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
Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land with a fair market value of $380,000. Packard's basis in the State stock was $740,000. The land had a basis to State Company of $562,000. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives
Answer:
No loss recognized by State and a basis in the land of $562,000 to Packard.
Explanation:
Given that:
Percentage amount transferred by Packard Corporation = 100%
In exchange ;
Packard received land with a fair market value of $380,000
Packard's basis in the State stock was $740,000
The land had a basis to State Company of $562,000
We are to determine What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives.
Since there is complete liquidation of the state's company.
The state will not recognize any amount of loss due to the fact that the complete liquidation is tax-deferred to Packard Corporation.
Similarly, Packard's basis in the land is equal to State's basis in the land.
Thus;
In present case, The State Company has basis of $562000; Hence; $562000 is the basis in the land for Packard's.
A production department's output for the most recent month consisted of 16,500 units completed and transferred to the next stage of production and 16,500 units in ending Work in Process inventory. The units in ending Work in Process inventory were 60% complete with respect to both direct materials and conversion costs. There were 2,300 units in beginning Work in Process inventory, and they were 80% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.
Answer:
The equivalent units of production for the month, assuming the company uses the weighted average method is 26,400 units.
Explanation:
The equivalent units of production for the month when the company uses the weighted average method is the addition of the units completed and transferred to next stage and degree of completion of the units in ending Work in Process inventory.
This can therefore be calculated as follows:
Equivalent units of production for the month = Units completed and transferred to next stage + Units in ending Work in Process inventory
Since,
Units completed and transferred to next stage = 16,500 units
Units in ending Work in Process inventory = 16,500 * 60% complete = 9,900 units
Therefore, we have:
Equivalent units of production for the month = 16,500 + 9,900 = 26,400 units
Therefore, the equivalent units of production for the month, assuming the company uses the weighted average method is 26,400 units.
What is the opportunity cost of owning a business? I. The economic profits that the business earns II. The accounting profits that the business earns III. The profits that could be earned in another business using the same amount of resources
Answer:
III. The profits that could be earned in another business using the same amount of resources.
Explanation:
Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.
Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.
Hence, the opportunity cost of owning a business is the profits that could be earned in another business using the same amount of resources.
For instance, if you decide to invest resources such as money in a food business (restaurant), your opportunity cost would be the profits you could have earned if you had invest the same amount of resources in a salon business or any other business as the case may be.
Carla Vista Electronics reported the following information at its annual meetings: The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,184,800, accounts receivables of $3,472,300, short-term notes payable worth $1,136,100, and other current assets of $121,455. What is the company's net working capital
Answer:
$6,718,553
Explanation:
Working capital is the net of current assets (Inventory, account receivables, Cash etc) and current liabilities (Accounts payable, short term notes payable etc).
It is a financial measure that gives insight into how liquid a company is. .
As such, the company's working capital
= $1,235,455 - $4,159,357 + $7,184,800 + $3,472,300 - $1,136,100 + $121,455
( the signs are positive for assets and negative for liabilities)
= $6,718,553
On January 1 of the current year (Year 1), our company acquired a truck for $75,000. The estimated useful life of the truck is 5 years or 100,000 miles. The residual value at the end of 5 years is estimated to be $5,000. The actual mileage for the truck was 22,000 miles in Year 1 and 27,000 miles in Year 2. What is the depreciation expense for the second year of use (Year 2) if we use the units of production method
Answer:
The depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
Explanation:
Units of production method is depreciation method that considers the number of units that an asset produces more closely relevant than the number of economic useful life of the assets. The method therefore produces a greater depreciation expenses in years when the assets is heavily put into use.
Under the units of production method, the depreciation expenses for a particular is the original cost of the equipment minus its salvage value, and this is then multiplied by the ratio of the expected number of units the asset should produce in that year to the number of units the asset is expected to produce in its useful life. Mathematically, this can be stated as follows:
Depreciation expenses for a particular = (Cost - Salvage/Residual value) * (Units produced in the year / Total units expected to produce throughout useful life)
To calculate the depreciation expense for the second year of use (Year 2) in this question, use the above formula as follows:
Depreciation expenses in Year 2 = ($75,000 - $5,000) * (27,000 / 100,000) = $70,000 * 0.27 = $18,900
Therefore, the depreciation expense for the second year of use (Year 2) if we use the units of production method is $18,900.
NB - Extra Information that can assist your learning:
Although this is not part of the question, but we can also compute the depreciation expenses for Year 1 in order to compare it with Year 2 as follows:
Depreciation expenses in year 1 = ($75,000 - $5,000) * (22,000 / 100,000) = $70,000 * 0.22 = $15,400.
We can see that the depreciation expenses of $18,900 for Year 2 is greater than the depreciation expenses of $15,400 for Year 1. The reason is that the truck is more heavily used in Year 2 at 27,000 miles than in Year 1 at just 22,000 miles.
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and a market value of $60,000 at the date of combination. The remainder of the differential at acquisition was attributable to an increase in the value of patents, which had a remaining useful life of five years. All depreciable assets held by Side at the date of acquisition had a remaining economic life of five years. Plus uses the equity method in accounting for its investment in Side. Based on the preceding information, the increase in the fair value of patents held by Side is:
Answer:
$25,000
Explanation:
Plus corporation acquired 90% of Side Corporation for $180,000 cash.
Net income = $30,000
Dividend for 3 years = $10,000
Common stock outstanding = $100,000
Retained earnings = $60,000
Fair value = $20,000
Book value of land = $30,000
Market value of land = $35,000
Book value of equipment = $50,000
Market value of equipment = $60,000
Required:
Find the increase in the fair value of patents held by Side Corporation.
To find the increase in the fair value of patents, use:
Increase in fair value = Fair value of corporation - Total value without patent.
Where
Fair value = $180,000 + $20,000 = $200,000
Total value without patent = common stoc(100,000) + retained earnings(60,000) + equipment adjustment($60,000 - $50,000 = $10,000) + land adjustment($35,000 - $30,000= $5,000) =
$100,000 + $60,000 + $10,000 + $5,000 = $175,000
Therefore,
Increase = Fair value of corporation($200,000) - Total value without patent($175,000) = $25,000
The increase in the fair value of patents held by Side Corporation is $25,000
A jewely firm buys semiprecious stones to make bracelets and rings. The supplier quotes a price of $8.90 per stone for quantities of 600 stones or more, $9.30 per stone for orders of 400 to 599 stones, and $9.80 per stone for lesser quantities. The jewelry firm operates 108 days per year. Usage rate is 26 stones per day, and ordering costs are $406.
a.If carrying costs are $3 per year for each stone,find the order quantity that will minimize total annual cost. (Do not roun d intermediate calculations. Round your final answer to the nearest whole number) Order quantity stones _________
b. If annual carrying costs are 28 percent of unit cost, what is the optimal order size? (Do not round intermediate calculations. Round your final answer to the nearest whole number.) Optimal order size stones ___________
c. If lead time is 4 working days, at what point should the company reorder? (Do not round intermediate calculetions. Round your final answer to the nearest whole number) Reorder quantity stones ___________
Answer:
a. Order quantity that will minimize total cost = 503 stones
b. Optimal order size = 605 stones
c. Reorder point = 104 stones
Explanation:
Demand = 26 stones per day * 108 days = 2808 stones per year
a. Order quantity of Stones:
Economic Order Quantity = [tex]\sqrt{2DS}/H[/tex]
D = Demand, S = Ordering Cost, H = Carrying Cost
= [tex]\sqrt{2*2808*406}[/tex] / 3
EOQ = 503 stones.
b. If Carrying cost is 28% of unit cost then EOQ:
= [tex]\sqrt{2*2808*406}[/tex] / 8.90* 0.28
= 1510 / 2.492 = 605 stones
c. Reorder Point:
= Average Usage per day * Average lead time + Safety stock
= 26 stones per day * 4 working days
= 104.
Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $61,000. and Martin's capital balance $58,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,600 in the partnership. The bonus that is granted to Hewlett and Martin equals:___________ a) $2,340 each b) $3,560 each. c) $0, because Hewlett and Martin actually grant a bonus to Black d) 1,825 to Hewlett; $1,780 to Martin. e) $1,825 each.
Answer:
The bonus hat is granted to Hewlett and Martin equals is $2340
Explanation:
Solution
Given that:
Hewlett's capital balance = $61,000
Martin's capital balance = $58,000
The existing partners agrees ti accept black with =20% interest
Black invest the amount of =$35,600
Now,
The equity after admitting black or allowing black is given below:
$61,000 + $58,000 +$35,600 = $154,600
The share of black in equity is given as,
$154, 600 * 20% = $30,920
The Bonus that is present for Hewlett and Martin is = $35,600 - $30,920
=$4,680
Thus,
When shared equally it is = $2340 for both partners
Suppose you borrow $10,000 right now to start a business. If the terms of the loan require you to pay back $16,000 in 5 years, what is the implied annual compound interest rate
Answer:
r = 9.86%
Explanation:
The formula for calculating the future value of an invested amount yielding a compound interest is given by:
[tex]FV=PV(1+\frac{r}{n})^{nt}[/tex]
where:
FV = future value = $16,000
PV = present value = $10,000
r = interest rate = ?
n = number of compounding period per year = 1
t = time in years = 5
∴ [tex]16000=10000(1+\frac{r}{1})^{5}[/tex]
dividing both sides by 10,000
[tex]\frac{16000}{10000} =\frac{10000(1+\frac{r}{1})^{5}}{10000}[/tex]
[tex]1.6 = (1 + r)^{5}[/tex]
to remove the power of 5, we have to take the 5th root of both sides:
[tex](1.6)^{1/5} = (1 + r )^{5 * 1/5}[/tex]
Using your calculator:
1.09856 = 1 + r
∴ r = 1.09856 - 1 = 0.09856
r = 0.0986 = 9.86%
∴ r = 9.86%
In 2010, the BowWow Company purchased 11,752 units from its supplier at a cost of $ 11.73 per unit. BowWow sold 18,971 units of its product in 2010 at a price of $ 24.86 per unit. BowWow began 2010 with $ 864,593 in inventory (inventory is carried at a cost of $ 11.73 per unit). Using this information, compute BowWow's 2010 ending inventory balance (in dollars).
Answer:
Ending inventory balance is $ 779,914.13
Explanation:
The cost of goods sold formula can be used to determine the ending inventory by rearranging the formula and making the ending inventory the subject of the formula:
cost of goods=beginning inventory+inventory purchased-ending inventory
ending inventory=beginning inventory+inventory purchased-costs of goods sold
ending inventory=$864,593+(11,752*$11.73)-(18971*$11.73)=$ 779,914.13
Deborah Lewis, general manager of the Northwest Division of Berkshire Co., has significant authority over pricing decisions as well as programs that involve cost reduction/control. The data that follow relate to upcoming divisional operations:
Average invested capital: $15,000,000
Annual total fixed costs: $3,900,000
Variable cost per unit: $80
Number of units expected to be sold: 120,000
Assume the unit selling price is $132 and that Berkshire has a 16% imputed interest charge.
Top management will promote Deborah to corporate headquarters if her division can generate $200,000 of residual income (RI). If Deborah desires to move to corporate, what adjustment must the division do to the amount of annual total fixed costs?
Answer:
The revised fixed costs = $3,640,000
Explanation:
Calculation of Residual Income:
Residual Income = Net income - (Invested capital * Minimum required rate of return)
Net Income = Sales - Variable costs - Fixed costs
Net Income = (120,000*132) - (120,000*80) - 3,900,000
Net Income = $2,340,000
Invested capital = $15,000,000
Minimum required rate of return = 16%
Therefore, residual income = $2,340,000 - ($15,000,000 * 16%)
= -$60,000
Hence, adjustment to be made to the amount of fixed costs so that residual income becomes $200,000 = $200,000+$60,000 = $260,000
Therefore, revised fixed costs = $3,900,000 - $260,000 = $3,640,000
CMS Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt
Answer:
$5,412,000
Explanation:
Given:
Long-term debt (bonds, at par):$10,000,000
Preferred stock :2,000,000
Common stock ($10 par): 10,000,000
Retained earnings: 4,000,000
Total debt and equity :$26,000,000
Coupon rate = 4%(semi annually)
Par value = $1000
YTM = 12%
Required:
Find the current market value of the firm's debt.
Find the bond price:
Bond price [tex] = (C * (\frac{1 - (\frac{1}{(1+i)^n})}{i}) + (\frac{m}{(1+i)^n}) [/tex]
[tex] = (C * (\frac{1 - (\frac{1}{(1+0.06)^2^0})}{0.06}) + (\frac{1000}{(1+0.06)^2^0}) [/tex]
[tex] = 541.20 [/tex]
Bond price = $541.20
Find number of bonds:
Number of bonds [tex] = \frac{10,000,000}{1,000} = 10,000[/tex]
Now, to find the current market value of the firm's debt, use:
Current market value of debt = number of bonds × bond price
= 10,000 × 541.20
= $5,412,000
Current market value of the firm's debt = $5,412,000
A company's beginning Work in Process inventory consisted of 20,000 units that were 80% complete with respect to direct labor. A total of 90,000 were finished during the period and 25,000 remaining in Work in Process inventory were 40% complete with respect to direct labor at the end of the period. Using the weighted-average method, the equivalent units of production with regard to direct labor were:
Answer:
Total number of equivalent units= 100,000
Explanation:
Giving the following information:
A total of 90,000 were finished during the period and 25,000 remaining in Work in Process inventory were 40% complete with respect to direct labor at the end of the period.
Weighted-average method:
Units completed= 90,000
Ending inventory= 25,000*0.4= 10,000
Total number of equivalent units= 100,000
A company purchased equipment and signed a 5-year installment loan at 10% annual interest. The annual payments equal $11,600. The present value of an annuity factor for 5 years at 10% is 3.7908. The present value of a single sum factor for 5 years at 10% is .6209. The present value of the loan is:
Answer:
The present value of the loan is $43,973.98
Explanation:
In order to calculate the present value of the loan we would have to make the following calculation:
Present value of the loan=annual payments*present value of an annuity factor for 5 years at 10%
annual payments=$11,600
present value of an annuity factor for 5 years at 10%=3.7908
Therefore, Present value of the loan=$11,600*3.7908
Present value of the loan=$43,973.98
The present value of the loan is $43,973.98
blanchard company manufactures a signle product that sells for $104 per unit and whose total viarable costs are $78 per unit. The company's annual fixed costs are $369200. Management targets an annual pretax income of $650000. Assume that fixed cost remains at $369200
(1) Compute the unit sales to earn the target income.
(2) Compute the dollar sales to earn the target income.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $104 per unit
Unitary variable cost= $78
Fixed costs= $369,200.
Management targets an annual pretax income of $650,000.
First, we need to calculate the number of units required to reach the objective. We will use the following formula:
Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit
Break-even point in units= (369,200 + 650,000) / (104 - 78)
Break-even point in units= 39,200 units
Now, the sales in dollars required:
Break-even point (dollars)= (fixed costs + desired profit)/ contribution margin ratio
Break-even point (dollars)= 1,019,200 / (26/104)
Break-even point (dollars)= $4,076,800
On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of $15,500. Jarden prepares a schedule of its December 31 accounts receivable by age.
Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible
$880,000 Not yet due 1.25%
352,000 1 to 30 days past due 2.00
70,400 31 to 60 days past due 6.50
35,200 61 to 90 days past due 32.75
14,080 Over 90 days past due 68.00
Required:
a. Compute the required balance of the Allowance for Douitful Accounts at December 31 using an aging of accounts receivable.
b. Prepare the adjusting entry to record bad debts expense at December 31.
c. On June 30 of the next year, Jarden concludes that a customer's $4,750 receivable is uncollectible and the account is written off. Does this write-off directly affect Jarden's net income?
Answer:
(a) The required balance in allowance for doubtful debt account is $43,718.4.
(b) The adjusting entry to record bad debts expense at December 31 is:
Debit Bad debt expense ($43,718.4 - $15,500) $28,218.4
Credit Allowance for doubtful accounts $28,218.4
(To record bad debt expense)
(c) The write-off does not affect Jarden's net income since it would be between allowance for doubtful accounts and the accounts receivable.
Explanation:
An allowance for doubtful accounts is an estimate of the accounts receivable that is deemed uncollectible.
(a) Computation of the required balance of the Allowance for Doubtful Accounts at December 31 using an aging of accounts receivable
Accounts Rec. Age Accounts Rec. %Uncollectible Allowance
$880,000 Not yet due 1.25 $11,000
352,000 1 to 30 days past due 2.00 7,040
70,400 31 to 60 days past due 6.50 4,576
35,200 61 to 90 days past due 32.75 11,528
14,080 Over 90 days past due 68.00 9,574.4
$1,351,680 $43,718.4
On October 1, 2018, Mills Company borrowed $52,000 cash on a one-year note that required Mills to pay 7 percent interest and $52,000 principal, both on September 30, 2019. Assuming the note is paid when due in 2019, what is the debit to interest payable when recording the payment of the note
Answer:
$910
Explanation:
As there are only 3 months left to end 2019 we will multiply the principal amount with interest and apportion it according to remaining months
Debt to interest payable = $52000 x 7% x 3/12
Debt to interest payable = $910
United Apparel has the following balances in its stockholders' equity accounts on December 31, 2021: Treasury Stock, $850,000; Common Stock, $600,000; Preferred Stock, $3,600,000; Retained Earnings, $2,200,000; and Additional Paid-in Capital, $8,800,000.
Required:
Prepare the stockholders' equity section of the balance sheet for United Apparel as of December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
The answer is $14,350,000
Explanation:
UNITED CAPITAL
BALANCE SHEET
(STOCKHOLDERS' EQUITY SECTION)
DECEMBER 31, 2021
Preferred Stock $3,600,000
Common Stock. $600,000
Additional Paid-in Capital $8,800,000
Total Paid-in Capital. $13,000,000
Retained Earnings $2,200,000
Treasury Stock,. -$850,000
Total Stockholders'equity $14,350,000
Scorpion Company has net credit sales of $5,400,000 for the year and it estimates that doubtful accounts will be 2% of sales. If its Allowance for Doubtful Accounts has a credit balance of $18,000 prior to adjustment, its balance after adjustment will be a credit of:
Answer:
Balance after adjustment will be a credit of $90,000
Explanation:
Particulars Amount
Non-collectible accounts $108,000
Credit balance $18,000
Balance Adjustment $90,000
Balance after adjustment will be a credit of $90,000
Note: Non-collectible accounts = 2% * $5,400,000 =$108000
T. Boone Pickens football stadium at Oklahoma State University has a seating capacity of about 40,000. Assume the stadium sells out all six home games before the season begins and the athletic department collects $31 million in ticket sales.
Required:
a. What was the average price per season ticket and average price per individual game ticket sold?
b. Record the advance collection of $29 million in ticket sales.
c. Record the revenue earned after the first home game was completed.
Answer:
Total collection of ticket sales is $31 million
Seating capacity is 40,000 tickets
Average price per season ticket = Total collection / Seating capacity
=$31,000,000 / 40,000
=$775
Therefore, the average price per season ticket is $775
Average price per individual game ticket sold = Average price per ticket / Number of games
= 775 / 6
= $129
Therefore, the average price per individual game sold is $129 and the number of games is 6
2. Journal entry to record advance collection of $31 million in ticket sales
Account Title and Explanation Debit$ Credit$
Cash $31,000,000
Unearned Ticket Revenue $31,000,000
(To record entry for advance received)
3. Journal entry to record revenue earned after the first home game was completed
Account Title and Explanation Debit$ Credit$
Unearned Ticket Revenue 5,160,000
($129 per individual game * 40,000 tickets)
Service Revenue 5,160,000
(To record unearned ticket revenue)
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be?
Answer:
41.9 units
Explanation:
Reorder point can be defined as the level of inventory which help to triggers an action to replace that particular inventory stock in such a way that when the stock level reduced the item must be reordered because it is the minimum unit quantity that a business owner or an organisation should always have in available inventory before they need to reorder more product.
Using this formula
Reorder point= Demand during the lead time + Z for customer service level * standard deviation * Square root of lead time multiplier.
Where,
Demand during the lead time =(8*4)
Z for customer service level =1.65
Standard deviation =3
Square root of lead time multiplier=4
Let plug in the formula
Reorder point=(8*4) + 1.65*3* square root of(4)
= 41.9 units.
Therefore the Reorder point is 41.9 units
For each of the following transactions of JonesSpa Corporation, for the month of January, identify each as an investing activity or financing activity on the statement of cash flows for January. (If the activity does not affect the statement of cash flows, select No Effect.)
Answer:
1. Paid cash to purchase inventory
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
2. Purchased land by issuing common stock
NON CASH INVESTING AND FINANCING ACTIVITY, DOES NOT AFFECT CASH FLOW STATEMENT
3. Accounts receivable decreased in the year
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
4. Sold equipment for cash
INVESTING ACTIVITY, INCREASES CASH FLOW STATEMENT
5. Recorded depreciation expense
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
6. Income taxes payable increased in the year
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
7. Declared and paid a cash dividend
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
8. Accounts payable decreased in the year
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
9. Paid cash to settle notes payable
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
10. Prepaid expenses increased in the year
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
11. Sold inventory for cash
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
12. Paid cash to acquire treasury stock
FINANCING ACTIVITY, DECREASES CASH FLOW STATEMENT
13. Net income
OPERATING ACTIVITY, INCREASES CASH FLOW STATEMENT
14. Decrease in accrued liabilities
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
15. Increase in prepaid expenses
OPERATING ACTIVITY, DECREASES CASH FLOW STATEMENT
Diane's Designs has two classes of stock authorized: 9%, $10 par value preferred and $1 par value common. The following transactions affect stockholders' equity during 2021, its first year of operations: January 1 Issue 200,000 shares of common stock for $15 per share. February 6 Issue 900 shares of preferred stock for $13 per share. October 10 Purchase 12,000 shares of its own common stock for $14 per share. November 12 Resell 5,000 shares of treasury stock at $24 per share. Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $3,000,000 (200,000 × $15)
To Common stock $200,000 (200,000 × $1)
To Paid in capital in excess of par - Common stock $2,800,000
(Being issuance of common stock is recorded)
Here we debited the cash as it increased the current assets and we credited the common stock and paid in capital in excess of par - common stock as it also increased the stockholder equity
2. Cash Dr, 11,700 (900 × $13)
To Preferred stock $10,000 (900 × $10)
To Paid in capital in excess of par - Preferred stock $1,700
(Being issuance of the preferred stock is recorded)
Here we debited the cash as it increased the current assets and we credited the preferred stock and paid in capital in excess of par - Preferred stock as it also increased the stockholder equity
3. Treasury stock Dr, $168,000 (12,000 × $14)
To Cash $168,000
(Being cash paid is recorded)
Here we debited the treasury stock as it increased the treasury stock and we credited the cash as it reduced the current assets
4. Cash Dr, 120,000 (5,000 × $24)
To Treasury stock $70,000 (5,000 × $14)
To Paid in capital in excess of par - Treasury stock $50,000
(Being issuance of the treasury stock is recorded)
Here we debited the cash as it increased the current assets and we credited the treasury stock and paid in capital in excess of par - Treasury stock as it reduced the treasury stock
Managers spend less on prevention costs because managers are typically evaluated on a short term basis, while investments on prevention may experience long gestation periods to returns and their ROIs may be uncertain.
1. True
2. False
Managers spend less on prevention costs because managers are typically evaluated on a short-term basis, while investments in prevention may experience long gestation periods to returns and their ROIs may be uncertain. The given statement is True.
What is the cost-benefit analysis rule?When possible, cost-benefit analysis involves quantifying and monetizing the potential costs and benefits of regulation and otherwise describing them in qualitative terms.
In general, a cost-benefit analysis is based on three key indicators: the net present value (NPV), the economic rate of return (ERR), and the benefit-cost ratio. Each of these three indicators evaluates the project's viability, and when combined, they provide a realistic picture of the IPF.
Thus, the given statement is true.
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For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.
a. The adjustment for accrued wages of $5,200 was journalized as a debit to Wages Expense for $5,200 and a credit to Accounts Payable for $5,200.
b. The entry for $1,125 of supplies used during the period was journalized as a debit to Supplies Expense of $1,125 and a credit to Supplies of $1,152.
Answer:
a) The debit and credit side of the unadjusted trial balance would be increased by $ 5200.
b) The debit side would remain unchanged. No effect will be seen in the adjusted trial balance.
Explanation:
Effect of adjustments on adjusted Trial Balance.
This first entry would increase the wages expense and increase the liability account in the adjusted trial balance. Both debit and credit side would be increased by an equal amount.
b) This would decrease the Supplies account and increase the supplies expense in the unadjusted account. As both are on the debit side there would be no effect in the debit total.
Sr No Account Debit Credit
Original Entries
a. Wages Expense 5200
Accounts Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Correct Entries
a. Wages Expense 5200
Accrued Wages Account Payable 5200
b. Supplies Expense 1125
Supplies Account 1125
Difference:
a) We see that the first entry which was original passed the debit side is correct but the credit side would have been of accrued wages instead of accounts payable . This is to raise the amount by which wages are still outstanding by an amount 5200 at the end of the month.
This would decrease the accounts payable increase the wages payable . If the adjustment is not made it the salaries payable is understated .
b)This adjusting entry is correct.
On April 1, the price of gas at Bob’s Corner Station was $3.40 per gallon. On May 1, the price was $3.90 per gallon. On June 1, it was back down to $3.40 per gallon.
Between April 1 and May 1, Bob's price increased by____________ or __________
Between May 1 and June 1, Bob's price decreased by ___________ or ___________
Suppose that at a gas station across the street, prices are always 20% higher than Bob’s. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is___________ when gas costs $3.90 than when gas costs $3.40.
Some economists blame high commodity prices (including the price of gas) on interest rates being too low.
Suppose the Fed raises the target for the federal funds rate from 2% to 2.5%. This change of _________ percentage points means that the Fed raised its target by approximately __________
Answer:
1. Bob's Corner Station:
Prices of Gas per gallon:
Between April 1 and May 1, Bob's price increased by___$0.50_________ or ____14.7%______
Between May 1 and June 1, Bob's price decreased by ___$0.50________ or ____12.82%_______.
2. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is___$0.02________ when gas costs $3.90 than when gas costs $3.40.
3. Suppose the Fed raises the target for the federal funds rate from 2% to 2.5%. This change of ___25______ percentage points means that the Fed raised its target by approximately ____25%______
Explanation:
a) Computation of Price Increases:
i) Gas at Bob's
Between April 1 and May 1, price increased by $0.50 ($3.90 - $3.40)
This is an increase of 14.7% ($0.50/$3.40 x 100).
Between May 1 and June 1, price decreased by $0.50 ($3,90 - $3.40)
This is a decrease of 12.82% ($0.50/$3.90 x 100)
ii) When gas costs $3.40 at Bob's, the price at the other gas station will be $4.08 ($3.40 x 1.2), a difference of $0.68 ($4.08 - $3.40).
iii) When gas costs $3.90 at Bob's, the price at the other gas station will be $4.68 ($3.90 x 1.2), a difference of $0.78 ($4.68 - $3.90).
iv) So in absolute terms, the dollar difference is $0.02 ($0.78 - $0.68) when gas costs $3.90 than when gas costs $3.40.
v) Percentage and percentage points describe the relationship between two sets of data. Percent refers to the rate of change, whereas percentage point measures the actual amount of change.
vi) The percent change in our case is calculated as follows:
Change in Rate divided by Former Rate = (2.5 - 2)/ 2 = 0.25 = 25%.
The percentage point of 25% = 25.
A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $233,000. The current period's entry to record the warranty expense is:
Answer:
Dr Warranty expenses 9,320
Cr Estimated Warranty Liability 9,320
Explanation:
Preparation of thecurrent period's entry to record the warranty expense for A company
Since A company estimates that the warranty expense will be 4% of sales while the sales for the current period are $233,000 this means we have to find the 4% of $233,000 which gives us 9,320.
Hence the transaction will be recorded as :
Dr Warranty expenses 9,320
(4%×233,000)
Cr Estimated Warranty Liability 9,320
In May direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $120,600 and the direct materials cost was $29,200, the direct labor cost was:
Answer:
direct labor= $80,400
Explanation:
Giving the following information:
In May direct labor was 40% of conversion cost. The manufacturing overhead for the month was $120,600.
The conversion costs are the sum of direct labor and manufacturing overhead.
Conversion costs= 120,600/0.6= 201,000
direct labor= 210,000*0.4= 80,400
1. Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30
Answer:
Debit interest expenses for $15,000
Credit interest payable for $15,000
Explanation:
Since January 1 to June 30 is 6 months, we need to calculate interest expenses for the 6 months as follows:
Monthly interest expenses = ($500,000 * 6%) / 12 = $2,500
Interest expenses for 6 months = $2,500 * 6 = $15,000
The adjusting entry required will therefore look as follws:
Date Particulars Dr ($) Cr ($)
June 30 Interest expenses 15,000
Interest payable 15,000
(To record 6 months interest payable on note.)
When a monopolistically competitive market opens up to international trade, each firm produces a greater quantity of output than it did before. Explain why this is
Answer:
The correct answer is the increase in the amount of buyers.
Explanation:
To begin with, due to the fact that the company is now selling internationally then the market is wide more open for them to increase the portfolio of clients and moreover to increase the amount of sales that the company is having. Therefore that when the company starts to trade internationally it will increase its amount of consumers that will be able to buy from them and also the amount of resellers that can buy from them to buy to final consumers. Primarily, the improvement in the increase of buyers will tend to increase the amount of production that the company is producing and so also the amount of sales so therefore that the company will produce a greater quantity of output than it did before.