Answer:
Amber
October 8, 2020
Attn: Angela Riddle
The Board Chairperson
Amber Corporation
100 James Tower
Cleveland, OH 44106
Dear Ms. Riddle,
Re: President's Performance-based Compensation
I am responding to your inquiry regarding the current compensation plans for Amber Corporation's president.
The Board agreed to amend the president's compensation plan effective January 1, 2017, to allow an increase in the compensation she can earn through a performance-based compensation plan.
In 2017, the president earned an additional $300,000 under her revised contract. This amount increased to $350,000 in 2018 and 2019, and it is projected that she will increase her earnings by $350,000 under this plan in 2020.
In general, any salary paid to the president in excess of $_1 million______ is deemed excessive executive compensation and not deductible. Before 2018, compensation earned under a performance-based compensation option was not subject to this limitation. Therefore, in 2017, Amber deducted $__1.2 million______ as compensation.
I hope that the above clarifies the issue.
Yours sincerely,
Tony Ohagwam, FCCA
Chief Finance Officer
Explanation:
This is an official letter to the Chairperson of the Board of Directors of Amber Corporation. In this letter, the issue of the President's compensation and the tax deduction for the corporation is clearly presented. It is the writer's hope that the subjects of the enquiry are adequately resolved.
In the following summary of data for a payroll period, some amounts have been intentionally omitted:
Earnings:
1. At regular rate ?
2. At overtime rate $64,500
3. Total earnings ?
Deductions:
4. Social security tax 25,800
5. Medicare tax 6,450 6.
Income tax withheld 109,700
7. Medical insurance 14,800
8. Union dues ?
9. Total deductions 159,000
10. Net amount paid 271,000
Accounts debited:
11. Factory Wages 227,900
12. Sales Salaries ?
13. Office Salaries 86,000
A. Calculate the amounts omitted in lines (1), (3), (8), and (12).
B. Journalize the entry to record the payroll accrual.
C. Journalize the entry to record the payment of the payroll.
Answer:
A. Calculation of the amounts omitted in lines (1), (3), (8), and (12):
1. At regular rate
= $365,500
3. Total earnings
= $430,000
8. Union dues
= $2,250
12. Sales Salaries
= $116,100
B. Journal to record the payroll accrual:
Debit:
11. Factory Wages $227,900
12. Sales Salaries $116,100
13. Office Salaries $86,000
Credit Payables:
4. Social security tax $25,800
5. Medicare tax $6,450
6. Income tax withheld $109,700
7. Medical insurance $14,800
8. Union dues $2,250
10. Salaries Payable $271,000
To record the payroll accrual.
C. Journal Entry to record the payment of the payroll:
Debit Payables:
4. Social security tax $25,800
5. Medicare tax $6,450
6. Income tax withheld $109,700
7. Medical insurance $14,800
8. Union dues $2,250
10. Salaries Payable $271,000
Credit Cash Account $430,000
To record the payment of the payroll.
Explanation:
a) Data and Calculation of the amounts omitted in lines (1), (3), (8), and (12):
Earnings:
1. At regular rate $365,500
2. At overtime rate 64,500
3. Total earnings 430,000
Deductions:
4. Social security tax 25,800
5. Medicare tax 6,450
6. Income tax withheld 109,700
7. Medical insurance 14,800
8. Union dues 2,250
9. Total deductions 159,000
10. Net amount paid 271,000
Accounts debited:
11. Factory Wages 227,900
12. Sales Salaries 116,100
13. Office Salaries 86,000
1. At regular rate = 3. Total earnings - 2. At overtime rate
= $430,000 - 64,500
= $365,500
3. Total earnings = 9. Total deductions + 10. Net amount paid
= $159,000 + 271,000
= $430,000
8. Union dues = 9. Total deductions - other deductions from 4 to 7.
= $159,000 - (25,800 + 6,450 + 109,700 + 14,800)
= $2,250
12. Sales Salaries = 3. Total earnings - 11. Factory Wages - 13. Office Salaries)
= (430,000 - 227,900 - 86,000)
= $116,100
When Patey Pontoons issued 6% bonds on January 1, 2018, with a face amount of $600,000, the market yield for bonds of similar risk and maturity was 7%. The bonds mature December 31, 2021 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record their issuance by Patey on January 1, 2018.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2018.
5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2018
Answer:
Follows are the solution to this question:
Explanation:
Some of the missing data is defined in the attached file, please find it.
Bond problem rates
Diagram values are based on the following:
[tex]N = 4\times 2 \\\\[/tex]
[tex]= 8 \ Years \\[/tex]
[tex]i = 10.00 \% \times \frac{1}{2} \\\\[/tex]
[tex]= 5.00 \% \\[/tex]
[tex]\left\begin{array}{ccc} Cash \ Flow&\ \ \ \ \ \ \ Table \ Value \times Amount& \ \ \ \ \ \ \ \ = Present \ Value\\ Principal &0.676839 \times \$ 600,000& =\$ 406,104 \\ Semi-annual \ interest& 6.463213 \times \$ 18,000 & =\$ 116,337\end{array}\right \\[/tex]
Bond issuance price
Timetable for bond amortization:
please find the attachment.
Rick Wing, salesperson for Wave Soldering Systems, Inc. (WSSI), has provided you with a proposal for improving the temperature control on your present machine. The machine uses a hot-air knife to cleanly remove excess solder from printed circuit boards; this is a great concept, but the hot-air temperature control lacks reliability. According to Wing, engineers at WSSI have improved the reliability of the critical temperature controls. The new system still has the four sensitive integrated circuits controlling the temperature, but the new machine has a backup for each. The four integrated circuits have reliabilities of 0.88, 0.90, 0.92, and 0.94. The four backup circuits all have a reliability of 0.88.
The overall reliability of the new temperature controller = nothing% (enter your response as a percentage rounded to two decimal places).
Answer:
The answer is "A, B , C, D is now considered a single one".
Explanation:
[tex]\to (A = 0.84) \\\\ \to (B=0.86)\\\\ \to (C = 0.88)\\\\ \to (D =0.90)\\\\[/tex]
In the question, the components will be in series throughout or they must both work while the machine operates. The inability of one part fails. ABCD In each adjacent component is assisted and if those modules stop running the system works.
This device for one central ingredient and then one back up becomes perpendicular from each circuit throughout the given problem. For example, Is the device with two adjacent components
Parallel sequence method
Some modules were replicated in parallel here and in sequence. The whole four-circuit welding system is one.
Consistency in parallel systems
The probability each component would fail
The formula for calculating the Probability:
[tex]\text{Probability (single failed component) = 1-(component reliability)}[/tex]
Probability (A-key IC component failure)=1-(component reliability)=1-0.84
Probability (B-key IC component failure) = 1-(component reliability) = 1-0.86
Probability (C-key IC component failure) = 1-(component reliability) = 1-0.88
Probability (D-key IC component failure) = 1-(component reliability) = 1-0.90
Probability (backup fails)=1-0.84
Device stable = probability (at least one part works)
Using the approach as a supplement,
P (The function of at least one component)
= 1-Probability (Failure in all parts)
= 1- The result of single potential error probabilities
= 1-[Probability (Main IC-Fails) \times Probability \times (Backup-Fails)]
The Durability of A[tex]=1- [ (1-0.84)(1-0.84)] \\\\[/tex]
[tex]= 1- 0.256\\\\=0.9744[/tex]
The Durability of B [tex]=1- [ (1-0.86)(1-0.84)]\\[/tex]
[tex]=1- [ (0.14)(0.16)]\\\\=1- 0.0224\\\\= 0.9776[/tex]
The Durability of C [tex]=1- [ (1-0.88)(1-0.84)]\\\\[/tex]
[tex]=1- [ (0.12)(0.16)]\\\\=1- [0.0192]\\\\= 0.9808[/tex]
The Durability of D [tex]=1- [ (1-0.90)(1-0.84)]\\\\[/tex]
[tex]=1- [ (0.10)(1-0.16)]\\\\= 1- 0.016\\\\=0.984[/tex]
Durability of the system sequence
Durability of Device = consumer durability of series components
[tex]=0.9744\times 0.9766 \times 0.9808 \times 0.9840 \\\\=0.9184 \ \ or\ \ 91.84 \% \ \ reliability[/tex]
Note:
Any single part A, B , C, D is now considered a single one
An investor buys 100 shares of a stock for $20,000. After 5 years the stock is sold for $32,000. If interest is compounded continuously, what annual nominal rate of interest did the original $20,000 investment earn? Round the final answer to the nearest hundredth.
Answer: 9.4%
Explanation:
From the question,
Investment, Po = 20000
The formula to use will be:
P = Po × e^rt
where r = rate
t = time
Check the attachment for further details and explanation.
Olivia is ordering trendy necklaces and earrings made with semi-precious stones from a supplier in Belize, for her city boutique. Due to low paying wages in Belize, the supplier has promised an excellent wholesale price for these goods. You concur with Olivia when she explains to you that international business law is very clear-cut with these dealings. As long as the supplier is not breaking any labor laws in his country, Olivia's social responsibility is covered.
a. True
b. False
Answer:
b. False
Explanation:
Remember, the term social responsibility in this context refers to an individual doing what would benefit society first, over any gain he may derive if he does otherwise.
For example, we are told that there is "low paying wages in Belize," which means low worker welfare, thus, even if no labor laws were been broken in his country, Olivia has a social responsibility to pay fair prices for the necklaces and earrings.
Below are the transactions for Ute Sewing Shop for March, the first month of operations.
March 1 Issue common stock in exchange for cash of $2,000.
March 3 Purchase sewing equipment by signing a note with the local bank, $1,700.
March 5 Pay rent of $500 for March.
March 7 Martha, a customer, places an order for alterations to several dresses. Ute
estimates that the alterations will cost Martha $700. Martha is not required
to pay for the alterations until the work is complete.
March 12 Purchase sewing supplies for $120 on account. This material will be used
to provide services to customers.
March 15 Martha receives altered dresses and pays $700 to Ute.
March 19 Bob needs 100 pairs of overalls expanded as he purchased too many
small and medium sizes. He pays $600 to Ute for services and expects
the overalls to be completed by March 25.
March 25. March 25 Bob receives his completed overalls.
March 30 Pay utilities of $85 for the current period.
March 31 Pay dividends of $100 to stockholders.
Required:
1. Record each transaction.2. Post each transaction to the appropriate T-accounts.3. Prepare a trial balance as of March 31.
Answer:
1)
March 1 Issue common stock in exchange for cash of $2,000.
Dr Cash 2,000
Cr Common stock 2,000
March 3 Purchase sewing equipment by signing a note with the local bank, $1,700.
Dr Equipment 1,700
Cr Notes payable 1,700
March 5 Pay rent of $500 for March.
Dr Rent expense 500
Cr Cash 500
March 7 Martha, a customer, places an order for alterations to several dresses. Ute estimates that the alterations will cost Martha $700. Martha is not required to pay for the alterations until the work is complete.
no journal entry required
March 12 Purchase sewing supplies for $120 on account. This material will be used to provide services to customers.
Dr Supplies 120
Cr Accounts payable 120
March 15 Martha receives altered dresses and pays $700 to Ute.
Dr Cash 700
Cr Service revenue 700
March 19 Bob needs 100 pairs of overalls expanded as he purchased too many small and medium sizes. He pays $600 to Ute for services and expects the overalls to be completed by March 25.
Dr Cash 600
Cr Deferred revenue 600
March 25. March 25 Bob receives his completed overalls.
Cr Deferred revenue 600
Cr Service revenue 600
March 30 Pay utilities of $85 for the current period.
Dr Utilities expense 85
Cr Cash 85
March 31 Pay dividends of $100 to stockholders.
Dr Dividends 100
Cr Cash 100
2)
Cash Common stock
debit credit debit credit
2,000 2,000
500
700
600
85
100
2,615
Equipment Notes payable
debit credit debit credit
1,700 1,700
Rent expense Supplies
debit credit debit credit
500 120
Accounts payable Service revenue
debit credit debit credit
120 700
600
1,300
Deferred revenue Utilities expense
debit credit debit credit
600 85
600
0 0
Dividends
debit credit
100
3) Ute Sewing Shop
Trial Balance
For the month ended March 31, 202x
Debit Credit
Cash $2,615
Supplies $120
Equipment $1,700
Accounts payable $120
Notes payable $1,700
Common stock $2,000
Dividends $100
Service revenue $1,300
Rent expense $500
Utilities expense $85
Totals $5,120 $5,120
Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Milling Customizing
Machine-hours 26,000 29,000
Direct labor-hours 11,000 5,000
Total fixed manufacturing overhead cost $153,400 $18,500
Variable manufacturing overhead per machine-hour $1.30
Variable manufacturing overhead per direct labor-hour $5.00
During the current month the company started and finished Job A319. The following data were recorded for this job:
Job A319: Milling Customizing
Machine-hours 70 30
Direct labor-hours 50 60
Direct materials $450 $190
Direct labor cost $580 $570
If the company marks up its manufacturing costs by 20% then the selling price for Job A319 would be closest to:_____.
a. $563.
b. $2,816.
c. $3,379.
d. $4,055.
Answer:
Selling price= $3,379.2
Explanation:
First, we need to calculate the predetermined overhead rate for each department:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Milling= (153,400/26,000) + 1.3= $7.2 per machine hour
Customizing= (18,500/5,000) + 5= $8.7 per direct labor hour
Now, we can allocate overhead and calculate the total cost:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Milling= 7.2*70= $504
Customizing= 8.7*60= $522
Total cost= (450 + 190) + (580 + 570) + (504 + 522)
Total cost= $2,816
Finally, the selling price:
Selling price= 2,816*1.2= $3,379.2
Gitano Products operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated $800,000 of manufacturing overhead for an estimated allocation base of $500,000 direct material dollars to be used in production. The company has provided the following data for the just completed year:
Purchase of raw materials $510,000
Direct labor cost $90,000
Manufacturing overhead costs:
Indirect labor $170,000
Property taxes $48,000
Depreciation of equipment $260,000
Maintenance $95,000
Insurance $7,000
Rent, building $180,000
Required:
1) Compute the predetermined overhead rate for the year.
2) Compute the amount of underapplied or overapplied overhead for the year.
3) Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials.
4) Compute the unadjusted cost of goods sold for the year.
5) Identify the options available for disposing of underapplied or overapplied overhead?
6) Job 215 was started and completed during the year. What price would have been charged to the customer if the job required $8,500 in direct materials and $2,700 in direct labor cost and the company priced its jobs at 25% above the job's cost according to the accounting system?
7) Direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance. Supply the information missing below:
Beginning Ending
Raw Materials $20,000 $80,000
Work in Process $150,000 $70,000
Finished Goods $260,000 $400,000
Answer:
Gitano Products
1. Predetermined overhead rate
= $1.60
2. Overapplied overhead for the year
= $40,000
3. Schedule of Cost of Goods Manufactured for the year:
Direct raw materials $510,000
Direct labor cost $90,000
Manufacturing overhead costs: $760,000
Cost of Goods Manufactured $1,360,000
4. Unadjusted Cost of Good Sold for the year:
Direct raw materials $510,000
Direct labor cost $90,000
Manufacturing overhead applied $800,000
Cost of Goods Sold $1,400,000
5) The overapplied overhead can be deducted from the adjusted Cost of Goods Sold to arrive at a cost of goods sold that is equal to $1,360,000. If there were inventories, the overapplied overhead can be allocated to the cost of goods sold, finished goods inventory, and work in process.
6) Job 215:
Direct materials $8,500
Direct labor 2,700
Overhead 13,600 ($1.60 * $8,500)
Total cost $24,800
Markup 25% 6,200
Price to customer $31,000
7) Beginning Ending
Raw Materials $20,000 $80,000
Work in Process $150,000 $70,000
Finished Goods $260,000 $400,000
If direct materials made up $24,000 of the $70,000 ending Work in Process inventory balance, then the balance is made up of $7,600 direct labor and $38,400 Overhead. The overhead = $24,000 * $1.60 = $38,400. The direct labor = $70,000 - ($24,000 + 38,400) = $7,600.
Explanation:
Estimated Manufacturing overhead = $800,000
Estimated direct materials = $500,000
Computation of Predetermined overhead rate
= $800,000/$500,000
= $1.60 per direct material
b) Data
Actual Expenses:
Purchase of raw materials $510,000
Direct labor cost $90,000
Manufacturing overhead costs:
Indirect labor $170,000
Property taxes $48,000
Depreciation of
equipment $260,000
Maintenance $95,000
Insurance $7,000
Rent, building $180,000
Total overhead $760,000
Total manufacturing cost $1,360,000
c) Computation of Overapplied overhead:
Estimated overhead minus actual overhead
= $800,000 - $760,000
= $40,000
A retired auto mechanic hopes to open a rustproofing shop. Customers would be local new-car dealers. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $6,950 and labor, materials, and transportation costs of $30 per car. The outside location would have fixed monthly costs of $4,500 and labor, materials, and transportation costs of $40 per car. Dealer price at either location will be $90 per car.
1. Which location will yield the greatest profit if monthly demand is (1) 200 cars, (2) 300 cars?
2. At what volume of output will the two sites yield the same monthly profit?
Answer:
1.
(1) Profit - Location B = $5500
(2) Profit - Location A = $11050
2.
x = 245 cars
Explanation:
1.
Profit is the difference between the revenue and the total cost. To determine which location will provide greatest profit, we need to solve the equation for profit for both the locations under different demand scenarios as given in the question.
Let Location A be the central city location.Let Location B be the outskirts locations
The profit equation for Location A = 90 * x - (6950 + 30 * x)
The profit equation for Location B = 90 * x - (4500 + 40 * x)
Where x is the monthly demand in number of cars.
Scenario (1) 200 Cars
Profit - Location A = 90 * 200 - (6950 + 30 * 200)
Profit - Location A = $5050
Profit - Location B = 90 * 200 - (4500 + 40 * 200)
Profit - Location B = $5500
Scenario (2) 300 Cars
Profit - Location A = 90 * 300 - (6950 + 30 * 300)
Profit - Location A = $11050
Profit - Location B = 90 * 300 - (4500 + 40 * 300)
Profit - Location B = $10500
2.
To calculate the output/ demand that will produce the same profit under both locations, we need to equate the two profit equations.
90 * x - (6950 + 30 * x) = 90 * x - (4500 + 40 * x)
90x - 30x - 6950 = 90x - 40x - 4500
60x - 6950 = 50x - 4500
60x - 50x = -4500 + 6950
10x = 2450
x = 2450 / 10
x = 245 cars
Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500 (under a divorce decree effective June 1, 2005). Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $3,500 in federal income taxes withheld from their paychecks during the year. (Use the tax rate schedules)
A. What is Marc and Michelle’s gross income?
B. What is Marc and Michelle’s adjusted gross income?C. What is the total amount of Marc and Michelle’s deductions from AGI?D. What is Marc and Michelle’s taxable income?E. What is Marc and Michelle’s taxes payable or refund due for the year?
Answer:
Since we are not given any specific year, I will use the 2020 tax schedule:
Marc and Michelle's gross income = Marc's and Michelle's salaries + interest from corporate bonds = $64,000 + $12,000 + $500 = $76,500
they should choose the standard deduction since it is higher than their itemized deductions = ($24,400)
contribution to IRA = ($2,500)
alimony payment = ($1,500) the divorce agreement was settled before 2019
Marc and Michelle's taxable income = $48,100
Marc and Michelle's tax liability = $1,975 + [12% x ($48,100 - $19,750)] = $5,377
Interests on municipal bonds is not taxable.
The amount of taxes that they owe = $5,377 - $3,500 (federal tax withholdings) = $1,877
Since they are allowed a $2,000 child tax credit, that will wipe out any taxes owed and result in a $2,000 - $1,877 = $123 refund.
Personnel Selection Standards Personnel selection is the method by which companies decide who will or will not be allowed to join the organization. The selection process should be set up so that the organization can identify the individuals who have the knowledge, skills, and abilities to best perform the job. This strategic approach to selection means measuring and confirming the effectiveness of the selection tools that are used. The tools are most effective when measured against these standards: reliability, validity, generalizability, utility, and legality. Review the section in your textbook on "Selection Process." The five standards against which to measure the selection tools used by an organization contribute to their effectiveness. Effective tools, in turn, help ensure an organization selects the best candidates for a particular job. This activity is important because you will review terms related to the selection process and think about to which of the standards they best apply The goal of this activity is to define ways to measure the success of a selection method. Read each scenario, then match it to the correct category it represents. 1. An intelligence test is an example of a measure that should yield similar results each time an individual takes the test. Click to select) 2. The HR manager of a manufacturing company has discovered a great personality test for choosing sales personnel, but it's rather expensive. He needs to show that using this test will benefit the company. Click to select) 3. Your HR assistant points out that the employment application used at one of the company's branch offices asks for a high school graduation date Click to select) 4. A company performed a successful validity study on a new selection tool for their sales department and now wonders if it would be acceptable to use that tool for different jobs throughout their organization Click to select)
Answer:
1. An intelligence test is an example of a measure that should yield similar results each time an individual takes the test.
RELIABILITY: means that the test is free from random errors, therefore, results should be consistent over time. If one employee takes the test today and scores 99%, and the next week takes it again and scores 40%, then the test is not reliable.2. The HR manager of a manufacturing company has discovered a great personality test for choosing sales personnel, but it's rather expensive. He needs to show that using this test will benefit the company.
UTILITY: Is it worth applying the test? This standard applies to everything in life, e.g. you want to buy a new car. You can prepare your own crash text that specifically applies to your family plus all the rest of safety measures that you can imagine, but it will cost hundreds of thousands of dollars. The new car itself is probable worth around $40 - $50 thousand. Your life is on stake, but who actually pays that money to test a potential purchase (you might even have to spend millions testing other possible cars). So, you must rely on the tests performed and paid by the car companies themselves. A personality test might be great and 100% certain, but if it costs too much, then it is useless.3. Your HR assistant points out that the employment application used at one of the company's branch offices asks for a high school graduation date.
LEGALITY: Is it legal for you to ask about someone's graduation date? The answer is NO.4. A company performed a successful validity study on a new selection tool for their sales department and now wonders if it would be acceptable to use that tool for different jobs throughout their organization.
GENERALIZABILITY: This is about whether this tool or test is applicable in other contexts, businesses, industries, or in other business units or departments of the same company.who represents the company in professional, social, and civic activities?
Answer:
The President/CEO represents the company in all professional, social, and civic activities.
Explanation:
While the President/CEO represents the company in all professional, social, and civic activities, she or he can always appoint another company employee to do the representation. Some companies call their leadership heads, presidents, others call the leadership heads "chief executive officer" abbreviated to CEO.
The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $68,000. He estimates that in subsequent years the annual repair costs will decline by $7000, making the second-year cost $61,000; the third-year $54,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 6%.
Answer:
$230,899
Explanation:
Calculation for what the equivalent present cost is for the first 5 years
Present cost of the repair work = 68,000 * (P/A, 6%,5) - 7,000 * (P/G, 6%,5)
Present cost of the repair work= 68,000 * 4.212364 - 7,000 * 7.934549
Present cost of the repair work= $230,898.90 Approximately $230,899
Therefore the Present cost of the repair work will be $230,899
Plumlee Corporation has the following account balances at December 31, 2017.
Debit Credit
Service Fees Earned.......... $92,500
Interest Income.......... 2,200
Salaries Expense.......... $41,800
Advertising Expense.......... 4,300
Depreciation Expense.......... 8,700
Income Tax Expense.......... 9,900
Retained Earnings.......... 42,700
Prepare entries to close these accounts in journal entry form. Set up T-accounts for each of the ledger accounts and post the entries to them. After these entries are posted, what is the balance of the Retained Earnings account?
Answer and Explanation:
Please find answer and explanation attached
On November 1, Arvelo Corporation had $38,500 of raw materials on hand. During the month, the company purchased an additional $71,500 of raw materials. During November, $82,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,300. Prepare journal entries to record these events. Use those journal entries to answer the following questions:
The credits to the Raw Materials account for the month of November total:_________
Answer:
$73,400
Explanation:
The computation of Raw Materials account for the month of November total is shown below:-
Raw Materials account for the month of November = Work in progress inventory - Manufacturing overheads
= ($82,000 - $4,300) - $4,300
= $77,700 - $4,300
= $73,400
Therefore for computing the raw materials we simply applied the above formula.
John Law, a local police officer, is sitting outside an AM/PM around Midnight. He is eating a protein bar and drinking an energy drink when he observed a man walking up to the entrance of the AM/PM. The man then walked away from the entrance and met up with another individual on a street corner while repeatedly walking up and down the same street. The men would periodically peer into the AM/PM window and then talk some more. The men also spoke to a third man whom they eventually followed up the street. The officer believed that the men were "casing" the store for a potential robbery. The officer decided to approach the men for questioning, and given the nature of the behavior the officer decided to perform a quick search of the men before questioning. A quick frisking of one of the men, Jake, produced a concealed weapon and Jake was charged with carrying a concealed weapon, a felony.
Jake, hires a lawyer and fights the charges against him. He believes that his greatest argument is that the officer did not have probably cause to search and seize the firearm. Do you agree or disagree? Within your answer, please discuss whether the search was lawful or unlawful. In other words, did the search violate Jake’s 4th Amendment rights?
Answer:
I agree that, the search was lawful due to the fact that, the police officer has every reason to believe that, a crime was about to take place. The man, Jake looking into the store and walking up and down the street creates the impression of an intent. The search did not violate Jake's 4th Amendment rights.
Explanation:
Bond Company adopted the dollar-value LIFO inventory method on January 1, 2016. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO: Under the dollar-value LIFO method the inventory at December 31, 2017, should be:________.a) $362,750. b) $355,000. c) $356,150. d) None of these answer choices is correct.
Answer:
a) $362,750
Explanation:
The computation of inventory is shown below:-
Year Inventory at Change in Cost Layer at Ending
base layer at base current
1-1-2016 304,500 304,500 1.00 304,500
31-12-2016 327,500 23,000 1.05 24,150 328,650
(327,500 - 304,500)
31-12-2017 355,000 27,500 1.24 34,100 362,750
(355,000 - 327,500)
Answer:
A- 362.750
Explanation:
A- 362.750
Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:30-Nov 31-Decdebit credit debit creditsupplies $ 2,000 $ 3,500 prepaid Insurance $ 8,000 $ 6,000 salaries payable $ 11,000 $ 16,000unearned revenue $ 3,000 $ 1,500The following information also is known:
1. Purchases of supplies in December total $4,500.
2. No insurance payments are made in December.
3. $11,000 is paid to employees during December for November salaries.
4. On November 1, a tenant pays Golden Eagle $4,500 in advance rent for the period November through January. Unearned Revenue is credited.Required:Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.
Answer:
30-Nov 31-Dec
debit credit debit credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500
1. Purchases of supplies in December total $4,500.
Dr Supplies expense 3,000
Cr Supplies 3,000
beginning balance = $2,000 + $4,500 = $6,500
supplies expense = $6,500 - ending balance
2. No insurance payments are made in December.
Dr Insurance expense 2,000
Cr Prepaid insurance 2,000
Insurance expense = November 30's balance - December 31's balance
3. $11,000 is paid to employees during December for November salaries.
Dr Salaries expense 16,000
Cr Salaries payable 16,000
The beginning balance of salaries payable = $11,000, then it was paid (balance = $0), so any ending balance represents wages expense.
4. On November 1, a tenant pays Golden Eagle $4,500 in advance rent for the period November through January.
Dr Unearned revenue 1,500
Cr Rental revenue 1,500
Monthly rent revenue = $4,500 / 3 = $1,500
unearned revenue balance Nov. 30 = $3,000
unearned revenue balance Dec. 31 = $1,500
rental revenue = Nov. 30's balance - Dec. 31's balance
Consider a Treasury bill with a rate of return of 5% and the following risky securities: Security
Security A: E(r)= 0.15; variance= 0.400
Security B: E(r)= 0.10; variance= 0.0225
Security C: E(r)=0.12; variance= 0.1000
Security D: E(r)=0.13; variance= 0.0625
The investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. The security the investor should choose as part of her complete portfolio to achieve the best CAL would be:
a. security D
b. security C
c. security A
d. security B
Answer:
b. security C
Explanation:
Risk averse investors are investors that are not risk takers or are risk averse and so from the above, such investors will go for a less variable portfolio which has less risk. The security with the least risk from the options is option B. This is the security that the risk averse investor will choose to add to the portfolio with the risk free t bill
The Green Giant has a 4 percent profit margin and a 40 percent dividend payout ratio. The total asset turnover is 1.5 times and the equity multiplier is 1.4 times. What is the sustainable rate of growth?
Answer:
sustainable growth rate = 5.04%
Explanation:
the sustainable growth rate = retention rate x return on equity
retention rate = 1 - dividend payout ratio = 1 - 40% = 60%return on equity = profit margin x asset turnover x equity multiplier = 4% x 1.5 x 1.4 = 0.084 = 8.4%sustainable growth rate = 0.6 x 8.4% = 5.04%
the mathematical explanation on how I determined ROE:
equity multiplier = total assets / equity
1.4 equity = total assets
total assets turnover = net sales / total assets
1.5 = net sales / 1.4 equity
2.1 equity = net sales
profit margin = net profit / net sales
net sales = net profit / 0.04
2.1 equity = net profit / 0.04
2.1 x 0.04 = net profit / equity = ROE = 0.084
Which of the following statements about annuities are true? (Select all that apply.) Check All That Apply The first cash flow of an annuity due is made on the first day of the agreement. The first cash flow of an annuity due is made on the first day of the agreement. The first cash flow of an ordinary annuity is made on the first day of the agreement.
Answer:
The first cash flow of an annuity due is made on the first day of the agreement. The last cash flow of an ordinary annuity is made on the last day covered by the agreement.Explanation:
The difference between an Annuity due and an Ordinary annuity is the timing in the period it is paid. Annuity dues are paid in the beginning of the period which means that they accrue more interest because they have the rest of the year to build.
Ordinary annuities on the other hand see their cashflows made on the last day of the period which is why the last cash flow of an ordinary annuity is made on the last day covered by the agreement.
The first cash flow of an annuity due is made on the first day of the agreement. Thus, option A is appropriate.
The movement of money within and outside of a business is known as cash flow. Cash received represents inflows, while cash spent represents outflows. A financial statement that describes the sources and uses of a company's cash over time is called a cash flow statement.
An annuity's first cash flow is made on the initial day of the contract. An annuity with cash flows or payments that start at the start of the period is said to be due. An annuity in arrears is another name for a due annuity. The cash flows start in years one through five. And at time 0 (right now), the very first cash flow happens.
Thus, option A is correct.
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Wang Company accumulates the following adjustment data at December 31. For each item, indicate the:
1. Type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense)
2. The status of the accounts before adjustment (overstated or understated).
a. Services performed but unbilled totals $600.
b. Store supplies of $160 are on hand. The supplies account shows a $1,900 balance.
c. Utility expenses of $275 are unpaid.
d. Service performed of $490 collected in advance.
e. Salaries of $620 are unpaid.
f. Prepaid insurance totaling $400 has expired.
Answer:
Wang Company
1. Type of adjustment (prepaid expense, unearned revenue, accrued revenue, or accrued expense)
2. The status of the accounts before adjustment (overstated or understated).
a. Services performed but unbilled totals $600.
Accrued Revenue
Service Revenue was understated by $600
Accounts Receivable understated by $600
b. Store supplies of $160 are on hand. The supplies account shows a $1,900 balance.
Prepaid Expense
Supplies Expense understated by $1,740.
Supplies overstated by the same amount.
c. Utility expenses of $275 are unpaid.
Accrued Expense
Utility Expense understated by $275.
Utility Payables understated by $275.
d. Service performed of $490 collected in advance.
Accrued Revenue
Unearned Revenue overstated by $490
And Service Revenue understated by $490
e. Salaries of $620 are unpaid.
Accrued Expense
Salaries Expense understated by $620
Salaries Payable understated by $620
f. Prepaid insurance totaling $400 has expired.
Prepaid Expense
Insurance Expense understated by $400.
Prepaid Insurance overstated by $400.
Explanation:
Wang Company must adjust prepaid expense, unearned revenue, accrued revenue, or accrued expense is the items in order to arrive at financial statement elements are agree with the accrual basis of accounting. The accrual concept is that these mentioned items must be recognized without regard to when or whether cash exchanges hands between the parties to the transactions.
Ellyn Kole is the assistant chief accountant at Doman Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter. Ellyn is hurriedly trying to prepare a transaction analysis to assist her in preparing the financial statements. The total of the liabilities and owner's equity exceeds the total assets by $1,000. In order to meet the 4 pm deadline, Ellyn decides to force the transaction analysis into balance by adding the amount of the difference to the Equipment account. She chooses Equipment because it is one of the larger account balances; percentage-wise, it will be the least misstated. Ellyn "plugs" the difference! She believes that the difference will not affect anyone's decisions. She wishes that she had another few days to find the error but realizes that the final information is already late.
In your discussion posting address ALL questions but not limit to the following questions:
a. Who are the stakeholders in this situation?
b. What are the ethical issues involved in this case?
c. What are Ellyn's alternatives?
Answer and Explanation:
A. Stakeholders in the situation are:
1. Ellyn
2. The company
3. People using the financial statements
B. Ethical issues include:
1. Ellyn being dishonest by adding $1000 to the equipment asset and mistating the numerical value. This could cause loss as the $1000 could be from a liability account
C. Alternatives:
1. Creating a suspense account for the difference of $1000
2. Postponing finalisation and escalating the issue to a senior accountant to find out where the difference is from
a. The name of the stakeholders mentioned in the context are:
Ellyn The company People using the financial statements
b. Misstatement or the manipulation of the data records is the ethical issue that has been involved in the case mentioned over the context.
c. The final alternative that has been in the hand of Ellyn is to create the suspense account of the misstated amount and also extend the finalization date of the data.
a. The stakeholders are termed as the person who is also a member of the company and are included in the roles, operations, and functions of the company.
In this context, Ellyn, the company, and the People using the financial statements are the owners of the company and also the stakeholders of the company. these have purchased or invested in part of the company and have their part of share in the firm.
b. The ethical issues in the firm are termed as the issues that arose because of not following the laid norms of the firm.
In this context, Ellyn has misstated the amount of $1000 and decided to adjust it in the equipment account as it carries a high amount. This is the ethical issue of manipulation of the data.
c. The alternative that Ellyn has is she needs to adjust the difference amount in the suspense account that is created in order to adjust the unknown amount or the mistaken amount.
In order to get the time to correct the mistake of the data, she also has options to extend the date of the finalization of the data.
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a law firm seeks to recruit top quality experienced lawyers. the total package offered is the sum of three separate components: a basic salary which 1.2 times the candidate's current salary together with an addintional $3000 for each year worked as a qualified lawyer and an extra $1000 for every year that they are over the age of 21.
Work out a formula that could be used to calculate the total salary, S, offered to someone who is A years of age, has E years of relevant experienced and who is 30 years old with five years experienced and who currently earns $150.000.
Answer:
S = 1.2N + 3,000E + 1,000 * (A - 21)$204,000Explanation:
1. An extra $1,000 for every year that they are over the age of 21. If the person is A years of Age then the expression is 1,000 * (A - 21).
An additional $3,000 for each year worked as a qualified lawyer. If the person has E years experience. Expression = 3,000E.
The basic salary is 1.2 time the candidate current salary. If the person currently earns $N the expression is; 1.2N
Putting that all together;
S = 1.2N + 3,000E + 1,000 * (A - 21)
2. Variables are; N = 150,000; E = 5 ; A = 30
S = 1.2N + 3,000E + 1,000 * (A - 21)
= 1.2 * 150,000 + 3,000 * 5 + 1,000 * (30 - 21)
= $204,000
S = 1.2N + 3,000E + 1,000 * (A - 21)
$204,000
What is the current salary?
1. an additional $1,000 for each year that they're over the age of 21. If the person could be years old then the expression is 1,000 * (A - 21).
An additional $3,000 for every year worked as a professional lawyer. If the person has E years experience. Expression = 3,000E.
The basic salary is 1.2 times the candidate's current salary.
When If the person currently earns $N the expression is; 1.2N
Putting that every one together; S = 1.2N + 3,000E + 1,000 * (A - 21)
2. Now, the Variables are; N = 150,000; E = 5 ; A = 30
S = 1.2N + 3,000E + 1,000 * (A - 21)
= 1.2 * 150,000 + 3,000 * 5 + 1,000 * (30 - 21)
= $204,000
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Olivia, Kyle, and Andy formed a partnership in which they share all things equally. Kyle contributed an asset on which there is a liability of $22,500, which was assumed by the partnership. Kyle's AB in the asset he contributed was $16,000 and the FMV of the asset on the date of contribution was $60,000. What is Kyle's outside basis immediately after the contribution
Answer:
$1,000
Explanation:
Calculation for Kyle's outside basis immediately after the contribution
Since the Liability of the amount of $22,500 was distributed among the three partners which makes each of one of them to have a liability of
the amount of $7,500 calculated as: ($22,500/3 partners ), that means that Kyle will have a debt relief of the amount of $15,000 calculated as (7,500 * 2 partners)
Hence,
Kyle's outside basis= Asset contributed - Debt relief amount
Kyle's outside basis=16,000 -15,000
Kyle's Outside basis= $1,000
Therefore Kyle's outside basis immediately after the contribution will be $1,000
An inexperienced bookkeeper prepared the following trial balance that does not balance. Prepare a correct trial balance, assuming all account balances are normal.
CULLUMBER COMPANY
Trial Balance December 31, 2017
Debit Credit
Cash $22,720
Prepaid Insurance $ 4,860
Accounts Payable 4,420
Unearned Service Revenue 3,890
Common Stock 10,000
Retained Earnings 6,600
Dividends 7,020
Service Revenue 26,960
Salaries and Wages Expense 12,580
Rent Expense 4,690
$39,190 $64,550
Answer:
DEBIT SIDE $51,870
CREDIT SIDE $51,870
Explanation:
Preparation of the correct trial balance,
Trial balance
DEBIT SIDE
Dr Cash 22,720
Dr Prepaid insurance 4,860
Dr Dividends 7,020
Dr Salaries and wages expense 12,580
Dr Rent expense 4,690
TOTAL $51,870
CREDIT SIDE
Cr Account payable 4,420
Cr Unearned service revenue 3,890
Cr Common Stock 10,000
Cr Retained Earnings 6,600
Cr Service revenue 26,960
TOTAL $51,870
Therefore the corrected trial balance DEBIT SIDE is $51,870 while the CREDIT SIDE is $51,870
Trial Balance for CULLUMBER COMPANY as of December 31, 2017,Thus, the trial balance is as follows: DEBIT SIDE $51,870 (Debit Credit Cash $22,720, Prepaid Insurance $ 4,860).BONUS SIDE $51,870
The calculation is as follows:
creating the appropriate trial balance,
Test of balance
AMOUNT SIDE- 22,720 Dr. Cash
4,860 Dr. Prepaid insurance
7,020 Dr. Dividends
12,580 was spent on Dr. salaries and wages.
Cost of Dr. Rent: $4,690
TOTAL $51,870
BONUS SIDE-4,420 in Cr Account Payable
Revenue from unearned services, Cr 3,890
10,000 Cr Common Stock
6,600 in Cr Retained Earnings
Revenue from Cr Services 26,960
TOTAL $51,870
As a result, the DEBIT SIDE of the adjusted trial balance is $51,870 and the CREDIT SIDE is $51,870.
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Prepare journal entries to record each of the following transactions of a merchandising company. The company uses a perpetual inventory system and the gross method.
Nov. 5 Purchased 950 units of product at a cost of $12 per unit. Terms of the sale are 5/10, n/60; the invoice is dated November 5.
Nov. 7 Returned 40 defective units from the November 5 purchase and received full credit.
Nov. 15 Paid the amount due from the November 5 purchase, minus the return on November 7
Answer:
November 5, 202x, merchandise purchased on account, credit terms 5/10, n/60
Dr Merchandise inventory 11,400
Cr Accounts payable 11,400
November 7, 202x, 40 defective units returned
Dr Accounts payable 480
Cr Merchandise inventory 480
November 15, 202x, paid invoice within discount term
Dr Accounts payable 10,920
Cr Cash 10,374
Cr Purchase discounts 546
A seller uses a perpetual inventory system, and on April 17, a customer returns $1,000 of merchandise previously purchased on credit on April 13. The seller's cost of the merchandise returned was $480. The merchandise is not defective and is restored to inventory. The seller has not yet received any cash from the customer. Complete the two journal entries (the first for the revenue part of the transaction and the second for the cost part) to record the sales return transaction by selecting the account names and dollar amounts from the drop-down menus.
Date Account Title Debit Credit April 17
Answer:
Date Accounts Titles and Explanation Debit Credit
Apr 17 Sales return and allowances a/c $1,000
Account receivable a/c $1,000
Merchandise inventory a/c $480
Cost of goods sold a/c $480
(To record sales return)
Corporation W, which uses the accrual method of accounting, had earnings and profits of $95,000 on December 31, Year 1. Based on the following information, compute earnings and profits as of December 31, Year 2:
Taxable income per return $185,000
Contributions in excess of 10% limitation 1,500
Interest paid for tax-exempt bonds 1,000
Tax-exempt interest received 3,000
Federal income taxes 55,400
MACRS depreciation in excess of straight-line alternative depreciation system 1,500
a. $226,600
b. 220,600
c. $282,000
d. $228,600
Answer:
a. $226,600
Explanation:
Profit = $ (95000+185000-1500
- 1,000 + 3,000 - 55,400 + 1,500 )= $226000
items added back to profit are allowed deductions while items deducted are disallowed deductions
Depreciation was added back to profit because method used was in excess of straight line method and so does not reflect true depreciation
Larner Corporation is a diversified manufacturer of industrial goods. The company%u2019s activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 7.00 per direct labor-hour Machine processing $3.00 per machine-hour Machine setups $40.00 per setup Production orders $160.00 per order Shipments $ 120.00 per shipment Product sustaining $ 800.00 per productActivity data have been supplied for the following two products: Total Expected Activity J78 W52 Direct labor-hours 1,000 40 Machine-hours 3,200 30 Machine setups 5 1 Production orders 5 1 Shipments 10 1 Product sustaining 1 1 Required:Determine the total overhead cost that would be assigned to each of the products. (Omit the "$" sign in your response.) Activity Cost Pool J78 W52 Supporting direct labor $ $ Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost $ $
Answer and Explanation:
The computation of total overhead cost that would be assigned to each of the products is presented with the help of a spreadsheet:-
Here are the formulas from which we can determine the total cost of J78 and W52
For J78
Total cost = Activity rate of J78 × Expected activity of J78
For W52
Total cost = Activity rate of J78 × Expected activity of W52
The Spreadsheet has been attached.