Answer:
Allocated MOH= $50,000
Explanation:
Giving the following information:
Mesa’s total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead applied to a job which used $20,000 of direct labor
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 450,000/180,000
Predetermined manufacturing overhead rate= $2.5 per direct labor dollar
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 2.5*20,000
Allocated MOH= $50,000
1. If you are a major shareholder or an owner of a company, what could you do to make sure that your hired top managers are working in your interest? 2. If a firm is growing at its internal growth rate forever, what will happen to its capital structure or debt equity ratio? And why? 3. If you want to start a business, what long-term investments do you plan to choose and what assumptions and methods do you use to estimate your sales growth rates?
Answer:
1) As a shareholder, I have no direct control over what happens in the business. I'd influence the HR situation via the CEO. As the owner, I'd have a site down with the Head of HR to design a compensation plan that ties the performance of the Managers to the profitability of the company. One of such HR strategies are:
Profit-Sharing Incentives: This can be designed to be enforced on an enterprise-level or at the Business Unit Level or both. A profit-sharing compensation system ensures that a percentage (which is usually decided by the Remuneration Committee) is distributed according to points accrued based on the company's performance assessment for each unit/individual Sales/New Business Commission/Bonuses: This is a bonus/commission given for every sale/new business brought in to the company This encourages everyone in the company to become a salesperson. How much commission to give will depend on the advice fo the Chief Financial officer and the HR department.2) Internal Growth Rate is the maximum level of expansion attainable for a company using only self-financing or profits reinvested.
When this is the case, the company's capital structure will comprise mostly of ploughed back profits.
The Debt to Equity ratio will tend towards zero. This is because the company is funded more from Equity than from debt.
3) A long-term investment refers to an asset remains in the company's holding/books for a year and above. Its value is usually recorded on the assets part of a company's balance sheet. Investments which can be held for the long term are stocks, bonds, real estate, and interest earning savings.
Prior to igniting a startup, best practice requires that one holds a combination of various kinds of long-term investments. This portfolio will depend on a host of various factors such as:
Risk Affinity andEconomic PulseGovernment Bonds, Rent earning Real Estate and Interest-Earning Savings are relatively safe options. A ratio of 20:20:40 respectively will make for a great combination. The ratio for cash reserves is highest because, the higher the cash, the higher the interest. Besides, it's safe to keep maintain longterm investment that can be quickly converted when the need arises.
Sales Forecasting
As a startup, I'd go for the Intuitive Forecasting Method.
This method has a lot of demerits as it is not based on historical evidence or data. However, it's the best way to start off. If combined with market intelligence, (that is, data of businesses in a similar industry) this method can prove to be more effective.
Cheers!
Identify and explain the main objectives of government financial business.
Revenue Objectives
Driving revenue and proving consistent profitability is a major goal for any business. Without profits, the business simply is not viable. Creating revenue consistently is a great sign for the life of a business.
Operational Objectives
Operations are critical to keep everything running. Important objectives include human resources processes, accounting objectives to make payroll and billing statements on-time and daily tasks for each job role. Without sound operational objectives being met, achieving revenue goals is difficult.
Productivity and Performance
Maximizing employee productivity and performance drives revenue. Setting goals for the year, each quarter and even the month or week is a good start. Adding incentive for meeting objectives will also increase performance and productivity.
Customer Satisfaction
The customer is top priority and delivering satisfaction is a major objective. Survey the customers and make an objective to always look for ways to improve. Happy customers leave positive reviews, spread positive word of mouth and are more likely to repeat business.
Employee Health
While production and performance are important, employee health is a major objective for many businesses. Fair compensation and benefits are goals every business should strive to meet. Happy and healthy employees are often more productive as well.
Contingency Objectives
Unexpected events can break a business without contingency plans. A contingency is something a business cannot prevent. A key employee does not show up for work, a natural disaster strikes and halts production, the economy crashes. How will your business survive? Create a series of contingency objectives to prepare for the worst case scenarios.
Growth Objectives
Growing a business requires a series of objectives to scale effectively. Objectives to replicate processes and manage hiring, after meeting sales goals and revenue benchmarks, is a necessary objective.
Management and Leadership
Hiring and developing effective managers and business leaders is a key objective. Leadership upholds the core values and drives the business to success. Businesses focused on developing the best possible leadership as a primary objective are on a positive track.
Minimizing Turnover
Employee turnover slows business by making ongoing hiring and training a necessity. Make it an objective to retain employees. Investing more upfront in each employee saves the time required to train and hire new employees.
Automate When Possible
Automation and delegation are both great objectives. Simple tasks that can be completed efficiently will ultimately save time and direct high level focus to more important tasks.
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%
Pelicans Ice is a snow cone stand near the local park. To plan for the future, it wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served. Month Number of snow cones Total operating costsJanuary 6400 5980 February 7000 6400March 4000 4000April 6900 6330May 9000 8000June 7250 6575Using the high-low method, the monthly operating costs if Pelicans sells 12,000 snow cones in a month are:__________. A. $9,600 B. $21,000 C. $800 D. $10,400
Answer:
Total cost= $10,400
Explanation:
Giving the following information:
Month Number of snow cones Total operating costs
January 6400 5980
February 7000 6400
March 4000 4000
April 6900 6330
May 9000 8000
June 7250 6575
UNits= 12,000
First, we need to calculate the unitary variable cost and total fixed cost:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (8,000 - 4,000) / (9,000 - 4,000)
Variable cost per unit= $0.8
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 8,000 - (0.8*9,000)
Fixed costs= $800
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 4,000 - (0.8*4,000)
Fixed costs= $800
Now, for 12,000 units:
Total cost= 800 + 12,000*0.8
Total cost= $10,400
You own 500 shares of Great, Inc. stock. It is currently priced at $50. You are going on vacation, and you realize that the company will be reporting earnings while you are away. To protect yourself against a rapid drop in the price, you place a stop-limit order to sell 500 shares at $40. It turns out the earnings report was not so good and the stock price fell to $30 right after the announcement. It did, however, bounce back, and by the end of the day it was back to $42. What happened in your account
Answer:
It is likely I sold 500 shares between $40 and $42 per share
Explanation:
Given that:
No of Shares owned = 500 Shares
Current Price per share = $50
Stop limit order price per share = $40
Thus, note that, Stop Limit order is a type of order that specify, the maximum amount at which an individual is willing to buy a stock i.e stop limit buy order or the minimum amount at which individual is willing to sell a stock i.e stop limit sell order.
Therefore, as I have placed a Stop limit sell price at $40, this implies that minimum price for the sale of share is fixed at $40, hence, if the selling price falls to $30, sale will not be executed.
However, Sale will be executed at $40 or more. Therefore, as the share price rose to $42 per share, it is likely I sold my share between $40 and $42
Hence, It is likely i sold 500 shares between $40 and $42 per share
On December 31 the Income Summary account of Cook Company has a debit balance of $18,000 after revenue of $49,000 and expenses of $67,000 were closed to the account. Maria Cook, Drawing has a debit balance of $23,000 and Maria Cook, Capital has a credit balance of $84,000. Record the journal entries necessary to complete closing the accounts. Post the closing entries to the Maria Cook, Capital account.
Answer: The answer is given below
Explanation:
The journal gives a detailed account of the financial activities that has taken place in an organization or a business.
The journal entries necessary to complete closing the above accounts has been recorded and attached. It should also be noted that the capital balance will be:
= $84000 - $18000 - $23000
= $43000
Check the attached file for further analysis.
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
Montgomery wants to get the overall staff reduction taken care of before he tackles the HR reduction; he will need his staff to help manage the reduction process. He wants to make this as smooth as possible with consideration for the employees and for the future of Thompson. He has asked for input from all of his managers. He has scheduled a meeting with your team this afternoon, and he asked you to report on the following: What should Montgomery do to prepare the organization for downsizing and the best long-term results for both JID and the employees
Answer:
To prepare the organization for downsizing, Montgomery should:
Develop a well-thought-out transition planWork closely with human resources team to consider options: early retirements, voluntary layoffs, ... Maintain open and clear communications to dismissals and who are untouchedProvide outplacement servicesThe best long-term results for both JID and the employees:
Maintain the group's reputationKeep the morale of remaining employees from sinking to dangerous lows during a workforce reductionPosition employer brand for a future workforce expansionExplanation:
9 Wheeling Company produces and sells bikes. It expects to sell 22,000 bikes in the month of April. It had 1,200 bikes in Finished Goods Inventory at the end of March. Wheeling Company would like to complete operations in the month of April with at least 1,500 completed bikes in inventory. The bikes sell for $100 each. How many bikes would Wheeling need to produce in April? a. 19,700 bikes c. 18,800 bikes b. 22,300 bikes d. 20,300 bikes
13) The _________ system is an integrated system capable of providing access to real-time data from the various funcitonal areas of a company. a. lean accounting management b. operational control information c. enterprise resource planning d. financial management information
14)In a company that supplies muffins to bakeries, which of the following would be considered an input? a. cashier c. delivered muffins b. flour d. None of the above
Answer: 9. b. 22,300 bikes
13. c. enterprise resource planning
14. Flour
Explanation:
1. 22,000 bikes need to be sold in April.
Let x be the number of bikes required
The equation then should be;
22,000 = Opening stock + x - Closing stock
x = 22,000 - opening stock + closing stock
x = 22,000 - 1,200 + 1,500
x = 22,300 bikes.
2. Entreprise Resource Planning allows for the integration of the various functions of a company to enable faster information processing and dissemination. It therefore allows for the provision of access to real-time data from the various funcitonal areas of a company.
14. The company supplies Muffins that they bake and an input refers to the goods or services required to produce the final good. Flour is used in the banking of the muffin which is the final good hence flour must be an input.
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
Farming today in the U.S. is __________ productivity compared to a century ago, resulting in there being __________ farmers today than at the turn of the previous century.
Answer: d) much more fewer
Explanation:
Farming in the United States now employs large scale machinery to get the work done faster and more efficiently. As a result productivity has sky rocketed compared to a century ago and the contribution of Agriculture to US GDP is even higher than the entire GDP of some Countries such as Indonesia.
However, due to the large scale mechanisation involved as well as the diversification of the US economy, fewer people are farmers compared to a century ago with only 1.3% of employed Americans working in farms today.
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.
A $ 43 comma 000,twominusmonth,10%note payable was issued on December 1, 2018. What is the amount of interest expense recorded in the year 2019? (Round your final answer to the nearest dollar.)
Answer:
Preparation of the amount of interest expense recorded in the year 2019
Dr Notes Payable 43,000
Dr Interest expense 358.33
($43,000 × 0.1% × 1/12)
Dr Interest Payable 358.33
($43,000 × 0.1% × 1/12)
Cr Cash 43,716.66
Explanation:
Since $ 43,000 2month and 10%note payable were been issued on December 1, 2018 this means we have to record the transaction by Debiting Notes Payable 43,000, Debiting Interest expense 358.33 ($43,000 × 0.1% × 1/12) and Debiting Interest Payable 358.33
($43,000 × 0.1% × 1/12) while we Credit Cash with 43,716.66(43,000+358.33+358.33)
firm uses both labor and machines in production. Explain why an increase in the average wage rate causes both a movement along the demand curve and a shift of the demand curve. An increase in the average wage causes a movement
Answer:
The answer is explained below
Explanation:
When a firm increases the average wage rate, the firm would employ fewer workers causing a movement up along the demand curve and a shift to the left of the labor demand curve. As wage increase, the firm production will reduce because of a decrease in number of staffs, the causes the number of machines needed for production to reduce causing the marginal product of labor to shift to the left. The labor demand is further reduced, the firm then employ less labor at a higher wage.
the jackson -timberlake wardrobe co. just paid a dividend of $1.95 per share on its stock, the dividends are expected to grow at a constant rate of 4 percent per year indefinitely. if investors require a return of 10.5 percent on the stock, what is the current price
Answer:
Current Price of the stock is $31.20
Explanation:
Price of the stock is the present value of the future dividends associated with the stock.
As per given data
Dividend = $1.95
Growth rate = 4%
Required rate of return = 10.5%
Current Price of the stock can be determined using following formula
Price of Stock = Dividend ( 1 + growth rate ) / ( Required rate of return - Growth rate )
Price of Stock = $1.95 ( 1 + 4% ) / ( 10.5% - 4% )
Price of Stock = $2.028 / 6.5%
Price of Stock = $31.20
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:
brainly.com/question/14184995
Victoria Enterprises expects earnings before interest and taxes (EBIT) next year of $ 2.5 million. Its depreciation and capital expenditures will both be $ 295 comma 000, and it expects its capital expenditures to always equal its depreciation. Its working capital will increase by $ 53 comma 000 over the next year. Its tax rate is 40 %. If its WACC is 11 % and its FCFs are expected to increase at 4 % per year in perpetuity, what is its enterprise value?
Answer:
Value of Victoria Enterprises= $21,498,285.71
Explanation:
Free cash flow represents the amount that is left to all the providers of capital after the payment of all all operating expenses, working capital and investment in fixed asset expenditures.
It is computed as cash flow made from operation less capital expenditures
For Victoria Enterprises
The Free cash flow
= EBIT(1-T) + depreciation- increase in capital expenditure - increase in working capital
= 2.5 × (1-0.4) + 0.295 - 0.295 - 0.053
= 2,500,000 × (1-0.4) + 295,000 -295,000- 53,000
FCFF= $1,447,000
Value of a firm = FCFF (1+g)/(WACC-g)
g- growth rate - 4%, WACC- 11%, FCFF-1,447,000
Value of Victoria = 1,447,000 × (1+0.04)/(0.11- 0.04) = 21,498,285.71
Value of Victoria= $21,498,285.71
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.
The following information is available for a company’s maintenance cost over the last seven months.
Month Maintenance Hours Maintenance Cost
June 9 $5,450
July 18 6,900
August 12 5,100
September 15 6,000
October 21 6,900
November 24 8,100
December 6 3,600
Using the high-low method, estimate both the fixed and variable components of its maintenance cost.
High-Low method - Calculation of variable cost per maintenance hour
Total cost at the high point
Variable costs at the high point:
Volume at the high point:
Variable cost per maintenance hour
Total variable costs at the high point
Total fixed costs
Total cost at the low point
Variable costs at the low point:
Volume at the low point:
Variable cost per maintenance hour
Total variable costs at the low point
Total fixed costs
Answer:
Variable cost per unit= $250 per unit
Fixed costs= $2,100
Explanation:
Giving the following information:
June= 9 $5,450
July= 18 $6,900
August= 12 $5,100
September= 15 $6,000
October= 21 $6,900
November= 24 $8,100
December= 6 $3,600
To calculate the fixed and variable costs under the high-low method, we need to use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (8,100 - 3,600) / (24 - 6)
Variable cost per unit= $250 per unit
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 8,100 - (250*24)
Fixed costs= $2,100
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 3,600 - (250*6)
Fixed costs= $2,100
Suppose there is a simple two good economy that produces fish and cars. When the economy increases its production of fish from 0 to 15 tons of fish, it has a relatively small opportunity cost in terms of cars. What is the most likely explanation for this?
Answer:
The most likely explanation for the relatively small opportunity cost that the economy incurs as a result of increasing production of fish from 0 to 15 tons is that the economy will lose some of the benefits it derives from the production of cars now that more resources have been committed to the production of fish. It is like a question of not being able to "eat your cake and have it." Something must give way.
Opportunity cost is an economic cost that an entity or individual bears when it forgoes one option in preference to another. Once there is a choice between two options, economists will always recognize the forgone benefits from the other option a consequence of the loss.
Explanation:
When economists refer to the “opportunity cost” of a resource, they imply that the value of the next-highest-valued alternative resource will be lost. This means that a cost is incurred by not enjoying the benefit associated with the best alternative choice. A consideration of opportunity cost is, therefore, an assessment of the relative risk of each option vis-a-vis its potential returns.
The demand for chicken wings is more elastic than the demand for razor blades. Suppose the government levies an equivalent tax on chicken wings and razor blades. The deadweight loss would be larger in the market for _______________.
Answer:
chicken wings
Explanation:
Based on this scenario it can be said that if this were to happen then the deadweight loss would be larger in the market for chicken wings than in the market for razor blades due to their higher elastic demand, which would ultimately cause the number of chicken wings to fall drastically when compared to the number of razor blades. Thus causing a greater loss of equilibrium for chicken wings.
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 .
A 15-year, $1,000 par value zero-coupon rate bond is to be issued to yield 9 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What should be the initial price of the bond
Answer:
$274.54
Explanation:
Given:
n = 15 years
Future Value, FV = 1000
rate, r = 9%
Required:
Find the initial price of the bond
Given that we have a zero coupon bond here, it means the par value is paid at date of maturity, and no issuer pays no regular coupon payment.
To find the initial price of the bond, use the formula:
[tex]\frac{FV}{(1+r)^n}[/tex]
Substitute figures:
[tex] \frac{1000}{(1+0.09)^1^5}[/tex]
[tex] = \frac{1000}{(1.09)^1^5}[/tex]
[tex] = \frac{1000}{3.642}[/tex]
[tex] = 274.57 [/tex]
The initial price of the bond should be $274.54
Net income $ 15,500 Cash dividends paid to stockholders 3,600 Cash proceeds from sale of land 3,800 Cash proceeds from bank loan 9,800 Cash payment (principal) on bank loan 2,700 Cash paid to purchase equipment 7,200 The company would report net cash provided by (used in) financing activities of:
Answer: 3500
Explanation:
The company would report net cash provided by (used in) financing activities based on the following:
Cash proceeds from bank loan 9,800
Less: Cash dividends paid to stockholders 3,600
Less: Cash payment (principal) on bank loan 2,700
Cash flow on financing activity will now be:
= (9800 - 3600 - 2700)
= 9800 - 6300
= 3500
Therefore, the The company would report net cash provided by (used in) financing activities of 3500
Osage Corporation issued 2,000 shares of common stock. Prepare the entry for the issuance under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The stock had a par value of $5 per share and was issued for a total of $52,000. (b) The stock had a stated value of $5 per share and was issued for a total of $52,000. (c) The stock had no par or stated value and was issued for a total of $52,000.
Answer:
Osage Corporation
Journal Entries for the Issuance of 2,000 Shares under the following assumptions:
(a) The stock had a par value of $5 per share and was issued for a total of $52,000.
Debit Cash Account $52,000
Credit Common Stock $10,000
Credit Additional Paid-in Capital $42,000
To record the issuance of 2,000 shares of Common Stock, par $5 for a total of $52,000.
(b) The stock had a stated value of $5 per share and was issued for a total of $52,000:
Debit Cash Account $52,000
Credit Common Stock $10,000
Credit Additional Paid-in Capital $42,000
To record the issuance of 2,000 shares of Common Stock, stated value of $5 for a total of $52,000.
(c) The stock had no par or stated value and was issued for a total of $52,000.
Debit Cash Account $52,000
Credit Common Stock $52,000
To record the issuance of 2,000 shares of Common Stock, with no par, for a total of $52,000.
Explanation:
Shares can be issued at par and above the par value. A stated value is an amount assigned to a corporation's stock for internal accounting purposes when the stock has no par value. Like par value, stated value is nominal, typically between $0.01 and $1.00.
If no-par value stock does not have a stated value, the entire proceeds from the issuance of the stock become legal capital.
A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at 5% per year thereafter. The expected rate of return on the stock is 12%.
Required:
a. What is the current price of the stock?
b. What is the expected price of the stock in a year?
c. Show that the expected return, 12%, equals dividend yield plus capital appreciation.
Answer:
current price P = $ 52.81
The expected price of the stock after one year = $57.16
The Total expected return for any investor after one year = 12%
Explanation:
Given that:
Dividend paid in 1 year = $2/ share
Dividend paid in 2 years = $4/share
Expect growth rate of the dividends g = 5% = 0.05
Expected rate of return on the stock r =12% = 0.12
Required:
a. What is the current price of the stock?
To calculate the current price of the stock ; we need to first determine the terminal value of the stock which can be done by using the formula:
[tex]Terminal \ Value = \dfrac{Dividend \ for \ the \ second \ year*(1+g)}{r-g}[/tex]
[tex]Terminal \ Value = \dfrac{4*(1+0.05)}{0.12-0.05}[/tex]
[tex]Terminal \ Value = \dfrac{4*(1.05)}{0.07}[/tex]
[tex]Terminal \ Value = \dfrac{4.2}{0.07}[/tex]
Terminal value = $60
Now; the current price of the stock is calculate as follows:
[tex]current \ price \ P = \dfrac{\$ 2}{(1+0.12)^1} + \dfrac{\$ 4 }{(1+0.12)^2} + \dfrac{\$ 60}{(1+0.12)^2}[/tex]
[tex]current \ price \ P = \dfrac{\$ 2}{1.12} + \dfrac{\$ 4 }{1.2544} + \dfrac{\$ 60}{1.2544}[/tex]
current price P = $1.79 + $3.19 + $47.83
current price P = $ 52.81
b) What is the expected price of the stock in a year?
The expected price of the stock after one year = [tex]\dfrac{\$ 4}{(1+0.12)^1}+ \dfrac{\$60}{(1+0.12)^1}[/tex]
The expected price of the stock after one year = $3.58 + $53.58
The expected price of the stock after one year = $57.16
c. Show that the expected return, 12%, equals dividend yield plus capital appreciation.
We understand now that the current price of the sock = $52.81
and the expected price of the stock after one year = $57.16 ; so any investor who purchased the stock at the current price will receive a dividend of $2 after one year.
Hence;
The Total expected return for any investor after one year =( (price after one year - current price ) + Dividend received) /current price
The Total expected return for any investor after one year =( ($57.16 - $52.81)+ $2 )/$52.81
The Total expected return for any investor after one year = ($4.35+$2)/$52.81
The Total expected return for any investor after one year = 0.12
The Total expected return for any investor after one year = 12%
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%
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
GPR, Inc., has an inventory turnover of 18.42 times, a payables turnover of 10.93 times, and a receivables turnover of 8.24 times. What is the length of the company's cash cycle
Answer: 30.73 days
Explanation:
From the question, we are told that GPR, Inc., has an inventory turnover of 18.42 times, a payables turnover of 10.93 times, and a receivables turnover of 8.24 times. The length of the company's cash cycle for thus:
Let's assume that there are 365 days in a year.
The cash cycle will be:
= (365/18.42) + (365/8.24) − (365/10.93)
= 19.82 + 44.3 - 33.39
= 30.73
The length of the company's cash cycle is 30.73 days
Tony and Suzie are ready to expand Great Adventures even further in 2022. Tony believes that many groups in the community (for example, Boy Scouts, church groups, civic groups, and local businesses) would like to hold one-day outings for their members. Groups would engage in outdoor activities such as rock climbing, fishing, capture the flag, paintball, treasure hunts, scavenger hunts, nature hikes, and so on. The purpose of these one-day events would be for each member of the group to learn the importance of TEAM (Together Everyone Achieves More).
Tony knows that most people are not familiar with these types of activities, so to encourage business he allows groups to participate in the event before paying. He offers a 4% quick-payment discount to those that pay within 10 days after the event. He also guarantees that at least eight hours of outdoor activities will be provided or the customer will receive a 20% discount. For the first six months of the year, the following activities occur for TEAM operations.
Jan. 24 Great Adventures purchases outdoor gear such as ropes, helmets, harnesses, compasses, and other miscellaneous equipment for $6,000 cash.
Feb. 25 Mr. Kendall’s Boy Scout troop participates in a one-day TEAM adventure. Normally, Tony would charge a group of this size $4,500, but he wants to encourage kids to exercise more and enjoy the outdoors so he charges the group only $4,000. Great Adventures provides these services on account.
Feb. 28 The Boy Scout troop pays the full amount owed, less the 4% quick-payment discount.
Mar. 19 Reynold’s Management has its employees participate in a one-day TEAM adventure. Great Adventures provides services on account for $5,000, and Reynold’s agrees to pay within 30 days.
Mar. 27 Reynold’s pays the full amount owed, less the 4% quick-payment discount.
Apr. 7 Several men from the Elks Lodge decide to participate in a TEAM adventure. They pay $8,500, and the event is scheduled for the following week.
Apr. 14 The TEAM adventure is held for members of the Elks Lodge.
Apr. 30 Myers Manufacturing participates in a TEAM adventure. Great Adventures provides services on account for $7,000, and Myers agrees to pay within 30 days.
May 31 Myers Manufacturing fails to pay the amount owed within the specified period and agrees to sign a three-month, 7% note receivable to replace the existing account receivable.
Jun. 15 Several MBA groups participate in TEAM adventures. Great Adventures provides services on account for $29,000 to these groups, with payment due in July.
a. Suzle estimates uncollectible accounts to be 8% of accounts recevable (which does not include the $7,000 note receivable from Myers Manufacturing). Prepare the adjusting entry for uncollectible accounts. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" In the first account field.)
View transaction list
Journal entry worksheet
Record adjusting entry for uncollectible accounts.
Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 30, 2022
Record entry Clear entry View general journal
b. Accrue one month of Interest on the note receivable from Myers Manufacturing. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" In the first account field.)
View transaction list
Journal entry worksheet
Record the accrued interest revenue.
Note: Enter debits before credits.
Date General Journal Debit Credit
Jun 30, 2022
Record entry Clear entry View general journal
c. Prepare a partial balance sheet showing the net accounts receivable section. (Amounts to be deducted should be indicated by a minus sign.)
GREAT ADVENTURES, INC.
Partial Balance Sheet
June 30, 2022
Assets
Current Assets:
Net Accounts Receivable $ 0
Answer:
Great Adventures
a) Adjusting Entry for Uncollectible Accounts:
Date General Journal Debit Credit
Jun. 30 Uncollectible Expense $2,320
Allowance for Uncollectibles $2,320
To provide 8% allowance for uncollectibles.
b) To accrue one month of interest on the note receivable:
Date General Journal Debit Credit
Jun. 30 Interest Receivable $40.83
Interest on Notes $40.83
To accrue one month of interest.
c) GREAT ADVENTURES, INC.
Partial Balance Sheet as at June 30, 2022
Assets
Current Assets:
Accounts Receivable $29,000
less allowance for uncollectibles 2,320
Net Accounts Receivable $26,680
Explanation:
a) Accounts Receivable
Date Description Debit Credit Balance
Feb. 25 Kr. Kendall's Boys Scout $4,000 $4,000
Feb. 28 Cash $3,840 160
Feb. 28 Cash Discount 160 0
Mar. 19 Reynold 5,000 5,000
Mar. 27 Cash 4,800 160
Mar. 27 Cash Discount 200 0
Apr. 7 Cash 8,500 (8,500)
Apr. 14 Elks Lodge 8,500 0
Apr. 30 Myers Manufacturing 7,000 7,000
May 31 7% Note Receivable 7,000 0
Jun. 15 MBA Groups 29,000 29,000
b) Allowance for uncollectibles = $29,000 x 8% = $2,320
c) Interest on Notes = ($7,000 x 7%)/12 = $40.83