Answer:
c. III only
Explanation:
The correct option is - c. III only
Reason -
III option is correct because The trade-off theory states that there is an optimal level of debt for firms, given the benefits of tax shields and the costs of financial distress
On January 1, Marigold Corp. issued $6600000, 9% bonds for $7029000. The market rate of interest for these bonds is 8%. Interest is payable annually on December 31. Marigold uses the effective-interest method of amortizing bond premium. At the end of the first year, Marigold should report unamortized bond premium of:________
a) $397320
b) $398580
c) $375320
d) $297000
Answer:
a) $397320
Explanation:
Total premium of bond = Issue price - Par value
Total premium of bond = $7,029,000 - $6,600,000
Total premium of bond = $429,000
Total Annual payment to be made by firm = Coupon rate* par value of bond
= 0.09*$6,600,000
= $594,000
Interest part of the total annual payment made by firm = Market rate*Issue price of bond
= 0.08*$7,029,000
= $562,320
Premium of bond to be amortized at the end of year 1 = Total Annual payment to be made by firm - Interest part of the total annual payment made by firm
= $594,000 - $562,320
= $31,680
Unamortized premium at the end of year 1 = total premium of bond - amortized premium at the end of year 1
= $429,000 - $31,680
= $397,320
In the trade-off theory, debt levels chosen to balance interest tax shield against the costs of financial distress imply:________
a. an interior optimum (firm value maximizing) debt ratio
b. that investors are irrational, since they require lower returns the hgher the risk
c. that a firm would use little to no debt
d. that a firm would borrow as much as possible
Answer:
a) an interior optimum (firm value maximizing) debt ratio
Explanation:
Trade off Theory is about capital structure of an economic unit. It mentions about the benefit of debt - ie tax saving, as interest on debt is tax deductible; & cost of debt - bankruptcy & insolvency risk, due to fix interest cost.
The theory depicts the debt level, which is best to - balance interest tax shield against the costs of financial distress imply, which implies that it seeks a balance between benefit & cost of debt.
So, the theory finds the best interior optimum (firm value maximising) debt equity ratio.
You must choose between four pieces of comparable equipment based on the cash flows given below. All four pieces have a life of 8 years.
Parameter A B C D
First cost $25,000 $35,000 $20,000 $40,000
Annual costs $8,000 $6,000 $9,000 $5,000
Salvage value $2,500 $3,500 $2,000 $4,000
The discount rate is 12%. Ignore taxes. The most preferable top two projects and the difference between their present worth values are most nearly:_____.
A. A and C, $234.
B. B and D, $170.
C. A and C, $170.
D. B and D, $234.
Answer:
You must choose between four pieces of comparable equipment based on the cash flows.
Explanation:
Kemper Company's balance sheet and income statement are shown below (in millions of dollars). The company and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the $5 preferred will be exchanged for one share of $1.00 preferred with a par value of $25 plus one 9% subordinated income debenture with a par value of $75. The $9 preferred issue will be retired with cash. The company's tax rate is 30 percent.
Balance Sheet prior to Reorganization (in millions
Current Assets 400 Current liabilities 350
Net fixed assets 450 Advance payments 20
$5 preferred stock, $100 par value (1,000,000) shares 100
$9 preferred stock, no par, callable at 100 (160,000 shares) 30
Common stock, $0.10 par value (10,000,000) shares 50
Retained earnings 300
Total assets 850 Total claims 850
a. Construct the pro forma balance sheet after reorganization takes place. Show the new preferred at its par value.
b. Construct the pro forma income statement after reorganization takes place. How does the recapitalization affect net income available to common stockholders?
Answer:
Kemper Company
a. Pro forma Balance Sheet after Reorganization (in millions)
Current Assets 400
Net fixed assets 450
Total assets 850
Current liabilities 350
Advance payments 20
9% subordinated Debenture,
$75 par value (1,000,000) 75
$1 preferred stock, $25 par value
(1,000,000) shares 25
Common stock, $0.10 par value
(10,000,000) shares 50
Retained earnings 300
b. Pro forma Income Statement after Reorganization (in millions)
Retained earnings 300
Income tax 128.6 ($300/(1 - 0.3) - $300)
add $5 preferred dividend 5
$9 preferred dividend 1.44
Less: 9% debenture interest (6.75)
Income before taxes $428.29
Income tax 128.49
Income after taxes $299.80
Preferred dividend 1.00
Retained earnings $298.80
The recapitalization reduces the net income available to common stockholders by $0.2 million.
Explanation:
a) Data and Calculations:
Kemper Company
Balance Sheet prior to Reorganization (in millions
Current Assets 400
Net fixed assets 450
Total assets 850
Current liabilities 350
Advance payments 20
$5 preferred stock, $100 par value
(1,000,000) shares 100
$9 preferred stock, no par,
callable at 100 (160,000 shares) 30
Common stock, $0.10 par value
(10,000,000) shares 50
Retained earnings 300
Total assets 850 Total claims 850
Transaction Analysis:
$5 preferred stock, $100 par value (1,000,000) shares $100 $1 Preferred stock, $25 par value (1,000,000) shares $25 9% subordinated Debenture, $75 par value (1,000,000) $75
$9 preferred stock, no par, callable at 100 (160,000 shares) 30 Cash $30
Total assets 850 Total claims 850
The following transactions occurred during July:
a. Received $1,090 cash for services provided to a customer during July.
b. Issued common stock for $5,800 cash.
c. Received $940 from a customer in partial payment of his account receivable which arose from sales in June.
d. Provided services to a customer on credit, $565.
e. Borrowed $7,900 from the bank by signing a promissory note.
f. Received $1,440 cash from a customer for services to be performed next year.
Required:
What was the amount of revenue for July?
Answer:
$1,655
Explanation:
Revenue results from transactions with customers. We recognize revenue when services or goods have been transferred to customers not as when they are paid.
Calculation of Revenue for July :
Transaction a $1,090
Transaction d $565
Total Revenue $1,655
therefore,
The amount of revenue for July is $1,655.
For what reason might keeping an accounts payable subsidiary ledger be unnecessary for a business? A. if the business is very small B. if the business processes invoices for payment. C. if the business pays only on account D. if the business has more customers then vendors
Answer:
A. if the business is very small
Explanation:
Subsidiary ledgers are maintained to support the entries in the main ledger. They give more details of the individual items in the main ledger.
They are usually used when a company has large sales volumes to make sure transactions are accurate.
However in small businesses there no need for subsidiary ledger in a small company.
Accounts payable subsidiary ledger shows details of amounts owed to suppliers by a business.
When the business is very small there will be no need for this.
The accountant for Christiane Company forgot to make an adjusting entry for Depreciation expense for the current year. Which of the following is one of the effects of this error in the current year?
A. Revenues are overstated.
B. Net income is understated.
C. Total assets are overstated.
D. Total assets are understated.
Answer:
B. Net income is understated.
Explanation:
While computing the bills for an organization, if one makes an error while valuation of the of the goods or an inventory or a depreciation expenses, on the balance sheet, then it causes a corresponding error in the balance sheet for the company, which is represented on the income statement.
Thus in the context, when the accountant of Christiane company did not make an entry of the depreciation cost in the balance sheet for the current year, it produces an error for the current year in the form of the net income that is being understated.
Thornton Industries began construction of a warehouse on July 1, 2021. The project was completed on March 31, 2022. No new loans were required to fund construction. Thornton does have the following two interest-bearing liabilities that were outstanding throughout the construction period:
$3,000,000, 12% note
$7,000,000, 7% bonds
Construction expenditures incurred were as follows:
July 1, 2021 $ 700,000
September 30, 2021 990,000
November 30, 2021 990,000
January 30, 2022 930,000
The company’s fiscal year-end is December 31.
Required:
Calculate the amount of interest capitalized for 2021 and 2022.
Calculate the amount of interest capitalized for 2021. (Do not round the intermediate calculations. Round your percentage answers to 1 decimal place (i.e. 0.123 should be entered as 12.3%).)
Date Expenditure Weight Average
July 1, 2021 x =
September 30, 2021 x =
November 30, 2021 x =
Accumulated expenditures
Amount Interest Rate Capitalized Interest
Average accumulated expenditures x % x =
2021
Date Expenditure Weight Average
January 1, 2022 x =
January 30, 2022 x =
Amount Interest Rate Capitalized Interest
Average accumulated expenditures x x =
Solution :
The interest capitalization for 2021
Date Expenditure x Weight = Average
1 July,2021 700,000 6/12 350,000
30 Sept,2021 990,000 3/12 247,500
30 Nov, 2021 990,000 1/12 82,500
Total 2,680,000 680,000
Amount x interest rate = Capitalization interest
Average total expenditure 680,000 8.50% 57,800
The weighted average interest rate
[tex]$=\frac{3,000,000 \times 12\% + 7,000,000 \times 7\%}{3,000,000+7,000,000}$[/tex]
= 8.5 %
Balance as on 1st Jan, 2022 = [tex]$2,680,000+57,800 = 2,737,800$[/tex]
The interest Capitalized for 2022
Date Expenditure x Weight = Average
1 Jan,2022 2,737,800 12/12 2,737,800
30 Jan, 2022 930,000 11/12 852,500
Accumulated 3,667,800 3,590,300
expenditures
Amount x interest rate = Capitalization interest
Average accumulated 3,590,000 8.50% 305,175.5
expenditure
The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and finally pays $1,000 every six months over the last six years. Bond N also has a face value of $30,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 8 percent compounded semiannually, what is the current price of Bond M? of Bond N?
Answer:
a. Current value of Bond M = $5,066.47
b. Current value of Bond N = $1,380.93
Explanation:
a. Calculation of current price of Bond M
Note: See the attached excel file for the calculation of the total present of value of the coupon payment of Bond M.
From the attached excel file, we have:
Total present of value of the coupon payment of Bond M = $3,685.54
Present value of the face value of Bond M = Face value / (100% + Required return)^(Number of years to maturity * Number of years in a year) = $30,000 / (100% + 8%)^(20 * 2) = $1,380.93
Current value of Bond M = Total present of value of the coupon payment of Bond M + Present value of the face value of Bond M = $3,685.54 + $1,380.93 = $5,066.47
b. Calculation of current price of Bond N
Since no coupon payments is made over the life of Bond N, we have:
Current value of Bond N = Present value of the face value of Bond N = Face value / (100% + Required return)^(Number of years to maturity * Number of years in a year) = $30,000 / (100% + 8%)^(20 * 2) = $1,380.93
The financial statements for Highland Corporation included the following selected information:
Common stock $ 1,000,000
Retained earnings $ 770,000
Net income $ 1,020,000
Shares issued 100,000
Shares outstanding 77,000
Dividends declared and paid $ 690,000
The common stock was sold at a price of $31 per share.
1. What is the amount o f additional paid-in capital?
2. What was the amount of retained earnings at the beginning of the year?
3. How many shares are in treasury stock?
Answer:
Highland Corporation
1. The amount of additional paid-in capital is:
= $210,000.
2. The amount of the retained earnings at the beginning of the year is:
= $440,000.
3. The number of shares in treasury stock is:
= 23,000 shares.
Explanation:
a) Data and Calculations:
Common stock $ 1,000,000
Retained earnings $ 770,000
Net income $ 1,020,000
Shares issued 100,000
Shares outstanding 77,000
Dividends declared and paid $ 690,000
Price of common stock = $31 per share
1. The amount of additional paid-in capital is:
Issued stock = 100,000 * ($31 - $10) = $210,000
2. The amount of the retained earnings at the beginning of the year:
Retained earnings at the ending $ 770,000
Add dividend 690,000
Total available for distribution $1,460,000
Less Net income 1,020,000
Retained earnings at the beginning $440,000
3. Treasury stock = 23,000 (100,000 - 77,000)
On September 30, 2018, Corso Steel acquired a patent from Thermo Steel. The agreement specified that Corso will pay Thermo $1,000,000 immediately and then another $1,000,000 on September 30, 2020. An interest rate of 8% reflects the time value of money for this type of loan agreement.
What amount of interest expense, if any, would Corso record on December 31, 2019, the company’s fiscal year end?
a. $68,687.
b. $80,000.
c. $60,000.
d. $69,959.
Answer: $69,959
Explanation:
The amount of interest expense, that Corso will record on December 31, 2019, the company’s fiscal year end will be calculated thus:
First, we calculate the present value of payment which will be made on September 30,2020 and this will be:
= $1000000 × 0.857339
= $857339
Then, the interest expense on December 31,2018 will be:
= $857339 × 8%/12 × 3
= $17147
Therefore, the Interest expense on December 31,2019 will be:
= ($857339 + $17147) × 8%
= $874486 × 0.08
= $69959
Speedy has net income of $30,955, and assets at the beginning of the year of $212,000. Assets at the end of the year total $258,000. Compute its return on assets.
Answer:
13.17%
Explanation:
Given that;
Net income = $30,955
Asset at the beginning of the year = $212,000
Asset at the end of the year = $258,000
Return on assets = Net income / Average total assets
But,
Average total assets = (Assets at the beginning of the year + Assets at the end of the year ) / 2
Average total assets = ($212,000 + $258,000) / 2
Average total assets = $235,000
Therefore,
Return on assets = ($30,955 / $235,000) × 100
Return on assets = 13.17%
how to vote correctly? explain your answer
he following labor standards have been established for a particular product: Standard labor-hours per unit of output 10.1 hours Standard labor rate $ 13.90 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 7,900 hours Actual total labor cost $ 106,650 Actual output 1,100 units
What is the labor efficiency variance for the month?
a. $47,779 F
b. $47,779 U
c. $43,335 F
d. $44,619 F
Answer:
d. $44,619 Favorable
Explanation:
Given the above information, labor efficiency variance is computed as;
= (Standard quantity - Actual quantity) × Standard rate
Standard quantity = 10.1 × 1,100 = 11110
Actual quantity = 7,900
Standard rate = $13.9
Then,
Labor efficiency variance =
(11,110 - 7,900) × $13.90
= (3,210) × $13.90
= $44,619 favorable
Grouper Company purchased an electric wax melter on April 30, 2020, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.
List price of new melter $21,804
Cash paid 13,800
Cost of old melter (5-year life, $966 salvage value) 15,456
Accumulated Depreciation-old melter (straight-line) 8,694
Secondhand fair value of old melter 7,176
Required:
Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Sage’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2020.
Answer and Explanation:
The journal entries are shown below;
a. the exchange has commercial substance
Depreciation expense (($15,456 - $966) ÷ 5 × 4 ÷ 12 ) $966
To Accumulate depreciation $966
(being depreciation expense is recorded)
New Melter ($13,800 + $7,176) $20,976
accumulated depreciation ($8,694 + $966) $9,660
To loss on sale of melter $1,380
To old melter $15,456
To cash $13,800
(being equipment exchange is recorded)
b. The exchange lacks commercial substance
Depreciation expense (($15,456 - $966) ÷ 5 × 4 ÷ 12 ) $966
To Accumulate depreciation $966
(being current depreciation expense is recorded)
New Melter ($13,800 + $7,176) $20,976
accumulated depreciation ($8,694 + $966) $9,660
To loss on sale of melter $1,380
To old melter $15,456
To cash $13,800
(being equipment exchange is recorded)
what does it mean to be an economically responsible citizen?
Answer: Hope This Helps!
Explanation:
A responsible citizen has knowledge about his/her role in community, state and the world. A responsible citizen has a role in making the world a better place to live (for every components in biosphere). A responsible citizen is change agent that acts out against injustice in social, economic, and environmental sectors.
On March 1, 2021, McHugh Enterprises issued 1000 of its 8%, $1,000 bonds dated January 1, 2021 at 98. Interest is payable semiannually on January 1 and July 1. The bonds mature on January 1, 2031. McHugh paid $50,000 in bond issue costs. McHugh uses straight-line amortization. The interest expense recognized on July 1, 2021 will be:__________
Answer: $82000
Explanation:
Interest will be calculated as:
= No of shares x Face value per Share x Interest rate
= 1000 × $1000 × 8%
= 1000 × $1000 × 0.08
= $80000
Total face value of shares issued = 1000 × $1000 = $1,000,000
Issue Amount will be:
= No of shares x Face value per Share x Issue rate
= 1,000 x 1,000 x 98 %
= $980,000
Discount on issue will be:
= $1,000,000 - $980,000
= $20,000
Amortization of Discount on issue per annum will be:
= $20,000/10
= $2000
Therefore, interest expense will be:
= $80000 + $2000
= $82000
Gundy Company expects to produce 1,213,200 units of Product XX in 2020. Monthly production is expected to range from 80,000 to 114,000 units. Budgeted variable manufacturing costs per unit are: direct materials $5, direct labor $7, and overhead $11. Budgeted fixed manufacturing costs per unit for depreciation are $6 and for supervision are $1. In March 2020, the company incurs the following costs in producing 97,000 units: direct materials $515,000, direct labor $670,000, and variable overhead $1,073,000. Actual fixed costs were equal to budgeted fixed costs. Prepare a flexible budget report for March. (List variable costs before fixed costs.)
Answer:
Gundy Company
Flexible Budget Report for March 2020:
Actual Budget Flexible Budget Variance
Direct materials $515,000 $485,000 $30,000 U
Direct labor 670,000 679,000 9,000 F
Variable overhead 1,073,000 1,067,000 6,000 U
Actual fixed costs 679,000 679,000 0 None
Total costs incurred $2,937,000 $2,910,000 $27,000 U
Explanation:
a) Data and Calculations:
Expected production of Product XX in 2020 = 1,213,200 units
Monthly production range = 80,000 to 114,000 units
Budgeted variable manufacturing costs per unit are:
Direct materials $5
Direct labor $7
Overhead $11
Total variable $23
Fixed manufacturing costs per unit:
Depreciation are $6
Supervision are $1
Total fixed costs $7
Total costs = $30
March 2020 costs incurred for 97,000 units:
Direct materials $515,000
Direct labor $670,000
Variable overhead $1,073,000
Actual fixed costs 679,000
Total costs incurred $2,937,000
Flexible Budget Report for March 2020:
Actual Budget Flexible Budget Variance
Direct materials $515,000 $485,000 $30,000 U
Direct labor 670,000 679,000 9,000 F
Variable overhead 1,073,000 1,067,000 6,000 U
Actual fixed costs 679,000 679,000 0 None
Total costs incurred $2,937,000 $2,910,000 $27,000 U
Explain how introducing an agile method will improve the outcomes of software development?
Answer:
In simple words, Agile architecture, in fact, speeds up the distribution of original market value and ensures that quality is maximized during the implementation system by a process of constant preparation and feedback.
Projects are finished in shorter iterations, rendering them more achievable, thanks to the incremental design of the agile process. It also makes it possible to roll out goods efficiently and make adjustments at any time throughout the phase
Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's retained earnings stock basis taxable income for the year earnings and profits.
a. True
b. False
Answer: Earnings and profits.
Explanation:
This is not a true or false question as the options are given first.
It is assumed that dividends comes from earnings and profits so when a company distributes dividends, the total amount of those dividends cannot exceed the total amount of accumulated earnings and profits that the company has.
If the dividends exceed this amount, then they are to be considered as a return on capital to the shareholder and this is beholden to a different tax regime.
Foreign Sub, for which the functional currency is the local currency, recognizes a receivable on 11/12/20X1. On December 31, 20X1, Foreign Sub's parent company determines that the exchange rate has changed since the receivable was recognized. In its consolidated financial statements, the parent company should report Foreign Sub's receivable using the exchange rate:_______
a. in effect on 12/31/20X1.
b. that results in the highest reported receivable.
c. in effect on 11/12/20X1.
d. that results in the lowest reported receivable.
Answer:
c. in effect on 11/12/20X1.
Explanation:
According to IAS 21 the exchange rate used to record financial transactions in consolidated statement is the exchange rate at which the transaction took place. There is allowance to used an average rate if the historic rate is not accurate. The receivable should be recorded at the exchange rate which was in effect on 11/12/20X1.
Sabrina Company borrowed $225,000 to buy an equipment on January 1, 2019, and signed a 7% instalment note requiring annual equal payments of $24,704, including principal and interest at the end of every year for 15 years. Rounded to the nearest dollar, determine the balance in the Instalment Note Payable account on January 1, 2021, after making the first two annual payments.
a. $189,613.
b. $206,466.
c. $199.194.
d. $216,046.
Answer:
The correct option is b. $206,466.
Explanation:
Interest expense on December 31, 2019 = Note payable on January 1, 2019 * Interest rate = $225,000 * 7% = $15,750
Principal paid on December 31, 2019 = Annual fixed installment - Interest expense on December 31, 2019 = $24,704 - $15,750 = $8,954
Note Payable balance on January 1, 2020 = Note payable on January 1, 2019 - Principal paid on December 31, 2019 = $225,000 - $8,954 = $216,046
Interest expense on December 31, 2020 = Note payable on January 1, 2020 * Interest rate =$216,046 * 7% = $15,123
Principal paid on December 31, 2020 = Annual fixed installment - Interest expense on December 31, 2020 = $24,704 - $15,123 = $9,581
Note Payable balance on January 1, 2021 = Note payable balance on January 1, 2020 - Principal paid on December 31, 2020 = $216,046 - $9,581 = 206,465
From the options in the question, the closest one to the Note Payable balance on January 1, 2021 calculated above is b. $206,466. Therefore, the correct option is b. $206,466.
Aztec Company sells its product for $160 per unit. Its actual and budgeted sales follow
Units Dollars
April (actual) 4,500 720,000
May (actual) 2,200 352,000
June (budgeted) 5,000 800,000
July (budgeted) 4,000 799,000
August (budgeted) 3,000 600,000
All sales are on credit. Recent experience shows that 28% of credit sales are collected in the month of the sale, 42% in the month after the sale, 27% in the second month after the sale, and 3% prove to be uncollectible. The product's purchase price is $110 per unit, 60% of purchases made in a month is paid in that month and the other 40% is paid in the next month. The company has the policy to maintain an ending monthly inventory of 18% of the next month's unit sales plus a safety stock of 180 units. The April 30 and May 31 actual Inventory levels are consistent with this policy. Selling and administrative expenses for the year are $1,584,000 and are paid evenly throughout the year In cash. The company's minimum cash balance at the month-end is $120,000. This minimum is maintained, If necessary, by borrowing cash from the bank. If the balance exceeds $120,000, the company repays as much of the loan as It can without going below the minimum. This type of loan carries an annual 13% interest rate. On May 31, the loan balance is $39,500, and the company's cash balance Is $120,000
Required:
a. Prepare a schedule that shows the computation of cash collections of its credit sales (accounts receivable) in each of the months of June and July.
b. Prepare a schedule that shows the computation of budgeted ending inventories (in units) for April, May, June, and July.
c. Prepare the merchandise purchases budget for May, June, and July. Report calculations in units and then show the dollar amount of purchases for each month.
d. Prepare a schedule showing the computation of cash payments for product purchases for June and July.
e. Prepare a cash budget for June and July, including any loan activity and interest expense. Compute the loan balance at the end of each month.
Answer:
a. Total cash collections are as follows:
June = $605,760
July = $715,580
b. Ending units are as follows:
April = 623 units
May = 1,295 units
June = 1,055 units
July = 815 units
c-1. Units purchased are as follows:
May = 2,872 units
June = 4,760 units
July = 2,130 units
c-2. Purchases amount are as follows:
May = $315,920
June = $523,600
July = $234,300
d. Cash payments for product purchases are as follows:
June = $440,528
July = $350,020
e. Loan Balance End of Month are as follows:
June = $1,324,163
July = $2,226,541
Explanation:
Note: See the attached excel file for requirements a, b, c, d, and e.
In the attached excel file under requirement e, the following calculations is made:
June additional loan = Minimum required cash balance - June Preliminary cash balance = $110,000 - (-$1,169,663) = $110,000 + $1,169,663 = $1,279,663
July additional loan = Minimum required cash balance - July Preliminary cash balance = $110,000 - (-$792,378) = $110,000 + $792,378 = $902,378
Howell Company has the following selected accounts after posting adjusting entries:
Accounts Payable $45,000
Notes Payable, 3 - month 80,000
Accumulated Depreciation - Equipment 14,000
Payroll and Benefits Payable 27,000
Notes Payable, 5-year, 8% 30,000
Estimated Warranty Liability 34,000
Payroll Tax Expense 6,000
Interest Payable 3,000
Mortgage Payable 200,000
Sales Tax Payable 16,000
Instructions:
(a) Prepare the current liability section of Howell Company's balance sheet, assuming $25,000 of the mortgage is payable next year.
(b) Comment on Howell's liquidity, assuming total current assets are $450,000.
Answer and Explanation:
a. The preparation of the current liability section is presented below;
Notes payable - 3 months $80,000
Accounts payable $45,000
Estimated warranty liabilities $34,000
Payroll and benefit payable $27,000
Current portion of the Mortgage $25,000
Sales Tax payable $16,000
Interest payable $3,000
Total $230,000
b. We know that
Current ratio = current asset ÷ current liabilty
= $450,000 ÷ $230,000
= 1.95 times
This represent the company is in the good liquidity position to pay off the short term liability
Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 370 units and of Product B is 740 units. There are three activity cost pools, with total cost and activity as follows:
Total Activity
Activity Cost Pools Total Cost Product A Product B Total
Activity 1 $23,205 900 150 1,050
Activity 2 $38,850 1,950 1,550 3,500
Activity 3 $10,598 145 245 390
The activity rate for Activity 2 is closest to:______.
a. 43.17.
b. 25.06.
c. 19.92.
d. 11.10.
Answer:
Predetermined manufacturing overhead rate (A2)= $11.1
Explanation:
Giving the following information:
Total Activity
Activity Cost Pools Total Cost Total
Activity 2 $38,850 3,500
To calculate the activity 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 (A2)= 38,850 / 3,500
Predetermined manufacturing overhead rate (A2)= $11.1
You are an insurance salesman. If you make 12% on all insurance sales and sold an average $35,000 / month, how much money did you make at the end of 12 months?
Answer:
$50,400
Explanation:
To do this first start by multiplying .12 x 35,000. The answer should be $4,200. After this multiply 4,200 by 12 in order to get the amount of money earned over a 12 month period. This will give you $50,400.
Butler Corporation is considering the purchase of new equipment costing $84,000. The projected annual after-tax net income from the equipment is $3,000, after deducting $28,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 9% return on its investments. The present value of an annuity of $1 for different periods follows:
Periods 11 Percent
1 0.9009
2 1.7125
3 2.4437
4 3.1024
What is the net present value of the machine?
a. $(4,502).
b. $48,000.
c. $5,400.
d. $43,498.
e. $39,099.
Answer:
($16,2470.30)
Explanation:
After-tax cash flow = After-tax net income + Depreciation
After-tax cash flow = $3,000 + $28,000
After-tax cash flow = $31,000
Net present value = Purchase cost + After-tax cash flow*PVIFA(%, n)
Net present value = -$84,000 + $31,000*PVIFA(9%, 3)
Net present value = -$84,000 + $31,000*2.5313
Net present value = -$84,000 + $78,470.30
Net present value = -$16,2470.30
Carts Corporation
is trying to determine how long it takes for one product to pass through the production process. The following information was gathered regarding how many days the product spent in various production activities:
Activity Number of Days
Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assembly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Painting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
a. Which of the above activities are value-added?
b. What is Carts' total cycle time?
c. Determine Carts' manufacturing efficiency ratio.
d. If Carts implements a total quality management program and a just-in-time inventory system, which of the above activities could be eliminated? What would be the change in Carts' manufacturing efficiency ratio?
Answer:
Following are the solution to the given points:
Explanation:
For point a:
[tex]\text{Value added activities = Assembly and Paintings}[/tex]
For point b:
[tex]Activity \ \ \ \ \ \ \ \ \ \ \ \ \ Number \ of \ days \\\\[/tex]
[tex]Inspection \ \ \ \ \ \ \ \ \ \ \ \ \ 4 \\\\ Storage\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 3\\\\ Assembly\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 5\\\\ Handling \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 2\\\\ Painting \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 3\\\\ Packaging \ \ \ \ \ \ \ \ \ \ \ \ \ 1\\\\ Total \ cycle\ time \ \ \ \ \ 18\ days[/tex]
For point c:
[tex]\text{Efficiency ratio of production} = \frac{\text{time added value}}{\text{total cycle time}} \\\\[/tex]
[tex]\text{VAT = 5 days assembled + 3 days in paint = 8 days in painting}[/tex]
[tex]= \frac{8}{18} \\\\ = 44.44\%[/tex]
For point d:
In inspection, TQM will cut back 4 days
JIT reduces storage time by 3 days.
Reduction total = 7 days
Retrofiled The total time of the cycle[tex]= 18 \ days - 7 \ days = 11\ days[/tex]
Revised efficiency of production [tex]=\frac{8 \ days}{ 11\ days} =72.73\%[/tex]
The value added activities are assembly and paintings, the total chart's time is 18 days, the manufacturing ratio is 44.44% and the revised value of efficiency is 72.73%.
For point A:
What are value added activities?Value Added Activities are those activities that modify the product from raw material into finished goods that the customer is willing to pay for.
Hence, the value added activities are assembly and paintings.
For point B:
The chart of the total cycle time is given in the image below:
For option C:
[tex]\text{Production Efficiency Ratio}=\dfrac{\text{Time Value Added}}{\text{Sum of Time Cycle}}\\\\\text{Value Added Time(VAT)}= \text{Assembled 5 Days}+\text{Days in Paint}\\\\=8\text{Days}\\\\=\dfrac{8}{18}= 44.44\%.[/tex]
For option D:
Time Quantity Management = 4 days,
Just-in-time Inventory Shortage Time= 3 days,
Reduction Total = 7 days,
[tex]\text{Total Time of cycle}=\text{18 days - 7 days}\\\\=11\text{days}[/tex]
[tex]\text{Revised Efficiency Production}=\frac{\text{8 days}}{\text{11 days}}\\\\\\=72.73\%.[/tex]
Learn more about value-added, refer:
https://brainly.com/question/22241921
Jordan performs services for Ryan. Which, if any, of the following factors indicate that Jordan is an independent
contractor, rather than an employee?
a. Ryan sets the work schedule
b. Ryan provides the tools used.
c. Jordan follows a specific set of instructions from Ryan to complete tasks.
d. Jordan is paid based on tasks performed.
Answer:
d. Jordan is paid based on tasks performed.
Explanation:
In the given options, the option d seems to be an independent contractor instead of an employee as the independent contractor would be paid that depend upon the performance of the task. They are free to choose their time and resources in order to performing the task. In other way, they dont have to depend upon others
So, the option d is correct
Which portion of government does reapportionment significantly impact? A. Congress
B. Judicial branch, specifically federal judges
C. Senate
D. House of Representatoves
Answer:
judicial branch , specifically federal judges