Answer:
Megginson, Inc.
Effect of the Bond Issuance on Megginson, Inc.'s accounting equation:
(The account equation states that Assets = Liabilities + Equity.)
With the bond issuance, the Assets (Cash) will increase by $290,000 and the Liabilities (Bonds Payable) will increase by $300,000, and there will be a loss (Equity - Retained Earnings) of $10,000 in the form of Discount on Bonds. This discount on bonds is usually amortized over the bonds' life, thus increasing the interest payable.
Explanation:
The issuance of bonds is one of the means of obtaining finance for business operations. It is a long-term borrowing, which entities use to finance the activities when funds cannot be sourced from other sources or when it is considered cheaper to borrow from outside sources.
A team is working on a cutting-edge technology, and does not have a lot of familiarity with the technical environment. As a result, it is struggling to estimate a complex story because the approach itself is not clear. How should the team proceed
Answer:
The answer is "Writing a SPIKE (a non-technical nonstory) as well as the period box until you accept your system planning article".
Explanation:
The working of the team is on state-of-the-art technology and its understanding of the relevant setting, and its main purpose of removing technological complexity is to conduct experiments-this is what a SPIKE tale is about. Whenever a story could not be predicted as the manager wants an experiment, it's indeed best to read a piece before continuing to work on the storyline.
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Activity Rate Setting up batches $ 59.71 per batch Processing customer orders $ 73.05 per customer order Assembling products $ 4.40 per assembly hour Data concerning two products appear below: Product K91B Product F65O Number of batches 92 63 Number of customer orders 42 56 Number of assembly hours 496 903 How much overhead cost would be assigned to Product K91B using the activity-based costing system
Answer:
Product K91B= $10,743.82
Explanation:
Giving the following information:
Activity Cost Pool Activity Rate
Setting up batches $ 59.71 per batch
Processing customer orders $ 73.05 per customer order
Assembling products $ 4.40 per assembly hour
Product K91B
Number of batches 92
Number of customer orders 42
Number of assembly hours 496
We were given the allocation rates, all we need to do is allocate based on actual allocation base:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product K91B= 59.71*92 + 73.05*42 + 4.4*496
Product K91B= $10,743.82
The required return on the stock of Moe's Pizza is 10.8 percent and aftertax required return on the company's debt is 3.40 percent. The company's market value capital structure consists of 69 percent equity. The company is considering a new project that is less risky than current operations and it feels the risk adjustment factor is minus 1.9 percent. The tax rate is 39 percent. What is the required return for the new project? rev: 12_20_2018_QC_CS-152115 Multiple Choice 10.41% 6.19% 8.51% 9.99% 6.61%
Answer:
The required return for the new project is 6.87%
Explanation:
In order to calculate the required return for the new project we would have to calculate the Weighted Average Cost of Capital (WACC) adjusted by risk adjustment factor .
The Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]
After -tax Cost of Debt = 3.40%
Cost of Equity = 10.80%
Weight of Debt = 0.39
Weight of Equity = 0.69
Therefore, the Weighted Average Cost of Capital (WACC) = [After Tax Cost of Debt x Weight of Debt] + [Cost of equity x Weight of Equity]
= [3.40% x 0.39] + [10.80% x 0.69]
= 1.32% + 7.45%
= 8.77%
The required return for the new project = Weighted Average Cost of Capital – Risk Adjustment Factor
= 8.77% - 1.90%
= 6.87%
The required return for the new project is 6.87%
On August 31,the balance sheet of La Brava Veterinary Clinic showed cash $9,000,Account receivable$1700,supplies $600,equipments $6000,account payable $3600,common stock $13,00 and retained earings $700. During september,the following transaction occur
1. paid $2900 cash for accounts payable
2. collected $1,300 of accounts receivable
3. purchased additional equipments for $2100,paying $800 in cash and the balance on account
4. recognized revenue of $7300 of which $1500 is collected in cash and balance due in october
5. declared and paid $400 cash dividend
6. paid salaries $1700 rent for september $900,and advertising expense $200
7. Incurred utilities expense for month on account $170
8. Received $10,000 from capital bank on 6 month note payable
a. prepare a tabular analysis of september transactions begin with august 31 balances.column headings: cash,account receivable,supplies,equipments,account payable,common stock,retain earnings with separate column for revenues,expenses,dividends.Including margin explanation changes in retain earnings. Revenue is called Service Revenueb. prepare an income statements for september,a retained earnings statements for september,and a balance sheet at september 30.
Answer:
Brava Veterinary Clinic
a) Tabular Analysis of September Transactions:
see attached.
b1) Income Statement for September:
Service Revenue $7,300
Expenses:
Salaries $1,700
Rent 900
Advertising 200
Utilities 170 ($2,970)
Net Income $4,330
b2) Retained Earnings Statements for September
Net Income $4,330
Beginning Retained Earnings $700
Dividends ($400)
Ending Retained Earnings $4,630
b3) Balance Sheet at September 30:
Assets:
Cash $14,900
Accounts Receivable 6,200
Supplies 600
Equipment 8,100
Total Assets $29,800
Liabilities + Equity:
Accounts Payable $12,170
Common Stock 13,000
Retained Earnings 4,630
Total Liabilities + Equity $29,800
Explanation:
Financial Statements (Income Statement and Balance Sheet) are prepared at the end of a period to show the financial performance (Net Income) and the financial position (Assets = Liabilities + Equity) of a business entity.
A tabular statement of transactions illustrates the changes that have taken place during the period as a result of transactions. Transactions affect the Assets and Liabilities and Equity equally. The excess of revenue over expenses gives a net income.
Answer:
For a better visualization of the answer the first point was attached as an image.
Income Statement
Sales Revenues 7300
Salaries expense (1700)
Rent Expense (900)
Advertising Expense (200)
Utilities expense (170)
Net Income 4,330
Retained Earnings
Beginning 700
Income 4,330
Dividends (400)
Ending 4,630
Balance Sheet
Cash 14,900
Account Receivables 6,200
Supplies 600
Current 21,700
Equipment 8,100
Total Assets 29,800
Liablities
Account Payable 2,170
Note Payable 10,000
Total Liabilities 12,170
Equity
Common Stock 13,000
Retained Earnings 4,630
Total Equity 17,630
Total Liabilities + Equity 29,800
Explanation:
The dividends paid are not considered an expense.
We consider revenues and expense using the accrual basis rather than cash basis so we also recognize accrued expense (utilities ) and accrued revenues (sales which weren't paid right away)
For the Balance sheet the equipment is considered long.temr asset as their usefil life exceed a year.
The note payable while it is different from account payable is also a current liaiblity as it is due within the one-uyear window.
Assume the following data for Lusk Inc. before its year-end adjustments: Debit CreditSales $3,600,000 Cost of Merchandise Sold $2,100,000Estimated Returns Inventory 1800Customer Refunds Payable 900Estimated cost of merchandise that Will be returned in the next year 15,000Estimated percent of refunds for current year sales 0.8%Journalize the adjusting entries for the following: a. Estimated customer allowances b. Estimated customer returns
Answer:
a. Estimated customer allowances
December 31, 202x. estimated customer allowance
Dr Sales 27,900
Cr Customer refunds payable 27,900
total estimated refunds payable = $3,600,000 x 0.8% = $28,800 - $900 (account balance) = $27,900
b. Estimated customer returns
December 31, 202x. estimated customer returns
Dr Estimated returns inventory 13,200
Cr Cost of merchandise sold 13,200
total estimated returns $15,000 - $1,800 = $13,200
Explanation:
Sales $3,600,000
Cost of Merchandise Sold $2,100,000
Estimated Returns Inventory $1800
Customer Refunds Payable $900
Estimated cost of merchandise that Will be returned in the next year $15,000
Estimated percent of refunds for current year sales 0.8%
Compute net income for 2019 by comparing total equity amounts for these two years and using the following information: During 2019, the owner invested $33,000 additional cash in the business (in exchange for common stock) and the company paid a $36,000 cash dividend.
Equity, December 31, 2018
Equity, December 31, 2019
The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2018 and 2019.
December 31 2018 2019
Cash $55,530 $10,900
Accounts receivable 30,142 23,632
Office Supplies 4,755 3,483
Office equipment 145,958 155,473
Trucks 57, 115 66, 115
Building 0 190, 398
Land 0 47,511
Accounts payable 79,245 39,303
Note payable 0 137,909
Answer:
net income during 2019 = $109,045
Explanation:
total stockholder equity 2018 = assets - liabilities = $293,500 - $79,245 = $214,255
total stockholder equity 2019 = assets - liabilities = $497,512 - $177,212 = $320,300
change in equity from 2018 to 2019 = $106,045
$33,000 can be explained by additional capital invested, and the remaining $73,045 corresponds to change in retained earnings
change in retained earnings = net income - dividends distributed
$73,045 = net income - $36,000
net income = $109,045
A company has net credit sales of $ 1 comma 300 comma 000, beginning net accounts receivable of $ 270 comma 000, and ending net accounts receivable of $ 202 comma 000. What is the days' sales in accounts receivable? (Use 365 days in calculations as needed. Round any intermediate calculations to two decimal places, and your final answer to the nearest whole day.)
Answer:
66.36 days
Explanation:
Calculation of the days' sales in accounts receivable .
Using this formula
Accounts Receivable Turnover Ratio = [Net credit sales (Beginning net account receivable +Ending net account receivable)/2)]
Let plug in the formula
[$1,300,000/($270,000 + $202,000)/2)]
$1,300,000/($472,000/2)
=$1,300,000/236,000
=$5.50 Days' sales in receivables
= 365/5.5
= 66.36 days
Therefore the days' sales in accounts receivable will be 66.36 days
Sub Sandwiches of America made the following expenditures related to its restaurant.
1. Replaced the heating equipment at a cost of $250,000.
2. Covered the patio area with a clear plastic dome and enclosed it with glass for use during the winter months. The total cost of the project was $750,000.
3. Performed annual building maintenance at a cost of $24,000.
4. Paid for annual insurance for the facility at $8,800.
5. Built a new sign above the restaurant, putting the company name in bright neon lights, for 9,900.
6. Paved a gravel parking lot at a cost of $65,000.
Required:
Sub Sandwiches of America credits cash for each of these expenditures. Select the account it debits for each.
Answer:
1. Heating Equipment
2. Premises
3. Maintenance Expense
4. Prepaid Insurance
5. Intangible Asset ; Logo
6. Premises
Explanation:
1. Replacement of heating equipment is substantial hence it is capitalized to the Heating Equipment Account.
2. The project is capitalized to the Premises Account as it form part of premises.
3. Annual Building maintenance is a revenue expenditure not capitalized.
4. An Asset Insurance Prepaid for future economic benefits to be realized is recognized.
5. The new sign would result in inflow of economic benefit and is non-tangible hence Intangible Asset is recognized.
6. Work done is capitalized in the Premises Account
For a Marketing course: What skills from this course would you use to create a three-paragraph promotional tool that explains the value of a chosen product and a sales pitch aimed at individual buyers
Answer:
After taking a Marketing Course, I should be armed with the following promotional skills:
Innovation Skills: It is expected that a marketing professional should be able to think differently, energise creativity in the business and craft maverick ways of gaining the attention of the market and transform that attention to patronage.Market Development Skills: One is also expected to gain the ability to identify and articulate latent customer needs (even before the customers become aware of them), spot socioeconomic trends as well as technological developments which create opportunities for the company as well as for the customer.Pricing Technology: Pricing is an art and a science. It involves accounting, economics and psychology. Marketing deals with the economics and psychology bit of it. Armed with this information, one is able to get into the mind of the individual buyers and them to firm up their buying decision.Cheers!
To create a promotional tool that explains the value of a product and a sales pitch aimed at buyers, its characteristics and benefits could be cited, such as innovation, price and added benefits.
For a company to be well positioned in the market, it is necessary to create value for its consumers, which is identified from:
How much the customer is willing to pay for your products and services.Marketing skills therefore must identify the strengths of the company and opportunities from the external environment, to satisfy consumer needs through:
IdentificationQualityAvailabilityCompatible priceBenefitsRelationshipTherefore, to create value, a company must reduce production costs or generate differentiation in order to be able to charge a premium price in relation to competitors.
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Determine the total equivalent units for direct materials, assuming that the first-in, first-out method is used to cost inventories. Assume that all direct materials are placed in the process at the beginning of production.
Answer:
37,000 units
Explanation:
The computation of the total equivalent units for direct material is shown below:
= Transferred to finished goods during the month of July + Ending work in process during the month of July - Inventory in process, July 1
= 37,500 units + 3,500 units - 4,000 units
= 41,000 units - 4,000 units
= 37,000 units
We simply applied the above formula so that the total equivalent units for direct materials could come
Prepare summary journal entries to record the following transactions for a company in its first month of operations.
1. Raw materials purchased on account, $86,000.
2. Direct materials used in production, $38,500. Indirect materials used in production, $23,000.
3. Paid cash for factory payroll, $50,000. Of this total, $38,000 is for direct labor and $12,000 is for indirect labor.
4. Paid cash for other actual overhead costs, $7,375.
5. Applied overhead at the rate of 125% of direct labor cost.
6. Transferred cost of jobs completed to finished goods, $62,600.
7. Sold jobs on account for $90,000 g(2). The jobs had a cost of $62,600 g(1).
Answer:
1.
Raw Materials $86,000 (debit)
Accounts Payable $86,000 (credit)
2.
Work In Process : Direct Materials $38,500 (debit)
Work In Process : Indirect Materials $23,000 (debit)
Raw Materials $61,500 (credit)
3.
Work In Process : Direct Labor $38,000 (debit)
Work In Process : Indirect Labor $12,000 (debit)
Cash $50,000 (credit)
4.
Overheads $7,375 (debit)
Cash $7,375 (credit)
5.
Work In Process $47,500 (debit)
Overheads $47,500 (credit)
6.
Finished Goods $62,600 (debit)
Work In Process $62,600 (credit)
7.
Accounts Receivable $90,000 (debit)
Cost of Sales $62,600 (debit)
Sales Revenue $90,000 (credit)
Finished Goods $62,600 (credit)
Explanation:
The costs of manufacture are accumulated in the Work In Process Account as was shown above.
Note that only Applied Overheads not Overheads incurred are included in Work In Process Account.
The Costs of Goods Transferred is Eliminated from The Work In Process Account and Included in the Finished Goods Account.
Journal 7 Records Both the Revenue and Cost of Goods Sold on Account.
Change all of the numbers in the data area of your worksheet so that it looks like this:
Data
4 Unit sales 10,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
A) What is the break-even in dollar sales?
B) What is the margin of safety percentage?
C) What is the degree of operating leverage?
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
Data
4 Unit sales 12,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
A. What is net operating income?
B. By what percentage did the net operating income increase?
Answer:
A) What is the break-even in dollar sales?
$150,000B) What is the margin of safety percentage?
25%C) What is the degree of operating leverage?
41. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
if unit sales increase by 20%, then profits should increase by 80%2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20%
A. What is net operating income?
(10,000 x 1.2 x $20) - (10,000 x 1.2 x $8) - $90,000 = $240,000 - $96,000 - $90,000 = $54,000B. By what percentage did the net operating income increase?
net operating income increased from $30,000 to $54,000 (an 80% increase)Explanation:
selling price $20
variable costs $8
contribution margin $12
break even point = $90,000 / $12 = 7,500 x $20 = $150,000
margin of safety = (current sales - break even) / current sales = $50,000 / $200,000 = 25%
degree of operating leverage = (quantity x contribution margin) / [(quantity x contribution margin) - fixed costs] = (10,000 x $12) / ($120,000 - $90,000) = $120,000 / $30,000 = 4
or contribution margin / net profits = $120,000 / $30,00 = 4
Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition is known as:
Answer: Value proposition
Explanation: Value proposition in business is that service, innovation, or uniqueness about your business that attracts customers. A value proposition also helps answers the question 'why' someone should do business with you. It hells to convince potential customer why they should patronize you, and why your service or product would be of more value to them than what your competitors offering same service would be able to offer them.
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today
Answer:
The annuity will cost him $963,212.95.-
Explanation:
Giving the following information:
Cash flow= $75,000
Interest rate= 0.0525
n= 20
First, we need to calculate the final value. We will use the following formula:
FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}
A= annual cash flow
FV= {75,000*[(1.0525^20) - 1]/0.0525} + {[75,000*(1.0525^20)] - 75,000}
FV= 2,546,491.88 + 133,690.82= $2,680,182.70
Now, the present value:
PV= FV/(1+i)^n
PV= 2,680,182.70/(1.0525^20)
PV= $963,212.95
1. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system. Inventory, June 30 $ Cost of goods sold $ 2. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system. Inventory, June 30 $ Cost of goods sold $ 3. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Note: Round the weighted average unit cost to the nearest dollar and final answers to the nearest dollar. Inventory, June 30 $ Cost of goods sold $ 4. Compare the gross profit and June 30 inventories using the following column headings. For those boxes in which you must enter subtracted or negative numbers use a minus sign. FIFO LIFO Weighted Average Sales $ $ $ Cost of goods sold Gross profit $ $ $ Inventory, June 30 $ $ $
Complete Question:
The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are as follows: Date Transaction Number of Units Per Unit Total Apr. 3 Inventory 25 $1,200 $30,000 8 Purchase 75 1,240 93,000 11 Sale 40 2,000 80,000 30 Sale 30 2,000 60,000 May 8 Purchase 60 1,260 75,600 10 Sale 50 2,000 100,000 19 Sale 20 2,000 40,000 28 Purchase 80 1,260 100,800 June 5 Sale 40 2,250 90,000 16 Sale 25 2,250 56,250 21 Purchase 35 1,264 44,240 28 Sale 44 2,250 99,000
Required: 1. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system. Inventory, June 30 $ Cost of goods sold $
2. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system. Inventory, June 30 $ Cost of goods sold $
3. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Note: Round the weighted average unit cost to the nearest dollar and final answers to the nearest dollar. Inventory, June 30 $ Cost of goods sold $
4. Compare the gross profit and June 30 inventories using the following column headings. For those boxes in which you must enter subtracted or negative numbers use a minus sign. FIFO LIFO Weighted Average Sales $ $ $ Cost of goods sold Gross profit $ $ $ Inventory, June 30 $ $ $
Answer:
Dunne Co.1. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system:
a) Inventory, June 30 = $32,864 (26 x $1,264)
b) Cost of goods sold = Cost of goods available for sale - Ending Inventory = $310,776 ($343,640 - $32,864)
2. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system:
a) Inventory, June 30 = $31,240
Beginning Inventory 25 units at $1,200 = $30,000
Purchase on April 8, 1 unit at $1,240 1,240
Total Ending Inventory $31,240
b)Cost of goods sold = Cost of goods available for sale - Ending Inventory
= $311,400 ($343,640 - $32,240)
3. Determination of the inventory on June 30 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Note: Round the weighted average unit cost to the nearest dollar and final answers to the nearest dollar:
a) Inventory, June 30 = $32,500 (26 x $1,250)
b) Cost of goods sold = $311,250 (249 x $1,250)
4. Comparison of the Gross Profit and June 30 inventories using the following column headings:
FIFO LIFO Weighted Average
Sales $525,250 $525,250 $525,250
Cost of goods sold -310,776 -311,400 -311,150
Gross profit $214,474 $213,850 $214,100
Inventory, June 30 $32,864 $31,240 $32,489.60
Explanation:
a) Data on Purchase and Sale Transactions with the Quarter:
Date Transaction Number of Units Per Unit Total
In Out Cost Sales
Apr. 3 Inventory 25 $1,200 $30,000
8 Purchase 75 1,240 93,000
11 Sale 40 2,000 80,000
30 Sale 30 2,000 60,000
May 8 Purchase 60 1,260 75,600
10 Sale 50 2,000 100,000
19 Sale 20 2,000 40,000
28 Purchase 80 1,260 100,800
June 5 Sale 40 2,250 90,000
16 Sale 25 2,250 56,250
21 Purchase 35 1,264 44,240
28 Sale 44 2,250 99,000
b) Goods Available 275 $343,640
Cost of goods sold 249 See calculations
Sales 249 $525,250
Ending Inventory 26 See Calculations
c) Average cost of goods = Cost of goods available for sale/Quantity of goods available for sale = $343,640/275 = $1,249.60
d) Under the periodic inventory system:
1) FIFO assumes that the goods bought first are sold first.
2) LIFO assumes that the goods bought last are sold first
3) Weighted Average takes for granted that the cost of goods available for sale and inventory can be determined with the weighted average.
Using the period inventory system, it is when physical count is taken of inventory that one can estimate its value. Unlike the perpetual inventory system, the periodic inventory system waits till a financial period ends to value stock. The results for ending inventory under the weighted average method, using the perpetual inventory system differs from the results under the same method, using the periodic inventory system.
Russell Co. received a $680 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Russell Co. make to record the receipt of the bill?
a. Utilities Expense 400
Accounts Payable 400
b. Accounts Payable 400
Utilities Expense 400
c. No journal entry is required.
d. Cash 400
Utilities Expense 400
e. Utilities Expense 400
Accounts Receivable 400
The correct options are :
a. Utilities Expense 680
Accounts Payable 680
b. Accounts Payable 680
Utilities Expense 680
c. No journal entry is required.
d. Cash 680
Utilities Expense 680
e. Utilities Expense 680
Accounts Receivable 680
Answer:
a. Debit Utilities Expense $680
Credit Accounts Payable $680
Explanation:
Russel Co has received a utility bill for the current month but they intend to pay next month.
Since the expense is for this month it must be recognised now. So there will be a debit to the Utilities Expense account for $680.
The payment is not being made now but in the next month. This is an amount the business owes so it will be recorded as a credit to Accounts Payable of $680
Accounts payable is used to record monies that the business owes its creditors. Payments are due at a future date.
Answer:
Debit Utilities Expense 680
Credit Accounts Payable 680
Explanation:
Russell Co. Journal entry to record the receipt of the bill will be:
Debit Utilities Expense 680
Credit Accounts Payable 680
Since Russell Co. received a $680 utility bill which is not yet due until the end of the next month which means we have to Debit Utilities Expense with 680 which is the amount not yet due and Credit Accounts Payable with the same amount .
Bill Phillips is developing a Monte Carlo simulation to value a complex and thinly traded security. Phillips wants to model one input variable to have negative skewness and a second input variable to have positive excess kurtosis. In a Monte Carlo simulation, Phillips can appropriately use:_________
Answer: Both of them
Explanation:
The Monte Carlo Simulation is a forecasting technique that allows one to find out the probability of occurence of different outcomes which may be difficult to come up with because there are multiple random variables involved.
Monte Carlo simulations are used in many diverse fields such as Finance, Engineering and Science.
As earlier mentioned, this simulation allows for multiple random variables so Phillips can use it to model both the variables to have different characteristics.
Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.)
Sales $668,600
Cost 431,300
Depreciation 103,700
EBIT
Taxes (24%)
Net Income
a. Calculate the OCF. (Do not round intermediate calculations.)
b. What is the depreciation tax shield?
Answer:
a. $205,236
b. $24,888
Explanation:
a. The computation of OCF is shown below:-
EBIT = Sales - Cost - Depreciation
= $668,600 - $431,300 - $103,700
= $133,600
Net income = EBIT - Taxes
= $133,600 - ($133,600 × 24%)
= $133,600 - $32,064
= $101,536
Operating cash flow = EBIT - Taxes + Depreciation
= $133,600 - $32,064 + $103,700
= $205,236
b. The computation of depreciation tax shield is shown below:-
Depreciation tax shield = Depreciation × Tax
= $103,700 × 24%
= $24,888
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.
Account Title Debits Credits
Cash 32,000
Accounts receivable 40,600
Supplies 1,800
Inventory 60,600
Notes receivable 20,600
Interest receivable 0
Prepaid rent 1,200
Prepaid insurance 6,600
Office equipment 82,400
Accumulated depreciation 30,900
Accounts payable 31,600
Salaries payable 0
Notes payable 50,600
Interest payable 0
Deferred sales revenue 2,300
Common stock 64,200
Retained earnings 30,000
Dividends 4,600
Sales revenue 149,000
Interest revenue 0
Cost of goods sold 73,000
Salaries expense 19,200
Rent expense 11,300
Depreciation expense 0
Interest expense 0
Supplies expense 1,400
Insurance expense 0
Advertising expense 3,300
Totals 358,600 358,600
Information necessary to prepare the year-end adjusting entries appears below.
Depreciation on the office equipment for the year is $10,300.
Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $900.
On October 1, 2021, Pastina borrowed $50,600 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
On March 1, 2021, the company lent a supplier $20,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
On April 1, 2021, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to prepaid insurance.
$560 of supplies remained on hand at December 31, 2021.
A customer paid Pastina $2,300 in December for 900 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
On December 1, 2021, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $600 per month. The entire amount was debited to prepaid rent.
Required:
1. Prepare an income statement and a statement of shareholders’ equity for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. Assume that no common stock was issued during the year and that $4,600 in cash dividends were paid to shareholders during the year.
2. Prepare the statement of shareholders' equity for the year ended December 31, 2021.
3. Prepare the classified balance sheet for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Adjusting entries
Depreciation on the office equipment for the year is $10,300.
Dr Depreciation expense 10,300
Cr Accumulated depreciation 10,300
Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $900.
Dr Wages expense 900
Cr Wages payable 900
On October 1, 2021, Pastina borrowed $50,600 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
Dr Interest expense 1,518
Cr Interest payable 1,518
On March 1, 2021, the company lent a supplier $20,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
Dr Interest receivable 1,373
Cr Interest revenue 1,373
On April 1, 2021, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to prepaid insurance.
Dr Insurance expense 2,475
Cr Prepaid insurance 2,475
$560 of supplies remained on hand at December 31, 2021.
Dr Supplies expense 1,240
Cr Supplies 1,240
A customer paid Pastina $2,300 in December for 900 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
No entry is required
On December 1, 2021, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $600 per month. The entire amount was debited to prepaid rent.
Dr Rent expense 600
Cr Prepaid rent 600
Pastina Company
Income Statement
For the Year Ended December 31, 2021
Sales revenue $149,000
Interest revenue $1,373
Cost of goods sold -$73,000
Salaries expense -$20,100
Rent expense -$11,900
Depreciation expense -$10,300
Interest expense -$1,518
Supplies expense -$2,640
Insurance expense -$2,475
Advertising expense -$3,300
Net income = $25,140
Pastina Company
Balance Sheet
For the Year Ended December 31, 2021
Assets
Current assets:
Cash $32,000
Accounts receivable $40,600
Supplies $560
Inventory $60,600
Notes receivable $20,600
Interest receivable $1,373
Prepaid rent $600
Prepaid insurance $4,125
Total current assets: $160,458
Non-current assets:
Office equipment $82,400
Accumulated depreciation $41,200
Total non-current assets: $41,200
Total assets: $201,658
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $31,600
Wages payable $900
Interest payable $1,518
Deferred sales revenue $2,300
Total current liabilities: $36,318
Long term debt:
Notes payable $50,600
Total long term debt: $50,600
Total liabilities: $86,918
Stockholders' equity:
Common stock $64,200
Retained earnings $50,540
Total stockholders' equity: $114,740
Total liabilities and stockholders' equity: $201,658
retained earnings = previous balance + net income - dividends = $30,000 + $25,140 - $4,600 = $50,540
Pastina Company
Statement of Shareholders’ Equity
For the Year Ended December 31, 2021
Balance on January 1: Common stock $64,200
Balance on January 1: Retained earnings $30,000
Net income 2021 $25,140
- Dividends ($4,600)
Subtotal $50,540
Balance on December 31: Common stock $64,200
Balance on December 31: Retained earnings $50,540
Zaid's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $65 for 10,000 tents. At that level of output, the firm's average total costs equal Group of answer choices $65 $75 $85 $95
Answer:
$95
Explanation:
average variable cost per unit = $65
average fixed cost per unit = $300,000 / 10,000 = $30
average total cost per unit = $95
Fixed costs do not vary if the production output changes, while variable costs move in the same direction as the production output, e.g. if output increases, variable costs increase as well.
E-Eyes just issued some new preferred stock. The issue will pay an annual dividend of $14 in perpetuity, beginning 19 years from now. If the market requires a return of 4.4 percent on this investment, how much does a share of preferred stock cost today
Answer:
Price of stock = $181.78
Explanation:
PV of dividend in year 13
PV =A×(1- (1+r)^(-n)/r )
PV of dividend in (year 13) = 14/(0.044=318.18
PV of dividend in year 0
PV = Div× (1+r)^(-n)
Dividend in year 13, r-interest rate, n- number of years
PV in year 0 = 318.1818182 × 1.044^(-13)= 181.78
Price of stock = $181.78
On January 1, 2021, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2024, at which time possession of the leased asset will revert back to Aqua. The equipment cost Aqua $412,184 and has an expected economic life of five years. Aqua expects the residual value at December 31, 2024, to be $50,000. Negotiations led to Maywood guaranteeing a $70,000 residual value. Equal payments under the lease are $100,000 and are due on December 31 of each year with the first payment being made on December 31, 2021. Maywood is aware that Aqua used a 5% interest rate when calculating lease payments.
Required:
1. Prepare the appropriate entry for Maywood on January 1, 2021, to record the lease.
2. Prepare all appropriate entries for Maywood on December 31, 2021, related to the lease.
Answer:
1/1/2021
Dr Right of use Asset 371,049
Dr Lease Payable 371,049
12/31/2021
Dr Interest Expense 18,552
Dr Lease Payable 81,448
Cr Cash 100,000
12/31/2021
Dr Amortization Expense 92,762
Cr Right of use Asset 92,762
Explanation:
Maywood Hydraulics
First step is to Calculate for PMT, FV and PV
N= 4, I= 5, PMT=100,000, FV=20,000, PV= 371,049
1/1/2021
Dr Right of use Asset 371,049
Dr Lease Payable 371,049
12/31/2021
Dr Interest Expense 18,552
(371,049*.05)
Dr Lease Payable 81,448
(100,000-18,552)
Cr Cash 100,000
12/31/2021
Dr Amortization Expense 92,762
Cr Right of use Asset 92,762
[ (371,049-0)/4 years]
Beginning and ending work in process inventories are negligible, so they are omitted from the cost of production report. The flavor changeover cost represents the cost of cleaning the bottling machines between production runs of different flavors. Determine the cost per case for each of the four flavors. Round your answers to two decimal places.
Answer and Explanation:
The cost per case for each of the four flavors are shown below:
Particulars Orange Cola Lemon Lime Root Beer
Total Cost Transferred
to finished goods (a) $19,125 $391,800 $324,000 $36,000
No. of Cases (b) 2,500 60,000 50,000 4,000
Cost Per Case
(a ÷ b) $7.65 $6.53 $6.48 $9
By dividing the total cost from the number of cases we can get the cost per case for each of the four flavors
Fifteen years ago, Mr. Fairhold paid $50,000 for a single-premium annuity contract. This year, he began receiving a $1,300 monthly payment that will continue for his life. On the basis of his age, he can expect to receive $312,000. How much of each monthly payment is taxable income to Mr. Fairhold
Answer: $1091.61
Explanation:
From the question, we are told that fifteen years ago, Mr. Fairhold paid $50,000 for a single-premium annuity contract and that this year, he began receiving a $1,300 monthly payment that will continue for his life and based on his age, he can expect to receive $312,000. The amount of each monthly payment is taxable income to Mr. Fairhold goes thus:
Based on the question, Mr Fairhold will have a tax free return of the $50,000 paid. The exclusion ratio will be the investment divided by the expected return. This will be:
= $50,000/$312,000
= 0.1603
Since he received monthly payment of $1,300 and exclusion ratio is 0.1603, the tax free return on investment will be:
= $1,300 × 0.1603
= $208.39
Taxable annuity payment will now be:
= $1300 - $208.39
= $1091.61
An example of an inventory accounting policy that should be disclosed in Summary of Significant Accounting Policies is the:_________ . a. amount of income resulting from the involuntary liquidation of LIFO b. major backlogs of inventory orders. c. method used for pricing inventory. d. division of inventory by raw materials, work-in-process, finished goods.
Answer:
Option C
Explanation:
The overview of important accounting rules is a portion of the end notes that accompanies the financial statements of an company, outlining the key policies that the finance department is following. The policy overview is prescribed by the accounting system in force (like the GAAP or IFRS).
The approach a corporation uses to assess the inventory expense (inventory valuation) affects the financial reports explicitly. Thus, it should be depicted in summary of accounting policies.
The one that exemplifies an inventory accounting policy would be:
C). method used for pricing inventory.
Inventory PolicyThe financial statement at the end of the accounting books exemplifies one of the significant rules of accounting.
This highlights the major policies to be followed by the company and its finance team.
The outline of policies acting are provided through this and hence, they will help in offering the method for pricing of inventory in the firm.
Thus, option C is the correct answer.
Learn more about "Inventory" here:
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For each of the following separate transactions: Sold a building costing $38,500, with $23,400 of accumulated depreciation, for $11,400 cash, resulting in a $3,700 loss. Acquired machinery worth $13,400 by issuing $13,400 in notes payable. Issued 1,340 shares of common stock at par for $2 per share. Note payables with a carrying value of $41,700 were retired for $50,400 cash, resulting in a $8,700 loss. (a) Prepare the reconstructed journal entry. (b) Identify the effect it has, if any, on the investing section or financing section of the statement of cash flows.
Answer:
Both requirements are solved below
Explanation:
REQUIREMENT A:
Sale of a building Debit Credit
Cash $11,400
Acc Depreciation $23,400
Loss on disposal $3700
Building $38,500
Acquisition of Machinery Debit Credit
Machinery $13,400
Notes $13,400
Issuance of share Debit Credit
Cash(1340x2) $2,680
Share Capital $2,680
Retired Debt Debit Credit
Note payable $41,700
Loss on retirement $8,700
Cash $50,400
REQUIREMENT B:
Cash flow from investing activities
Gain on disposal of building $11,400
Net cash flow from investing activities $11,400
Cash flow from financing activities
Cash received from issuing shares $2,680
Cash paid for retirement of debt ($50,400)
Net cash flow from investing activities ($47,720)
Decision Making Mystic Bottling Company bottles popular beverages in the Bottling Department. The beverages are produced by blending concentrate with water and sugar. The concentrate is purchased from a concentrate producer. The concentrate producer sets higher prices for the more popular concentrate flavors. A simplified Bottling Department cost of production report separating the cost of bottling the four flavors follows:
A B C D E
1 Orange Cola Lemon-Lime Root Beer
2 Concentrate $ 4,625 $129,000 $ 105,000 $ 7,600
3 Water 1,250 30,000 25,000 2,000
4 Sugar 3,000 72,000 60,000 4,800
5 Bottles 5,500 132,000 110,000 8,800
6 Flavor changeover 3,000 4,800 4,000 10,000
7 Conversion cost 1,750 24,000 20,000 2,800
8 Total cost transferred to finished goods $19,125 $391,800 $324,000 $36,000
9 Number of cases 2,500 60,000 50,000 4,000
10 Beginning and ending work in process inventories are negligible, so they are omitted from the cost of production report. The flavor changeover cost represents the cost of cleaning the bottling machines between production runs of different flavors.
Determine the cost per case for each of the four flavors. Round your answers to two decimal places
Orange Cola Lemon-Lime Root Beer
per case $_____ $_____ $_____ $_____
Answer and Explanation:
As per the scenario the solution of cost per case for each of the four flavors is shown below:-
Particulars Orange Cola Lemon Lime Root Beer
Total Cost
transferred to
finished goods a $19,125 $391,800 $324,000 $36,000
Number of cases b 2,500 60,000 50,000 4,000
Cost Per Case $7.65 $6.53 $6.48 $9
(c = a ÷ b)
Therefore we divide the total cost transferred to finished out by number of cases to figure out the cost per case.
Vargas Company uses the perpetual inventory method. Vargas purchased 800 units of inventory that cost $9.00 each. At a later date the company purchased an additional 1,200 units of inventory that cost $10.00 each. Vargas sold 900 units of inventory for $13.00. If Vargas uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be:
Answer:
$8200
Explanation:
FIFO means first in first out. It means that it is the first purchased inventory that is the first to be sold.
The cost of the 900 units sold, would be:
800 x 9 = $7200
100 × $10 = $1000
Total = $8200
I hope my answer helps you
You work for a marketing agency advising a client considering whether to drop prices during an economic downturn. The client, a manufacturer of children's outdoor swing sets, believes that reducing prices would lead to more sales. The client is aware that lower prices would yield less revenue per sale. However, the client is unaware of any other possible negative consequences of dropping prices.
1. Advise the client of some of those possible consequences. Include a description of the psychological issues at play in dropping a brand's price.
2. Identify and evaluate price-adjustment strategies beyond a straightforward reduction in retail price that the client should consider.
Explanation:
1- One of the pieces of advice I could give the customer about lowering the balance sheet price is that this could generate different interpretations for the potential consumer, as there may be a perception that the price reduction of the product occurred due to the loss of product quality in relation to competing products.
2- There are other effective strategies for managing an economic crisis in addition to a direct reduction in the retail price, such as the psychological price strategy, which are the marketing techniques used by salespeople so that consumers respond emotionally to the product, and not a logical way, which generates a perception of greater benefit for the consumer, which can lead to increased sales without having to lower the price of the product.
O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $2,000,000 of overhead during the next period and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company's overhead application rate
Answer:
Predetermined manufacturing overhead rate= $0.4 per direct labor dollar
Explanation:
Giving the following information:
O.K. expects to incur $2,000,000 of overhead during the next period and expects to use 50,000 labor hours for $10.00 per hour.
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= 2,000,000/ (50,000*10)
Predetermined manufacturing overhead rate= $0.4 per direct labor dollar