Answer:
See the answers and explanation below.
Explanation:
1. Prepare general journal entries to record the transactions above for Spade Company
These can presented as follows:
Trans. General Journal Debit ($) Credit ($)
a. Cash 13,250
Common stock 13,250
(To record cash investment by the owner in the company.)
b. Office supplies 384
Cash 384
(To record cash purchase of office supplies.)
c. Office equipment 7,327
Account payable 7,327
(To record purchase of office equipment on credit.)
d. Cash 1,564
Fees earned 1,564
(To record cash received as fees for service rendered.)
e. Account payable 7,327
Cash 7,327
(To record cash paid for office equipment bought on credit.)
f. Account receivable 2,809
Fees earned 2,809
(To record fees earned from services provided on credit.)
g. Rent 515
Cash 515
(To record monthly rent paid in cash.)
h. Cash 1,180
Account receivable 1,180
(To record partial cash receipt from account receivable.)
i. Dividend 1,000
Cash 1,000
(To record drawings by Kacy for personal use.)
2. Post the above journal entries to T-accounts, which serve as the general ledger for this assignment.
Note: Find the attached the excel file for the T-accounts.
The Casings Plant of Wyoming Machines makes plastics shells for the company’s calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 160,000 calculators. The beginning finished goods inventory of shells at the Casings Plant is 20,000 units. However, the target ending finished goods inventory for each year is 5,000 units. Each unit (shell) requires 6 ounces of plastic. At the beginning of the year, 60,000 ounces of plastic are in inventory. Management has set a target to have plastic on hand equal to two months’ sales requirements. Sales and production take place evenly throughout the year. Required: a. Compute the total targeted production of the finished product for the coming year. b. Compute the required amount of plastic to be purchased for the coming year. (Do not round intermediate calculations.)
Answer and Explanation:
a. The computation of the targeted production of the finished product is shown below:
= Expected sales units - beginning finished goods + ending finished goods
= 160,000 - 20,000 + 5,000
= 145,000 shells
b. The required amount of plastic purchased is
Plastic to be purchased = Consumed plastic + closing inventory - opening inventory
where,
Consumed plastic is
= 145,000 × 6 ounces
= 870,000 ounces
Opening inventory is 60,000 ounces
And, the closing inventory is
= 160,000 ÷ 12 months × 2 months × 6 ounces
= 160,000
So, the purchased plastic is
= 870,000 + 160,000 - 60000
= 970,000 ounces
The total targeted production of the finished product for the coming year is $145,000shells. The required amount of plastic to be purchased is 970,000 ounces.
What is inventory?All the raw materials available for production plus all the goods produced that are intended for sale are known as inventory.
A. Computing total targeted production of the finished product-
[tex]=Expected sales units - beginning finished goods + ending finished goods\\=160,000-20,000+5,000\\=145,000 shells[/tex]
B. Computing required amount of plastic to be purchased
[tex]=Consumed plastic+ closing inventory-inventory at end\\=870,000+160,000-60,000\\=970,000[/tex]
Working note-
Consumed plastic is calculated as 145,000 x 6 ounces.Closing inventory is calculated as 160,000/12 x 2 x 6.Therefore, the required amount of plastic to be purchased is 970,000.
Learn more about Inventory here:
https://brainly.com/question/14184995
The due diligence process of analyzing and evaluating an existing business ________. Group of answer choices may be just as time consuming as the development of a comprehensive business plan for a start-up helps to determine if the company will generate sufficient cash to pay for itself and leave you with a suitable rate of return on your investment helps to determine what the company's potential for success is All of these
Answer:
All of these.
Explanation:
The due diligence process of analyzing and evaluating an existing business, is the process responsible for revealing the positive and negative aspects of a business.
This process aims to satisfy the buyer and seller by examining the main details of a transaction and ensuring its legality and evaluating most of the facts of the deal.
The agreement must then satisfy the due diligence aspects, so that the two parties involved can price and finalize the transaction effectively.
Therefore, all answer options are correct.
Tactical decisions define Group of answer choices the day-to-day activities of the organization. the goals and plans of the organization. the domain of operations managers, who are close to the customer. the steps taken to achieve the goals and objectives.
Answer:
E. the steps taken to achieve the goals and objectives.
Explanation:
Tactical decisions are the decisions made by the mid-level management in an organization, in a bid to implement the strategic plans of the director-general of the organization. These decisions are made and implemented within a short period of time. Some tactical decisions include;
1. Structuring of workforce
2. Purchase of items and resources
3. Marketing strategies
4. Allocation of jobs to employees.
When these decisions are made by the middle-level management, they are under obligation to answer to the directors of the organization as to how these decisions were implemented.
The Importance of Starting Early.
Because 401(k) accounts and annuities are an example of the power of compound interest, an amazing amount of growth occurs in the later years of the 401(k) or annuity. This can be calculated with the formula
Balance after nt deposits = 12M*((1+) "8) – 1)/r.
1. Lulu started saving $200/month in a 401(k) earning 6% interest compounded monthly when she was 45 years old. How much will be in her account when she retires at age 65?
2. How much money did Lulu deposit into her account over the course of the 20 years?
3. What dollar amount of interest did her account earn?
4. Murphy started putting $100/month into his 401(k) earning 6% APR when he was 25 years old. How much will be in his account when he retires at age 65, if interest is compounded monthly?
5. How much money did Murphy deposit into his account over the course of the 40 years?
6. What dollar amount of interest did his account earn?
7. Murphy's account earned how much more interest than Lulu's account?
Answer:
1. Lulu started saving $200/month in a 401(k) earning 6% interest compounded monthly when she was 45 years old. How much will be in her account when she retires at age 65?
Lulu made 12 x 20 = 240 payments
to calculate how much she earned we can use the future value of ordinary annuity formula:
FV annuity = payment x {[(1 + r)ⁿ - 1] / i} = $200 x {[(1 + 0.5%)²⁴⁰ - 1] / 0.5%} = $200 x 462.04 = $92,408.18
2. How much money did Lulu deposit into her account over the course of the 20 years?
240 x $200 = $48,000
3. What dollar amount of interest did her account earn?
$92,408.18 - $48,000 = $44,408.18
4. Murphy started putting $100/month into his 401(k) earning 6% APR when he was 25 years old. How much will be in his account when he retires at age 65, if interest is compounded monthly?
480 payments, again we use the same formula as in (1):
FV annuity = $100 x {[(1 + 0.5%)⁴⁸⁰ - 1] / 0.5%} = $100 x 1,991.49 = $199,149.07
5. How much money did Murphy deposit into his account over the course of the 40 years?
480 x $100 = $48,000
6. What dollar amount of interest did his account earn?
$199,149.07 - $48,000 = $151,149.07
7. Murphy's account earned how much more interest than Lulu's account?
$151,149.07 - $44,408.18 = $106,740.89
Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $12.21 per hour. 2. Determine the amount of applied overhead if 19,000 actual hours are worked in the upcoming year.
Answer:
Instructions are below.
Explanation:
We weren't provided with enough information to calculate the requirements. But, I will provide the formulas and a small example.
For example:
Estimated overhead for the period= $750,000
Estimated direct labor hours= 25,000
Actual hours= 19,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 750,000/25,000
Predetermined manufacturing overhead rate= $30 per direct labor hour
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 30*19,000
Allocated MOH= $570,000
Prepare the journal entry to record Autumn Company’s issuance of 78,000 shares of no-par value common stock assuming the shares:
a. Sell for $32 cash per share.
b. Are exchanged for land valued at $2,496,000.
Answer:
A Journal entry was recorded for Autumn Company which is given below.
Explanation:
Solution
(A) Journal Entry:
No Account and Explanation Debit Credit
a Cash (78000*32) 2496000
Common Stock 2496000
(To record issued common stock)
(B) Journal Entry:
No Account and Explanation Debit Credit
b Land 2496000
Common Stock 2496000
(To record issued common stock)
The following information for the past year for the Blaine Corporation has been provided:Fixed costs:Manufacturing$ 125, 000$125,000Marketing24,00024,000Administrative20,00020,000Variable costs: Manufacturing $ 110,000$110,000 Marketing 30,00030,000 Administrative 34,00034,000 During the year, the company produced and sold 60,00060,000 units of product at a selling price of $ 12.40$12.40 per unit. There was no beginning inventory of the product at the beginning of the year.What is the contribution margin ratio for Blaine Corporation (round to 1 decimal)?A. 70.470.4 %B. 53.953.9 %C. 22.722.7 %D. 76.676.6 %
Answer:
D. 76.6 %
Explanation:
Contribution Margin Ratio = Contribution / Sales × 100
First Calculate the Contribution
Contribution = Sales - Variable Costs
= (60,000 units × $ 12.40) - ($110,000+$30,000+$34,000)
= $744,000 - $174,000
= $570,000
Then Calculate Contribution Margin Ratio
Contribution Margin Ratio = $570,000 / $744,000 × 100
= 76.61290
= 76.6 % ( 1 decimal)
Vargo Company has bonds payable outstanding in the amount of $500,000, and the Premium on Bonds Payable account has a balance of $7,500. Each $1,000 bond is convertible into 20 shares of preferred stock of par value of $50 per share. All bonds are converted into preferred stock.
Assuming that the book value method was used, what entry would be made?
Answer and Explanation:
The journal entry is shown below:
Bonds Payable $500,000
Premium on Bonds Payable $7,500
To Preferred Stock ($500,000 ÷ $1,000 × 20 × $50) $500,000
To Paid-in Capital in Excess of Par (Preferred Stock) $7,500
(Being the preferred stock is recorded)
For recording this we debited the bond payable and premium on bond payable as it decreased the liabilities and credited the preferred stock and paid in capital as it increased the stockholder equity
Assume that you are an intern with the Brayton Company, and you have collected the following data: The yield on the company's outstanding bonds is 7.75%; its tax rate is 25%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F= 5%; and the target capital structure is 25% debt and 75% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
a. 6.89%
b. 7.24%
c. 7.64%
d. 8.55%
e. 8.44%
Answer:
WACC is 9.37%
Explanation:
After tax cost of debt=yield to maturity*(1-t)
where t is the tax rate of 25% or 0.25
after tax cost of debt=7.75%*(1-0.25)=5.81%
Using stock price formula,the cost of equity can be determined as below:
stock price=Di/k-g
Di is the next dividend of $0.65
k is the cost of equity which is unknown
g is the constant growth rate of 6.00%
stock price=$15*(1-f)
f is the flotation cost percentage
stock price=$15*(1-5%)=$14.25
14.25=0.65/k-6%
14.25(k-6%)=0.65
k-6%=0.65/14.25
k=(0.65/14.25)+6%=10.56%
WACC=Ke*We+Kd*Wd
ke is 10.56%
We is the weight of equity which is 75%
Kd is 5.81%
We is the weight of debt which is 25%
WACC==(10.56%*75%)+(5.81%*25%)=9.37%
want to make confetti. In order to get the right balance of ingredients for their tastes they bought 2 pounds of paper hearts at $ 4.07 per pound comma 4 pounds of sparkling stars for $ 2.71 per pound comma and 2 pounds of shiny coils for $ 4.25 per pound. Determine the cost per pound of the
Answer:
Cost per pound of confetti= $3.44 per pound
Explanation:
The cost per pound of the Confetti = Total material cost divided by the total pound
Total material cost = (2×$4.07) + (4× $2.71) + ( 2× $4.25)= $27.48
Total number of pounds = 2 + 4 + 2 = 8 pounds
Cost per pound of confetti = $27.48 / 8 pounds =$3.44 per pound
Cost per pound of confetti= $3.44 per pound
Six years ago, James Corporation sold a $100 million bond issue to expand its facilities. Each debenture has a $1,000 par value, an original maturity of 20 years (there are now 14 years left to maturity), and an annual coupon rate of 11.5% with semiannual payments. If you require a 14% return, what price would you pay today for a James bond?
Answer:
Price of Bonds=$848.286
Explanation:
The value of the bond is the present value (PV) of the future cash receipts expected from the bond. The value is equal to present values of interest payment plus the redemption value (RV) discounted at the yield rate
Value of Bond = PV of interest + PV of RV
The value of bond for James Corporation can be worked out as follows:
Step 1
PV of interest payments
PV = A × (1+r)^(-n)/r
A- semiannual interest payment, n-number of periods, r- semi annul yield
A-semi- annul interest payment:
=11.5%× 1,000× 1/2 = 75
r-semi-Annual yield = 14%/2 = 7%
n-Maturity period =1 4 × 2= 28
PV of interest payment:
=57.5 × (1- (1+0.07)^(-28)/0.07)
= 697.88
Step 2
PV of Redemption Value
= 1,000 × (1.07)^(-28) = 150.40
Step 3
Price of bond
=697.88 + 150.40
=$848.286
On December 1, 2019, Carrie's Day Care receives $ 2 comma 700 in advance for an agreement to care for Susan's children for the months of December, January, and February. Carrie's Day Care will make an adjusting entry on December 31, 2019 to:
Answer:
Unearned Revenue $900 (debit)
Revenue $900 (credit)
Explanation:
On 1 December Carrie's Day Care recorded Unearned Revenue of $2,700 the entry is as follows ;
Cash $2,700 (debit)
Unearned Revenue $2,700 (credit)
By end of the first month (31 December) one month`s revenue will have been earned and the unearned revenue balance decreases. The entries are as follows :
Unearned Revenue $900 (debit)
Revenue $900 (credit)
Calculation : December Revenue = 1/3 × $2,700 = $900
Grace Food Company Contribution Income Statement for the Month of October Corn Flakes Frosted Flakes Total Amount Percent Amount Percent Amount Percent Sales $ 2,000,000 100 % $ 500,000 100 % $ 2,500,000 100 % Variable expenses 800,000 40 % 250,000 50 % 1,050,000 42 % Contribution margin $ 1,200,000 60 % $ 250,000 50 % 1,450,000 58 % Fixed expenses 870,000 Net operating income $ 580,000 Knowledge Check 01 What is the amount of the break-even sales for Grace Food Company
Answer:
$1.5 million.
Explanation:
Calculation of the amount of the break-even sales for Grace Food Company:
Sales mix calculation will be:
Corn Flakes = $2,000,000/$2,500,000
= 0.80,
Frosted Flakes = $500,000/$2,500,000
= 0.20.
Calculation for the Contribution margin ratio will be:
(60%) × (0.80) + (50%) × (0.20) = 58�lculation for the Break-even point will be:
Break even point= Total Fixed Costs/Overall Contribution margin ratio
Hence,
$870,000/0.58= $1.5 million.
Therefore amount of break even sales will be $1.5 million.
The June 30, 2021, year-end trial balance for Askew company contained the following information:
Account Debit Credit
Inventory, 7/1/2020 32,600
Sales revenue 386,000
Sales returns 12,600
Purchases 246,000
Purchase discounts 6,600
Purchase returns 10,600
Freight-in 18,200
In addition, you determine that the June 30, 2021, inventory balance is $40,600.
Required:
a. Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2011
b. Prepare the year-end adjusting entry to record cost of goods sold.
Answer:
The answer is:
A. $239,000
B.
June 30
Dr Cost of goods sold. $239,000
Closing Inventory $40,600
Purchase returns $10,600
Purchase discounts $ 6,600
Cr Opening Inventory. $ 32,600
Purchase $247,000
Freight-in $18,200
Explanation:
Net purchase is
Purchases. $246,000
Minus: Purchase discounts $6,600
Minus:Purchase returns $10,600
Plus: Freight-in $18,200
Net purchase. $247,000
A.
Cost of sales:
Opening Inventory $32,600
Plus: Purchases. $247,000
Minus: closing Inventory. $40,600
Cost of sales. $239,000
B.
June 30
Dr Cost of goods sold. $239,000
Closing Inventory $40,600
Purchase returns $10,600
Purchase discounts $ 6,600
Cr Opening Inventory. $ 32,600
Purchase $247,000
Freight-in $18,200
tell me your score, did you do good?
On September 1, 2021, Southwest Airlines borrows $40.3 million, of which $8.6 million is due next year. Show how Southwest Airlines would record the $40.3 million debt on its December 31, 2021, balance sheet. (Enter your answers in dollars, not millions. For example, $5.5 million should be entered as 5,500,000.)
Answer and Explanation:
The presentation of the liabilities side of the balance sheet is presented below:
Southwest Airlines
Liabilities side
Balance sheet
Current liability
Current portion of the long term debt $8,600,000
Long term liability
Notes payable $31,700,000 ($40,300,000 - $8,600,000)
Total liabilities $40,300,000
Ramsey Company produces speakers (Model A and Model B). Both products pass through two producing departments. Model A's production is much more labor-intensive than that of Model B. Model B is also the more popular of the two speakers. The following data have been gathered for the two products.
Model A Model B
Units produced per year 10,000 Units produced per year 100,000
Prime Costs $150,000 Prime Costs $1,500,000
Direct Labor Hours 140,000 Direct labor Hours 300,000
Machine Hours 20,000 Machine Hours 200,000
Production runs 40 Production runs 60
Inspection hours 800 Inspection hours 1200
Maintenance hours 10,000 Maintenance hours 90,000
Overhead costs:
Setup costs $270,000
Inspection costs $210,000
Machining $240,000
Maintenance $270,000
Total overhead costs $990,000
Required:
a. Compute the overhead cost per unit for each product by using a plantwide rate based on direct labor hours (Round to two decimal places).
b. Compute the overhead cost per unit for each product by using ABC.
c. Using the activity-based product costs as the standard, comment on the ability of departmental rates to improve the accuracy of product costing. Did the department rate do better than the plant rate?
Answer:
a. $2.05 (two decimal places)
b. Model A = $312,000 Model B= $1,397,000
c. The use of departmental overheads rate is more accurate than the plant wide.
Explanation:
Plant wide overhead rate = Total Overheads / Total Activity
= $990,000 / (140,000 + 300,000)
= $990,000 / 440,000
= $2.04545 OR $2.05 (two decimal places)
For ABC, first calculate Cost Driver Rate as follows :
Setup costs = $270,000 / (40 +60)
= $2,700 per production run.
Inspection costs = $210,000 / (800 +1,200)
= $105 per inspection hour
Machining = $240,000 / (20,000 + 200,000)
= $1.09 per machine hour
Maintenance = $990,000 / (10,000 + 90,000)
= $9.90 per maintenance hour
The next step is to Allocate the overheads to the Products :
Model A Model B
Overhead costs:
Setup costs $108,000 $162,000
Inspection costs $84,000 $126,000
Machining $21,000 $218,000
Maintenance $99,000 $891,000
Total overhead costs $312,000 $1,397,000
"In the text case, Penny Garrison v. The Superior Court of Los Angeles, plaintiffs sought to sue a residential care facility and avoid the effect of a durable power of attorney by which the decedent's daughter signed agreements to arbitrate disputes involving the facility. Which of the following was the result?
a. That the durable power of attorney was ineffective because it did not grant the holder authority to enter into arbitration agreements and that the arbitration agreements, therefore, were unenforceable.
b. That the durable power of attorney was ineffective because it did not specifically give the daughter authority to enter into agreements involving health care and that the arbitration agreements, therefore, were unenforceable.
c. That the durable power of attorney was ineffective because it was revoked after the decedent became ill and that the arbitration agreements, therefore, were unenforceable.
d. That the durable power of attorney was effective but that the arbitration agreements were void as against public policy.
e. That the durable power of attorney was effective but that the arbitration agreements were void as against public policy
Answer:
The case in question is:
"PENNY GARRISON et al., Petitioners, v. THE SUPREME COURT OF LOS ANGELES COUNTY, Respondent; COUNTRY VILLA BELMONT HEIGHTS HEALTHCENTER et al., Real Parties in Interest. , 132 Cal. App. 4th 253"
The following resulted:
It was resolved that the durable power of attorney would hold and that the consensus to arbitrate would be upheld.
Due the powers availed by Cal. Prob. Code §§ 4683(a), 4684, and 4688, the heir apparent had the authority to enter into the two arbitration arrangement on instead of the deceased.
Cheers!
Suppose for every dollar change in household wealth, consumption expenditures change by $0.05. If real household wealth declines by $45 billion, potential GDP is $120 billion, and the multiplier effect for the second year after an expenditure shock is 1.1, what is the total change in output relative to the potential for the second year?
Answer:
2.062%
Explanation:
The computation of total change in output relative to the potential for the second year is shown below:-
Before that, we need to do the following calculations
Increase in consumption = Change in consumption × Household wealth
= $0.05 × $45 billion
= $2.25
Total output = Potential GDP ÷ Multiplier effect
= $120 billion ÷ 1.1
= $109.09
Total change in output = Increase in consumption ÷ Total output
= $2.25 ÷ $109.09
= 0.02062
= 2.062%
J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 33,500 Annual cash inflows $ 7,400 Salvage value of equipment $ 0 Life of the investment 15 years Required rate of return 10 % The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return for the investment (rounded to the nearest tenth of a percent) is:
Answer:
15.4%
Explanation:
required initial investment $33,500
annual cash flows $7,400
useful life 15 years, no salvage value
depreciation expense per year = $33,500 / 15 = $2,233.33
simple rate of return = annual incremental net operating income / Initial investment
annual incremental net operating income = $7,400 - $2,233.33 = $5,166.67initial investment = $33,500simple rate of return = $5,166.67 / $33,500 = 15.4%
Q4) An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this investment will be only 7 percent. What does Janice believe the approximate inflation rate will be over the next year
Answer:
inflation rate= 5.8%
Explanation:
Giving the following information:
An investment offers a total return of 12.8 percent over the coming year. Janice thinks the total real return on this investment will be only 7 percent.
The real return on investment includes the effect on inflation.
Real rate of return= total return - inflation rate
0.07=0.128 - inflation rate
inflation rate= 0.058= 5.8%
1- Storm Concert Promotions: Determine whether overhead is overapplied or underapplied.
2- Storm Concert Promotions: Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
3- Valle Home Builders: Determine whether overhead is overapplied or underapplied.
4- Valle Home Builders: Prepare the journal entry to allocate (close) overapplied or underapplied overhead to Cost of Goods Sold.
Storm Concert Promotions Valle Home Builders
Actual indirect materials costs $12,800 $6,800
Actual indirect labor costs $55,500 $47,000
Other overhead costs $17,100 $49,000
Overhead applied $91,600 $98,400
Answer and Explanation:
1. The overhead is overapplied or underapplied is shown below:-
Valle Home Storm:
Particulars Amount
Indirect materials $12,800 $91,600 Applied overhead
Indirect Labor $55,500
Other overhead costs $17,100
$85,400 $6,200 Over applied overhead
2. The Journal entry is shown below:-
Factory overhead Dr, $6,200
To Cost of goods sold $6,200
(Being overapplied overhead is recorded)
3. The overhead is overapplied or underapplied is shown below:-
Valle Home Builders:
Indirect materials $6,800 $98,400 Applied overhead
Indirect Labor $47,000
Other overhead costs $49,000
Underapplied overhead $4,400
4. The Journal entry is shown below:-
Cost of goods sold Dr, $4,400
To Factory overhead $4,400
(Being under applied is recorded)
StarZinc Company produced 200 defective units last month at a unit manufacturing cost of $50. The defective units were discovered before leaving the plant. StarZinc can sell them as is for $35 or can rework them at a cost of $25 and sell them at the regular price of $100. The total relevant cost of reworking the defective units is:
Answer:
Star Zinc should rework the defective units as it will produce a net cash flow of $15,000
Explanation:
The cost of producing the defective units is Irrelevant to the decision as to rework or to sell the defective units.
Option 1
Rework: $
Sales revenue from sale = (100×200) = 20,000
Relevant cost (25× 200) = 5000
Net cash flow 15,000
Option 2: Outright sale
Revenue from outright sales = 35× 200 = 7,000
Star Zinc should rework the defective units as it will produce a net cash flow of $15,000.
In its first year of operations, Roma Company reports the following. Earned revenues of $47,000 ($39,000 cash received from customers). Incurred expenses of $26,500 ($20,950 cash paid toward them). Prepaid $7,250 cash for costs that will not be expensed until next year. Compute the company’s first-year net income under both the cash basis and the accrual basis of accounting.
Answer:
Net Income
Cash basis $10,800
Accrual basis $20,500
Explanation:
Computation of Roma company’s first-year net income under both the cash basis and the accrual basis of accounting will be:
Cash basis Accrual basis
Revenue $39,000 $47,000
Expenses $28,200 $26,500
Net Income $10,800 $20,500
Cash paid $20,950
Add Prepaid cash $7,250
=$28,200
Therefore first-year net income cash basis will e $10,800 and accrual basis will be $20,500
Lower of Cost or Market Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of $300, a normal profit margin of $35, and a current replacement cost of $250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Black’s ending inventory.
Answer:
$265
Explanation:
The computation of Net realizable value-normal profit margin by using the lower of cost or market rule is shown below:-
Amount per unit = Net realizable value or Ceiling - Normal profit margin
= $300 - $35
= $265
Therefore for computing the amount per unit we simply applied the above formula i.e by deducting the normal profit margin from the net realizable value so that the amount per unit could come
A product cost is
A: shown with current liabilities on the balance sheet
B: expensed in the period in which it is manufactured
C: expensed in the period the product is sold
D: shown with operating expenses on the income statement
Answer:
C: expensed in the period the product is sold
Explanation:
A product cost is the manufacturing costs that are accumulated on the product. Before the product is sold these product cost is shown in the current asset section on the balance sheet as inventory valuation.
In the period that the product is sold, the product cost are included in the cost of sales expenses to determine profit from sale.
A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. This firm is earning $5.50 on every $50 invested by its founders.
a. What is its percentage rate of return? 11 percent.
b. Is the firm earning an economic profit? Yes If so, how large? 6 percent.
c. Will this industry see entry or exit? Entry
d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
Answer: The answers are given below
Explanation:
a. What is its percentage rate of return?
From the question, we are told that the firm is earning $5.50 on every $50 invested by its founders. The percentage of return will now be:
= $5.50/$50 × 100%
= 0.11 × 100%
= 11%
b. Is the firm earning an economic profit? If so, how large?
The economic profit will be the difference that exists between the percentage of return which is 11% and the normal rate of profit which is 5%. This will be:
= 11% - 5%
= 6%
The firm is earning economic profit of 6%.
c. Will this industry see entry or exit?
There will be entry into the industry. This is because the percentage of return which is 11% is greater than the normal rate of profit which is 5%.
d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium?
The rate of return earned by firms in this industry once the industry reaches long-run equilibrium will be 5% which is the normal rate of profit in the economy.
A proposed new project has projected sales of $125,000, costs of $59,000, and depreciation of $12,800. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches.
Answer:$47,380
Explanation:
To calculate the Operating Cash Flow using the four different approaches.
1. Operating Cash Flow= EBIT + Depreciation − Taxes
We calculate EBIT first
Sales of project= 125000
Cost of project=59000
Depreciation 12800
Earnings Before Income Tax, EBIT= Sales – (Variable Costs + Fixed Costs) – Depreciation = 53200
Operating Cash Flow= EBIT + Depreciation − Taxes
Operating Cash Flow= $53,200 + 12,800 − 18,620
=$47,380
2 The top-down approach
Operating Cash Flow = Sales − Costs − Taxes
= $125,000 − 59,000 − 18,620
=$47,380
(3)The tax-shield approach is:
Operating Cash Flow = (Sales − Costs)(1 − T) + T(Depreciation)($125,000 − 59,000)(1 − 0.35) + 0.35($12,800)
=$47,380
4. The bottom-up approach
Operating Cash Flow= Net income + Depreciation
First we calculate net income
Sales of project= 125000
Cost of project=59000
Depreciation 12800
Earnings Before Income Tax= Sales – (Variable Costs + Fixed Costs) – Depreciation = 53200
taxes at 35%=0.35 x 53,200= 18, 620
Net income= 53,200- 18,620=34580
Operating Cash Flow= Net income + Depreciation
$34,580 + 12,800
=$47,380
A recent consumer survey conducted for a car dealership indicates that, when buying a car, customers are primarily concerned with the salesperson's ability to explain the car's features, the salesperson's friendliness, and the dealer's honesty. The dealership should be ESPECIALLY concerned with which determinants of service quality?
Answer: a. communication, courtesy, and credibility
Explanation:
The Consumer survey showed that when buying a car customers are interested in the salesperson's ability to explain what the car does and what it's has, in short it's features. This means that they would like a Salesperson that Communicates effectively, the need for the car.
Dealers should therefore be very concerned with the communication skills of their sales people.
The Consumers would also like a friendly person. This is simple Courtesy. The sales person must be able to show courtesy to the customers to entice them to buy a car and so Dealership management should be very worried about this.
A final thing the Dealer should be worried about is Credibility. Consumers want to know if the Dealer is credible in that if the claims the dealer is making is true and honest. Too many salespersons say anything to get people to buy things even if it is a lie. A car is a big investment and so consumers would very much like to avoided being lied to.
Which of the following is long-term debt instrument that requires t5he issuer to repay the lender in regular interest payments until the loan is repaid on or before the specified maturity rate?
A. A bond
B. Trade credit
C. A Treasury bill
D. Commercial paper
E. A certificate of deposit
Answer:
The answer is option (a) Bond
Explanation:
Solution
A Bond : It refers to as an investment securities where an investor borrows money to an organization or a government for a an amount of time, in exchange for consistent interest payments.
Once the bond approaches maturity, the issuer of the bond returns the investor’s money.
Another term used in describing bonds are fixed income. since your investment gains fixed payments over the life of the bond.
Bond is the long-term debt instrument that requires the issuer to repay the lender in regular interest payments until the loan is repaid.
A bond is a debt instrument of issued by bond investor to the interested party (like private investors, government etc)
Hence, the long-term debt instrument that requires the issuer to repay the lender in regular interest payments until the loan is fully repaid is called Bond..
Therefore, the Option A is correct.
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Video Planet (VP) sells a big screen TV package consisting of a 60-inch plasma TV, a universal remote, and on-site installation by VP staff. The installation includes programming the remote to have the TV interface with other parts of the customer’s home entertainment system. VP concludes that the TV, remote, and installation service are separate performance obligations. VP sells the 60-inch TV separately for $1,810 and sells the remote separately for $130, and offers the entire package for $2,020. VP does not sell the installation service separately. VP is aware that other similar vendors charge $180 for the installation service. VP also estimates that it incurs approximately $130 of compensation and other costs for VP staff to provide the installation service. VP typically charges 40% above cost on similar sales.
Required:
Calculate the stand-alone price of the installation service using each of the following approaches.
1. adjusted market assessment
2. expected cost plus margin
3. residual
Answer:
1. The stand-alone price for installation service using adjusted market assessment is $180
2. The stand-alone price for installation service using expected cost plus margin is $182
3. The stand-alone price for installation service using residual is $182
Explanation:
1. According to the given data the market price at which similar vendors charge installation service should be taken as the stand-alone price which is $180
Therefore, The stand-alone price for installation service using adjusted market assessment is $180
2. The stand-alone price of the installation service using expected cost plus margin would be a follows:
Stan−alone price=Estimated Cost+Estimated margin
=$130+(40%×$130)
=$182
Therefore, The stand-alone price for installation service using expected cost plus margin is $182
3. The stand-alone price of the installation service using residual would be a follows:
Stand−alone price=Total transaction price−Stand−alone price for T.V−
−Stand−alone price for compensation and other costs
=$2,020−$1,810−$130
=$80
Therefore, The stand-alone price for installation service using residual is $182