Answer: $5,300
Explanation:
Private Saving refers to money that households did not consume nor pay as taxes so the formula is;
= Output - Consumption - Taxes
= 14,000 - 7,500 - 1,200
= $5,300
Public Saving refers to money that the government got as revenue but did not spend so the formula is;
= Taxes - Government Spending
= 1,200 - 1,200
= $0
Total Saving (Private + Public Saving)
= 5,300 + 0
= $5,300
A working capital managers role is to manage: Select one: a. accounts receivable and payable only. b. cash, inventory, accounts receivable, accounts payable and risk management. c. cash and inventory only. d. inventory and accounts receivable only.
Answer:
b. cash , inventory, accounts receivable, accounts payable and risk management
Explanation:
Working capital is defined as a measure that shows how a company is operating efficiently and it's ability to meet the short term financial obligations.
When a business working capital is properly managed, then the business will be healthy financially hence operate successfully and able to meet up with it's daily obligations.
A good working capital manager must be able to make use of working capital management to maintain balance between profitability, growth and liquidity. The role of working capital manager is also to manage cash, inventory, accounts receivable and payable and risk management.
A working capital manager must be able to manage cash that will be used for a business daily operation, must ensure the business inventories are properly managed and accounted for. It's duty also include risk management as he is responsible for making decisions regarding day to day finance of a business operation; the success or failure in terms of meeting up with short term financial obligation depends on him.
ABC Corporation has E & P of $240,000. It distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole shareholder, Paul. The land is subject to a liability of $55,000 that Paul assumes. Paul has: A
a. Taxable dividend of $15,000.
b. A taxable dividend of $25,000.
c. A taxable dividend of $45,000.
d. A taxable dividend of $70,000.
e. A basis in the machinery of $55,000
Answer: Paul has a taxable dividend of $15,000.
Explanation:
From the question, we are informed that ABC Corporation has E & P of $240,000 and distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole shareholder, Paul. We are further informed that the land is subject to a liability of $55,000.
The taxable dividend will be the difference between the fair market value of land and the liability on the land. This will be:
= $70,000 - $55,000
= $15,000
Therefore, Paul has a taxable dividend of $15,000.
Depreciation for Partial Periods Hathaway Company purchased a copying machine for $8,700 on October 1, 2019. The machine's residual value was $500 and its expected service life was 5 years. Hathaway computes depreciation expense to the nearest whole month. Required: Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) Straight-line method 2019 $ 2020 $ Sum-of-the-years'-digits method 2019 $ 2020 $ Double-declining-balance method 2019 $ 2020 $ Next Level Which method produces the highest book value at the end of 2020
Answer:
straight line method
2019: $4102020: $1,640sum of digits method
2019: $683.332020: $2,596.67double declining method
2019: $8702020: $3,134Which method produces the highest book value at the end of 2020?
the straight line method because the deprecation expense is lowest, book value at Dec. 31, 2020 = $6,650Explanation:
copying machine purchased October 1, 2019 at $8,700
residual value $500
expected life 5 years
depreciation using straight line method:
depreciation expense per year: ($8,700 - $500) / 5 = $1,640
2019: $1,640 x 3/12 = $410
2020: $1,640
sum of digits method:
depreciation first year = 5/15 x $8,200 = $2,733.33
2019: $2,733.33 x 3/12 = $683.33
2020: $2,733.33 x 9/12 = $2,050
$8,200 x 4/15 x 3/12 = $546.67
total 2020: $2,596.67
double declining balance:
depreciation year 1 = 2 x 20% x $8,700 = $3,480
2019: $3,480 x 3/12 = $870
2020: $3,480 - $870 = $2,610
2 x 20% x ($8,700 - $3,460) x 3/12 = $524
total 2020 = $2,610 + $524 = $3,134
The accounts receivable turnover ratio for a merchandiser is 9.6 times. Calculate the days' sales in receivables for the merchandiser. (Round your answer to the nearest day.) Group of answer choices 34 days 38 days 29 days 41 days
Answer:
38
Explanation:
365/9.6=38.02
Choose the correct answers :
1. If the demand for product A displays high and postitive cross-price elasticity with respect to the price of product B, then:
a. the demand for product A is likely to have a low price elasticity
b. product A and B are subtitutes
c. products A and B are complements
d. the demand for product B is likely to have a low price elasticity
2. Fast food is believed to be an inferior good. This means that:
a. the quantity of fast food consumed decreases as income increases
b. the income elasticity of demand for fast food is positive
c. The quantity of fast food consumed will always be high
d. fast food is really not quality food
Answer:
b. product A and B are subtitutes
a. the quantity of fast food consumed decreases as income increases
Explanation:
Cross price elasticity of demand measures the responsiveness of quantity demanded of good A to changes in price of good B.
Cross price elasticity = percentage change in quantity demanded of good A / percentage change in price of good B.
The cross price elasticity of substitute goods are always positive because if the price of good B increases, the Quanitity demanded of good A rises.
Substitute goods are goods that can be used in place of another good.
Complement goods are goods that are used together. E.g. car and gas
Inferior goods are goods whose demand increases when income falls and whose demand falls when income rises.
I hope my answer helps you
Black Cable Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year) or two years in advance ($960). In September 2019, the company collected the following amounts applicable to future services: October 2019 - September 2021 services (200 two-year contracts) $192,000 October 2019 - September 2020 services (200 one-year contracts) 120,000 Total $312,000As a result of this, Black Cable should report gross income for 2020:a. $54,000 b. $78,000 c. $258,000 d. $312.000
Answer:
c. $258,000
Black cable should report $258,000 as gross income for 2020
Explanation:
One-eighth (3/24) of the payments on the two-year contracts were earned (1/8 of $192,000 =24,000)
One-fourth (1/4 of $120,000 = $30,000) of the payment on the one-year contracts were earned in 2019 and is included in 2019 gross income.
The balance of the payment = $312,000 - $24,000-$30,000 = $258,000. $258,000 must be included in 2020 Black Cable gross income
When the U.S. dollar is strong, Select one: a. U.S. manufacturers tend to make more purchases from foreign sources. b. U.S. manufacturers tend to limit purchases from foreign sources. c. U.S. manufacturers do not change standard business practices. d. U.S. manufacturers are more likely to close plants abroad.
Answer:
a. U.S. manufacturers tend to make more purchases from foreign sources
Explanation:
The US dollar is high producers in the US prefer to make more purchases from international sources, according to the provided scenario.
Therefore the correct option is a which indicates that when the US dollar is strong then the manufacturer of the united states prefer to buy as much from international entities in order to capture the market at the maximum level so that they could able to achieve their sales targets
Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:
Answer:
Estimated Over head applied = ($112500 / $125000) *100 = 90% of Direct labor cost.
Thus, Actual Over Head applied = 90% of $120000 = $108000
Moreover, Actual Over Head incurred = $107400
Therefore, Overhead Over-applied is to be applied as the Actual Overhead applied is higher than the Actual Overhead Incurred
Overhead Over-applied = $108000 - $107400
Overhead Over-applied = $600
The entry to close the over-applied overhead at year-end would include:
i. Over-head A/c will be debited for $600
ii. Cost of goods sold will to be credited for $600
Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What amount will Andrew debit to Work in Process Inventory for the month of March
Answer:
Journal entry for raw material used will be :
Dr. Work in process Inventory $141,000
Cr. Raw materials Inventory $141,000
Explanation:
The beginning Raw Materials Inventory balance = $22,000
The materials used to complete jobs during the month = $141,000 of direct materials and $13,000 of indirect materials
Journal entry for raw material used will be :
Dr. Work in process Inventory $141,000
Cr. Raw materials Inventory $141,000
The form of inventory is modified but the company's assets remain in the form of Work in Process. Assets are debited at all times.
All of the following would cause a shift in the aggregate supply curve except:________.
a. a change in the price level.
b. an increase in the real wages of workers.
c. a decrease in productivity.
d. the emergence of a new production technology.
e. a tax on all manufactured goods.
Answer: a change in the price level.
Explanation:
A shift in the aggregate supply curve is caused by non-price changes such as real wages of the workers, tax, technological innovation, productivity level etc.
The change in price will only result in the movement along the supply curve, which is also referred to as the change in quantity supplied. A change in price will not cause a shift on the aggregate supply curve.
Therefore, option A is the correct answer.
Ajax common stock is expected to return 17 percent in a boom economy, 11 percent in a normal economy, and 2 percent in a recession. The probability of a boom is 25 percent, of a normal economy is 70 percent, and of a recession is 5 percent. What is the expected return on this stock?
Answer:
Expected Value of the return = 12.1%
Explanation:
The expected rate of return is the weighted average of all the possible returns associated with an investment decision. The returns are weighted using the probability associated with their outcomes.
Expected return = WaRa + Wb+Rb + Wn+Rn
W- weight of the outcome, R - return of the outcome
W- Probability of the expected outcome, R- expected return under a circumstance
Expected Value of the return
(0.25× 17%) + (0.7× 11%) + (0.05 × 2%) = 0.1205
=0.1205 × 100
= 12.1%
Expected Value of the return = 12.1%
Oriole Company had sales of $392000, variable costs of $192000, and direct fixed costs totaling $97000. The company’s operating assets total $809000, and its required return is 10%. How much is the residual income?
Answer:
Residual Income = $ 22,100
Explanation:
Residual income is the excess of the controllable profit over the opportunity cost of capital invested.
It is computed as follows:
Residual income = Controllable profit - (cost of capital× operating assets)
Controllable profit = 392,000 - 192,000- 97,000 = $103,000
Residual income = 103,000 - (10%× 809,000)= 22,100
Residual Income = $ 22,100
On January 1, 2021, Gundy Enterprises purchases an office building for $360,000, paying $60,000 down and borrowing the remaining $300,000, signing a 7%, 10-year mortgage. Installment payments of $3,483.25 are due at the end of each month, with the first payment due on January 31, 2021.
Required:
a. Record the purchase of the building on January 1, 2015.
b. Record the first monthly mortgage payment on January 31, 2015. How much of the first payment goes to interest expense and how much goes to reducing the carrying value of the loan?
c. Total payments over the 10 years are $417,990 ($3,483.25 x 120 monthly payments). How much of this is interest expense and how much is actual payment of the loan?
Answer:
A.Dr Building $360,000
Cr Cash $60,000
Cr Notes Payable $300,000
B.Dr Interest Expense $1,750
Dr Notes Payable $1,733.25
Cr Cash $3,483.25
C.$117,990
Explanation:
Grundy Enterprises
1/1/18
Cash Paid/monthly payment
Interest Expense/carrying value
Decrease in Carrying Value
Carrying Value/prior carrying value- $300,000
1/31/18
Cash Paid/Monthly Payment - $3,483.25
Interest Expense/Carrying Value - $1,750.00
Decrease in Carrying Value - $1,733.25
Carrying Value/Prior Carrying Value - (300,000- 1,733.25) $298,266.75
2/28/18
Cash Paid/Monthly Payment - $3,483.25
Interest Expense/Carrying Value - $1,739.89
Decrease in Carrying Value - $1,743.36
Carrying Value/Prior Carrying Value - $296,523.39
A. Preparation of the entry to record the purchase of the building on January 1, 2015.
Dr Building $360,000
Cr Cash $60,000
Cr Notes Payable $300,000
B. Preparation to Record the first monthly mortgage payment on January 31, 2015 and How much of the first payment goes to interest expense and the carrying value of the loan
Dr Interest Expense $1,750
Dr Notes Payable $1,733.25
Cr Cash $3,483.25
C. Calculation of How much of this is interest expense and how much is actual payment of the loan.
Total Paid: $417,990
Less: Principal Balance: ($300,000)
Amount of Interest Paid: $117,990
a.) The purchase of the building on January 1, 2015 is $300000
b.) The amount that goes to interest expense is $1750 and $1733.25 goes towards reducing the carrying value.
c.) The total actual payment on this loan is $300000 and the interest expense = $1733.25
a. Asset = Liability + Equity
asset = 360000 building
Liability = 300000
Equity = - 60000
360000 = liability + 60000
Liability = 360000 - 60000
= $300000
The purchase of the building on January 1 2015 is $300000
b. Interest expense calculation
value = 300000
Interest rate = 7%
time = 1 month out of 12 months
Interest = 0.07*300000*1/12
= $1750
The fall in the carrying value
Payment in the month = 3483.25
Interest = $1750
Decrease = 3483.25-1750
= $1733.25
The carrying at Jan 31st
= 300000-1733.25
= $298266.75
Interest = 298266.75*0.07*1/12
= $1739.89
c. Total loan = $417990
Actual payment = 300000
difference = 417990-300000
= $117990
The total actual payment on this loan is $300000 and the interest expense = $1733.25
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Walther PPK: George Lazenby's bonds mature in nine years, offer an annual seven percent coupon rate, make semiannual payments, and have a yield to maturity of eight peprcent. What is the market value per bond considering the face value is $1,000
Answer:
The answer is $936.70
Explanation:
This is a semiannual paying coupon.
N(Number of periods) = 18 years ( 9years x 2)
I/Y(Yield to maturity) = 4percent( 8 percent ÷ 2)
PV(present value or market price) = ?
PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)
FV( Future value or par value) = $1,000.
We are using a Financial calculator for this.
N= 18; I/Y = 4; PMT = 35; FV= $1,000; CPT PV= -936.79
Therefore, the market price of the bond is $936.70
Edwards Company applies manufacturing overhead to jobs on the basis of machine hours used. Overhead costs are expected to total $1,800,000 for the year, and machine usage is estimated at 200,000 hours. In January, $186,000 of overhead costs are incurred and 22,000 machine hours are used. For the remainder of the year, $1,940,000 of additional overhead costs are incurred and 214,000 additional machine hours are worked.
1. Compute the manufacturing overhead rate for the year.
2. What is the amount of over- or underapplied overhead at January 31?
3. What is the amount of over- or underapplied overhead at December 31?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Overhead costs are expected to total $1,800,000 for the year, and machine usage is estimated at 200,000 hours.
January:
$186,000 of overhead costs are incurred and 22,000 machine hours are used.
The remainder of the year:
$1,940,000 of additional overhead costs are incurred and 214,000 additional machine hours are worked.
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= 1,800,000 / 200,000
Predetermined manufacturing overhead rate= $9 per machine-hours
Now, we can determine over/under allocation:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Under/over applied overhead= real overhead - allocated overhead
January:
Allocated MOH= 9*22,000= $198,000
Under/over applied overhead= 186,000 - 198,000= $12,000 overallocated
Rest of the year:
Allocated MOH= 9*214,000= 1,926,000
Under/over applied overhead= 1,940,000 - 1,926,000= $14,000 underallocated
For the whole year:
Allocated MOH= 9*236,000= 2,124,000
Under/over applied overhead= 2,126,000 - 2,124,000= $2,000 underallocated
Assume a Cobb-Douglas production function of the form: q equals 10 Upper L Superscript 0.33 Baseline Upper K Superscript 0.75. What type of returns to scaleLOADING... does this production function exhibit?
Answer:
Since 0.33 + 0.75 = 1.08 is greater than one, this production function therefore exhibits increasing returns to scale.
Explanation:
From the question, we have the following restated equation:
[tex]q=10L^{0.33} K^{0.75}[/tex]
Where q is the output, and L and K are inputs
To determine the types of returns to scale, we increase each of L and K inputs by constant amount c as follows:
[tex]q = 10(cL)^{0.33}(cK)^{0.75}[/tex]
We can now solve as follows;
[tex]q = 10c^{0.33+0.75} L^{0.33}K^{0.75}[/tex]
[tex]q=c^{1.08} L^{0.33} K^{0.75}[/tex]
Since 0.33 + 0.75 = 1.08 is greater than one, this production function therefore exhibits increasing returns to scale.
1. At year-end, Harris Co. had shipped $12,500 of merchandise FOB destination to Harlow Co. Which company should include the $12,500 of merchandise in transit as part of its year-end inventory?
2. Harris Company has shipped $20,000 of goods to Harlow Co., and Harlow Co. has arranged to sell the goods for Harris. Identify the consignor and the consignee. Which company should include any unsold goods as part of its inventory?
Answer:
1. Harris company
2. The Consignor should be Harris Company
The Consignee should be Harlow Company
Explanation:
1.Harris company should include the amount of $12,500 as part of their year end inventory because based on the information given we were told that Harris Company was the company which at year-end shipped $12,500 of merchandise FOB destination to Harlow Co.
2.
The Consignor should be Harris Company
The Consignee should be Harlow Company
Because Harris Company was the company which shipped the goods worth $20,000 to Harlow Co Which means HARRIS COMPANY is the CONSIGNOR in which Harlow Co. has as well arranged to sell the goods for Harris which means HARLOW COMPANY is the CONSIGNEE because they are the buyer of the goods
Therefore Harris company should tend to include any goods which are unsold as part of the inventory.
If a gain of $221000 is realized in the cash sale of a building having a book value of $882000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
Answer:
$1,103,000
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
For assets disposed, the amount received from the disposal is the amount recorded as an investing activity.
Amount received - Book value of asset = Gain on disposal
Amount received = $221000 + $882000
= $1,103,000
A government has the following liabilities at the end of the year: General obligation bonds Compensated absences Salaries payable $1,500,00 120,000 40,000 What amount of liabilities should be reported in the governmental activities column of the government-wide statement of net position
Answer:
What should be reported is $1660000
Explanation:
Solution
Given that:
Thus
General obligation bonds=$1,500000
Compensated absences=$120,000
Total liabilities in the governmental activities column=$1660000
Therefore, the amount $1660000 should be reported in the governmental activities column of the government-wide statement of net position.
Jackson Manufacturing Company had a beginning inventory of $30,000. During the year, the company recorded inventory purchases of $90,000 and cost of goods sold of $100,000. The ending inventory must equal:
Answer:
The answer is $20,000
Explanation:
Solution
Given that:
Jackson Manufacturing Beginning inventory = 30,000
Inventory purchases recorded = $90,000
Cost of goods sold = $100,000
Then
We find the ending inventory which is given below:
Now
The inventory (ending) is = beginning inventory + purchases - cost of goods sold
= $30,000 + $90,000 - $100,000
=$20,000
Hence, the ending inventory must equal the amount of $20,000
Grayille Financial Consultants, Inc. is planning to reduce the number of days it allows its clients to pay their bills from 45 days to 30 days. Grayille believes that this policy change will have no effect on either sales or costs. Any asset changes resulting from this new policy will be offset by a corresponding and equal change in equity. All else constant, this new collection policy should be expected to (circle all that apply - if the correct answer is a and b and you circle any letter(s) other than a and b, you will receive no credit - that is, no partial credit will be awarded for your answer to this question):
Answer: c. Lower the firm's quick ratio.
d. Lower the firm's current ratio.
Explanation:
Reducing the amount of time that clients have to pay will reduce the amount of Account Receivables as clients will no longer have long outstanding due dates. This reduction in Accounts Receivables will be felt by the Quick and Current ratios.
Quick Ratio formula
= [tex]\frac{Current Assets - Inventory}{Current Liabilities}[/tex]
Current Ratio Formula
= [tex]\frac{Current Assets}{Current Liabilties}[/tex]
As is evident from the formulas, Current Assets are integral to both ratios and as Accounts Receivables is a current asset that will be reduced, the current assets will be reduced and by extension both the Current and Quick Ratios will be reduced as well.
The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $35,000 per year forever. If the required return on this investment is 5.5 percent, how much will you pay for the policy
Answer:
$636,363.63
Explanation:
The computation of the amount paid for the policy is shown below:
As we know that
The Present value of perpetuity = Annual inflows ÷ required rate of return on this investment
where,
Annual inflows is $35,000
And, the required return is 5.5%
Now placing these values to the above formula
So, the amount paid for the policy is
= $35,000 ÷ 5.5%
= $636,363.63
Foot Locker, Inc., is a large global retailer of athletic footwear and apparel selling directly to customers and through the Internet. It includes the Foot Locker family of stores, Champs Sports, Footaction, Runners Point, and Sidestep. The following are a few of Foot Locker's investing and financing activities as reflected in a recent annual statement of cash flows.
a. Capital expenditures (for property, plant, and equipment).
b. Repurchases of common stock from investors.
c. Sale of short-term investments.
d. Issuance of common stock.
e. Purchases of short-term investments.
f. Dividends paid on common stock.
Required:
For activities (a) through (f), indicate whether the activity is investing (l) or financing (F) and the direction of the effect on cash flows (+ for increases cash; - for decreases cash).
Answer:
a. Capital expenditures (for property, plant, and equipment) : (l), -
b. Repurchases of common stock from investors : (F), -
c. Sale of short-term investments : (O) +
d. Issuance of common stock : (F) +
e. Purchases of short-term investments : (O) -
f. Dividends paid on common stock : (F) -
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.
The Village of Seaside Pines prepared the following enterprise fund Trial Balance as of December 31, 2020, the last day of its fiscal year. The enterprise fund was established this year through a transfer from the General Fund. Prepare the reconciliation of operating income to net cash provided by operating activities that would appear at the bottom of the December 31 Statement of Cash Flows. Recall that the beginning balance of all assets and liabilities is zero. (Deductions should be entered as a negative amount.)
Answer:
Hello your question lacks some details and attached to the answer is the missing parts of the question although the year is slightly different ( 2017 ) and yours is 2020 but the General idea of what you want is contained in it
ANSWER: Net cash provided by operating activities = 93000
Explanation:
Before preparing the reconciliation of operating income to net cash provided by operating activities we will have to calculate the operating income form the given table
Charge for sales = 555,000
Less: Cost of goods = -497,000
Administrative and selling expenses = -49,000
Depreciation expense = -47,000
Operating Income = (charge for sales + cost of goods + admin and selling expenses + depreciation expenses ) = -38000
Note : interest income and interest expenses are not considered when calculating operating income
Note : when calculating the net cash provided, Increase in current liabilities is been added and increase in current assets is been subtracted while depreciation is been added to the operating income
ATTACHED TO THIS ANSWER IS THE TABLES SHOWING THE COMPLETE ANSWER AND THE COMPLETE QUESTION
An entrepreneur is investigating starting a company that provides tax advice to small companies. In order to position his company differently from the existing competitors, the entrepreneur must:
Answer:
b. provide tax advice either in a different manner or provide a different kind of tax service than competitors.
Explanation:
When the company's objective is to position itself in the market differently from competitors, the focus should be on offering a product or service that has different attributes than the competitor.
A differentiated product or service can be defined by presenting innovative features or functions in the market, which generates the desire for the purchase in the customer.
Investing in different attributes for a good or service generates value for the brand and helps to achieve strategic advantages that competitors are unable to achieve.
Therefore, the most suitable alternative for this issue is the letter b, because to position your company differently from existing competitors, the entrepreneur must provide tax advice differently or provide a different type of tax service than competitors.
The following data were selected from the records of Sykes Company for the year ended December 31, 2014.
Balances January 1, 2014
Accounts receivable (various customers) $ 122,000
Allowance for doubtful accounts 8,000
In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 5/10, n/30 (assume a unit sales price of $900 in all transactions and use the gross method to record sales revenue).
Transactions during 2014
a. Sold merchandise for cash, $248,000.
b. Sold merchandise to R. Smith; invoice price, $11,500.
c. Sold merchandise to K. Miller; invoice price, $29,000.
d.
Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit.
e. Sold merchandise to B. Sears; invoice price, $23,000.
f. R. Smith paid his account in full within the discount period.
g. Collected $92,000 cash from customer sales on credit in prior year, all within the discount periods.
h. K. Miller paid the invoice in (c) within the discount period.
i. Sold merchandise to R. Roy; invoice price, $18,500.
j.
Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund.
k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year.
l. Wrote off a 2013 account of $5,000 after deciding that the amount would never be collected.
m. The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns.
Required:
1. Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account and the adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is used as an example. (Round your answers to the nearest whole dollar amount. Amounts to be deducted should be indicated by a minus sign.)
Transactions | Sales Revenue | Sales discounts | Sales Returns and Allowances | Bad Debt
a
b
c
d
e
f
g
h
i
j
k
l
m
Show how the accounts related to the preceding sale and collection activities should be reported on the 2014 income statement. (Treat sales discounts as a contra-revenue.)
Sales renenue
Less: Sales and return
Sales discounts
Net sales revenue
Operating expenses
Bad debt expenses
Answer:
Sales Revenue: 316,000
Sales Discounts Taken: 2680
Sales Returns and Allowances: 4000
Bad Debt Expense: 1155
Explanation:
A. Sales Revenue- 235,000
B. Sales Revenue- 11,500
C. Sales Revenue- 26,500
D. Sales Returns and Allowances- 500
E. Sales Revenue- 24,000
F. Sales Discounts (Taken)- 220
G. Sales Discounts (Taken)
(Sales discounts (taken) $98,000 ÷ (1 - 0.02) = $100,000 gross sales; $100,000 × 0.02 = $2,000)
H. Sales Discounts (Taken)- 530
I. Sales Revenue- 19,000
J. Sales Discounts (Taken) - (70)
Sales Returns and Allownaces- 3500
K.
L.
M. Bad Debt Expense
Credit sales ($11,500 + $26,500 + $24,000 + $19,000) =$81,000
Less: Sales returns ($500 + $3,500)= 4,000
______________________________
Net sales revenue
77,000
Estimated bad debt rate
× 1.5 %
_____________________________
Bad debt expense
+$1,155
At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 1,269,730 Credit sales $ 3,913,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 1,185,639 debit Allowance for doubtful accounts $ 17,990 debit Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. Bad debts are estimated to be 3% of credit sales. Bad debts are estimated to be 2% of total sales. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible
Answer:
Hawke Company
1. Adjusting Journal Entries to record bad debts under:
a) Bad debts are estimated to be 3% of credit sales:
Debit Bad Debts Expense $135,380
Credit Allowance for Doubtful Accounts $135,380
To record the bad debt expense for the period.
b) Bad debts are estimated to be 2% of total sales:
Debit Bad Debts Expense $121,645
Credit Allowance for Doubtful Accounts $121,645
To record the bad debt expense for the period.
c) An ageing analysis estimates that 6% of year-end accounts receivable are uncollectible:
Debit Bad Debts Expense $89,128
Credit Allowance for Doubtful Accounts $89,128
To record bad debt expense for the period.
Explanation:
a) Allowance for doubtful accounts should have a credit balance of $117,390 ($3,913,000 * 3%). Since there was a debit balance in the unadjusted trial balance of $17,990, the two are added to arrive at what should be expensed.
b) Allowance for doubtful accounts will have a credit balance of $103,655 ($5,182,730 * 2%). With a debit balance in the unadjusted trial balance of $17,990, the sum of $121,645 (amount expensed) will bring the balance to a credit balance of $103,655.
c) Allowance for doubtful accounts will have a credit balance of $71,138 ($ 1,185,639 * 6%). With a debit balance in the unadjusted trial balance of $17,990, the sum of $89,128 will be expensed to bring the balance to a credit balance of $71,138.
Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend yield of 7.50% and a par value of $60. If the market value for the preferred stock is $70, what is the required return on this preferred stock?
Answer:
10.71%
Explanation:
The computation of the required rate of return on this preferred stock is shown below :
The Required return on preferred stock is
= Dividend ÷ market value of preferred stock
= 7.50 ÷ $70
= 10.71%
By dividing the dividend from the market value of preferred stock we can get the Required return on preferred stock and the same is to be considered
therefore we ignored the par value i.e $60 as this is not relevant
Answer:
$61.54
Hope this helps! good luck :)
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film:
Willingness to Pay (Dollars)
Musashi Sean Bob Eric
First film 10 9 8 3
Second film 8 7 6 2
Third film 6 5 4 1
Fourth film 4 3 2 0
Fifth film 2 1 0 0
Within the dorm room, the showing of a movie ( IS OR IS NOT ) a public good.
If it costs $8 to rent a movie, the roommates should rent__________movies in order to maximize the total surplus.
Suppose the roommates choose to rent the optimal number of movies you just indicated and then split the cost of renting equally.
This means that each roommate will pay $__________.
Answer:
1. Inside the dorm room, the movies are Non-Rival which means that one person can watch the movie and it will not diminish the ability of others to watch as well.
Also as they are all in the same dorm, the showing of the movie is Non-Excludable as well because no one can stop the other from watching.
Public good is both Non-Rival and Non-Excludable so the showing of a movie IS a public good.
2.
Musashi Sean Bob Eric Total Willingness to pay
10 9 8 3 30
8 7 6 2 23
6 5 4 1 16
4 3 2 0 9
2 1 0 0 3
The optimal number of movies that can be rented is dependent on their total willingness to pay. If their Total willingness to pay for the movie is above $8 which is the cost of a movie, then they will get it. From the table, the fifth movie is below the price of $8 so they should rent 4 movies.
3. If they rent 4 movies and there are 4 of them then the cost per person is;
= (8 *4)/4 people
= 24/4
= $8
This means that each roommate will pay $8.
Larned Corporation recorded the following transactions for the just completed month.
$72,000 in raw materials were purchased on account. $70,000 in raw materials were used in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials. Total labor wages of $106,000 were paid in cash. Of this amount, $102,200 was for direct labor and the remainder was for indirect labor. Depreciation of $193,000 was incurred on factory equipment.
Required:
Record the above transactions in journal entries.
Answer:
Larned Corporation
Journal Entries
Sr. No Account Debit Credit
1 Materials $72,000
Accounts Payable $72,000
$72,000 in raw materials were purchased on account.
2 Work in Process $62,000
Materials Inventory $62,000
$70,000 in raw materials were used in production. Of this amount, $62,000 was for direct materials
3 Manufacturing Overheads $8000
Materials Inventory $ 8000
$70,000 in raw materials were used in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials.
4 Work In Process $ 102,000
Payroll ( Direct Labor ) $102,000
$102,200 was for direct labor
5 Manufacturing Overheads $3800
Payroll (Indirect Labor) $3800
Total labor wages of $106,000 were paid in cash. Of this amount, $102,200 was for direct labor and the remainder was for indirect labor.
6 Depreciation $193,000
Factory Overhead Control Account $193,000
Depreciation of $193,000 was incurred on factory equipment.