The largest companies performed the best over the past twelve months, this given statement is false because over the last twelve months companies have faced huge losses due to pandemic.
What losses did businesses face during the Pandemic?Businesses have reduced employment, supply chain have got affected, lack of storage, less demand for products and services, human resource loss, productivity loss, and increased expenditures of the firms, these are some of the major losses faced by the companies during the pandemic.
Thus, the given statement is false.
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Information related to Riverbed Co. is presented below.
a. On April 5, purchased merchandise on account from Tamarisk Company for $36,000, terms 3/10, net/30, FOB shipping point.
b. On April 6, paid freight costs of $920 on merchandise purchased from Tamarisk.
c. On April 7, purchased equipment on account for $30,500.
d. On April 8, returned damaged merchandise to Tamarisk Company and was granted a $4,200 credit for returned merchandise.
e. On April 15, paid the amount due to Wilkes Company in full.
Required:
Prepare the journal entries to record these transactions on the books of Kerber Co. under a perpetual inventory system.
Answer:
April 5
Debit : Merchandise $36,000
Credit : Accounts Payable - Tamarisk Company $36,000
April 6
Debit : Accounts Payable - Tamarisk Company $920
Credit : Cash $920
April 7
Debit : Equipment $30,500
Credit : Accounts Payable $30,500
April 8
Debit : Accounts Payable - Tamarisk Company $4,200
Credit : Merchandise $4,200
April 15
Debit : Accounts Payable - Tamarisk Company $30,880
Credit : Discount received $926.40
Credit : Cash $29,954
Explanation:
Working for Journal on April 15
Balance = $36,000 - $920 - $4,200
= $30,880
Discount = $30,880 x 3%
= $926.40
Amount Paid = $30,880 - $926.40
= $29,954
A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: (3 points)
Debit Credit
Cash sales……………………………………………….. $188,000
Credit sales……………………………………………… 275,000
Accounts receivable…………………………………….. $76,000
Allowance for doubtful accounts……………………….. 1,000
Prepare the adjusting entry to estimate bad debts assuming an aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.
Answer:
Particulars Amount
Provision for uncollectible $6,080 ($76000*8%)
Less: Provision already made $1,000
Provision to be made $5,080
Date Particulars Debit Credit
31-Dec Bad Debts $5,080
To Allowance for Doubtful Accounts $5,080
(Being the adjusting entry to estimate bad debts)
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:________
A. Accounts Receivable-A. Hopkins 2,000
Allowance for Doubtful Accounts 2,000
Cash
Accounts Receivable-A. Hopkins 2,000
B. Cash 2.000
Bad debts expense 2,000
C. Accounts Receivable-A. Hopkins
Bad debts expense 2,000
Cash 2,000
Accounts Receivable-A. Hopkins
D. Accounts Receivable-A. Hopkins 2,000
Bad debts expense 2,000
Cash 2,000
Accounts Receivable-A. Hopkins 2,000
E. Allowance for Doubtful Accounts 2,000
Accounts Receivable-A. Hopkinse 2,000
Accounts Receivable-A. Hopkins 2,000
Cash 2,000
F. Cash 2,000
Accounts Receivable-A. Hopkins 2,000
Answer:
A. Accounts Receivable-A. Hopkins 2,000
Allowance for Doubtful Accounts 2,000
Cash
Accounts Receivable-A. Hopkins 2,000
B. Cash 2.000
Explanation:
Based on the information given if July 10, Gideon received a check for the full amount of $2,000 from Hopkins which means that On July 10, the entry or entries that Gideon makes to record the recovery of the bad debt is:
Accounts Receivable 2,000
Allowance for Doubtful Accounts 2,000
To receive cash
Cash 2,000
Accounts Receivable 2000
Sheridan Enterprises reported cost of goods sold for 2020 of $1,322,900 and retained earnings of $4,854,000 at December 31, 2020. Sheridan later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $106,470 and $36,820, respectively. Determine the corrected amounts for 2020 cost of goods sold and December 31, 2020, retained earnings. Corrected cost of goods sold $enter a dollar amount Corrected 12/31/20 retained earnings $enter a dollar amount
Answer:
See below
Explanation:
With regard to the above information,
1. Corrected cost of goods sold is computed as
= Cost of goods sold + Overstated ending inventories 2019 - overstated ending inventories 2020
= $1,322,900 + $106,470 - $36,820
= $1,253,250
2. Corrected 12/31/2020 retained earnings is computed as
= Retained earnings DEC 2020 - overstated ending inventories 2020
= $4,854,000 - $36,820
= $4,817,180
You want to save at least $10,000 for a down payment on a new car. In cell B6, enter a formula to calculate how much you will have saved by putting away $500 per month for 24 months at a 1.5% annual interest rate. Use the appropriate cell references. Remember to use a negative value for the Pmt argument. There is no money in the account yet and payments are applied at the end of every month, so omit both the Pv and Type arguments. (Hint: Use the FV function.)
Answer:
$14,316.76
Explanation:
How much you will have saved?
Using MS Excel to calculate the FV function
= FV(Rate, Nper, Pmt)
= FV(1,5%, 24, 500)
= 14316.7604
= $14,316.76
So, the total amount you will have saved by putting away $500 per month for 24 months at a 1.5% annual interest rate is $14,316.76
The manager at the Overton Hotel in Lubbock believes that the success of the Texas Tech Red Raider Basketball team has an impact on the occupancy rate at the hotel during the first quarter of every year. Below are the number of victories for the Red Raiders in during the last three seasons and the hotel occupancy rate. This year, (year 4) the Red Raiders Basketball Team is expected to have another phenomenal season and win 31 games and the manager at the Overton has asked you to determine their first quarter occupancy rate for the upcoming year (year 4) using associative forecasting, given that the SLOPE = 0.0474 and the INTERCEPT =0.4743
Year Wins First Quarter Occupancy Rate
1 15 60%
2 28 90%
3 31 93%
a. 93.4%
b. 88.1%
c. 91.7%
d. 36.9%
e. 90.0%
Answer: 99.51%
Explanation:
This is a linear regression problem.
The relationship between the success of the team and the occupancy rate is in the form:
y = mx + c
y = occupancy rate
m = slope
x = number of games
c = slope
Intercept is supposed to be negative in question:
= 0.0474 * 31 + (-0.4743)
= 99.51%
Options are most probably for a variant of this question.
A small town is considering paving paradise hotel to put up a parking lot. The land will cost $25,000 and the construction of the lot is estimated to be $150,000. Each year, costs associated with the parking lot are estimated to be $17,500. The income from the lot is expected to be $18,000 the first year and increase by $3,500 each year for the 12 year life of the lot. Determine the B/C ratio if interest rate is 12%. [4 points]
Answer:
0.71
Explanation:
The benefit cost ratio is used to determine the profitability of an investor. It is determined by dividing the present value of benefit by the present value of cost
Benefit cost ratio (BC) = present value of benefits / present value of costs
if BC is greater than 1, the project is profitable
If BC is less than 1, the project is not profitable
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Present value of the benefits
Cash flow in year 1 = $18,000
Cash flow in year 2 = $18,000 + 3500 = $21500
Cash flow in year 3 = $18,000 + (3500 x 2) = $25,000
Cash flow in year 4 = $18,000 + (3500 x 3) = $28500
Cash flow in year 5 = $18,000 + (3500 x 4) = $32,000
Cash flow in year 6 = $18,000 + (3500 x 5) = $35,500
Cash flow in year 7 = $18,000 + (3500 x 6) = $39,000
Cash flow in year 8 = $18,000 + (3500 x 7) = $42,500
Cash flow in year 9 = $18,000 + (3500 x 8) = $46,000
Cash flow in year 10 = $18,000 + (3500 x 9) = $49500
Cash flow in year 11 = $18,000 + (3500 x 10) = $53,000
Cash flow in year 12 = $18,000 + (3500 x 11) = $56,500
I = 12 %
PV = $202,331.70
Present value of the cost
Cash flow in year 0 = $25,000 + $150,000 = $175,000
Cash flow in year 1 to 12 = $17,500.
I = 12 %
PV = $283,401.55
B/C ratio = $202,331.70 / $283,401.55 = 0.71
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows:
(1) not yet due, $13,000;
(2) up to 120 days past due, $6,000; and
(3) more than 120 days past due, $5,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is
(1) 2 percent,
(2) 12 percent, and
(3) 30 percent, respectively.
At December 31 (end of the current year), the Allowance for Doubtful Accounts balance is $710 (credit) before the end-of-period adjusting entry is made. Data during the current year follow:
a. During December, an Account Receivable (Patty's Bake Shop) of $660 from a prior sale was determined to be uncollectible; therefore, it was written off immediately as a bad debt.
b. On December 31, the appropriate adjusting entry for the year was recorded.
Required:
1. Give the required journal entries for the two items listed above.
2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.
Answer:
1. Journal Entries :
a. Bad Debt Expense (Dr.) $660
Accounts Receivable (Cr.) $660
2. Accounts receivable Ending Balance :
Not yet due $13,000 * 98% = 12,740
Up to 120 days $6000 * 88% = 5280
More than 120 days $5500 * 70% = 3850
Totals = 21,870
Bad debt expense Ending balance :
Not yet due $13,000 * 2% = $260
Up to 120 days $6000 * 12% = $720
More than 120 days $5500 * 30% = $1,650
Totals = 2630
Explanation:
Bad debt expense is the expected uncollectible amount from accounts receivable. Usually company maintains an allowance for doubtful debt. Brown cow dairy uses aging approach for estimating bad debts of the company. The uncollectible amount is expensed out in Income Statement and asset is decreased in Balance Sheet.
You just won a lottery that promises to pay you $1 million exactly 10 years from today. Because the $1 million payment is guaranteed by the state in which you live, opportunities exist to sell the claim today for an immediate lump-sum cash payment. What is the least you will sell your claim for if you could earn 8.73 % on similar-risk investments during the 10-year period
Answer:
The minimum price is $434,214.74.
Explanation:
Giving the following information:
Future Value= $1,000,000
Number of periods= 10 years
Discount rate= 8.73%
The minimum price of the prize is the present value of the payment. To calculate the present value, we need to use the following formula:
PV= FV /(1 + i)^n
PV= 1,000,000 / (1.087^10)
PV= $434,214.74
The minimum price is $434,214.74.
Richards Corporation uses the weighted-average method of process costing. The following information is available for October in its Fabricating Department:
Units:
Beginning Inventory: 94,000 units, 80% complete as to materials and 25% complete as to conversion.
Units started and completed: 278,000.
Units completed and transferred out: 372,000.
Ending Inventory: 37,000 units, 40% complete as to materials and 15% complete as to conversion.
Costs:
Costs in beginning Work in Process - Direct Materials: $47,200.
Costs in beginning Work in Process - Conversion: $89,700.
Costs incurred in October - Direct Materials: $759,920.
Costs incurred in October - Conversion: $929,300.
Required:
Calculate the cost per equivalent unit of materials.
Answer:
386,800 units
Explanation:
Note that, Richards Corporation uses the weighted-average method of process costing.
This method focuses on units completed and units in ending work in process.
therefore,
Equivalent units calculation
Materials = 372,000 x 100 % + 37,000 x 40 % = 386,800 units
Therefore, the cost per equivalent unit of materials is 386,800 units.
Mortensen Industries, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records:
Total equivalent units of materials: 5,000
Total equivalent units of conversion: 4,400
Units started and completed during the period: 3,500
On the basis of this information, the ending work-in-process inventory's stage of completion is:_____.
a. 80%.b. 70%.c. 60%.d. 40%.
Answer:
c. 60%.
Explanation:
Calculation for what the ending work-in-process inventory's stage of completion is:
First step is to calculate the Ending WIP
Ending WIP = 5,000 - 3,500
Ending WIP = 1,500 units
Now let calculate the ending work-in-process inventory's stage of completion using this formula
Ending work-in-process inventory's stage of completio
4,400 = 3,500 + (x% * 1,500)
4,400 = 3,500 + 15x
15x = 4,400 - 3,500
15x = 900
x = 900/15
x = 60%
Therefore the ending work-in-process inventory's stage of completion is:60%
Which of the following typically occurs during an expansionary phase of a business cycle?
A. Nominal interest rates decrease.
B. Income taxes decrease.
C. The price level decreases.
D. Government transfer payments increase.
E. Employment increases.
Answer:
E. Employment increases.
Explanation:
The correct answer is - E. Employment increases.
On October 29, 2012, Lobo Co. began operations by purchasing razors for resale. Lobo uses the perpetual inventory method. The razors have a 90-day warranty that requires the company to replace any nonworking razor. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is S20 and its retail selling price is S75 in both 2012 and 2013. The manufacturer has advised the company to expect warranty costs to equal 8% of dollar sales. The following transactions and events occurred.
2012
Nov. 11 Sold 105 razors for S7,875 cash.
30 Recognized warranty expense related to November sales with an adjusting entry.
Dec. 9 Replaced 15 razors that were returned under the warranty.
16 Sold 220 razors for S16,500 cash.
29 Replaced 30 razors that were returned under the warranty.
31 Recognized warranty expense related to December sales with an adjusting entry.
2013
Jan. 5 Sold 150 razors for S11,250 cash.
17 Replaced 50 razors that were returned under the warranty.
31 Recognized warranty expense related to January sales with an adjusting entry.
Required:
a. Prepare journal entries to record these transactions and adjustments for 2012 and 2013.
b. How much warranty expense is reported for November 2012 and for December 2012?
c. How much warranty expense is reported for January 2013?
d. What is the balance of the Estimated Warranty Liability account as of December 31, 2012?
Answer:
a. See the attached excel file for the journal entries for 2012 and 2013.
b. We have the following:
Warranty Expense reported for November 2012 = $630
Warranty Expense reported for December 2012 = $1,320
Total Warranty Expense reported for 2012 = $1,950
c. Warranty Expense reported for January 2013 = $900
d. Balance of the Estimated Warranty Liability account as of December 31, 2012 = $1,050
Explanation:
a. Prepare journal entries to record these transactions and adjustments for 2012 and 2013.
Note: See the attached excel file for the journal entries for 2012 and 2013.
In the attached excel, the following workings are used:
w.1: Cost of Goods Sold = Units sold * Cost per unit = 105 * $20 = $2,100
w.2: Warranty Expense = Sales * 8% = $7,875 * 8% = $630
w.3: Estimated Warranty Liability = Units replaced * Cost per unit = 15 * $20 = $300
w.4: Cost of Goods Sold = Units sold * Cost per unit = 220 * $20 = $4,400
w.5: Estimated Warranty Liability = Units replaced * Cost per unit = 30 * $20 = $600
w.6: Warranty Expense = Sales * 8% = $16,500 * 8% = $1,320
w.7: Cost of Goods Sold = Units sold * Cost per unit = 150 * $20 = $3,000
w.8: Estimated Warranty Liability = Units replaced * Cost per unit = 50 * $20 = $1,000
w.9: Warranty Expense = Sales * 8% = $11,250 * 8% = $900
b. How much warranty expense is reported for November 2012 and for December 2012?
Warranty Expense reported for November 2012 = Sales for November 2012 * 8% = $7,875 * 8% = $630
Warranty Expense reported for December 2012 = Sales for December 2012 * 8% = $16,500 * 8% = $1,320
Total Warranty Expense reported for 2012 = Reported Warranty Expense for November 2012 + Reported Warranty Expense for December 2012 = $630 + $1,320 = $1,950
c. How much warranty expense is reported for January 2013?
Warranty Expense reported for January 2013 = Sales for January 2013 * 8% = $11,250 * 8% = $900
d. What is the balance of the Estimated Warranty Liability account as of December 31, 2012?
Total Warranty Expense reported for 2012 = $1,950
Value of returned 15 razors replaced on Dec. 9, 2012 = Units replaced * Cost per unit = 15 * $20 = $300
Value of returned 30 razors replaced on Dec. 29, 2012 = Units replaced * Cost per unit = 30 * $20 = $600
Total value of returned razors replaced in 2012 = Value of returned 15 razors replaced on Dec. 9, 2012 + Value of returned 30 razors replaced on Dec. 29, 2012 = $300 + $600 = $900
Therefore, we have:
Balance of the Estimated Warranty Liability account as of December 31, 2012 = Total Warranty Expense reported for 2012 - Total value of returned razors replaced in 2012 = $1,950 - $900 = $1,050
Which scenarios provided would cause a change in demand for grape jelly?
A)
The price of grape jelly increases considerably.
B)
Grape jelly is placed on sale at a local supermarket.
The prices of peanut butter and bread increase substantially.
D)
Summer is approaching and more people prefer sandwiches for lunch.
E)
The federal government releases a report on the positive health benefits of
grape jelly
Answer:C d and e
Explanation:there different scenarios
The expected average rate of return for a proposed investment of $5,330,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $15,990,000 over the 20 years is (round to two decimal points). a.1.50% b.15.00% c.60.00% d.30.00%
Answer:
The Expected Average Rate of Return for the proposed investment is 30%.
Explanation:
This can be calculated as follows:
Average Investment = (Initial Cost + Residual Value) / 2 = ($5,330,000 + $0) / 2 = $2,665,000
Expected average annual income = Expected total net income / Useful life = $15,990,000 / 20 = $799,500
Expected Average Rate of Return = Estimated Average Annual Income / Average Investment = $799,500 / $2,665,000 = 0.30, or 30%
A technological improvement in apple production will: A. Increase the demand for apples, lowering the equilibrium price but raising the equilibrium quantity of apples. B. Increase the supply of apples, raising the equilibrium price but lowering the equilibrium quantity of apples. C. Increase the supply of apples, lowering the equilibrium price and quantity of apples. D. Increase the supply of apples, lowering the equilibrium price but raising the equilibrium quantity of apples. E. Increase the supply apples, raising the equilibrium price and quantity of apples.
Answer:
C. Increase the supply of apples, lowering the equilibrium price and quantity of apples.
Explanation:
Technological improvement can be regarded as an positive change or rise in efficiency of a product as well as the process which in turn results in tangible increase in output, even though there is no significant increase in input. It should be noted that technological improvement in apple production will Increase the supply of apples, lowering the equilibrium price and quantity of apples.
Compute cost of goods sold for the period using the following information. Finished goods inventory, beginning $ 354,000 Work in process inventory, beginning 83,000 Work in process inventory, ending 77,100 Cost of goods manufactured 944,200 Finished goods inventory, ending 292,000
Answer:
the cost of goods sold is $1,006,200
Explanation:
The computation of the cost of goods sold is shown below:
As we know that
Cost of goods sold = Opening finished goods + cost of goods manufactured - closing finished goods
= $354,000 + $944,200 - $292,000
= $1,006,200
Hence, the cost of goods sold is $1,006,200
Using the appropriate present value table and assuming a 12% annual interest rate, determine the present value on December 31, 2018, of a five-period annual annuity of $5,000 under each of the following situations: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
1. The first payment is received on December 31, 2019, and interest is compounded annually.
2. The first payment is received on December 31, 2018, and interest is compounded annually.
3. The first payment is received on December 31, 2019, and interest is compounded quarterly.
Answer:
1. Present value on December 31, 2018 = $18,023.88
2. Present value on December 31, 2018 = $20,186.75
3. Present value on December 31, 2018 = $17,780.59
Explanation:
1. The first payment is received on December 31, 2019, and interest is compounded annually.
This is an example of ordinary annuity. Therefore, the present value on December 31, 2018 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 = present value on December 31, 2018 = ?
P = Annual annuity = $5,000
r = Annual interest rate = 12%, or 0.12
n = number of years = 5
Substitute the values into equation (1), we have:
PV = $5,000 * ((1 - (1 / (1 + 0.12))^5) / 0.12)
PV = $5,000 * 3.60477620234501
PV = $18,023.88
2. The first payment is received on December 31, 2018, and interest is compounded annually.
This is an example of annuity due. Therefore, the present value on December 31, 2018 can be calculated using the formula for calculating the present value of an annuity due as follows:
PV = P * ((1 - [1 / (1+r))^n) / r) * (1+r) .................................. (2)
Where;
Where;
PV = present value on December 31, 2018 = ?
P = Annual annuity = $5,000
r = Annual interest rate = 12%, or 0.12
n = number of years = 5
Substitute the values into equation (1), we have:
PV = $5,000 * ((1 - [1 / (1+0.12))^5) / 0.12) * (1+0.12)
PV = $5,000 * 3.60477620234501 * 1.12
PV = $5,000 * 4.03734934662641
PV = $20,186.75
3. The first payment is received on December 31, 2019, and interest is compounded quarterly.
Note: See the calculation of the present value on December 31, 2018 in the attached excel file.
This is also an example of ordinary annuity.
In the attached excel file, the following formula is used:
Discounting factor = 1 / (1 + r)^n .............. (1)
Where;
r = Quarterly interest rate = Annual interest rate / Number of quarters in a year = 12% / 4 = 0.12 / 4 = 0.03
n = number of quarters = number of years * Number of quarters in a year
From the attached excel file, we have:
Present value on December 31, 2018 = Total present value = $17,780.59
The following information is from Amos Company for the year ended December 31, 2019. Retained earnings at December 31, 2018 (before discovery of error), $858,000. Cash dividends declared and paid during the year, $18,000. Two years ago, it forgot to record depreciation expense of $42,600 (net of tax benefit). The company earned $220,000 in net income this year. Prepare a statement of retained earnings for Amos Company. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
$1,017,400
Explanation:
Particulars Amount
Retained earnings December 31st, 2018 $858,000
Prior period adjustment
Depreciation expense error -$42,600
Adjusted retained earnings December 31st, 2018 $815,400
Add: Net income $220,000
Less: Dividend -$18,000
Retained earnings December 31st, 2019 $1,017,400
You just got a job and plan to save for the college expenses for your kids. You have a son and a daughter. Your son is 4 years old, and your daughter is only 1 year old. Both of them plan to go to a four-year college at the age of 18. The estimated college expense is about $40,000 per year. Assume you plan to invest into a portfolio that offers you return about 6% per year until your daughter is graduated from college. How much money do you need to save every year if your first saving is in one year
Answer:
$11,508.25
Explanation:
your son will start college in 14 years, and the present value of his college tuition = $40,000 x 3.4651 (PVIFA, 6%, 4 periods) = $138,604
your daughter will start college in 17 years, so you need in today's dollars $138,604
you will need to save enough money to cover both tuitions;
money required to cover your son's tuition = $138,604 / 21.015 (FVIFA, 6%, 14 periods) = $6,595.48
money required to cover your daughter's tuition = $138,604 / 28.213 (FVIFA, 6%, 14 periods) = $4,912.77
total annual savings = $11,508.25
Virginia Enterprises makes all purchases on account, subject to the following payment pattern: Paid in the month of purchase: 30% Paid in the first month following purchase: 65% Paid in the second month following purchase: 5% If purchases for April, May, and June were $200,000, $160,000, and $250,000, respectively, what was the firm's budgeted payables balance on June 30
Answer:
$18,000
Explanation:
Prepare an Accounts Payables Budget
The firm's budgeted payables balance on June is $18,000
On January 1, 2021, Majestic Mantles leased a lathe from Equipment Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Majestic. Portions of the Equipment Leasing’s lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease in Balance Outstanding Balance 308,032 2021 30,000 30,000 278,032 2022 30,000 23,633 6,367 271,665 2023 30,000 23,092 6,908 264,757 2024 30,000 22,504 7,496 257,261 2025 30,000 21,867 8,133 249,128 2026 30,000 21,176 8,824 240,303 2027 30,000 20,426 9,574 230,729 — — — — — — — — — — — — — — — 2038 30,000 6,513 23,487 53,135 2039 30,000 4,516 25,484 27,651 2040 30,000 2,350 27,650 0 Required: 1. What is Majestic’s lease liability after the first lease payment?2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? (Round your percentage answers to 1 decimal place.) 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?
1. Majestic’s lease liability after the first lease payment is $278,032.
2. The amount that Majestic would record as a right-of-use asset is $308,032.
3. The lease term in years is 20 years.
4. The effective annual interest rate is 8.5%.
5. The total amount of lease payments is $600,000.
6. The total effective interest expense recorded over the term of the lease is $29,1968.
Data and Calculations:Lease Amortization Schedule
Jan. 1 Payments Effective Interest Decrease Outstanding
in Balance Balance
308,032
2021 30,000 30,000 278,032
2022 30,000 23,633 6,367 271,665
2023 30,000 23,092 6,908 264,757
2024 30,000 22,504 7,496 257,261
2025 30,000 21,867 8,133 249,128
2026 30,000 21,176 8,824 240,303
2027 30,000 20,426 9,574 230,729
— — — — — — — — — — — — — — —
2038 30,000 23,487 6,513 53,135
2039 30,000 25,484 4,516 27,651
2040 30,000 27,650 2,350 0
Lease term = 20 years (2040 - 2020).
Effective annual interest rate = 8.5% ($23,633/$278,032 x 100).
Total amount of lease payments = $600,000 ($30,000 x 20).
Total effective interest expense recorded over the term of the lease = $29,1968 ($600,000 - $308,032).
Thus, the total effective interest expense recorded over the term of the lease is $29,1968.
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Company X paid Company Y $1.85 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $353,000, Accounts Receivable increased by $321,800, Inventory increased by $276,300, Property, Plant, and Equipment increased by $753,400, and Bonds Payable increased by $2 million. The net cash flow provided by financing activities is:
Answer:
An Inflow of $2 million
Explanation:
Financing Activities involve the sourcing of capital and the repayment thereoff.
Only item that belongs to financing activities is the Increase in Bonds Payable by $2 million which presents a Cash Inflow.
The net cash flow provided by financing activities is: An Inflow of $2 million
Consider the following information about employment across industries in Chicago.
Number of employees Location Quotient
Manufacturing 58,435 0.559
Finance and insurance 102,751 1.825
Administrative and support 107,618 1.181
Educational services 9,379 1.566
Health care and social assistance 179,570 1.046
Arts, entertainment, and recreation 19,132 0.986
If there were a national downturn in these industries, which is likely to be most closely linked to the residential real estate market in Chicago?
A. Manufacturing
B. Finance and Insurance
C. Administrative and Support
D. Educational services
E. Health care and social assistance
F. Arts, entertainment, and recreation
G. None of the above.
Answer:
B. Finance and Insurance
Explanation:
The Location Quotient (LQ) value of finance and insurance is the highest (1.825) and its employment concentration (102,751) is higighesth as well although not the highest.
We know that when (LQ) is greater that 1, its indicates the high concentration in regional growth and opportunities as finance and insurance is concerned.
On the other hand lowest, (LQ) at manufacturing is less than 1 and the employment is also low (58,435), that indicates that manufacturing employment has less of a share of the total in regional growth and opportunities.
So, if there were a national downturn in these industries, Finance and Isurance is likely to be most closely linked to the residential real estate market in Chicago.
Lowell Corporation paid $80,000 to acquire all of Boston Company's net assets. Boston reported assets with a book value of $60,000 and fair value of $98,000 and liabilities with a book value and fair value of $23,000 on the date of combination. Lowell also paid $3,000 to a search firm for finder's fees related to the acquisition. What amount will be recorded as goodwill by Lowell Corporation while recording its investment in Boston
Answer:
Lowell Corporation
The amount that will be recorded as goodwill by Lowell Corporation to record its investment in Boston is:
= $5,000.
Explanation:
a) Data and Calculations:
Investment in Boston Company = $83,000
Fair value of assets = $98,000
Fair value of liabilities 23,000
Net value of assets = $75,000
Goodwill = $5,000 ($80,000 - $75,000)
b) Acquired Goodwill is the difference between the cost of purchasing Boston Company ($80,000) and the net identifiable assets of Boston Company ($75,000). The net identifiable assets are calculated by subtracting the fair value of the liabilities from the fair value of the assets.
Sarasota Company sells on credits goods that cost $310,000 to Ricard Company for $409,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $42,500. The standalone selling price of the goods is $367,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2020
Answer and Explanation:
The journal entries are shown below:
Account Receivable $409,500
To Sales Revenue $367,000
To Unearned Service Revenue $42,500
(Being account receivable is recorded)
Cost of Goods Sold $310,000
To Merchandised Inventory $310,000
(Being cost of goods sold is recorded)
These two journal entries are to be recorded
Extend the application of a method or conclusion
a.Segmentation b.Extrapolate
c.Diffusion d.Multinational
Answer:
B - Extrapolate
Explanation:
Extrapolate means to extend the application of (a method or conclusion, especially one based on statistics) to an unknown situation by assuming that existing trends will continue or similar methods will be applicable.
A semiprofessional baseball team near your town plays two home games each month at the local baseball park. The team splits the concessions 50/50 with the city but keeps all the revenue from ticket sales. The city charges the team $500 each month for the three-month season. The team pays the players and manager a total of $2500 each month. The team charges $10 for each ticket, and the average customer spends $6 at the concession stand. Attendance averages 100 people at each home game.
The team earns an average of $_________ in revenue for each game and $_____________ of revenue each season. With total costs of $___________ each season, the team finishes the season with $____________ of profit.
Answer: See explanation
Explanation:
Amount charges for each ticket = $10
The average customer spends $6 at the concession stand but the team splits the concessions 50/50 with the city. Therefore, the team gets $6/2 = $3 from concession.
Revenue gotten per customer = $10 + $3 = $13
Average attendance = 100
Total revenue per game = $13 × 100 = $1300
Since there are 2 matches every months and it's a three months season, the number of home matches player will be: = 2 × 3 = 6. Therefore, total revenue will be:
= $1300 × 6
= $7800
The city charges the team $500 each month for the three-month season. The team pays the players and manager a total of $2500 each month. Therefore, Total cost = (500 × 3) + (2500 × 3)
= 1500 + 7500
= 9000
Profit/Loss = Revenue - Cost
= 7800 - 900
= 1200
Loss of $1200
The team earns an average of ($1300) in revenue for each game and ($7800) of revenue each season. With total costs of ($9000) each season, the team finishes the season with ($1200) as loss.
A nation's GDP at purchasing power parity (PPP) exchange rates refers to:_____.
a. the value of the GDP divided by the population of the country.
b. the value of all the goods and services produced by a country in a single year.
c. the value of the GDP adjusted for purchasing power.
d. a country's average achievements in health, knowledge, and standard of living.
e. the sum value of all goods and services produced in the country valued at prices prevailing in the United States.
Answer:
c
Explanation:
The following table presents Generic Motors Company's production budget. GM's inventory policy is to have ending inventory equal to20% of next month's sales.
February March April
Ending inventory 5,000
Beginning inventory 2,000
Budgeted sales 13,000 17,000 18,000
Budgeted production
Required:
a) Fill in the missing numbers in the table above.
(Hint if you get stuck: What is the relation between ending inventory for one month and beginning inventory for the following month?)
b) Why do firms want to hold inventory of finished goods? (an alternative could be to produce exactly the amount they are going to sell, and hold zero inventories)
Answer:
a.
________________________________February__March__April
Ending inventory 20% of next Months sale _3400___3600__5,000
Beginning inventory__________________ 2,000__ 3400__ 3600
Budgeted sales _____________________ 13,000__17,000_ 18,000
Budgeted production_________________ 14,400__ 17,200_ 19,400
b.
Firms wants to hold the finished goods inventry in order to deal with the future demand
Explanation:
a.
Use the following formula to calculate the Budgeted production
Budgeted Production = Beginning Inventory - Ending Inventory + Busgeted Sales
Working
________________________________February__March__April
Ending inventory 20% of next Months sale _3400___3600__5,000
Less: Beginning inventory______________2,000__ 3400__ 3600
Add: Budgeted sales _________________ 13,000__17,000_ 18,000
= Budgeted production________________14,400__ 17,200_ 19,400
b.
The finished goods inventory is held to deal with the future market demand. If the firm produce the uniits equals o the current demand then in case of increase in demand or unexpected demand increase the firms will not be able to fulfil the demand and will lose the opportunity.