Answer:
A. Dec 31
Dr Sales $32400
Cr Customer refunds payable $32400
Dr Estimated returns inventory $12,000
Cr Cost of goods sold $12,000
B. Feb 3
Dr Customer refunds payable $4,800
Cr Cash $4,800
Dr Merchandise Inventory $3,200
Cr Estimated returns inventory $3,200
Explanation:
a. Preparation of the the adjusting entries on December 31, 20Y1, to record the expected customer returns.
Dec 31
Dr Sales $32400
Cr Customer refunds payable $32400
($1,800,000*1.8%)
Dr Estimated returns inventory $12,000
Cr Cost of goods sold $12,000
(Being to record the expected customer returns)
b. Preparation of the entries to record the returned merchandise and cash refund to Buck Co. on February 3, 20Y2.
Feb 3
Dr Customer refunds payable $4,800
Cr Cash $4,800
Dr Merchandise Inventory $3,200
Cr Estimated returns inventory $3,200
(Being to record the returned merchandise and cash refund to Buck Co)
Hughes Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 5 percent thereafter. If the required return is 12 percent and the company just paid a $2.35 dividend, what is the current share price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Answer: $53.94
Explanation:
Current share price is the present value of the dividends for the next 3 years and the terminal value in year 3.
Terminal value = D₄ / ( required return - growth rate)
= (2.35 * 1.22³ * 1.05) / (12 % - 5%)
= $64
D₁ = 2.35 * 1.22 = $2.867
D₂ = 2.867 * 1.22 = $3.49774
D₃ = 3.49774 * 1.22 = $4.2672428
Share price = (2.867 / (1 + 12%)) + (3.49774 / 1.12²) + (4.2672428 / 1.12³) + (64/1.12³)
= $53.94
A-Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr. Jeter, the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.
The company currently has outstanding a bond with a 10.6 percent coupon rate and another bond with an 8.2 percent rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield 11.5 percent. The common stock has a price of $60 and an expected dividend (D1) of $1.80 per share. The historical growth pattern (g) for dividends is as follows:
1.35
1.49
1.64
1.80
The preferred stock is selling at $80 per share and pays a dividend of $7.60 per share. The corporate tax rate is 30 percent. The flotation cost is 2.5 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 10 percent preferred stock, and 65 percent common equity in the form of retained earnings.
(a) Compute the historical growth rate. (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole percent. Omit the "%" sign in your response.)
Growth rate %
(b) Compute the cost of capital for the individual components in the capital structure. (Round growth rate to nearest whole percent. Round your answers to 2 decimal places. Omit the "%" sign in your response.)
Cost of capital
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
(c) Calculate the weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "%" sign in your response.)
Weighted cost
Debt (Kd) %
Preferred stock (Kp)
Common equity (Ke)
Weighted average cost of capital (Ka) %
Answer:
PV = 1.35
FV = 1.8
n = 3
a. Growth rate = Rate(N, -PV, FV)
Growth rate = Rate(3, -1.35, 1.8)
Growth rate = 0.10
Growth rate = 10%
B. Cost of debt Kd (After tax) = 11.5%*(1-0.30) = 8.05%
Cost of preference share Kp = Dividend/Price = 7.6 /[80*(1 - 0.025)] = 9.74%
Cost of equity Ke = D1/P0+g = 1.8/60 + 0.1 = 0.03+0.1 = 0.13 = 13%
c. Source Weight A COC(%)(B) Weight cost of capital(A*B)
Debt 25% 8.05% 2.01%
Preferred stock 10% 9.74% 0.97%
Common stock 65% 13.00% 8.45%
Weighted average cost of capital 11.44%
Three accuracy problems with the consumer price index (CPI) are Group of answer choices price confusion, substitution, and quality changes. substitution, quality changes, and the money illusion. substitution, quality changes, and the availability of new goods and services. the availability of new goods and services, substitution, and traditional bundle bias. the income effect, substitution effect, and money illusion.
Answer:
Option b (Substitution.....services) is the appropriate choice.
Explanation:
The above leads to calculating difficulties as well as the failure throughout the Index to identify better products and services contributing to less precise inflation outcomes.It does not take account of the replacement facilities, which arise when an increase throughout the price of one promising recommendation to a replacement including its good by another, which often increases the costs of one quality.The other options are not related to the given scenario. So the above is the correct choice.
It is now January 1, 2018, and you are considering the purchase of an outstanding bond that was issued on January 1, 2016. It has a 9% annual coupon and had a 20-year original maturity. (It matures on December 31, 2035.) There is 5 years of call protection (until December 31, 2020), after which time it can be called at 109-that is, at 109% of par, or $1,090. Interest rates have declined since it was issued, and it is now selling at 114.12% of par, or $1,141.20. What is the yield to maturity
Answer:
YTM is 7.54%.
Explanation:
The yield to maturity can be calculated using the following RATE function in Excel:
YTM = RATE(nper,pmt,-pv,fv) .............(1)
Where;
YTM = yield to maturity = ?
nper = number of periods = number of years to maturity = original maturity number of years - number of years between January 1, 2016 and January 1, 2018 = 20 - 2 = 18
pmt = annual coupon payment = face value * annual coupon rate = 1000 * 9% = 90 (Note: This is an inflow to the bondholder and it is therefore a positive figure).
pv = present value = current bond price = -1141.20 (Note: This is an outflow to the buyer of the bond and it is therefore a negative figure).
fv = face value of the bond = 1000 (Note: This is an inflow to the bondholder and it is therefore a positive figure).
Substituting the values into equation (1), we have:
YTM = RATE(18,90,-1141.20,1000) ............ (2)
Inputting =RATE(18,90,-1141.20,1000) into excel (Note: as done in the attached excel file), the YTM is obtained as 7.54%.
Therefore, YTM is 7.54%.
If a sales tax is the same for all goods sold within a given area, why are sales taxes considered regressive?
High-income earners avoid paying sales tax through deductions.
Sales taxes tend to be higher in areas with large low-income populations.
Sales tax disproportionately affects low-income earners.
Low-income earners make purchase decisions based exclusively on sales tax.
Answer:
the answer is c on edge
Explanation:
Rusty has been experiencing serious financial problems. His annual salary was $100,000, but a creditor garnished his salary for $20,000; so the employer paid the creditor (rather than Rusty) the $20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $150,000 rent income but had $160,000 in related expenses, including a $20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
Salary received $80,000
Loss from rental property ($150,000-$160,000) (10,000)
Gross income $70,000
Compute rustys correct gross income for the year, and explain any differences between your calculation and rusty
Answer:
Rusty annual salary was $100,000.
Rusty will not be taxed on the interest and dividend amount of $5,000 as Rebecca is the owner of the assets that is producing this income.
Secondly, Rusty will also need to report the $6,000 interest income. This has to be reported even though it has not been withdrawn.
Thirdly, he received $20,000 as salary from his wholly owned corporation.
Salary from employer $100,000
Salary from wholly owned corporation $20,000
Dividends and interest from the investments $0
Interest from Swiss bank account $6,000
Rental loss incurred $0
Gross income $126,000
Capital using technological process results in ____?
Capital-driven technological processes lead to creating new and innovative capital goods.
What are capital goods?Capital goods are the assets utilized by a production company while engaging in the manufacturing of goods.
When the technological process is driven by capital funds, then the company starts manufacturing innovative capital products which further increase its worth. This leads to a decline in the worth of capital goods that are already been present in the consumer market.
Therefore, the emergence of new capital products is being produced due to technological processes.
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Organizations exchange information internally and externally. External messages go to customers, vendors, the government, and other business partners. Internal messages travel upward to supervisors, downward to employees, and horizontally among workers. Understanding the different types of business messages and following the 3-x-3 writing process will help you write more effective professional messages.
Match the message content area with the correct types of messages.
a. Sales pitches, requests for favors
b. Replies, goodwill messages, direct claims
c. Bad news, refusals
1. persuasive
2. positive
3. negative
Answer:
1. persuasive: a. Sales pitches, requests for favors
2. positive: b. Replies, goodwill messages, direct claims
3. negative: c. Bad news, refusals
Explanation:
a) A persuasive speech is one whose goal is to convince someone of something, so it is correct to say that in an organizational message where there are sales speeches and requests for favors, there is a need for a persuasive speech, whose message seeks to convince the sender of the benefits of make a sale for example.
b) A positive speech is one whose intention is to motivate, give praise, offer positive feedback, etc. Therefore, in responses, messages of goodwill, direct claims, positive speech will help in better understanding of the sender and in the positive positioning of the company.
c) A negative discourse occurs when there is bad news to be shared, it is necessary that this message is written in a soft way, with damping words and indirectly, because this way the acceptability can be greater.
3. The day after Thanksgiving, known as Black Friday, is the biggest shopping day
of the year. One major retailer advertised a "Black Friday only" laptop for $150.
On Thanksgiving night, hundreds of people waited for the store to open to take
advantage of the laptop deal-only to learn that the store only had two units for
sale at the discounted price. Did the retailer breach its contract with the hundreds
of consumers who sought the deal? What obligation, if any, does the retailer have
to its consumers?
Answer:
No there is no breach of contract since the retailer should have mentioned that stock is limited.
Explanation:
The retailer should have mentioned with the advertisement that the stock is limited. If such is the case then there is no breach as it is up to the store how many units it has kept for sale. The store should be opened on Black Friday and those customers who grab the sale items first will be given the discounted products. It is not responsibility of the store to entertain every customer as the stock in the store is limited.
When the equity method of accounting for investments is used by the investor, the amortization of additional depreciation due to differences between book values and fair values of investee assets on the date of acquisition: Group of answer choices Increases the investment account and reduces investment revenue. Increases the investment account and increases investment revenue. Reduces the investment account and increases investment revenue. Reduces the investment account and reduces investment revenue.
Answer:
d. Reduces the investment account and reduces investment revenue.
Explanation:
When the equity method of accounting for investments is used by the investor, the amortization of additional depreciation due to differences between book values and fair values of investee assets on the date of acquisition reduces the investment account and reduces investment revenue.
The amortization of additional depreciation reduces the investment account in the investee as well as reduces the income recognized from investee.
In the equity method, an investor amortizes, or expenses, the additional over book value paid for its portion of the investee's tangible non current assets. For non current assets, book value is purchase price minus accumulated depreciation. The investor amortizes the amount above book value it allocates to investee assets.
Plant-wide, department, and activity-cost rates. Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10,000 basic trophies and 5,000 deluxe trophies. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The basic trophies are formed in batches of 200 but be-cause of the more intricate detail of the deluxe trophies, they are formed in batches of 50.
The controller has asked you to compare plant-wide, department, and activity-based cost allocation.
Forming Department Basic Delux Total
$60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Overhead costs Setup $48,000
General overhead $32,000
Assembly Department Basic Delux Total
Direct materials $50,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Overhead costs Setup
General overhead 40,000
Required:
a. Calculate the budgeted unit cost of basic and deluxe trophies based on a single plant-wide overhead rate, if total overhead is allocated based on total direct (Don't forget to include direct material and direct manufacturing labor cost in your unit cost calculation.)
b. Calculate the budgeted unit cost of basic and deluxe trophies based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department
c. Calculate the budgeted unit cost of basic and deluxe trophies if Acclaim allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department.
d. Explain briefly why plant-wide, department, and activity-based costing systems show different costs for the basic and deluxe trophies. Which system would you recommend and why?
Answer:
Acclaim Inc.
Basic Trophies Deluxe Trophies
Budgeted unit cost:
a. using single-plant o/h rate $17.60 $28.80
b. using departmental rates $17.42 $29.16
c. using ABC $18.26 $27.48
d. They show different costs because the overhead rates are based on different parameters.
I recommend ABC system. It is more fair because the overhead rates are based on product line's activity usage instead of an arbitrary figure.
Explanation:
a) Data and Calculations:
Basic Trophies Deluxe Trophies Total
Budgeted production 10,000 5,000 15,000
Batches 200 50 250
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total direct costs $110,000 $90,000 $200,000
Overhead costs 66,000 54,000 120,000
Total production costs $176,000 $144,000 $320,000
Budgeted production 10,000 5,000
Budget unit costs $17.60 $28.80
Overhead rate
Total overhead/total direct costs = $120,000/$200,000 = $0.60
Basic Deluxe Total
Trophies Trophies
Forming department:
Overhead costs Setup $48,000
General overhead $32,000
Total overhead costs $80,000
Overhead rate = $80,000/$145,000 = $552
Assembly department
General overhead $40,000/$55,000 = $0.727
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Total direct costs $90,000 $55,000 $145,000
Overhead costs 49,680 30,360 80,040
Total departmental costs $139,680 $85,360 $225,040
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total direct costs $20,000 $35,000 $55,000
Overhead costs 14,540 25,445 39,985
Total departmental costs $34,540 $60,445 $94,985
Total production costs $174,220 $145,805 $320,025
Budgeted production 10,000 5,000
Budget unit costs $17.42 $29.16
Basic Trophies Deluxe Trophies Total
Forming Department $60,000 $35,000 $95,000
Direct manufacturing labor $30,000 $20,000 $50,000
Assembly
Direct materials $5,000 $10,000 $15,000
Direct manufacturing labor 15,000 25,000 40,000
Total overhead allocated $72,600 $47,400 $120,000
Total production costs $182,600 $137,400 $320,000
Budgeted production 10,000 5,000
Budget unit costs $18.26 $27.48
Overhead costs allocation:
Basic Deluxe Total
Trophies Trophies
Forming department:
Overhead costs Setup $48,000/250 $38,400 $9,600 $48,000
General overhead $32,000/$50,000 19,200 12,800 32,000
Assembly department
General overhead $40,000/$40,000 15,000 25,000 40,000
Total overhead allocated $72,600 $47,400 $120,000
Forsyth Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. During the year, the company produced and sold 10,000 units at a price of $135 per unit. Its standard cost per unit produced is $105 and its selling and administrative expenses totaled $235,000. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
Materials price variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,500 F
Materials quantity variance . . . . . . . . . . . . . . . . . . . . . . . . $10,200 U
Labor rate variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,500 U
Labor efficiency variance . . . . . . . . . . . . . . . . . . . . . . . . . . $4,400 F
Fixed overhead budget variance . . . . . . . . . . . . . . . . . . . . . $2,500 F
Fixed overhead volume variance . . . . . . . . . . . . . . . . . . . . $12,000 F
Required:
1. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
2. Using Exhibit 10B-5 as a guide, prepare an income statement for the year.
Dylan Corporation
Income Statement
For the year ended 12/31/xx
dollars in thousands
Sales 5270
Cost of goods sold at stanadard 4335
Total variance adustments 36
Cost of goods sold 4371
Gross margin 899
Selling and administrative expenses 450
Net operating income 449
Answer:
See below
Explanation:
1. Computation of cost of goods sold
Materials Price Variance
$6,500 F
Materials Quantity Variance
$10,200 U
Labor Rate Variance
$3,500 U
Labor Efficiency Variance
$4,400 F
Fixed Overhead budget variance
$2,500 F
Fixed Overhead volume variance
$12,000 F
Cost of goods sold
$11,700
2. Net operating statement
Sales[$153 × 10,000]
$1,530,000
Less: Cost of goods sold
Cost of goods sold at standard [$105 × 10,000]
$1,050,000
Cost of good sold adjusted
($11,700)
Variance adjustment Balance
$1,038,300
Gross profit
$491,700
Less selling and administrative expenses
($235,000)
Net operating income
$256,700
Adams Company manufactures two products. The budgeted per-unit contribution margin for each product follows: Super Supreme Sales price $ 95 $ 124 Variable cost per unit (58 ) (74 ) Contribution margin per unit $ 37 $ 50 Adams expects to incur annual fixed costs of $227,880. The relative sales mix of the products is 60 percent for Super and 40 percent for Supreme. Required Determine the total number of products (units of Super and Supreme combined) Adams must sell to break even. How many units each of Super and Supreme must Adams sell to break even
Answer:
Expected contribution as per sales mix = $37*0.60 + $50*0.40
= $22.20 + $20
= $42.20 per unit
Total number of products in total at break even point = Total fixed cost / Contribution per unit
= $227,880 / $42.20 per unit
= 5,400 units
How many units each of Super and Supreme must Adams sell to break even?
According to sales mix:
Super = 5,400 * 60% = 3,240 units
Supreme = 5,400 * 40% = 2,160 units.
Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $265,000, variable expenses of $141,600, and traceable fixed expenses of $66,800. The Alpha Division has sales of $575,000, variable expenses of $321,800, and traceable fixed expenses of $126,300. The total amount of common fixed expenses not traceable to the individual divisions is $126,200. What is the company's net operating income
Answer:
$57,300
Explanation:
Calculation to determine the company's net operating income
Sales $840,000
($265,000+$575,000)
Less Variable expenses $463,400
($141,600+$321,800)
Contribution margin $376,600
($840,000-$463,400)
Less Traceable fixed expenses $193,100
($66,800+$126,300)
Divisional segment margin $183,500
Less Common fixed expenses $126,200
Net Operating Income $57,300
Therefore the company's net operating income will be $57,300
Why does operations managers need to get involved into planning?
Answer:
See below
Explanation:
The reason is that he oversees the entire operations of an organization, hence must know what the planning entails at the beginning.
Again, if the operating manager is involved in planning at the early stage, he would be able to contribute meaningfully towards the success of the plan
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 130 shares of its common stock on May 1 for $6,500. On July 1, it reissued 65 of these shares at $53 per share. On August 1, it reissued the remaining treasury shares at $48 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2
Answer:
Fortune Company
There is a balance of ($65) in the Paid-in Capital, Treasury Stock account on August 2.
However, this balance will be transferred to the Additional Paid-in Capital account at year-end, since there are no outstanding shares for the Treasury Stock account.
Explanation:
a) Data and Calculations:
May 1 Repurchase of 130 shares (Treasury Stock) = $6,500
July 1 Reissue of 65 shares at $53 per share = (3,445)
August 1 Reissue of 65 shares at $48 per share = (3,120)
August 2, Balance in the Paid-in Capital = ($65)
b) The Treasury Stock account is a contra Paid-in Capital account which records transactions involving the repurchase and reissue of treasury shares. Treasury shares represent the company's own shares which are repurchased from its investors.
A company received 500 applications for a specific position.30 were given an assignment test. Only 15 were invited to an interview. The yield ratio of passing the interview is
a.
75%
b.
20%
c.
50%
d.
25%
Patty and Bob were in a romantic relationship. While they were seeing each other, Patty and Bob acquired an electronics service center, Bob paying $60,000 and Patty running all facets of the center. The center becomes very profitable. Two years later, when the romantic relationship ended, Bob goes to court for a declaration that they had no partnership because they did not have a written partnership agreement and Patty contributed no cash, she was merely an employee. Did they have a partnership
Answer:
Most states accept oral agreements when forming partnerships. This would not be an exception. the fact that Patty didn't contribute any money doesn't mean that she cannot be considered a partner. Her contribution might be her labor. Unless the partnership previously recorded Patty as an employee, then she can claim being a partner. Since no written agreement was made, profits must be divided equally.
Explanation:
The decision regarding the partnership between Patty and Bob would be as follows:
Yes, they have been partners where one has employed capital while the other has employed his entrepreneurship.
What is Partnership?A Partnership is described as an acquaintance and association that exists between two or more individuals in order to run a business.
In the given situation, although there is no written agreement between them, Bob will have an equal share in the profit of the business.
The reason behind this is that one employed his capital while the other employed his skills and efforts(entrepreneurship).
Thus, they would be considered as partners as he was not hired as an employee in the company.
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A manager who creates an incentive program for the team to hit quarterly sales goals is performing the management function of ____________.
Answer:
Controlling.
Explanation:
Planning is a term used to describe the process of developing the organization's objectives and translating those into courses of action.
This ultimately implies that, planning is a strategic technique used by organizations to make an aggregate plan for its manufacturing (production) process typically ahead of time, in order to have an idea of the level of goods are to be produced and what resources are required so as to reduce the total cost of production to its barest minimum.
A manager who creates an incentive program for the team to hit quarterly sales goals is performing the management function of controlling.
The following trial balance was taken from the records of Fairport Manufacturing Company at the beginning of 2019:
Cash $ 20,000
Raw materials inventory 1,800
Work in process inventory 2,400
Finished goods inventory 4,200
Property, plant, and equipment 15,000
Accumulated depreciation $ 6,000
Common stock 16,800
Retained earnings 20,600
Total $ 43,400 $ 43,400
Transactions for the Accounting Period:
Fairport purchased $11,400 of direct raw materials and $600 of indirect raw materials on account. The indirect materials are capitalized in the Production Supplies account. Materials requisitions showed that $10,800 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.
By the end of the year, $10,500 of the accounts payable had been paid in cash.
During the year, direct labor amounted to 950 hours recorded in the Wages Payable account at $21 per hour.
By the end of the year, $18,000 of wages payable had been paid in cash.
At the beginning of the year, the company expected overhead cost for the period to be $12,600 and 1,000 direct labor hours to be worked. Overhead is allocated based on direct labor hours, which, as indicated in Event 3, amounted to 950 for the year.
Selling and administrative expenses for the year amounted to $1,800 paid in cash.
Utilities and rent for production facilities amounted to $9,300 paid in cash.
Depreciation on the plant and equipment used in production amounted to $3,000.
There was $24,000 of goods completed during the year.
There was $25,500 of finished goods inventory sold for $36,000 cash.
A count of the production supplies revealed a balance of $178 on hand at the end of the year.
Any over- or underapplied overhead is considered to be insignificant.
Required
a) Prepare T-accounts with the beginning balances shown in the preceding list and record all transactions for the year including closing entries in the T-accounts.
b) Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.
Answer:
Fairport Manufacturing Company
T-accounts
Cash
Account Titles Debit Credit
Beginning balance $ 20,000
Accounts payable $10,500
Wages payable 18,000
Selling and distribution expense 1,800
Utilities and Rent for production 9,300
Sales Revenue 36,000
Ending balance $16,400
Raw materials inventory
Account Titles Debit Credit
Beginning balance $ 1,800
Accounts Payable 11,400
Work-in-Process $10,800
Ending balance $2,400
Work in process inventory
Account Titles Debit Credit
Beginning balance $ 2,400
Raw materials 10,800
Wages Payable 19,950
Overhead Applied 11,970
Finished Goods Inventory $24,000
Ending balance $21,120
Finished goods inventory
Account Titles Debit Credit
Beginning balance $ 4,200
Work-in-Process 24,000
Cost of goods sold $25,500
Ending balance $2,700
Property, plant, and equipment
Account Titles Debit Credit
Beginning balance $ 15,000
Accumulated depreciation
Account Titles Debit Credit
Beginning balance $ 6,000
Depreciation expense 3,000
Ending Balance $9,000
Accounts Payable
Account Titles Debit Credit
Raw materials $12,000
Cash $10,500
Ending balance $1,500
Wages Payable
Account Titles Debit Credit
Work-in-Process $19,950
Cash $18,000
Ending balance $1,950
Common stock
Account Titles Debit Credit
Beginning balance $ 16,800
Retained earnings
Account Titles Debit Credit
Beginning balance $ 20,600
Production Supplies
Account Titles Debit Credit
Accounts Payable $600
Overhead $422
Ending balance $178
Overhead Expenses
Account Titles Debit Credit
Work-in-Process $11,970
Cash (Utilities) 9,300
Depreciation expense 3,000
Production supplies 422
Cost of goods sold (Underapplied) 752
Sales Revenue
Account Titles Debit Credit
Cash $36,000
Income Summary $36,000
Cost of Goods Sold
Account Titles Debit Credit
Finished Goods Inventory $25,500
Overhead (underapplied) 752
Income Summary $26,252
Selling and Distribution Expense
Account Titles Debit Credit
Cash $1,800
Utilities and Rent
Account Titles Debit Credit
Cash $9,300
Overhead $9,300
Depreciation Expense - Plant & Equipment
Account Titles Debit Credit
Accumulated Depreciation $3,000
Overhead $3,000
b) Schedule of Cost of Goods Manufactured and Sold:
WIP Beginning Inventory $ 2,400
Raw materials 10,800
Direct labor 19,950
Overhead Applied 11,970
Cost of goods in production $45,120
Ending WIP Inventory 21,120
Cost of manufactured $24,000
Finished Goods Inventory $ 4,200
Cost of manufactured 24,000
Cost of goods available $28,200
Ending FG Inventory 2,700
Cost of goods sold $25,500
Income Statement for the year ended December 31, 2019:
Sales Revenue $36,000
Cost of Goods Sold 26,252
Gross profit 9,748
Selling and distribution exp. 1,800
Net income $7,948
Retained Earnings, January 1, 2019 $20,600
Net income 7,948
Retained Earnings, December 31, $28,548
Balance Sheet as of December 31, 2019:
Assets:
Cash $ 16,400
Raw materials inventory 2,400
Work in process inventory 21,120
Finished goods inventory 2,700
Production Supplies 178 $42,798
Property, plant, and equipment 15,000
Accumulated depreciation 9,000 $6,000
Total assets $48,798
Liabilities and Equity:
Accounts Payable $1,500
Wages Payable 1,950
Total liabilities $3,450
Common stock $16,800
Retained earnings 28,548 $45,348
Total liabilities and equity $48,798
Explanation:
a) Data and Calculations:
Trial Balance at January 1, 2019:
Account Titles Debit Credit
Cash $ 20,000
Raw materials inventory 1,800
Work in process inventory 2,400
Finished goods inventory 4,200
Property, plant, and equipment 15,000
Accumulated depreciation $ 6,000
Common stock 16,800
Retained earnings 20,600
Total $ 43,400 $ 43,400
Analysis of Transactions for the period:
1. Raw materials $11,400 Production Supplies $600 Accounts payable $12,000
2. Work-in-Process $10,800 Raw materials $10,800
3. Accounts payable $10,500 Cash $10,500
4. Work-in-Process $19,950 Wages Payable $19,950
5. Wages Payable $18,000 Cash $18,000
6. Work-in-Process $11,970 Overhead Applied $11,970 ($12,600 * 950/1,000)
7. Selling and Administrative expense $1,800 Cash $1,800
8. Utilities and Rent for production $9,300 Cash $9,300
9. Depreciation Expense-Plant and Equipment $3,000 Accumulated Depreciation $3,000
10. Finished Goods Inventory $24,000 Work-in-Process $24,000
11. Cost of Goods Sold $25,500 Finished Goods Inventory $25,500
12. Cash $36,000 Sales Revenue $36,000
13. Overhead $422 Production Supplies $422 ($600 - $178)
14. Cost of Goods Sold $752 Underapplied Overhead $752
Adjusted Trial Balance at December 31, 2019:
Account Titles Debit Credit
Cash $ 16,400
Raw materials inventory 2,400
Work in process inventory 21,120
Finished goods inventory 2,700
Property, plant, and equipment 15,000
Accumulated depreciation $ 9,000
Accounts Payable 1,500
Wages Payable 1,950
Common stock 16,800
Retained earnings 20,600
Production Supplies 178
Sales Revenue 36,000
Cost of Goods Sold 26,252
Selling and distribution exp. 1,800
Totals $85,850 $85,850
Which one of the following statements is correct concerning the relationship between a levered and an unlevered capital structure? Assume there are no taxes.
a. At the break-even point, there is no advantage to debt.
b. The earnings per share will equal zero when EBIT is zero for a levered firm.
c. The advantages of leverage are inversely related to the level of EBIT.
d. The use of leverage at any level of EBIT increases the EPS.
e. EPS are more sensitive to changes in EBIT when a firm is unlevered
Answer:
a. At the break-even point, there is no advantage to debt.
Explanation:
In the case when we concerned about the relationship between the levered and an unlevered capital structure also there is no taxes so the statement i.e. correct is at the break even point we dont have an advantage with respect to the debt
Therefore the first option is correct
The statement about the relationship between a levered and an unlevered capital structure is valid in that debt has no advantage at the break-even point.
What is a break-even point?Break-even point is the market condition where there is no profit and no loss to the company.
Here, the total revenue and the total cost of the firm equals.
When it comes to the relationship between a levered and an unlevered capital structure, there are no taxes, hence the statement, i.e., correct, is that at the break-even point, we don't have a debt advantage.
Therefore, option A is correct.
Learn more about the break-even point, refer to:
https://brainly.com/question/15356272
Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Continent does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow.
Cost Category Job A Job B
Contract price $800,000 $750,000
Unit—level materials 250,000 220,000
Unit—level labor 260,000 310,000
Unit—level overhead 40,000 30,000
Supervisor's salary 70,000 70,000
Rental equipment costs 26,000 29,000
Depreciation on tools (zero market value) 19,900 19,900
Allocated portion of companywide facility—sustaining costs 10,400 8,600
Insurance cost for job 18,200 18,200
Required
a. Assume that Continent has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. Recommend which job to accept.
b. Assume that Job A is no longer available. Continent's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B.
Answer:
1. Job A is considered for recommendation
2. Accept B
Explanation:
1. We calculate contribution for A and B
For job A
$(800000-250000-260000-40000-26000)
= $224000
For job B
$(750000-220000-310000-30000-29000)
= $161000
We compare the costs of both jobs. A has more contribution compared to B so we consider A.
2. A is no longer available
We add supervisors salary as well as insurance as additional costs
$(750000-220000-310000-30000-29000-70000-18200)
= 72800
The contribution from b is positive so the decision is to accept it.
You plan to retire in 28 years. You would like to maintain your current level of consumption which is $52,672 per year. You will need to have 30 years of consumption during your retirement. You can earn 5.03% per year (nominal terms) on your investments. In addition, you expect inflation to be 2.82% inflation per year, from now and through your retirement. How much do you have to invest each year, starting next year, for 13 years, in nominal terms to just cover your retirement needs?
Answer:
The amount to invest each year for 13 years is $5,617.37.
Explanation:
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) …………………………………. (1)
Where;
PV = current level of consumption = $52,672
P = amount to invest each year = ?
r = annual nominal interest rate = 5.03%, or 0.0503
n = number of years = 13
Substituting the values into equation (1) and solve for n, we have:
$52,672 = P * ((1 - (1 / (1 + 0.0503))^13) / 0.0503)
$52,672 = P * 9.37662983027493
P = $52,672 / 9.37662983027493
P = $5,617.37
Therefore, the amount to invest each year for 13 years is $5,617.37.
Selected information from Peridot Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to acquire machinery $ 35 Reacquired Peridot common stock 56 Proceeds from sale of land 97 Gain from the sale of land 55 Investment revenue received 72 Cash paid to acquire office equipment 84 In its statement of cash flows, Peridot should report net cash outflows from investing activities of:
Answer:
Peridot should report net cash outflows from investing activities of $22 million.
Explanation:
Peridot corporation
Statement of cash flows
$ in millions
Purchase of machinery
($35)
Proceeds from sale of land
$97
Cash paid to acquire office
($84)
Net cash outflows from investing activities
($22)
• We ignored required common stock because it belongs to financing activities section of cash outflows. Gain from sale of land and investment revenue is for operating activities section of the cash flow
A company is forecasted to generate free cash flows of $25 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 12.0%. The company has $34 million in debt, $19 million of cash, and 23 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 17, what's your estimate of the company's stock price
Answer:
$18.41
Explanation:
Equity value = FCF next year / (1 + cost of capital) + FCF in year 2 / (1 + cost of capital)^2 + 1 / (1 + cost of capital)^2 * [ (FCF in year 2 * exit multiple)]
= $25 million/1.12 + $29 million/1.12^2 + 1 / 1.12^2*[($29 million*17)]
= $25 million/1.12 + $29 million/1.12^2 + $493 million/1.12^2
= $25 million / 1.12 + $522 million / 1.12^2
= $438.4566327 million
The stock price = ($438.4566327 million - Debt + Cash) / Number of shares outstanding
= ($438.4566327 million - $34 million + $19 million) / 23 million shares
= $423.4566327 million / 23 million shares
= 18.4111579435
= $18.41
On January 1, 2019, Lightfoot Corporation issues 10%, 5-year bonds with a face value of $275,000 when the effective interest rate is 9%. Interest is to be paid semiannually on June 30 and December 31. Prepare calculations to prove that the selling price of the bonds is $285,880.07. Click here to access the tables to use with this exercise. Round your answers to two decimal places, if necessary. Present value of principal$fill in the blank 1 Present value of interestfill in the blank 2 Selling price
Answer:
Face Value of Bonds = $275,000
Annual Coupon Rate = 10%
Semiannual Coupon Rate = 5%
Semiannual Coupon = 5% * $275,000 = $13,750
Time to Maturity = 5 years
Semiannual Period = 10
Annual Interest Rate = 9%
Semiannual Interest Rate = 4.5%
Present Value of Principal = $275,000 * PV of $1 (4.50%, 10)
Present Value of Principal = $275,000 * 0.643928
Present Value of Principal = $177,080.20
Present Value of Interest = $13,750 * PVA of $1 (4.50%, 10)
Present Value of Interest = $13,750 * 7.912718
Present Value of Interest = $108,799.87
Cross-Check
Selling Price = Present Value of Principal + Present Value of Interest = $177,080.20 + $108,799.87 = $285,880.07
makes a product with the following standards for direct labor and variable overhead: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct labor 0.20 hours $ 26.00 per hour $ 5.20 Variable overhead 0.20 hours $ 6.20 per hour $ 1.24 In November the company's budgeted production was 6500 units, but the actual production was 6300 units. The company used 1550 direct labor-hours to produce this output. The actual variable overhead cost was $8990. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for November is:
Answer:
See
Explanation:
Given that;
Direct labor hours used to produce this output = 1,550
Actual variable overhead cost = $8,990
Variable overhead per hour = $6.2
The variable overhead rate variance for July is;
= Direct labor hours used to produce this out put × (Actual variable overhead rate per hour - Variable overhead per hour)
= 1,550 × ($8,990/1,550 - $6.2)
= 1,550 × ($5.8 - $6.2)
= 1,550 × (-$0.4)
= $620 favorable
g At the beginning of the month, the Painting Department of Skye Manufacturing had 39,000 units in inventory, 75% complete as to materials, and 20% complete as to conversion. During the month the department started 134,000 units and transferred 148,500 units to the next manufacturing department. At the end of the month, the department had 24,500 units in inventory, 40% complete as to materials and 15% complete as to conversion. If Skye Manufacturing uses the weighted average method of process costing, compute the equivalent units for materials and conversion respectively for the Painting Department. Group of answer choices 158,300 materials; 152,175 conversion. 152,175 materials; 158,300 conversion. 158,300 materials; 144,375 conversion. 129,050 materials; 152,175 conversion. 129,050 materials; 144,375 conversion.
Answer:
Skye Manufacturing
Painting Department
Equivalent units:
158,300 materials; 152,175 conversion
Explanation:
a) Data and Calculations:
Beginning WIP = 39,000 units; Degree of completion: 75% materials and 20% conversion.
Units started during the month = 134,000
Units completed and transferred out = 148,500
Ending units of WIP = 24,500
Equivalent units, using the weighted average method of process costing:
Units Materials Conversion
Units transferred out 148,500 148,500 (100%) 148,500 (100%)
Ending Work in Process 24,500 9,800 (40%) 3,675 (15%)
Total equivalent units 158,300 152,175
On March 10, 2017, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2017, Barr returned 6 tool sets and received a credit to its account.
Prepare journal entries for Steele to record (1) the sale on March 10, 2017, (2) the return on March 25, 2017, and (3) any adjusting entries required on March 31, 2017 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
Answer:
Date Account Titles Debit Credit
March, 10 Accounts Receivables $10,000
Sales Revenue $10,000
Cost of Good sold $6,000
Inventory $6,000
Working
Receivables = 200 tool sets * 50 = $10,000
COGS = 200 * 30 = $6,000
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $300
Accounts Receivable $300
Returned Inventory $180
Cost of Goods sold $180
Working:
Sales returns = 6 * 50 = $300
Cost of goods = 6 * 30 = $180
Estimated that 10 sets would be returned but only 6 were.
Date Account Titles Debit Credit
March, 25 Sales Returns and Allowances $200
Allowance for Sales Returns $200
and Allowances
Returned Inventory $120
Cost of goods sold $120
Working:
Sales returns = 4 * 50 = $200
COGS = 4 * 30 = $120
elisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $528,000 $142,000 $386,000 Variable expenses 319,460 72,420 247,040 Contribution margin 208,540 69,580 138,960 Traceable fixed expenses 109,920 29,400 80,520 Segment margin 98,620 $ 40,180 $ 58,440 Common fixed expenses 55,370 Net operating income $ 43,250 The break-even in sales dollars for Division Q is closest to:
Answer:
the break even point in sales dollars is $223,667
Explanation:
The computation of the break even point in sales dollars is shown below:
= Fixed cost ÷ contribution margin ratio
= $80,520 ÷ ($138,960 ÷ $386,000)
= $80,520 ÷ 36%
= $223,667
Hence, the break even point in sales dollars is $223,667