Answer:
1.Jan 01 Dr Cash 360,000
Cr Notes payable 340,000
2.Interest expense 28,800
Principal Reduction 61,364
Explanation:
MM Co.
1 . Journal entry
Since MM Co. borrows $360,000 cash on January 1 from a bank this means we have to
Debit Cash with the amounts of money he borrowed which is $360,000 and Credit Notes Payable with the same amount.
Jan 01 Dr Cash 360,000
Cr Notes payable 340,000
2. Calculation of the amount goes toward interest expense and Principal reduction
Interest expense 28,800
(360,000*8%)
Principal Reduction 61,364
(90,164-28,800)
A company received a bank statement showing a balance of $78,000. Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400. What is the company's adjusted bank balance
Answer:
Adjusted Bank Balance = $85,000
Explanation:
Adjustment of bank balance is a bank reconciliation procedure, that is used to match the amount in the bank statement with the amount in the company's balance sheet.
To adjust the bank balance, particulars that need to be subtracted or added to the bank statement balance has to be identified and treated accordingly.
For this example, the adjusted balance is calculated thus:
Adjusted bank balance = (Bank statement balance) - (outstanding checks) +(deposit in transit)
Adjusted Bank Balance = 78,000 - 2,400 + 9,400 = $85,000
Note:
outstanding checks are subtracted because they are payments to be made made by the company, representing a liability to the company (payer)
deposit in transit is an income to the company that has not been credited yet, but that will be credited.
Change all of the numbers in the data area of your worksheet so that it looks like this:
Data
4 Unit sales 10,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
A) What is the break-even in dollar sales?
B) What is the margin of safety percentage?
C) What is the degree of operating leverage?
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
Data
4 Unit sales 12,000 units
5 Selling price per unit $20 per unit
6 Variable expenses per unit $8 per unit
7 Fixed expenses $90,000
1. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:
A. What is net operating income?
B. By what percentage did the net operating income increase?
Answer:
A) What is the break-even in dollar sales?
$150,000B) What is the margin of safety percentage?
25%C) What is the degree of operating leverage?
41. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.
if unit sales increase by 20%, then profits should increase by 80%2. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20%
A. What is net operating income?
(10,000 x 1.2 x $20) - (10,000 x 1.2 x $8) - $90,000 = $240,000 - $96,000 - $90,000 = $54,000B. By what percentage did the net operating income increase?
net operating income increased from $30,000 to $54,000 (an 80% increase)Explanation:
selling price $20
variable costs $8
contribution margin $12
break even point = $90,000 / $12 = 7,500 x $20 = $150,000
margin of safety = (current sales - break even) / current sales = $50,000 / $200,000 = 25%
degree of operating leverage = (quantity x contribution margin) / [(quantity x contribution margin) - fixed costs] = (10,000 x $12) / ($120,000 - $90,000) = $120,000 / $30,000 = 4
or contribution margin / net profits = $120,000 / $30,00 = 4
Strawberry Fields purchased a tractor at a cost of $40,000 and sold it two years later for $25,000. Strawberry Fields recorded depreciation using the straight-line method, a five-year service life, and an $6,000 residual value.
1. What was the gain or loss on the sale?2. Record the sale using a general journal entry.
Answer:
1.Loss on sale 1,400
2.Dr Cash 25,000
Dr Accumulated Depreciation 13,600
Dr Loss on sale 1,400
Cr Equipment - Tractor 40,000
Explanation:
1.Calculation of the gain or loss on the sale of Strawberry Fields
Using this formula
Depreciation per year = (Cost - Salvage value)/Useful life
= (40,000-6,000)/5
=34,000/5
= 6,800 per year
The Book value after two years will be:
40,000 - (6,800*2)
=40,000-13,600
=26,400
Gain(Loss) = Cash received - Book value
= 25,000 - 26,400
Loss on sale 1,400
2.Record of the sale using a general journal entry
Dr Cash 25,000
Dr Accumulated Depreciation 13,600
Dr Loss on sale 1,400
Cr Equipment - Tractor 40,000
In the business gift-giving world, if a company gives a gift to a potential client for the purpose of influencing their behavior in their favor, it is unethical. What are the three criteria and dimensions of evaluating a business gift? Multiple Choice Question
Answer:
Context, culture and content
Explanation:
Gift giving in business is common and also contentious. Business gifts are often for advertising, sales promotion, and marketing communication medium.
These kind of gifts are for the following reasons:
1. In appreciation.
2. In the hopes of creating a positive first impression.
3. Returning a favor or expecting a favor in return for something.
When it comes to considering appropriate business gifts it is helpful for one to think about the content of the gift, the context of the gift, and the culture in which it will be received.
Giving a gift to a potential client for the purpose of influencing their behavior is a form of Bribery.
Record adjusting journal entries 100 of the following for year ended December 31
Assume no other adjusting entries are made during the year
Salaries Payable.: At year-end, salaries expense of $24,000 has been incurred by the company, but is not yet paid to employees.
Interest Payable: At its December 31 year-end, the company owes $675 of interest on a line-of-credit loan. That interest will not be paid until sometime in January of the next year.
Interest Payable: At its December 31 year-end, the company holds a mortgage payable that has incurred $1,300 in annual interest that is neither recorded nor paid. The company intends to pay the interest on January 7 of the next year.
Answer:
Salaries Payable :
Salaries Expense $24,000 (debit)
Salaries Payable $24,000 (credit)
Interest Payable:
Interest Expense $675 (debit)
Interest Payable $675 (credit)
Interest Payable:
Interest Expense $1,300 (debit)
Interest Payable $1,300 (credit)
Explanation:
When an amount is incurred but is deferred to another period for payment, a liability is recognized.
A liability is a present legal obligation arising from a past event, the settlement of which will result in outflow of economic benefits (Cash) from the entity.
Nathan’s Athletic Apparel has 2,000 shares of 5%, $100 par value preferred stock the company issued at the beginning of 2017. All remaining shares are common stock. The company was not able to pay dividends in 2017, but plans to pay dividends of $22,000 in 2018.Required: 1. & 2. Assuming the preferred stock is cumulative and noncumulative, how much of the $22,000 dividend will be paid to preferred stockholders and how much will be paid to common stockholders in 2018? Cumlative Non Cumlativepreferred Dividends for 2018 preferred Dividends in arrears for 2017 Remaining Dividends to common stockholders Total Dividens:
Answer:
1.
Preferred stock dividends to be paid in 2018 = $20000
Common stock dividends to be paid in 2018 = $2000
2.
Preferred stock dividends to be paid in 2018 = $10000
Common stock dividends to be paid in 2018 = $12000
Explanation:
The preferred stock dividends are always paid before the common stock dividends.
Cumulative preferred stock is the stock which accumulates or accrues dividends if the dividends are partially paid or not paid at all in a particular year. These dividends are accrued and are required to be paid by the company whenever it declares dividends.
Non cumulative preferred stock does not accrue or accumulates dividends. Thus, if dividends are not paid in a particular year, the company has no obligation to pay these dividends ever in the future.
1.
If the preferred stock is assumed to be cumulative, then the dividends in arrears for 2017 will be paid in 2018 along with dividends for 2018 on preferred stock before paying the common stock holders.
Preferred stock dividend per year = 2000 * 100 * 0.05
Preferred stock dividend per year = $10000
Preferred stock dividends to be paid in 2018 = 10000 + 10000 = $20000
Common stock dividends to be paid in 2018 = 22000 - 20000 = $2000
2.
If the preferred stock is assumed to be non cumulative, then the dividends in arrears for 2017 will not be paid in 2018. Only the dividends for 2018 on preferred stock will be paid before paying the common stock holders.
Preferred stock dividend per year = 2000 * 100 * 0.05
Preferred stock dividend per year = $10000
Preferred stock dividends to be paid in 2018 = $10000
Common stock dividends to be paid in 2018 = 22000 - 10000 = $12000
Suppose a consumer has the following utility function defined over the 2 goods X and Y: a. If this consumer originally consumed 10 units of X and 24 units of Y, and if the consumption of X were increased to 12 units, how much Y would be would the consumer be willing to give up and maintain the initial level of satisfaction
Answer:
Y = 22 units (Approx)
Explanation:
Note:
The utility function is not given, the utility function is as follows.
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
So,
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
When X = 10 and Y = 24 units
U(10 ,24) = 2(10) + [tex]16(24)^{1/2}[/tex]
U(10 ,24) = 98.4
U(10 ,24) = 99 Units (Approx)
So,
U(X ,Y) = 2X + [tex]16Y^{1/2}[/tex]
When X = 12 Find Y
99 units = 2(12) + [tex]16Y^{1/2}[/tex]
75 = [tex]16Y^{1/2}[/tex]
Y = 21.97
Y = 22 units (Approx)
E-Eyes just issued some new preferred stock. The issue will pay an annual dividend of $14 in perpetuity, beginning 19 years from now. If the market requires a return of 4.4 percent on this investment, how much does a share of preferred stock cost today
Answer:
Price of stock = $181.78
Explanation:
PV of dividend in year 13
PV =A×(1- (1+r)^(-n)/r )
PV of dividend in (year 13) = 14/(0.044=318.18
PV of dividend in year 0
PV = Div× (1+r)^(-n)
Dividend in year 13, r-interest rate, n- number of years
PV in year 0 = 318.1818182 × 1.044^(-13)= 181.78
Price of stock = $181.78
The expected average rate of return for a proposed investment of $636,800 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $191,560 for the 4 years is (round to two decimal points)
Answer: 15.96
Explanation:
The expected rate of return will be the Average income divided by the average cost.
It is stated that the asset has a useful life of 4 years with no residual value so at the end of 4 years it will be worth $0.
The Average Cost/ Value of the Asset is calculated as;
= (Beginning Asset value - Ending Asset Value) / 2
= (600,000 - 0) /2
= 300,000
Total Income of $191,560 for the 4 years so Average income will be,
= 191,560/4
= $47,890
Expected Average Rate of Return = 47,890/300,000
= 15.96%
Zaid's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $65 for 10,000 tents. At that level of output, the firm's average total costs equal Group of answer choices $65 $75 $85 $95
Answer:
$95
Explanation:
average variable cost per unit = $65
average fixed cost per unit = $300,000 / 10,000 = $30
average total cost per unit = $95
Fixed costs do not vary if the production output changes, while variable costs move in the same direction as the production output, e.g. if output increases, variable costs increase as well.
Prepare a multiple-step income statement through the calculation of gross profit.
For each transaction, indicate the impact each item had on income and the dollar amount of the change in income, if any. Input decreases to net income as negative values. Upon completion, compare the gross profit with the amount reported on the partial income statement.
Jul. 1 Purchased merchandise from Boden Company for $6,000 under credit terms of 1/15, n/30,
FOB shipping point, invoice dated July 1.
Jul. 2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB shipping point,
invoice dated July 2. The merchandise had cost $500.
Jul. 3 Paid $125 cash for freight charges on the purchase of July 1.
Jul. 8 Sold merchandise that had cost $1,300 for $1,700 cash.
Jul. 9 Purchased merchandise from Leight Co. for $2,200 under credit terms of 2/15, n/60, FOB
destination, invoice dated July 9.
Jul. 11 Received a $200 credit memorandum from Leight Co. for the return of part of the merchandise
purchased on July 9.
Jul. 12 Received the balance due from Creek Co. for the invoice dated July 2, net of the discount.
Jul. 16 Paid the balance due to Boden Company within the discount period.
Jul. 19 Sold merchandise that cost $800 to Art Co. for $1,200 under credit terms of 2/15, n/60, FOB
shipping point, invoice dated July 19.
Jul. 21 Issued a $200 credit memorandum to Art Co. for an allowance on goods sold on July 19.
Jul. 24 Paid Leight Co. the balance due after deducting the discount.
Jul. 30 Received the balance due from Art Co. for the invoice dated July 19, net of discount.
Jul. 31 Sold merchandise that cost $4,800 to Creek Co. for $7,000 under credit terms of 2/10, n/60,
FOB shipping point, invoice dated July 31.
Answer:
inventory 6,000 debit
account payable 6,000 credit
--to record July 1st--
Acc Rec 900 debit
Sales Revenues 900 credit (+900 income)
--to record sale--
COGS 500 debit (-500 expense)
Inventory 500 credit
--to record cost of sale--
Delivery expense 125 debit (-125 expense)
Cash 125 credit
--to record freight-out --
Cash 1,700 debit
Sales Revenues 1,700 credit (+1,700 income)
--to record sale--
COGS 1,300 debit (-1,300 expense)
Inventory 1,300 credit
--to record cost of sale--
Inventory 2,200 debit
Account Payable 2,200 credit
--to record purchase--
Account Payable 200 debit
Inventory 200 credit
--to record return of goods--
Cash 882 debit
Sales DIscount 18 debit
Accounts Receivables 900 credit
--to record payment from customer--
Account Payable 6,000 debit
Cash 5,940 credit
Inventory 60 credit
--to record payment to supplier--
Cash 1,200 debit
Sales Revenues 1,200 credit (+1,200 income)
--to record sale--
COGS 800 debit (-800 expense)
Inventory 800 credit
--to record cost of sale--
Sales Returns 200 debit
Account Receivables 200 credit
-- to record return from customer--
Account Payable 2,000 debit
Cash 1,960 credit
Inventory 40 credit
--to record payment to supplier--
Cash 980 debit
Sales DIscount 20 debit
Accounts Receivables 1,000 credit
--to record payment from customer--
Cash 7,000 debit
Sales Revenues 7,000 credit (+7,000 income)
--to record sale--
COGS 4,800 debit (-4,800 expense)
Inventory 4,800 credit
--to record cost of sale--
Explanation:
Cheek
900 x 2% = 18
net of discount 900 - 18 = 882
Boden:
6,000 x 1% = 60
Net of discount 6,000 - 60 = 5,940
Leight:
2,200 - 2,000 = 2,000 balance due
2,000 x 2% = 40
net of discount 1,960
Art Co:
1,200 - 200 = 1,000 balance due
1,000 x 2% = 20 discount
net = 1,000 - 20 = 980
Review the "Types of Distribution Channels" study material. Explain why the selection of distribution channels is essential to a successful marketing strategy. Provide an example of a well-known company's distribution channels and defend their choices. In replies to peers, agree or disagree with their assessment and justify your response.
The correct answer to this open question is the following.
Although the question does not provide a specific text, we can say that the selection of distribution channels is essential to a successful marketing strategy because that is how companies deliver their products to consumers. This is of key importance due to the fact that there are numerous competitors selling the same or similar products so the company has to be precise and effective in delivering the product to match the client's expectations.
One good example of a successful company would be Underarmour. This Maryland company sells its products through direct distribution, uses intermediaries and brokers, has open many outlets where the company sells direct to the consumer, and also sells products through e-commerce portals. You can find Underarmour apparel in big chain stores, fashion stores, the internet, and sports stores.
ABC Appliance offers a warranty requiring an annual fee. The warranty may be purchased at the time of sale or at any time within the first year after the appliance was purchased. The warranty fee after the date of purchase is twice the time-of-purchase fee. When asked why the fee was higher after the date of purchase, ABC's president said, "Buying a warranty is voluntary. We've noted that those who buy the warranty after the purchase date have a greater need for service." Charging the same rate or a lower rate after the date of purchase would expose ABC to what problem that also impacts private insurers?
Answer: adverse selection
Explanation:
Adverse selection is a situation whereby the sellers possesses information that the buyers do not have. It may also be the other way round whereby the buyers have information which the sellers don't have regarding the quality of a product.
There is information failure between both parties; typically, it's usually the sellers who has more information. Therefore, base on the scenario above, charging same rate or lower rate after the date of the purchase would expose ABC to adverse selection problems.
Small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition is known as:
Answer: Value proposition
Explanation: Value proposition in business is that service, innovation, or uniqueness about your business that attracts customers. A value proposition also helps answers the question 'why' someone should do business with you. It hells to convince potential customer why they should patronize you, and why your service or product would be of more value to them than what your competitors offering same service would be able to offer them.
Fill in the missing numbers for the following income statement. (Do not round intermediate calculations.)
Sales $668,600
Cost 431,300
Depreciation 103,700
EBIT
Taxes (24%)
Net Income
a. Calculate the OCF. (Do not round intermediate calculations.)
b. What is the depreciation tax shield?
Answer:
a. $205,236
b. $24,888
Explanation:
a. The computation of OCF is shown below:-
EBIT = Sales - Cost - Depreciation
= $668,600 - $431,300 - $103,700
= $133,600
Net income = EBIT - Taxes
= $133,600 - ($133,600 × 24%)
= $133,600 - $32,064
= $101,536
Operating cash flow = EBIT - Taxes + Depreciation
= $133,600 - $32,064 + $103,700
= $205,236
b. The computation of depreciation tax shield is shown below:-
Depreciation tax shield = Depreciation × Tax
= $103,700 × 24%
= $24,888
Motorzone offers replacement parts for old Volkswagen Beetles. The company calculates shipping charges based on shipping parts from Boston, even though some parts actually ship from St. Louis. Motorzone most likely practices ________ pricing.
Answer:
basing-point
Explanation:
Basing point pricing is a system used to establish prices in which the business charges a fixed amount for the product and an additional charge for the shipping that is determined according to the customer's distance from a certain place that is called the basing point. According to this, the answer is that Motorzone most likely practices basing-point pricing because they establish the shipping charges based on a pre-determined location even though some products are not in this place.
All projects are unique:________.
Select one:
A. Therefore all project management circumstances are equally unique.
B. So knowledge should not be transferred to avoid bias in future projects.
C. So knowledge cannot be transferred.
D. But they may have several common points.
Answer:
D. But they may have several common points
Explanation:
Although all projects are unique, they still share similar similarities. So knowledge can be transferred.
Rogers Inc. has provided the following data for the month of June. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month.
Work in process Finished goods Cost of goods sold Total
Direct materials $2,380 16790 43930 $63,100
Direct labor 1710 16060 42020 $59,790
Manufacturing overhead applied 1520 9880 26600 $38,000
Total $5,610 $42,730 $112,550 $160,890
Manufacturing overhead for the month was underapplied by $1,000. The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. The work in process inventory at the end of June after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
a. $5,570
b. $5,575
c. $5,645
d.$5,650
Answer:
d.$5,650
Explanation:
Rogers Inc.
Work in process Finished goods Cost of goods sold Total
Direct materials $2,380 16790 43930 $63,100
Direct labor 1710 16060 42020 $59,790
Manufacturing overhead
Applied 1520 9880 26600 $38,000
% OF OH Applied 1520/38000 9880/38000 26600 /38000
4% 26% 70%
Total $5,610 $42,730 $112,550 $160,890
Under applied 4% of 1000 26% of 1000 70% of 1000
Under applied 40 260 700
Total $ 5650 42990 113250
We find the percentage of the manufacturing overhead applied and multiply it with the under applied amount. Then we add the underapplied amount to the total to get the actual amount.
Prepare summary journal entries to record the following transactions for a company in its first month of operations.
1. Raw materials purchased on account, $86,000.
2. Direct materials used in production, $38,500. Indirect materials used in production, $23,000.
3. Paid cash for factory payroll, $50,000. Of this total, $38,000 is for direct labor and $12,000 is for indirect labor.
4. Paid cash for other actual overhead costs, $7,375.
5. Applied overhead at the rate of 125% of direct labor cost.
6. Transferred cost of jobs completed to finished goods, $62,600.
7. Sold jobs on account for $90,000 g(2). The jobs had a cost of $62,600 g(1).
Answer:
1.
Raw Materials $86,000 (debit)
Accounts Payable $86,000 (credit)
2.
Work In Process : Direct Materials $38,500 (debit)
Work In Process : Indirect Materials $23,000 (debit)
Raw Materials $61,500 (credit)
3.
Work In Process : Direct Labor $38,000 (debit)
Work In Process : Indirect Labor $12,000 (debit)
Cash $50,000 (credit)
4.
Overheads $7,375 (debit)
Cash $7,375 (credit)
5.
Work In Process $47,500 (debit)
Overheads $47,500 (credit)
6.
Finished Goods $62,600 (debit)
Work In Process $62,600 (credit)
7.
Accounts Receivable $90,000 (debit)
Cost of Sales $62,600 (debit)
Sales Revenue $90,000 (credit)
Finished Goods $62,600 (credit)
Explanation:
The costs of manufacture are accumulated in the Work In Process Account as was shown above.
Note that only Applied Overheads not Overheads incurred are included in Work In Process Account.
The Costs of Goods Transferred is Eliminated from The Work In Process Account and Included in the Finished Goods Account.
Journal 7 Records Both the Revenue and Cost of Goods Sold on Account.
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%
The duration of copyright protection for works not made for hire is: Select one: a. 20 years from the date of filing. b. Generally perpetually as long as the works are in print. c. One year if no registration has been f
Answer:
Life of the author plus 70 years
Explanation:
Copyright can be defined as the legal ways of protecting an author's work. It is a type of intellectual property right that protect authors from unauthorized individuals from publishing their work.
It is the right to copy given by an author to anyone to copy their work. Content that can be protected by copyright includes; books, poems, plays, songs, films, and artwork and website.
Daniel acquires a 30 percent interest in the PPZ Partnership from Paolo, an existing partner, for $48,000 of cash. The PPZ Partnership has borrowed $19,000 of recourse liabilities as of the date Daniel bought the interest. What is Daniel's basis in his partnership interest
Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR formula to find the true annual percentage rate. Assume you repay the entire loan in one year
Answer:
APR =5.263%
Explanation:
Computation of the true annual percentage rate
Using the APR formula to find the true annual percentage rate
APR=(2 × n × I) / [P × (N + 1)]
Hence;
APR= (2 × 1 × $100) / [$1,900 × (1 + 1)]
APR=$200/($1,900×2)
APR=$200/$3,800
APR= 0.05263 ×100
APR =5.263%
Therefore the true annual percentage rate using the APR formula will be 5.263%
Linea, an employee of Hard Labor Industries (HLI), is injured in a work-related accident. Based on the diagnosis of Newt, a doctor, Linea accepts $50,000 from HLI and waives the right to future claims. Newt's diagnosis later proves to have been wrong. In terms of the impact on Linea's agreement with HLI, Newt's mis-diagnosis is:_______.
a. obtain damages from HLI.
b. recover nothing.
c. set aside the settlement withHLI.
Answer: set aside the settlement withHLI.
Explanation:
From the question, Linea, who is an employee of Hard Labor Industries (HLI), is injured in a work-related accident and based on the diagnosis of Newt, who is a doctor, Linea accepts $50,000 from HLI and waives the right to future claims.
We are also informed that Newt's diagnosis later proves to have been wrong. In terms of the impact on Linea's agreement with HLI, Newt's mis-diagnosis is to set aside the settlement with HLI.
This will be necessary to make them understand that it was a mistake and make a settlement with Hard Labor Industries so that Linea won't be affected as they make think she has it planned in order to collect money from them so the hospital should make a settlement.
Sub Sandwiches of America made the following expenditures related to its restaurant.
1. Replaced the heating equipment at a cost of $250,000.
2. Covered the patio area with a clear plastic dome and enclosed it with glass for use during the winter months. The total cost of the project was $750,000.
3. Performed annual building maintenance at a cost of $24,000.
4. Paid for annual insurance for the facility at $8,800.
5. Built a new sign above the restaurant, putting the company name in bright neon lights, for 9,900.
6. Paved a gravel parking lot at a cost of $65,000.
Required:
Sub Sandwiches of America credits cash for each of these expenditures. Select the account it debits for each.
Answer:
1. Heating Equipment
2. Premises
3. Maintenance Expense
4. Prepaid Insurance
5. Intangible Asset ; Logo
6. Premises
Explanation:
1. Replacement of heating equipment is substantial hence it is capitalized to the Heating Equipment Account.
2. The project is capitalized to the Premises Account as it form part of premises.
3. Annual Building maintenance is a revenue expenditure not capitalized.
4. An Asset Insurance Prepaid for future economic benefits to be realized is recognized.
5. The new sign would result in inflow of economic benefit and is non-tangible hence Intangible Asset is recognized.
6. Work done is capitalized in the Premises Account
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Activity Rate Setting up batches $ 59.71 per batch Processing customer orders $ 73.05 per customer order Assembling products $ 4.40 per assembly hour Data concerning two products appear below: Product K91B Product F65O Number of batches 92 63 Number of customer orders 42 56 Number of assembly hours 496 903 How much overhead cost would be assigned to Product K91B using the activity-based costing system
Answer:
Product K91B= $10,743.82
Explanation:
Giving the following information:
Activity Cost Pool Activity Rate
Setting up batches $ 59.71 per batch
Processing customer orders $ 73.05 per customer order
Assembling products $ 4.40 per assembly hour
Product K91B
Number of batches 92
Number of customer orders 42
Number of assembly hours 496
We were given the allocation rates, all we need to do is allocate based on actual allocation base:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product K91B= 59.71*92 + 73.05*42 + 4.4*496
Product K91B= $10,743.82
As a financial advisor, what will you tell your client, Ryan, he should be willing to pay for an investment property that he plans to buy today and hold for 5 years and then sell, given the following cash flows and the fact that he expects 9% on any investment he makes?
Inflows Outflows Net
InitialOutlay $0
Year 1 $45,000 $55,000 10,000
Year 2 55,000 20,000 35,000
Year 3 55,000 20,000 35,000
Year 4 255,000 235,00 220,000
A. $189, 910.29.
B. $194, 589.33.
C. $178, 656, 73.
D. $191, 231, 57.
Answer:
The option (A) $189, 910.29 is correct
Explanation:
Solution
Given that
Years Net Cash flow Discount Factor at 11% Present Value
1 $ (10,000.00) 0.901 $(9,009.01)
2 $ 35,000.00 0.812 $ 28,406.79
3 $ 35,000.00 0.731 $ 25,591.70
4 $ 220,000.00 0.65 $ 144,920.81
Now,
The Net Present Value $189,910.29
Thus
After carrying out the financial analysis, it has been seen that if we go ahead to buy the Investment Property, then today we have Net present Value of $ 189,910.29.
So, i will inform my client to buy the Investment Property.
Jayne Butterfield, a single mother with three children, lived in Sacramento, California. Sarah Huckleberry also lived in California until she moved to New York City to open and operate an art gallery. Huckleberry asked Butterfield to manage the gallery under a one-year contract for an annual salary of $90,000. To begin work, Butterfield relocated to New York. As part of the move, Butterfield transferred custody of her children to her husband, who lived in London, England. In accepting the job, Butterfield also forfeited her husband's alimony and child-support payments, including unpaid amounts of nearly $45,000. Before Butterfield started work, Huckleberry repudiated the contract. Unable to find employment for more than an annual salary of $30,000, Butterfield moved to London to be near her children. She filed a suit in an California state court against Huckleberry, seeking damages for breach of contract. Should the court hold, as Huckleberry argued, that Butterfield did not take reasonable steps to mitigate her damages? Why or why not?
Answer:
No, the court should not hold in favor of Huckleberry.
Explanation:
The rule of mitigation that Huckleberry tries to use in her favor states that the non-breaching party (Butterfield) should have taken all the necessary steps to reduce her loss, e.g. take a job in New York. She probably argued that Butterfield leaving for England to meet with her children made things worse.
But in this case, Butterfield relied on Huckleberry's promise to organize her life and the well being of her children. Butterfield made a lot of changes and sacrifices in her life because of this, e.g. forfeiting unpaid alimony, transferring custody of her children , etc.
Moving to a different city or country requires a lot of work, expat life is not easy and not everyone can handle it. Butterfield took decisions that affected the lives of many people and she is not responsible for Huckleberry's breaching, the only party responsible for all this mess is Huckleberry and it is normal that Butterfield would want to go to where her children are.
The government establishes an effective price ceiling for a gallon of milk. What will be the result of this ceiling? a) It will create a surplus b) It will create a shortage c) It will have no effect d) It will cause an increase in demand e) it will cause an increase in supply
Answer:
D
Explanation:
Because price ceiling is put by the government so that certain commodities could still be available at a reasonable price for many
Answer: D
Explanation:
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