On January 1, 2020, Bonita Company purchased 12% bonds, having a maturity value of $320,000 for $344,260.74. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Bonita Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified as available-for-sale category. The fair value of the bonds at December 31 of each year-end is as follows.
2020 $342,000
2023 $330,700
2021 $329,700
2024 $320,000
2022 $328,700
(a) Prepare the journal entry at the date of the bond purchase.
(b) Prepare the journal entries to record the interest revenue and recognition of fair value for 2020.
(c) Prepare the journal entry to record the recognition of fair value for 2021.
Answers
Answer:
Following are the responses to the given points:
Explanation:
For point a:
Criteria I
Date: 1-1.2020 Debt Investments [tex]\$3,44,260.74[/tex]
cash [tex]\$3,44,260.74[/tex]
For point b:
Criteria II
Date: 31.12.2020 Interest Account receivable to pay [tex]\$38,400.00 \ \ \ \ \ \ \ \ \ \ 320000\times 12\%[/tex]
Debt Investments [tex]\$3973.93[/tex]
rate of Revenue [tex]\$34,426.07(\$344,261.74 \times 0.10)[/tex]
31.12-2020 Fair Value Adjustment [tex]1713.19[/tex]
Gain or loss - equity unrealized holding [tex]1713.19[/tex]
for point c:
Criteria III
31.12-2021 Interest Account receivable to pay [tex]\$38,400[/tex]
Debt Investments [tex]\$4,371[/tex]
rate of Revenue [tex]\$34,029[/tex]
31.12-2021 Gain or loss - equity unrealized holding [tex]\$7,927.69[/tex]
Fair Value Adjustment [tex]\$7,927.69[/tex]
[tex]329700-335914.50=6214.50+1713.19 =7,927.69[/tex]
Please find the attached table.
Related Questions
Mr.fernando jose witches to put -up an Php85 million sports complex within the vicinity of the intramuros are.What advice will you give?
Answers
all I can advise is to be careful with those we should first get to know the people we trust and we should make sure if you are sure of what you want to be careful and not complacent because there are so many witches that will never go away
Exercise caution when dealing with people. We should first get to know the individuals we can trust. If you are certain of what you want, you should exercise caution and avoid becoming complacent since there are so many witches who will never go away.
What is the meaning of a sports complex?A sports complex is a sizable, open space with a number of fields or courts devoted to a single sport or group of sports. These kinds of sports facilities are frequently utilized for leagues and tournaments since they can accommodate a sizable crowd to watch the teams compete.
This includes, but is not limited to, ice skating rinks, baseball diamonds, basketball courts, and soccer fields. "That portion of a room or place where the play or practice of a sport occurs" is the "area of sport activity." Boundary lines, for instance, are used to delineate football fields.
a huge structure with a grandstand surrounding it on all sides and a field utilized for sporting events inside.
Thus, Exercise caution when dealing with people.
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recommend two ways in which women and children can be protected from discrimination and violence
Answers
Answer:
People always assume woman and children need to be protected from discrimmination, when in reality, they are stronger to deal with it themselves. For examole, of they become activists and speak up for themselves, they would control the flow of discrimmination, and the children can be more edcated on what discrimmination is, and understand how to come to terms with their identitity without being silenced and viewed as weak
Explanation:
Answer: 1. Women/children could stand up for themselves
2. We are all created equal, we all deserve the same respect as anyone else. Woman, child, man, everyone should be treated as an equal
Explanation:
— I’m in 6th grade P.S.
:)
Mr. Renaldo purchased 30 acres of undeveloped ranch land 10 years ago for $935,000. He is considering subdividing the land into one-third-acre lots and improving the land by adding streets, sidewalks, and utilities. He plans to advertise the 90 lots for sale in a local real estate magazine. Mr. Renaldo projects that the improvements will cost $275,000 and that he can sell the lots for $20,000 each. He is also considering an offer from a local corporation to purchase the 30-acre tract in its undeveloped state for $1.35 million. Assume that Mr. Renaldo makes no other property dispositions during the year and has a 35 percent tax rate on ordinary income and a 15 percent tax rate on capital gain. Required: Compute the after-tax cash flow if Mr. Renaldo develops the land. Compute the after-tax cash flow if Mr. Renaldo sells the land.
Answers
Answer is in the photo. I can only upload it to a file hosting service. link below!
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Define the term petty cash book and how is it prepared?
Answers
A petty cash book is a ledger kept with the petty cash fund to record amounts that are added to or subtracted from its balance. Petty cash should be part of an overall business accounting system that documents how your business moves funds between one account and another and how it spends its money.
In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information conserning the buses is summarized as follow.
Bus Acquired cost salvage Value Useful Life in Years Depreciation Method
1 1/1/12 $99,100 $7,900 4 Strait-line
2 1/1/12 128,000 11,000 4 Declining- balance
3 1/1/13 66,350 8,800 5 Unit-of-activity
For the declining -balance method, the company uses the double-declining rate. for the units-of-activity method, total miles are expected to be 115,100. Actual miles of use in the first 3 years were: 2013, 23,400; 2014, 32,700; and 2015, 31,900. For Bus #3, calculate depreciation expense per mile under units-of-activity method.(Round answer to 2 decimal places,e.g.$0.50.).
Compute the amount of accumulated depreciation on each bus at December 31, 2014 (Round answers to 0 decimal places, e.g. $2,125.).
2014
BUS 1 $
BUS 2 $
BUS3 $
If bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in 2012 and 2013? (Round answers to 0 decimal places, e.g.$2,125.).
2012 2013
Depreciation expense $ $
Answers
Answer:
1. For Bus #3, calculate depreciation expense per mile under units-of-activity method
Depreciation expense per mile = ((Cost of bus - Salvage value) / Total miles)
= ($66,350 - $8,800) / 115,100 miles
= $0.5 per mile
The depreciation expense per mile is $0.5 per mile.
2. BUS 1
Depreciation for 1 year = (Cost of assets - Residual value) / Useful life
= $99,100−$7,900 / 4 years
= $22,800
Accumulated depreciation = Depreciation for 1 year * 3 years (from 2012 to 2014)
= $22,800 * 3 years
= $68,400
BUS 2
Depreciation rate = (1/4 *100)*2 = 50%
Years Annual Depreciation Accum. depreciation
2012 $64,000(128,000*50%) $64,000
2013 $32,000(128,000-64,000)*50% $96,000
2014 $16,000(128,000-64,000-32,000)*50% $112,000
BUS 3
Accumulated depreciation = Depreciation expense per mile * Total miles of 2013 and 2014
= $0.50 * (23,400 miles +32,700 miles)
= $0.50 * 56,100 miles
= $28,050
3. Depreciation rate = (1/4 *100)*2 = 50%
Years Depreciation Calculation
2012 $48,000 128,000*50%*9/12
2013 $40,000 128,000-40,000*50%
So, the depreciation expense for Bus 2 for 2012 and 2013 is $48,000 and $40,000
Answer 1:
The depreciation expense per mile under units of activity method of Bus=3 :
Depreciation Expense per mile = ((Cost of bus - Salvage value) / Total miles) Depreciation Expense per mile = ($66,350 - $8,800) / 115,100 miles Depreciation Expense per mile= $0.5 per mile
Answer 2: The amount of accumulated depreciation on each bus on December 31, 2014 :
BUS 1Depreciation for 1 year = (Cost of assets - Residual value) / Useful life
Depreciation for 1 year = $99,100−$7,900 / 4 years
Depreciation for 1 year = $22,800
Accumulated depreciation = Depreciation for 1 year * 3 years (from 2012 to 2014)
Accumulated Depreciation = $22,800 * 3 years
Accumulated Depreciation= $68,400
BUS 2
Years Annual Depreciation Accum. Depreciation
2012 $64,000(128,000*50%) $64,000
2013 $32,000(128,000-64,000)*50% $96,000
2014 $16,000(128,000-64,000-32,000)*50% $112,000
Note : Depreciation rate = (1/4 *100)*2 = 50%
BUS 3
Accumulated depreciation = Depreciation expense per mile * Total miles of 2013 and 2014
Accumulated depreciation= $0.50 * (23,400 miles +32,700 miles)
Accumulated depreciation= $0.50 * 56,100 miles
Accumulated depreciation= $28,050
Answer 3: The depreciation expense for this bus in 2012 and 2013:
Years Depreciation Calculation
2012 $48,000 128,000*50%*9/12
2013 $40,000 128,000-40,000*50%
Note : Depreciation rate = (1/4 *100)*2 = 50%
Thus, the depreciation expense for Bus 2 for 2012 is $48,000 and 2013 is $40,000.
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g Sparky Corporation uses the weighted-average method of process costing. The following information is available for February in its Molding Department: Units: Beginning Inventory: 27,000 units, 100% complete as to materials and 55% complete as to conversion. Units started and completed: 114,000. Units completed and transferred out: 141,000. Ending Inventory: 31,000 units, 100% complete as to materials and 30% complete as to conversion. Costs: Costs in beginning Work in Process - Direct Materials: $45,000. Costs in beginning Work in Process - Conversion: $50,850. Costs incurred in February - Direct Materials: $311,160. Costs incurred in February - Conversion: $601,150. Calculate the cost per equivalent unit of conversion. Group of answer choices $4.76 $3.96 $5.29 $4.34 $5.69
Answers
Answer:
Conversion cost per equivalent unit = $4.76
Explanation:
Conversion cost per equivalent unit = Total conversion cost / Equivalent units
Conversion cost is the sum of the direct labour cost and the factory overhead cost.
Equivalent units are notional whole units which represent incomplete work and are used to apportion cost between work progress and completed work. These units are determined as follows:
Equivalent units = Degree of work done(%) × units of inventory
Equivalent units
Item Unit Equivalent unit
Completed unit 140,000 140000× 100% 140,000
Closing inventory 31,000 31,000× 30% 9,300
Total equivalent unit 149,300
Completed units = opening inventory + units started in the period - closing inventory
Completed units = 27000 + 114,000 - 31,000 = 140,000
The conversion cost = 50,850 + 601,150 = 652,000
conversion cost per equivalent unit = 652,000 /140,000 = 4.65
Conversion cost per equivalent unit = $4.76
The city of Bethville establishes an Internal Service Fund to account for printing services provided to the various departments of the government. Police chief, Winston Watson, authorizes the payment of $2,000 for printing services provided by the Printing Services Internal Services Fund. The accounting department makes the payment. What entry should be reported in the Printing Services Internal Service Fund for receipt of the payment
Answers
Answer:
Dr Cash $2,000
Cr Transfer in from General Fund $2,000
Explanation:
Based on the information given if Winston authorizes the payment of the amount of $2,000 for the printing services that was rendered by the Printing Services Internal Services Fund which means that if The accounting department makes the payment the Journal entry that should be reported in the Printing Services Internal Service Fund for receipt of the payment is :
Dr Cash $2,000
Cr Transfer in from General Fund $2,000
The process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods.
a. True
b. False
Answers
Answer:
A) true
Explanation:
Compound interest can be regarded as
adding of interest gotten to the principal sum of a deposit or the principal sum of a loan. It's one that is gotten after reinvesting of ones interest instead of paying it out, as a result of this the interest that comes in
next period will be earned on the principal sum along with those interests accumulated before. It should be noted the process of earning compound interest allows a depositor or investor to earn interest on any interest earned in prior periods.
Proprietary technology is technology that is a. widely used because it is easy to learn. b. widely used because the government subsidizes its use. c. not widely used because people could, but have not, taken the time to learn how to apply it. d. not widely used because it is known or controlled only by the company that discovered it.
Answers
Answer:
d. not widely used because it is known or controlled only by the company that discovered it.
Explanation:
Technology can be defined as a branch of knowledge which typically involves the process of applying, creating and managing practical or scientific knowledge to solve problems and improve human life. Technologies are applied to many fields in the world such as medicine, information technology, cybersecurity, engineering, environmental etc.
Proprietary technology is peculiar to a particular company.
Proprietary technology is technology that is not widely used because it is known or controlled only by the company that discovered it.
Doral Corp. has provided a part of its budget for the third quarter: JulyAugustSeptember Cash Collections$40,000 $45,000 $52,000 Cash Payments Purchases of Inventory 4,500 7,200 4,500 Operating Expenses 7,900 5,600 9,000 Capital expenditures 0 20,000 4,600 The cash balance on July 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. What is the cash balance at the end of September
Answers
Answer:
$39,600
Explanation:
Particulars Amount
Opening cash balance $12,000
Add: Cash collection $40,000
Total cash available $52,000
Less: Cash payment
Purchase of inventory $4,500
Operating expenses $7,900
Capital expenditure $0 $12,400
Cash balance at the end $39,600
The cash balance at the end of September is $39,600
First, we'll determine the total cash available
Total cash available
= Opening cash balance + Cash collection
= 12,000 + 40,000
= 52,000
Cash balance at the end
The next step is to deduct the cash payments from the total cash available.
= Total cash available - (Purchase of inventory + Operating expenses + Capital expenditure)
= 52,000 - (4,500 + 7,900 - 0)
= 52,000 - 12,400
= 39,600
The cash balance at the end of September is $39,600
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The Anderson Company has equal amounts of low-risk, average-risk, and high-risk projects. The firm's overall WACC is 12%. The CFO believes that this is the correct WACC for the company's average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects. The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accepted, what is likely to happen over time? a. The company's overall WACC should decrease over time because its stock price should be increasing. b. The CEO's recommendation would maximize the firm's intrinsic value. c. The company will take on too many low-risk projects and reject too many high-risk projects. d. The company will take on too many high-risk projects and reject too many low-risk projects. e. Things will generally even out over time, and, therefore, the firm's risk should remain constant over time
Answers
Answer:
d. The company will take on too many high-risk projects and reject too many low-risk projects.
Explanation:
Weighted Average Cost of capital is the firm's is the rate which a firm has to pay to the lenders of fund. There can be different WACC for different projects as the WACC is based on the business risk. The beta factor can be different for all projects and since it is dependent on the nature of project and the risk it involves.
You just bought a motorcycle for $8,000. You plan to ride the motorcycle for two years, and then sell it for $3,200. During this two-year period, you expect to ride the motorcycle 10,000 miles each year, and you expect the motorcycle to get 50 miles per gallon of gasoline. The annual cost of insurance is $960, registration costs are $80 (good for two years), and the price of gasoline is $2.50 per gallon. During this same two-year period, you will need to service your motorcycle five times, at $240 per service check, and obtain five oil changes. Each oil change costs $35. You will also need to replace your tires once during this two-year period, for a total cost of $400.
a. Calculate the total fixed cost, total variable cost, and cost per mile for the two-year period, and then complete the table below.
Instructions: Round your answers for total fixed cost and total variable cost to the nearest whole number. Round your answer for cost per mile to two decimal places.
Total Fixed Cost Total Variable Cost Cost per Mile $
b. Suppose you want to lower the cost per mile. You should focus on: __________
a) variable costs, because they represent a majority of the total costs.
b) fixed costs, because they must be paid.
c) variable costs, because they can be avoided.
d) fixed costs, because they represent a majority of the total costs.
Answers
Answer:
1. a. Total fixed costs
= Depreciation + Insurance + Registration cost
Depreciation = Cost - salvage = 8,000 - 3,200 = $4,800
Total fixed cost = 4,800 + (960 * 2) + 80
= $6,800
b. Total variable cost:
= Gasoline + Service + Oil change + tire replacement
= (10,000 / 50 * 2.5 * 2 years) + (240 * 5) + (35 * 5) + 400
= 1,000 + 1,200 + 175 + 400
= $2,775
c. Cost per mile:
= Total cost / Number of miles
= (6,800 + 2,775) / (10,000 * 2 years)
= $0.48 per mile
2. c) variable costs, because they can be avoided.
Galen started a new job by showing up fifteen minutes before the official start time, taking a short lunch, and leaving approximately fifteen minutes after the official quitting time. During the first week Galen's supervisor takes him aside and tells him that he is really impressed with the fact that Galen is so punctual and dedicated to the work. The next week Galen supervisor once again compliments Galen on his punctuality and hard work. Galen continues this behavior while he works under this supervisor.
Required:
What type of conditioning has occurred here?
Answers
Answer:
Operant conditioning
Explanation:
Operant conditioning is a form of learning wherein consequences or rewards are attached to behaviors. When an individual demonstrates positive behavior, he is rewarded for such an action. Displaying bad behavior also results in punishments or negative consequences.
This type of learning is evident in the compliment Galen received from her supervisor because of her punctuality. Here a positive reward is attached to the good behavior and this will encourage Galen to keep displaying the good behavior. This type of conditioning is also known as instrumental conditioning.
Advisors, an international pension fund manager, uses the concepts of purchasing power parity(PPP) and the International Fisher Effect (IFE) to forecast spot exchange rates. Omni gathers the financial information as follows:
Base price level 100
Current U.S. price level 105
Current South African price level 111
Base rand spot exchange rate $0.175
Current rand spot exchange rate $0.158
Expected annual U.S. inflation 7%
Expected annual South African inflation 5%
Expected U.S. one-year interest rate 10%
Expected South African one-year interest rate 8%
Required:
Calculate the following exchange rates (ZAR and USD refer to the South African rand and U.S. dollar, respectively)
a. The current ZAR spot rate in USD that would been forecast by PPP.
b. Using the IFE, the expected ZAR spot rate in USD one year from now.
c. Using PPP, the expected ZAR spot rate in USD four years from now.
Answers
Answer:
a. Current spot rate / Base spot rate = Price level in home country / Price level in foreign country
CSR / 0.175 =105 / 111
CSR = (105/ 111) * 0.175
= $0.1655 / ZAR
b. Expected ZAR spot rate / Current ZAR spot rate = (1 + interest rate in home country) / (1 + interest rate in foreign country)
Expected ZAR spot rate / 0.158 = (1 + 10%) / ( 1 + 8%)
Expected ZAR spot rate = (1.1/1.08) * 0.158
= $0.1609 / ZAR
c. Expected ZAR spot rate / Current ZAR spot rate = (1 + inflation rate in home country) / (1 + inflation rate in foreign country)
Expected ZAR spot rate / 0.158 = (1 + 7%) / ( 1 + 5%)
= 1.07/1.05 * 0.158
= $0.1610 / ZAR
The market interest rate of a bond is: Multiple Choice An implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond. A government-issued rate based on general economic conditions. The rate specified in the bond contract used to calculate the cash payments for interest. The amount of principal to be returned to the bondholder at the maturity date.
Answers
Answer:
a. An implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond.
Explanation:
The market interest rate of a bond is an implied rate based on the price investors pay to purchase a bond in return for the right to receive the face amount at maturity and periodic interest payments over the remaining life of the bond.The market interest rate of bond are specified in the bond contract, of which the ultimate purpose is to calculate cash payments.
Officials from the City of Galveston and State of Texas gathered to celebrate the start of a beach restoration project that involves dumping sand and adding antierosion structures. The first cost of the project is $30 million with annual maintenance estimated at $340,000. If the restored/expanded beaches attract visitors who will spend $6.2 million per year, what is the conventional B/C ratio at the social discount rate of 8% per year
Answers
Answer:
The conventional B/C ratio is 1.83.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Officials from the City of Galveston and State of Texas gathered to celebrate the start of a beach restoration project that involves dumping sand and adding antierosion structures. The first cost of the project is $30 million with annual maintenance estimated at $340,000. If the restored/expanded beaches attract visitors who will spend $6.2 million per year, what is the conventional B/C ratio at the social discount rate of 8% per year. Assume the State wants to recover the investment in 20 years.
Explanation of the answers is now given as follows:
From the question, we have:
First cost = $30 million, or $30,000,0000
Estimated annual maintenance cost = $340,000
Expected annual revenue = Amount to spend per year by the visitors = $6.2 million, or 6,200,000
r = social discount rate per year = 8%, or 0.08
n = number of recover the investment years = 20
Incorporating the formula for calculating the present value of an ordinary annuity, we have:
B = Present worth of annual revenue = Estimated annual revenue * ((1 - (1 / (1 + r))^n) / r) = $6,200,000 * ((1 - (1 / (1 + 0.08))^20) / 0.08) = $60,872,513.93
C = Present worth of cost = First cost + (Estimated annual maintenance cost * ((1 - (1 / (1 + r))^n) / r)) = $30,000,0000 + ($340,000 * ((1 - (1 / (1 + 0.08))^20) / 0.08)) = $33,338,170.12
B/C ratio = B / C = $60,872,513.93 / $33,338,170.12 = 1.83
Therefore, the conventional B/C ratio is 1.83.
2. Which group listed below can be used to set indents and
spacing?
Answers
Explanation:
nothing is listed below
JRJ Corporation issued 10-year bonds at a price of $1,000. These bonds pay $60 interest every six months. Their price has remained the same since they were issued; that is, the bonds still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years and a par value of $1,000 and pay $40 interest every six months. If both bonds have the same yield, how many new bonds must JRJ issue to raise additional capital of $2 million
Answers
Answer:
JRJ must issue 2,596 bonds to raise additional capital of $2 million.
Explanation:
From the question, we have the following:
Amount needed to be raised = $2 million = $2,000,000
Coupon rate = 8.0%, or 0.08
FV = Face value = 1000
Year to maturity = 10
NPER = Number of period = Year to maturity * Number of semiannuals in a year = 10 * 2 = 20
PMT = (FV * Coupon rate) / Number of semiannuals in a year =(1000 * 0.08) / 2 = 40
Rate = Semiannual interest / FV = $60 / $1000 = 0.06
The net proceeds can be calculated using the following excel function:
Net proceed = PV(rate, NPER, -PMT, -FV) ........... (1)
Substituting all the relevant value into equation (1), we have:
Net proceed = PV(6%, 20, -40, -1000)
Inputing =PV(6%, 20, -40, -1000) in any cell in excel sheet (Note: as done in the attached excel file), we have:
Net proceed = $770.60
Therefore, we have:
Number of bonds that must be raised = Amount needed to be raised / Net proceed = $2,000,000 / $770.60 = 2,596
Mr. and Mrs. FB, a retired couple, decided to open a family restaurant. During March and April, they incurred the following expenses: Prepaid rent on commercial real estate ($2,100 per month from April through December) $ 18,900 Prepaid rent on restaurant equipment ($990 per month from April through December) 8,910 Advertising of upcoming grand opening 900 Staff hiring and training 11,500 $ 40,210 Mr. and Mrs. FB served their first meal to a customer on May 1. Determine the tax treatment of the given expenses on their tax return.
Answers
Answer:
$7,920 for rent on the equipment
$16,800 for rent on the commercial real estate
Explanation:
Calculation to Determine the tax treatment of the given expenses on their tax return.
First step is to calculate the Start Up Expenditure
Rent for April:
Commercial real estate $2,100
Equipment $990
Advertising during pre-operating phase $900
Staff hiring and training during pre-operating phase 11,500
Start Up Expenditure $15,490
Second step is to calculate the amount capitalized over 180 months
Amount capitalized over 180 months=$15,490 - $5,000 = $10,490
Amount capitalized over 180 months=$10,490 / 180 months
Amount capitalized over 180 months=$58.28 per month
Third step is to calculate the amortization deducted from this year’s tax return
Amortization deducted from this year’s tax return=(April – December = 8 months) ($58.28 x 8 months
Amortization deducted from this year’s tax return = $466.24
Now let Determine the tax treatment of the given expenses on their tax return
They can deduct ($990 x 8 months)$7,920 for rent on the equipment from May-December*
They can deduct ($2,100 x 8 months)$16,800 for rent on the commercial real estate fromMay-December
QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lopez Company paid $1,200 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Zim Company has a Supplies account balance of $5,000 at the beginning of the year. During the year, it purchased $2,000 of supplies. As of December 31, a physical count of supplies shows $800 of supplies available. Prepare the year-end adjusting entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.
Answers
Answer:
S/n General Journal Debit Credit
a Insurance expense $1,200
Prepaid Insurance $1,200
(To record insurance expired)
b Supplies expense $6,200
Supplies $6,200
($5,000 + $2,000 - $800)
(To record supplies used)
. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model.
Answers
Question Completion:
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. Process Activity Overhead Cost Driver Quantity Components Changeover $ 500,000 Number of batches 800 Machining 279,000 Machine hours 6,000 Setups 225,000 Number of setups 120 $ 1,004,000 Finishing Welding $ 180,300 Welding hours 3,000 Inspecting 210,000 Number of inspections 700 Rework 75,000 Rework orders 300 $ 465,300 Support Purchasing $ 135,000 Purchase orders 450 Providing space 32,000 Number of units 5,000 Providing utilities 65,000 Number of units 5,000 $ 232,000 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,500 3,500 Welding hours 800 2,200 Batches 400 400 Number of inspections 400 300 Machine hours 1,800 4,200 Setups 60 60 Rework orders 160 140 Purchase orders 300 150 Required: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model.
Answer:
Way Cool
1. Departmental overhead rates:
Departmental overhead rates:
Components = $167.33 per MH
Finishing = $155.10 per welding hour
Support = $515.56 per purchase order
Overhead cost per unit $496.19 $245.72
2. The total cost per unit for each product line, if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212:
Model 145 Model 212
Total cost per unit $636.63 $500.38
3. If the market price for Model 145 is $820 and the market price for Model 212 is $480, the profit or loss per unit for each model:
Model 145 Model 212
Profit per unit $183.37 ($20.38)
Explanation:
a) Data and Calculations:
Process Activity Overhead Cost Driver Quantity
Components Changeover $ 500,000 Number of batches 800
Machining 279,000 Machine hours 6,000
Setups 225,000 Number of setups 120
Total $ 1,004,000
Finishing
Welding $ 180,300 Welding hours 3,000
Inspecting 210,000 Number of inspections 700
Rework 75,000 Rework orders 300
Total $ 465,300
Support
Purchasing $ 135,000 Purchase orders 450
Providing space 32,000 Number of units 5,000
Providing utilities 65,000 Number of units 5,000
Total $ 232,000
Additional production information concerning its two product lines follows:
Model 145 Model 212 Total
Units produced 1,500 3,500 5,000
Welding hours 800 2,200 3,000
Batches 400 400 800
Number of inspections 400 300 700
Machine hours 1,800 4,200 6,000
Setups 60 60 120
Rework orders 160 140 300
Purchase orders 300 150 450
Overhead Rates per Activity Pool:
Components Changeover $ 500,000/800 = $625
Machining 279,000/6,000 = $46.50
Setups 225,000/120 = $1,875
Total $ 1,004,000/6,000 = $167.33 per MH
Finishing
Welding $ 180,300/3,000 = $60.10
Inspecting 210,000/700 = $300
Rework 75,000/300 = $250
Total $ 465,300/3,000 = $155.10 per welding hour
Support
Purchasing $ 135,000/450 = $300
Providing space 32,000/5,000 = $6.40
Providing utilities 65,000/5,000 = $13
Total $ 232,000/450 = $515.56 per purchase order
Model 145 Model 212
Units produced 1,500 3,500
Components department $301,194 $702,786
($167.33*1,800) ($167.33*4,200)
Finishing department $124,080 $341,220
($155.10*800) ($155.10*2,200)
Support department $154,668 $77,334
($515.56*300) ($515.56*150)
Total overhead costs $579,942 $1,121,340
Units produced 1,500 3,500
Overhead cost per unit $386.63 $320.38
Total production costs:
Model 145 Model 212
Direct costs per unit $250 $180
Total direct costs $375,000 $630,000
Total overhead costs $579,942 $1,121,340
Total production costs $954,942 $1,751,340
Units produced 1,500 3,500
Total cost per unit $636.63 $500.38
Model 145 Model 212
Market price per unit $820.00 $480.00
Total cost per unit 636.63 500.38
Profit per unit $183.37 ($20.38)
John's House of Pancakes uses a weighted moving average method to forecast pancake sales. It assigns a weight of 5 to the previous month's demand, 3 to demand two months ago, and 1 to demand three months ago. If sales amounted to 992 pancakes in May, 2,222 pancakes in June, and 2,907 pancakes in July, what should be the forecast for August
Answers
Answer:
2,466
Explanation:
Calculation to determine what should be the forecast for August
August Forecast =[992 pancakes +(2,222 pancakes x3)+(2,907 pancakes x5)]/(5+3+1) =
August Forecast =(992 pancakes+6,666 pancakes+14,535 pancakes)/9
August Forecast =22,193 pancakes/9
August Forecast =2,466
Therefore should be the forecast for August is 2,466
When a firm adopts a just-in-time operating environment,
1) new more efficient machinery and equipment must be purchased and installed in the original layout.
2) machinery and equipment are moved into small autonomous production lines called manufacturing cells.
3) new machinery and equipment must be purchased from franchised JIT dealers.
4) employees are trained on different equipment but the plant layout generally stays unchanged.
Answers
Answer:
2) machinery and equipment are moved into small autonomous production lines called manufacturing cells.
Explanation:
It should be noted that when a firm adopts a just-in-time operating environment,machinery and equipment are moved into small autonomous production lines called manufacturing cells.
[The following information applies to the questions displayed below.] Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2021. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a perpetual inventory system. Required: 1. Prepare the journal entries to record the (a) purchase by Thomas on November 17 and (b) payment on November 26, 2021. Thomas uses the gross method of accounting for purchase discounts. 2. Prepare the journal entry for the payment, assuming instead that it was made on December 15, 2021.
Answers
Answer:
1A. November 17
Dr Purchases 35,000
Cr Accounts payable 35,000
1B. November 26
Dr Accounts payable 35,000
Cr Purchase discounts 700
Cr Cash 34,300
2. December 15, 2021
Dr Accounts payable 35,000
Cr Cash 35,000
Explanation:
1A Preparation of the journal entries to record the (a) purchase by Thomas on November 17
November 17
Dr Purchases 35,000
Cr Accounts payable 35,000
[(100*$500)-(100*500*30%)]
=50,000-15,000
=35,000
B.Preparation of the journal entries to record the purchase by Thomas on November 26
November 26
Dr Accounts payable 35,000
Cr Purchase discounts 700
(2%*35,000)
Cr Cash 34,300
(35,000-700)
2. Preparation of the journal entry for the payment, assuming instead that it was made on December 15, 2021.
December 15, 2021
Dr Accounts payable 35,000
Cr Cash 35,000
[(100*$500)-(100*500*30%)]
On January 1, Wei company begins the accounting period with a $43,000 credit balance in Allowance for Doubtful Accounts. On February 1, the company determined that $9,400 in customer accounts was uncollectible; specifically, $2,200 for Oakley Co. and $7,200 for Brookes Co. Prepare the journal entry to write off those two accounts. On June 5, the company unexpectedly received a $2,200 payment on a customer account, Oakley Company, that had previously been written off in part a. Prepare the entries to reinstate the account and record the cash received.
Answers
Answer:
1.
Date Account Title Debit Credit
February 1 Allowance for Doubtful accounts $9,400
Oakley Co. - Accounts Receivable $2,200
Brookes Co. - Accounts Receivable $7,200
2.
Date Account Title Debit Credit
June 5 Oakley Co. - Accounts Receivable $2,200
Allowance for Doubtful Accounts $2,200
June 5 Cash $2,200
Oakley Co. - Accounts Receivable $2,200
Bob lives in San Diego and runs a business that sells boats. In an average year, he receives $793,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Bob does not operate this boat business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom at the $15,000 per year rate. No other costs are incurred in running this boat business.
Identify each of Charles's costs in the following table as either an implicit cost or an explicit cost of selling guitars.
a. The wages and utility bills that Charles pays
b. The wholesale cost for the guitars that Charles pays the manufacturer
c. The rental income Charles could receive if he chose to rent out his showroom
d. The salary Charles could earn if he worked as a financial advisor
Answers
Answer:
Explanation:
Explicit Costs refers to costs that involve an immediate outlay of cash from the business and it is recorded and reported to the management.
Implicit Cost refer to the cost which the company had foregone while employing the alternative course of action and is neither recorded nor reported to the management of the company.
a. The wages and utility bills that Charles pays
Identification: Explicit Cost
b. The wholesale cost for the guitars that Charles pays the manufacturer
Identification: Explicit Cost
c. The rental income Charles could receive if he chose to rent out his showroom
Identification: Implicit Cost
d. The salary Charles could earn if he worked as a financial advisor
Identification: Implicit Cost
Conifer Craft is a furniture firm that specializes in creating customized furniture for the commercial market. The firm has recently acquired a large amount of funds from investors and is looking to diversify by introducing customized products for the industrial market. The firm has completed a complete situation analysis for the purpose and the results are favorable. According to the market segmentation process model, the firm must next:_________
Answers
Answer:
implement a portfolio strategy
Explanation:
According to information regarding the company Conifer Craft, it is possible to identify that the company is diversifying its portfolio by launching customized products for the industrial market. Therefore, after this market segmentation process, it is recommended that the company develops and implements a portfolio strategy, which aims to reduce the aggregate risks of the diversification of new product lines, improving the decision-making process, identifying the potential for value of each product line according to a strategic vision, so that the company remains competitive and well positioned in the market.
The Bonita Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Bonita has decided to locate a new factory in the Panama City area. Bonita will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs.
Building A: Purchase for a cash price of $611,000, useful life 25 years.
Building B: Lease for 25 years with annual lease payments of $71,370 being made at the beginning of the year.
Building C: Purchase for $657,400 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,800. Rental payments will be received at the end of each year. The Nash Inc. has no aversion to being a landlord.
Required:
In which building would you recommend that The Bonita Inc. locate, assuming a cost of funds?
Answers
Answer:
Building C
Explanation:
Building A: Purchase for a cash price of $611,000, useful life 25 years.
Building B: Lease for 25 years with annual lease payments of $71,370 being made at the beginning of the year.
Building C: Purchase for $657,400 cash. This building is larger than needed; however, the excess space can be sublet for 25 years at a net annual rental of $6,800. Rental payments will be received at the end of each year.
11% cost of funds
we must determine the present value of each option:
Building A's present value = $611,000
Building B's present value = $71,370 x 8.4217 (PV annuity due factor, 11%, 25 periods) = $601,057
Building C's present value = $657,400 - ($6,800 x 8.4217) = $657,400 - $57,268 = $600,132 (LOWEST PV)
The Sunland Inc., a manufacturer of low-sugar, low-sodium, low-cholesterol TV dinners, would like to increase its market share in the Sunbelt. In order to do so, Sunland has decided to locate a new factory in the Panama City area. Sunland will either buy or lease a site depending upon which is more advantageous. The site location committee has narrowed down the available sites to the following three very similar buildings that will meet their needs. Building A: Purchase for a cash price of $612,100, useful life 26 years. Building B: Lease for 26 years with annual lease payments of $71,490 being made at the beginning of the year. Building C: Purchase for $655,200 cash. This building is larger than needed; however, the excess space can be sublet for 26 years at a net annual rental of $6,850. Rental payments will be received at the end of each year. The Sunland Inc. has no aversion to being a landlord.
Instructions:
In which building would you recommend that Brubaker Inc. locate, assuming a 12% cost of funds?
Answers
Answer:
Building C
Explanation:
To solve this, we find the present value of each of the buildings.
Building A: We are told that it is to be Purchased for a cash price of $612,100, useful life 26 years. Thus;
PV = $612000
Building B: PV = 71490 + (71490 × ((1+r)ⁿ - 1)/(r(1+r)ⁿ)
Where,
r = 12% = 0.12
n = 26 - 1 = 25
Thus;
PV = 71490 + (71490 × (1 + 0.12)^(25) -1)/(0.12(1 + 0.12)^25)
PV = = $632196
Building C:
PV = 655200 - 6850 × ((1+r)ⁿ - 1)/(r(1+r)ⁿ)
Where;
r = 12% = 0.12
n=26
Thus;
PV = 655200 - (6850 × (1 + 0.12)^(25) -1)/(0.12(1 + 0.12)^25)
PV = $601474
Thus, the minimum PV is building C and therefore it is the one I will recommend that Brubaker Inc. locate
At the start of the current year, a company paid for the following in cash: Copyrights, $500,000 Equipment, $25,000,000 Goodwill, $4,500,000 Inventory, $4,000,000 Land, $15,000,000 Prepaid rent, $500,000 Research and development, $2,000,000 Supplies, $1,500,000 Trademarks, $1,000,000 It amortizes its intangibles over 10 years. Determine its current year amortization expense.
Answers
Answer:
$50,000
Explanation:
Calculation to determine its current year amortization expense.
Using this formula
Current year amortization expense=(Copyrights /Numbers of Intangibles years)
Let plug in the formula
Current year amortization expense=($500,000/10 years)
Current year amortization expense=$50,000
Therefore its current year amortization expense will be $50,000
The current year amortization expense of the company will be $150,000. It is calculated in respect of copyright and trademark.
What is amortization?Amortization refers to the writing down of value of intangible assets over their useful life. Is compared to the depreciation amortization reduces the value of the intangible assets.
The assets that are subject to amortization are Trademark, copyright, patent, license and so on.
In the given question the intangible assets that are subject to amortization are Trademark and copyright. The amortization period for these asset is 10 years. Therefore the amortization expense will be some of cost of asset subject to amortization divided by the number of years.
Hence the amortization expense will be:
[tex]\rm Amortization \:expense = \dfrac{Copyright + Trademark}{10}\\\\\rm Amortization \:expense = \dfrac{\$500,000 + \$1,000,000}{10}\\\\\rm Amortization \:expense = \dfrac{ \$1,500,000}{10}\\\\\rm Amortization \:expense = \$150,000[/tex]
Therefore the amortization expense will be $150,000.
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