Answer:
$50,000
Explanation:
Since the gift certificates being sold expire 1 year after their issuance, this implies that all revenues in Year 1 will be recognized as already earned. Therefore, the calculation of the unearned revenue will based on Year 2 sales only since their certificates have not expired.
Since,
Amount of gift certificates sold in Year 2 that will not be redeemed = Year 2 sales * 10% = $250,000 * 10% = $25,000
Therefore, we have:
Unearned revenue in Year 2 = Year 2 sales - Year 2 redemptions of current-year sales - Amount of gift certificates sold in Year that will not be redeemed = $250,000 - $175,000 - $25,000 = $50,000
Therefore, Regal should report $50,000 as unearned revenue in its December 31, Year 2, balance sheet.
Maeko likes to purchase many of the products she needs online to save herself time. Her go-to online store is Zappos. She finds most of what she needs there and has had very satisfying shopping experiences in the past. What type of brand is Zappos?
Answer:
e-brand brand.
Explanation:
In this scenario, Maeko likes to purchase many of the products she needs online to save herself time. Her go-to online store is Zappos, where she finds most of what she needs and has had very satisfying shopping experiences in the past. This type of brand are generally referred to as an e-brand.
An e-brand is a short for "electronic brand" and can be defined as a virtual marketplace where various customers have access to order or purchase a variety of products or services being provided by the company over the world wide web (internet). Generally, an e-brand is primarily focused on digital marketing and electronic buying and selling of their products through the use of internet and credit cards.
Simply stated, an e-brand eliminates the cumbersome stress of having customers being physically present in a store to buy goods or get a service.
Generally, an e-brand is advantageous because it increases sales, provides larger markets, enhances scaling up and restocking, customer data can be used for surveys etc.
Hence, Zappos is an example of an e-brand.
Answer:
C
Explanation:
The January 1, Year 1 trial balance for the Tyrell Company is found on the trial balance tab. The beginning balances are assumed. Tyrell Co. entered into the following transactions involving short-term liabilities in Year 1 and Year 2.
Year 1
Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n/30.
May 19 Replaced the April 20 account payable to Locust with a 90-day, 10%, $35,000 note payable along with paying $5,250 in cash.
July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 note payable.
Aug. 17 Paid the amount due on the note to Locust at the maturity date.
Nov. 5 Paid the amount due on the note to NBR Bank at the maturity date.
Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8%, $42,000 note payable.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Year 2
Jan. 27 Paid the amount due on the note to Fargo Bank at the maturity date.
Requirement General General Trial Schedule of Calculation of Year 2
Journal Ledger Balance Payables Interest Payment
1. General Journal tab- Prepare the 2016 journal entries related to the notes and accounts payable of Tyrell Co
2. Calculation of interest tab - Use the interest formula (P x Rx T) to verify the amount of interest recorded in your entries. Verify that total interest expense agrees with the trial balance.
3. Year 2 payment tab - Prepare the January 27, 2017 entry to record the re-payment of the note at maturity
Answer: Please see explanatory column
Explanation:
Tyrell Company for 2016
Journal to record the purchase of merchandise inventory
Date Account Title Debit Credit
April 20 Merchandise inventory $40,250
2016 Accounts payable - Locust $40250
Journal to record the replacement of account with 10% notes payable
Date Account Title Debit Credit
March 19 Accounts payable - Locust $40,250
2016 10%notes payable $35,000
Cash $5,250
Journal to record the Borrowing of $80,000 cash in 120-days at 9%,
Date Account Title Debit Credit
July 8 Cash $80,000
2016 9%notes payable $80,000
Journal to record the 10%, notes payable at maturity date
Date Account Title Debit Credit
Aug 17 10% notes payable $35,000
2016 interest expense $875
Cash $35,875
Using Interest = P X R X T
= 35,000 X 10% X 90/360=$875
Journal to record the 9%, notes payable at maturity date
Date Account Title Debit Credit
Nov 5 9% notes payable $80,000
2016 interest expense $2,400
Cash $82,400
Using Interest = P X R X T
= 80,000 X 9% X 120/360=$2,400
Journal to borrowing of 42,000 for 60 days at 8% interest payable at maturity date
Date Account Title Debit Credit
Nov 28 Cash $42,000
2016 8% notes payable $42,000
Journal to record the interst accrued on the notes payable
Date Account Title Debit Credit
Dec 31 Interest expense $308
2016 interest payable $308
Using Interest = P X R X T
= 42,,000 X 8% X 33/360=$308
33 days because the note payable was issued on November 28 but interest was accrued on December 31 making the accrued interest expense to be calculated for 33 days
Tyrell Company for 2017
Journal to record the payment of 8% payable at maturity date
Date Account Title Debit Credit
Jan 31 8%notes payable $42,000
2017 interest payable $308
Interest expense $252
Cash $42,560
Using Interest = P X R X T
= 42,,000 X 8% X 27/360=$252
27 days because from december to january 27th,
On 12/31/X4, Zoom, LLC, reported a $55,500 loss on its books. The items included in the loss computation were $27,000 in sales revenue, $12,000 in qualified dividends, $19,000 in cost of goods sold, $47,000 in charitable contributions, $17,000 in employee wages, and $11,500 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return
Answer:Ordinary Business income loss =-$20,500.
Explanation:
Ordinary business Expenses are the expenses generally accepted according to the industry standards associated with running of a business.
Here, the ordinary business expenses for Zoom include
cost of good sold= $19,-000
employee wages= $17,000
rent expense = $11,500 and therefore will be deducted from its sales revenue.
charitable contributions and qualified dividends, do not cut across all industries and so are not classified under Ordinary Buisness expences.
Ordinary Business income loss = Sales revenue - cost of good sold, -employee wages- rent expense.
$27,000- $19,000-$`17,000-$11,500= -$20,500. to be reported on its X4 return
If two different fuel sources (e.g., coal and natural gas) are perfect substitutes in the long-run production of energy. How will a profit maximizing firm choose between these two inputs
Answer:
The firm would choose the input with the lower cost.
Explanation:
Perfect subsituites are goods that can be used in place of one another. If the price of one good rises, the demand for the other good increases.
A profit maximising firm would aim to use the cheapest input available, so in the long run when all inputs of production are variable, the firm would choose the less expensive input.
I hope my answer helps you
A group of investors has formed SandInn Corporation to purchase a small hotel. The price is $200,000 for the land and $800,000 for the hotel building. If the purchase takes place in June, com- pute the MACRS depreciation for the first three calendar years. Then assume the hotel is sold in June of the fourth year, and compute the MACRS depreciation in that year also.
Answer:
1. Land is not to be depreciated under the Modified Accelerated Cost Recovery System (MACRS) depreciation schedule.
The Building however will be depreciated over a period of 39 years as it is considered an place of business and not a residential property.
The depreciation for such assets is 1.3% in year 1 and 40, and 2.6% for the years in-between.
Year 1 = 1.3% * 800,000
= $10,400
Year 2 = 2.6% * 800,000
= $20,800
Year 3 = 2.6% * 800,000
= $20,800
The total for the first 3 years is,
= 10,400 + 20,800 + 20,800
= $52,000
2. Depreciation in Year 4
= 800,000 * 2.6%
= $20,800
Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?
Answer:
Standard cost= $3.42
Explanation:
Giving the following information:
Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour.
To calculate the standard cost we need to use the following formula:
Standard cost= standard direct material + standard direct labor + allocated overhead
Standard cost= 1.2*0.85 + 0.1*15 + 9*0.1
Standard cost= $3.42
The trial balance of Kroeger Inc. included the following accounts as of December 31, 2021: Debits Credits Sales revenue 8,340,000Interest revenue 56,000Gain on sale of investments 116,000 Gain on debt securities 138,000 Loss on projected benefit obligation 156,000Cost of goods sold 144,000Selling expense 740,000Goodwill impairment loss 520,000Interest expense 26,000General and administrative expense 460,000The gain on debt securities represents the increase in the fair value of debt securities and is classified a component of other comprehensive income. Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been recorded. The effective tax rate is 25%.Required: Prepare a 2021 separate statement of comprehensive income for Kroeger Inc.
Answer:
Kroeger Inc.
Statement of Comprehensive Income for the year ended December 31, 2021:
Income after taxes $4,966,500
Gain on debt securities 138,000
Loss on projected benefit obligation (156,000)
Net Income $4,948,500
Explanation:
a) Kroeger Inc. Trial Balance as of December 31, 2021:
Debits Credits
Sales revenue 8,340,000
Interest revenue 56,000
Gain on sale of investments 116,000
Gain on debt securities 138,000
Loss on projected benefit obligation 156,000
Cost of goods sold 144,000
Selling expense 740,000
Goodwill impairment loss 520,000
Interest expense 26,000
General and administrative expense 460,000
b) Kroeger Inc. Income Statement for the year ended December 31, 2021:
Sales revenue $8,340,000
less Cost of goods sold 144,000
Gross Profit $8,196,000
General & Admin. Expense 460,000
Selling expenses 740,000 1,200,000
Operating Income $6,996,000
Interest Revenue 56,000
Interest Expense (26,000)
Goodwill impairment loss (520,000)
Gain on sale of investments 116,000
Income before taxes $6,622,000
Income Tax (25%) $1,655,500
Income after taxes 4,966,500
c) According to the corporate finance institute, "the Statement of Comprehensive Income provides a summary of a company's net assets over a given period of time. It highlights the adjustments on equity and other comprehensive income (OCI). Other comprehensive income includes net after taxes and other unrealized incomes minus unrealized losses, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses.
d) Goodwill impairment is recognized as a loss on the income statement under other operating expenses and as a reduction in the goodwill account.
e) Investopedia.com says that "projected benefit obligation (PBO) is an actuarial measurement of what a company will need at the present time to cover future pension liabilities." Under U.S. GAAP, the adjustments for PBO are recorded through other comprehensive income in shareholders' equity and are amortized into the income statement over time.
f) A gain on sale of investments is the amount by which the proceeds from the sale of investments exceed the carrying amount of the investments. It is reported as a non-operating gain in the income statement.
g) Securities that are held-for-trading are recorded on the balance sheet at their fair value, and the unrealized gains and losses are recorded on the income statement. According to strategiccfo.com "Unrealized income or losses are recorded in an account called accumulated other comprehensive income, which is found in the owner's equity section of the balance sheet." They are gains and losses from changes in the value of assets or liabilities that have not yet been settled and recognized.
An investor is considering the purchase of a residential rental property that has an asking price of $400,000. The property has four rental units that are expected to rent for $1,200 each per month. Operating expenses and vacancy allowances are expected to be 45% of gross income. An 5% interest only mortgage loan is available for 5 years at 100% of the purchase price. How much cash income will the investor receive each month of the first year after paying the monthly mortgage payment
Answer:
The answer is $973
Explanation:
Solution
Given that:
A residential rental property asking price = $400,000
Property expected to rent = $1200
Operating expenses expected = 45%
Interest =5%
Mortgage loan available for =5 years
Purchase price =100%
Now, we find out the cash income the investor receive each month of the first year after paying the monthly mortgage payment
Thus
Rental income (1200*4 units)=$4800
Less: operating expenses (4800*45%)=$2160
The Net income per month=$2640
So,
Less:Monthly mortgage interest payment=$1667 [(400000*5%)
=20000/12=1667]
The Cash income =$973
Therefore the investor will receive $973 each month of the first year.
You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how much will you have just after you make the 3rd deposit, 3 years from now
Answer:
$16,390.50
Explanation:
For computing the amount after you make the 3rd deposit we need to use the future value formula i.e to be shown in the attachment
Provided that,
Present value = $0
Rate of interest = 9%
NPER = 3 years
PMT = $5,000
The formula is shown below:
= -FV(Rate;NPER;PMT;PV;type)
So, after applying the above formula, the future value is $16,390.50
Agency conflicts between managers and shareholders An agency relationship can degenerate into an agency conflict when an agent acts in a manner that is not in the best interest of his or her principal. In business, these conflicts most frequently involve the enrichment of the firm's executives or managers (in the form of money and perquisites or power and prestige) at the expense of the shareholders. This usurping of shareholder wealth is most likely to occur when shareholders do not have sufficient information about the decisions and actions being made by the firm's management. Consider the following scenario and determine whether an agency conflict exists: Daniel owns Daniel's Tantalizing Tees, a T-shirt shop in a small college town in Kansas. With a staff of three part-time employees, Daniel operates the business in accordance with his personal goals, dreams, and capabilities.
Does Daniel have an agency conflict to deal with?
A. No; by having part-time, as opposed to full-time, employees, Daniel is prevented from experiencing an agency conflict.
B. Yes; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has created the necessary agency relationship through which an agency conflict can exist.
C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
D. Yes; there is always an inherent conflict of interest between owners and operators (managers). Consider the following scenario and determine whether an agency conflict exists: Five years ago, Li created a plant-care business that grew, stocked, and maintained fresh plants in office buildings throughout Denver. Over time, The Green Zone Inc. (TGZ) has grown from a proprietorship into a corporation, now reaching far beyond Denver. To finance and support this growth, TGZ issued shares that were sold to TGZ employees, Li's family members, and selected outsiders. Li is TGZ's chairman of the board of directors and CEO, but he is no longer the largest shareholder. At the latest annual meeting, two mutually exclusive proposals were placed on the ballot for discussion and vote. The first was put forth by Li and TGZ's management team, and the second was proposed by a small group of other shareholders. Both groups are adamantly opposed to the other group's proposal, even though both proposals would likely have the same effect on TGZ's value and riskiness.
Does an agency conflict exist between TGZ's management and the small group of opposing shareholders?
A. Yes; an agency relationship exists, and an agency relationship always gives rise to agency conflicts, regardless of the actual behavior of the participants.
B. Yes; any conflict or disagreement between the firm's managers and its shareholders constitutes an agency conflict.
C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
D. No; Li was the original owner of TGZ, so he would always be sensitive to the concerns of the firm's current owners (shareholders) and would not engage in an agency conflict. For the past 40 years, companies have attempted to attract, retain, and encourage managers by developing attractive compensation packages. These compensation packages have also been intended to reduce potential agency conflicts between these managers and the firm's shareholders. In the best interest of shareholders, compensation packages should be structured in a way such that managers have an incentive to maximize the____value of the company's common stock price. Great Fortunes Baking Company's stockholders are mostly individual investors, and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Great Fortunes Baking Company's stock, direct shareholder intervention would be likely to motivate the firm's management. Katz Investment Group's stock price is currently trading at $20 per share. The consensus among market analysts is that the stock should trade for $27.5 per share, given the amount, timing, and riskiness of the company's dividends. Is Katz Investment Group more or less likely to receive a hostile takeover bid?
1. Less likely
2. More likely
Answer:
1. C. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist.
For an agency problem to exist, the owners and the managers must be two different sets of people. If they are the same person, then practically speaking, they cannot usurp their own wealth.
2. C. No; although an agency relationship exists between TGZ's management-including Li as TGZ's chairman and CEO and the firm's shareholders-there is no agency conflict, because no expropriation or wasting of the shareholders' wealth has occurred.
Indeed there is an Agency relationship in effect because some shareholders are not in management. However, it cannot be said that there is a agency conflict because there is no evidence shown that shareholder wealth is being expropriated.
3. Intrinsic
The Intrinsic value of a stock is the value that an investor believes the stock is worth. A Manager should therefore get incentives that will inspire them to take investor perception of stock high. When this happens it increases shareholder wealth primarily through capital gain.
4 ... direct shareholder intervention would be more likely to motivate the firm's management.
Institutional Investors such as Pension and Mutual funds usually have more say in a company as they represent several shareholders and have expertise in the field. Should they get involved, their direct intervention would motivate the firm's management.
5. More likely
If investors believe that the stock should be trading for higher than it actually is, this is incentive to try to lay their hands on the stock to take advantage of this undervaluation. They would be able to offer the current shareholders more money than what it is currently worth which will most likely get them the shares they want. This is classified as a Hostile takeover.
Calculate the effective annual interest rate for the following: a. A 3-month T-bill selling at $97,270 with par value $100,000. (Round your answers to 2 decimal places.) b. A 13% coupon bond selling at par and paying coupons semiannually. (Round your answers to 2 decimal places.)
Answer:
(a) The effective annual interest rate for a 3-month T-bill selling at $97,270 with par value $100,000 is 11.71%
(b) The effective annual interest rate for a 13% coupon bond selling at par and paying coupons semiannually is 13.42%
Explanation:
(a) A 3-month T-bill selling at $97,270 with par value $100,000
EAR =[tex][par value /price]^n-1}[/tex]
n = 3 months or 12/3 = 4 times in a year
= [tex][100,000/97,270]^4 - 1[/tex]
=[tex][1.028066]^4 -1[/tex]
= 1.1171 - 1
= .1171 or 11.71%
b) EAR(coupon bond) = [tex][1+.13/2]^2 -1[/tex]
=[tex][1+.065]^2 -1[/tex]
= [tex][1.065]^2 -1[/tex]
= 1.1342 - 1
= .1342 or 13.42%
A sinking fund is established by a working couple so that they will have $60,000 to pay for part of their daughter's education when she enters college. If they make deposits at the end of each 3-month period for 8 years, and if interest is paid at 10%, compounded quarterly, what size deposits must they make
Answer:
quarterly deposit= $12,460.99
Explanation:
Giving the following information:
FV= $60,000
Number of periods= 4*8= 32
i= 0.10/4= 0.025
To calculate the quarterly deposit required, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= quarterly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (60,000*0.025) / [(1.025^32) - 1]
A= 12,460.99
Preferred stock valuation TXS Manufacturing has an outstanding preferred stock issue with a par value of $68 per share. The preferred shares pay dividends annually at a rate of 9%. a. What is the annual dividend on TXS preferred stock? b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock? c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Answer:
a. Annual dividend on TXS preferred stock is $6.12 per share.
b. The price of TXS preferred stock is $153 per share.
c. The value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
Explanation:
These can be calculated as follows:
a. What is the annual dividend on TXS preferred stock?
The formula for calculating the annual dividend on preferred stock is given as follows:
Annual dividend on preferred stock = Par value of preferred stock * annual dividend rate
Since we have the following for TXS:
Par value of preferred stock = $68 per share
Annual dividend rate = 9%
Therefore, we have:
Annual dividend on preferred stock = $68 * 9% = $6.12 per share
Therefore, annual dividend on TXS preferred stock is $6.12 per share.
b. If investors require a return of 4% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock?
The formula for calculating the price of preferred stock is given as follows:
Price of preferred stock = Dividend per share / Preferred stock required rate of return
Since for TXS, we have
Dividend per share = $6.12 per share
Preferred stock required rate of return = 4%, or 0.04
Therefore, we have:
Price of preferred stock = $6.12 / 0.04 = $153 per share
Therefore, the price of TXS preferred stock is $153 per share.
c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year. What is the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return?
Cumulative preferred stock implies that unpaid previous dividends can be carried forward as arrears to when the dividend is paid.
Since TXS has not paid dividends on its cumulative preferred shares in the past two years, but will start paying dividends again in one year implies that preferred stockholders will receive the dividends in arrears of one year together with the next dividend payment.
Based on this, we have
TXS preferred stock value = PV of two dividends + Preferred stock price
PV of two dividends = Present value of two dividends in arrears to paid now = M / (1 + r)^n
Where,
M = 2 * Annual dividend on TXS preferred stock = 2 * $6.12 = $12.24
r = 4%, or 0.04
n = 1 year
Therefore, we have:
PV of two dividends = $12.24 / (1 + 0.04)^1 = $11.77
Since from part b. preferred stock price is $153 per share, we therefore have:
TXS preferred stock value = $11.77 + 153 = $164.77 per share
Therefore, the value of TXS preferred stock if it is cumulative and if investors require a(n) 4% rate of return is $164.77 per share.
As per the question, the TXS company has outstanding preferred stock issues with a value that is parred USD 68 per share and prefers to pay the dividend at an annual rate of 9%.
Thus the yearly dividend of the TXS on preferred stock is a. total dividend on TXS stock is of $6.12 per share. If the investors gained four percent on this stock and next is made payable 1 year from now, then the prices of TXS stock will be $153/share. If the TXS is not being paid then the preferred share for the two-year period is total and if investors require at 4% rate of return which is at $164.77 per share.Learn more about the TXS Manufacturing has an outstanding.
brainly.com/question/13739586.
Tri Fecta, a partnership, had revenues of $364,000 in its first year of operations. The partnership has not collected on $45,100 of its sales and still owes $38,400 on $220,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $28,300 in salaries. The partners invested $46,000 in the business and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest that was the amount owed for the year and paid $9,400 for a two-year insurance policy on the first day of business. Ignore income taxes.Compute the cash balance at the end of the first year for Tri Fecta.
a) $ 332,110
b) $ 161,640
c) $ 166,290
d) $ 155,440
Answer:
$167,600
Explanation:
Net income:
Sales revenue $364,000
- COGS $220,000
- Salaries $28,300
- Interest $3,000
- Insurance $4,700
Net Income $108,000
Cash flow from operating activities:
Net income $108,000
adjusting entries:
accounts receivable ($45,100)accounts payable $38,400prepaid insurance ($4,700)Net cash flow from operating activities $96,600
Cash flow from financing activities:
capital invested $46,000
money borrowed $25,000
Net cash flow from financing activities $71,000
Cash balance $167,600
Williamson Industries has $7 billion in sales and $2 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. What level of sales could Williamson Industries have obtained if it had been operating at full capacity
Answer: Williamson industries would have obtained $7.78 billion in sales
Explanation: According to the question, the company is having a total of $2 billion in fixed assets. The fixed assets are currently operating at 90% (0.9) of its total capacity. At his level, the company is able to achieve a sales figure of $7 billion. The implication is as follows;
Fixed assets (at 100%) = 2 billion
Fixed assets (at 90%) = 2 * 0.9
Fixed assets (at 90%) = 1.8
If the company utilizes $1.8 billion to achieve a $7 billion sales figure, then operating at full capacity (100%) would yield the following;
7/x = 90/100
(Where x equals sales level at 100% capacity)
7/x = 0.9
Cross multiply
x = 7/0.9
x = 7.7777...
x ≈ 7.78
Therefore, if Williamson Industries had been operating at full capacity, it would have obtained a sales level of $7.78 billion
Use the information below to answer the following question. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 24 20 Sale 6 23 Sale 3 30 Purchase 10 30 Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.
Answer:
Boxwood Company
Determination of the Ending Inventory, using the FIFO method:
Date Blankets Units Unit Cost Total cost
May 17 Purchase 3 24 $72
May 30 Purchase 10 30 $300
Total cost of Ending Inventory = $372 ($72 + 300)
Explanation:
a) Inventory Records during May:
Date Blankets Units Cost
May 3 Purchase 5 $20
May 10 Sale 3
May 17 Purchase 10 24
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 30
May 31 Ending Balance 13
FIFO method of costing inventory is based on the assumption that a business entity sells older stock of goods first before the latest goods brought into the store. FIFO means First-in, First-out. It is one of the methods of costing inventory. Others include LIFO, Weighted Average, and Specific Identification.
2. (20 points) A couple plans to purchase a home for $320,000. Property taxes are expected to be $1,200 per year while insurance premiums are estimated to be $1400 per year. Annual repair and maintenance are estimated at $1,950. An alternative is to rent a house of about the same size for $2,150 per month [approximate using $25,800 per year]. If an 8.0% return before-taxes is the couple's minimum rate of return, what must the resale value be 10 years from today for the cost of ownership to equal the cost of renting
Answer:
$371,200
Explanation:
For the computation of annual price escalation first we need to follow some steps which are shown below:-
Future value of payment if the property purchased is
= Property taxes + Insurance premium + Annual repair and maintenance
= $1,200 + $1,400 + $1,950
= $4,550
Future value = (1 + K)^n
= (1 + 0.08)^10
= 2.158924997
or
= 2.16
Future value of annuity factor = (1 + K)^n -1 ÷ K
= ((1 + 0.08)^10 - 1) ÷ 0.08
= 1.158924997
÷ 0.08
= 14.487
Future value of the cost of property = Purchase amount of a home × Future value
= $320,000 × 2.16
= $691,200
Future value of recurring cost = Future value of payment if property purchased × Future value of annuity factor
= $4,550 × 14.487
= $65,915.85
Total value of payment = Future value of the cost of property + Future value of recurring cost
= $691,200
+ $65,915.85
= $75,7115.85
Future value of the payment in property taken on rent
The Total value of the payment in 10 year when the property taken on rent = Amount using per year × Future value of annuity factor
= $25,800 × 14.487
= $373,764.6
The amount incurred in both the methods will be the same if the property can be sold = Total value of payment - Total value of the payment in 10 year when the property was taken on rent
= $75,7115.85 - $373,764.6 0
= 383351.25
finally,
The annual price escalation = Future value of the cost of the property - Purchase amount of home
= $691,200 - $320,000
= $371,200
Blossom Distribution Co. has determined its December 31, 2020 inventory on a LIFO basis at $962000. Information pertaining to that inventory follows: Estimated selling price $1000000 Estimated cost of disposal 38000 Normal profit margin 118000 Current replacement cost 882000 Blossom records losses that result from applying the lower-of-cost-or-market rule. At December 31, 2020, the loss that Blossom should recognize is
Answer:
The answer is $118,000
Explanation:
Solution
Given that:
Now
The selling price estimated is = $1,000,000
Less: Cost of disposal = $38,000
Less: Normal profit margin = $118,000
The net realizable value = $844,000
The market value of inventory is lesser of Net realizable value
Thus
The net realizable value = $844,000
The cost of replacement = $225,000
The Market value of inventory greater of the above) = $844,000
Inventory is valued at cost or market value which ever is low
Then
Cost = $962,000
The market value = $844,000
Hence
The value of Inventory (lesser of the above) = $844,000.
Now,
The loss = $962,000 - $844,000
= $118,000
Therefore, At December 31, 2020, the loss that Blossom should recognize is $118,000
A business received an offer from an exporter for 10,000 units of product at $13.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 12 Fixed 5 What is the amount of the gain or loss from acceptance of the offer
Answer:
Effect on income= $15,000 increase
Explanation:
Giving the following information:
A business received an offer from an exporter for 10,000 units for $13.50 per unit.
Unit manufacturing costs:
Variable 12
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Effect on income= number of units*unitary contribution margin
Effect on income= 10,000*(13.5 - 12)
Effect on income= $15,000 increase
Pratt Corp. started the Year 2 accounting period with total assets of $37,000 cash, $15,500 of liabilities, and $12,000 of retained earnings. During the Year 2 accounting period, the Retained Earnings account increased by $14,550. The bookkeeper reported that Pratt paid cash expenses of $29,500 and paid a $2,700 cash dividend to stockholders, but she could not find a record of the amount of cash revenue that Pratt received for performing services. Pratt also paid $10,000 cash to reduce the liability owed to a bank, and the business acquired $8,500 of additional cash from the issue of common stock. Assume all transactions are cash transactions.Requried:a. Prepare an income statement for the 2018 accounting period.b. Prepare a statement of changes in stockholders’ equity for the 2018 accounting period.c. Prepare a period-end balance sheet for the 2018 accounting period.d. Prepare a statement of cash flows for the 2018 accounting period.
Answer:
a) Revenue = $46,750
b) Stockholder's equity $35,050
c) Net Total Assets = Stockholder's equity = $35,050
d) Net cash generated for the year is $13,050; and Ending cash balance is $50,050
Explanation:
a. Prepare an income statement for the 2018 accounting period
To prepare this, cash revenue is first determined as follows:
Revenue = Retained earning for the year + Expenses + dividend = $46,750
The income statement can now be prepared as follows:
Pratt Corp.
Income statement
For the 2018 accounting period
Particulars $
Revenue 46,750
Expenses (29,500)
Net income 17,250
Dividend paid (2,700)
Retained Earnings for the year 14,550
b. Prepare a statement of changes in stockholder's equity for the 2018 accounting period
Pratt Corp.
Statement of changes in stockholder's equity
For the 2018 accounting period
Particulars $
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year 14,550
Stockholder's equity 35,050
c. Prepare a period-end balance sheet for the 2018 accounting period
Pratt Corp.
Balance Sheet
For the 2018 accounting period
Particulars $
Total Assets
Ending cash balance 50,050
Total Liability
Liability (15,500)
Net Total Assets 35,050
Financed By:
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year 14,550
Stockholder's equity 35,050
Note: Since both the Net Total Assets and Stockholder's equity are both equal to $35,050 as normally require, it shows the balance sheet is accrurately prepared.
d. Prepare a statement of cash flows for the 2018 accounting period
Pratt Corp.
Statement of Cash Flows
For the 2018 accounting period
Particulars $ $
Net income 17,250
Cash flow from operating activities 17,250
Changes in Financing Activities:
Decrease in liability (10,000)
Issue of common stock 8,500
Dividend paid (2,700)
Cash flow from financing activities (4,200)
Net cash generated for the year 13,050
Beginning cash balance 37,000
Ending cash balance 50,050
Information concerning Department A of Ali Company for the month of June is as follows: Unit MaterialsCosts Work in process, beginning of month 20,000 $14,250 Started in June 85,000 $66,600 Units completed 90,000 Work in process, end of month 15,000 All materials are added at the beginning of the process. Using the average cost method, the cost (rounded to two places) per equivalent unit for materials is: Group of answer choices $0.75. $0.61. $0.77. $0.79.
Answer:
The answer is $0.77
Explanation:
Solution
Given that:
The Statement of equivalent production for direct materials:
Particulars Direct Material
% completed Units
Units completed 100% 90000
Ending Work in process 100% 15000
Therefore, the total Equivalent unit of Production is 105000
Now,
We find the statement of cost per equivalent unit:
Particulars Direct Material
Cost of beginning work in process inventory $14,250
Add: cost added during the month $66,600
Total Costs $80,850
Equivalent unit of Production 105000
cost per equivalent unit of production for materials is $0.77
Note: The total costs was divided with the Equivalent unit of Production
= $80.850/$105000
= $0.77
Based on the following data, estimate the cost of the ending merchandise inventory:
Sales (net) $1,450,000
Estimated gross profit rate 42%
Beginning merchandise inventory $100,000
Purchases (net) 860,000
Merchandise available for sale $960,000
Cost of Ending Merchandise Inventory
Merchandise available for sale $
Less cost of merchandise sold
Estimated ending merchandise inventory $
Answer:
Ending inventory $119,000
Explanation:
Estimation of cost of ending merchandise inventory:
Merchandise available for sale $960,000
Less Cost of goods sold $841,000
[1,450,000* (100%-42%)]
Ending inventory $119,000
( $960,000 - $841,000)
Therefore the cost of the ending merchandise inventory will be $119,000
Roman Mfg.'s July production involved actual direct labor costs of $41,514 for 3,400 direct labor hours. The budget for the July level of production called for 3,500 direct labor hours at $12.20 per hour, using a standard cost system.
1. Roman's labor rate variance for July is ____________
2. Roman's labor efficiency variance for July is _______________
Answer:
Instructions are below.
Explanation:
Giving the following information:
Roman Mfg.'s July production involved actual direct labor costs of $41,514 for 3,400 direct labor hours. The budget for the July level of production called for 3,500 direct labor hours at $12.20 per hour.
To calculate the direct labor efficiency and rate variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (3,500 - 3,400)*12.2
Direct labor time (efficiency) variance= $1,220 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 41,514/3,400= $12.21
Direct labor rate variance= (12.20 - 12.21)*3,400
Direct labor rate variance= $34 unfavorable
Alex expects to incur personal costs of $3,800 in Year 1, and $4,300, $5,200 and $4,600 in costs over the following three years, respectively. What is the present value of these costs at 7 percent
Answer:
$15,061.26
Explanation:
The computation of the present value for these costs are shown below:
Year Expected cash flow Discount factor at 7% Present value
1 $3,800 0.9345794393 $3,551.40
2 $4,300 0.8734387283 $3,755.79
3 $5,200 0.8162978769 $4,244.75
4 $4,600 0.762895212 $3,509.32
Total $15,061.26
Refer to the discount factor table
Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization.
9.05 9.05
9.64 9.64
9.70 9.70
9.95 9.95
13.91 13.91
14.60 14.60
The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy.
Excluding discouraged workers from the official unemployment rate may cause the official rate to (overstate/understate) the true extent of underemployment.
Answer and Explanation:
The computation of the official unemployment rate is shown below:
Official unemployment rate is
= Unemployed workers ÷ (Unemployed + employed) × 100
= 13,863,000 ÷ (13,863,000 + 139,323,000) × 100
= 9.05%
Now for the U-4 is
= (Unemployed workers + discouraged workers) ÷ (Unemployed + employed + discouraged workers) × 100
= (13,863,000 + $993,000) ÷ (13,863,000 + 139,323,000 + $993,000) × 100
= 9.64%
Therefore for exclduing the discouraged workers it may cause the offical rate to understate the underemployment true extent
Required: Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel Template.xlsx". Use the following accounts as appropriate: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation, Accounts Payable, Wages Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Depreciation Expense, Wages Expense, Supplies Expense, Rent Expense, and Insurance Expense. 1-Dec Began business by depositing $10500 in a bank account in the name of the company in exchange for 1050 shares of $10 per share common stock. 1-Dec Paid the rent for the current month, $950 . 1-Dec Paid the premium on a one-year insurance policy, $600 . 1-Dec Purchased Equipment for $3600 cash. 5-Dec Purchased office supplies from XYZ Company on account, $300 . 15-Dec Provided services to customers for $7200 cash. 16-Dec Provided service to customers ABC Inc. on account, $5200 . 21-Dec Received $2400 cash from ABC Inc., customer on account. 23-Dec Paid $170 to XYZ company for supplies purchased on account on December 5 . 28-Dec Paid wages for the period December 1 through December 28, $4480 . 30-Dec Declared and paid dividend to stockholders $200 .
Answer:
journal entries to record the December transactions
1-Dec
Cash $10500 (debit)
Common Stock $10500 (credit)
1-Dec
Rent Expense $950 (debit)
Cash $950 (credit)
1-Dec
Prepaid Insurance $600 (debit)
Cash $600 (credit)
1-Dec
Equipment $3600 (debit)
Cash $3600 (credit)
5-Dec
Supplies Expense $300 (debit)
Accounts Payable $300 (credit)
15-Dec
Cash $7200 (debit)
Service Revenue $7200 (credit)
16-Dec
Accounts Receivable $5200 (debit)
Service Revenue $5200 (credit)
21-Dec
Cash $2400 (debit)
Accounts Receivable $2400 (credit)
23-Dec
Accounts Payable $170 (debit)
Cash $170 (credit)
28-Dec
Wages Expense $4480 (debit)
Cash $4480 (credit)
30-Dec
Dividends $200 (debit)
Cash $200 (credit)
Explanation:
The General Journal consists of Entries of Expenses, Capital Expenditures and Receipts and Payments in Cash.
, a doctor from the local hospital, is a friend of Fran, the owner of a candy store. Every day, Ed spends about five minutes in Fran’s candy store during his breaks, looking at the candy and usually buying one or two candy bars. One afternoon Ed goes into Fran’s store, looks at the candy and picks up a $1 candy bar. Fran is busy talking and checking out another customer so to avoid interrupting, Ed merely waves the candy bar at Fran without saying a word as he is walking toward the door. Fran smiles but keeps talking to the customer as Ed walks out. Based upon the information given, as well as making your own assumptions...do Ed and Fran have a contract? If so, what type of contract is it? Is it enforceable? Why or why not.
Answer:
- Yes,
- Bilateral, Implied contract which is enforceable.
Explanation:
Note, both parties consented to a contract even though it was an informal setting. Remember, certain gestures were used by Ed to show contract acceptance, There's also valid consideration since the value of the exchange is known; which is a candy bar for $1.
Fran thus understands that Ed will pay for the candy later since he saw the sign, this also makes it a bilateral contract (between two parties only). The contract is also enforceable since it is legal to sell candies.
The process of negotiation between buyer and supplier inevitably raises some ethical tensions, given that the situation is often characterized as one of the two combatants coming together to do battle. Explain any five popular negotiating tactics, all of which can be challenged on ethical grounds.
Answer:
there are five popular negotiating tactics, all of which can be challenged on ethical grounds.
Explanation:
Principle 1. Reciprocity:
Would I want others to treat me or someone close to me this way?
Principle 2. Publicity:
Would I be comfortable if my actions were fully and fairly described in the newspaper?
Principle 3. Trusted friend:
Would I be comfortable telling my best friend, spouse, or children what I am doing?
Principle 4. Universality:
Would I advise anyone else in my situation to act this way?
Principle 5. Legacy:
Does this action reflect how I want to be known and remembered?
Doing the right thing sometimes means that we must accept a known cost. But in the long run, doing the wrong thing may be even more costly.
The auditors are concerned that these practices are inadequate and that more secure alternatives should be explored. Management has expressed counter concerns about the high cost of purchasing new equipment and relocating its data center. Required: What risks currently exist that are of concern to the auditors
Answer:
Audit Risk
Explanation:
Auditors could be Internal or External auditors, however, they both perform similar function in accessing company financial statements or reports. If the auditors are unable to find out financial misstatement and flag the report as correct, meanwhile, the report in actual sense contain errors, it is termed Audit Risk. It comprises of three components which are Detection risk, Inherent Risk, and Control risk
Bay City uses the purchases method to account for supplies. At the beginning of the year the City had no supplies on hand. During the year the City purchased $600,000 of supplies for use by activities accounted for in the General Fund. The City used $400,000 of those supplies during the year. Assuming that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements, at fiscal year-end the appropriate account balances related to supplies expenditures and supplies inventory would be
Answer:
Supplies Expenditure $600,000
Supplies Inventory $200,000
Explanation:
Calculation for the appropriate account balances related to supplies expenditures and supplies inventory :
Supplies Expenditure will be $600,000 because during the year purchased of $600,000 supplies were made.
Therefore Supplies Expenditure will be $600,000
Supplies Inventory will be:
Purchased supplies $600,000
Less used supplies $400,000
Balance =$200,000
Therefore Supplies Inventory will be $200,000