Answer:
$5 is the value for dinner.
Explanation:
Thomas has bought the movie ticket for $15. The movie ticket can be resell at a price of $10. His friend has asked him for free dinner but the dinner will cost him $5 since he will incur a loss of $5 on the movie ticket. The lowest value is the $5 for the dinner and the maximum value is $15 for the movie. Thomas can choose between two alternatives but will go towards the lowest value.
An All-Pro defensive lineman is in contract negotiations. The team has offered the following salary structure: Time Salary 0 $ 5,700,000 1 $ 4,300,000 2 $ 4,800,000 3 $ 5,300,000 4 $ 6,700,000 5 $ 7,400,000 6 $ 8,200,000 All salaries are to be paid in lump sums. The player has asked you as his agent to renegotiate the terms. He wants a $9.2 million signing bonus payable today and a contract value increase of $1,200,000. He also wants an equal salary paid every three months, with the first paycheck three months from now. If the interest rate is 4.7 percent compounded daily, what is the amount of his quarterly check
Answer:
The amount of his quarterly check is $1,439,900.81.
Explanation:
Note: The data on the salary structure offered in the question are merged together. They are therefore sorted before answering the question as follows:
Time Salary
0 $ 5,700,000
1 $ 4,300,000
2 $ 4,800,000
3 $ 5,300,000
4 $ 6,700,000
5 $ 7,400,000
6 $ 8,200,000
The explanation of the answer is now given as follows:
The amount of his quarterly check can be calculated using the following 4 steps:
Step 1: Calculation of effective annual rate (EAR)
Note: There is a need to calculate this because the interest rate in the question is compounded daily.
The effective annual rate (EAR) can be calculated using the following formula:
EAR = ((1 + (i / n))^n) - 1 .............................(1)
Where;
i = Interest rate = 4.7%, or 0.047
n = Number of compounding days in a year = 365
Substituting the values into equation (1), we have:
EAR = ((1 + (0.047 / 365))^365) - 1
EAR = 0.0481188377107922, or 4.81188377107922%
Step 2: Calculation of present of the cash of the contract offer
PV of the cash flow of the contract offer = ($5,700,000 / (1 + EAR)^Time) + ($4,300,000 / (1 + EAR)^Time) + ($4,800,000 / (1 + EAR)^Time) + ($5,300,000 (1 + EAR)^Time) + ($6,700,000 / (1 + EAR)^Time) + ($7,400,000 / (1 + EAR)^Time) + ($8,200,000 / (1 + EAR)^Time)
PV of the cash flow of the contract offer = ($5,700,000 / (1 + 0.0481188377107922)^0) + ($4,300,000 / (1 + 0.0481188377107922)^1) + ($4,800,000 / (1 + 0.0481188377107922)^2) + ($5,300,000 (1 + 0.0481188377107922)^3) + ($6,700,000 / (1 + 0.0481188377107922)^4) + ($7,400,000 / (1 + 0.0481188377107922)^5) + ($8,200,000 / (1 + 0.0481188377107922)^6)
PV of the cash flow of the contract offer = $37,861,722.19
Step 3: Calculation of present of the new contract
PV of the new contract = PV of the cash flow of the contract offer - Signing bonus payable today + Contract value increase = $37,861,722.19 - $9,200,000 + $1,200,000 = $29,861,722.19
Step 4: Calculation of quarterly check
Since the first paycheck is three months from now, this can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (2)
Where;
PV = PV of the new contract = $29,861,722.19
P = Quarterly check = ?
r = Quarterly interest rate = EAR / Number of quarters in a year = 0.0481188377107922 / 4 = 0.012029709427698
n = number of quarters = number of years * Number of quarters in a year = 6 * 4 = 24
Substitute the values into equation (2) and solve for P, we have:
$29,861,722.19 = P * ((1 - (1 / (1 + 0.012029709427698))^24) / 0.012029709427698)
$29,861,722.19 = P * 20.738735546182
P = $29,861,722.19 / 20.738735546182
P = $1,439,900.81
Therefore, the amount of his quarterly check is $1,439,900.81.
When auditing the existence assertion for an asset, auditors proceed from the: Multiple Choice General ledger back to the supporting original transaction documents. Financial statement amounts back to the potentially unrecorded items. Potentially unrecorded items forward to the financial statement amounts. Supporting original transaction documents to the general ledger.
Answer:
General ledger back to the supporting original transaction documents
Explanation:
In the case when auditing is done with the assertion of an asset i.e. existed so here the auditor would proceed from general ledger and back to the real documents i.e. supported to the business transactions
Therefore as per the given situation, the first option is correct
Norman Dowd owns his own taxi, for which he bought a $11,400 permit to operate two years ago. Mr. Dowd earns $34,200 a year operating as an independent but has the opportunity to sell the taxi and permit for $41,000 and take a position as dispatcher for Carter Taxi Co. The dispatcher position pays $32,000 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $41,000 and can earn a 9 percent return.
Required:
a. Determine the opportunity cost of owning and operating the independent business.
b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher. Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher?
Answer and Explanation:
The computation is shown below:-
a. Opportunity cost = $41,000
b
Working as dispatcher = Dispatcher pays + (Earn Percentage return × Opportunity cost)
= $32,000 + (9% × $41,000)
= $32,000 + $3,690
= $35,690
Yes, Mr Dowd would sell the taxi and accept the position as a role of dispatcher
Indicate in the table below the financial statement on which each of the following accounts appear.
Account Income Statement Statement of Changes in Owner's Equity Balance Sheet
1. Cash in Bank
2. Utilities Expense
3. Accounts Payable
4. Commissions
5. Capital
6. Withdrawals
Answer:
Income Statement Statement of Balance
Changes in Sheet
Owner's Equity
1. Cash in Bank NO NO YES
2. Utilities Expense YES NO NO
3. Accounts Payable NO NO YES
4. Commissions YES NO NO
5. Capital NO YES YES
6. Withdrawals NO YES NO
Cash in bank is an Asset so will be in the balance sheet.
Utilities expense goes to the Income statement alone because that is where expenses go.
Accounts Payable is a liability so will be in the Balance Sheet.
Commission is an expense.
Capital will be shown in both the Statement of Changes in Owner's Equity and the Balance Sheet
Withdrawals are a change in Owners equity and will be shown in the Statement of Changes in Owner's Equity.
Income Statement Statement of Balance
Changes in Sheet
Owner's Equity
1. Cash in Bank NO NO YES
2. Utilities Expense YES NO NO
3. Accounts Payable NO NO YES
4. Commissions YES NO NO
5. Capital NO YES YES
6. Withdrawals NO YES NO
In this way it should be categorized.
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The Lawrence Company records its trade accounts payable net of any cash discounts. At the end of 2016, Lawrence had a balance of $300,000 in its trade accounts payable account before any adjustments related to the following items: 1. Goods shipped to Lawrence FOB shipping point were in transit on December 31. The invoice price of the goods was $50,000, with a 2% discount allowed for prompt payment. 2. Goods shipped to Lawrence FOB destination on December 29 arrived on January 2, 2017. The invoice price of the goods was $9,000, with a 4% discount allowed for payment within 20 days. 3. On December 10, Lawrence had recorded a shipment received. The recorded invoice price was $24,750, net, with a 1% discount allowed for payment within 14 days. At the end of the year, payment had not been made. At what amount should Lawrence report trade accounts payable on its December 31, 2016 balance sheet
Answer:
The Lawrence Company
The amount that Lawrence should report trade accounts payable on its December 31, 2016 balance sheet is:
= $349,000.
Explanation:
a) Data and Calculations:
Trade accounts payable balance on December 31, 2016 = $300,000
1. Shipment at FOB Shipping point at $50,000(2% discount) 49,000
2. Shipment at FOB destination on December 29 (Jan. 2) 0
3. Already recorded invoice of $24,750 (with 1% discount) 0
Total value of accounts payable balance on December 31 $349,000
A prospective MBA student earns $45,000 per year in her current job and expects that amount to increase by 12% per year. She is considering leaving her job to attend business school for two years at a cost of $35,000 per year. She has been told that her starting salary after business school is likely to be $115,000 and that amount will increase by 11% per year. Consider a time horizon of 10 years, use a discount rate of 12%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice? Please round your answer to the nearest dollar.
Answer:
She is considering leaving her job to attend business school for two years at a cost of $35,000 per year. She has been told that her starting salary after business school is likely to be $115,000 a day
Explanation:
Consider the assembly line of a laptop computer. The line consists of 9 stations and operates at a cycle time of 2.50 minutes/unit. Their most error-prone operation is step 3. There is no inventory between the stations, because this is a machine-paced line. Final inspection happens at station 9.
Required:
What would be the information turnaround time for a defect made at station 2?
Answer:
17.5minutes
Explanation:
Calculation to determine would be the information turnaround time for a defect made at station 2
Station 2 information turnaround time=[(Station 9-Station 2)*2.50 minutes/unit]
Station 2 information turnaround time=7x 2.50
Station 2 information turnaround time=17.5minutes
Therefore the information turnaround time for a defect made at station 2 is 17.5minutes
Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,100 units, but its actual level of activity was 6,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:
Data used in budgeting:
Fixed element per month Variable element per unit
Revenue - $32.60
Direct labor $0 $3.90
Direct materials 0 12.10
Manufacturing overhead 33,400 1.80
Selling and administrative expenses 28,300 0.40
Total expenses $61,700 $18.20
Actual results for May:
Revenue $200,564
Direct labor $22,786
Direct materials $73,824
Manufacturing overhead $43,922
Selling and administrative expenses $31,896
The direct labor in the planning budget for May would be closest to:_________
a. $23,010
b. $22,633
c. $22,786
d. $23,166
Answer:
$23,595
Explanation:
The computation of the direct labor in the planning budget is shown below:
Direct labor in planning budget is
= Actual level of Activity × Direct labor per unit
= 6,050 × $3.90
= $23,595
For calculating the direct labor in the planning budget we simply multiplied the actual activity level by the direct labor per unit
This is the answer but the same is not provided in the given options
Miao Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,000 client-visits, but its actual level of activity was 2,980 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Fixed element per month Variable element per client-visit Revenue − $39.80 Personnel expenses $26,500 $12.30 Medical supplies 1,400 8.20 Occupancy expenses 8,200 1.00 Administrative expenses 5,300 0.40 Total expenses $41,400 $21.90 Actual results for July: Revenue $114,494 Personnel expenses $60,564 Medical supplies $26,936 Occupancy expenses $10,980 Administrative expenses $6,192 The administrative expenses in the planning budget for July would be closest to:
Intercontinental Inc., uses a periodic inventory system. At the end of Year 2, the account records provided the following information relating to one of its products. Units Unit Cost Inventory, December 31, Year 1 1,830 $ 6 For Year 2: Purchase, March 21, Year 2 6,200 $ 5 Purchase, August 1, Year 2 4,070 $ 3 Inventory, December 31, Year 2 2,910 What is the amount of ending inventory and cost of goods sold under the LIFO inventory costing method
Answer:
Intercontinental Inc.
The amount of ending inventory is = $16,380
The cost of goods sold is = $37,810
Explanation:
a) Data and Calculations:
Units Unit Cost Total Cost
Inventory, December 31, Year 1 1,830 $ 6 $10,980
For Year 2: Purchase, March 21, Year 2 6,200 $ 5 31,000
Purchase, August 1, Year 2 4,070 $ 3 12,210
Total cost of inventory 12,100 $54,190
Inventory, December 31, Year 2 2,910 16,380
Cost of units sold 9,190 $37,810
Cost of ending inventory, 2,910
= 1,830 at $6 = $10,980
1,080 at $5 = 5,400
2,910 = $16,380
Cost of goods sold = Cost of inventory available minus the cost of ending inventory
= $54,190 - $16,380
= $37,810
Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $920,000. Lonergan needs approximately $570,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives:
A. Borrow $570,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 10% interest on the unpaid balance of the note at the beginning of the period.
B. Transfer $620,000 of specific receivables to the bank without recourse. The bank will charge a 3% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met.
Required:
1. Prepare the journal entries that would be recorded on July 1 for:
a. alternative a.
b. alternative b.
2. Assuming that 70% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for:____.
a. alternative a.
b. alternative b.
Answer:
1.
ALTERNATIVE A
01-Jul
Dr Cash $570,000
Cr Notes Payable $570,000
ALTERNATIVE B
01-Jul
Dr Cash 601,400
Dr Loss on sale of receivables $18,600
Cr Accounts Receivables $620,000
2.
ALTERNATIVE A
Dr Cash $644,000
Cr Notes Payable $644,000
Dr Interest Expense $4,750
Dr Notes Payable 570,000
Cr Cash 574,750
ALTERNATIVE B
Dr Cash $210,000
Cr Accounts Receivable $210,000
Explanation:
1. Preparation of the journal entries that would be recorded on July 1 for alternative a and
alternative b.
ALTERNATIVE A
01-Jul
Dr Cash $570,000
Cr Notes Payable $570,000
(Notes payable collected)
ALTERNATIVE B
01-Jul
Dr Cash 601,400
($620,000-$18,600)
Dr Loss on sale of receivables $18,600 (3%*$620,000)
Cr Accounts Receivables $620,000
(Remittance to bank)
2. Preparation of the necessary journal entries to record the collection and the remittance to the bank for alternative a and
alternative b.
ALTERNATIVE A
Dr Cash (920,000 x 70%) $644,000
Cr Notes Payable $644,000
Dr nterest Expense($570,000 x 10%x 1/12) $4,750
Dr Notes Payable 570,000
Cr Cash 574,750
($570,000+$4,750)
ALTERNATIVE B
Dr Cash [ (920,000 -620,000)x 70%] $210,000
Cr Accounts Receivable $210,000
The stockholders' equity accounts of Bramble Corp. on January 1, 2022, were as follows.
Preferred Stock (7%, $100 par noncumulative, 4,500 shares authorized) 270000
Common Stock ($4 stated value, 270,000 shares authorized) 900000
Paid-in Capital In Excess of Par Value-Preferred Stock 13500
Paid-in Capital in Excess of Stated Value-Common Stock 432000
Retained Earnings 619200
Treasury Stock (4,500 common shares) 36000
During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity.
Feb. 1 Issued 4,500 shares of common stock for $27,000.
Mar. 20 Purchased 900 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022.
Dec. 31 Determined that net income for the year was $252,000. Paid the dividend declared on December 1.
Required:
1. Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings).
2. Prepare the stockholders' equity section of the balance sheet at December 31, 2017.
3. Calculate the payout ratio, earnings per share, and return on common stockholders' equity.
Answer:
Bramble Corp.
1. Journal Entries:
Feb. 1 Debit Cash $27,000
Credit Common Stock $18,000
Paid in excess - Common $9,000
To record the issue of 4,500 shares of common stock at $6 per share.
Mar 20: Debit Treasury Stock $6,300
Credit Cash $6,300
To record the purchase of 900 shares of treasury stock at $7 per share.
Oct. 1: Debit Dividends: Preferred $18,900
Credit Dividends payable $18,900
To record the declaration of 7% cash dividend on preferred stock.
Nov. 1: Debit Dividends payable $18,900
Credit Cash $18,900
To record dividend paid on preferred stock.
Dec. 1: Debit Dividends: Common Stock $112,050
Credit Dividends Payable $112,050
To record the declaration of dividend.
Dec. 31 Debit Dividends payable $112,050
Credit Cash $112,050
To record the payment of dividends.
Closing Journal Entries:
Dec. 31 Debit Income summary $252,000
Credit Retained Earnings $252,000
To close net income to retained earnings.
Debit Retained Earnings $130,950
Credit Dividends $18,900
Credit Dividends - Common $112,050
To close dividends to retained earnings.
2. Stockholders' Equity Section of the Balance Sheet at December 31, 2017:
Preferred Stock (7%, $100 par noncumulative, 4,500 shares authorized)
Issued and outstanding, 2,700 shares = $270,000
Common Stock ($4 stated value, 270,000 shares authorized)
Issued 229,500 shares at $4 = $918,000
Paid-in Capital In Excess of Par Value-Preferred Stock = $13,500
Paid-in Capital in Excess of Stated Value-Common Stock $441,000
Retained Earnings $740,250
Treasury Stock (5,400 common shares) ($42,300)
Total common equity $2,070,450
Total equity = $2,340,450
3. Payout ratio:
= Total dividends/Net Income
= $130,950/$252,000
= 0.52
Earnings per share
Earnings after preferred dividends/Outstanding common stock
= $233,100/224,100
= $1.04 per share
Return on Common Stockholders' equity:
= $233,100/ $2,070,450 * 100
= 11.26%
Explanation:
a) Data
Preferred Stock (7%, $100 par noncumulative, 4,500 shares authorized)
Issued and outstanding, 2,700 shares = $270,000
Common Stock ($4 stated value, 270,000 shares authorized)
Issued 225,000 shares at $4 = $900,000
Paid-in Capital In Excess of Par Value-Preferred Stock = $13,500
Paid-in Capital in Excess of Stated Value-Common Stock $432,000
Retained Earnings $619,200
Treasury Stock (4,500 common shares) $36,000
Transaction Analysis:
Feb. 1 Cash $27,000 Common Stock, 4,500 shares $27,000
Mar 20: Treasury Stock $6,300 Cash $6,300
Oct. 1: Dividends: Preferred $18,900 Dividends payable $18,900
Nov. 1: Dividends payable $18,900 Cash $18,900
Dec. 1: Dividends: Common Stock $112,050 Dividends Payable $112,050
Dec. 31 Net Income = $252,000
Dec. 31 Dividends payable $112,050 Cash $112,050
Common Stock shares:
Beginning balance = 225,000
Treasury stock (4,500)
Issued 4,500
Treasury stock (900)
Outstanding shares 224,100
Retained Earnings $619,200
Net Income 252,000
Less Dividends:
Preferred stock 18,900
Common stock 112,050
Retained Earnings $740,250
Treasury stock (4,500 + 900) = 5,400 shares $42,300 ($36,000 + 6,300)
Problem 8-15 Nonconstant Growth [LO1] Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share 10 years from today and will increase the dividend by 6 percent per year thereafter. If the required return on this stock is 12 percent, what is the current share price
Answer:
$84.14
Explanation:
P9 = Nest dividend (D10) / Required rate (r) - Growth rate (g)
P9 = $14 / 12% - 6%
P9 = $14 / 0.06
P9 = $233.33
P0 = P9 / (1+Required rate of return)^9
P0 = $233.33/(1+0.12)^9
P0 = $233.33/2.7731
P0 = $84.1404926
P0 = $84.14
So, the current share price is $84.14
A lender is considering what terms to allow on a loan. Current market terms are 8 percent interest for 25 years for a fully amortizing loan. The borrower, Rich, has requested a $100,000 loan. The lender believes that extra credit analysis and careful loan control will have to be exercised because Rich has never borrowed such a large sum before. In addition, the lender expects that market rates will move upward very soon, perhaps even before the loan is closed. To be on the safe side, the lender decides to extend Rich a fixed rate, constant payment mortgage (CPM) loan commitment of $95,000 at 9 percent interest for 25 years. However, the lender wants to charge a loan origination fee to make the mortgage loan yield 10%. What origination fee should the lender charge? What fee should be charged if it is expected that the loan will be repaid after 10 years?
Answer:
1. The origination fee that the lender should charge if Rich will repay the loan after 25 years = $20,000 approximately.
2. The origination fee that the lender should charge if Rich will repay the loan after 10 years = $6,600 approximately.
Explanation:
a) Data and Calculations:
Amount requested by Rich = $100,000
Amount the bank is willing to lend Rich = $95,000
Interest rate = 9%
Period of loan = 25 years or 10 years
From an online finance calculator:
At 10% interest rate:
PMT = $-10,465.97
Sum of all periodic payments = $-261,649.17
Total Interest = $166,649.17
At 9% interest rate:
PMT = $-9,671.59
Sum of all periodic payments = $-241,789.84
Total Interest = $146,789.84
Expected Origination Fee:
Interest at 10% = $166,649.17
Interest at 9% = $146,789.84
Required origination fee = $19,859.32 ($166,649.17 - $146,789.84)
This is equivalent to $20,000
Payment after 10 years:
At 10% interest rate:
PMT = $-15,460.81
Sum of all periodic payments = $-154,608.13
Total Interest = $59,608.13
At 9% interest rate:
PMT = $-14,802.91
Sum of all periodic payments = $-148,029.09
Total Interest = $53,029.09
Expected Origination Fee:
Interest at 10% = $59,608.13
Interest at 9% = $53,029.09
Required origination fee = $6,579.04 or $6,600 ($59,608.13 - $53,029.09)
Which of the following completes the sentence, 'The target audience’s ________ will include the market’s social activities and styles, such as their level of social media participation, the channels they utilize and the communities in which they are active, and their behavior in social communities'?
Answer:
Social profile
Explanation:
The completes sentence is
'The target audience’s Social profile
will include the market’s social activities and styles, such as their level of social media participation, the channels they utilize and the communities in which they are active, and their behavior in social communities''
Social profile gives the description of social characteristics of different individuals which defined them on social media and in communities
On March 1, 2019, Rasheed Company assigns $825,000 of its accounts receivable to the Third National Bank as collateral for a $600,000 loan due April 1, 2019. The assignment agreement calls for Rasheed Company to continue to collect the receivables. Third National Bank assesses a finance charge of 2.5% of the accounts receivable, and interest on the loan is 8% (a realistic rate of interest for a note of this type).
Required:
a. Prepare the March 1, 2019, journal entry for Rasheed Company.
b. Prepare the journal entry for Rasheed's collection of $750,000 (need to factor out discounts and sales returns) of the accounts receivable during March of 2019. Sales discounts of $8,000 apply, as well as $22,000 of sales returns.
c. On April 1, 2019, Rasheed paid Third National all that was due from the loan it secured on March 1, 2019. Prepare the journal entry to record this payment.
Answer:
A.Dr Cash 579,375
Dr Finance charge 20,625
Cr Loan payable 600,000
Dr Accounts Receivable Assigned 825,000
Cr Accounts Receivable 825,000
b) Dr Cash 750,000
Cr Sales discounts 8,000
Cr Sales returns 22,000
Cr Accounts Receivable Assigned 720,000
c)Dr Loan Payable 600,000
Cr nterest expense 4,000
Cr Cash 596,000
Explanation:
a. Preparation for March 1, 2019, journal entry for Rasheed Company
March 01,2019
Dr Cash 579,375
(600,000-20,625)
Dr Finance charge (825,000*2.5%) 20,625
Cr Loan payable 600,000
(Loan amount received)
March 01,2019
Dr Accounts Receivable Assigned 825,000
Cr Accounts Receivable 825,000
(Assigning Accounts receivable)
b.Preparation of the journal entry for Rasheed's collection of the amount of $750,000 of the accounts receivable during March of 2019
March, 2019
Dr Cash 750,000
Cr Sales discounts 8,000
Cr Sales returns 22,000
Cr Accounts Receivable Assigned 720,000
(750,000-8,000-22,000)
C.Preparation of the journal entry to record this payment.
April 01,2019
Dr Loan Payable 600,000
Cr nterest expense (600,000*8%*1/12) 4,000
Cr Cash 596,000)
(600,000-4,000)
(Loan settled along with interest)
What is a transition?
A. An animation that happens on a single slide
B. An outline format that uses roman numerals
C. An image file imported to a title slide
D. An effect that happens between slides
Answer:
d
Explanation:
i jus answered it
Answer:
d
Explanation:
i just took the test
Firms manage a variety of current assets. Permanent current assets are necessary for firms to maintain their businesses, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Firms must devise a financing strategy that best fits their business situation and that best manages their risk.
Use the following table to identify the different current asset financing policies
Description Financing policy
Long-term capital finances all fixed assets and the
non-seasonal portion of current assets, as well as
seasonal needs of current assets.
Long-term capital finances some permanent current assets,
but short-term debt finances all temporary current assets
and the remaining permanent current assets.
This current asset financing policy finances current assets
with liabilities that are expected to mature at the same time
the current asset will be liquidated.
Suppose a firm wants to take advantage of an upward-sloping yield curve. If the firm believes that interest rates will stay constant and it wants to use the current yield curve to bolster profits, which approach should the firm follow?
a. Conservative approach.
b. Maturity matching approach.
c. Aggressive approach.
Answer:
1.a. Long-term capital finances all fixed assets and the non-seasonal portion of current assets, as well as seasonal needs of current assets. ⇒ CONSERVATIVE APPROACH.
b. Long-term capital finances some permanent current assets, but short-term debt finances all temporary current assets and the remaining permanent current assets. ⇒ AGGRESSIVE APPROACH.
c. This current asset financing policy finances current assets with liabilities that are expected to mature at the same time the current asset will be liquidated. ⇒ MATURITY MATCHING APPROACH.
2. Conservative Approach
They should use the conservative approach by seeking long term financing for more permanent assets since the rates will increase in future. For now, seeing as rates are lower, they should use short-term debt for temporary current assets so that they can invest more and make more profit.
Litton Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The machine hours for the month of April for all of the jobs were 4,780. If the actual factory overhead totaled $141,800, determine the over- or underapplied amount for the month.
Answer:
Overapplied overhead= $7,575
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,250,000 / 40,000
Predetermined manufacturing overhead rate= $31.25 per machine hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 31.25*4,780
Allocated MOH= $149,375
Finally, the over/under allocation:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 141,800 - 149,375
Overapplied overhead= $7,575
The dollar change for a comparative financial statement item is calculated by: Multiple Choice Subtracting the analysis period amount from the base period amount. Subtracting the base period amount from the analysis period amount. Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100. Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100. Subtracting the base period amount from the analysis amount, then dividing the result by the base amount.
Answer: B)Subtracting the base period amount from the analysis period amount
Explanation:
The dollar change for a comparative financial statement item is calculated through the subtracting of the base period amount from the analysis period amount.
Therefore, based on the options given in the question, the right option is B as other options are wrong.
A shop can sell at most 200 pairs of socks and at most 100 pairs of shoes. To maximize the profit, they have decided to make 2 offers. Offer 1 is a package of 1 pair of socks and 1 pair of shoes. Offer 2 is a package of 3 pairs of socks and 1 pair of shoes. The shop sells offer 1 for 30$ and offer 2 for 50$. They also want to sell at least 20 packages of offer 1 and at least 10 packages of offer 2. How many packages of each offer do they have to sell to maximize the profit
Answer:
50 packages of offer 1 and 50 packages of offer 2
Explanation:
Determine How many packages of each offer do they have to sell to maximize the profit
Number of package of offer 1 = x
Number of package of offer 2 = y
Applying the LPP model
max Z = 30 x + 50 y ---- ( 1 )
now subject to the constraints from Linear programming
x + 3y ≤ 200 ------ L1
x + y ≤ 100 ------ L2
x ≥ 20 ------------- L3
y ≥ 10 -------------- L4
therefore the number of packages of each offer that can be sold to maximize profit will be : X = 50 and Y = 50 referring to equation from the LPP model considering that the shop can sell at most 100 pairs
Day Company has the following sales budget: July August September $105,000 $211,000 $134,000 Credit sales represent 80 percent of budgeted sales. Of the credit sales, 20 percent is collected in the month of the sale, 60 percent in the month after the sale, and the remaining 15 percent is collected two months after the sale. Five percent of all sales are uncollectible and written-off. In September, total cash receipts from sales amount to
Answer:
Day Company
In September, total cash receipts from sales amount to:
= $162,080.
Explanation:
a) Data and Calculations:
sales budget: Credit (80%) Cash (20%)
July $105,000 $84,000 $21,000
August $211,000 $168,800 $42,200
September $134,000 $107,200 $26,800
July August September
Sales $105,000 $211,000 $134,000
Credit sales 84,000 168,800 107,200
Cash sales 21,000 42,200 $26,800
20% 16,800 33,750 21,400
60% after sales 50,400 101,280
15% after 2 months 12,600
Total cash receipts from sales $162,080
During the course of your examination of the financial statements of Trojan Corporation for the year ended December 31, 2018, you come across several items needing further consideration. Currently, net income is $88,000.
A. An insurance policy covering 12 months was purchased on October 1, 2018, for $16,800. The entire amount was debited to Prepaid Insurance and no adjusting entry was made for this item in 2018.
B. During 2018, the company received a $2,800 cash advance from a customer for services to be performed in 2019. The $2,800 was incorrectly credited to Service Revenue.
C. There were no supplies listed in the balance sheet under assets. However, you discover that supplies costing $2,150 were on hand at December 31, 2018.
D. Trojan borrowed $58,000 from a local bank on September 1, 2018. Principal and interest at 12% will be paid on August 31, 2019. No accrual was made for interest in 2018.
Required:
Using the information in a. through d. above, determine the proper amount of net income as of December 31, 2018.
Answer: $80,830
Explanation:
A. 3 months of this insurance should have been for the year:
= 3/12 * 16,800
= $4,200
This should be treated as an expense.
B. The services have not yet being performed so this should not be recognized as revenue but rather as Unearned revenue. It has to be deducted from Net income.
C. These supplies should have been treated as assets but they were treated as expenses. They need to be added back to the net income to correct it.
D. The interest for the 4 months of the year from September to December should have been recorded.
= 58,000* 4/12 * 12%
= $2,320
This should be treated as an expense.
Adjusted Net income = 88,000 - 4,200 - 2,800 - 2,320 + 2,150
= $80,830
During 2017, its first year of operations as a delivery service, Sarasota Corp. entered into the following transactions.
1. Issued shares of common stock to investors in exchange for $103,000 in cash.
2. Borrowed $45,000 by issuing bonds.
3. Purchased delivery trucks for $61,000 cash.
4. Received $18,000 from customers for services performed.
5. Purchased supplies for $4,900 on account.
6. Paid rent of $5,400.
7. Performed services on account for $12,000.
8. Paid salaries of $26,100.
9. Paid a dividend of $11,200 to shareholders.
Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes Liabilities or Stockholders' Equity in the far right column.
Answer:
1. Capital will Increase and Asset will increase
2. Cash in the Assets will increase and liability will increase
3. Assets increase and decrease off sets the effect on equation
4. Asset will increase and capital will increase
5. Asset will increase and liability will increase
6. Asset increase and decrease will offset
7. Asset will increase and liability will increase
8. Asset decreases
9. Asset decrease and capital will decrease
Explanation:
Accounting equation is Asset = Liabilities + Capital
Accounting equation is affected in business transaction. The Increase in the side will lead to increase in either liability or capital. There are some transactions which just involve asset side transaction which means there will be increase and decrease on the same account this will offset the balance and no effect on equation.
A price ceiling is Group of answer choices often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. a legal maximum on the price at which a good can be sold. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. All of the above are correct.
Answer:
. a legal maximum on the price at which a good can be sold
Explanation:
price ceiling can be regarded as price Control usually imposed by government or group on Products/ services so that how high a price is been charged can be control/ limit. It is a way government utilized in protection of consumer from buying too expensive commondities i.e buying at extreme price. It should be noted that a price ceiling is a legal maximum on the price at which a good can be sold
Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2019:
Date Amount
Description Purchased Basis Date Sold Realized
Stock A 1/23/1996 $7,900 7/22/2020 $5,020
Stock B 4/10/2020 15,300 9/13/2020 19,090
Stock C 8/23/2018 12,375 10/12/2020 17,510
Stock D 5/19/2010 5,750 10/12/2020 13,375
Stock E 8/20/2020 7,755 11/14/2020 3,825
1. What is Grayson's net short-term capital gain or loss from these transactions?
2. What is Grayson's net long-term gain or loss from these transactions?
3. What is Grayson's overall net gain or loss from these transactions?
4. What amount of the gain, if any, is subject to the preferential rate for certain capital gains?
Answer:
Holding period for more than years is long term
Basis Realized Gain/Loss
Stock A Long term 7,900 5,020 2,880
Stock B Short term 15,300 19,090 -3,790
Stock C Long term 12,375 17,510 -5,135
Stock D Long term 5,750 13,375 -7,625
Stock E Short term 7,755 3,825 3,930
Grayson's Total or Net capital gain or loss -$9,740
1. Stock B -3,790
Stock E 3,930
Net short-term capital gain or loss $140
2. Stock A 2,880
Stock C -5,135
Stock D -7,625
Net long-term capital gain or loss -$9,880
3. Net capital gain or loss = -$9,880 - $140 = -$9,740
4. Amount subject to the preferential rate for certain capital gains = $0
Business ethics are
A) an individual’s personal set of values in the workplace.
B) the way a company interacts with employees and customers.
C) are universal principles that govern how people behave in life.
D) subject to expensive fines and legal prosecution.
Business ethics are an individual’s personal set of values in the workplace. The correct option is A. Business ethics refers to the morals, practices, and policies that guide business decision-making and the resolution of controversies or issues.
What is the importance of ethics?Ethics is what motivates us to tell the truth, keep our promises, and assist those in need. On a daily basis, an ethical framework underpins our lives, assisting us in making decisions that have a positive impact and steering us away from unjust outcomes.
The standards for morally right and wrong business behavior are referred to as business ethics. The law defines some of the behavior, but "legal" and "ethical" are not always synonymous. Business ethics strengthens the law by defining acceptable behaviors outside of government control.
Thus, the ideal selection is option A.
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Pedro, not a dealer, sold real property that he owned with an adjusted basis of $120,000 and encumbered by a mortgage for $56,000 to Pat in 2018. The terms of the sale required Pat to pay $28,000 cash, assume the $56,000 mortgage, and give Pedro 11 notes for $12,000 each (plus interest at the Federal rate). The first note was payable two years from the date of sale, and each succeeding note became due at two-year intervals. Pedro did not elect out of the installment method for reporting the transaction. If Pat pays the 2020 note as promised, what is the recognized gain to Pedro in 2020 (exclusive of interest)
Answer:
$64,000
Explanation:
Calculation for the recognized gain to Pedro in 2020
First step is to calculate the Realized gain
Realized gain=($120,000+$12,000+$28,000+$56,000-$120,000)
Realized gain=$96,000
Second step is to calculate the Contract Price
Contract Price=$216,000-$56,000
Contract Price=$160,000
Now let calculate the recognized gain to Pedro in 2020
Recognized gain=$160,000-$96,000
Recognized gain=$64,000
Therefore the recognized gain to Pedro in 2020 is $64,000
what is employment equity act?
Answer:
Employment equity, as defined in federal Canadian law by the Employment Equity Act, requires federal jurisdiction employers to engage in proactive employment practices to increase the representation of four designated groups: women, people with disabilities, Aboriginal peoples, and visible minorities.
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Problem 5-13 Qualified Retirement Plans Including Section 401(K) Plans (LO 5.4) During 2020, Jill, age 39, participated in a Section 401(k) plan which provides for maximum employee contributions of 12%. Jill's salary was $80,000 for the year. Jill elects to make the maximum contribution. What is Jill's maximum tax-deferred contribution to the plan for the year
Answer:
Jill's maximum tax-deferred contribution to the plan for the year is $9,600.
Explanation:
Jill's maximum tax-deferred contribution to the plan for the year can be calculated as follows:
Maximum employee contributions provided for by Section 401(k) plan = 12%
Jill's salary = $80,000
Since Jill elects to make the maximum contribution, we have:
Jill's maximum tax-deferred contribution = Maximum employee contributions provided for by Section 401(k) plan * Jill's salary = 12% * $80,000 = $9,600
Therefore, Jill's maximum tax-deferred contribution to the plan for the year is $9,600.