory.
This can therefore be calculated as follows:
Equivalent units of production for the month = Units completed and transferred to next stage + Units in ending Work in Process inventory
Since,
Units completed and transferred to next stage = 16,500 units
Units in ending Work in Process inventory = 16,500 * 60% complete = 9,900 units
Therefore, we have:
Equivalent units of production for the month = 16,500 + 9,900 = 26,400 units
Therefore, the equivalent units of production for the month, assuming the company uses the weighted average method is 26,400 units.
For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.
a. The adjustment for accrued wages of $5,200 was journalized as a debit to Wages Expense for $5,200 and a credit to Accounts Payable for $5,200.
b. The entry for $1,125 of supplies used during the period was journalized as a debit to Supplies Expense of $1,125 and a credit to Supplies of $1,152.
Answer:
a) The debit and credit side of the unadjusted trial balance would be increased by $ 5200.
b) The debit side would remain unchanged. No effect will be seen in the adjusted trial balance.
Explanation:
Effect of adjustments on adjusted Trial Balance.
This first entry would increase the wages expense and increase the liability account in the adjusted trial balance. Both debit and credit side would be increased by an equal amount.
b) This would decrease the Supplies account and increase the supplies expense in the unadjusted account. As both are on the debit side there would be no effect in the debit total.
Sr No Account Debit Credit
Original Entries
a. Wages Expense 5200
Accounts Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Correct Entries
a. Wages Expense 5200
Accrued Wages Account Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Difference:
a) We see that the first entry which was original passed the debit side is correct but the credit side would have been of accrued wages instead of accounts payable . This is to raise the amount by which wages are still outstanding by an amount 5200 at the end of the month.
This would decrease the accounts payable increase the wages payable . If the adjustment is not made it the salaries payable is understated .
b)This adjusting entry is correct.
Platen purchased inventory on August 17 and received an invoice with a list price amount of $5,900 and payment terms of 4/10, n/30. Platen uses the net method to record purchases. For what amount should Platen record the purchase
Answer:
$5,664
Explanation:
Calculation of the amount that Platen should record the purchase.
Using this formula
List price -(Percentage of payment term × list price)
Let plug in the formula
$5,900 -(4%×5,900 )
=$5,900-$236
=$5,664
Therefore Platen should record the purchase on August 17 as a:
Debit to Purchases (periodic system) and a Credit to Accounts Payable for $5,664
Therefore the amount that Platen should record the purchase will be $5,664
A company applies overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $1,150,000, and direct labor cost is $565,000. Determine whether there is over- or underapplied overhead using the T-account below. Factory OverheadActual Overhead 950,000 Overapplied overhead 950,000
Answer:
Under applied overheads= $302,500
Explanation:
Overheads are charged to units produced by the means of an estimated overhead absorption rate. This rate is computed using budgeted overhead and budgeted activity level.
As a result of this, overhead charged to total units product might be over or under absorbed compared to the actual amount incurred.
Overhead absorption rate
=budgeted Overhead/Budgeted labour cost × 100
This already given in the question as 150% of the direct labour rate
= 150% of direct labour cost
Applied overhead= OAR× actual labour cost
= 150% × $565,000=$847,500
Under applied overhead = is the difference between actual overhead and applied overhead
$1,150,000 - $847,500 = $302,500
Under applied overheads= $302,500
Here it is under applied because the applied is less than the actual overhead cost
1. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30
Answer:
Debit interest expenses for $15,000
Credit interest payable for $15,000
Explanation:
Since January 1 to June 30 is 6 months, we need to calculate interest expenses for the 6 months as follows:
Monthly interest expenses = ($500,000 * 6%) / 12 = $2,500
Interest expenses for 6 months = $2,500 * 6 = $15,000
The adjusting entry required will therefore look as follws:
Date Particulars Dr ($) Cr ($)
June 30 Interest expenses 15,000
Interest payable 15,000
(To record 6 months interest payable on note.)
T. Boone Pickens football stadium at Oklahoma State University has a seating capacity of about 40,000. Assume the stadium sells out all six home games before the season begins and the athletic department collects $31 million in ticket sales.
Required:
a. What was the average price per season ticket and average price per individual game ticket sold?
b. Record the advance collection of $29 million in ticket sales.
c. Record the revenue earned after the first home game was completed.
Answer:
Total collection of ticket sales is $31 million
Seating capacity is 40,000 tickets
Average price per season ticket = Total collection / Seating capacity
=$31,000,000 / 40,000
=$775
Therefore, the average price per season ticket is $775
Average price per individual game ticket sold = Average price per ticket / Number of games
= 775 / 6
= $129
Therefore, the average price per individual game sold is $129 and the number of games is 6
2. Journal entry to record advance collection of $31 million in ticket sales
Account Title and Explanation Debit$ Credit$
Cash $31,000,000
Unearned Ticket Revenue $31,000,000
(To record entry for advance received)
3. Journal entry to record revenue earned after the first home game was completed
Account Title and Explanation Debit$ Credit$
Unearned Ticket Revenue 5,160,000
($129 per individual game * 40,000 tickets)
Service Revenue 5,160,000
(To record unearned ticket revenue)
Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $61,000. and Martin's capital balance $58,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,600 in the partnership. The bonus that is granted to Hewlett and Martin equals:___________ a) $2,340 each b) $3,560 each. c) $0, because Hewlett and Martin actually grant a bonus to Black d) 1,825 to Hewlett; $1,780 to Martin. e) $1,825 each.
Answer:
The bonus hat is granted to Hewlett and Martin equals is $2340
Explanation:
Solution
Given that:
Hewlett's capital balance = $61,000
Martin's capital balance = $58,000
The existing partners agrees ti accept black with =20% interest
Black invest the amount of =$35,600
Now,
The equity after admitting black or allowing black is given below:
$61,000 + $58,000 +$35,600 = $154,600
The share of black in equity is given as,
$154, 600 * 20% = $30,920
The Bonus that is present for Hewlett and Martin is = $35,600 - $30,920
=$4,680
Thus,
When shared equally it is = $2340 for both partners
A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $233,000. The current period's entry to record the warranty expense is:
Answer:
Dr Warranty expenses 9,320
Cr Estimated Warranty Liability 9,320
Explanation:
Preparation of thecurrent period's entry to record the warranty expense for A company
Since A company estimates that the warranty expense will be 4% of sales while the sales for the current period are $233,000 this means we have to find the 4% of $233,000 which gives us 9,320.
Hence the transaction will be recorded as :
Dr Warranty expenses 9,320
(4%×233,000)
Cr Estimated Warranty Liability 9,320
Suppose you borrow $10,000 right now to start a business. If the terms of the loan require you to pay back $16,000 in 5 years, what is the implied annual compound interest rate
Answer:
r = 9.86%
Explanation:
The formula for calculating the future value of an invested amount yielding a compound interest is given by:
[tex]FV=PV(1+\frac{r}{n})^{nt}[/tex]
where:
FV = future value = $16,000
PV = present value = $10,000
r = interest rate = ?
n = number of compounding period per year = 1
t = time in years = 5
∴ [tex]16000=10000(1+\frac{r}{1})^{5}[/tex]
dividing both sides by 10,000
[tex]\frac{16000}{10000} =\frac{10000(1+\frac{r}{1})^{5}}{10000}[/tex]
[tex]1.6 = (1 + r)^{5}[/tex]
to remove the power of 5, we have to take the 5th root of both sides:
[tex](1.6)^{1/5} = (1 + r )^{5 * 1/5}[/tex]
Using your calculator:
1.09856 = 1 + r
∴ r = 1.09856 - 1 = 0.09856
r = 0.0986 = 9.86%
∴ r = 9.86%
On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of $15,500. Jarden prepares a schedule of its December 31 accounts receivable by age.
Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible
$880,000 Not yet due 1.25%
352,000 1 to 30 days past due 2.00
70,400 31 to 60 days past due 6.50
35,200 61 to 90 days past due 32.75
14,080 Over 90 days past due 68.00
Required:
a. Compute the required balance of the Allowance for Douitful Accounts at December 31 using an aging of accounts receivable.
b. Prepare the adjusting entry to record bad debts expense at December 31.
c. On June 30 of the next year, Jarden concludes that a customer's $4,750 receivable is uncollectible and the account is written off. Does this write-off directly affect Jarden's net income?
Answer:
(a) The required balance in allowance for doubtful debt account is $43,718.4.
(b) The adjusting entry to record bad debts expense at December 31 is:
Debit Bad debt expense ($43,718.4 - $15,500) $28,218.4
Credit Allowance for doubtful accounts $28,218.4
(To record bad debt expense)
(c) The write-off does not affect Jarden's net income since it would be between allowance for doubtful accounts and the accounts receivable.
Explanation:
An allowance for doubtful accounts is an estimate of the accounts receivable that is deemed uncollectible.
(a) Computation of the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable
Accounts Rec. Age Accounts Rec. %Uncollectible Allowance
$880,000 Not yet due 1.25 $11,000
352,000 1 to 30 days past due 2.00 7,040
70,400 31 to 60 days past due 6.50 4,576
35,200 61 to 90 days past due 32.75 11,528
14,080 Over 90 days past due 68.00 9,574.4
$1,351,680 $43,718.4
In May direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $120,600 and the direct materials cost was $29,200, the direct labor cost was:
Answer:
direct labor= $80,400
Explanation:
Giving the following information:
In May direct labor was 40% of conversion cost. The manufacturing overhead for the month was $120,600.
The conversion costs are the sum of direct labor and manufacturing overhead.
Conversion costs= 120,600/0.6= 201,000
direct labor= 210,000*0.4= 80,400
On October 1, 2018, Mills Company borrowed $52,000 cash on a one-year note that required Mills to pay 7 percent interest and $52,000 principal, both on September 30, 2019. Assuming the note is paid when due in 2019, what is the debit to interest payable when recording the payment of the note
Answer:
$910
Explanation:
As there are only 3 months left to end 2019 we will multiply the principal amount with interest and apportion it according to remaining months
Debt to interest payable = $52000 x 7% x 3/12
Debt to interest payable = $910
For each event listed below, identify the accounts that should be used to record the economic event and the dollar amount for that account. You should enter the letters that correspond to the accounts that should be used, along with the related dollar amounts. Your answers will be evaluated based on whether you have included every account and the related dollar amount that is needed and not included any account that is not needed. An account can be used in analyzing more than one event.A. additional paid-in capitalB. bonds payableC. cashD. common stockE. discount on bonds payableF. equipmentG. interest expenseH. interest payableI. preferred stockJ. premium on bonds payableK. treasury stock(Example:Event: The company purchased equipment, paying cash of $15,0001,) The company issued bonds in the amount of $10,000,000, receiving cash of $9,400,000 at the time of issuance.
Answer: C $9,400,000 E $600,000; B $10,000,000
Explanation:
The Company Issued bonds worth $10,000,000 but only received $9,400,000 in cash.
This means that they issued the Bonds at a discount. With the discount being the difference between how much was issued and how much was received.
This discount will be sent to the Discount on Bonds Payable account.
The Cash received of $9,400,000 will be sent to the cash account.
The company will still have to pay the entire figure of $10,000,000 in bonds so the full amount will go to the Bonds Payable account.
The Journal Entry is thus,
DR Cash $9,400,000
DR Discount on Bonds Payable $600,000
CR Bonds Payable $10,000,000