Answer:
Express Meals
The budgeted accounts payable balance on November 30 is:
= $347,000.
Explanation:
a) Data and Calculations:
Budgeted inventory purchases:
September: $ 300,000
October: $ 350,000
November: $ 390,000
Payment to suppliers:
Month of purchase = 20%
Month following purchase = 70%
Two months after purchase = 10%
September October November Total
Purchase $300,000 $350,000 $390,000 $1,040,000
Payments:
Month of purchase (20%) 60,000 70,000 78,000 $208,000
Month following purchase (70%) 210,000 245,000 $455,000
Two months after purchase (10%) 30,000 $30,000
Total payments 60,000 280,000 353,000 $693,000
Outstanding balance ($1,040,000 - $693,000) = $347,000
n January 1, 2022, Smeder Company, an 80% owned subsidiary of Collins, Inc. transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $104,000 cash. At the date of transfer, Smeder's records carried the equipment at a historical cost of $140,000 less accumulated depreciation of $58,000. Straight-line depreciation is used. Smeder reported net income of $28,000 for 2022 and 2023, respectively. Prepare the consolidation entries related to the equipment for year 2022 and year 2023
Answer:
2022
Dr. Equipment _________ $22,000
Cr.Reserve Account _____$19,800
Cr. Depreciation expenses $2,200
2022
Dr. Depreciation Expense ___ $14,000
Cr. Accumulated Depreciation $14,000
2023
Dr. Depreciation Expense ___ $14,000
Cr. Accumulated Depreciation $14,000
Explanation:
2022
Calculate the net book value
Net book value = Historical cost - Accumulated depreciatin = $140,000 - $58,000 = $82,000
Unrealised profit on the sale of the asset = Cash receipt - Nreet book value = $104,000 - $82,000 = $22,000
Annual Depricaiton = Historical cost / remaining life = $140,000 / 10 = $14,000
Excess depreciation charged = Unrealised profit / Remaining life = $22,000 / 10 = $2,200
Indicate the missing amount for each letter.
Case
1 2
Direct materials used $9,780
Direct labor 5,950 8,300
Manufacturing overhead 8,870 4,880
Total manufacturing costs 16,210
Beginning work in process inventory1,510
Ending work in process inventory 3,650
Sales revenue 25,780
Sales discounts 2,810 2,070
Cost of goods manufactured 17,970 22,620
Beginning finished goods inventory 4,030
Goods available for sale 22,860
Cost of goods sold 19140
Ending finished goods inventory 3,720 3,110
Gross profit 8,100
Operating expenses 3,510
Net income 5,330
1. Prepare a condensed cost of goods manufactured schedule for case 1.
2. Prepare an income statement for case 1.
Answer:
See below
Explanation:
Case 1.
Total manufacturing costs
= Direct material + Direct labor + Manufacturing overhead
= $9,780 + $5,950 + $8,870 = $24,000
Ending work in process inventory
= Opening work in process + total manufacturing cost - cost of goods manufacturing
= $1,510 + $24,600 - $17,970 = $8,140
Beginning finished goods inventory
= Cost of goods sold - cost of goods manufactured + closing finished goods inventory
= $19,140 - $17,970 + $3,720 = $4,890
Cost of goods sold
= Opening finished good inventory + cost of goods manufactured - closing finished goods inventory
= $4,890 + $17,970 - $3,720 = $19,140
Gross profit
= Sales - cost of goods sold
= $25,780 - $2,810 - $19,140 = $3,830
Net income
= Gross profit - Operating expense
= $3,830 - $3,510 = $320
*Condensed cost of goods manufactured schedule
Opening work in process $1,510
Direct material
9,780
Direct labor
$5,950
Manufacturing overhead
$8,870
Total manufacturing cost $24,600
Cost of goods manufactured available
$26,110
Less:
Closing work in process
($8,140)
Cost of goods manufactured
$17,970
* Income statement
Sales
$25,780
Less:
Discount
($2,810)
Net sales $22,970
Less:
Cost of goods sold
Beginning finished goods inventory
$4,890
Add:
Cost of goods manufactured
$17,970
Cost of goods available for sale
$22,860
Less:
Closing finished goods inventory
($3,720)
Cost of goods sold $19,140
Gross profit
$3,830
Less:
Operating expenses
($3,510)
Net income
$320
The following information is available for Trinkle Company for the month of June: The unadjusted balance per the bank statement on June 30 was $56,084. Deposits in transit on June 30 were $2,655. A debit memo was included with the bank statement for a service charge of $22. A $4,418 check written in June had not been paid by the bank. The bank statement included a $800 credit memo for the collection of a note. The principal of the note was $775, and the interest collected amounted to $25. Required Determine the true cash balance as of June 30. (Hint: It is not necessary to use all of the preceding items to determine the true balance.)
Answer:
$54,321
Explanation:
Prepare a Bank Reconciliation statement to determine the true cash balance as of June 30.
Bank Reconciliation statement as at June 30
Balance as per Bank Statement $56,084
Add Outstanding Lodgments $2,655
Less Unpresented Checks ($4,418)
Balance as per Cash Book $54,321
Conclusion
The true cash balance as of June 30 is $54,321.
Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 5%. The company's weighted average cost of capital is 16%. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent. $ Calculate the value of Kendra's operations. Do not round intermediate calculations. Round your answer to the nearest cent. $
Answer:
$856,376.30
Explanation:
What is the terminal, or horizon, value of operations?
2 years, FCF 1 = 80,000, FCFC 2 = 100,000, Growth rate= 5%, WACC = 16%
==> 100,000*(1+0.05)/(0.16-0.05)
==> 100,000*(1.05/0.11)
==> 100,000*(9.545454(
==> 954,545
Calculating the value of Kendra's operations.
Years Cash-flows PVF at 16% Present value
1 800,000 0.86206 68964.80
2 105,000 0.74316 78031.80
2 954,545 0.74316 709379.70
Total value 856,376.30
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a one-time cash of $200,000 today or receive payments of $1,400 a month starting at the end of this month for 20 years. Assuming the APR is 6 percent with monthly compounding, which option should you take and why
Answer:
Option 1 PV lumpsum = $200000
Option2 PV of Annuity = $195413.08035 rounded off to $195413.08
Based on the present value of both the options, Option 1 should be chosen as it has a higher present value than option 2.
Explanation:
To decide on the best option to choose among the given two, we need to find the present value of both the options.
As the first option is to receive a lumpsum payment of $200000 today, the present value of this option is also equal to $200000 as it will be received today.
Option two, on the other hand, is an annuity as fixed payments will be received after equal intervals of time and for a limited time period and at the end of the period which satisfies the criteria of annuity ordinary. We will use the formula for the present value of annuity which is,
PV of Annuity = C * [( 1 - (1+r)^-n) / r]
Where,
C is the periodic paymentr is the rate of return of discount raten is the number of periodsThe periodic payment is provided as $1400. We are also provided with and APR of 6% which is the Annual rate. We will have to convert it into monthly rate by dividing it by 12. We are also provided with the number of years which we will need to convert into number of months by multiplying it by 12.
Monthly r = 6%/12 = 0.5%
Number of periods = 20 * 12 = 240
PV of Annuity = 1400 * [( 1 - (1+0.5%)^-240) / 0.5%]
PV of Annuity = $195413.08035 rounded off to $195413.08
Clothing retail stores are an example of this market structure.
a monopoly
monopolistic competition
perfect competition
an oligopoly
Answer:Monopolistic Competition
Explanation:
Helppppp pleaseeee!!!!!!!!!
Ursula, a conventional advertising manager, allocates a sizeable amount of funds toward advertising budgets. She is primarily concerned with the sales figures at the end of every quarter and calculates return on investment for her company's product portfolio. Based on these characteristics, which of the following approaches to advertising does Ursula follow?
a. The marketing management approach
b. The generalist viewpoint
c. The specialist viewpoint
d. The consumer attrition perspective
Answer:
b. The generalist viewpoint
Explanation:
From the question we are informed about Ursula, a conventional advertising manager, allocates a sizeable amount of funds toward advertising budgets. She is primarily concerned with the sales figures at the end of every quarter and calculates return on investment for her company's product portfolio. Based on these characteristics, the approaches to advertising Ursula followed was the generalist viewpoint. Generalist can be regarded as social workers which view problems from context, and they combine some practice techniques that are best fit the situation, so some implement skills needed to intervene can be made available. They are available for well being of the clients since they knows problems can develop at any level of daily living.
ACTIVITY 7
7.1 Read the following text and answer the following questions.
VENTURING AND EXPANDING
Businessmen have realised that it is not always necessary to start a business from scratch. In order to
expand, wise businessmen have given other businesses a right to sell their similar products within some
regulations. Others have been smart enough to realise that their small items that require regular
maintenance can make money for by contracting them to another business. It is even more
advantageous when an institution decides to focus on its vision and improve their quality by allowing
specialists to perform other duties on their behalf.
7.1.1
Identify THREE ways of acquiring a business avenue from the scenario above. Motivate your
answer by quoting from the scenario above.
(9)
Use the table below to present your answer.
BUSINESS AVENUE
MOTIVATION
7.1.2
Analyse the impact of each of way of acquiring a business avenue identified in QUESTION
7.1.1.
(18)
7.1.3
Outline the contractual obligations of any TWO of the ways to acquire a business avenue
identified in QUESTION 7.1.1
(12)
Answer:
add a responsible business partner that add income to your sales and together you can achieve your success
The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: June 8. Wrote off account of Kathy Quantel, $4,360. Aug. 14. Received $3,100 as partial payment on the $7,800 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $4,360 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt. Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): Wade Dolan $1,260 Greg Gagne 780 Amber Kisko 3,010 Shannon Poole 1,740 Niki Spence 480 Dec. 31 If necessary, record the year-end adjusting entry for uncollectible accounts. Rustic Tables Company prepared the following aging schedule for its accounts receivable: Aging Class (Number of Days Past Due) Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts 0-30 days $209,000 3% 31-60 days 78,000 9 61-90 days 25,000 25 91-120 days 9,000 45 More than 120 days 13,000 85 Total receivables $334,000
Answer:
See journal entry below
Explanation:
June 8. Bad debt expense Dr. $4,360
To Accounts receivable - Kathy Quantel Cr. $4,360
Aug. 14. Bank Dr. $3,100
Bad debt expense Dr. $4,700
To Accounts receivable - Rosalie Oakes Cr. $7,800.
Oct. 16 Accounts receivable - Kathy Quantel Dr. $4,340
To Bad debts expense Cr $4,340
Cash Dr. $4,340
To Accounts receivable - Kathy Quantel Cr. $4,340
Dec. 31 Bad debt expense. Dr $7,270
To Account receivable - Wade Dolan
Cr $1,260
A/R - Greg Gagne
Cr $780
A/R - Amber Kisko
Cr $3,010
A/R - Shanoon Poole
Cr $1,740
A/R - Niki Spence
Cr $480
Tony runs a sales and marketing research firm. He is very hands-on and participates in various client meetings. In almost all his conversations, Tony repeats or rephrases what a person has said. Which crucial aspect of good listening skills does Tony demonstrate? A. questioning B. negotiation C. reflecting D. confronting
Answer:
C. Reflecting
Explanation: it is correctomando
On January 1, Year 1, Samuel Company leases equipment from Lease Corp. The lease agreement specifies five annual payments of $50,000, with the first payment due at lease signing (January 1, Year 1), and at each January 1 from Year 2 to Year 5. At the end of the lease term, the equipment will be returned to the lessor and is expected to have a residual value of $30,000. The estimated useful life of the equipment is six years. The interest rate in the financing arrangement is 6%. The cost to Lease Corp of manufacturing the equipment is $150,000. The journal entry for the Lessor on January 1, Year 1 will include __________-
Answer:
Cash (Dr.) $50,000
Lease Receivable (Cr.) $50,000
Explanation:
Lessor is the person who leases the item to gain financial benefit from the asset user lease. Lessee is a person who uses the assets but does not owns it so he pays lease rentals. In the given scenario the lease recoding at inception in the lessor books will be cash debit and lease receivable credit.
Noncash investing and financing activities may be disclosed in: Multiple Choice A note in the financial statements or a schedule attached to the statement of cash flows. The operating activities section of the statement of cash flows. The investing activities section of the statement of cash flows. The financing activities section of the statement of cash flows. The reconciliation of cash balance section.
Answer:
(A note in the financial statements or a schedule attached to the statement of cash flows.
Explanation:
Noncash investing and financing transactions do appear as a separate schedule on the statement of cash flows. They are are notable investing and financing activities that do not affect cash directly. The IFRS and US GAAP mandates companies to disclose all notable or significant non-cash investing and financing activities either at the bottom of the statement of cash flows usually in a form of a footnote or in the notes to the financial statements.
Noncash investing and financing activities may be disclosed in "a note in the financial statements or a schedule attached to the statement of cash flows". The correct option is A.
Noncash investing and financing activities refer to transactions that do not involve the direct use or receipt of cash but have significant financial implications for a company.
This statement of cash flows itself typically segregates cash flow information into three sections: operating activities, investing activities and financing activities.
While the noncash activities are not part of the operating, investing or financing activities sections, they are important to provide a comprehensive view of a company's financial health.
It can be included in a separate note or schedule to ensure transparency and proper understanding by stakeholders.
Therefore, the correct option is A.
To know more about Noncash investing here,
https://brainly.com/question/33031340
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) Consider two perfectly negatively correlated risky securities A and B. A has an expected rate of return of 10% and a standard deviation of 16%. B has an expected rate of return of 8% and a standard deviation of 12%. The risk-free portfolio that can be formed with the two securities will earn a(n) ________ rate of return. A) 8.9% B) 9.9% C) 8.5% D) 9.0%
Answer:
D) 9.0%
Explanation:
Calculation to determine what The risk-free portfolio that can be formed with the two securities will earn
Using this formula
Return of the portfolio =Weight of stock A * Return of Stock A + Weight of Stock B * Return of Stock B
Let plug in the formula
Return of the portfolio=( 0.5 * 0.1)+ (0.5 * 0.08)
Return of the portfolio= 0.05 + 0.04
Return of the portfolio= 0.09*100
Return of the portfolio= 9%
Therefore The risk-free portfolio that can be formed with the two securities will earn a(n) 9.0% rate of return.
Hollywood Co. computed an overhead rate for machining costs ($1,500,000) of $15 per machine hour. Machining costs are driven by machine hours. The company produces two products, Chapel and Tower. Chapel requires 60,000 machine hours, while Tower requires 40,000 machine hours. Using activity-based costing, machining costs using machine hours to assign overhead to each product is
Answer:
Results are below.
Explanation:
To allocate overhead to Chapel and Tower, we need to use the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Chapel:
Allocated MOH= 15*60,000
Allocated MOH= $900,000
Tower:
Allocated MOH= 15*40,000
Allocated MOH= $600,000
Savers make deposits and investments in order to earn what?
Why don't savers invest their money directly with the businesses?
Answer:
Savers make deposits and investment in order to earn interest on their money. This often works very well because they do not earn only interest as a percentage of their money, but also interest as a percentage of previously accrued interest, something known as compound interest.
Savers do not invest their money directly with the businesses because real economic activity tends to be riskier (although it could also be more profitable for this same reason). This is why they often prefer to invest the money on financial instruments.
At Bargain Electronics, it costs $30 per unit ($20 variable and $10 fixed) to make an MP3 player at full capacity that normally sells for $55. A foreign wholesaler offers to buy 4,960 units at $24 each. Bargain Electronics will incur special shipping costs of S4 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Reject Accept Net Income
Order order Increase
(Decrease)
Revenues $ $ $
Cost-Manufacturing
Shipping
Net Income $ $ $
The special order should be:______.
Answer:
Effect on income= $0
Explanation:
Because the company has excess capacity and it is a special offer that would not affect normal sales, we will not include the fixed costs.
Effect on income= total sales revenue - total variable cost
Effect on income= 24*4,960 - (20 + 4)*4,960
Effect on income= $0
what is the difference between capital and drawings ?
Beech Manufacturing makes expanded and is now making two products: Standard and Deluxe. Each Standard model takes 1.5 machine hours and the Deluxe model requires 2 machine hours. The company predicted it would produce 1,100 units of the Standard Model and 770 units of the Deluxe Model during July. The company uses units of input (machine hours) to budget utility costs. The utility rate per machine hour is $0.35. During July, the company produced 1200 units of the Standard model and 850 units of the Deluxe model and used 3400 machine hours. What is the utilities flexible budget for July
Answer:
Beech Manufacturing
The utilities flexible budget for July is:
= $1,225
Explanation:
a) Data and Calculations:
Utility rate per machine hour = $0.35
Standard Deluxe Total
Predicted production 1,100 770 1,870
Expected machine hours 1,650 3,080 4,730
Units produced 1,200 850 2,050
Standard machine hour/unit 1.5 2
Budgeted machine hours
(flexible budget) 1,800 1,700 3,500
Actual machine hours used 3,400
Utilities Static Budget = $1,655.50 (4,730 * $0.35)
Utilities Flexible Budget = $1,225 (3,500 * $0.35)
Utilities Actual Budget = $1,190 (3,400 * $0.35)
Selected transactions for Therow Corporation during its first month in business are presented below.
Sept. 1 Issued common stock in exchange for $20,000 cash received from investors.
5 Purchased equipment for $9,000, paying $3,000 in cash and the balance on account.
8 Performed services on account for $18,000.
14 Paid salaries of $1,200.
25 Paid $4,000 cash on balance owed for equipment.
30 Paid $500 cash dividend.
Required:
a. Prepare a tabular analysis of the transactions.
b. Journalize the transactions. Do not provide explanations.
c. Post the transactions to T-accounts.
Answer:
Therow Corporation
a) Tabular Analysis of Transactions:
Assets = Liabilities + Equity
1. Cash $20,000 = + Common Stock $20,000
2. Cash -$3,000
Equipment $9,000 = $6,000
3. Accounts
Receivable $18,000 = + Retained Earnings $18,000
4. Cash -$1,200 + Retained Earnings -$1,200
5. Cash -$4,000 -$4,000
6. Cash -$500 + Retained Earnings -$500
b. Sept. 1:
Debit Cash $20,000
Credit Common Stock $20,000
Sept. 5:
Debit Equipment $9,000
Credit Cash $3,000
Credit Accounts Payable $6,000
Sept. 8:
Debit Accounts Receivable $18,000
Credit Service Revenue $18,000
Sept. 14:
Debit Salaries Expense $1,200
Credit Cash $1,200
Sept. 25:
Debit Accounts Payable $4,000
Credit Cash $4,000
Sept. 30:
Debit Dividends $500
Credit Cash $500
c. T-accounts:
Cash
Account Titles Debit Credit
Common Stock $20,000
Equipment $3,000
Salaries Expense 1,200
Accounts payable 4,000
Dividends 500
Accounts Receivable
Account Titles Debit Credit
Service Revenue $18,000
Common Stock
Account Titles Debit Credit
Cash $20,000
Equipment
Account Titles Debit Credit
Cash $3,000
Accounts payable 6,000
Accounts Payable
Account Titles Debit Credit
Equipment $6,000
Cash $4,000
Service Revenue
Account Titles Debit Credit
Accounts receivable $18,000
Salaries Expense
Account Titles Debit Credit
Cash $1,200
Dividends
Account Titles Debit Credit
Cash $500
Explanation:
a) Data and Analysis:
Sept. 1: Cash $20,000 Common Stock $20,000
Sept. 5: Equipment $9,000 Cash $3,000 Accounts Payable $6,000
Sept. 8: Accounts Receivable $18,000 Service Revenue $18,000
Sept. 14: Salaries Expense $1,200 Cash $1,200
Sept. 25: Accounts Payable $4,000 Cash $4,000
Sept. 30: Dividends $500 Cash $500
The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6.4 million, and the 2018 balance sheet showed long-term debt of $6.6 million. The 2018 income statement showed an interest expense of $225,000. During 2018, the company had a cash flow to creditors of $25,000 and the cash flow to stockholders for the year was $80,000. Suppose you also know that the firm’s net capital spending for 2018 was $1,490,000, and that the firm reduced its net working capital investment by $93,000. What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
$1,452,000
Explanation:
Calculation for the firm’s 2018 operating cash flow
First step is to calculate the Cash flow from assets using this formula
Cash flow from assets= Cash flow to creditors + Cash flow to stockholders
Let plug in the morning
Cash flow from assets=-$25,000 + $80,000= $55,000
Now let calculate Cash flow from assets using this formula
Cash flow from assets = OCF capital - Net capital spending-Change in Net Capital spending
Let plug in the formula
$55,000=OCF-$1,490,000-($93,000)
OCF=$1,490,000+$55,000-$93,000
OCF=$1,452,000
Therefore the firm’s 2018 operating cash flow is $1,452,000
For each of the following scenarios, identify the number of firms present, the type of product, and the appropriate market model. Select the matching entry for each dropdown box in the following table.
Scenario
Number of Firms
Type of Product
Market Model
There are hundreds of colleges and universities that serve millions of college students each year. The colleges vary by location, size, and educational quality, which allows students with diverse preferences to find schools that match their needs.
There are hundreds of high school students in need of algebra tutoring services. Dozens of companies offer tutoring services; parents view the quality of the tutoring at the different companies to be largely the same.
In a small town, there are four providers of broadband Internet access: a cable company, the phone company, and two satellite companies. The Internet access offered by all four providers is of the same speed. Almost everyone in the city already has broadband, so any potential new company would have to engage in a price war with the existing companies and would be unlikely to cover its costs for years, if ever.
The government has granted the U.S. Postal Service the exclusive right to deliver mail.
Answer:
Number of Firms - many
Type of Product - differentiated
Market Model - monopolistic competition
Number of Firms - many
Type of Product - standardised
Market Model - perfect competition
Number of Firms - few
Type of Product - standardised
Market Model - oligopoly
Number of Firms - one
Type of Product - unique
Market Model - monopoly
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry. In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
A monopolistic competition is when there are many firms selling differentiated products in an industry. A monopoly has characteristics of both a monopoly and a perfect competition. the demand curve is downward sloping. it sets the price for its goods and services.
An example of monopolistic competition are restaurants
A monopoly is when there is only one firm operating in an industry. there are usually high barriers to entry of firms. the demand curve is downward sloping. it sets the price for its goods and services.
An example of a monopoly is a utility company
An Oligopoly is when there are few large firms operating in an industry. While, a monopoly is when there is only one firm operating in an industry.
Oligopolies are characterised by:
price setting firms profit maximisation high barriers to entry or exit of firms downward sloping demand curveFinancial analysis Group of answer choices uses historical financial statements and is thus useful only to assess past performance uses historical financial statements and is thus useful only to assess past performance uses historical financial statements to measure a company's performance and in making financial projections of future performance. is accounting record-keeping using generally accepted accounting principles
Answer:
uses historical financial statements to measure a company's performance and in making financial projections of future performance.
Explanation:
Financial accounting is an accounting technique used for analyzing, summarizing and reporting of financial transactions like sales costs, purchase costs, payables and receivables of an organization using standard financial guidelines such as Generally Accepted Accounting Principles (GAAP) and financial accounting standards board (FASB).
Financial analysis uses historical financial statements to measure a company's performance and in making financial projections of future performance.
In Financial accounting, the horizontal financial analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially. Hence, it is also referred to as the trend analysis.
Under the horizontal analysis of financial statement, we use the financial statements of two or more periods; earliest and latter periods.
Generally, the earliest is chosen as the base period while all other items on the statement for a latter period will be compared with the items on the statement of the base period.
A year ago, you graduated from college and decided to open your own computer software company. Over the past year, your firm generated $500,000 in revenue. You hired two software engineers and paid each of them $150,000 over the past year. You also purchased computer equipment that cost a total of $30,000. To save money, you decided to use the basement of your house for the business. Previously, you had rented this space to a tenant for $6,000 per year. Instead of opening your own business, you could have gone to work for Microsoft and earned $200,000 over the past year.
Required:
a. What were your accounting profits of your firm over the past year?
b. What were the economic profits of your firm over the past?
Answer:
170,000
$-36,000
Explanation:
Accounting profit= total revenue - explicit cost
Total revenue =price x quantity sold
Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Accounting profit = $500,000 - [( $150,000 x 2) + $30,000] = $170,000
Economic profit = $170,000 - ($200,000 + $6000) = -36,000
On June 30, 2021, the High Five Surfboard Company had outstanding accounts receivable of $720,000. On July 1, 2021, the company borrowed $570,000 from the Equitable Finance Corporation and signed a promissory note. Interest at 10% is payable monthly. The company assigned specific receivables totaling $720,000 as collateral for the loan. Equitable Finance charges a finance fee equal to 1.2% of the accounts receivable assigned.
Required: Prepare the journal entry to record the borrowing on the books of High Five Surfboard. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
Dr Cash$561,360
Dr Finance charge expense $8,640
Cr Finance arrangement $570,000
Explanation:
Preparation of the journal entry to record the borrowing on the books of High Five Surfboard.
Dr Cash$561,360
[$570,000-($720,000*1.2%)]
$570,000-$8,640
=$561,360
Dr Finance charge expense $8,640
($720,000*1.2%)
Cr Finance arrangement $570,000
(Being to record the borrowing on the books of High Five Surfboard )
On June 30, 2021, Georgia-Atlantic, Inc. leased a warehouse equipment from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,946 over a four-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2021. Georgia-Atlantic's incremental borrowing rate is 10%, the same rate IC uses to calculate lease payment amounts. Amortization is recorded on a straight-line basis at the end of each fiscal year. The fair value of the equipment is $3.8 million. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the present value of the lease payments at June 30, 2021 that Georgia-Atlantic uses to record the right-of-use asset and lease liability.
2. What pretax amounts related to the lease would Georgia-Atlantic report in its balance sheet at December 31, 2021?
3. What pretax amounts related to the lease would Georgia-Atlantic report in its income statement for the year ended December 31, 2021?
(For all requirements, enter your answers in whole dollars and not in millions. Round your final answers to the nearest whole dollar.)
1. Present value
2. Pretax amount for liability Pretax amount for right-of-use asset
3. Pretax amount for interest expense Pretax amount for amortization expense
Answer:
1. $3,800,001
2. Pretax amount of liability $2,842,112
Pre tax amount of right to use asset $3,325,000
3. Pre tax amount of interest expense $162,003
Pre tax amount of amortization expenses $475,000
Explanation:
1. Calculation for the Present value
Using this formula
PV of minimum lease payments used to record right to use assets = Semi Annual lease payments * Cumulative PV Factor of annuity due for 8 periods at 5%
Where,
Semiannual lease payment = $559,946
Total semiannual payments = 4*2 = 8
Incremental borrowing rate = 10%, 5% semiannual
Let plug in the formula
PV of minimum lease payments used to record right to use assets= $559,946 * 6.78637
PV of minimum lease payments used to record right to use assets= $3,800,001
Therefore the Present value will be $3,800,001
2. Calculation for the Pretax amount for liability and Pretax amount for right-of-use asset
Calculation for Pretax amount of liability
First step is to calculate the Pretax amount of liability on 30.06.2021
Pretax amount of liability on 30.06.2021 = ($3,800,001 - $559,946)
Pretax amount of liability on 30.06.2021= $3,240,055
Second step is to calculate the Interest expense for 31.12.2021
Interest expense for 31.12.2021 = $3,240,055 * 5%
Interest expense for 31.12.2021= $162,003
Now let calculate the Pre tax amount for liability December 31, 2021
Pre tax amount for liability December 31, 2021 = $3,240,055 + $162,003 - $559,946
Pre tax amount for liability December 31, 2021= $2,842,112
Therefore The Pre tax amount for liability December 31, 2021 will be $2,842,112
Calculation for Pre tax amount of right to use asset
First step is to calculate the Depreciation on right to use assets for 2021
Depreciation on right to use assets for 2021 = $3,800,000 / 4 * 6/12
Depreciation on right to use assets for 2021 = $475,000
Now let calculate the Pre tax amount of right to use asset to be reported for 2021
Pre tax amount of right to use asset to be reported for 2021 = $3,800,000 - $475,000
Pre tax amount of right to use asset to be reported for 2021 = $3,325,000
Therefore Pre tax amount of right to use asset to be reported for 2021 will be $3,325,000
3. Calculation for Pretax amount for interest expense Pretax amount for amortization expense
Calculation for Pretax amount for interest expense
Pre tax amount of interest expense = $3,240,054 * 5%
Pre tax amount of interest expense= $162,003
Therefore the Pre tax amount of interest expense will be $162,003
Calculation for Pre tax amount of amortization expenses
Pre tax amount of amortization expenses = $3,800,000 / 4 * 6/12
Pre tax amount of amortization expenses = $475,000
Therefore The Pre tax amount of amortization expenses will be $475,000
Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $131 Units in beginning inventory 50 Units produced 2,110 Units sold 1,110 Units in ending inventory 1,050 Variable costs per unit: Direct materials $ 45 Direct labor $ 33 Variable manufacturing overhead $ 9 Variable selling and administrative expense $ 7 Fixed costs: Fixed manufacturing overhead $18,990 Fixed selling and administrative expense $22,200 What is the total period cost for the month under variable costing
Answer:
Period costs= $48,960
Explanation:
Giving the following information:
Units sold 1,110
Variable selling and administrative expense $ 7
Fixed manufacturing overhead $18,990
Fixed selling and administrative expense $22,200
Under the variable costing method, the period costs include the fixed manufacturing overhead, selling, and administrative costs both fixed and variable.
Period costs= (7*1,110) + 18,990 + 22,200
Period costs= $48,960
Joe Corporation produces and sells two products. In the most recent month, Product C90B had sales of $19,950 and variable expenses of $5,985. Product Y45E had sales of $26,190 and variable expenses of $10,476. The fixed expenses of the entire company were $17,000. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:
Answer:
Decrease
Explanation:
Calculation to determine overall break-even point for the entire company
Contribution margin for C90B = ($19,950-
$5,985)/$19,950
Contribution margin for C90B = 70%
Contribution margin for Y45E =( $26,190- $10,476)/$26,190
Contribution margin for Y45E= 60%
Therefore Based on the above calculation if the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company
Would DECREASE reason been that C90B have more contribution margin ratio of 70% compare to Y45E which had contribution margin ratio of 60%
Elana's Traveling Veterinary Services, Inc., completed its first year of operations on December 31. All of the year's entries have been recorded except for the following:
On March 1 of the current year, the company borrowed $60,000 at a 10 percent interest rate to be repaid in five years.
On the last day of the current year, the company received a $360 utility bill for utilities used in December. The bill will be paid in January of next year.
1. Prepare the required adjusting entry for transactions
2. Record the interest accrued at year-end.
3. Record the utilities incurred at year-end.
Answer:
A. Dr Interest expense $5,000
Cr Interest payable $5,000
B. Dr Utilities expense $360
Cr Utilities payable$360
Explanation:
A. Preparation of the Journal entry to Record the interest accrued at year-end.
Dec 31
Dr Interest expense $5,000
Cr Interest payable $5,000
($60,000 principal × .10 rate × 10 months/12 months = $5,000)
(To record interest accrued at year-end)
B. Preparation of the Journal entry to Record the utilities incurred at year-end.
Dec 31
Dr Utilities expense $360
Cr Utilities payable$360
(To record utilities incurred at year-end)
The Richmond Corporation uses the weighted-average method in its process costing system. The company has only a single processing department. The company's ending work in process inventory on August 31 consisted of 18,000 units. The units in the ending work in process inventory were 100% complete with respect to materials and 60% complete with respect to labor and overhead. If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labor and overhead, the total cost assigned to the ending work in process inventory was:
Answer:
$95,400
Explanation:
Step 1 : Find the equivalent units of production in Ending Work in Progress
Materials = 18,000 x 100 % = 18,000 units
Conversion costs = 18,000 x 60 % = 10,800 units
Step 2 : Calculate the Cost of units in Ending Work in Progress
Cost of units in Ending Work in Progress = 18,000 x $2.75 + 10,800 x $4.25
= $95,400
Conclusion :
The ending work in process inventory was $95,400.