Answer:
Julie
The percent of her monthly income that will be budgeted for transportation is:
= 13%.
Explanation:
a) Data and Calculations:
Amount budgeted for transportation = $175
Amount being spent on transportation = $250
Total monthly income = $1,900
Percentage of monthly income that will be budgeted for transportation = $250/$1,900 * 100
= 13.16%
= 13.2%
= 13%
Percentage of monthly income earlier budgeted for transportation = 9% ($175/$1,900 * 100)
The additional spending on transportation represents 4% ($75/$1,900 * 100)
New percentage spending on transportation = 13% (9% + 4%)
About 5% of hourly paid workers in a region earn the prevailing minimum wage or less. A grocery chain offers discount rates to companies that have at least 30 employees who earn the prevailing minimum wage or less. Complete parts (a) through (c) below.
a. Company A has 285 employees. What is the probability that Company A will get the discount? (Round to four decimal places as needed.)
b. Company B has 502 employees. What is the probability that Company B will get the discount? (Round to four decimal places as needed.)
c. Company C has 1033 employees. What is the probability that Company C will get the discount? (Round to four decimal places as needed.)
Answer:
a. 0.0000
b. 0.1841
c. 0.9992
Explanation:
a. n = 285
p = 5% = 0.05
μ = np = 285 x 0.05
= 14.25
we fnd the standard deviation
sd = √np(1-p)
= [tex]\sqrt{285*0.05*0.95}[/tex]
= 3.6793
we find the z score
x = 30-0.5 = 29.5
[tex]z=\frac{29.5-14.25}{3.6793} \\= 4.14[/tex]
using the microsoft excel function
1-NORMSDIST(4.14)
probability = 1 -0.999982
= 0.0000
b.
n = 502
p = 0.05
np = 502x0.05
= 25.1
sd = [tex]\sqrt{np(1-p)}[/tex]
= [tex]\sqrt{502*0.05*0.95} \\= 4.8831[/tex]
x = 29.5
[tex]z = \frac{29.5-25.1}{4.8831} \\= 0.90[/tex]
1 - NORMSDIST(0.90)
= 1 - 0.815939875
PROB = 0.1841
c. n = 1033
p = 0.05
np = 1033*0.05
= 51.65
sd [tex]\sqrt{np(1-p)} \\= \sqrt{1033*0.05*0.95}[/tex]
= 7.0048
x = 29.5
[tex]z=\frac{29.5-51.65}{7.0048} \\= -3.16[/tex]
probability =
1 - normsdist(-3.16)
= 1 - 0.000788846
= 0.9992
Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Wages Machine operators $ 400,000 Selling and administrative personnel $ 85,000 Materials used Lubricant for oiling machinery $ 35,000 Cocoa, sugar, and other raw materials $ 350,000 Packaging materials $ 290,000 Randall's direct materials amounted to:
Answer:
1160.000
Explanation:
suma los gastos
What is the purpose of using predetermined overhead rates: Variation in cost assignment due to short-term variations in volume can be prevented Delays in product costing can be avoided Variation in cost assignment due to seasonality can be prevented. All of the answers are correct.
Answer:
All of the answers are correct.
Explanation:
At the beginning of the accounting period a pre-determined overhead is computed by dividing the estimated overhead production by the estimated basis of operations. The default overhead rate is then applied to manufacturing, so that the standard cost for a product may be calculated
The purpose of using pretermined overhead rates are
Delays in product costing can be avoided
Variation in cost assignment due to seasonality can be prevented
Variation in cost assignment due to short-term variations in volume can be prevented
The Use of predetermined overhead rates serves all the above purposes
Hence, all answers are correct.
The following expenditures relating to plant assets were made by Adam Company during the first 2 months of 2020.
1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck
Required:
a. Explain the application of the cost principle in determining the acquisition cost of plant assets.
b. List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.
Explanation:
a.)
In terms of the cost principle, the cost of acquiring a plant asset involves all of the expenditures required to get this asset and also to get ready to serve it's purpose.
Cost is measurable by the cash amount paid for a transaction that has to do with money or the money equivalent paid when assets that are not cash are used as a means of payment.
the cash equivalent is the same as the fair market value of the assets that were given or received..
b )
the account title that expenditure should be debited
1. 5000 paid for land
2. 200 paid is for factory machine equipment
3. 850 paid for delivery truck is for equipment
4. 17500 paid for parking lot is for land improvement
5. 250 paid for companies name to be printed on truck is equipment
6. 8000 paid for installation is for equipment
7. 900 paid for insurance policy on truck is prepaid insurance
8. 75 paid as license fee is for license insurance
The Nash equilibrium of this game is for Tying-the-Knot to set alow price and Bridezilla-No-More to set alow price. True or False: Both firms would be worse off if they cooperated and set a high price for their services, instead of using the Nash equilibrium. True False Suppose that the firms play this game indefinitely. Both firms agree to cooperate in order to maintain higher profits. To deter cheating, Tying-the-Knot announces that it will play a grim strategy. Given this strategy, what will happen if Bridezilla-No-More breaks the cooperative agreement in the first period
Answer:
Tying-the-Knot and Bridezilla-No-More
1. The Nash equilibrium of this game is for Tying-the-Knot to set a low price and Bridezilla-No-More to set a low price.
True
2. Both firms would be worse off if they cooperated and set a high price for their services, instead of using the Nash equilibrium.
False
3. Given Tying-the-Knot grim strategy, if Bridezilla-No-More breaks the cooperative agreement in the first period,
there will be a permanent breakdown in cooperation between the two firms.
Explanation:
Playing the grim trigger strategy, Tying-the-Knot cooperates with Bridezilla-No-More in the first round and in the subsequent rounds as long as Bridezilla-No-More does not defect from the agreement. Once Tying-the-Knot finds that Bridezilla-No-More has betrayed the agreement in the previous game, he will then defect forever. Both firms will then lose as they cannot cooperate to achieve higher profits.
Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: What is the systematic risk of the stock return
Answer:
The answer is "[tex]6.33\%[/tex]"
Explanation:
The systematic portion of the return can be defined as follows:
[tex]\to 0.0000734(\$17,863?\$17,034)?0.90(2.60\%?2.80\%)?0.32(3.50\%?3.70\%)[/tex]
[tex]= 0.0000734 (829) - .90 (-.002) - .32(-.002)\\\\= 0.0608486 + 0.0018 + 0.00064\\\\= 0.0633 \\\\ = 6.33\%[/tex]
4. Know the market trends of products that are in demand not
only within the local market but also in the international market.
Answer:
oligopoly
Explanation:
it is unique the market is blocked not easy to enter
You just won the lottery! As your prize you will receive $1,200 a month for 100 months starting today. If you can earn 8% on your money, what is this prize worth to you today
Answer: $87,380.23
Explanation: n = 100
I/Y = 8%/12
PMT = 1,200
AVP = 1,200 × (1-(1/(1+0.08/12)^100))/(0.08/12) = 1,200 × 72.816858 = 87,380.23
The prize worth to a person today is $87,380.23 approx, if the person wins a lottery.
What is the present value?A financial calculation known as present value, commonly referred to as discounted value, assesses the value of a future sum of money or stream of payments in today's dollars after accounting for interest and inflation.
It contrasts the purchasing power of one dollar today with that of one dollar in the future, present value\ is computed by the following formula:
[tex]\text{Present Value} = \rm A\times {\dfrac{1-(1+\dfrac{i}{m})^n^m}{\dfrac{i}{m}}\\[/tex]
whereas:
A= Annuity
i= Interest rate
n= Number of periods
m= Periodicity
Computation of present value of the price:
Apply the given values in (1),
[tex]\text{Present Value} = \rm A\times {\dfrac{1-(1+\dfrac{i}{m})^n^m}{\dfrac{i}{m}}\\\text{Present Value} = $1,200\times {\dfrac{1-(1+\dfrac{0.08}{12})^(8.33 \times 12)}{\dfrac{0.08}{12}}[/tex]
Present Value = $87,380.23 approx.
Therefore, the prize worth to a person today is $87,380.23 approx.
Learn more about the present value, refer to:
https://brainly.com/question/17322936
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Finance
Walter and Gordon model analyse the impact of distribution of dividends on the valuation of the firm but the formula used in both the cases are different. Company
ABC Ltd wanted to evaluate the price of the share in both cases. The company earns ₹ 50 per share and expects the same for the next year. The cost of capital to the firm is 11%. The company earns return on investment of 15% and the firm 8is planning dividend payout ratio of 60%. Calculate:
a. Price of the share using Walter Model. Comment on the relationship between return on investment and cost of capital in the case above and decision of the firm whether dividend is to be declared or not.
b. Price of the share using Gordon model. Comment on the relationship between return on investment and cost of capital in the case above and decisionm
[2] R6 386,16.
[3] R1 930,43.
[4] R3 897,29.
[5] none of the above
Checking answer$1
Financial Math
Q198898
Deadline passed
Mr Mahlangu invests R20000 to play lobola. After 48 months he receives 65000. The interest on the investment is compounded quarterly. Determine the yearly interest rate at which money was invested. Give your answer as a percentage rounded to two decimal places.
Checking answer$1
Archive Tasks & Questions are stored in archive for 14 days
Biochemistry
Q198087
Deadline passed
11. Indicate which type of bonds are involved in the following
a. Formation of the primary structure of a protein
b. Stabilization of the alpha helix and beta pleated sheet structures of proteins
12.Identify the biomolecular composition of the following cells
a.Endoplasmic reticulum
b.Mitochondria
c.Cytoskeleton
d. Nucleus
13 Under aerobic catabolism of glucose ,in which compartment of the eukaryotic cell does the following reaction occurs?
a conversion of pyruvate to acetyl CoA
b.conversion of succinyl -CoA to succinate
c.conversion ofNADH to ATP.
d.conversion of phosphologlycerate to phosphoenolpyruvate.
14. Briefly outline how ATP is generated from glucose in the absence of oxygen. What is the importance of this pathway?
15. Briefly explain the process by which excess dietary carbohydrates and lipids are stored in the human body
Answer approved2$1
Finance
Q199880
Deadline: 28.05.21, 18:48
Walter and Gordon model analyse the impact of distribution of dividends on the valuation of the firm but the formula used in both the cases are different. Company
ABC Ltd wanted to evaluate the price of the share in both cases. The company earns ₹ 50 per share and expects the same for the next year. The cost of capital to the firm is 11%. The company earns return on investment of 15% and the firm is planning dividend payout ratio of 60%. Calculate:
a. Price of the share using Walter Model. Comment on the relationship between return on investment and cost of capital in the case above and decision of the firm whether dividend is to be declared or not.
b. Price of the share using Gordon model. Comment on the relationship between return on investment and cost of capital in the case above and decision of the firm whether
dividend is to be declared or not.
Answer:
An apple, potato, and onion all taste the same if you eat them with your nose plugged≡⇵∠⊅↓⇆°∞∴∴∵∵∵∴∴∵∵∴∴∵∴
∴∴≈↓∴↔∪∪∩⇄
Explanation:
Many restaurants do not take reservations. You simply arrive and wait your turn. If you arrive at 7:30 in the evening, you have at least an hour wait. Notwithstanding that fact, a few people arrive, speak quietly with the maître d’, hand him some money, and are promptly seated. At some restaurants that do take reservations, there is a month wait for a Saturday evening, three weeks for a Friday evening, two weeks for a Tuesday through Thursday, and virtually no wait for Sunday or Monday evening. How do you explain these events using demand and supply?
A major U.S. manufacturer of children's toys believes its main competitive advantage lies in its continuing the creation of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is: Group of answer choices research and development. operations. supply-chain management. distribution.
Answer:
research and development
Explanation:
Since in the given situation, it is mentioned that the company faced the increased in the competition and also it considered an outsourcing in order to offshore the firm so that the cost can be minimized so here the last function the firm should considered outsourcing is the research and development as there is the outsourcing so there would be the research and development also it deals with innovation & introduction of new products & services
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 45,000 for January, 55,000 for February, and 50,000 for March. Cost of goods sold is $14 per unit. Other expense information for the first quarter follows. Commissions 8 % of sales dollars Rent $ 14,000 per month Advertising 15 % of sales dollars Office salaries $ 75,000 per month Depreciation $ 40,000 per month Interest 5 % annually on a $250,000 note payable Tax rate 30 % Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)
Answer:
Fortune, Inc.
Budgeted Income Statement for the first quarter
Sales Revenue $3,750,000
Cost of goods sold 2,100,000
Gross profit $1,650,000
Expenses
Sales commission 300,000
Rent 42,000
Advertising 562,250
Office salaries 225,000
Depreciation 120,000
Interest 3,125
Total expenses $1,252,375
Income before tax $397,625
Tax (30%) 119,288
Net income $278,337
Explanation:
a) Data and Calculations:
Selling price per unit = $25
January February March Total
Sales (in units) 45,000 55,000 50,000 150,000
Sales revenue $1,125,000 $1,375,000 $1,250,000 $3,750,000
Cost of goods sold 630,000 770,000 700,000 2,100,000
Gross profit $495,000 $605,000 $550,000 $1,650,000
Expenses:
Sales commission $90,000 $110,000 $100,000 $300,000
Rent expense 14,000 14,000 14,000 42,000
Advertising expense 168,750 206,250 187,500 562,250
Office salaries 75,000 75,000 75,000 225,000
Depreciation 40,000 40,000 40,000 120,000
Interest expense 3,125
Total expenses $1,252,375
Income before tax $397,625
Tax (30%) 119,288
Net income $278,337
You have deposited $1,200 into an account that will earn an interest rate of 8% compounded semiannually. How much will you have in this account at the end of 10 years
Answer:
$2,629.35
Explanation:
The amount in future for the dollar invested today is known as the Future Value (FV)
We can simply calculate the Future Value using a Financial Calculator as follows :
PV = - $1,200
PMT = $0
P/YR = 2
I = 8 %
N = 10 x 2 = 20
FV = ??
Therefore,
The Future Value (FV) will be $2,629.35
You will have $2,629.35 in this account at the end of 10 years.
Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's total consumer surplus from the five bars that he purchased
Answer:
$5
Explanation:
Assume the total cost of a college education will be $184,061 when your child enters college in 19 years. You presently have $49,327 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? Enter answer as 3 decimal places (e.g. 0.123)
Answer:
Interest rate = 0.9313
Explanation:
Future value or the cost of edcuation after 19 years = $184061
Present value, money in hand at present = $49327
Time period, n = 19
Future value = Present value (1 + r)²
184061 = 49327 (1 + r )²
(1 + r )² = 184061 ÷ 49327
(1 + r )² = 3.73
(1 + r) = √3.73
(1 + r) = 1.9313
r = 1.9313 - 1
r = 0.9313
Or Interest rate = 0.9313
a sale is made at a lumber company for goods costing a total of $13,359 (which includes 9.5% sales tax). in the books of the lumber company revenue should be credited for what amount
Answer:
$12,200
Explanation:
Sales including sales tax = $13,359
Sales tax rate = 9.5%
Let the sales be = $X
Sales tax payable = Sales * Sales tax rate
Sales tax payable = X * 9.5%
Sales tax payable = 0.095X
Sales + Sales tax = Sales including sales tax
X + 0.095X = 13,359
1.095X = 13,359
X = 13,359/1.095
X = $12,200
So, Sales = $12,200. Thus, in the books of the lumber company, Revenue should be credited for $12,200
Several artists in Charleston, South Carolina, show and sell their work in an art gallery downtown. The gallery is owned by an art lover who does not buy the paintings but displays the work of various artists. She collects a percentage on each piece sold. In terms of the marketing channel, the gallery is Multiple Choice an ultimate consumer. a manufacturer. a wholesaler. an agent. a clearinghouse.
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2800 units, the actual direct labor cost was $83200 for 5200 direct labor hours worked, the total direct labor variance is $2800 unfavorable. $800 favorable. $800 unfavorable. $500 unfavorable.
Answer:
$800 favorable
Explanation:
Calculation to determine what the total direct labor variance is
Using this formula
Total Direct Labor Variance=(Standard Direct Labor Cost - Actual Direct Labor Cost
Let plug in the formula
Total Direct Labor Variance=[(2800 × 2) × $15]- $83200
Total Direct Labor Variance=$84000 - $83200
Total Direct Labor Variance = $800 favorable
Therefore the total direct labor variance is$800 favorable
Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,000 letters 1,400 letters How much of the account billing cost will be assigned to Department B
Answer:
$24,750
Explanation:
The computation of the account billing cost assigned to department B is shown below;
Computation of the activity rate of account billing cost pool
Activity rate = Account billing cost ÷ Expected account billing lines
= $220,000 ÷ 4,000,000
= $0.055 per line
Now Calculation for account billing cost assigned to department B is
Cost assigned = Activity rate × Activity of Department B
= $0.055 × 450,000
= $24,750
Consider the bond (newly issued, issued on Nov 2013) for a country A: Face value $10 million Coupon rate 4.3% If this bond is purchased (in April 2014) at $9.02 million, instead of $10 million, the yield would be: Group of answer choices same as 4.3% greater than 4.3% less than 4.3%
Answer: greater than 4.3%
Explanation:
Given that
Face Value = $10 million
Current Price = $9.02 million
Coupon Rate = 4.3%
Coupon Payment per annum = $10million x 4.3% = $430,000 annually
Current yield = Annual Coupon Payment ÷ Current price of the bond
Current Yield = $430,000 ÷ 9,020,000 = 0.0476 =4.76% which is greater than 4.3%
For airlines that sell flights from New York City to Boston, Amtrak trains are primarily a __________ Group of answer choices Potential entrant Buyer Supplier Rival Substitute product
Answer: rival
Explanation:
For airlines that sell flights from New York City to Boston, Amtrak trains are primarily a rival.
A rival in a business environment simply refers to ones competitor. In this case, the companies are all in the same industry and competes against each other, seeks competitive advantage over one another and seeks to capture a bigger market.
Janine is considering what auto costs she is going to have after buying a new Honda Civic. She has budgeted enough money for the monthly auto loan payment, gas, and auto insurance. Has Janine factored in all of the costs associated with car ownership
Answer:
No. Janine has not factored in all of the costs usually associated with car ownership.
Explanation:
Other costs associated with the ownership of a car like a new Honda Civic that Janine is considering buying are: maintenance, license and registration, loan finance charges, and depreciation costs. These costs can drastically reduce Janine's monthly purchasing power and ability to save. The costs of owning a new Honda Civic should be compared to the cost of not owning one now vis-a-vis Janine income.
BMW and United Airlines cannot be considered in the same industry analysis because they compete in different industries.
a. True
b. False
Answer: False
Explanation:
The statement that "BMW and United Airlines cannot be considered in the same industry analysis because they compete in different industries" is wrong.
It should be noted that both of them are in the mobility industry. The mobility industry refers to the industry which covers the broad range of the organisations which provide products and services thar are used to support domestic and international relocations and assignments.
The current assets of Sheridan Company are $292400. The current liabilities are $116960. The current ratio expressed as a proportion is
The current ratio expressed as a proportion is 2.5
Explanation:
Given :
The current assets = $292400
The current liabilities are $116960.
To find :
The current ratio
Solution :
Current Ratio =
[tex]\sf{\dfrac{Current \: Assets }{Current \: Liabilities}}[/tex]
[tex]\sf{\implies{\dfrac{292400}{116960}}}[/tex]
[tex]\implies[/tex] 2.5
Therefore, The current ratio expressed as a proportion is 2.5
A management decision may be beneficial for a given profit center, but not for the entire company. From the overall company viewpoint, this decision would lead to
Answer:
A management decision may be beneficial for a given profit center, but not for the entire company. From the overall company viewpoint, this decision would lead to:
Sub-optimization.
Explanation:
Suboptimization describes a situation whereby changes effected in a unit of an organization improves the specific component without benefiting the whole organization. It is a common policy mistake that management makes when it uses its success in a department or division to apply the same techniques in a different division without achieving similar results. This implies that management may focus on one component of its organization and make improvements in that one component while the effects on the other components are ignored. Simply, it means optimizing the results of a unit rather than the results of the whole organization.
Tradable permits are likely to result in less inefficiency, relative to a pollution tax, when ... a. the marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable. b. the marginal costs of damages are steep and the marginal costs of pollution reduction are steep. c. the marginal costs of damages are relatively stable and the marginal costs of pollution reduction are relatively stable. d. the marginal costs of damages are relatively stable and the marginal costs of pollution reduction are steep. e. the marginal costs of damage are elastic and the marginal costs of pollution reduction are also elastic.
Answer:
a. the marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable.
Explanation:
Pollution can be defined as the physical degradation or contamination of the environment through an emission of harmful, poisonous and toxic chemical substances.
Offset trading refers to a type of trading system that is typically designed for the realization of more efficient pollution control.
This ultimately implies that, an offset trading is a strategic program that allows emerging business firms to pay existing business firms in order to significantly reduce their emissions or pollutants below a specific standard.
Free market in tradable pollution permits simply means giving manufacturing companies and individuals the legal right to pollution of the environment. For example, XYZ company is purchasing the permit of 500 units of carbon dioxide (CO2) pollution annually, this simply means it is permitted to pollute the environment by 500 units of CO2 annually.
Additionally, a free market in tradable pollution permits has some sort of benefits as companies can resell their unused permits or devise a cheaper means of reducing pollution. It also compensate companies that significantly reduces its pollution of the environment.
A pollution tax can be defined as a type of tax imposed on business firms that causes pollution and damages to the environment. It is also referred to as Pigovian tax which is a tax on goods with negative externality.
Hence, tradable permits when compared with pollution tax are likely to result in less inefficiency, when the marginal costs of damages are steep and the marginal costs of pollution reduction are relatively stable.
You have been given $5 million to market Kaiser health insurance to new college graduates in California. Briefly mention how you will spend the $5 million in an attempt to motivate new graduates to sign up for Kaiser health insurance. Include a brief rationale for your marketing plan.
Answer:
You have been given $5 million to market Kaiser health insurance to new college graduates in California. Briefly mention how you will spend the $5 million in an attempt to motivate new graduates to sign up for Kaiser health insurance. Include a brief rationale for your marketing plan.
Assume US GAAP to answer this question. In 2017, $2 million in wages were earned and no cash wages were paid. In 2018, $8 million in wages were earned and $9 million in cash wages were paid. Cash wages were used to first pay wages earned in 2017 with the remainder used to pay wages earned in 2018. Any earned but unpaid wages will be paid during the first quarter of 2019. Using only the information provided, which of the following statements is most accurate?
a. Liabilities increased by $1.0 million in 2018
b. Liabilities increased by $3.0 million in 2018
c. Assets decreased by $5.0 million in 2018
d. Retained earnings decreased by $10.0 million in 2018
e. Retained earnings decreased by $7.0 million in 2018
Answer: a. Liabilities increased by $1.0 million in 2018
Explanation:
In 2018, $9 million was used to settle the wage debt of 2017 and the remainder was used to settle the wages in 2018.
The money remaining in cash after the wage settlement was:
= 9,000,000 - 2,000,000 - 8,000,000
= -$1,000,000
This means that $1,000,000 of wages was not settled in 2018 which means that this would have to go to the Wages Payable account to signify that the company owes wages.
This account is a liability account so liabilities in 2018 would increase by $1,000,000.
On February 5, McCracken Co. purchases 25 percent of Bradley Company common stock at a total cost of $90,000. Write the necessary adjusting entry.
Answer:
February 5
Dr Investment in Equity Shares $90,000
Cr Cash $90,000
Explanation:
Preparation of the necessary adjusting entries
Based on the information given we were told that the Company common stock was purchased at a total cost of $90,000 which means that the appropriate adjusting journal entry will be:
February 5
Dr Investment in Equity Shares $90,000
Cr Cash $90,000
:
Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2021, management decided to change from the average inventory costing method to the FIFO inventory costing method at each of its outlets. The following table presents information concerning the change. The income tax rate for all years is 40%.
Income before Income Tax
FIFO Average Cost Difference
Before 2015 $35 million $28 million $7 million
2015 48 million 25 million 23 million
2016 30 million 29 million 1 million
Requied:
a. Prepare the journal entry to record the change in accounting principle.
b. Determine the net income to be reported in the 2016–2015 comparative income statements.
Answer:
A. Dr Inventory $30
Cr Income tax payable $12
Cr Retained earnings $18
B. 2016 Net income $18
2015 Net income $28.80
Explanation:
a. Preparation of the journal entry to record the change in accounting principle.
Dr Inventory $30
Cr Income tax payable $12
Cr Retained earnings $18
b. Calculation to Determine the net income to be reported in the 2016–2015 comparative income statements
Balance at Jan ,2015 $21.00 millions
[35 millions- (35 millions* 40%)]
NET INCOME $28.80 millions
Cash dividends ($4.20) millions
Balance At December 31,2015 $45.60 millions
NET INCOME $18 millions
Cash dividends ($4.20) millions
BALANCE AT DECEMBER 31,2016 $59.40 millions
Therefore the net income to be reported in the 2016–2015 comparative income statements will be:
2016 Net income $18
2015 Net income $28.80
The journal entry to record the change in accounting principle will be:
Debit Inventory $30 million
Credit Income tax $12 million
Credit Retained earnings $18 million
(To record error correction)
It should be noted that the income tax will be credited in the amount below:
= 40% × ($7 million + $23 million)
= 40% × $30 million.
= 0.4 × $30 million
= $12 million
The retained earnings will be:
= $30 million - $12 million
= $18 million
The net income to be reported in the 2016–2015 comparative income statements will be $18 million and $28.8 million.
The net income for 2016 will be:
= $30 million - $12 million
= $18 million
The net income for 2015 will be:
= $48 million - (40% × $48 million)
= $45 million - $19.2 million
= $25.8 million
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