Answer:
5%
Explanation:
nominal interest rate = 5%
real interest rate = nominal interest rate - increase in GDP deflator (inflation rate) = 5% - 2% = 3%
The nominal interest rate is the interest rate earned or charged without considering the effects of inflation. The real interest rate adjusts the nominal interest rate against the year's inflation rate.
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 200 shares of its common stock on May 1 for $10,000. On July 1, it reissued 100 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
Answer:
$100
Explanation:
The computation of the balance in the paid - in capital for treasury stock account on August 2 is shown below:
On May 1 $0
July 1 : $2/share × 100 shares $200
Less:
Aug 1 : $1 share × 100 shares ($100)
Balance as on August 2 $100
We simply deduct the august 1 amount from the July 1 amount so that the balance as on August 2 for the paid - in the capital for treasury stock could come
Country Farm Supply applies for a business loan from Farmers Credit Co-Op. Country Farm Supply owes McGregor money under another business deal, so to help Country Farm Supply get the loan so that it will be able to stay in business to pay him back, McGregor promises Farmer's Credit Co-Op that he will repay the loan if Country Farm Supply does not. To be enforceable, McGregor's promise:________.1. need not be in writing.2. must be in writing because it benefits Country Farm Supply.3. must be in writing because Farmer's Credit Co-Op is not a party to McGregor's deal with Country Farm Supply.4. must be in writing because it benefits McGregor.
Answer: must be in writing because it benefits McGregor.
Explanation:
From the question, we are told that Country Farm Supply applies for a business loan from Farmers Credit Co-Op. We are also aware that Country Farm Supply owes McGregor money under another business deal, and that McGregor wants to help Country Farm Supply get the loan so that it will be able to stay in business to pay him back, McGregor promises Farmer's Credit Co-Op that he will repay the loan if Country Farm Supply does not.
Therefore to be enforceable, McGregor's promise must be in writing because it benefits him. The the deal is between Farmer's Credit Co-Op and McGregor, hence, the promise must be in writing because this will make it valid and also applicable for future purpose in case McGregor isn't able to repay the loan he took .
Answer the question based on the following supply and demand schedules in units per week for a product. Price Quantity Demanded Quantity Supplied $60 100 400 50 140 340 40 180 280 30 220 220 20 260 160 10 300 100 If the government introduced a guaranteed price floor of $40 and agreed to purchase surplus output, then the government's total support payments to producers would be
Answer:
$4,000
Explanation:
For computation of the government's total support payments to producers first we need to find out the surplus units which is shown below:
Floor price = $40
[tex]Q_d = 180[/tex]
[tex]Q_s = 280[/tex]
[tex]Surplus\ units[/tex] = [tex]Q_s - Q_d[/tex]
= 280 - 180
= 100
Therefore,
The Total support payments to producer = Price floor × Surplus units
= $40 × 100
= $4,000
So, for determining the total support payment to producer we simply multiply the price floor with surplus units.
Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries? a. A technological advance makes it possible to produce less of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing good Y. b. A technological advance makes it possible to produce more of good X with less labor. As a result, labor becomes more important to the production of good X. More labor ends up producing good X. c. A technological advance makes it possible to produce more of good X with more labor. As a result, more labor is needed to produce good X. There is less labor available to produce goods Y and Z. d. A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.
Answer:
A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.
Explanation:
According to the National Business Ethics survey, if senior management in a company wants to boost or ensure ________ ________, they need to begin with accountability in the organization.
Answer:
- Ethical Behavior.
Explanation:
The National Business Ethics Survey revealed that senior management is required to begin with taking the responsibility and enforcement in case they are willing to improve 'ethical behavior' in the company. Ethics begins with taking the accountability of the actions or decisions taken as it encourages fellow employees to follow the norms or policies of the company. It promotes maintaining the moral conduct and standards of the company. This would assist in preventing discrimination and fulfilling corporate responsibilities.
Dollar-Value LIFO On January 1, 2018, Sato Company adopted the dollar-value LIFO method of inventory costing. Sato's ending inventory records appear as follows: Year Current Cost Index 2018 $40,000 100 2019 56,100 120 2020 58,500 130 2021 70,000 140 Required: Compute the ending inventory for the years 2018, 2019, 2020, and 2021, using the dollar-value LIFO method. Do not round your intermediate calculations. If required, round your answers to the nearest dollar. Year Ending inventory 2018 $ 2019 $ 2020 $ 2021 $
Answer:
40,000 ; 48100 ; 46000 ; 53000
Explanation:
Year Current(A) Cost Index(B) base amount(A/B) change from prior year
2018 $40,000 1.00 40000 0
2019 56,100 1.20 46750 6750
2020 58,500 1.30 45000 (1750)
2021 70,000 1.40 50000 5000
Year 2018 = $40,000
Year 2019:
$40000 × 1.00 = $40,000
$6750 × 1.20 = 8100
$40,000 + 8100 = $48100
Year 2020:
$40000 × 1.00 = $40,000
($6750 - $1,750 = $5000) × 1.20 = $6,000
40000 + 6000 =$46000
Year 2021 :
$40,000 × 1.00 =$40,000
($6750 - $1750 = $5000) × 1.20 = $6000
$5000 × 1.40 = $7000
40000 + 6000 + 7000 =$53000
Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its simple costing system uses a single Indirect-cost pool and allocates costs to the two lamps on the basis of cirect manufacturing labor-hours. It provldes the following budgeted cost Information: Calculate the total budgeted costs of the basic and designer lamps using Amherst's simple costing system. Begin by Calculating the budgeted indirect cost rate for the single indirect cost pool. First select the formula, then enter the applicable amounts and calculate the rate Abbreviations used: MOH = Manufacturing Overhead Budgeted indirect manufacturing costs Budgeted manufacturing labor hours- Budgeted MOH rate per manutacturing labor-hour 234,000 13,000 S 18 Now calculate the total budgeted costs and per unit costs of the basic and designer lamps using Amherst's simple costing system. (Round all per unit amounts to two decimal places.] Basic lamps Total Per unit Direct materials Direct manufacturing labor Total direct costs Indirect costs allocated Total costs 180,000 $ 200,000 380,000 9.00 10.00 19.00
Answer:
Total Budgeted Costs = $ 450,000
Total Costs 515,000
Explanation:
Manufacturing Overhead Budgeted 234,000
Budgeted manufacturing labor hours 13,000
Budgeted MOH rate per manufacturing labor-hour = 234,000/13,000= $ 18
Basic lamps 20,000 units
Total Budgeted Costs = 18*20,000= 360,000
Unit Costs Total Costs
Direct materials 9.00 180,000
Direct manufacturing labor 10.00 200,000
Total Per unit 19.00 380,000
Total direct costs 180,000
Indirect costs allocated 200,000
Total costs $ 380,000
Designer lamps 5,000 units
Total Budgeted Costs = 18*5,000= 90,000
Unit Costs Total Costs
Direct materials 15.00 75,000
Direct manufacturing labor 12.00 60,000
Total Per unit 27.00 135,000
Total direct costs 75,000
Indirect costs allocated 60,000
Total costs $ 135,000
Basic Designer Total
Total Direct Materials 180,000 75000 255,000
Direct Labor 200,000 60,000 260,000
Total Budgeted Costs = 360,000+ 90,000= $ 450,000
Total Costs =255,000+ 260,000= $ 515,000
Budgeting is the act of estimating a company's future income and expenditures that goes out from paying expense over a set period of time.
Total Budgeted Costs = $ 450,000
Total Costs 515,000
SOLUTION:-
Manufacturing Overhead Budgeted 234,000
Budgeted manufacturing labor hours 13,000
Budgeted MOH rate per manufacturing labor-hour = 234,000/13,000= $ 18
Basic lamps 20,000 units
Total Budgeted Costs = 18*20,000= 360,000
Unit Costs Total Costs
Direct materials 9.00 180,000
Direct manufacturing labor 10.00 200,000
Total Per unit 19.00 380,000
Total direct costs 180,000
Indirect costs allocated 200,000
Total costs $380,000
Designer lamps 5,000 units
Total Budgeted Costs (18*5,000) 90,000
Unit Costs Total Costs
Direct materials 15.00 75,000
Direct manufacturing labor 12.00 60,000
Total Per unit 27.00 135,000
Total direct costs 75,000
Indirect costs allocated 60,000
Total costs $135,000
Basic Designer Total
Total Direct Materials 180,000 75000 255,000
Direct Labor 200,000 60,000 260,000
Total Budgeted Costs = 360,000+ 90,000= $ 450,000Total Costs =255,000+ 260,000= $ 515,000
To know more about Budgeting, refer to the link:
https://brainly.com/question/14777070
The Gillette Sensitive portfolio "combines outstanding shaving performance and comfort to address the significant unmet need of 70% of men who say they have sensitive skin." What is the point of difference in this positioning statement?
a. Outstanding shaving performance and comfort Men with sensitive skin
b. Other razors
Answer:
The correct answer is A)
Explanation:
In marketing, the positioning means presenting one's product or service (that is brand image or identity) such that consumers or users of such product or service perceive it in a certain way, usually in a very positive light.
The statement "outstanding shaving performance" speaks to the benefits of using a Gillette.
Cheers!
Reliable Moving Company reported the following amounts on its balance sheet as of December 31, 2019 and December 31, 2018: 2019 2018 Cash and Receivables $95,000 $155,000 Merchandise Inventory 225,000 250,000 Property, Plant and Equipment, net 750,000 770,000 Total Assets $1,070,000 $1,175,000 Total Liabilities $465,000 $395,000 For the vertical analysis, what is the percentage of total liabilities for December 31, 2018?
Answer:
33.61%
Explanation:
Reliable Moving Company calculation of percentage of total liabilities for December 31, 2018
Using this formula
Vertical analysis % = Specific item / Base amount × 100Vertical analysis %
Where:
Specific item =$395,000
Base amount =$1,175,000
Thus:
= ($395,000 / $1,175,000) × 100Vertical analysis %
=0.33617×100 Vertical analysis %
2018 Percentage of total liabilities= 33.61%
A major distinction between a conventional bank and an Islamic bank is that Islamic banks Group of answer choices are supposed to refrain from making a profit through any source. are allowed to charge higher interest rates on loans. cannot pay or charge interest. are not subject to any form of law.
Answer:
cannot pay or charge interest
Explanation:
Islamic banks do not charge interest. The banks are based on Sharia law. Islamic banks make a profit through equity participation.
I hope my answer helps you
Blue Circle Corporation's comparative balance sheet for current assets and liabilities was as follows:
Dec. 31, Year 2 Dec. 31, Year 1
Accounts receivable $32,400 $26,800
Inventory 45,400 51,000
Accounts payable 29,800 24,600
Dividends payable 17,000 16,000
Adjust net income of $74,900 for changes in operating assets and liabilities to arrive at net cash flow from operating activities. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
Amount Descriptions
Cash paid for dividends
Decrease in accounts payable
Decrease in accounts receivable
Decrease in dividends payable
Decrease in inventory Increase in accounts payable
Increase in accounts receivable
Increase in dividends payable
Increase in inventory
Net cash flow from operating activities
Answer:
$81,100
Explanation:
The computation of the net cash flow from operating activities are as follows
Cash flow from operating activities
Adjusted net income $74,900
Add or less adjustments made
Less: Increased in account receivable -$5,600 ($32,400 - $26,800)
Add: Increase in account payable $5,200 ($29,800 - $24,600)
Add: Increase in dividend payable $1,000 ($17,000 - $16,000)
Add: Decrease in inventory $5,600 ($45,400 - $51,000)
Net cash flow provided by operating activities $81,100
MCO Leather manufactures leather purses. Each purse requires 3 pounds of direct materials at a cost of $4 per pound and 0.7 direct labor hours at a rate of $17 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $13,000 per month. The company’s policy is to end each month with direct materials inventory equal to 40% of the next month’s materials requirement. At the end of August the company had 3,480 pounds of direct materials in inventory. The company’s production budget reports the following. Production Budget September October November Units to be produced 5,300 6,900 6,300 (1) Prepare direct materials budgets for September and October. (2) Prepare direct labor budgets for September and October. (3) Prepare factory overhead budgets for September and October.
Answer:
Results are below.
Explanation:
Giving the following information:
Direct material:
Each purse requires 3 pounds of direct materials for $4 per pound.
The company’s policy is to end each month with direct materials inventory equal to 40% of the next month’s materials requirement.
At the end of August the company had 3,480 pounds of direct materials in inventory.
Direct labor:
0.7 direct labor hours at a rate of $17 per hour.
Overhead:
Variable manufacturing overhead is charged at a rate of $3 per direct labor hour.
Fixed manufacturing overhead is $13,000 per month. T
Production Budget:
September= 5,300 units
October= 6,900 units
November= 6,300 units
1) Direct material budget:
September (in pounds):
Production= 5,300*3= 15,900
Desired ending inventory= (6,900*3)*0.4= 8,280
Beginning inventory= (3,480)
Total pounds= 20,700
Total cost= 20,700*4= $82,800
October (in pounds):
Production= 6,900*3= 20,700
Desired ending inventory= (6,300*3)*0.4= 7,560
Beginning inventory= (8,280)
Total pounds= 19,980
Total cost= 19,980*4= $79,920
2) Direct labor:
September:
Total direct labor hours= 0.7*5,300= 3,710
Total cost= 3,710*17= $63,070
October:
Total direct labor hours= 0.7*6,900= 4,830
Total cost= 4,830*17= $82,110
3) Manufacturing overhead:
September:
Variable overhead= $3*3,710= $11,130
Fixed overhead= 13,000
Total overhead= $24,130
October:
Variable overhead= $3*4,830= $14,490
Fixed overhead= 13,000
Total overhead= $27,490
Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $7,950 at the end of five years. Using the straight-line method, the book value at December 31, 2021, would be:
Answer:
Depreciation expense $12,910
Book value $46,680
Explanation:
Kansas Enterprises
Formula for Depreciation expenses
Annual depreciation expense=(Cost-Residual value)/Useful Life
Where,
Cost = 72,500
Residual value =7,950
Useful life = 5 years
Let plug in the formula
=(72,500-7950)/5
=64,550/5
=$12,910/year
Therefore depreciation expense for 2021
=$12,910
Calulation for Book value
Book value = $72,500 – ($12,910× 2)
$72,500 -$25,820
=$46,680
Therefore the book value would be $46,680
As a student in the Principles of Management class of Ama Ghana University, you are expected to have experiential knowledge so that you can be able to solve real life business problems after graduation. To achieve this objective, the 2020 class has been divided into ten groups; and each team works in a management capacity with ten management consulting companies in the Greater Accra Region. San Consulting - the firm that your group works with is a project management company that is into Real Estate construction and management consulting. This firm which has twenty years’ experience in this business is the first choice for all individuals and companies that want quality service. You have on the contrary, observed that many of the management practices have not developed precipitously as situations in the business environment warrant. The accountant confirmed this by saying in the last general meeting that a certain percentage of San’s profit margin is being lost because of this situation. She gave the example that the surveying department spent eight labor hours generating data that had been generated two weeks ago by another unit. Due to the fact that the surveying department did not know that the data had already been created, a substantial effort was wasted and this has been a recurrent problem.
In addition, the increase in demand of the services of San’s Consulting has placed significant pressures on the five managers whose duties are not clearly defined. For instance, you have observed that any of these managers perform duties in the operations department as well as any other unit within the firm. They are not able to perform all the functions required of them due to the ineffectiveness of the organizational structure.
You and the members of your group are expected to write a report to the top-level management team regarding your analysis of the situation in the firm.
Questions
1. Explain which of the four main management functions is/are not operating as it/they should within the firm? 3 Marks
2. What recommendations will you make in your report that will help assure that this situation or similar one would not happen again? 4 Marks
3. Assume that the top-level management team has accepted your recommendations, how can their effectiveness be evaluated three months after implementation? 4 Marks
4. Discuss the organizational structure currently used by San’s Consulting and would you recommend the continuous use of this structure? If yes or no, present the factors (4) that influenced your decision regarding the right organizational structure for San’s Consulting. 5 Marks
5. Identify and discuss the main problems that the firm is likely to experience (i) if the current structure is continued or (ii) if a new structure is implemented. 5 Marks
1B) Akwamba made this statement ‘organisations cannot be successful if managers fail to pay attention to the forces in the external environment’. Do you agree or not? Justify using practical examples (9 marks)
Answer:
San Consulting
1. There are four main management functions which work coherently: Planning, Organizing tasks & delegation, Leading, and Controlling. The main function is not operating within the firm is Organizing. Tasks which are necessary to achieve organizational plans are not been effectively organized. That is why more than one department will be handling a task.
2. I would recommend that operational tasks are organized and delegated according to functional departments (functional organizational structure). Any task that requires cross-functional efforts should attract the setting up of a project team from relevant departments. The five managers should be in charge of one operational department each, with clear assignment of authorities and responsibilities. This will ensure that they can be held accountable for their departmental results and avoid duplication of efforts companywide.
3. The effectiveness can be evaluated by checking if the problem situation is recurring and also how much is now being saved through proper delegation of responsibilities.
4. San Consulting is currently using a flat organizational structure. This is not suitable for the organization. The best organizational structure will be a functional structure, with clearly defined roles, responsibilities, and reporting lines. Some of the factors that influenced my decision for choosing the functional structure are size and strategy. The size of San Consulting given its businesses and experience shows that it is not a small organization.
5. 1) If the current structure is continued, the firm will continue to witness duplication of efforts by various units, lack of coordination of tasks, and loss of profit margin, companywide. These problems are already been noticed. The only way to solve them is to put an end to the existing structure and then its replacement with a more suitable structure.
5.2) Resistance to change will be the main problem encountered initially with the implementation of a new structure. This is always to be expected. However, all stakeholders can be carried along through proper communication. Brainstorming can even be introduced to enable different contributions to be made on the way forward.
1B) I agree with Akwamba's statement. Every successful organization monitors its external environment and tries to be proactive instead of reactive to external environmental forces. Without such external environmental monitoring, the organizational may find itself in the position of IBM, Xerox, etc. The external environment is made of these factors: customers, competition, economy, technology, political and social conditions, laws and regulations, and resources.
Explanation:
1. There are four management functions which are linked to one another. The first is planning and involves plans designed to achieve goals. The second is the organization of tasks to implement the plans. The third is the leadership that must be provided to ensure that tasks are carried out according to plan. The last is the coordination, which involves the evaluation of activities and results to monitor performance and make improvements.
2. There are four main organizational structures: functional, flat, divisional, and matrix.
3. There are two environments in which an organization operates: internal and external. The organization controls its internal environment. However, its external environment is usually outside its control. But, attention should always be paid to the external environment because of its influences on organizational success and failure.
Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows:
Common Stock, $20 stated value (500,000 shares authorized, 375,000 shares issued) $ 7,500,000
Paid-In Capital in Excess of Stated Value—Common Stock 825,000
Retained Earnings 33,600,000
Treasury Stock (25,000 shares, at cost) 450,000
The following selected transactions occurred during the year:
Jan. 22 Paid cash dividends of $0.08 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $28,000.
Apr. 10 Issued 75,000 shares of common stock for $24 per share.
Jun. 6 Sold all of the treasury stock for $26 per share.
Jul. 5 Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 per share.
Aug. 15 Issued the certificates for the dividend declared on July 5.
Nov. 23 Purchased 30,000 shares of treasury stock for $19 per share.
Dec. 28 Declared a $0.10-per-share dividend on common stock.
31 Closed the credit balance of the income summary account, $1,125,000.
31 Closed the two dividends accounts to Retained Earnings.
Required:
A. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed.
B. Journalize the entries to record the transactions, and post to the eight selected accounts. No post ref is required in the journal. Refer to the Chart of Accounts for exact wording of account titles.
C. Prepare a retained earnings statement for the year ended December 31, 2016.
Answer:
Morrow Enterprises Inc.
A. January 1 balances in T-accounts:
Common Stock
Jan. 1 Balance b/d $7,500,000
Additional Paid-in Capital -Common Stock
Jan. 1 Balance b/d $825,000
Retained Earnings
Jan. 1 Balance b/d $33,600,000
Treasury Stock
Jan. 1 Balance b/d $450,000
B1. Journal entries to record the transactions:
Jan. 22
Debit Dividends Payable $28,000
Credit Cash Account $28,000
To record payment of $0.08 dividends per share.
April 10
Debit Cash Account $1,800,000
Credit Common Stock $1,500,000
Credit Additional Paid-in Capital $300,000
To record the issue of 75,000 shares for $24 per share.
June 6
Debit Cash Account $650,000
Credit Treasury Stock $450,000
Credit Additional Paid-in Capital $200,000
To record reissue of 25,000 shares of treasury stock at $26 per share and close the Treasury Stock balance to Additional Paid-in Capital.
July 5
Debit Stock Dividends $450,000
Credit Dividends Payable $450,000
To record the declaration of the 4% stock dividend on 450,000 shares of common stock.
August 15
Debit Dividends Payable $450,000
Credit Common Stock $360,000
Credit Additional Paid-in Capital $90,000
To record the issue of a 4% stock dividend certificates on 450,000 shares at $25
Nov. 23
Debit Treasury Stock $570,000
Credit Cash Account $570,000
To record the purchase of 30,000 shares of treasury stock for $19 per share.
Dec. 28
Debit Dividends $42,000
Credit Dividends Payable $42,000
To record the declaration of a $0.10 per share dividend on 420,000 shares of common stock.
Dec. 31
Debit Income Summary Account $1,125,000
Credit Retained Earnings $1,125,000
To close the credit balance of the income summary.
Dec. 31
Debit Retained Earnings $492,000
Credit Stock Dividends $450,000
Credit Dividends $42,000
To close the two dividends accounts.
B2) Posting to the selected accounts:
Common Stock
Dec. 31 Balance c/d $9,360,000 Jan. 1 Balance b/d $7,500,000
Apr. 10 Balance b/d $1,500,000
Aug 15 Dividend Payable $360,000
$9,360,000 $9,360,000
Jan. 1 Balance b/d $9,360,000
Additional Paid-in Capital -Common Stock
Dec. 31 Balance c/d $1,415,000 Jan. 1 Balance b/d $825,000
Apr. 10 Balance b/d $300,000
Jun. 6 Treasury Stock $200,000
Aug 15 Dividend Payable $90,000
$1,415,000 $1,415,000
Jan. 1 Balance b/d $1,415,000
Retained Earnings
Dec. 31 Stock Dividends $450,000 Jan. 1 Balance b/d $33,600,000
Dec. 31 Dividends $42,000 Dec. 31 Income Summary $1,125,000
Dec. 31 Balance c/d $34,233,000
$34,725,000 $34,725,000
Jan. 1 Balance b/d $34,233,000
Treasury Stock
Jan. 1 Balance b/d $450,000 Jun. 6 Cash $450,000
Nov. 23 Cash $570,000 Dec. 31 Balance c/d $570,000
$1,020,000 $1,020,000
Jan. 1 Balance b/d $570,000
Dividends Payable
Jan. 22 Cash $28,000 Jan. 1 Balance b/d $28,000
Aug. 15 Common Stock $360,000 Jul. 5 Stock Dividends $450,000
Aug. 15 Additional Paid-in$90,000 Dec. 23 Cash Dividends $42,000
Dec. 31 Balance c/d $42,000
$520,000 $520,000
Jan. 1 Balance b/d $42,000
Stock Dividends
Jul. 5 Dividends Payable $450,000 Dec. 31 Retained Earnings $450,000
Cash Dividends
Dec. 28 Dividends Payable $42,000 Dec. 31 Retained Earnings $42,000
Income Summary Account
Dec. 31 Retained Earnings $1,125,000 Dec. 31 Balance b/d $1,125,000
C. Retained Earnings Statment for the year ended December 31, 2016:
Beginning Balance $33,600,000
Income Summary $1,125,000
Stock Dividends ($450,000)
Cash Dividends ($42,000)
Ending Balance $34,233,000
Explanation:
a) Cash Account
Apr. 10 Common Stock $1,500,000 Jan. 22 Dividends Payable$28,000
April 10 Additional Paid-in $300,000 Nov. 23 Treasury Stock $570,000
Jun. 6 Treasury Stock $450,000
Jun. 6 Additional Paid-in $200,000
Calculating and using Dual Charging Rates
The expected costs for the Maintenance Department of Stazler, Inc., for the coming year include:
Fixed costs (salaries, tools): $65,400 per year
Variable costs (supplies): $1.3 per maintenance hour
The Assembly and Packaging departments expect to use maintenance hours relatively evenly throughout the year. The Fabricating Department typically uses more maintenance hours in the month of November. Estimated usage in hours for the year and for the peak month is as follows:
Yearly Monthly
hours Peak Hours
Assembly Department 4,300 210
Fabricating Department 6,900 1,050
Packaging Department 10,800 840
Total maintenance hours 22,000 2,100
Actual usage for the year by:
Assembly Department 3,500
Fabricating Department 7,000
Packaging Department 10,000
Total maintenance hours 20,500
Required:
1. Calculate a variable rate for the Maintenance Department. Round your answer to the nearest cent. $ per maintenance hour Calculate the allocated fixed cost for each using department based on its budgeted peak month usage in maintenance hours.
Department Peak Number of Hours Allocated Fixed Cost
Assembly
Fabrication
Packaging
Total
2. Use the two rates to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year.
Assembly
Fabricating
Packaging
Total
3. What if the Assembly Department used 3,550 maintenance hours in the year? How much would have been charged out to the three departments?
Assembly
Fabricating
Packaging
Total
Answer:
1. Calculate a variable rate for the Maintenance Department. Round your answer to the nearest cent. $ per maintenance hour Calculate the allocated fixed cost for each using department based on its budgeted peak month usage in maintenance hours.
variable rate = $1.30 per maintenance hour
Department Peak Number Allocated
of hours Fixed cost
Assembly (210/2,100) x $65,400 $6,540
Fabrication (1,050/2,100) x $65,400 $32,700
Packaging (840/2,100) x $65,400 $26,160
Total 2,100/2,100 $65,400
2. Use the two rates to assign the costs of the Maintenance Department to the user departments based on actual usage. Calculate the total amount charged for maintenance for the year.
Department Fixed costs Variable cost Total
Assembly $6,540 3,500 x $1.30 = $4,550 $11,090
Fabricating $32,700 7,000 x $1.30 = $9,100 $41,800
Packaging $26,160 10,000 x $1.30 = $13,000 $39,160
Total $65,400 $26,650 $92,050
3. What if the Assembly Department used 3,550 maintenance hours in the year? How much would have been charged out to the three departments?
Department Fixed costs Variable cost Total
Assembly $6,540 3,550 x $1.30 = $4,615 $11,155
Fabricating $32,700 7,000 x $1.30 = $9,100 $41,800
Packaging $26,160 10,000 x $1.30 = $13,000 $39,160
Total $65,400 $26,715 $92,115
You expect to receive a payment of £1,000,000 in British pounds after six months. The pound is currently worth $1.60 (i.e., £1 $1.60), but the six-month futures price is $1.56 (i.e., £1 5 $1.56). You expect the price of the pound to decline (i.e., the value of the dollar to rise). If this expectation is fulfilled, you will suffer a loss when the pounds are converted into dollars when you receive them six months in the future.
a) Given the current price, what is the expected payment in dollars?
b) Given the futures price, how much would you receive in dollars?
c) if, after six months, the pound is worth $1.35, what is your loss from the decline in the value of the pound?
d) To avoid this potential loss, you decide to hedge and sell a contract for the future delivery of pounds at the going futures price of $1.56. What is the cost to you of this protection from the possible decline in the value of the pound?
e) if, after hedging, the price of the pound falls to $1.35, what is the maximum amount that you lose? Why is your answer different from your answer to part (c)?
f) if, after hedging, the price of the pound rises to $1.80, how much do you gain from your position? g) how would your answer to part (f) be different if you had not hedged and the price of the pound
Answer:
a) Expected payment in dollars is $1,600,000
b) $1,560,000
c) Loss is -$250,000
d) Loss would be $40,000
e) If after hedging the price falls to $1.35, the contract amount would still not change.
f) If after hedging the price rises to $1.80, the contract amount would still not change.
g) Loss would be $200,000
Explanation:
You expect to receive a payment of £1,000,000 in British pounds after six months.
The pound is currently worth $1.60, i.e., £1 = $1.60
Six-month future price is $1.56, i.e., £1 = $1.56
a) At £1 = $1.60 current price, expected payment of £1,000,000 in dollars
= £1,000,000 × $1.60 = $1,600,000
b) At £1 = $1.56 future price, expected payment of £1,000,000 in dollars
= £1,000,000 × $1.56 = $1,560,000
c) If after six months, £1 = $1.35, expected payment of £1,000,000 in dollars
= £1,000,000 × $1.35 = $1,350,000
Therefore, loss = $1,350,000 - $1,600,000 = -$250,000
d) Present price at $1.60 delivery = $1,600,000
Future price at $1.56 delivery = $1,560,000
Loss = $1,600,000 - $1,560,000 = $40,000
g) Present price at $1.60 delivery = $1,600,000
Future price at $1.80 = $1,800,000
Loss = $1,800,000 - $1,600,000 = $200,000
Springer Corporation had the following transactions in August: Earned $3,000 of revenues on account; collected $4,000 from a customer for services provided last month; incurred $400 of repair expense and paid cash; paid $300 for rent that it owed from the previous month. What is the net income in August?
Answer:
6300
Explanation:
Net income is the amount of income remaining after payments have been made. So sum up all receipt and subtract all payments to get net income
The net income for Springer Corporation, after fulfilling or satisfying the conditions of receipts and payments as mentioned above, will amount to a total of $6,300.
What is the significance of net income?Net income can be referred to or considered as the total disposable income left in the hands after all the necessary dues and payments have been cleared out of the revenue receipts made during the period. A surplus of such income indicates a net profit for the firm.
As per the given information, Springer Corporation, in the month of August, had a revenue of $7,000, and expenditures of $700 for the same month. So, the net income will amount to a total of $6,300, i.e., $ (7000 – 700).
Therefore, the significance regarding the net income for Springer Corporation has been aforementioned.
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At around 6 p.m., Joe, who manages the Spaghetti Restaurant, decided that it was a slow night and he sent home two of his waiters. At 6:30 p.m., the restaurant becomes very busy and the other employees are frustrated because orders are behind. However, Joe tells them that sending home the two waiters was the right decision and that the reason orders are behind is because they are distracted. This reflects ______.
a. sticking to what you believe in
b. controlling your decision
c. implementation of a decision
d. escalation of commitment
Exercise 8-14 Bank reconciliation LO P3 Wright Company's cash account shows a $30,500 debit balance and its bank statement shows $28,800 on deposit at the close of business on May 31. The May 31 bank statement lists $250 in bank service charges; the company has not yet recorded the cost of these services. Outstanding checks as of May 31 total $7,100. May 31 cash receipts of $7,700 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement. In reviewing the bank statement, a $550 check written by Smith Company was mistakenly drawn against Wright’s account. The bank statement shows a $300 NSF check from a customer; the company has not yet recorded this NSF check. Prepare its bank reconciliation using the above information.
Answer:
Bank Reconciliation Statement
Balance at Bank as per updated cash book $29,950
Add Unpresented Cheques $7,100
Less Bank Lodgements not yet credited ($7,700)
Balance as per Bank Statement $29,350
Explanation:
The first step is to update the Cash Book Bank Balance as follows :
Debit :
Balance as at May 31 (un-adjusted) $30,500
Totals $30,500
Credit:
Service Charges $250
Dishonored Cheque $300
Updated Cash Book Balance (balancing figure) $29,950
Totals $30,500
The next step is to prepare a Bank Reconciliation Statement
Bank Reconciliation Statement
Balance at Bank as per updated cash book $29,950
Add Unpresented Cheques $7,100
Less Bank Lodgements not yet credited ($7,700)
Balance as per Bank Statement $29,350
The Bank Statement has an error and must be reported :
After the Error is Reported, the Bank Statement will show a Balance of $29,350.
Adjustment Being as follows,
Balance as at May $28,800
Add Back Check Mistakenly drawn against Wright’s account $550
Balance as per Bank Statement $29,350
An operational plan provides a detailed road map of the steps necessary to achieve operational goals (sometimes referred to as objectives). Although there are many specific types of operational plans, they can be broadly characterized as either single-use plans or standing plans. A__________ is designed to be used once, while a_________ is designed to be used repeatedly.
For each of the following examples, identify whether it reflects a single-use plan or a standing plan
The plan to merge Bank of America with Merrill Lynch:
A) Single use plan
B) Standing plan
Company guidelines that require employees to wear suits and ties (professional business attire) when interacting with customers:
A) Single use plan
B) Standing plan
Answer:
A single used plan are used only once, while a standing plan can be used repeatedly.
(1) The option A is correct single use plan
(2) the option B is correct standing use plan.
Explanation:
Solution
A single use plan is to be used only once, while a standing plan is designed to be used repeatedly.
A single used plan are only used once and never to be used again. an example is project plans and program plans
A standing plan can be used all the time, that is something that is ongoing. it includes policies, rules and regulations.
(1) The option (A) is correct
(2) The option (B) is correct
Hampton Company reports the following information for its recent calendar year. Income Statement Data Selected Year-End Balance Sheet Data Sales $ 71,000 Accounts receivable increase $ 6,000 Expenses: Inventory decrease 4,000 Cost of goods sold 38,000 Salaries payable increase 900 Salaries expense 11,000 Depreciation expense 6,000 Net income $ 16,000 Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
Net Cash provided by Operating Activities $20,900.00
Explanation:
Cash Flows from Operating Activities
Net Income $16,000.00
Adjustments to reconcile Net Income:
+ Depreciation expenses.
$6,000.00
- Increase in Accounts receivables.
($6,000.00)
+Decrease in Inventory
$4,000.00
+Increase in Salaries Payable.
$900.00
Net Cash provided by Operating Activities $20,900.00
Which of the following is not counted as a part of GDP?
A. the purchase of 100 shares of AT&T stock by your grandfather.
B. the purchase of a snow plough by the city of Minneapolis.
C. the unsold additions to inventory at an appliances store
D. the purchase of a loaf of bread by a consumer
Answer:
C, The unsold additions to inventory at an appliances store.
Explanation:
GDP = Gross DOMESTIC Product
Since the unsold additions are not sold, there's no money coming from it, thus it is not counted in GDP.
Bonus: If you order clothes from Thailand, that is called GNP. It counts as Thailand's GDP because the money is going into the country, and it counts as America's GNP as you are buying goods from another country.
At college X and at college Y, students pay $3,000 less than the equilibrium tuition. If the supply of openings is the same at both colleges, it follows that a shortage of openings will be greater at:____________.
a) college X than college Y.
b) college X than the surplus at college Y.
c) college Y than the surplus at college X.
d) college X than college Y if the demand is greater at college X.
e) college X than college Y if the demand is less at college X.
Answer:
Option “D” College X than college Y if the demand is greater at college X.
Explanation:
Option D is correct because shortage depends on the degree of demand if the supply is the same and prices are below the equilibrium price. If the price paid is below the equilibrium price then it will generate a shortage because at this point demand is greater than supply. Therefore, if college X has greater demand then it will have a greater shortage.
A list of financial statement items for Blue Spruce Corp. includes the following: accounts receivable $28,700; prepaid insurance $5,330; cash $21,320; supplies $7,790; and debt investments (short-term) $16,810. Prepare the current assets section of the balance sheet listing the items in the proper sequence. (List current assets in order of liquidity.
Answer:
BLUE SPRUCE CORPS
PARTIAL BALANCE SHEET
Current Assets $
Cash 21,320
Debt Investment (Short Term) 16,810
Account Receivables 28,700
Supplies 7,790
Prepaid Insurance 5,530
Total Current Assets 79,950
Juggernaut Satellite Corporation earned $19.6 million for the fiscal year ending yesterday. The firm also paid out 30 percent of its earnings as dividends yesterday. The firm will continue to pay out 30 percent of its earnings as annual, end-of-year dividends. The remaining 70 percent of earnings is retained by the company for use in projects. The company has 2.8 million shares of common stock outstanding. The current stock price is $84. The historical return on equity (ROE) of 14 percent is expected to continue in the future.
What is the required rate of return on the stock?
Answer:
The required rate of return on the stock is 12.55%
Explanation:
According to the given data we have the following:
The Company is distributing 30% of its earnings as dividends
Therefore, company is retaining = 100-30 = 70% of its earnings
Growth = Retention ratio * ROE = 0.7*0.14 = 9.8%
Earning = 19.6 million
hence, Paid as dividends = 19.6*0.3 = $5.88 million
The Number of shares outstanding = 2.8 million
hence, Dividend per share = Total dividends / number of shares outstanding = 5.88/2.8 = $2.1
Current stock price = $84
Therefore, to calculate the required rate of return on the stock we would have to use the following formula:
Price of stock = Current dividend*(1+growth)/(r-growth), where r is required rate of return
84 = 2.1*(1.098)/(r-0.098)
40 = 1.098/(r-0.098)
r - 0.098 = 0.02745
r = 0.02745+0.098 = 0.12545
The required rate of return on the stock is 12.55%
Ultimate Butter Popcorn issues 7%, 15-year bonds with a face amount of $57,000. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually. At what price will the bonds issue
Answer:
$52,440
Explanation:
Calculation of what price will the bonds issue
Market rate of 8% ×$57,000
=$4,560
Hence,
$57,000-$4,560
=$52,440
This means that the bonds price will be issue at $52,440
Calculation for Interest payment :
($57,000 × 7% × ½ year) = $1,995
Calculation for the Market interest rate:
8%/2 which is the semi annual periods = 4%
Calculation of the Periods to maturity:
(15 years × 2 periods each year) = 30
Therefore the price that the bonds will be issued is $52,440
Oriole Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $803000. What is the required journal entry as a result of this litigation
Answer:
No journal entries required
Explanation:
According to attorney estimation, the chances of winning the case are certain therefore no journal entry is required for adjustments since the chances of losing the case are very uncertain.
Balance sheet and income statement data indicate the following: Bonds payable, 11% (due in 15 years) $1,023,237 Preferred 8% stock, $100 par (no change during the year) $200,000 Common stock, $50 par (no change during the year) $1,000,000 Income before income tax for year $383,882 Income tax for year $115,165 Common dividends paid $60,000 Preferred dividends paid $16,000 Based on the data presented above, what is the times interest earned ratio (round to two decimal places)
Answer:
The times interest earned (TIE) ratio = 4.41 times
Explanation:
The times interest earned (TIE) ratio is an accounting ratio that shows the extent to which the income income of an organization can be used to cover its future interest expenses. This can be calculated as follows:
TIE Ratio = Earning before interest and tax (EBIT) / Interest expenses
Since,
Bonds payable, 11% (due in 15 years) = $1,023,237
Interest expenses = 11% * $1,023,237 = $112,556.07
Income before income tax for year = $383,882
EBIT = Interest expenses + Income before income tax for year = $112,556.07 + $383,882 = $496,438.07
Therefore, we have:
The times interest earned (TIE) ratio = $496,438.07 / $112,556.07 = 4.41 times
This shows that the income is 4.41 times greater than its annual interest expense. That is, the income can cover the annual interest 4.41 times.
8. Problems and Applications Q8 There are four consumers willing to pay the following amounts for haircuts, and there are four haircutting businesses with the following costs: Consumers' Willingness to Pay Charles: $50 Gilberto: $35 Juanita: $25 Dina: $40 Firms' Costs Firm A: $25 Firm B: $40 Firm C: $30 Firm D: $45 Each firm has the capacity to produce only one haircut. For efficiency, should be given. Which businesses should cut hair
Answer: For efficiency 1 hair cut should be given.
Firm A should cut hair, because the marginal cost is lower than the willingness to pay.
Explanation:
Given Data:
Consumers' Willingness to Pay,
Charles: $50
Gilberto: $35
Juanita: $25
Dina: $40
Marginal cost,
Firm A: $25
Firm B: $40
Firm C: $30
Firm D: $45
The marginal willingness to pay is higher than the marginal cost till the first haircut. So, for efficiency, 1 haircuts should be given.
Firm A should cut hair, because the marginal cost is lower than the willingness to pay.