Sales-Related and Purchase-Related Transactions for Seller and Buyer Using Perpetual Inventory System The following selected transactions were completed during April between Swan Company and Bird Company: Apr. 2. Swan Company sold merchandise on account to Bird Company, $19,900, terms FOB shipping point, 1/10, n/30. Swan Company paid freight of $435, which was added to the invoice. The cost of the merchandise sold was $12,500. 8. Swan Company sold merchandise on account to Bird Company, $25,000, terms FOB destination, 2/15, n/30. The cost of the merchandise sold was $15,000. 8. Swan Company paid freight of $650 for delivery of merchandise sold to Bird Company on April 8. 12. Bird Company paid Swan Company for purchase of April 2. 18. Swan Company paid Bird Company a refund of $2,000 for defective merchandise in the April 2 purchase. Bird Company agreed to keep the merchandise. 23. Bird Company paid Swan Company for purchase of April 8. 24. Swan Company sold merchandise on account to Bird Company, $11,200, terms FOB shipping point, n/45. The cost of the merchandise sold was $6,700. 26. Bird Company paid freight of $280 on April 24 purchase from Swan Company. Required: 1. Journalize the April transactions for Bird Company (the buyer). If an amount box does not require an entry, leave it blank.
Answer:
1. Bird Company (Buyer)
Apr-02 Dr Merchandise Inventory $20,335
Cr Accounts Payable $20,335
Apr-08 Dr Merchandise Inventory $25,000
Cr Accounts Payable $25,000
Apr-08 No entry
Apr-12 Dr Accounts Payable $20,335
Cr Cash $19,937
Cr Merchandise Inventory $ 398
Apr-18 Dr Cash $ 2,000
Cr Merchandise Inventory $ 2,000
Apr-23 Dr Accounts Payable $25,000
Cr Cash $24,750
Cr Merchandise Inventory $ 250
Apr-24 Dr Merchandise Inventory $11,200
Cr Accounts Payable $11,200
Apr-26 Dr Merchandise Inventory $280
Cr Cash $280
2.Swan Company (Seller)
Apr-02 Dr Accounts Receivable $20,335
Cr Sales Revenue $19,900
Cr Cash $435
Dr Cost of Goods Sold $12,500
Dr Merchandise Inventory $12,500
Apr-08 Dr Accounts Receivable $ 25,000
Cr Sales Revenue $ 25,000
Dr Cost of Goods Sold $15,000
Cr Merchandise Inventory $15,000
Apr-08 Dr Delivery Expense $650
Cr Cash $650
Apr-12 Dr Cash $19,937
Dr Sales Discounts $ 398
Cr Accounts Receivable $20,335
Apr-18 Dr Sales Returns and allowances $ 2,000
Cr Cash $ 2,000
Apr-23 Dr Cash $ 24,750
Dr Sales Discounts $ 250
Cr Accounts Receivable $25,000
Apr-24 Dr Accounts Receivable $11,200
Cr Sales Revenue $11,200
Dr Cost of Goods Sold $6,700
Cr Merchandise Inventory $6,700
Apr-26 No entry
Explanation:
1. Preparation of the journal entry for Bird Company (the buyer).
Bird Company (Buyer)
Apr-02 Dr Merchandise Inventory $20,335
Cr Accounts Payable $20,335
($19,900+$435)
Apr-08 Dr Merchandise Inventory $25,000
Cr Accounts Payable $25,000
Apr-08 No entry
Apr-12 Dr Accounts Payable $20,335
($19,900+$435)
Cr Cash $19,937
($20,334-$398)
Cr Merchandise Inventory $ 398
($19,900*2%)
Apr-18 Dr Cash $ 2,000
Cr Merchandise Inventory $ 2,000
Apr-23 Dr Accounts Payable $25,000
Cr Cash $24,750
($25,000-$250)
Cr Merchandise Inventory $ 250
(1%*$25,000)
Apr-24 Dr Merchandise Inventory $11,200
Cr Accounts Payable $11,200
Apr-26 Dr Merchandise Inventory $280
Cr Cash $280
2. Preparation of the journal entry for Bird Company the (Seller).
Swan Company (Seller)
Apr-02 Dr Accounts Receivable $20,335
($19,900+$435)
Cr Sales Revenue $19,900
Cr Cash $435
Dr Cost of Goods Sold $12,500
Dr Merchandise Inventory $12,500
Apr-08 Dr Accounts Receivable $ 25,000
Cr Sales Revenue $ 25,000
Dr Cost of Goods Sold $15,000
Cr Merchandise Inventory $15,000
Apr-08 Dr Delivery Expense $650
Cr Cash $650
Apr-12 Dr Cash $19,937
($20,335-$398)
Dr Sales Discounts $ 398
(2%*$19,900)
Cr Accounts Receivable $20,335
(19,900+435)
Apr-18 Dr Sales Returns and allowances $ 2,000
Cr Cash $ 2,000
Apr-23 Dr Cash $ 24,750
Dr Sales Discounts $ 250
(1%*25,000)
Cr Accounts Receivable $25,000
Apr-24 Dr Accounts Receivable $11,200
Cr Sales Revenue $11,200
Dr Cost of Goods Sold $6,700
Cr Merchandise Inventory $6,700
Apr-26 No entry
Drag each label to the correct location on the image.
Identify the features of stocks and bonds.
There are various types of investments. The most common type of investments are Bonds and Stocks.
What is difference between Bond and Stock?A bond is an investment which is considered as less risky because it provides fixed coupon rate as return.
A Stock is considered as risky investment because its returns vary.
The features of Bond are : It has Coupon rate, Face value and Maturity date
The features of Stock are : It has Closing Price
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Answer:
stock- closing price; bond- coupon rate, face value, maturity date
Explanation:
For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the direct method.
Potential Matches:
1 : Declaration and payment of a cash dividend.
2 : Decrease in accounts receivable during a period.
3 : Conversion of bonds payable into common stock.
4 : Purchase of land for cash.
5 : Decrease in merchandise inventory during a period.
6 : Decrease in accounts payable during a period.
7 : Issuance of preferred stock for cash.
8 : Sale of equipment for cash at book value.
: Added in determining cash receipts from customers
: Added in determining cash payments to suppliers
: Deducted in determining cash payments to suppliers
: Cash outflow-investing activity
: Cash inflow-investing activity
: Cash outflow-financing activity
: Cash inflow-financing activity
: Significant non-cash investing and financing activity
Answer and Explanation:
The matching is as follows;
1. The cash dividend should belong from financing activity as a cash outflow
2. If there is an decrease in the account receivable so it would be added for calculating the cash receipts from customers
3. The bond payable would be converted into common stock so this is a non-cash investing and financing activity
4. The land should be purchased for cash so it belong from investing activity as a cash outflow
5. There is a reduction in the merchandise inventory so it would be subtracted for calculating the cash payment made to suppliers
6. There is a reduction in the account payable so it would be added for calculating the cash payment made to suppliers
7. The preferred stock is issued for cash belong from financing activity as a cash inflow
8. The equipment is sold at the book value belong from investing activity as a cash inflow
On August 8, 2020, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000. On November 1, 2020, he purchased a new residence for $80,000. For 2020, Sam should recognize a gain on the sale of his residence of: a.$130,000 b.$25,000 c.$50,000 d.$0 e.None of these choices are correct.
Answer: d. $0
Explanation:
IRS rules state that if a person sells their principal residence in which they have lived for at least 2 of the last 5 years, they are not to be taxed on up to $250,000 of profit.
Sam had lived in the sold house for 10 years and this was his principal residence so it qualifies for the above provision.
Gain = Selling price - Basis
= 210,000 - 60,000
= $150,000.
This gain is less than the $250,000 allowed so Sam would recognize a gain of $0.
distribution strategies
A firm has production function y = f(x1, x2) = x 1^1/3 x 2 ^2/3 , where y is the amount of output, x1, x2 are the amount of input 1 and 2 respectively.
(a) Suppose the firms chooses to produce with inputs x1^0 , x2^0 . Calculate the marginal product with respect to input 1 and input 2. (Express them in terms of x1^0 , x2^0 .)
(b) What’s the firm’s technical rate of substitution given input level x1^0 , x2^0 ?
(c) Suppose the prices for input 1 and input 2 are are respectively w1 = 8, w2 = 2. The market price for the output is p = 50. In order to produce a fixed level of output y 0 = 8, what’s the optimal amount of each input that the firm chooses to use for production?
Answer: B
po yata ayan po yata yung sagot ?
Ring Me Up Inc. has net income of $143,100 for the year ended December 31, 2019. At the beginning of the year, 36,000 shares of common stock were outstanding. On May 1, an additional 18,000 shares were issued. On December 1, the company purchased 4,300 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ring Me Up paid the annual dividend on the 9,000 shares of 4.65%, $100 par value preferred stock that were outstanding the entire year.
Required:
Calculate basic earnings per share of common stock for the year ended December 31, 2019.
Answer:
$2.13
Explanation:
Computation what the basic earnings per share of common stock for the year ended December 31, 2019 be
Using this formula
Basic earnings per share = Net income - preferred dividends / Weighted average no of shares outstanding
Let plug in the formula
Basic earnings per share = $143,100 - (9,000*4.65%*100) / (36,000*12/12)+(18,000*8/12) - (4,300*1/12)
Basic earnings per share = $143,100 - 41,850 / 36,000+12,000 - 358
Basic earnings per share = 101,250 / 47,642
Basic earnings per share =$2.13
Therefore the basic earnings per share of common stock for the year ended December 31, 2019 be $2.13
Steeler Towel Company estimates its overhead to be $203,000. It expects to have 58,000 direct labor hours costing $1,015,000 in labor and utilizing 14,500 machine hours. Calculate the predetermined overhead rate using: Round your answers to two decimal places. A. Direct labor hours $fill in the blank 1 per direct labor hour B. Direct labor dollars $fill in the blank 2 per direct labor dollar C. Machine hours $fill in the blank 3 per machine hour
Answer and Explanation:
The computation of the predetermined overhead rate in the following cases are shown below:
As we know that
Predetermined overhead rate = Estimated overhead ÷ activity level
1.
= $203,000 ÷ 58,000
= $3.50 per direct labor hour
2.
= $203,000 ÷ $1,015,000
= $0.20 per direct labor dollar
3.
= $203,000 ÷ 14,500
= $14.00 per machine hour
The marketing decision and research problem should be defined clearly so that a. communication between the researcher and the decision maker can be reduced. b. research can be designed properly. c. the researcher knows what results to come up with. d. the decision maker understands the decision to be made. e. all of the above.
Answer:
b. research can be designed properly.
Explanation:
Market research can be defined as a strategic technique which typically involves the process of identifying, acquiring and analyzing informations about a business. It involves the use of product test, surveys, questionnaire, focus groups, interviews, etc.
Secondary market research can be defined as a method designed to determine the demographics of a particular target market.
The marketing decision and research problem should be defined clearly so that the research can be designed properly. Some of the factors to be considered in the design of a market research are;
I. Corporate culture.
II. The environment of the decision maker.
III. The decision maker's objectives.
Danks Corporation purchased a patent for $405,000 on September 1, 2019. It had a useful life of 10 years. On January 1, 2021, Danks spent $99,000 to successfully defend the patent in a lawsuit. Danks feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2021?
Answer:
Amortization Expense for year 2021 $90,000
Explanation:
The computation of the amount that should be reported for patent amortization for the year 2021 is shown below:
But before that following calculations need to be done
The value of the patent as of 31st Dec, 2020
Purchase Value as of Sep 1,2019 $405000
Less:- Amortization Expense for the year 2019 $13,500
($405000 ÷ 10 × 4 ÷ 12)
Less:- amortization expense for the year 2020 $40500 ($405,000 ÷ 10)
Value of patent as on 1st Jan, 2021 $351,000
Add:- fees to defend $99000
New Book Value for the year 2021 $450,000
Now Remaining Useful Life 5 years
So,
Amortization Expense for year 2021 $90,000 ($450,000 ÷ 5)
Aster Inc. has developed a new digital three-tier food steamer. Though the product comes with a self-explanatory manual, the controls and the operation of the appliance have to be explained to the customer on a one-to-one basis, in great detail. Which of the following elements of the promotional mix is Aster most likely to rely on to sell its products?
a. Advertising
b. Sales promotion
c. Public relations
d. Personal selling
Answer:
d. Personal selling
Explanation:
Personal selling would be the one of the component of the promotional mix where the person interact with the customers from face to face and explains the product with respect to its features, price, benefits, etc also at the same time customer could solve their doubts related to the product
So as per the given situation, the option d is correct
clarify the term fair discrimination
The term fair discrimination is a type of discrimination that is legally required.
What is fair discrimination?Firm discrimination may be based on the following situations:
Inherent requirements of a particular job (qualifications)Compulsory discrimination by law (for example, laws that regulated interracial marriages)Discrimination based on productivity (meritocracy).Thus, fair discrimination is a type of discrimination that is legally required.
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Identify two employment laws which might affect
easyJet plc's business activities.
Answer:
EasyJet Plc is the eighth largest airline in the world and the second biggest in Europe, . The business generated revenue per passenger of £58 compared with a cost per seat . The return on capital employed was just under 12% in 2017. regarding Brexit which might impact on both revenue and costs going forward.
Explanation:I dont have one
Management of Wee Ones (WO), an operator of day-care facilities, wants the company's profit to be subdivided by center. The firm's accountant has provided the following data: Center Budgeted Revenue Actual Revenue Budgeted Direct Costs Actual Direct Costs Downtown $ 320,000 $ 340,200 $ 300,000 $ 300,000 Irvine 560,000 534,600 510,000 440,000 H. Beach 720,000 745,200 690,000 740,000 Totals $ 1,600,000 $ 1,620,000 $ 1,500,000 $ 1,480,000 WO's advertising, which is handled by the home office, is not reflected in the preceding figures and amounted to $60,000. Assume that management used the allocation base that is most influenced by advertising effort and consistent with sound managerial accounting practices. How much advertising would be allocated to the Irvine center
Answer: $19,800
Explanation:
Actual Revenue would be the most appropriate base to use because it is the most influenced by advertising effort and sound managerial practices.
Total actual revenue from all centers is $1,620,000.
Actual revenue for Irvine center is $534,600.
Advertising expenses to Irvine would be:
= Advertising cost * Actual revenue for Irvine / Total actual revenue for all centers
= 60,000 * 534,600 / 1,620,000
= $19,800
Suppose the total damage function is given as D = M2 for M ≥ 0. Suppose the total abatement cost function is given as TAC = 96M − 0.2M2, where M is emissions
Answer:
so like what is your question
A mining company is evaluating when to open a gold mine. The mine has 100,000 ounces of gold left that can be mined and mining operations will produce 10,000 ounces per year. The price of gold from the mine will be guaranteed for the remaining life of the mine through the gold futures contracts. If the mine is opened today, each ounce of gold will generate an after-tax cash flow (= total or net cash flow) of $1,300 per ounce. If the company waits one year, there is a 70 percent probability that the contract price will generate an after-tax cash flow of $1,550 per ounce and a 30 percent probability that the after-tax cash flow will be $1,200 per ounce. The required return on the gold mine is 15 percent and it will cost $30,000,000 to open the mine regardless of whether the mine is open today or in one year. Compute the value of the option to wait today.
Answer:
The value of the option to wait today = $2,500,000
Explanation:
a) Data and Calculations:
Quantity of gold left in the mine = 100,000 ounces
Quantity of gold to be produced yearly = 10,000 ounces
Estimated life of mine = 10 years (100,000/10,000)
After-tax cash flow if mine is opened today = $1,300 per ounce
After-tax cash flow if mine is opened a year later:
Expected value = ($1,550 * 70%) + ($1,200 * 30%) = $1,325 per ounce
Comparison of the values of opening options:
Mine opened Mine opened
today a year later
After-tax cash flow per ounce $1,300 $1,325
Quantity of gold in the mine 100,000 100,000
Total after-tax cash flows $130,000,000 $132,500,000
Cost of opening mine 30,000,000 30,000,000
Required return (15%) 4,500,000 4,500,000
Actual returns from mine $100,000,000 $102,500,000
Therefore, the value of option to wait:
Returns from mine opened next year = $102,500,000
Returns from mine opened today = 100,000,000
Value of the option to wait today = $2,500,000
Uptown Bank provides lockbox services. They estimate that you can reduce your average mail time by 2.2 days and your combined clearing and processing time by .75 days by implementing their system. Your firm receives 65 checks a day with an average value of $298 each. The current T-Bill rate is .01 percent per day. Assume a 365-day year. The bank will charge your firm $.15 per check. What is the annual net savings from installing this system?
Answer: $1473.067
Explanation:
First, we calculate the total time that's saved by the firm when it installs the lockbox services. This will be:
= 2.2 days + 0.75 days
= 2.95 days
Then, the gross amount that the firm will save will be:
= 65 × 2.95 × 298 × 0.01%
= $5.7142 per day
Since the bank charges the firm $0.15 per check and the firm receives 65 checks per day, the total cost to the firm will then be:
= 65 × $0.15
= $9.75 per day
The net loss will then be calculated as:
= $9.75 - $5.7142
= $4.0358 per day
Then, to get that for annual, we multiply the above value by 365. This will be:
= $4.0358 × 365
= $1473.067 per annum.
gooQS 8-1 Cost of plant assets LO C1 Kegler Bowling buys scorekeeping equipment with an invoice cost of $160,000. The electrical work required for the installation costs $16,800. Additional costs are $3,360 for delivery and $11,530 for sales tax. During the installation, the equipment was damaged and the cost of repair was $1,550. What is the total recorded cost of the scorekeeping equipment
Answer:
$180,160
Explanation:
Calculation of Cost of scorekeeping equipment
Purchase Price $160,000
Installation Cost $16,800
Delivery Cost $3,360
Total Cost $180,160
Note Sales Tax and Costs incurred subsequently after asset is put to use is excluded from Cost of Asset.
Therefore,
the total recorded cost of the scorekeeping equipment is $180,160.
Shining Cookie Company, Inc., in Murfreesboro, TN bought a new ice cream maker at the beginning of the year at a cost of $12,000. The estimated useful life was four years, and the residual value was $960. Assume that the estimated productive life of the machine was 9,200 hours. Actual annual usage was 3,680 hours in year 1; 2,760 hours in year 2; 1,840 hours in year 3; and 920 hours in year 4.
Required:
1. Complete a separate depreciation schedule for each of the alternative methods. (Do not round intermediate calculations.)
a. Straight-line.
b. Units-of-production (use four decimal places for the per unit output factor).
c. Double-declining-balance.
Answer:
a. Straight Line :
Year 1 : $2760
Year 2 : $2760
Year 3 : $2760
Year 4 : $2760
b. Units of production :
Year 1 : $4416
Year 2 : $3312
Year 3 : $2208
Year 4 : $1104
a. Double Declining Balance :
Year 1 : $6000
Year 2 : $3000
Year 3 : $1500
Year 4 : $560
Explanation:
a. Straight Line Depreciation:
( Cost of Ice cream maker - Residual Value ) / Useful life in years
( $12,000 - $960 ) / 4 = $2760
b. Units of production :
( Cost of Ice cream maker / Total Productive machine hours ) * Annual Usage
Year 1 ($12,000 / 9200 ) * 3680 = 4416
Year 2 ($12,000 / 9200 ) * 2760 = 3312
Year 3 ($12,000 / 9200 ) * 1840 = 2208
Year 4 ($12,000 / 9200 ) * 920 = 1104
c. Double declining method :
Year 1: $12,000 * 50% = $6000
Year 2 : $12,000 * 25% = $3000
Year 3 : $12,000 * 12.5% = $1500
Year 4 : $12,000 * 6.25% = $560
Olaf lives in the state of Minnesota. In 2019, a tornado hit the area and damaged his home and automobile Applicable information is as follows:
Item Adjusted Basis FMV before FMV after Insurance Proceeds
Home $350,000 60,000 $500,000 40,000
Auto $100,000 10,000 $280,000 20,000
Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2019 tax return shows AGI of $180,000 and taxable income of $145,000. In 2020, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $225,000. Assume the taxpayers are in the 22% tax bracket in 2019 and the 24% tax bracket in 2020.
Required:
Determine the amount of Olaf and Anna's loss and the year in which they should take the loss.
Misra Inc. forecasts a free cash flow of $ 35 million in Year 3, ie, at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 10.0% and the cost of equity is 15.0%, what is the horizon, or terminal, value in millions at t = 3?
Answer:
the answer for this question is 1289.44
As a project engineer, you received the AW analysis below from the finance department. It is for a new piece of equipment you ordered some months ago. You were told the interest rate used was 10% per year, but no first cost or projected salvage value was provided and you want to know them. Determine the values of P and S using the AW values for the year 3. Note: The AW values are equivalent values through the given year, not costs for the single year.
Answer and Explanation:
The computation of the value of P and the value of S is shown below:
For P
The Annual worth of the first cost for the year 3 is $18,899
Now
Annual worth = First Cost(A/P, 10%, 3)
$18,899 = P[0.1(1 + 0.1)^3 ÷ ((1 + 0.1)^3 - 1)]
$18,899 = 0.4021P
P = $46,999
For S
The Annual worth of the salvage value for the year 3 is $6,648
Now
Annual worth = Salvage value(A/F, 10%, 3)
$6,648 = S[0.1 ÷ ((1 + 0.1)^3 – 1)]
$6,648 = 0.30211S
S = $22,005
he following information relates to Halloran Co.'s accounts receivable for 2021: Accounts receivable balance, 1/1/2021 $ 840,000 Credit sales for 2021 3,300,000 Accounts receivable written off during 2021 70,000 Collections from customers during 2021 3,100,000 Allowance for uncollectible accounts balance, 12/31/2021 210,000 What amount should Halloran report for accounts receivable, before allowances, at December 31, 2021
Answer:
$970,000
Explanation:
Accounts receivable balance, 1/1/2021 = $840,000
Credit sales for 2021 = $3,300,000
Collections from customers during 2021 = $3,100,000
Accounts receivable written off during 2021 = $70,000
Allowance for uncollectible account balance 12/31/2021 = $210,000
Goran report for accounts receivable before allowances at December 31, 2021 would be;
= Beginning accounts receivables + Credit sales for 2021 - Accounts receivables written off during 2021 - Collections from customers during 2021
= $840,000 + $3,300,000 - $70,000 - $3,100,000
= $970,000
Corona Industries purchased a stamping machine on January 2, 20X1, for $100,000. It made an initial payment of $20,000 and financed the balance over 5 years at State Bank. The loan terms were for annual payments of $16,000 plus 10% interest, payable on December 31 each year. The year 20X4 proves to be a difficult year and on December 1, 20X4 Corona negotiates a debt restructuring with State Bank. The settlement calls for cash payment of accrued interest plus $4,000 on December 1 and the transfer of 200 acres of land held by Corona that cost $15,000. The land has a current fair value of $22,000. Which one of the following entries will Corona make to adjust for the land just prior to transfer?
a. DR Loss on disposal of asset $7,000 CR Land $7,000
b. DR Land $7,000 CR Gain on disposal of asset $7,000
c. DR Note payable—State Bank $7,000 CR Gain on disposal of asset $7,000
d. DR Land $7,000 CR Note payable—State Bank $7,000
Answer:
(a) DR Loss on disposal of asset $7,000 CR Land $7,000
The correct option is A). DR Loss on disposal of asset $7,000 and CR Land $7,000
What is journal entry? What are the debit and credit?A journal entry is the process of recording a business transaction in the accounting records of a business.
Debits are always on the left side of the entry, which shows an increase in assets or decrease in liabilities.
Credits are always on the right side, which depicts that there is a decrease in assets or an increase in liabilities.
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Analyzing and Interpreting Restructuring Costs and Effects
General Electric (GE) reports the following footnote disclosure (excerpted) in its 2018 10-K relating to its restructuring program. Restructuring actions are an essential component of our cost improvement efforts to both existing operations and those recently acquired. Restructuring and other charges relate primarily to workforce reductions, facility exit costs associated with the consolidation of sales, service and manufacturing facilities, the integration of recent acquisitions, and other asset writedowns. We continue to closely monitor the economic environment and may undertake further restructuring actions to more closely align our cost structure with earnings and cost reduction goals. 2018 2017 2016 $0.9 $1.2 $1.3 1.8 1.9 1.3 Workforce reductions Plant closures & associated costs and other asset write-downs Acquisition/disposition net charges Other 0.8 0.8 0.6 0.1 0.2 0.3 Total $3.6 $4.1 $3.5 For 2018, restructuring and other charges were $3.5 billion of which approximately $1.4 billion was reported in cost of products/services and $2.1 billion was reported in selling, general and administrative expenses (SG&A). These activities were primarily at Power, Corporate and Oil & Gas. Cash expenditures for restructuring and other charges were approximately $2.0 billion for the twelve months ended December 31, 2018. (a) Which of the following in NOT an example of a common non-cash charge associated with corporate restructuring activities? Olnventory revaluations Severance paid to employees O Fixed-asset write-downs Olmpairment charges on intangible assets (b) Using the financial statement effects template, show the effects on financial statements of the (1) 2018 restructuring charge of $3.6 billion, and (2) 2018 cash payment of $2.0 billion. Use negative signs with answers, when appropriate. Enter answers in billions. Balance Sheet (in $ billions) Income Statement Noncash Contributed Earned Transaction Cash Asset + Assets Liabilities Capital Capital Revenue Expenses = Net Income (1) (2) + + (c) Assume that instead of accurately estimating the anticipated restructuring charge in 2018, the company overestimated them by $30 million. (1) How would this overestimation affect financial statements in 2018? OOverstates the expense and understates pretax income by $30 million. The restructuring liability on the 2018 balance sheet will be overstated by $30 million. OUnderstates the expense and overstates pretax income by $30 million. The restructuring liability on the 2018 balance sheet will be overstated by $30 million. OOverstates the expense and understates pretax income by $30 million. The restructuring liability on the 2018 balance sheet will be understated by $30 million. OUnderstates the expense and understates pretax income by $30 million. The restructuring liability on the 2018 balance sheet will be overstated by $30 million. (2) How would this overestimation affect financial statements in 2019 when severance costs are paid in cash? OThe cash paid out in 2019 will be more than the 2018 accrual. Any excess (the $30 million) would increase expense (decrease profit) in 2019. OThe overestimation from 2018 will have no effect on the 2019 balance sheet or income statement. OThe cash paid out in 2019 will be less than the 2015 accrual. Any excess (the $30 million) would increase expense (decrease profit) in 2019. OThe cash paid out in 2019 will be less than the 2018 accrual. Any excess (the $30 million) would reduce expense (increase profit) in 2019.
Tar Heel Auto Parts owns a manufacturing facility that is currently sitting idle. The facility is located on a piece of land that cost $134,000 at the time Tar Heel Auto Parts bought it (several years ago). The facility itself cost $700,000 to build. The current book values of the land and the facility are $134,000 and $214,000, respectively. Tar Heel Auto Parts received a bid of $640,000 for the land and facility last week. They rejected this bid even though they were told that it is a reasonable offer in today's market. If Tar Heel Auto Parts were to consider using this land and facility in a new project, what cost, if any, should they include in the project analysis?
Answer:
Tar Heel Auto Parts
The cost that Tar Heel Auto Parts should include in their new project analysis for the land and facility should be:
= $640,000.
Explanation:
a) Data and Analysis:
Cost Book Value
Cost of a piece of land $134,000 $134,000
Cost of idle manufacturing facility $700,000 $214,000
Current market value of the land and facility = $640,000
b) The current market value of Tar Heel's land and facility is the relevant cost for project analysis. The book value and the cost prices are no longer relevant as they relate to the past and are sunk and historical costs. Sunk and historical costs do not make any difference in decision making. The fair or current market value is a future value that is useful for Tar Heel's project analysis and decision making.
What is the net present value of a project with the following cash flows if the required rate of return is 9 percent? Year Cash Flow 0 -$42,398 1 18,201 2 21,219 3 17,800 Group of answer choices -$1,574.41 -$1,208.19 $5,904.64 $6,029.09 $6,311.16
Answer:
$5,904.64
Explanation:
We discount the future cashflows to their present values to determine the net present value.
Using the CFj function of the Financial Calculator, this will be set as :
-$42,398 CFj 0
$18,201 CFj 1
$21,219 CFj 2
$17,800 CFj 3
I/Yr = 9 %
Therefore,
the net present value is $5,904.64
Marriott International is a worldwide operator, franchisor, and licensor of hotels, residential, and timeshare properties totaling nearly $1.8 billion in net property and equipment. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the following regarding the sale of the existing furniture:Furniture (cost) Accumulated depreciation $8,000,000 7,700,000 Required: Prepare the journal entry for the disposal of the furniture, assuming that it was sold for: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars not in millions.) a. $300,000 cash b. $900,000 cash c. $100,000 cash
Answer:
Net Book Value of furniture:
= Cost price - Accumulated depreciation
= 8,000,000 - 7,700,000
= $300,000
a. $300,000 cash
Account Title Debit Credit
Cash $300,000
Accumulated Depreciation $7,700,000
Furniture $8,000,000
b. $900,000 cash
Account Title Debit Credit
Cash $900,000
Accumulated Depreciation $7,700,000
Furniture $8,000,000
Gain on disposal $600,000
c. $100,000 cash
Account Title Debit Credit
Cash $100,000
Accumulated Depreciation $7,700,000
Loss on Disposal $200,000
Furniture $8,000,000
Suppose the economy of the large country of Hendrix is currently experiencing economic growth and has a trade deficit. Consider the possible effects of this economic growth on the trade balance and place them in the appropriate category. 1. Likely to occur during economic growth and increase the trade deficit 2. Likely to occur during economic growth and decrease the trade deficit 3. Not likely to occur during economic growth imports increase a. imports decrease b. government borrowing increases c. private savings decrease d. private savings increase e. government borrowing decreases
Answer:
1. Likely to occur during economic growth and increase the trade deficit - imports increase
Economic growth increases the living standard of people because it raises the average income. People often use this income to buy goods from abroad in case demand is not met by domestic firms.
2. Likely to occur during economic growth and decrease the trade deficit - d. private savings increase
Private savings increase during economic growth because people enjoy a higher disposable income. A share of this private savings are invested abroad, where foreigners use this capital to import goods from the original country, decreasing the trade deficit.
3. Not likely to occur during economic growth - c. private savings decrease
Private savings usually increase during times of economic growth for the reasons explained above.
Trade policies a. alter the trade balance because they alter imports of the country that implemented them. b. do not alter the trade balance because they cannot alter the real exchange rate of the currency of the country that implements them. c. alter the trade balance because they alter net capital outflow of the country that implemented them. d. do not alter the trade balance because they cannot alter the national saving or domestic investment of the country that implements them.