Blossom Construction Company uses the percentage-of-completion method of accounting. In 2021, Blossom began work on a contract it had received which provided for a contract price of $47500000. Other details follow:
2021
Costs incurred during the year $22000000
Estimated costs to complete as of December 31 16000000
Billings during the year 21500000
Collections during the year 10500000
What should be the gross profit recognized in 2021?
Answer:
Blossom Construction Company
The gross profit that should be recognized in 2021 is:
= $5,500,000.
Explanation:
a) Data and Calculations:
Contract price = $47,500,000
Others:
Billings during the year $21,500,000
Collections during the year $10,500,000
Costs incurred during the year $22,000,000
Estimated costs to complete as of December 31 $16,000,000
Total estimated costs to complete = $38,000,000 ($22 + $16 million)
2021 Revenue = $22/$38 * $47.5 = $27,500,000
Costs incurred during the year = 22,000,000
Gross profit to be recognized = $5,500,000
b) The percentage-of-completion method of accounting for long-term contract measures the percentage of costs incurred in each year against the contract price to determine the revenue which can be attributed to the year.
Select the qualification that is best demonstrated in each example.
Noah calculates the amount of money to add to a bank account.
Conrad stays calm and professional even when speaking with an angry customer.
Gabby is friendly and welcoming to customers who visit her bank.
Keiko explains a complicated loan application to a customer.
Answer:
Bankers
Explanation:
They all work in the bank but in different positions
Answer:
math skills, stress-management skills, customer-service skills & communication skills
Explanation:
I just did it on edge
At December 31, Folgeys Coffee Company reports the following results for its calendar year. Cash sales $ 913,000 Credit sales 313,000 Its year-end unadjusted trial balance includes the following items. Accounts receivable $ 138,000 debit Allowance for doubtful accounts 6,300 debit Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be (1) 4% of credit sales, (2) 2% of total sales and (3) 7% of year-end accounts receivable.
Answer:
Folgeys Coffee Company
(1) 4% of credit sales:
Debit Bad Debts Expense $18,820
Credit Allowance for Doubtful Accounts $18,820
To record bad debts expense and bring the balance to $12,520
(2) 2% of total sales:
Debit Bad Debts Expense $30,820
Credit Allowance for Doubtful Accounts $30,820
To record bad debts expense and bring the balance to $24,520.
(3) 7% of year-end accounts receivable:
Debit Bad Debts Expense $15,960
Credit Allowance for Doubtful Accounts $15,960
To record bad debts expense and bring the balance to $9,660.
Explanation:
a) Data and Calculations:
Cash Sales = $913,000
Credit Sales = $313,000
Total Sales = $1,226,000
Accounts Receivable = $138,000 Debit
Allowance for Doubtful Accounts = $6,300 debit
Estimated uncollectibles:
(1) 4% of credit sales:
= $12,520 ($313,000 * 4%)
Bad Debts Expense $18,820
Allowance for Doubtful Accounts $18,820
(2) 2% of total sales:
= $24,520 ($1,226,000 * 2%)
Bad Debts Expense $30,820
Allowance for Doubtful Accounts $30,820
(3) 7% of year-end accounts receivable:
= $9,660 ($138,000 * 7%)
Bad Debts Expense $15,960
Allowance for Doubtful Accounts $15,960
Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 35,600 labor-hours. The estimated variable manufacturing overhead was $6.76 per labor-hour and the estimated total fixed manufacturing overhead was $906,732. The actual labor-hours for the year turned out to be 32,000 labor-hours. The predetermined overhead rate for the recently completed year was closest to:
Answer: $32.23 per labor-hour
Explanation:
To solve the question, we need to first calculate the estimated total manufacturing overhead which will be:
= $906,732 + ($6.76 per labor-hour × 35,600 labor-hours)
= $906732 + $240656
= $1,147,388
Predetermined overhead rate will then be:
= $1,147,388 / 35,600 labor-hours
= $32.23 per labor hour
ASC 480-10 provides guidance on determining whether (1) certain financial instruments with both debt-like and equity-like characteristics should be accounted for outside of equity (i.e., as liabilities or, in some cases, assets) by the issuer and (2) SEC registrants should present certain redeemable equity instruments as temporary equity. Examples of contracts and transactions that may require evaluation under ASC 480-10 include:________
Answer:
. Redeemable shares.
• Redeemable noncontrolling interests.
• Forward contracts to repurchase own shares.
• Forward contracts to sell redeemable shares.
• Written put options on own stock.
• Warrants (and written call options) on redeemable equity shares.
• Warrants on shares with deemed liquidation provisions.
• Puttable warrants on own stock.
• Equity collars.
• Share-settled debt (this term is used to describe a share-settled obligation that is not in the legal form of debt but has the same economic payoff profile as debt).
• Preferred shares that are mandatorily convertible into a variable number of common shares.
• Unsettled treasury stock transactions.
• Accelerated share repurchase programs.
• Hybrid equity units.
Explanation:
ASC 480-10 is used when an issuer, in the declaration of its financial position, has to categorize some financial instruments that share the characteristics of liabilities and equities. The issuer always classifies legal-form debt as liability and this makes it not applicable under the ASC 480-10.
Under the ASC 480-10, three types of financial instruments are meant to be classified and they include;
1. Mandatorily redeemable financial instruments
2. Obligations to repurchase the entity’s equity shares by transferring assets, and
3.Certain obligations to issue a variable number of equity shares
capital economical definition
Answer:
In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business. ... In classical economics, capital is one of the four factors of production. The others are land, labor and organization
Answer: In economics, capital consists of human-created assets that can enhance one's power to perform economically useful work. ... Capital goods, real capital, or capital assets are already-produced, durable goods or any non-financial asset that is used in production of goods or services.
Explanation:
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $360,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year:
A. Raw materials purchased for use in production, $295,000.
B. Raw materials requisitioned for use in production (all direct materials), $280,000.
C. Utility bills were incurred, $78,000 (95% related to factory operations, and the remainder related to selling and administrative activities).
D. Salary and wage costs were incurred:
Direct labor (890 hours) $325,000
Indirect labor $109,000
Selling and administrative salaries $205,000
E. Maintenance costs were incurred in the factory, $73,000.
F. Advertising costs were incurred, $155,000.
G. Depreciation was recorded for the year, $91,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).
H. Rental cost incurred on buildings, $105,000 (85% related to factory operations, and the remainder related to selling and administrative facilities).
I. Manufacturing overhead cost was applied to jobs, $ ?.
J. Cost of goods manufactured for the year, $960,000.
K. Sales for the year (all on account) totaled $2,150,000. These goods cost $990,000 according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were:
Raw materials $49,000
Work in process $40,000
Finished Goods $79,000
Required:
1. Prepare journal entries to record the above data. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Post your entries to T-accounts. (Don’t forget to enter the opening inventory balances below.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.
3. Prepare a schedule of cost of goods manufactured
4. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
5. Prepare an income statement for the year.
6. Job 412 was one of the many jobs started and completed during the year. The job required $9,900 in direct materials and 35 hours of direct labor time at a total direct labor cost of $10,800. If the job contained six units and the company billed at 60% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer?
Answer:
Froya Fabrikker A/S of Bergen, Norway
1. Journal Entries:
a. Debit Raw materials $295,000
Credit Cash $295,000
To record purchase of raw materials
b. Debit Work in Process $280,000
Credit Raw materials $280,000
To record direct materials requisitioned for production.
c. Debit Manufacturing overhead $74,100
Debit Selling and Admin. $3,900
Credit Utilities Expenses $78,000
To record utilities expense for manufacturing and selling and admin.
d. Debit Work in Process $325,000
Debit Manufacturing overhead $109,000
Debit Selling and Admin. $205,000
Credit Salary and Wages Expense $639,000
To record labor costs for production, etc.
e. Debit Manufacturing overhead $73,000
Credit Maintenance Expense $73,000
To record factory maintenance expense.
f. Debit Selling and Admin. $155,000
Credit Advertising Expense $155,000
Tor record advertising expense.
g. Debit Manufacturing overhead $72,800
Debit Selling and Admin. $18,200
Credit Depreciation Expense $91,000
To record depreciation expense for production and selling and admin.
h. Debit Manufacturing overhead $89,250
Debit Selling and Admin $15,750
Credit Rent Expense $105,000
Rent expense for the year.
i. Debit Work in Process $326,000
Credit Manufacturing overhead $326,000
To apply overhead to production.
j. Debit Finished Goods $960,000
Credit Work in Process $960,000
To transfer completed jobs to finished goods inventory.
k. Debit Account Receivable $2,150,000
Credit Sales Revenue $2,150,000
To record the sale of goods on account.
k. Debit Cost of Goods Sold $990,000
Credit Finished Goods $990,000
To record the cost of goods sold.
2. T-accounts
Raw materials
Account Titles Debit Credit
Beginning Balance $49,000
Cash 295,000
Work in process $280,000
Ending balance 64,000
Work in process
Account Titles Debit Credit
Beginning Balance $40,000
Raw materials 280,000
Salaries and wages 325,000
Overhead 326,000
Finished Goods inventory $960,000
Ending balance 11,000
Finished Goods
Account Titles Debit Credit
Beginning Balance $79,000
Work in Process 960,000
Cost of goods sold $990,000
Ending balance 49,000
Cost of Goods Sold
Account Titles Debit Credit
Finished Goods $990,000
Underapplied overhead 92,150
Income Summary $1,082,150
Manufacturing Overhead
Account Titles Debit Credit
Utilities expense $74,100
Salaries and wages 109,000
Maintenance exp. 73,000
Depreciation exp. 72,800
Rent expense 89,250
Work in Process $326,000
Underapplied overhead 92,150
Totals $418,150 $418,150
Cash
Account Titles Debit Credit
Raw materials $295,000
Accounts receivable
Account Titles Debit Credit
Sales Revenue $2,150,000
Sales Revenue
Account Titles Debit Credit
Accounts receivable $2,150,000
Selling and Admin.
Account Titles Debit Credit
Utilities expense $3,900
Salaries and wages 205,000
Advertising expense 155,000
Depreciation exp. 18,200
Rent expense 15,750
3. Schedule of Cost of Goods Manufactured
Beginning WIP $40,000
Raw materials 280,000
Direct labor 325,000
Overhead 326,000
Total cost of production $971,000
Less ending WIP (11,000)
Cost of goods manufactured $960,000
4. Journal Entry to close Manufacturing Overhead to Cost of Goods Sold
Debit Cost of Goods Sold $92,150
Credit Manufacturing overhead $92,150
To close manufacturing overhead to cost of good of goods sold.
Schedule of Cost of Goods Sold
Finished Goods Inventory $960,000
Underapplied overhead 92,150
Total cost of goods sold $1,052,150
5. Income Statement for the year ended December 31
Sales Revenue $2,150,000
Cost of goods sold 1,052,150
Gross profit $1,097,850
Selling and Admin expenses:
Utilities expense $3,900
Salaries and wages 205,000
Advertising expense 155,000
Depreciation exp. 18,200
Rent expense 15,750
Total selling and admin. $397,850
Net Income $700,000
6. Job 412
Selling price per unit = $9,253
Explanation:
Estimated manufacturing overhead = $360,000
Estimated direct labor hours = 900
Predetermined overhead rate = $360,000/900 = $400 per DLH
Beginning Inventory Balances:
Raw materials $49,000
Work in process $40,000
Finished Goods $79,000
Job 412
Direct materials = $9,900
Direct labor hours = 35
Direct labor cost = $10,800
Applied overhead = $14,000 ($400 * 35)
Total cost = $34,700
Units in Job 412 = 6
Unit cost = $5,783 ($34,700/6)
Selling price = 60% markup
The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Duerr Company follows:
Beginning raw materials inventory $28,000
Ending raw materials inventory 31,000
Raw material purchases 105,000
Beginning work in process inventory 40,000
Ending work in process inventory 50,000
Direct labor 130,000
Total factory overhead 105,000
Beginning finished goods inventory 80,000
Ending finished goods inventory 60,000
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:________.
A. Cost of Materials Used Cost of Goods Manufactured Cost of Goods Sold
$105,000 $327,000 $307,000
B. $100,000 $327,000 $342.000
Answer:
Direct material used= $102,000
Cost of goods manufactured= $327,000
COGS= $347,000
Explanation:
First, we need to calculate the cost of direct material used:
Direct material used= beginning inventory + purchases - ending inventory
Direct material used= 28,000 + 105,000 - 31,000
Direct material used= $102,000
Now, the cost of goods manufactured:
cost of goods manufactured= beginning WIP + direct materials used + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 40,000 + 102,000 + 130,000 + 105,000 - 50,000
cost of goods manufactured= $327,000
Finally, the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 80,000 + 327,000 - 60,000
COGS= $347,000
Installment note; amortization schedule [LO14-3]
American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. In payment for the $5.3 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 10%.
Required:
1. Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2018.
2. Prepare an amortization schedule for the four-year term of the installment note.
3. Prepare the journal entry for the first installment payment on December 31, 2018.
4. Prepare the journal entry for the third installment payment on December 31, 2020.
5. Prepare an amortization schedule for the four-year term of the installment note.
Answer:
Annuity to be paid:
5,300,000 = Annuity * Present value interest factor of annuity, 10%, 4 years
5,300,000 = Annuity * 3.16986
Annuity = 5,300,000 / 3.16986
= $1,671,995.4950
= $1,671,995
1.
Date Account Title Debit Credit
Jan 1 , 2021 Right of Use Asset $5,300,000
Lease Payable $5,300,000
3.
Date Account Title Debit Credit
Dec 31 , 2021 Interest expense $530,000
Lease Payable $1,141,995
Cash $1,671,995
4.
Date Account Title Debit Credit
Dec 31 , 2023 Interest expense $290,181
Lease Payable $1,381,814
Cash $1,671,995
Question 2 is attached.
Wildhorse Warehouse distributes hardback books to retail stores and extends credit terms of 4/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred. June 1 Purchased books on account for $2,265 (including freight) from Catlin Publishers, terms 4/10, n/30. 3 Sold books on account to Garfunkel Bookstore for $1,400. The cost of the merchandise sold was $800. 6 Received $65 credit for books returned to Catlin Publishers. 9 Paid Catlin Publishers in full. 15 Received payment in full from Garfunkel Bookstore. 17 Sold books on account to Bell Tower for $1,000, terms of 4/10, n/30. The cost of the merchandise sold was $850. 20 Purchased books on account for $800 from Priceless Book Publishers, terms 3/15, n/30. 24 Received payment in full, less discount from Bell Tower. 26 Paid Priceless Book Publishers in full. 28 Sold books on account to General Bookstore for $2,950. The cost of the merchandise sold was $830. 30 Granted General Bookstore $120 credit for books returned costing $60. Journalize the transactions for the month of June for Wildhorse Warehouse, using a perpetual inventor
Answer:
Wildhorse Warehouse
Journal Entries:
June 1: Debit Inventory $2,265
Credit Accounts payable (Catlin Publishers) $2,265
To record the purchase of goods on account, terms 4/10, n/30.
June 3: Debit Accounts receivable (Garfunkel Bookstore) $1,400
Credit Sales Revenue $1,400
To record the sale of goods on account.
June 3: Debit Cost of goods sold $800
Credit Inventory $800
To record the cost of goods sold.
June 6: Debit Accounts payable (Catlin Publishers) $65
Credit Inventory $65
To record the return of goods on account.
June 9: Debit Accounts payable (Catlin Publishers) $2,200
Credit Cash $2,112
Credit Cash Discounts $88
To record the payment on account.
June 15: Debit Cash $1,400
Credit Accounts receivable (Garfunkel Bookstore) $1,400
To record the receipt of cash on account.
June 17: Debit Accounts receivable (Bell Tower) $1,000
Credit Sales Revenue $1,000
To record the sale of goods on account.
June 17: Debit Cost of goods sold $850
Credit Inventory $850
To record the cost of goods sold.
June 20: Debit Inventory $800
Credit Accounts payable (Priceless Book Publishers) $800
To record the purchase of goods on account, terms 3/15, n/30.
June 24: Debit Cash $960
Debit Cash Discounts $40
Credit Accounts receivable (Bell Tower) $1,000
To record the receipt of cash on account.
June 26: Debit Accounts payable (Priceless Book Publishers) $800
Credit Cash $776
Credit Cash Discounts $24
To record the payment on account.
June 28: Debit Accounts receivable (General Bookstore) $2,950
Credit Sales Revenue $2,950
To receive the sale of goods on account.
June 28: Debit Cost of goods sold $830
Credit Inventory $830
To record the cost of goods sold.
June 30: Debit Sales Return $120
Credit Accounts receivable (General Bookstore) $120
To record the return of goods by a customer.
June 30: Inventory $60 Cost of Goods Sold $60
Explanation:
a) Data and Analysis:
Credit terms to all customers = 4/10, n/30. This means that 4% discount is allowed to customers who pay within 10 days. The credit period is for 30 days, after which the customer is expected to pay interest.
June 1: Inventory $2,265 Accounts payable (Catlin Publishers) $2,265; terms 4/10, n/30.
June 3: Accounts receivable (Garfunkel Bookstore) $1,400 Sales Revenue $1,400
June 3: Cost of goods sold $800 Inventory $800
June 6: Accounts payable (Catlin Publishers) $65 Inventory $65
June 9: Accounts payable (Catlin Publishers) $2,200 Cash $2,112 Cash Discounts $88.
June 15: Cash $1,400 Accounts receivable (Garfunkel Bookstore) $1,400
June 17: Accounts receivable (Bell Tower) $1,000 Sales Revenue $1,000
June 17: Cost of goods sold $850 Inventory $850
June 20: Inventory $800 Accounts payable (Priceless Book Publishers) $800; terms 3/15, n/30.
June 24: Cash $960 Cash Discounts $40 Accounts receivable (Bell Tower) $1,000
June 26: Accounts payable (Priceless Book Publishers) $800 Cash $776 Cash Discounts $24
June 28: Accounts receivable (General Bookstore) $2,950 Sales Revenue $2,950
June 28: Cost of goods sold $830 Inventory $830
June 30: Sales Return $120 Accounts receivable (General Bookstore) $120
June 30: Inventory $60 Cost of Goods Sold $60
Assume the perpetual inventory method is used:
a. Green Company purchased merchandise inventory that cost $16,800 under terms of 2/10, n/30 and FOB shipping point.
b. Green Company paid freight cost of $680 to have the merchandise delivered.
c. Payment was made to the supplier on the inventory within 10 days.
d. All of the merchandise was sold to customers for $25,100 cash and delivered under terms FOB destination with freight cost amounting to $480.
The gross margin from these transactions of Green Company is:________
Answer:
Gross margin = $8156
Explanation:
Formula for gross margin is given by;
Gross margin = Revenue - Cost of goods sold
where,
Revenue = $25100
Cost of goods sold = (cost of Purchase × ( 1 - Discount rate)) + freight cost
Thus;
Cost of goods sold = $16800 - (16800 × 0.02)) + $480
Cost of goods sold = $16944
Thus;
Gross margin = $25100 - $16944
Gross margin = $8156
A bank has kept records of the checking balances of its customers and determined that the average daily balance of its customers is $300 with a standard deviation of $56. A random sample of 200 checking accounts is selected. You are interested in calculating the following probabilities below.1. Assuming that the population of the checking account balances is normally distributed, what is the probability that a randomly selected account has a balance of more than $305?2. What is the probability that the mean balance for the selected sample is above $295?3. What is the probability that the mean balance for the selected sample is below $290?4. What is the probability that the mean balance for the selected sample is between $302 and $304?
Answer:
1. P(X > 305) = $0.1038
2. P ( X > 295) = $0.8962
3. P ( X > 290) = $0.0057
4. P(302 < X < 304 ) = $0.1488
Explanation:
Solution:
Data Given:
Mean = u = $300
SD = Standard Deviation = $56
Sample Size = n = 200
uX = u = 300
SDX = [tex]\frac{SD}{\sqrt{n} }[/tex] = [tex]\frac{56}{\sqrt{200} }[/tex] = 3.96
1.
P(X > 305) = 1-P ([tex]\frac{X - uX}{SDX} < \frac{305 - 300}{3.96}[/tex])
P(X > 305) = 1-P (Z < 1.26)
Using Standard Normal Table, we have:
P(X > 305) = 1 - 0.8962
Probability = $0.1038
2.
P ( X > 295) = 1 - P ( [tex]\frac{X - uX }{SDX} < \frac{295 - 300}{3.96}[/tex] )
P ( X > 295) = 1 - P (Z< 1.26)
Using standard normal table, we have:
P ( X > 295) = 1 - 0.1038
P ( X > 295) = $0.8962
3.
P ( X > 290) = P ( [tex]\frac{X - uX }{SDX} < \frac{290 - 300}{3.96}[/tex] )
P ( X > 290) = P ( z< -2.53)
Using Standard normal table, we have:
P ( X > 290) = $0.0057
4.
P(302 < X < 304 ) = P ( [tex]\frac{302 - 300}{3.96} < \frac{X - uX}{SDX} < \frac{304 - 300}{3.96}[/tex] )
P(302 < X < 304 ) = P ( 0.51 < z < 1.01)
P(302 < X < 304 ) = P (z < 1.01) - P (z < 0.51)
P(302 < X < 304 ) = 0.8438 - 0.6950
P(302 < X < 304 ) = $0.1488
Lightning Semiconductors produces 200,000 hi-tech computer chips per month. Each chip uses a component that Lightning makes in-house. The variable costs to make the component are $1.20 per unit, and the fixed costs are $1,300,000 per month. The company has been approached by a foreign producer who can supply the component, within acceptable quality standards, for $1.10 each. The fixed costs are unavoidable, and Lightning would have no other use for the facilities currently employed in making the component. What would be the effect if the company decides to outsource?
a. There would be no effect on operating income.
b. Lightning Semiconductors could save $1,300,000 per month in costs.
c. Lightning Semiconductors could save $20,000 per month in costs.
d. Lightning Semiconductor's costs would increase by $220,000 per month
Answer:
c. Lightning Semiconductors could save $20,000 per month in costs.
Explanation:
The Differential Analysis would be presented below:
Particulars Make Buy
Variable production cost $240,000
Purchase price $220,000
Total relevant Cost $240,000 $220,000
Based on the above table, the financial advantage is
= $240,000 - $220,000
= $20,000
.
Bonita Enterprises reported cost of goods sold for 2020 of $1,419,800 and retained earnings of $5,569,300 at December 31, 2020. Bonita later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $99,040 and $31,710, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings.
Answer:cost of goods sold in 2020 = $1,352,470
retained earnings in December 31, 2020 =$5,537,590
Explanation:
For cost of goods sold in 2020
Corrected cost of goods sold = Reported cost of goods sold in 2020 - overstated value of ending inventory in year 2019 + overstated value of ending inventory in year 2020
= $1,419,800 -$99,040+ $31,710,
= $1,352,470
For retained earnings in December 31, 2020
Corrected retained earnings == Reported retained earning in 2020 - overstated value of ending inventory in year 2020
= $5,569,300-$31,710
=$5,537,590
Cullumber Company uses the lower-of-cost-or-net realizable value basis for its inventory. The following data are available at December 31. Item Units Unit Cost Net Realizable Value Cameras: Minolta 3$172$152 Canon 9140170 Light meters: Vivitar 13130100 Kodak 16117128 Determine the amount of the ending inventory by applying the lower-of-cost-or-net realizable value basis. The ending inventory $enter The ending inventory in dollars
Answer:
Cullumber Company
The ending inventory is:
= $4,888.
Explanation:
a) Data and Calculations:
Item Units Unit Cost Net Realizable Value Value of Ending
Cameras: Inventory (LCNRV)
Minolta 3 $172 $152 $456 ($152 * 3)
Canon 9 140 170 1,260 ($140 * 9)
Light meters:
Vivitar 13 130 100 1,300 ($100 * 13)
Kodak 16 117 128 1,872 ($117 * 16)
Total value of Ending Inventory based on LCNRV = $4,888
b) The Lower of cost- or net realizable value method of valuing ending inventory determines the value by choosing the lower value between the cost price of the inventory and the net realizable value. The purpose that is served by using the LCNRV method is that it reflects the decrease of inventory value when it goes below its original cost while at the same time it does not recognize the increased market value when the cost is lower.
Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K.
Units of J MUj Units of K MUk
1 56 1 32
2 48 2 28
3 32 3 24
4 24 4 20
5 20 5 12
6 16 6 10
7 12 7 8
If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4, respectively, she would maximize her satisfaction by purchasing:
a. 4 units of J and 5 units of K.
b. 6 units of J and 3 units of K.
c. 5 units of J and 5 units of K.
d. 2 units of J and 7 units of K.
Answer:
d. 2 units of J and 7 units of K.
Explanation:
Marginal utility of a consumer is the measure of the benefit gained by consuming each additional unit. In the given scenario the consumer will gain from consuming each additional unit of J and K. When the consumer will have more of J then his marginal utility will decline which indicates that there should be combination of J and K.
Routsong Corporation had the following sales and production for the past four years:
Year 1 Year 2 Year 3 Year 4
Production in units 6,000 9,000 4,000 5,000
Sales in units 6,000 6,000 5,000 7,000
Selling price per unit, variable cost per unit, and total fixed cost are the same each year. There were no beginning inventories in Year 1. Which of the following statements is not correct?
A. Under variable costing, net operating income for Year 1 and Year 2 would be the same.B. Because of the changes in production levels, under variable costing the unit product cost will change each year.C. The total net operating income for all four years combined would be the same under variable and absorption costing.D. Under absorption costing, net operating income in Year 4 would be less than the net operating income in Year 2.
Answer:
B. Because of the changes in production levels, under variable costing the unit product cost will change each year
Explanation:
In variable costing, Product Cost is the total of variable manufacturing costs only. Whereas in Absorption costing, the Product cost is the total of both variable and fixed manufacturing overheads.
The following statements is not correct : Because of the changes in production levels, under variable costing the unit product cost will change each year.
The following information pertains to Blossom Company.
1. Cash balance per bank, July 31, $10,962.
2. July bank service charge not recorded by the depositor $63.
3. Cash balance per books, July 31, $11,088.
4. Deposits in transit, July 31, $4,473.
5. $2,520 collected for Blossom Company in July by the bank through electronic funds transfer. The accounts receivable collection has not been recorded by Blossom Company.
6. Outstanding checks, July 31, $1,890.
A. Prepare a bank reconciliation at July 31, 2010
B. Journalize the adjusting entries at July 31 on the books of Sunland Company.
Answer:
A. Adjusted cash balance per bank $13,545
Adjusted cash balance per books $13,545
B. July 31
Dr Cash $2,520
Cr Accounts Receivable $2,520
July 31
Dr Bank service charge $63
Cr Cash $63
Explanation:
A. Preparation of a bank reconciliation at July 31, 2010
PHAROAH COMPANY
Bank Reconciliation
31-Jul-10
Cash Balance per bank statement $10,962
Add: Deposit in transit $4,473
$15,435
Less: Outstanding checks $1,890
Adjusted cash balance per bank $13,545
Cash balance per books $11,088
Add: Electronic fund transfer received $2,520
$13,608
less; Bank service charge $63
Adjusted cash balance per books $13,545
B. Preparation of the adjusting entries at July 31 on the books of Sunland Company.
July 31
Dr Cash $2,520
Cr Accounts Receivable $2,520
(To record electronic fund transfer received by bank)
July 31
Dr Bank service charge $63
Cr Cash $63
(To record bank service charges )
The following situations refer only to the preceding data; there is no connectionbetween the situations. Unless stated otherwise, assume a regular selling price of $6 per unit. Choose the best answer to each question. Show your calculations.1.The pen is usually produced and sold at the rate of 240,000 units per year (an average of 20,000 per month). The selling price is $6 per unit, which yields total annual revenuesof $1,440,000. Total costs are $1,416,000, and operating income is $24,000, or $0.10 per unit. Market research estimates that unit sales could be increased by 10% if prices were cut to $5.80. Assuming the implied cost-behavior patterns continue, this action, if taken, would
Answer:
If prices are cut by $0.2 then the operating income will increase by $91,200.
Explanation:
Current Gross Profit is :
Revenue [240,000 * $6] = $1,440,000
Cost of Sales = $1,416,000
Gross Profit = $24,000
If selling price is reduced to $5.80
Revenue $5.80 * [ 240,000 * 1.10 % ] = $1,531,200
Cost of Sales $1,416,000
Gross Profit = $115,200
Cecil Green sells golf hats. He knows that most people will not pay more than $23 for a golf hat. Cecil needs a 39% markup on cost. What should Cecil pay for his golf hats? (Round your answer to the nearest cent.)
Answer: $16.55
Explanation:
People will not pay more than $23 for a golf hat but Mr. Green still needs to add a 39% markup on cost.
Assume the price Mr. Green sells at is $23. His cost to get one hat should be denoted as x:
23 = x + (x * 39%)
23 = x + 0.39x
23 = 1.39x
x = 23/1.39
x = $16.55
On April 1, 2020, Rasheed Company assigns $400,000 of its accounts receivable to the Third National Bank as collateral for a $200,000 loan due July 1, 2020. The assignment agreement calls for Rasheed to continue to collect the receivables. Third National Bank assesses a fi nance charge of 2% of the accounts receivable, and interest on the loan is 10% (a realistic rate of interest for a note of this type).
Required:
a. Prepare the April 1, 2020, journal entry for Rasheed Company.
b. Prepare the journal entry for Rasheed's collection of $350,000 of the accounts receivable during the period from April 1, 2014, through June 30, 2020.
c. On July 1, 2020, Rasheed paid Third National all that was due from the loan it secured on April 1, 2020. Prepare the journal entry to record this payment.
Answer:
1. Dr Cash 192,000
Dr Finance charge 8,000
Cr Notes payable 200,000
2. Dr Cash 350,000
Cr Accounts receivable 350,000
3. Dr Notes payable 200,000
Dr Interest expense 5,000
Cr Cash 205,000
Explanation:
A. Preparation of the April 1, 2020, journal entry for Rasheed Company.
Dr Cash 192,000
(200,000-8,000)
Dr Finance charge 8,000
(2%*400,000)
Cr Notes payable 200,000
B. Preparation of the journal entry for Rasheed's collection of the amount of $350,000 of the accounts receivable
Dr Cash 350,000
Cr Accounts receivable 350,000
C) Preparation of the journal entry to record all the amount that was due from the loan it secured on April 1, 2020
Dr Notes payable 200,000
Dr Interest expense 5,000
(10%*$200,000*3/12)
Cr Cash 205,000
(200,000+5,000)
A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 54,800 units, 75% complete with respect to direct labor and overhead. The department completed and transferred out 115,500 units this period. The ending inventory consists of 44,800 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $36,000 and overhead costs of $44,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:
Answer:
$0.28/EUP
Explanation:
Calculation for the direct labor cost per equivalent unit (rounded to the nearest cent) is:
First step is to calculate the Total EUP's
Completed and transferred out 115,500
Add EGIP $11,200
(44,800 * 25%)
Total EUP's $126,700
Now let calculate direct labor cost per equivalent unit using this formula
Direct labor cost per equivalent unit=Cost / Eup
Let plug in the formula
Direct labor cost per equivalent unit=($36,000/$126,700)
Direct labor cost per equivalent unit=$0.28/EUP
Therefore Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:$0.28/EUP
Catena's Marketing Company has the following adjusted trial balance at the end of the current year. Cash dividends of $630 were declared at the end of the year, and 590 additional shares of common stock ($0.10 par value per share) were issued at the end of the year for $2,910 in cash for a total at the end of the year of 810 shares). These effects are included below
Cash Catena's Marketing Company Adjusted Trial Balance End of the Current Year
Debit Credit
Cash $ 1,370
Accounts receivable 2,230
Interest receivable 170
Prepaid insurance 1,620
Long-term notes
receivable 2,890
Equipment 15,700
Accumulated depreciation $ 3.060
Accounts payable 2,400
Dividends payable 630
Accrued expenses payable 3,740
Income taxes payable 2,640
Unearned rent revenue 430
Common Stock (810 shares) 81
Additional paid in capital 3.589
Retained earnings 1,870
Sales revenue 38,780
Interest revenue 150
Rent revenue 760
Wages expense 20,700
Depreciation expense 1,700
Utilities expense
Insurance expense 760
Rent expense 7,880
Income tax expense 2,780
Total $58,130 $58,130
Prepare the closing entry at the end of the current year, (if no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
The Board of Ursinus College in Pennsylvania raised its tuition and fees 17.6 percent to $23,460 in 2000. It subsequently received 200 more applications than the year before. The president of the college surmised that "applicants had apparently concluded that if the college cost more, it must be better." Other colleges that raised tuition to match rival colleges in recent years include University of Notre Dame, Bryn Mawr College, Rice University, and the University of Richmond. They also experienced an increase in applications. In contrast, North Carolina Wesleyan College lowered their tuition and fees about 10 years ago by 22 percent and attracted fewer students. The college president concluded that "it didn't work out the way it had been hoped. People don't want cheap."
You are hired as a consultant to a President of a liberal arts college in the East. You are asked to evaluate a recommendation by the college's Admissions Director. Susan Hansen, to increase tuition and to reduce financial aid to students. Susan argues that the data from competing colleges suggest that the demand curves for colleges slope upward-the quantity demanded increases with price. Susan projects that the increase in tuition and reduction in financial aid will solve the school's financial problems. Last year, the college enrolled 400 new students who each paid an effective tuition of $15,000 (after financial aid), totaling $6,000,000. She projects that with the increased demand from charging an effective tuition of $25,000, the college will be able to enroll 600 new students (of equal or better quality), totaling $15,000,000.
Required:
Evaluate Susan's analysis and recommendation
Solution :
The demand curve : The quantity demanded for each price
[tex]$D=Q(P)$[/tex]
The prices goes up, quantity demanded will decreases.
The price goes up, quantity demanded will increase
Board of the Ursinus College in Pennsylvania raised tuition fees : $ 23,460 which is 17.6 % more to 2000.
The applicants : 200 more from previous year.
Therefore the college cost most, then it must be better.
Other rival competitions have also seen same scenarios. When cost goes down, the demand decreases.
Susan's perceptive :
Demand increases with cost increase and the demand curve slopes upwards.
Our understanding is completely different with the understanding of the college administrative officer, Susan.
Our understanding is negative slope of the demand curve other than change in price of any other parameter will lead to shift in demand curve, either in or out.
If all the tuitions fees are increased, then financial aid needs to be sponsored by the 'state'. That will effect reserves which leads to the failure of the sole purpose of aids.
Our recommendation should be to tell the board members the long term effects of the increase in the tuitions fees and no financial aid will create.
The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: Production volume 2,000 units 4,000 units Direct materials $ 88.40 per unit $ 88.40 per unit Direct labor $ 20.60 per unit $ 20.60 per unit Manufacturing overhead $ 86.90 per unit $ 55.30 per unit The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.) Multiple Choice
Answer:
$132.70
Explanation:
The computation of the total variable manufacturing cost per unit is shown below
But before that manufacturing overhead per unit is recorded
Variable manufacturing overhead
= (Cost at the highest activity - Cost at the lowest activity) ÷ (Highest activity-Lowest activity)
= [(2000 × 86.90) - (4000 × 55.30)] ÷ (2000 - 4000)
= (173,800 - 221,200) ÷ (-2000)
= 23.70 per unit
Now Total manufacturing cost per unit
= Direct Materials + Direct Labor + Variable Manufacturing Overhead
= $88.40 + $20.60 + $23.70
= $132.70
The United States is said to have an absolute advantage in producing food compared with Japan. What does that mean?
It must import most of its food from Japan.
It produces food more efficiently than Japan.
It produces food at a higher cost than Japan.
It must export most of its food to Japan.
Answer:
It produces food more efficiently than Japan.
Explanation:
Given that an ABSOLUTE ADVANTAGE is when a country or company can produce the same quantity of goods more efficiently than another country or company with lesser input or produce more quantities of goods with more efficiently with the same input.
Hence, in this case, when it is said that the United States has an absolute advantage in producing food compared with Japan, it means that "It produces food more efficiently than Japan."
The correct answer would be B: It produces food more efficiently than Japan
A man uses 1/8 of his salary after tax on
house rent and a 3/5 on transport, food and
other household items. He then reserves
5/8 of the remainder on leisure and
incidentals while saving the rest. If he
saves $37135 every month. How much is
his Salary after tax? (round to the nearest
whole number)
Answer:
$360,534
Explanation:
The computation of the salary after tax is shown below:
Let us assume the salary be x
So 1 by 8 of x = 0.125x
And, 3 by 5 of x = 0.6x
Now
X - (0.125x + 0.6x) = 0.275x
Balance = 0.275x
5 by 8 of 0.275x = 0.172x
0.275x - 0.172x = 0.103x
Now
0.103x = $37135
So,
x = $360,534
Riverside Oil Company in eastern Kentucky produces regular and supreme gasoline. Each barrel of regular sells for $21 and must have an octane rating of at least 90. Each barrel of supreme sells for $25 and must have an octane rating of at least 97. Each of these types of gasoline are manufactured by mixing different quantities of the following three inputs:
Input Cost per Barrel Octane Rating Barrels Available in (1000s)
1 $17.25 100 150
2 $15.75 87 350
3 $17.75 110 300
Riverside has orders for 300,000 barrels of regular and 450,000 barrels of supreme. How should the company allocate the available inputs to the production of regular and supreme gasoline to maximize profits?
a. Formulate and LP model for this problem.
b. What is the optimal solution?
Solution :
Here,
[tex]$X_{iR}$[/tex] = the number of the barrels mixed i to manufacture the regular gasoline
[tex]$X_{iS}$[/tex] = the number of the barrels mixed i to manufacture the supreme gasoline.
The [tex]$\text{selling price}$[/tex] of each of the barrel of both gasoline is [tex]$\$ 21$[/tex] and [tex]$\$25$[/tex]. So the total [tex]$\text{selling price}$[/tex] of both types of gasoline is represented by :
[tex]$21 \times \sum X_{iR} +25 \times \sum X_{iS}$[/tex]
The cost prices of one barrel of the three types of input are 17.25, 1575 and 17.75.
So the total price is represented by :
[tex]$17.25 \times (X_{iR}+X_{iS})+15.75 \times (X_{2R}+X_{2S})+17.75 \times (X_{3R}+X_{3S})$[/tex]
The company wants to increase the profit. So maximize objective function will be used.
Max Z = [tex]$(21. \times \sum X_{iR} +24 \times \sum X_{iS})-[17.25 \times (X_{iR}+X_{iS})+17.75 \times (X_{2R}+X_{2S})+17.75 \times (X_{3R}+X_{3S})]$[/tex]The company has 150,000 barrels of input 1 available. So,
[tex]$X_{1R}+ X_{1S} \leq 150,000$[/tex]
[tex]$X_{2R}+ X_{2S} \leq 350,000$[/tex]
[tex]$X_{3R}+ X_{3S} \leq 300,000$[/tex]
The company got an order to sell 300,000 barrels of regular and 450,000 barrels of supreme gasoline. So,
[tex]$X_{1R}+X_{2R}+X_{3R} = 300,000$[/tex]
[tex]$X_{1S}+X_{2S}+X_{3S} = 450,000$[/tex]
The company wishes the regular gasoline to have octane number of at least 90. So,
[tex]$\frac{100 \times X_{1R}+87 \times X_{2R} +10 \times X_{3R}}{\sum X_{iR}}\geq 90$[/tex]
The company wishes the supreme gasoline to have octane number of at least 97. So,
[tex]$\frac{100 \times X_{1S}+87 \times X_{2S} +10 \times X_{3S}}{\sum X_{iR}}\geq 97$[/tex]
Formulating the LP model :
Max :
[tex]$[21 \times \sum X_{iR}+25 \times \sum X_{iS}]$[/tex] [tex]$-[17.25 \times (X_{1R}+X_{1S})+15.75 \times (X_{2R}+X_{2S})+17.75 \times (X_{3R}+X_{3S})]$[/tex]
Subject to :
[tex]$X_{1R}+ X_{1S} \leq 150,000$[/tex]
[tex]$X_{2R}+ X_{2S} \leq 350,000$[/tex]
[tex]$X_{3R}+ X_{3S} \leq 300,000$[/tex]
Also,
[tex]$X_{1R}+X_{2R}+X_{3R} = 300,000$[/tex]
[tex]$X_{1S}+X_{2S}+X_{3S} = 450,000$[/tex]
[tex]$\frac{100 \times X_{1R}+87 \times X_{2R} +10 \times X_{3R}}{\sum X_{iR}}\geq 90$[/tex]
[tex]$\frac{100 \times X_{1S}+87 \times X_{2S} +10 \times X_{3S}}{\sum X_{iR}}\geq 97$[/tex]
Transactions for Buyer and Seller Sievert Co. sold merchandise to Vargas Co. on account, $148,600, terms FOB shipping point, 2/10, n/30. The cost of the merchandise sold is $89,160. Sievert Co. paid freight of $2,100. Assume that all discounts are taken. Journalize Sievert Co.'s entries for the (a) sale, (b) purchase, and (c) payment of amount due. If an amount box does not require an entry, leave it blank.
Answer:
Part a
Debit : Accounts Receivable - Vargas Co. $148,600
Debit : Cost of Sales $89,160
Credit : Sales Revenue $148,600
Credit : Merchandise $89,160
Part b
Debit : Freight Expenses $2,100
Credit : Cash $2,100
Part c
Debit : Cash $133,740
Debit : Discount allowed $14,860
Credit : Accounts Receivable - Vargas Co. $148,600
Explanation:
A corresponding cost of sales must be recorded each time a sale is made. The freight costs are company costs for Sievert Co. and will be expensed in the income statement.
The payment due is at 90 % after the discount of 10% given that the payment is made within the credit term of 30 days.
During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $6 per unit, Direct labor, $4 per unit, Variable overhead, $5 per unit, and Fixed overhead, $220,000. The company produced 22,000 units, and sold 16,000 units, leaving 6,000 units in inventory at year-end. Income calculated under variable costing is determined to be $330,000. How much income is reported under absorption costing
Answer:
$390,000
Explanation:
Given the above information, we'll determine first the total variable cost.
Total variable cost = (direct materials + direct labor + variable overhead) × units produced
= ($6 + $4 + $5) × 22,000 units
= $15 × 22,000 units
= $330,000
Per unit fixed cost = Fixed cost / total units produced
= $220,000/$22,000
= $10
Fixed cost in inventory = Inventory at year end × Per unit fixed cost
= 6,000 × $10
= $60,000
Net income under absorption costing = income under variable costing + Fixed cost on inventory
= $330,000 + $60,000
= $390,000