Answer and Explanation:
The preparation of the following statement is
Cash Basis Statement Accrual Basis Statement
Income Statement Income Statement
Revenues Revenues
Cash Sales $500,000 Sales to Customers $750,000
Customer Deposits $70,000
Total $570,000 Total $750,000
Expenses Expenses
Inventory Purchase $90,000 Cost of Sales $485,000
Wages Paid $180,300 Wages expense $184,000
Utilities paid $17,200 Utilities expense $19,130
Total $287,500 Total $688,130
Net Income $282,500 Net Income $61,870
Zolezzi Inc. is preparing its cash budget for March. The budgeted beginning cash balance is $23,000. Budgeted cash receipts total $102,000 and budgeted cash disbursements total $97,000. The desired ending cash balance is $75,000. The company can borrow up to $110,000 at any time from a local bank, with interest not due until the following month.
Required:
Prepare the company's cash budget for March in good form. Make sure to indicate what borrowing, if any, would be needed to attain the desired ending cash balance.
Beginning cash balance
Add cash receipts
Total cash available
Less cash disbursements
Excess (deficiency) of cash available over disbursements
Borrowings
Ending cash balance
Answer:
$75,000
Explanation:
Preparation of the company's cash budget for March in good form
CASH BUDGET
for the month of march
Beginning cash balance $23,000.00
Add: cash receipts $102,000
Total cash available $125,000
Less: cash disbursements $97,000.00
Excess (deficiency) of cash available over disbursements $28,000
Borrowings $47,000
Ending cash balance $75,000.00
Therefore the company's cash budget for March in good form is $75,000
We have a $500,000 line of credit with a 10% compensating balance. The quoted interest rate is 4.5%. We need $200,000 for inventory for one year. What is the effective interest rate we are paying on this credit line
Answer:
5.0%
Explanation:
Calculation to determine the effective interest rate we are paying on this credit line
First step is to calculate cost of inventory we need
Inventory=$200,000/(1 - 0.10)
Inventory=$222,222
Second step is to calculate Interest paid
Interest paid = $222,222(.045)
Interest paid= $9,999.99
Interest paid=$10,000 (Approximately)
Now let calculate the Effective rate
Effective rate =$10,000/$200,000
Effective rate= 0.05*100
Effective rate=5.0%
Therefore the effective interest rate we are paying on this credit line is 5.0%
Lynx Corp. The data presented below for Lynx Corp. are for the year ended December 31, 2017: Sales (100% on credit) $1,000,000 Sales returns 30,000 Accounts receivable (December 31, 2017) 170,000 Allowance for doubtful accounts (credit balance) (before adjustment at December 31, 2017) 1,300 Estimated amount of uncollectible accounts based on aging analysis 14,000 See the data for Lynx Corp. If Lynx Corp. uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debts expense for 2017
Answer:
Allowance for Doubtful Accounts 69,000
Explanation:
If the company estimates its bad debt to be 2% of net credit sales:
sales 2,500,000
return and allowance (50,000)
net sales 2,450,000
Then, we calculate 2% of this amount:
2,450,000 x 0.02 = 49,000
As the uncollectible amounts are related to sales rather than account receivable we adjust for the full value giving an ending value of:
beginning 20,000 + adjustment 49,000 = 69,000
The costs and revenues associated with two alternatives are listed below: Alternative 1 Alternative 2 Projected revenue $ 100,000 $ 125,000 Unit-level costs 20,000 30,000 Batch-level costs 20,000 25,000 Product-level costs 15,000 15,000 Facility-level costs 10,000 10,000 Which alternative should be selected based on this information
Answer:
Alternative 2
Explanation:
Calculation to determine Which alternative should be selected based on this information
Item Alt. 1 Alt. 2
Alt. 1 Alt. 2
Projected revenue $100,000 $125,000
Unit-level costs (20,000) (30,000)
Batch-level costs (20,000) (25,000)
Product-level costs (15,000) (15,000)
Facility-level costs (10,000) (10,000)
Profit $ 35,000 $ 45,000
Thereforer Based on the above calculation the alternative that should be selected based on this information will be ALTERNATIVE 2 because it has a higher profit of the amount of $45,000
Use the following stockholders' equity section of Marcy Company on December 31, 2004 to answer questions 45 through
50. Treat each question independent of the other questions - so your answer to question 46 should not be influenced by the
answer to question 45, and so on:
Preferred Stock - 6% cumulative, $20 par value, 10,000 shares authorized, 5,000 shares issued and outstanding . . $100,000
Contributed Capital in excess of par value, Preferred Stock . . 250,000
Common Stock, $5 par value, 20,000 shares authorized, 10,000 shares issued and outstanding. . . . . . . . . . 50,000
Contributed Capital in excess of par value, Common Stock . .450,000
Total Contributed Capital . . . . . . . . . . . . $ 850,000
Retained Earnings . . . . . . . . . . . . . . . . . 150,000
Total Stockholders' Equity . . . . . . . . . . . .$ 1,000,000
45. The average issue price per share of preferred stock must have been:
A) $20.00
B) $50.00
C) $70.00
D) $35.00
E) $45.00
46. Marcy Company did not pay any dividends in 2004. In 2005, they declared and paid total dividends of $4,000, and in 2006, they declared total dividends of $20,000. How much dividends will be paid to preferred and common stockholders in 2006?
A) Preferred $20,000, Common $0
B) Preferred $8,000, Common $12,000
C) Preferred $18,000, Common $2,000
D) Preferred $14,000, Common $6,000
E) Preferred $12,000, Common $8,000
47. Marcy Company issues 2,000 shares of common stock in exchange for a building, with a market value of $100,000.
The journal entry to record the exchange will cause Total Contributed Capital to:________
A) increase by $10,000
B) increase by $100,000
C) increase by $90,000
D) increase by $80,000
E) remain unchanged
48. Marcy Company declared and issued a 15% common stock dividend on January 1, 2005, when the market price of their common stock was $12 per share. The journal entry to record the stock dividend will:_____________
A) debit Retained Earnings by $18,000.
B) credit Common Stock Dividend Distributable, $15,000
C) credit Contributed Capital in excess of par, Common Stock, $21,000
D) credit Common Stock Dividend Distributable, $10,500
E) credit Contributed Capital in excess of par, Common Stock, $7,500
49. Marcy Company declared a 100% common stock dividend on January 1, 2005, when the market price of the stock was $7.50. The entry to record this dividend will:_________
A) debit Retained Earnings,$100,000
B) credit Common Stock Dividend Distributable,$50,000
C) credit Contributed Capital in excess of par, Common Stock, $25,000
D) credit Common Stock Dividend Distributable, $100,000
E) Since this is considered a stock split, no journal entry is made
50. On January 1, 2005, Marcy Company purchased 1,000 shares of its own common stock for $22,000. On February 1, 2005, they sold 600 of these shares for $25 per share, and on March 1, 2005, they sold the remaining 400 shares for
$15 per share. The journal entry required on March 1 will include:_______
A) credit Contributed Capital, Treasury Stock, $1,800
B) debit Retained Earnings for $1,800
C) debit Retained Earnings for $2,800
D) debit Contributed Capital, Treasury Stock, $2,800
E) debit Contributed Capital, Treasury Stock, $1,80040.
Answer:
Marcy Company
45. The average issue price per share of preferred stock must have been:
C) $70.00
46. The dividends paid to preferred and common stockholders in 2006 are:
B) Preferred $8,000, Common $12,000
47. The journal entry to record the exchange will cause Total Contributed Capital to:________
C) increase by $90,000
48. The journal entry to record the stock dividend will:_____________
A) debit Retained Earnings by $18,000.
49. The entry to record this dividend will:_________
B) credit Common Stock Dividend Distributable,$50,000
C) credit Contributed Capital in excess of par, Common Stock, $25,000
50. The journal entry required on March 1 will include:
Debit Cash $6,000
Credit Treasury stock $2,000
Credit Contributed Capital in excess of par value $4,000
Explanation:
a) Data and Calculations:
Preferred Stock:
6% cumulative, $20 par value, 10,000 shares authorized,
5,000 shares issued and outstanding . . $100,000
Contributed Capital in excess of par value, Preferred Stock . . 250,000
Common Stock:
$5 par value, 20,000 shares authorized,
10,000 shares issued and outstanding. . . . . . . . . . 50,000
Contributed Capital in excess of par value, Common Stock . .450,000
Total Contributed Capital . . . . . . . . . . . . $ 850,000
Retained Earnings . . . . . . . . . . . . . . . . . 150,000
Total Stockholders' Equity . . . . . . . . . . . .$ 1,000,000
Average issue price per share of preferred stock = $70 ($100,000 + $250,000)/5,000
2005 2006
Total dividends declared $4,000 $20,000
Preferred dividend 6,000 6,000
Cumulative dividend -2,000 2,000
Common stock dividend $0 $12,000
Journal Entry:
Debit Building $100,000
Credit Common stock $10,000
APIC - common stock $90,000
January 1, 2005: Treasury stock $5,000 Contributed Capital in excess of par value $17,000 Cash $22,000
February 1, 2005: Cash $15,000 Treasury stock $3,000 Contributed Capital in excess of par value $12,000
March 1, 2005: Cash $6,000 Treasury stock $2,000 Contributed Capital in excess of par value $4,000
A recent college graduate has obtained employment at a major financial institution in the big city. Since she just graduated, she has decided to continue to rent her college apartment in the suburbs and make the daily commute to the big city for work. She currently pays $1,200 per month to rent an apartment in the suburbs. She works at the bank five days a week and it takes her one hour each way to commute from her home to her office. According to the assumptions of the bid-rent model, what should this recent grad be willing to pay in rent per month to live in the big city if her hourly wage rate is $25
Answer:
$2,200
Explanation:
Calculation to determine what should this recent grad be willing to pay in rent per month
First step is to calculate the work days
Using this formula
Work days = 5 days per week x 1 hour to work+ 1 hour from work
Let plug in the formula
Work days = 5 days a week x 2 hours
Work days= 10 hours
The second step is to calculate the monthly commuting in a standard month of 4 weeks
Monthly commuting = 4 x 10 hours
Monthly commuting = 40 hours
Third step is to calculate hourly how much she will be able to maximize
Amount maximize = $25 x 40 hours (commuting hours)
Amount maximize= $1,000
Now let determine The total she will be willing to pay in rent
Rent per month= $1,200 + $1,000
Rent per month=$2,200
Therefore what should this recent grad be willing to pay in rent per month is $2,200
Hau Lee Furniture, Inc., spends 50% of its sales dollars in the supply chain and finds its current profit of $21,000 inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $26,000 so he can obtain the bank's approval for the loan. What percentage improvement is needed in the supply chain strategy for profit to improve to $26000
Answer: 7.1%
Explanation:
The cost of materials needs to reduce for the profit to increase. If the profit is to go from $21,000 to $26,000, the material cost would need to decrease by:
= 26,000 - 21,000
= $5,000
The current material cost is $70,000 so a decrease of $5,000 in percentage terms would be:
= 5,000 / 70,000 * 100%
= 7.1%
The new material cost would be:
= 70,000 - 5,000
= $65,000
You're prepared to make monthly payments of $380, beginning at the end of this month, into an account that pays 5 percent interest compounded monthly. How many payments will you have made when your account balance reaches $24,391
Answer:
the nper is 57 months
Explanation:
The computation of the time period is given below:
Given that
PMT is $380
RATE = 5% ÷ 12 = 0.416666%
PV = $0
FV = $24,391
The formula is shown below
=NPER(RATE,PMT,FV,PV,TYPE)
After applying the above formula, the nper is 57 months
Oligopolies would like to act like a Group of answer choices duopoly, but self-interest often drives them closer to the perfectly competitive outcome. competitive firm, but self-interest often drives them closer to the duopoly outcome. monopoly, but self-interest often drives them to charge a higher price than would be charged by a monopoly. monopoly, but self-interest often drives them closer to the perfectly competitive outcome.
Answer:
monopoly, but self-interest often drives them closer to the perfectly competitive outcome.
Explanation:
In the given situation, the oligopoly tried to act like the monopoly via collusion but at the same time they would tend to cheat that drives the profit and the price per unit is less also it acted as the competitive firm
so here the self-interest would also be drives them near to the perfectly competitive result
hence, the above represent the answer
Oligopolies would like to act like a monopoly, but self-interest often drives them closer to the perfectly competitive outcome. The correct option is d.
Oligopolies are a market structure with a small number of firms, none of which can keep the others from having significant influence. The concentration ratio measures the market share of the largest firms.
A monopoly is a market with only one producer, a duopoly has two firms, and an oligopoly consists of two or more firms. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others.
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Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 320 units and of Product B is 640 units. There are three activity cost pools, with total cost and activity as follows:
Total Activity
Activity Cost Pools Total Cost Product A Product B Total
Activity 1 $25,530 950 200 1,150
Activity 2 $40,140 2,000 1,600 3,600
Activity 3 $10,649 150 250 400
The activity rate for Activity 2 is closest to:
a. 11.15
b. 20.07
c. 25.09
d. 42.25
Answer:
Activity 2= $11.15
Explanation:
Giving the following information:
Total Activity Activity Cost Pools Total Cost Product A Product B Total
Activity 2 $40,140 2,000 1,600 3,600
To calculate the activity rate for Activity 2, we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Activity 2= 40,140 / 3,600
Activity 2= $11.15
Weighted-average method, spoilage, equivalent units. (CMA, adapted)
Consider the following data for November 2017 from MacLean Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process and conversion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value MacLean Manufacturing Company uses the weighted-average method of process costing
Physical Units Direct Materials
Pennants
Work in process, November 1 1,350 $ 966
Started in November 2017 ?
Good units completed and transferred 8,800
out during November 2017
Normal spoilage 80
Abnormal spoilage 50
Work in process, November 30 1700
Total costs added during November 2017 $10,302
aDegree of completion: direct materials, 100%, conversion costs, 45%
bDegree of completion: direct materials, 100%, conversion costs, 35%
Compute equivalent units for direct materials and conversion costs.
Answer:
Equivalent Units: Materials = 10630
Equivalent Units : Conversion = 9525
Explanation:
MacLean Manufacturing Company
Weighted-Average Method
Process Costing
Particulars Units % Of Completion Equivalent Units
Materials Conversion Materials Conversion
Units completed
and transferred 8,800 100 100 8800 8800
Add
Ending Inventory 1700 100 35 1700 595
Normal Spoilage 80 100 100 80 80
Abnormal Spoilage 50 100 100 50 50
Equivalent Units 10630 9525
The weighted average method equivalent unit production implies that the units completed and the ending inventory completed plus any spoilage normal or abnormal is taken is accounted for.
The weighted average method EUP can also be determined by adding the beginning units and units started
The normal and abnormal spoilage are taken 100 % because all the spoilage is evident once the goods are completed.
Select the correct revenue recognition principle for each of the following. Clear All Recognize revenue over the passage of time. Recognize revenue when the customer takes possession of the product. Recognize revenue when cash is collected. Recognize revenue when service is performed.
Answer:
Recognize revenue when service is performed.
Explanation:
Revenue recognition principle is an accounting principle which states that revenue should only be recognized when it is earned(when service has been rendered or completed) and not when cash is being collected.
What the above means is that revenue can only be earned when services are completed or rendered and not necessarily when payment is made. The reason is that payment may not be made for several weeks even after service has been rendered hence the principle or concept is incorporated into the accrual basis of accounting.
To open and operate Boo! City, a Halloween costume and paraphernalia shop, Dwayne and Erica form a business organization that combines the limited liability aspects of a corporation with the tax advantages of a partnership. Their form of business organization is
Answer:
a limited liability company.
Explanation:
From the question we are informed about To open and operate Boo! City, a Halloween costume and paraphernalia shop, Dwayne and Erica form a business organization that combines the limited liability aspects of a corporation with the tax advantages of a partnership. In this case, Their form of business organization is limited liability company.limited liability company can be regarded as business structure in which owners are not personally liable as regards to debts or liabilities of the company.It is hybrid entities with features of corporation and partnership as well as sole proprietorship.
Fed up with her working conditions at the university, Juanita decides to invest in a state-of-the-art sewing machine and produce limited quantities of her own clothing designs. After a few months of operation, she decides to apply some of the forecasting techniques she mastered in school. Which of these statements about her forecasts is correct?
a. Her forecasts will probably be 100% accurate.
b. Her demand forecasts for a year from now will probably be more accurate than her demand forecasts for three months from now.
c. Her demand forecasts for each style of skirt will be more accurate than her demand forecasts for all skirts.
d. The best way for her to determine the amount of fabric she needs is to forecast it based on her customer orders for each type of skirt.
Answer:
Juanita
The correct statement about her forecasts is:
c. Her demand forecasts for each style of skirt will be more accurate than her demand forecasts for all skirts.
Explanation:
Since she has produced limited quantities of her own clothing designs, Juanita is in a better position to determine the demand for each style of skirt that she had produced. This knowledge, which she acquired after a few months of operation, coupled with the forecasting techniques she had mastered in school, will enable her to make a demand forecast for her particular designs than she can make for all design types of skirts.
Supply chain management:is based on the concept of just-in-timefocuses on removing scheduling bottlenecks within the companyfocuses on the internal routing of products from raw materials to finished goodsis a complex computerized system for managing resources efficientlyis accurately described by none of the above
Answer:
is based on the concept of just-in-time.
Explanation:
Supply chain management can be defined as the effective and efficient management of the flow of goods and services as well as all of the production processes involved in the transformation of raw materials into finished products that meet the insatiable want and need of the consumers.
Generally, the supply chain management involves all the activities associated with planning, execution and supply of finished goods and services from the manufacturers to the consumers.
Additionally, all businesses tend to use supply chain management to eliminate waste and maximize value for growth and development.
Hence, supply chain management is based on the concept of just-in-time (JIT) because it is a management framework that is focused on cutting manufacturing costs while increasing efficiency between suppliers and consumers through the use of a proper inventory system.
Ryan's Sparkling Jewels estimated its payroll for the coming year to be $84,000. Its workers' compensation insurance premium rate of 0.6% is paid at the beginning of each quarter
Required:
1. Calculate the estimated cost of workers' compensation insurance for the year.
2. Show the journal entry for the first quarterly payment on January 2, 20.
3
a. Assume Ryan's actual payroll for the year was $89,000. Calculate the additional premium owed for 20--.
b. Assume Ryan's actual payroll for the year was $89,000. Record the adjustment needed on December 31, 20--. The actual payment of the additional insurance premium will not take place until January of the following year.
Answer:
Following are the responses to the given choice:
Explanation:
Please find the solution in the attached file.
Keating Co. is considering disposing of equipment with a cost of $63,000 and accumulated depreciation of $44,100. Keating Co. can sell the equipment through a broker for $26,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
Answer:
$11,080
Explanation:
Calculation to determine what The net differential income from the lease alternative is
Using this formula
Equipment leased net differential income = Lease amount - Estimated expenses - Net sale of equipment
Let plug in the formula
Equipment leased net differential income= $47,000-$10,000-[$26,000-($26,000*8%)]
Equipment leased net differential income=$47,000-$10,000-($26,000-$2,080)
Equipment leased net differential income=$47,000-$12,000-$23,920
Equipment leased net differential income=$47,000-$35,920
Equipment leased net differential income=$11,080
Therefore The net differential income from the lease alternative is $11,080
Martinson Inc. manufactures industrial-sized landscaping trailers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units 40,000 units Budgeted machine-hours 10,000 hours Budgeted variable manufacturing overhead costs for 40,000 units $310,000 Actual output units produced 36,500 units Actual machine-hours used 14,600 hours Actual variable manufacturing overhead costs $350,400 What is the budgeted variable overhead cost rate per output unit
Answer:
Overhead rate per unit= $124
Explanation:
Giving the following information:
Budgeted output units 40,000 units
Budgeted machine-hours 10,000 hours
Budgeted variable manufacturing overhead costs for 40,000 units $310,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 310,000 / 10,000
Predetermined manufacturing overhead rate= $31 per machine hour
Now, for each unit:
Machine hours per unit= 40,000/10,000= 4
Overhead rate per unit= 31*4
Overhead rate per unit= $124
Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 325,000 shares outstanding, and its debt/total invested capital ratio was 44%. The firm finances using only debt and common equity and its total assets equal total invested capital. How much debt was outstanding? Do not round your intermediate calculations.
Answer: $5,809,375
Explanation:
The outstanding debt will be calculated thus:
Firstly, we'll calculate the total equity which will be:
= Shares outstanding × Book value per share
= 325000 × $22.75
= $7,393,750
Total assets = Total equity/(1 - Debt ratio) = $7,393,750/(1 - 44%)
= $13,203,125
Total Debt will now be:
= Total assets - Total equity
= $13,203,125 - $7,393,750
= $5,809,375
Therefore, Outstanding debt is $5,809,375.
A firm's current profits are $400,000. These profits are expected to grow indefinitely at a constant annual rate of 4 percent. If the firm's opportunity cost of funds is 6 percent, determine the value of the firm: Instructions: Enter your responses rounded to one decimal place. a. The instant before it pays out current profits as dividends. $ million b. The instant after it pays out current profits as dividends. $ million
Answer:
A. $21,200,000
B. $20,800,000
Explanation:
A. Calculation to determine The instant before it pays out current profits as dividends
Value of the firm =[(Current profits) × (1 +Opportunity cost of funds)} ÷ (Opportunity cost of funds - Constant growth annual rate)
Let plug in the formula
Value of the firm= [($400,000) × (1 + 0.06)]÷ (0.06 - 0.04)
Value of the firm= [($400,000) × (1.06)]÷0.02
Value of the firm= $424,000 ÷ 0.02
Value of the firm= $21,200,000
Therefore The instant before it pays out current profits as dividends will be $21,200,000
B. Calculation to determine The instant after it pays out current profits as dividends
Using this formula
Value of the firm =[(Current profits) × (1 +Constant growth annual rate)} ÷ (Opportunity cost of funds - Constant growth annual rate)
Let plug in the formula
Value of the firm= [($400,000) × (1 + 0.04)] ÷ (0.06 - 0.04)
Value of the firm= [($400,000) × (1.04)] ÷ (0.06 - 0.04)
Value of the firm= $416,000 ÷ 0.02
Value of the firm= $20,800,000
Therefore The instant after it pays out current profits as dividends will be $20,800,000
The relationships between the dependent variables and the independent variables used in causal forecasting methods are described by two measures. What following best describes these measures?
Answer:
Coefficient of Chaos and Coefficient of Exponential smoothing.
Explanation:
Coefficient of exponential smoothing is the measure to smoothly run the timeseries data without using moving average data. It helps the identification of relationship between dependent and independent variables. It is same as regression model technique which determines the extent of dependence of the two variables.
At market interest rate level of 2%, a ten-year and a 30-year bond ( both with 8% coupon rates and semiannual payment ) are selling at the prices $1,541.37 and $2,348.65, respectively. If you expected that interest rate will jump to 10% from the current level, which bond is risker and which bond is more profitable if interest rate drop significantly
Answer:
30 year Bond , 30 year Bond
Explanation:
Market interest rate = 2%
Coupon rates for both ten-year bond and 30-year coupon bound = 8%
semi-annual payments : $1541.37 , $2348.65 respectively
Determine which bond is riskier
Assuming interest rate rise to 10%
Given that both both bonds have the same Coupon rate but the semiannually payments are different ( i.e. Ten year bond = $1541.37 , 30-year Bond = $2348.65 )
The riskier Bond will be the Riskier Bond , The more profitable Bond if the interest rate drop drastically will be 30 year Bond as well
A not-for-profit art museum that has elected to capitalize its art collection receives a donation of a rare piece of Native-American art. The donor paid $10,000 for the piece several years ago. Today the piece has an estimated value of $50,000. What entry should the museum make upon receipt of this donation
Answer and Explanation:
No journal entry is required as the art museum has been elected so it is not capitalized also the value is increased i.e. from $10,000 to $50,000 so we should not capitalized it
So for this there is no requirement of passing the journal enry
Hence, the same is to be considered
a. State the total monthly budgeted cost formula. b. Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data
Question Completion:
Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company's Assembling
Department is as follows.
Ratchet Company
Budget Report
Assembling Department
For the Month Ended August 31, 2017
Difference
Favorable F
Manufacturing Cost Budget Actual Unfavorable U
Variable costs
Direct materials $48,000 $47,000 $1,000 F
Direct labor 54,000 51,200 2,800 F
Indirect materials 24,000 24,200 200 U
Indirect labor 18,000 17,500 500 F
Utilities 15,000 14,900 100 F
Maintenance 12,000 12,400 400 U
Total variable 171,000 167,200 3,800 F
Fixed costs
Rent 12,000 12,000 0
Supervision 17,000 17,000 0
Depreciation 6,000 6,000 0
Total fixed 35,000 35,000 0
Total costs $ 206,000 $ 202,200 $3,800 F
The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 58,000 units were produced.
Instructions
(a) State the total monthly budgeted cost formula.
(b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data?
Answer:
Ratchet Company
a. The total monthly budget cost formula is:
= $35,000 + $2.85x
where x = budgeted monthly units
b. Flexible Budget for August:
Ratchet Company
Budget Report
Assembling Department
For the Month Ended August 31, 2017
Difference
Favorable F
Manufacturing Cost Flexible Actual Unfavorable U
Variable costs
Direct materials $46,400 $47,000 $600 U
Direct labor 52,200 51,200 1,000 F
Indirect materials 23,200 24,200 1,000 U
Indirect labor 17,400 17,500 100 U
Utilities 14,500 14,900 400 U
Maintenance 11,600 12,400 800 U
Total variable 165,300 167,200 1,900 U
Fixed costs
Rent 12,000 12,000 0
Supervision 17,000 17,000 0
Depreciation 6,000 6,000 0
Total fixed 35,000 35,000 0
Total costs $200,300 $ 202,200 $1,900 U
c. A flexible budget report provides a better basis for evaluating the Assembly Department's performance as it uses the same activity level as the actual results with which the budget is compared.
Explanation:
a) Data and Calculations:
Flexing the variable costs:
Direct materials = $46,400 ($48,000/60,000 * 58,000)
Direct labor 52,200 (54,000/60,000 * 58,000)
Indirect materials 23,200 (24,000/60,000 * 58,000)
Indirect labor 17,400 (18,000/60,000 * 58,000)
Utilities 14,500 (15,000/60,000 * 58,000)
Maintenance 11,600 (12,000/60,000 * 58,000)
Please answer the question posted in the attached image
Answer:
80
Explanation:
Years = 20
Compounding month = 4 (quarterly)
N is the number of compounding factors = 20 years * 4 periods per year = 80. So, the value of n in the F/A factor (for determining F/A factor the end of the 20 year period) is 80.
The balance in the prepaid insurance account, before adjustment at the end of the year, is $18,630. The year end is March 31.
Journalize the March 31 adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of insurance expired during the year is $15,300; (b) the amount of unexpired insurance applicable to future periods is $3,330. Refer to the Chart of Accounts for exact wording of account titles.
CHART OF ACCOUNTS
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance
15 Land
16 Equipment
17 Accumulated Depreciation-Equipment
19 Accumulated Depreciation-Automobiles
LIABILITIES
21 Accounts Payable
22 Unearned Fees
23 Salaries Payable
24 Taxes Payable
EQUITY
31 John Doe, Capital
32 John Doe, Drawing
REVENUE
41 Fees Earned
EXPENSES
51 Advertising Expense
52 Insurance Expense
53 Rent Expense
54 Salary Expense
55 Supplies Expense
56 Utilities Expense
57 Depreciation Expense
59 Miscellaneous Expense
Journalize the March 31 adjusting entry required when the amount of unexpired insurance applicable to future periods is $8,750. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
A. Dr Insurance Expense $15,300.00
Cr Prepaid Insurance 115,300.00
B. Dr Insurance Expense $15,300.00
Cr Prepaid Insurance 115,300.00
C. Dr Insurance Expense $9,880.00
Cr Prepaid Insurance $9,880.00
Explanation:
A. Preparation of the March 31 adjusting entry required when the amount of insurance expired during the year is $15,300
Dr Insurance Expense $15,300.00
Cr Prepaid Insurance 115,300.00
B. Preparation of the March 31 adjusting entry required when the amount of unexpired insurance applicable to future periods is $3,330
Dr Insurance Expense $15,300.00
Cr Prepaid Insurance $5,300.00
($18,630-$3,330)
C.Preparation of the March 31 adjusting entry required when the amount of unexpired insurance applicable to future periods is $8,750
Dr Insurance Expense $9,880.00
Cr Prepaid Insurance $9,880.00
($18,630-$8,750)
On January 1, 2021, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance 5,694,713 1 213,000 227,789 14,789 5,709,502 2 213,000 228,380 15,380 5,724,882 3 213,000 228,995 15,995 5,740,877 4 213,000 229,635 16,635 5,757,512 5 213,000 230,300 17,300 5,774,812 6 213,000 230,992 17,992 5,792,804 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 38 213,000 276,119 63,119 6,966,089 39 213,000 278,644 65,644 7,031,733 40 213,000 281,267 68,267 7,100,000 Required: 1. What is the face amount of the bonds
Answer:
1. $7,100,000
2. $5,694,713
3. 20 years
4. Effective interest method
5. 6%
6. 8%
7. $8,520,000
8. $9,925,287
Explanation:
1. Based on the information given the FACE AMOUNT of the bonds will be the Ending outstanding balance of $7,100,000
Therefore the face amount of the bonds is $7,100,000
2. Based on the information given the INITIAL SELLING PRICE of the bonds will be the beginning Outstanding balance of $5,694,713
Therefore Initial Selling Price of the bonds is $5,694,713
3. Calculation to determine the term to maturity in years
Term to maturity=40 years/2 (Semi annually)
Term to maturity=20 years
Therefore the term to maturity in years is 40 years
4. Interest is determined by EFFECTIVE INTEREST METHOD approach
5. Calculation to determine the stated annual interest rate
Annual interest rate=$213,000/$7,100,000*2
Annual interest rate=6%
Therefore the stated annual interest rate is 6%
6. Calculation to determine effective annual interest rate
Effective Annual interest rate=$227,789/$5,694,713*2
Effective Annual interest rate=8%
Therefore effective annual interest rate is 8%
7. Calculation to determine the total cash interest paid over the term to maturity
Total cash interest paid=$213,000*40
Total cash interest paid=$8,520,000
Therefore the total cash interest paid over the term to maturity is $8,520,000
8. Calculation to determine the total effective interest expense recorded over the term to maturity
Effective interest expense=$8,520,000+($7,100,000-$5,694,713)
Effective interest expense=$8,520,000+$1,405,287
Effective interest expense=$9,925,287
Therefore the total effective interest expense recorded over the term to maturity is $9,925,287
Q7 If the dividend yield for year 1 is expected to be 7% based on a stock price of $30, what will the year 5 dividend be if dividends grow annually at a constant rate of 8% (in $ dollars)
Answer:
$2.86
Explanation:
Dividend yield = Dividend in year 1 / Price
0.07 = Dividend in year 1 / $30
Dividend in year 1 = $30 * 0.07
Dividend in year 1 = $2.1
Dividend in 5 years = Dividend in year 1 * (1+growth rate)^4
Dividend in 5 years = $2.1 * (1.08)^4
Dividend in 5 years = $2.1 * 1.36048896
Dividend in 5 years = $2.857026816
Dividend in 5 years = $2.86
How much must he save during each of the next 10 years (with equal deposits being made at the end of each year, beginning a year from today) to meet his retirement goal
Question Completion:
Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires - that is, until he is 85. He wants his first retirement payment to have the same purchasing power at the time he retires as $40,000 has today. He wants all his subsequent retirement payments to be equal to his first retirement payment. (Do not let the retirement payments grow with inflation: Your father realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 10 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 5% per year from today forward. He currently has $100,000 saved up; and he expects to earn a return on his savings of 8% per year with annual compounding.
Answer:
He must save $57,326.75 yearly for 10 years to meet his retirement goal.
Explanation:
a) Data and Calculations:
The future value of the first retirement payment of $40,000 = $86,360 ($40,000 * 2.159)
Future value factor = 2.159 at 8% for 10 years
Amount to be paid over 24 years = $960,000 ($40,000 * 24)
Total amount to be paid in 25 years of retirement = $1,046,360 ($960,000 +$86,360)
Future value of initial savings of $100,000 = $215,892.50
Amount expected to be saved in ten years = $830,467.50 ($1,046,360 - $215,892.50)
N (# of periods) 10
I/Y (Interest per year) 8
PV (Present Value) 0
FV (Future Value) 830467.50
Results
PMT = $57,326.75
Sum of all periodic payments $573,267.47
Total Interest $257,200.03
hyde's headphones sells deluxe headphones for $90 each. Unit variable expenses total $50. The breakeven sales in units is 2,000 and budgeted sales in units is 4,525. What is the margin of safety in dollars
Answer:
See below
Explanation:
Given the above information, margin of safety in dollars is computed as;
= (Total sales - Break even sales) × Sales price
= (4,525 - 2,000) × $90
= $227,250
Therefore, the margin of safety in dollars is $227,250