Answer and Explanation:
a. The computation of the goods available for sale, the cost of goods sold and gross profit for the merchandiser is shown below:
Goods available for sale
Beginning inventory $11,500
Add:Net purchases $14,300
Goods available for sale $25,800
Cost of goods sold
Goods available for sale $25,800
less: Ending inventory -$6,900
Cost of goods sold $18,900
Gross profit
net sales $22,500
less:cost of goods sold -$18,900
Gross profit $3,600
b. The net income for each company is shown below:
Net income for Krug Service company
Revenues $27,000
less: Expenses -$8,700
Net income for Krug Service company $18,300
Net income for Kliener Merchandising Co
Gross profit $3,600
less:Expenses -$2,100
Net income for Kliener Merchandising Co $1,500
Marigold Corp. uses the periodic inventory system. For the current month, the beginning inventory consisted of 477 units that cost $65 each. During the month, the company made two purchases: 715 units at $68 each and 364 units at $70 each. Marigold Corp. also sold 1197 units during the month. Using the LIFO method, what is the amount of cost of goods sold for the month?
Answer:
COGS= $81,770
Explanation:
Giving the following information:
Beginning inventory= 477 units that cost $65 each.
Purchases:
715 units at $68 each
364 units at $70 each.
Units sold= 1,197
To calculate the cost of goods sold under the LIFO (last-in, first-out) method, we need to use the cost of the lasts units incorporated into inventory:
COGS= 364*70 + 715*68 + 118*65
COGS= $81,770
[The following information applies to the questions displayed below.] Campus Stop, Inc., is a student co-op. Campus Stop uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $152,070). $ 275,000 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $800). 1,600 c. Sold merchandise (costing $9,000) to a customer on account with terms n/30. 20,000 d. Collected half of the balance owed by the customer in (c). 10,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 1,800 Compute the gross profit percentage. (Round your answer to 1 decimal place.)
Answer: 45%
Explanation:
First calculate the sales:
= Cash sales + credit sale
= 275,000 + 20,000
= $295,000
Terms on credit sale was 2/10 n/30 and they paid half in time($10,000) but a partial allowance of $1,800 was granted:
Net sales would be:
= Sales - sales returns - sales discount
= 295,000 - 1,600 - (10,000 * 2%) - 1,800
= $291,400
COGS = 152,070 + 9,000 - 800
= $160,270
Gross profit percentage = (Sales - Cost of goods sold) / Sales
= (291,400 - 160,270) / 291,400 * 100%
= 45%
Newton Corporation was organized on January 1, 2017. On that date, it issued 200,000 shares of its $10 par-value common stock at $15 per share (400,000 shares were authorized). During the period from January 1, 2017, through December 31, 2019, Newton reported net income of $750,000 and paid cash dividends of $380,000. On January 5, 2019, Newton purchased 12,000 shares of its common stock at $12 per share. On December 31, 2019, the company sold 8,000 treasury shares at $8 per share.
Required:
What is the book value of total shareholders’ equity as of December 31, 2019?
Answer:
$30,290,000
Explanation:
Calculation for the book value of total shareholders’ equity as of December 31, 2019
First step is to calculate the Paid up share capital
Paid up share capital =200000*10
Paid up share capital=20,00,000
Second step is to calculate the Securities premium
Securities premium=2,00,000*5
Securities premium=10,00,000
Third step is to calculate the Net income after dividend
Net income after dividend=750,000-3,80,000
Net income after dividend=370,000
Fourth step is to calculate the Treasury stock at par value
Treasury stock at par value =8,000*10
Treasury stock at par value=80,00
Now let calculate the total shareholders’ equity as of December 31, 2019
Total Equity share holders Fund=20,00,000+10,00,000+370,000-80,000
Total Equity share holders Fund=$30,290,000
Therefore the book value of total shareholders’ equity as of December 31, 2019 is $30,290,000
An increase in the price of a good will cause suppliers / producers to__________the amount of the good (quantity supplied). the
Answer:
increase
Explanation:
Umatilla Bank and Trust is considering giving Sandhill Co. a loan. Before doing so, it decides that further discussions with Sandhills accounting may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $269,380. Discussions with the accountant reveal the following.
1. Sandhill shipped goods costing $55,680 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse.
2. The physical count of the inventory did not include goods costing $100,770 that were shipped to Sandhill FOB destination on December 27 and were still in transit at year-end.
3. Sandhill received goods costing $24,220 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count.
4. Sandhill shipped goods costing $53,270 to Ehler of Canada FOB destination on December 30. The goods were received in Canada on January 8. They were not included in Sandhill physical inventory.
5. Sandhill received goods costing $40,510 on January 2 that were shipped FOB destination on December 29. The shipment was a rush order that was supposed to arrive December 31. This purchase was included in the ending inventory of $269,380.
Determine the correct inventory amount on December 31.
Answer:
$306,360
Explanation:
Calculation to Determine the correct inventory amount on December 31.
Correct inventory amount on December 31=$269,380+$24,220+$53,270-$40,510
Correct inventory amount on December 31=$306,360
Therefore the Correct inventory amount on December 31 is $306,360
The following trial balance of Sarasota Traveler Corporation does not balance.
Sarasota Traveler Corporation
Trial Balance
April 30, 2020
Debit Credit
Cash $6,212
Accounts Receivable 5,390
Supplies 3,117
Equipment 6,250
Accounts Payable $7,194
Common Stock 8,150
Retained Earnings 2,150
Service Revenue 5,350
Office Expense 4,470 0
$25,439 $22,844
An examination of the ledger shows these errors.
1. Cash received from a customer on account was recorded (both debit and credit) as $1,730 instead of $2,000.
2. The purchase on account of a computer costing $3,339 was recorded as a debit to Office Expense and a credit to Accounts Payable.
3. Services were performed on account for a client, $2,400, for which Accounts Receivable was debited $2,400 and Service Revenue was credited $375.
4. A payment of $245 for telephone charges was entered as a debit to Office Expense and a debit to Cash.
5. The Service Revenue account was totaled at $5,350 instead of $5,430.
InstructionsFrom this information prepare a corrected trial balance.
Answer:
Sarasota Traveler Corporation
Trial Balance as at April 30, 2020
Debit Credit
Cash $6,212
Accounts Receivable 5,390
Supplies 3,117
Equipment 6,250
Accounts Payable $7,194
Common Stock 8,150
Retained Earnings 2,150
Service Revenue 5,350
Office Expense 4,470 0
Explanation:
First prepare correcting journals. Then adjust the ledger accounts using the journals prepared
Journals
Item 1
Debit : Cash $270
Credit : Accounts Payable $270
Item 2
Debit : Computer $3,339
Credit : Office Expense $3,339
Item 3
Debit : Suspense $2,025
Credit : Service Revenue $2,025
Following are the accounts and balances from the adjusted trial balance of Stark Company. Notes payable $ 11,000 Accumulated depreciation-Buildings $ 15,000 Prepaid insurance 2,500 Accounts receivable 4,000 Interest expense 500 Utilities expense 1,300 Accounts payable 1,500 Interest payable 100 Wages payable 400 Unearned revenue 800 Cash 10,000 Supplies expense 200 Wages expense 7,500 Buildings 40,000 Insurance expense 1,800 Stark, Withdrawals 3,000 Stark, Capital 24,800 Depreciation expense-Buildings 2,000 Services revenue 20,000 Supplies 800 Prepare the (1) income statement and (2) statement of owner's equity for the year ended December 31, and (3) balance sheet at December 31. The Stark, Capital account balance was $24,800 on December 31 of the prior year.
Answer:
STARK COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31
PARTICULARS AMOUNT$
Service Revenue 20,000
Less-Expenses
Supplies expense 200
Interest expense 500
Insurance expense 1800
Utilities expense 1300
Depreciation expense 2000
Wages expense 7500
Total expenses 13,300
Net profit $6,700
STARK COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31 Amount$
Retained earnings December 31 prior year end 14,800
Add- Net income 6,700
Less- Dividends 3,000
Retained earnings, December 31 Current year end $18,500
Cordova, Inc., reported the following receivables in its December 31, 2020, year-end balance sheet:
Current assets:
Accounts receivable, net of $45,000 in allowance for
uncollectible accounts $ 377,000
Interest receivable 15,000
Notes receivable 350,000
Additional information:
The notes receivable account consists of two notes, a $120,000 note and a $230,000 note. The $120,000 note is dated October 31, 2020, with principal and interest payable on October 31, 2021. The $230,000 note is dated March 31, 2020, with principal and 8% interest payable on March 31, 2021.
During 2021, sales revenue totaled $2,050,000, $1,910,000 cash was collected from customers, and $34,000 in accounts receivable were written off. All sales are made on a credit basis. Bad debt expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end gross accounts receivable.
Required:
1. In addition to sales revenue, what revenue and expense amounts related to receivables will appear in Cordova’s 2021 income statement?
2. Calculate the receivables turnover ratio for 2021. (Round your answer to 2 decimal places.)
1. Interest revenue
Bad debt expense
2. Accounts receivable turnover ratio
Answer:
Cordova, Inc.
1. Bad Debt Expense account of $41,800 will also appear in Cordova's 2021 income statement.
2. Receivables Turnover ratio = 4.32
Explanation:
a) Data and Calculations:
Partial Balance Sheet of Cordova, Inc.:
Current assets:
Accounts receivable, net of $45,000 in allowance for
uncollectible accounts $ 377,000
Interest receivable 15,000
Notes receivable 350,000
Notes Receivable:
Dated October 31, 2020, payable October 31, 2021 = $120,000
Dated March 31, 2020, payable March 31, 2021 = 230,000 (8%)
Total Notes Receivable = $350,000
Accounts receivable:
Beginning balance $422,000
Sales Revenue = 2,050,000
Cash collections 1,910,000
Bad Debts w/off 34,000
Ending balance = $528,000
Allowance for Uncollectible accounts:
Beginning balance $45,000
Bad debts w/off (34,000)
Bad debts expense 41,800
Ending balance (52,800)
Receivables Turnover ratio = Sales Revenue/Average Receivables
= $2,050,000/$475,000
= 4.32
Average Receivables = ($422,000 + $528,000)/2 = $475,000
Pension data for Fahy Transportation Inc. include the following: ($ in millions) Discount rate, 9% Expected return on plan assets, 12% Actual return on plan assets, 13% Projected benefit obligation, January 1 $ 550 Plan assets (fair value), January 1 500 Plan assets (fair value), December 31 560 Benefit payments to retirees, December 31 68 Required: Assuming cash contributions were made at the end of the year, what was the amount of those contributions
Answer:
the amount of those contributions is $63 million
Explanation:
The computation of the amount of those contributions is shown below:
Plan assets, end of year $560
Less: Plan assets, Starting of the year -$500
Less: Actual return -$65 ($500 × 13%)
Add: Retiree benefits paid $68
Cash contributions $63 million
Hence, the amount of those contributions is $63 million
Bonita Beauty Corporation manufactures cosmetic products that are sold through a network of sales agents. The agents are paid a commission of 20% of sales. The income statement for the year ending December 31, 2020, is as follows.
BONITA BEAUTY CORPORATION
Income Statement For the Year Ended December 31, 2020
Sales $79,500,000
Cost of goods sold
Variable $33,390,000
Fixed 8,670,000 42,060,000
Gross margin $37,440,000
Selling and marketing expenses
Commissions $15,900,000
Fixed costs 10,159,000 26,059,000
Operating income $11,381,000
The company is considering hiring its own sales staff to replace the network of agents. It will pay its salespeople a commission of 8% and incur additional fixed costs of $9,540,000.
Under the current policy of using a network of sales agents, calculate the Bonita Beauty Corporation's break-even point in sales dollars for the year 2020.
Answer:
$80,940,000
Explanation:
Calculation for the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020
First step is to calculate New Sales commission
New Sales commission = $79,500,000*8%
New Sales commission= 6,360,000
Second step is to calculate Cm ratio
Cm ratio = (79,500,000-6,360,000-33,390,000)/79,500,000 = 50%
Now let calculate the Estimated sales revenue
Estimated sales revenue = (8,670,000+10260000+ 10,159,000+$11,381,000)/.50 = $80,940,000
Therefore the estimated sales volume in sales dollars that would generate an identical net income for the year ending December 31, 2020 will be $80,940,000
On December 31, 2020, Swifty Corporation sold for $152000 an old machine having an original cost of $265000 and a book value of $113000. The terms of the sale were as follows: $39000 down payment $56500 payable on December 31 each of the next two years The agreement of sale made no mention of interest; however, 8% would be a fair rate for this type of transaction. What should be the amount of the notes receivable net of the unamortized discount on December 31, 2020 rounded to the nearest dollar
Answer:
the amount of the note receivable net of the unamortized discount is $100,754
Explanation:
The computation of the amount of the note receivable net of the unamortized discount is shown below:
= $56,500 × present value of an ordinary annuity for 2 years at 8%
= $56,500 × 1.783265
= $100,754
hence, the amount of the note receivable net of the unamortized discount is $100,754
Think Critically
1. Do you think the museum should
have a limited commercial broadcast
contract? Why or why not?
How might this contract impact
independent filmmakers? Discuss
your opinion
Answer:
no
Explanation:
Select the correct answer.
In general, how long does it take to accomplish a long-term goal?
OA.
a few days to a week
OB.
a few weeks to a month
OC.
a few months to a year
OD.
more than a year
Creativity within organizations can be enhanced by Group of answer choices employing only those individuals from environments that nurture creativity. encouraging employees to have less risk propensity. making it part of the organization's culture. setting ambiguous goals and objectives. training individuals to have an external locus of control.
Answer:
making it part of the organization's culture.
Explanation:
Creativity can be defined as the ability of an employee or group of employees (teams) working in an organization to use imagination and skills set to create (produce) a product or novel idea that solves a particular problem in the society.
Creativity within organizations can be enhanced by making it part of the organization's culture.
Culture can be defined as the general way of life of a group of people living or working together in a particular organization, location or society.
Basically, culture comprises of beliefs, values, behaviors, language, dressing, cuisine, music, symbols, arts, social habits, knowledge, customs, laws pertaining to a particular group of people living together in a society.
This ultimately implies that, culture are acquired and passed from one generation to another.
Partial income statements for Sherwood Company summarized for a four-year period show the following: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction.2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts? 29,000.
Answer:
1. The corrected gross profit are as follows:
2015 = $704,000
2016 = $836,000
2017 = $859,000
2018 = $1,024,000
2-a Gross profit percentage before and after correction are as follows:
Particulars 2015 2016 2017 2018
Before correction 32% 33% 31% 32%
After correction 32% 32% 32% 32%
2-b. Yes. This is because the gross profit percentage for the years are approximately the same at 32% after the correction was made.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Partial income statements for Sherwood Company summarized for a four-year period show the following:
2015 2016 2017 2018
Net Sales $2,200,000 $2,600,000 $2,700,000 $3,200,000
COGS 1,496,000 1,742,00 1,863,000 2,176,000
Gross Profit $704,000 $858,000 $837,000 $1,024,000
An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $22.000. The inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system.
Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error, 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction 2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts?
The explanation of the answer is now given as follows:
1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error
Note: See the attached excel file for the fixing the inventory error and the restated partial income statements to reflect the correct amounts, after fixing the inventory error.
The effect of the overstatement of closing inventory is reducing the 2016 cost of goods sold. To correct this in the attached excel file, the opening balance is reduced by $22,000 and this makes cost of goods sold of 2016 to increase and the cost of goods sold of 2017 to decrease by $22,000.
2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction
Note: See the attached excel file for the computed the gross profit percentage for each year (a) before the correction and (b) after the correction.
In the attached excel file, the following formula is used:
Gross Profit percentage = Gross profit / Net Sales) * 100
2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts?
Yes. This is because the gross profit percentage for the years are approximately the same at 32% after the correction was made.
When a firm declares bankruptcy, Group of answer choices the claims of preferred shareholders are honored before those of the common shareholders. the maximum that shareholders can lose is their original investment in the firm's stock. bond holders have claim to what is left from the liquidation of the firm's assets after paying the shareholders. the maximum that shareholders can lose is their original investment in the firm's stock AND the claims of preferred shareholders are honored before those of the common shareholders. the owners of common stock are the first in line to receive their claims on the firm's assets.
Answer:
the maximum that shareholders can lose is their original investment in the firm's stock AND the claims of preferred shareholders are honored before those of the common shareholders.
Explanation:
Bankruptcy may be defined as the legal proceedings that involves a person or a business where the person or the business firm is not able to repay the debts that are outstanding. When a firm or a person files a bankruptcy, there is an automatic stay put by the court that blocks the debts.
In case of bankruptcy the different shareholders of the firm losses a maximum of their original investment that they have done in the firm while purchasing the stocks. And also the claims of the preferred shareholders are being honored first than those of common shareholders.
Bing Book Bindery has identified two activity cost pools: printing, with an activity driver of batches processed, and binding, with an activity driver of direct labor hours. For the coming quarter, total factory overhead of $140,000 is split such that 65% is allocated to printing and 35% is allocated to binding. Bing makes two types of books: hard cover and soft cover. During the quarter, it expects to produce 5,200 hard cover books and 12,000 soft cover books. Hard covers are produced in batch sizes of 100 and soft covers are produced in batch sizes of 300. A hard cover book requires 0.75 hours of direct labor, while a soft cover book requires 0.25 hours. What is the overhead allocation to soft covers for printing
Answer:
Bing Book Bindery
The overhead allocation to soft covers for printing is:
= $68,250.
Explanation:
a) Data and Calculations:
Activity Cost Pools Overhead Activity Driver Number Overhead
Cost Usage Rates
Printing $91,000 Batches processed 400 $227.50
Binding $49,000 Direct labor hours 150 $326.67
Total $140,000
Overhead rates:
Printing = $227.50 ($91,000/400)
Binding = $326.67 ($49,000/150)
Hard Cover Soft Cover Total
Units produced 5,200 12,000 17,200
Batches 100 300 400
Direct labor hours 0.75 0.25
Total direct labor hours 75 (0.75*100) 75 (0.25*300) 150
Overhead allocated to Soft Cover:
Printing = ($227.50 * 300) $68,250
Binding = ($326.67 * 75) 24,500
Total overhead = $92,750
Overhead allocated to Harc Cover:
Printing = ($227.50 * 100) $22,750
Binding = ($326.67 * 75) 24,500
Total overhead = $47,250
Presented below is information for Kingbird Company.
1. Beginning-of-the-year Accounts Receivable balance was $16,600.
2. Net sales (all on account) for the year were $102,400. Kingbird does not offer cash discounts.
3. Collections on accounts receivable during the year were $90,000.
a. Prepare (summary) journal entries to record the items noted above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 1. 2. 3. SHOW LIST OF ACCOUNTS
b. Compute Kingbird's accounts receivable turnover and days to collect receivables for the year. The company does not believe it will have any bad debts. (Round answers to 2 decimal places, e.g. 4.57.) Accounts receivable turnover times Days to collect accounts receivable days Use the results to analyze Kingbird's liquidity. The turnover ratio last year was 8.1. This is a trend in liquidity.
Answer:
Kingbird Company
a) Journal Entries:
1. No journal required
2. Debit Accounts Receivable $102,400
Credit Sales Revenue $102,400
To record sales on account.
3. Debit Cash $90,000
Credit Accounts Receivable $90,000
To record the collections on account.
b) Accounts receivable turnover and days:
Accounts receivable turnover = Sales/Average Receivable
= $102,400/22,800
= 4.49
Accounts receivable days = 365/4.49 = 81.29 days
c) The accounts receivable turnover ratio for the current year is 4.49. This is better than last year's 8.1. The current year's ratio shows that liquidity had been improved.
Explanation:
a) Data and Calculations:
Accounts Receivable:
Beginning balance $16,600
Net sales 102,400
Cash collections (90,000)
Ending balance $29,000
Average receivable = ($16,600 + $29,000)/2 = $22,800
why do we have a graduated income tax?
Consider two $10,000 face value corporate bonds. Bond A is currently selling for $9,980 and matures in 15 years. The Bond B sells for $9,350 and matures in 3 years. a) Calculate the current yield as a percentage to 2 decimal places for both bonds if both have a coupon rate equal to 5%. Bond A % Bond B % b) Calculate the yield to maturity as a percentage to 2 decimal places for both bonds if both have a coupon rate equal to 5%. Bond A % Bond B % Which current yield is a better approximation of the yield to maturity, A or B
Solution :
Current yield of the Bond if the bonds are selling at a price of $ 9980.
Current yield = annual coupon amount / current selling price
Current yield [tex]$=\frac{10000 \times 5\%}{9980}$[/tex]
[tex]$=\frac{500}{9980}$[/tex]
= 0.0501
= 5.01 %
The current yield of a bond if the bonds are selling at $ 9350
Current yield = annual coupon amount / current selling price
Current yield [tex]$=\frac{10000 \times 5\%}{9350}$[/tex]
[tex]$=\frac{500}{9350}$[/tex]
= 0.0535
= 5.35 %
In supply and demand theory, an increase in consumer income for a normal good will: A. Shift the demand curve in and to the left, lowering the equilibrium price but raising the equilibrium quantity. B. Shift the demand curve out and to the right, raising the equilibrium price and quantity. C. Shift the supply curve out and to the right, lowering the equilibrium price but raising the equilibrium quantity. D. Shift the supply curve in and to the left, lowering the equilibrium price and quantity. E. Shift the demand curve out and to the right, lowering the equilibrium price but raising the equilibrium quantity.
Answer:
b
Explanation:
Normal goods are goods that are goods whose demand increases when income increases and falls when income falls
If income increases, demand increases. the demand curve shifts to the right. This leads to an increase in equilibrium price and quantity
Select the correct statement below regarding Manufacturing Overhead: Multiple Choice Manufacturing overhead is always an estimated cost. Manufacturing overhead is a clearing account and is neither shown on the balance sheet or income statement in published financial statements. Manufacturing overhead is an inventory account that is shown on the balance sheet. Manufacturing overhead is an expense account for all factory costs that are neither direct materials or direct labor.
Answer:
D) Expense account for all factory costs, except direct material or labour
Explanation:
Manufacturing Overhead refers to indirect costs, incurred during the process of production. This is charged as cost - to the units produced, during a reporting period. Example : Depreciation of asset, cost of asset is spread to all the useful years (& corresponding period output)
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal).
Answer:
(a) Debit Amortization expense - Patents for $43,750; and Credit Patents for $43,750.
(b) Debit Amortization expense - Patents for $5,230; and Credit Patents for $5,230.
(c) Debit Amortization expense - Franchise for $14,000; and Credit Franchises for $14,000.
Explanation:
(a) A patent with a 10-year remaining legal life was purchased for $350,000. The patent will be commercially exploitable for another eight years.
Annual amortization expenses = Purchase cost of the patent / Number of commercially exploitable years = $350,000 / 8 = $43,750
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - Patents 43,750
Patents 43,750
(To record patent amortization.)
(b) A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $52,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 10 years and is currently worth $400,000.
Annual amortization expenses = Legal fees / Remaining legal life = $52,300 / 10 = $5,230
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - Patents 5,230
Patents 5,230
(To record patent amortization.)
(c) A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $70,000. Satisfactory sales performance over the five years permits renewal of the franchise for another three years (at an additional cost determined at renewal).
Annual amortization expenses = Cost of acquiring the franchise / Number of years acquired = $70,000 / 5 = $14,000
Therefore, the journal entries will look as follows:
General Journal
Description Debit ($) Credit ($)
Amortization expense - franchise 14,000
franchise 14,000
(To record franchise amortization.)
If a country's nominal interest rate is zero, then Group of answer choices the country's economy is in a liquidity trap. monetary policy is likely to be very effective in stimulating the economy. exchange rates with other countries are likely to increase. exchange rates with other countries are likely to decline. the country's economy has achieved monetary equilibrium.
Answer:
the country's economy is in a liquidity trap.
Explanation:
A liquidity trap exists when interest rate are close to or equal to zero.
When there is a liquidity trap, expansionary monetary supply would not work because people would prefer to hold cash due to the believe that a negative economic event is about to occur e.g. deflation
When there is a liquidity trap, individuals prefer to save their monies rather than buy bonds
Liquidity trap was first discovered by John M. Keynes
Solutions to liquidity trap
1. Policies that would make savings less attractive
2, Increased government spending
Liquidity trap occurred in Japan in the 1990s and this led to a deflation
Blake doesn't much care about cars but is engaging in a substantial amount of information search about cars since he is about to buy a new car. In terms of involvement, Blake is Multiple Choice high in product involvement; low in purchase involvement. low in product involvement; low in purchase involvement. high in product involvement; high in purchase involvement. low in product involvement; high in purchase involvement. high in value-expressive involvement; low in product involvement.
Answer:
The answer "low in product involvement; high in purchase involvement".
Explanation:
In this question, Blake doesn't care a great deal about vehicles and is looking for something like a lot of information about cars when he's about to install a separate vehicle. Blake's involvement throughout the product is low; he is quite involved in purchasing because Low-involvement products were normally inexpensive, so if the customer makes an error by purchasing these they present a low risk. This same customer is related to excessive participation products if their fail, are complex, and are due to greater sticker prices. Somewhere in the middle of minimal participation products were falling.
Variable production costs Plastic for casing $ 171,500 Wages of assembly workers 490,000 Drum stands 215,600 Variable selling costs Sales commissions 161,700 Fixed manufacturing costs Taxes on factory 6,000 Factory maintenance 12,000 Factory machinery depreciation 72,000 Fixed selling and administrative costs Lease of equipment for sales staff 12,000 Accounting staff salaries 62,000 Administrative management salaries 142,000 Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income
Answer:
Part 1.
Contribution margin income statement for the year.
Sales (4,900 x 340) 1,666,000
Less Variable Costs
Plastic for casing 171,500
Wages of assembly workers 490,000
Drum stands 215,600
Sales commissions 161,700 (1,038,800)
Contribution 627,200
Less Fixed Costs
Taxes on factory 6,000
Factory maintenance 12,000
Factory machinery depreciation 72,000
Lease of equipment for sales staff 12,000
Accounting staff salaries 62,000
Administrative management salaries 142,000 (306,000)
Net Income 321,200
Part 2.
Contribution margin per unit = $627,200 / 4,900 = $128.00
Contribution margin ratio = $627,200/ $1,666,000 = 37.65 %
Explanation:
The Contribution Margin Income Statement calculates separately the contribution and net income as shown above.
Same facts as #16, except that Jessica files her lawsuit outside the US in a country that uses a "loser pays" rule. Instead of hiring her attorney on a contingency fee, she agrees to pay the attorney a fixed fee of 90,000. Based on a decision tree calculation, the value of Jessica’s litigation BATNA based on these revised facts is (select one):
Answer:
so when the cats eats the dog the dogs take the bone
Presented is basic financial information (in millions) from the annual reports of Nike Nike Sales revenue $18,627 Allowance for doubtful accounts, Jan. 1 71.5 Allowance for doubtful accounts, Dec. 31 78.4 Accounts receivable balance (gross), Jan 1 2,566.2 Accounts receivable balance (gross), Dec. 31 2,873.7 Instructions: Calculate the average collection period (DAYS) for Nike. Only record the number and round to one decimal.
Answer:
See below
Explanation:
Average collection period is computed as
= [Average accounts receivables / Net sales] × 365
Average accounts receivables = [(2,566.2 + 2,873.7)/2] = 2,720
Net sales = 18,627
Average collection period = [2,720/18627] × 365
= 53 days
The current spot price of WTI Houston Crude Oil Futures, expiring in 1-year, is $43 (per bbl). You can contract storage cost for oil, for one year, at 2% (of the underlying spot price) on a continuously compounded basis. The risk-free rate is 0.5% per annum on a continuously compounded basis. If the current spot price for oil is $40.50, what is the implied convenience yield for this contract?
Answer:
-3.49%
Explanation:
Theoretical price (Ft) = $43
Current spot price (St) = $40.5
Storage cost (u) = 2%
Risk free rate (Rf) = 0.5%
T = 1 year
Let y = Convenience yield
Ft = St e^(Rf + u - y)T
43 = 40.5 e^(0.005 + 0.02 - y)
y = - 3.49%
Hence, convenience yield = -3.49%
You plan to purchase a $340,000 house using either a 25-year mortgage obtained from your local savings bank with a rate of 8.10 percent, or a 10-year mortgage with a rate of 7.10 percent. You will make a down payment of 20 percent of the purchase price.
a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid?
b. Calculate your monthly payments on the two mortgages. What is the difference in the monthly payment on the two mortgages?
Answer:
a. Interest under 10 year mortgage = CUMIPMT(7.1%/12, 10*12, 340000*80%, 1, 10*12, 0)
Interest under 10 year mortgage = 108662.44
Interest under 25 year mortgage = CUMIPMT(8.1%/12, 10*12, 340000*80%, 1, 25*12, 0)
Interest under 25 year mortgage = 363217.16
Difference in interest = 363217.16 - 108662.44
Difference in interest = 254554.72
b. Monthly payment under 10 year = PMT(7.1%/12, 10*12, 340000*80%)
Monthly payment under 10 year = 3172.19
Monthly payment under 25 year = PMT(8.1%/12, 25*12, 340000*80%)
Monthly payment under 25 year = 2117.39
Difference in the monthly payment = 3172.19 - 2117.39
Difference in the monthly payment = 1054.80