Answer:
Alice's consumer surplus = $5
Jeff's consumer surplus = $16
Nicole's producer surplus = $1
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of a good.
Consumer surplus = willingness to pay - price of the good
Producer surplus is the difference between the price of a good and the least price the producer is willing to accept
Producer surplus = price of the good - least price the producer is willing to accept
Alice's consumer surplus = $30 - ($35 - $10) = $5
Jeff's consumer surplus = $20 - [$16 - (0.75 x $16)] = $16
Nicole's producer surplus = $501 - $500 = $1
Flint Hills, Inc. has prepared a year-end 2021 trial balance. Certain accounts in the trial balance do not reflect all activities that have occurred. The Supplies account shows a balance of $820, but a count of supplies reveals only $350 on hand. Flint Hills initially records the payments of all insurance premiums as expenses. The trial balance shows a balance of $560 in Insurance expense. A review of insurance policies reveals that $195 of insurance is unexpired. Flint Hills employees work Monday through Friday, and salaries of $3,800 per week are paid each Friday. Flint Hills' year-end falls on Tuesday. On December 31, 2021, Flint Hills received a utility bill for December electricity usage of $330 that will be paid in early January of 2022.
Required: Prepare adjusting journal entries, as needed, for the above items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. The Supplies account shows a balance of $680, but a count of supplies reveals only $280 on hand.
2. Flint Hills initially records the payments of all insurance premiums as expenses. The trial balance shows a balance of $490 in Insurance expense. A review of insurance policies reveals that $160 of insurance is unexpired.
3. Flint Hills employees work Monday through Friday, and salaries of $3,100 per week are paid each Friday. Flint Hills' year-end falls on Tuesday.
4. On December 31, 2018, Flint Hills received a utility bill for December electricity usage of $260 that will be paid in early January of 2019.
Event General Journal Debit Credit
1
2
3
4
Answer to Question 1
1. Dr Supplies expense 470
Cr Supplies 470
2. Dr Prepaid insurance 195
Cr Insurance expense 195
3. Dr Salaries expense 1,520
Cr Salaries payable 1,520
4. Dr Utilities expense 330
Cr Utilities payable 330
Answer to Question 2
1. Dr Supplies expense 400
Cr Supplies 400
2.Dr Prepaid insurance 160
Cr Insurance expense 160
3. Dr Salaries expense 1,240
Cr Salaries payable 1,240
4. Dr Utilities expense 260
Cr Utilities payable 260
Explanation:
QUESTION 1
Preparation of Journal entries
1. Based on the information given we were told that the company Supplies account shows a balance amount of $820 while the count of supplies shows only the amount of $350 on hand which means that the Journal entry will be:
Dr Supplies expense 470
Cr Supplies 470
(820-350)
2. Based on the information given we were told that the company trial balance reveal a balance of the amount of $560 in Insurance expense in which a review of the insurance policies shows that the amount $195 of insurance is unexpired which means that the Journal entry will be:
Dr Prepaid insurance 195
Cr Insurance expense 195
3. Based on the information given we were told that the company employees work from Monday through Friday in which salaries of the amount of $3,800 per week are paid each Friday while the company year-end falls on Tuesday which means that the Journal entry will be:
Dr Salaries expense 1,520
Cr Salaries payable 1,520
[(3,800÷5days)*2]
4. Based on the information given we were told that the company received a utility bill of the amount of $330 in December that will be paid in early January of 2022 which means that the Journal entry will be:
Dr Utilities expense 330
Cr Utilities payable 330
QUESTION 2
1. Based on the information given we were told that the company Supplies account shows a balance amount of $680 while the count of supplies shows only the amount of $280 on hand which means that the Journal entry will be:
Dr Supplies expense 400
Cr Supplies 400
(680-280)
2. Based on the information given we were told that the company trial balance reveal a balance of the amount of $490 in Insurance expense in which a review of the insurance policies shows that the amount $160 of insurance is unexpired which means that the Journal entry will be:
Dr Prepaid insurance 160
Cr Insurance expense 160
3. Based on the information given we were told that the company employees work from Monday through Friday in which salaries of the amount of $3,100 per week are paid each Friday while the company year-end falls on Tuesday which means that the Journal entry will be:
Dr Salaries expense 1,240
Cr Salaries payable 1,240
[(3,100÷5days)*2]
4. Based on the information given we were told that the company received a utility bill of the amount of $260 in December that will be paid in early January of 2022 which means that the Journal entry will be:
Dr Utilities expense 260
Cr Utilities payable 260
Eaton Co. sells major household appliance service contracts for cash. The service contracts are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to Unearned Service Revenue. This account had a balance of $3,800,000 at December 31, 2014 before year-end adjustment. Service contract costs are charged as incurred to the Service Contract Expense account, which had a balance of $900,000 at December 31, 2014. Service contracts still outstanding at December 31, 2014 expire as follows:
During 2015 $960,000
During 2016 1,140,000
During 2017 700,000
What amount should be reported as Unearned Service Revenue in Eaton's December 31, 2014 balance sheet?
a. $2,900,000.
b. $2,800,000. (Correct answer: $960,000 + $1,140,000 + $700,000 = $2,800,000.)
c. $1,900,000.
d. $1,000,000.
Answer:
b. $2,800,000.
Explanation:
Since the contracts are accepted on cash basis, receipts are recorded in Unearned Service Revenue. In this case, the contracts outstanding as on 31st December 2014 is recorded in unearned service revenue as those cash is received in advance and will be credited to unearned service revenue
Unearned service revenue in Eaton's December 31, 2014 Balance sheet = $960,000 + $1,140,000 + $700,000 = $2,800,000
The EZ Lawn Corporation manufactures lawn equipment such as lawn mowers, blowers, and trimmers. The lawn equipment is assembled in the U.S. at a facility in Florida, but the firm outsources inputs from a number of countries, each with varying degrees of economic stability. Given the importance of the firm's sourcing activities, EZ Lawn managers are discussing methods which might reduce the currency risk faced by EZ Lawn. Which of the following would most likely minimize the currency risk of EZ Lawn?
a. Concentrate all of the EZ Lawn outsourcing to one or two neighboring nations.
b. Re-locate a team of EZ Lawn managers overseas to stay abreast of currency changes.
c. List EZ Lawn stock on foreign stock exchanges to offset any currency losses.
d. Assign an EZ Lawn manager the task of monitoring currency fluctuations.
Answer:
c. List EZ Lawn stock on foreign stock exchanges to offset any currency losses.
Many foreign companies do this and list their stocks as ADRs in the US, so this is a method that actually works. The problem is that will listing American stocks in foreign markets help? Probably you could list some stocks in European, Japanese or even Canadian markets. But most foreign exchange markets pose a higher risk than a currency exchange risk.
Explanation:
Currency risk refers to the possibility that a company that engages in international trade losses money due to variations in the exchange rate between their domestic currency and a foreign currency. The best way to protect a company are currency hedged funds that trade currency exchange futures, but this option isn't included in the list.
a. Concentrate all of the EZ Lawn outsourcing to one or two neighboring nations. ⇒ This will increase the risk since it is similar to investing all your money in one single stock, it can be great or it can be a disaster.
b. Re-locate a team of EZ Lawn managers overseas to stay abreast of currency changes. ⇒ You can do this from anywhere in the world, you do not need to relocate someone.
d. Assign an EZ Lawn manager the task of monitoring currency fluctuations. ⇒ Similar to option B, it just takes a few seconds to do it and anyone can do it. It is something so basic that every company should do it. It is like telling someone that they shouldn't forget to keep breathing. It can help you deal with currency fluctuations, but it doesn't protect you from them.
Borges Machine Shop, Inc., has a 1-year contract for the production of gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow: General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) Dedicated Machine (DM) Annual contracted units Annual fixed cost Per unit variable cost Based on the cost, the process that is best suited for the current contracted volume is __________.
Answer:
All the numbers are missing, so I looked for a similar question.
The contract includes the production of 225,000 gear housings during 1 year.
We are also given the estimated costs of each alternative. We must choose the alternative that minimizes our total costs.
total costs for general purpose equipment (GPE) = $125,000 + (225,000 x $15) = $3,500,000total costs for flexible manufacturing system (FMS) = $200,000 + (225,000 x $14.50) = $3,462,500total costs for dedicated machine (DM) = $525,000 + (225,000 x $13.50) = $3,562,500For the current volume, the best option is flexible manufacturing system with a total cost of $3,462,500.
As total volume increases, the DM option becomes more attractive, but in order for it to cost less than FMS, total output should be higher than 325,000 units per year.
525,000 + 13.5x = 200,000 + 14.5x
x = 325,000 units
GPE is only attractive when the total units are lower (below 150,000 units per year):
125,000 + 15x = 200,000 + 14.5x
0.5x = 75,000
x = 150,000
Using the code letters below, indicate how each of the items listed would be handled in preparing a bank reconciliation. Enter the appropriate code letter in the space to the right of each item. Code A Add to cash balance per books B Deduct from cash balance per books C Add to cash balance per bank D Deduct from cash balance per bank E Does not affect the bank reconciliation Items 1. Outstanding checks select an code 2. Bank service charge select an code 3. Check for $320 correctly written and paid by the bank but incorrectly entered in the cash payments record for $230 select an code 4. Deposit in transit select an code 5. Bank returns customer deposited check marked NSF select an code 6. Bank collects notes receivable and interest for depositor select an code 7. Bank debit memorandum for check printing fees select an code 8. Petty cash custodian has $86 in paid petty cash vouchers that have not been reimbursed. select an code 9. Bank charged a check against the company, which should have been charged to another company. select an code 10. A check for $236 was correctly paid by the bank but was incorrectly entered in the cash payments records for $263
Answer and Explanation:
The matching is as follows
1. D. Subtract from cash balance per bank
2. B. Subtract from cash balance per books
3. B.Subtract from cash balance per books
4. C. Add to cash balance per bank
5. B. Subtract from cash balance per books
6. A. Add to cash balance per books
7. B. Subtract from cash balance per books
8. E. Does not affect the bank reconciliation
9. C. Add to cash balance per bank
10. A. Add to cash balance per books
Bintu has a comparative advantage in the production of:______.
a. bowls and Juba has a comparative advantage in the production of cups.
b. cups and Juba has a comparative advantage in the production of bowls.
c. both goods and Juba has a comparative advantage in the production of neither good.
d. neither good and Juba has a comparative advantage in the production of both goods.
Answer:
b. cups and Juba has a comparative advantage in the production of bowls.
Explanation:
A company or country could said to have a comparative advantage if t produces a good or service with the lowest possible opportunity costs.
Bintu's opportunity cost of 1 unit of Bowls.
Bintu can produce 2 Bowls or 8 cups.
Therefore; 2 Bowls = 8 cups
We need to make it 1 Bowl, so we divide both sides by 2.
2 Bowls / 2 = 1 Bowl
8 cups / 2 = 4 cups
Hence, 1 bowl = 4 cups
Juba's opportunity cost of 1 unit of Bowls.
Juba can produce 4 Bowls or 6 cups.
Therefore; 4 Bowls = 6 cups
We need to make it 1 Bowl, so we divide both sides by 4.
4 Bowls / 4 = 1 Bowl
6 cups / 4 = 1.5 cups
Hence, 1 bowl = 1.5 cups
We now need to calculate the opportunity cost of 1 unit of cups from Bintu and Juba. This is just the same process as before, but with 1 unit of cup instead.
Bintus's opportunity cost of 1 unit of cups
Bintu can produce 8cups or 2 bowl.
Therefore, 8 cups = 2 bowls.
We need to make it 1 cup, so we divide both sides by 8.
8 cups / 8 = 1 cup
2 bowls /8 = 0.25 bowls.
Hence, 1 cup - 0.25 bowls
Juba's opportunity cost of 1 unit of cups.
Juba can produce 6 cups or 4 bowls.
Therefore, 6 cups = 4 bowls.
We need to make it 1 cup, so we divide both sides by 6.
6 cups /6 = 1 cup
4 bowls / 6 =0.67 bowl
Hence, 1 cup = 0.67 bowl
Now comparative advantage is when either of these two can produce a good with the lowest possible opportunity cost.
From the calculation above, the opportunity cost for bowl is 4 in Bintu and 1.5 in Juba. So since Juba has the lowest opportunity cost for bowls, it, therefore, Juba has a comparative advantage in the production of bowls. In the same way, since cost for Cups in Bintu is 0.25 and that of Juba is 0.67, then Bintu has a comparative advantage in the production of cups
The most recent financial statements for Summer Tyme, Inc., are shown here:______.
Income Statement Balance Sheet
Sales $3,700 Current assets $4,200 Current liabilities $970
Costs 1,800 Fixed assets 5,700 Long-term debt 3,500
Taxable
income $1,900 Equity 5,430
Taxes (34%) 646 Total $9,900 Total $9,900
Net income $1,254
Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 50 percent dividend payout ratio. As with every other firm in its industry, next year's sales are projected to increase by exactly 25 percent.
Required:
What is the external financing needed? (Do not round your intermediate calculations.)
EFN = needed new long-term debt and/or external equity
Answer: $1,448.75
Explanation:
Sales are to increase by 25% along with Assets, costs and current liabilities.
Sales (3,700 * 1.25) $4,625
Less: Costs ( 1,800 * 1.25) $2,250
Taxable Income $2,375
Tax (2,375 * 34%) $807.50
Net Income $1,567.50
Addition to retained earnings = Net Income - Dividends
= 1,567.50 - ( 1,567.50 * 50%)
= $783.75
Equity = 5,430 + 783.75 = $6,213.75
Assets = 9,900 * 1.25 = $12,375
Total Liability = Long term debt + Current liability
= 3,500 + (970 * 1.25)
= $4,712.50
Assets = Liability + Equity
12,375 ≠ 4,712.50 + 6,213.75
External financing needed = 12,375 - 4,712.50 - 6,213.75
= $1,448.75
Harwell Company manufactures automobile tires. On July 15, 2021, the company sold 2,900 tires to the Nixon Car Company for $40 each. The terms of the sale were 2/10, n/30. Harwell uses the net method of accounting for cash discounts.
Required:
1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on July 23, 2021.
2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and payment on August 15, 2021.
Answer:
1. July 15
Dr Accounts Receivable 113,680
Cr Sales revenue 113,680
July 23
Dr Cash 113,680
Cr Accounts Receivable 113,680
2. July 15
Dr Accounts Receivable 113,680
Cr Sales revenue 113,680
Aug 15
Dr Cash 116,000
Cr Accounts Receivable 113,680
Cr Sales discount forfeited 2,320
Explanation:
1.Preparation of the journal entries to record the sale on July 15 and payment on July 23, 2021.
July 15
Dr Accounts Receivable 113,680
Cr Sales revenue 113,680
[($40*2,900)- (40*2,900*2%)]
(116,000-2,320=113,680)
July 23
Dr Cash 113,680
Cr Accounts Receivable 113,680
[($40*2,900)- (40*2,900*2%)]
(116,000-2,320=113,680)
2.Preparation of the journal entries to record the sale on July 15 and payment on August 15, 2021.
July 15
Dr Accounts Receivable 113,680
Cr Sales revenue 113,680
[($40*2,900)- (40*2,900*2%)]
(116,000-2,320=113,680)
Aug 15
Dr Cash 116,000
($40*2,900)
Cr Accounts Receivable 113,680
[($40*2,900)- (40*2,900*2%)]
(116,000-2,320=113,680)
Cr Sales discount forfeited 2,320
(40*2,900*2%)
3 sentences on why you would want to be a plumber
Answer:
I want to be a plumber because plumbing the toilets sound ____. The job is simple and ____ which means ill get it done. It also pays very well so I believe I can be a ______ plumber.
Explanation:
yes
A risk analyst gives Oracle Corporation, the enterprise software and database management firm, a CAPM equity beta of 1.2. As of May 2011, the risk free rate is 4.0 percent, the market risk premium is 6%, the analyst is forecasting for Oracle to have EPS of $2.17 per share and P/E ratio to be 20, for the fiscal year ending May 31, 2012. The company is expected to pay $0.24 in dividends per share for the fiscal year.
The equity cost of capital for Oracle is:__________The value per share of equity for Oracle in May 2011 is:________
Answer:
Cost of equity = 11.20%, Value of Equity = $39.25
Explanation:
a. Cost of equity = Rf + B(Rm-Rf)
Cost of equity = 4% + 1.2(6%)
Cost of equity = 4% + 7.20%
Cost of equity = 11.20%
b. P/E ratio = 20
Market Price / EPS = 20
Market Price = EPS * 20
-->P1 = $2.17 * 20 = $43.40
DPS1= $0.24
Value of Equity = P1/Cost of Equity + DPS1/Cost of equity
Value of Equity = $43.40/1.1120 + $0.24/1.1120
Value of Equity = $39.03 + $0.22
Value of Equity = $39.25
What is the difference between ordinal utility and cardinalutility?
Ordinal utility refers to
A. satisfaction when consumers are , while cardinal utility is satisfaction when consumers are .
B. a ranking of market baskets based on , while cardinal utility is a ranking of market baskets based on .
C. a ranking where the intensity of preferences is quantified, while cardinal utility is a number that by itself has no meaning.
D. an interpersonal comparison of satisfaction, while cardinal utility is a ranking of market baskets using arbitrary numerical values.
E. a ranking of market baskets in order of most to least preferred, while cardinal utility indicates how much one market basket is preferred to another.
Answer:
E. a ranking of market baskets in order of most to least preferred, while cardinal utility indicates how much one market basket is preferred to another.
Explanation:
Ordinal utility can be defined as an economic concept in which the consumer chooses a product or service from the market based on preferences in relation to another at a comparative level, but not exactly quantified.
In cardinal utility, on the other hand, the consumer is able to quantify the benefits perceived in a product or service with specific values, and this measure is beneficial to specify, for example, a choice based on price and utility for the consumer, which helps in the purchase decision process .
Sales and Cash Receipts Transactions
Sourk Distributors is a retail business. The following sales, returns, and cash receipts occurred during March 20--. There is an 8% sales tax.
1. Sale on account No. 33C to Donachie & Co., $1,700 plus sales tax.
3. Sale on account No. 33D to R. J. Kibubu, Inc., $2,190 plus sales tax.
5 Donachie & Co. returned merchandise from Sale No. 33C for a credit (Credit Memo No. 66), $40 plus sales tax.
7 Cash sales for the week were $3,140 plus sales tax.
10 Received payment from Donachie & Co. for Sale No. 33C less Credit Memo No. 66.
11 Sale on account No. 33E to Eck Bakery, $1,230 plus sales tax.
13 Received payment from R. J. Kibubu for Sale No. 33D.
14 Cash sales for the week were $4,100 plus sales tax.
16 Eck Bakery returned merchandise from Sale No. 33E for a credit (Credit Memo No. 67), $34 plus sales tax.
18 Sale on account No. 33F to R. J. Kibubu, Inc., $2,580 plus sales tax.
20 Received payment from Eck Bakery for Sale No. 33E less Credit Memo No. 67.
21 Cash sales for the week were $2,510 plus sales tax.
25 Sale on account No. 33G to Eck Bakery, $2,010 plus sales tax.
27 Sale on account No. 33H to Whitaker Group, $2,070 plus sales tax.
28 Cash sales for the week were $3,420 plus sales tax.
Required:
Record the transactions in the general journal.
Answer and Explanation:
Answer and explanation attached
The 2021 income statement of Anderson Medical Supply Company reported net sales of $12 million, cost of goods sold of $5.5 million, and net income of $835,000. The following table shows the company's comparative balance sheets for 2021 and 2020: ($ in thousands) 2021 2020Assets Cash$440 $520 Accounts receivable 840 570 Inventory 1,250 1,050 Property, plant, and equipment (net) 3,100 2,820 Total assets$5,630 $4,960 Liabilities and shareholders’ equity Current liabilities$1,100 $970 Bonds payable 1,550 1,550 Common stock 1,700 1,700 Retained earnings 1,280 740 Total liabilities and shareholders' equity$5,630 $4,960 Required:Calculate Anderson's turnover ratios for 2021. (Use 365 days a year. Round your answers to 2 decimal places.)Inventory turnover ratio timesReceivables turnover ratio timesAverage collection period days Asset turnover ratio times
Answer:
Inventory turnover ratio = cost of goods sold / average inventory = $5,500,000 / [($1,250,000 + $1,050,000)/2] = 4.78 times
Receivables turnover ratio = net sales / average accounts receivable = $12,000,000 / [($840,000 + $570,000)/2] = 17.02 times
Average collection period days = 365 / receivables turnover ratio = 365 / 17.02 = 21.45 days
Asset turnover ratio = net sales / average total assets = $12,000,000 / [($5,630,000 + $4,960,000)/2] = 2.27 times
become aware of the various institutions depa and center present within the school environment or the immediate community
Answer:
This represents the involvement of parents in their children's education
Explanation:
When parents worry about getting to know the institutions related to the school environment that their children attend, they show an involvement in education, which is very beneficial both for the development of children and communities, as it allows the recognition of factors favorable to academic construction children, being able to supervise and provide important advice about these institutions, but also to work for the benefit of education.
One approach to understanding corruption perceptions is to compare information across a variety of countries. Your company has had operations in South America for some time. However, there has not been an internal evaluation of perceived regional corruption to date. Therefore, you have been asked to provide insight on this topic for each country in South America. Based on an annual corruption perceptions index, develop a brief report and recommendations for the entire company.
Explanation:
A major problem in investing in the countries of South America are the problems arising from corruption, political instability and bureaucratization.
There are also many positive points that make large companies operate in such countries, such as Brazil, for example, which is a large country with enormous potential for consumption and also local and government incentives for setting international companies in the country.
However, it is essential that companies operate in these countries having knowledge of the real local situation in terms of the main problems occurring in the country, such as corruption, which can lead to significant problems for the company's business.
It is important, therefore, that there is an accurate internal control over the businesses and the corruption-related indexes and an active and regular monitoring of data essential to the business.
It is also important to have policies and an internal culture aimed at maintaining ethical values, so that the company is supported by positive and ethical values that will lead to a good positioning in the market.
Pinkie Copy Center sells laser printers and supplies. Pinkie Copy Center started the year with 90 containers of ink (average cost of $9.20 each, FIFO cost of $8.80 each, LIFO cost of $7.90 each). During the year, Pinkie Copy Center purchased 720 containers of ink at $10.10 and sold 630 units for $22.00 each. Pinkie Copy Center paid operating expenses throughout the year, a total of $4,000. Pinkie Copy Center's income statement-excluding the effects of income tax under each of the average-cost, FIFO, and LIFO inventory costing methods- is given.
Pinkie Copy Center is a corporation subject to a 40% income tax. Compute the company's income tax expense under the average-cost, FIFO, and LIFO inventory costing methods. Which method would you select to (a) maximize income before tax and (b) minimize income tax expense?
Pinkie Print Supplies, Inc.
Income Statement
Year Ended December 31
Average Cost FIFO LIFO
Sales revenue $13,860 $13,860 $13,860
Cost of goods sold 6,300 6,246 6,363
Gross profit $7,560 $7,614 $7,497
Operating expenses 4,200 4,200 4,200
Net income before
tax $3,360 $3,414 $3,297
Income tax expense
Answer:
A) FIFO costing method
B) LIFO cost method
Explanation:
Pinkie copy center income tax expense ending December 31
Average cost FIFO LIFO
Sales revenue 13860 13860 13860
Cost of goods sold 6300 6246 6363
Gross profit 7560 7614 7497
Operating expense 4000 4000 4000
Net income before tax 3560 3614 3497
Income tax expense 1424 1446 1399
Net income 2136 2168 2098
Suppose the government imposes a tax of 10 percent on the first $20,000 of income, 20 percent on the next 40,000 of income and 30 percent on income above $60,000. For a person whose income is $90,000, the tax liability is _________ and the marginal tax rate is __________.
Answer:
For a person whose income is $90,000, the tax liability is $9,000 and the marginal tax rate is 30%.
Explanation:
total tax liability for someone earning $90,000:
$20,000 x 10% = $2,000
$40,000 x 20% = $8,000
$30,000 x 30% = $9,000
total tax liability = $19,000
A taxpayer's marginal tax rate, refers to the rate at which every additional dollar of income will be taxed.
The following data are taken from the unadjusted trial balance of the Westcott Company at December 31, 2017. Complete the work sheet following adjustment. Use the following adjustment information to complete the work sheet.
A. Depreciation on equipment, $3.
B. Accrued salaries, $6.
C. The $12 of unearned revenue has been earned.
D. Supplies available at December 31, 2017, $15.
E. Expired insurance, $15.
WESTCOTT COMPANY
Partial Work Sheet
For the Year Ended December 31
Unadjusted Trial Adjusted Trial
Balance Adjustments Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 35 35
Accounts receivable 30 30
Supplies 42
Prepaid insurance 36 18 18
Equipment 54 54
Accumulated
depreciation-Equip 31 14
Accounts payable 5
Salaries payable 15
Unearned revenue 23 23
Common stock 15
Retained earnings 35
Dividends 26 26
Revenue 170 23 173
Depreciation expense-Equip 14 14
Salaries expense 33 15
Insurance expense 15
Supplies expense
Utilities expense 23
Totals $279 279 67 $70 177 $173
Find full question attached
Answer and Explanation:
Find full answer and explanation attached
Recording sales, returns, and discounts taken LO P2
Prepare journal entries to record each of the following sales transactions of a merchandising company. The company uses a perpetual inventory system and the gross method.
Apr. 1 Sold merchandise for $3,800, with credit terms n/30; invoice dated April 1. The cost of the merchandise is $2,280.
Apr. 4 The customer in the April 1 sale returned $460 of merchandise for full credit. The merchandise, which had cost $276, is returned to inventory.
Apr. 8 Sold merchandise for $1,400, with credit terms of 1/10, n/30; invoice dated April 8. Cost of the merchandise is $980.
Apr. 11 Received payment for the amount due from the April 1 sale less the return on April 4.
Answer:
Entries are given
Explanation:
We will record assets and expenses on the debit as they increase during the year and will record liabilities and capital on the credit side as they increase during the year or vice versa.
DEBIT CREDIT
April 01
Account Receivable $3,800
Sales $3,800
Apr - 01
Cost of Goods Sold $2,280
Merchandise $2,280
Apr - 04
Sales Return $460
Account Receivable $460
Apr - 04
Merchandise $276
Cost of Goods Sold $276
Apr - 08
Account Receivable $1,400
Sales $1,400
Apr - 08
Cost of Goods Sold $980
Merchandise $980
Apr - 11
Cash $3,340
Account Receivable $3,340
Prepare the Unadjusted Trial Balance Prepare the Unadjusted Trial Balance for Smart Touch Learning for December 31st. Check your spelling carefully and do not abbreviate. Enter the account names exactly as provided in the Chart of Accounts. Enter the accounts in the order of Assets, Liabilities, Equity, Revenues, and Expenses. ACCOUNT Accounts Receivable 800 Cash 41,140 Common Stock 36,400 Dividends 4,700 Furniture 13,900 Office Supplies 580 Prepaid Insurance 1,800 Rent Expense 2,300 Salaries Expense 2,900 Service Revenue 27,800 Unearned Revenue 4,200 Utilities Expense 280
Answer and Explanation:
The preparation of the unadjusted trial balance is shown below;
Particulars Debit Credit
Cash $41,140
Account receivable $800
Office supplies $580
Prepaid insurance $1,800
Furniture $13,900
Unearned revenue $4,200
Common Stock $36,400
Dividend $4,700
Service revenue $27,800
Rent expense $2,300
Salaries expense $2,900
Utilities expense $280
Total $68,400 $68,400
A retail store manager instructed two new sales associates to greet customers quickly when they enter the store.On the first day the sales associates are working on the selling floor,one sales associate greets customers immediately after they enter the store,while the other associate greets customers after they have looked around for a minute or two.Which of the following risks incurred by describing services in words alone has led to the sales associates greeting customers at different time intervals?
A) Overcautious
B) Ostentation
C) Objectivity
D) Biased interpretation
E) Transformation
Answer:
D) Biased interpretation
Explanation:
The risk that is most likely the cause of this would be Biased Interpretation. This is basically when an individual takes a very random or common and takes it as being either negative or positive. This is most likely causing the sales associates to greet the customers at different intervals as they see opportunities differently. Some sales associates may see an opportunity of greeting a customer as negative while another may see it as positive. Therefore, only the one that sees it as positive will greet the customer, while the other will wait for another opportunity.
You need to save a total of $7,500 in order to buy a new motorcycle. You are starting with savings of $4,000 but will make no additional contributions. How long do you need to wait in order to reach your goal? In excel, compute the number of years required for annual interest rates of 2% to 10%, in two percent increments. What accurately depicts this calculation?
Answer:
You do not need an excel spreadsheet to calculate this, you need to use the the future value formula:
future value = present value x (1 + r)ⁿ
present value = $4,000
future value = $7,500
so, (1 + r)ⁿ = $7,500 / $4,000 = 1.875
now we replace r:
for 2%)
1.02ⁿ = 1.875
n = log 1.875 / log 1.02 = 31.74 years
for 4%)
1.04ⁿ = 1.875
n = log 1.875 / log 1.04 = 16.03 years
for 6%)
1.06ⁿ = 1.875
n = log 1.875 / log 1.06 = 10.79 years
for 8%)
1.08ⁿ = 1.875
n = log 1.875 / log 1.08 = 8.17 years
for 10%)
1.1ⁿ = 1.875
n = log 1.875 / log 1.1 = 6.6 years
The higher the interest rate, the shorter it will take for you account to increase in value and the shorter you will have to wait in order to buy your motorcycle.
Bob Burgers allocates manufacturing overhead to jobs based on direct labor hours. The company has the following estimated costs for the upcoming year:
Direct materials used 50,000
Direct Labor costs 70,400
Wages of factory janitors 39,500
Sales supervisor salary 51,500
Utilities for factory 16,100
Rent on factory building 13,800
Advertising expense 5,830
The company estimates that direct labor hours will be worked in the upcoming year, while machine hours will be used during the year. The predetermined manufacturing overhead rate per direct labor hour will be:________
a. $154 46
b. $1869
c. $7921
d. $43.38
The company has the following estimated costs for the upcoming year: Direct materials used $50,800 Direct labor costs $70,000 Wages of factory janitors $39,500 Sales supervisor salary $51,600 Utilities for factory $16,100 Rent on factory building $13,200 Advertising expense $5130 The company estimates that 1420 direct ...Bob Burgers allocates manufacturing overhead to jobs based on direct labor hours. The company has the following estimated costs for the upcoming year: Direct materials used $50,800 Direct labor costs $70,000 Wages of factory janitors $39,500 Sales supervisor salary $51,600 Utilities for factory $16,100 Rent on factory building $13,200 Advertising expense $5130 The company estimates that 1420 direct labor hours will be worked in the upcoming year, while 1400 machine hours will be used during the year. The predetermined manufacturing overhead rate per direct labor hour will be (Round your answer to the nearest cent.)
Broomhilda manufactures broomsticks for her fellow witch (and wizard) friends. Broomhilda uses a job order cost system and applies overhead to production on the basis of direct labor cost. On September 1, Job 50 (a super deluxe broom complete with a separate sleep space and shower area as well as an espresso machine) was the only job in process. The costs incurred prior to September on this job were as follows: direct materials $20,000, direct labor $12,000, and manufacturing overhead $16,000. As of September 1, Job 49 (a broom shaped like a cat with some extra cargo space for all the cats) had been completed at a cost of $90,000 and was part of finished goods inventory. There was a $15,000 balance in the Raw Materials Inventory account. During the month of September, Broomhilda began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $122,000 and $158,000, respectively. The following additional events occurred during the month.
1. Purchased additional raw materials of $90,000 on account.
2. Incurred manufacturing overhead costs as follows: indirect materials $17,000 (including broom polish and specially crafted scissors to trim stray twigs), indirect labor $20,000 (Hansel and Gretel clean the shop and run errands for the elves), depreciation expense on equipment $12,000 (Broomhilda has multiple molding stations for each broom she creates), and various other manufacturing overhead costs on account $16,000.
3. Assigned direct materials and direct labor to jobs as follows:
Job no. Direct Materials Direct Labor
50 10,000 5,000
51 39,000 25,000
52 30,000 20,000
Required:
a. Calculate the predetermined overhead rate for September, assuming Broomhilda estimates total manufacturing overhead costs of $840,000 and direct labor costs of $700,000 for September.
b. Open job cost sheets for Jobs 50, 51, and 52. Enter the September 1 balances on the job cost sheet for Job 50.
c. Prepare the journal entries to record the purchase of raw materials, and the manufacturing overhead costs incurred during the month of March.
d. Prepare the summary journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning overhead costs, use the overhead rate calculated in (1). Post all costs to the job cost sheets as necessary.
e. Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry (or entries) to record the completion of any job(s) during the month.
f. Prepare the journal entry (or entries) to record the sale of any job(s) during the month.
g. What is the balance in the Finished Goods Inventory account at the end of the month? What job(s) does this balance consist of? 8. What is the amount of over- or underapplied overhead? Prepare the journal entry to close this to Cost of Goods Sold
Answer:
Broomhilda
a. Predetermined overhead rate = overhead costs/direct labor costs
= $840,000/$700,000
= $1.20 per direct labor cost
b. Job Cost Sheets for Job 50 Job 51 Job 52
Beginning balances:
Direct materials $20,000
Direct labor $12,000
Manufacturing overhead $16,000
c. Journal Entries for the purchase of raw materials and manufacturing overhead costs:
Debit Raw materials $90,000
Credit Accounts Payable $90,000
To record the purchase of raw materials on account.
Debit Manufacturing overhead $65,000
Credit Raw materials $17,000
Credit Wages $20,000
Credit Depreciation expense $12,000
To record the manufacturing overhead incurred.
d. Debit Job 50 $21,000
Credit Raw materials $10,000
Credit Direct labor $5,000
Credit Manufacturing overhead $6,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 50.
Debit Job 51 $94,000
Credit Raw materials $39,000
Credit Direct labor $25,000
Credit Manufacturing overhead $30,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 51
Debit Job 52 $74,000
Credit Raw materials $30,000
Credit Direct labor $20,000
Credit Manufacturing overhead $24,000
To record the assignment of direct materials, direct labor, and manufacturing overhead costs to Job 52
e. Job Cost Sheets for Job 50 Job 51 Job 52
Beginning balances:
Direct materials $20,000
Direct labor $12,000
Manufacturing overhead $16,000
Direct materials $10,000 $39,000 $30,000
Direct labor $5,000 $25,000 $20,000
Manufacturing overhead $6,000 $30,000 $24,000
Total $69,000 $94,000
f. Debit Accounts Receivable $280,000
Credit Sales Revenue $280,000
To record the sale of goods (Jobs 49 and 50 for $122,000 and $158,000, respectively).
Debit Cost of Goods Sold $159,000
Credit Job 49 $90,000
Credit Job 50 $69,000
To record the cost of goods sold for Jobs 49 and 50.
g. Finished Goods Inventory balance = $94,000
This balance consists of Raw materials $39,000, Direct labor $25,000, and Manufacturing overhead $30,000 for Job 51.
h. The amount of over-or underapplied overhead:
Overhead incurred = $65,000
Overhead applied = $60,000
Underapplied = $5,000
Debit Cost of Goods Sold $5,000
Credit Manufacturing overhead $5,000
To close the underapplied overhead to the cost of goods sold.
Explanation:
Jobs 50 costs prior to September:
direct materials $20,000,
direct labor $12,000, and
manufacturing overhead $16,000
Total costs so far = $$48,000
Job 49 completed at a cost of $90,000
Beginning balance of Raw Materials Inventory = $15,000
Started Jobs 51 and 52, completed Jobs 50 and 51
Sold Jobs 49 and 50 on account for $122,000 and $158,000, respectively.
Additional events:
Raw materials purchased on account = $90,000
Manufacturing overhead incurred:
indirect materials $17,000
indirect labor $20,000
depreciation expense on equipment $12,000
Various manufacturing overhead = $16,000
Total = $65,000
Assignment of direct materials and direct labor to jobs:
Job no. Direct Materials Direct Labor Manufacturing overhead
50 10,000 5,000 $6,000
51 39,000 25,000 $30,000
52 30,000 20,000 $24,000
Estimated total manufacturing overhead costs = $840,000
Estimated direct labor costs = $700,000
Predetermined overhead rate = overhead costs/direct labor costs
= $840,000/$700,000
= $1.20 per direct labor cost
Morgan (age 45) is single and provides more than 50% of the support of Tammy (a family friend), Jen (a niece, age 18), and Jerold (a nephew, age 18). Both Tammy and Jen live with Morgan, but Jerold (a French citizen) lives in Canada. Morgan earns a salary of $95,000, contributes $5,000 to a traditional IRA, and receives sales proceeds of $15,000 for an RV that cost $60,000 and was used for vacations. She has $8,200 in itemized deductions.
A. Morgan's taxable income is $____.
B. Using the Tax Rate Schedules (click here), tax liability for Morgan is $____for 2019.
C. Compute Morgan's dependent tax credit.
Answer:
RV is a personal asset, no loss on sale of personal asset is deductible and Morgan is eligible for filling as Head of Household
a. Morgan's Taxable Income
Salary $95,000
IRA Deduction $5,000
AGI $90,000
Greater of standard and itemized deduction $18,350
Taxable Income $71,650
b. Tax Liability for Morgan
= $6,065 + ($71,650 - $52,850)*22%
= $6,065 + ($18,800)*22%
= $6,065 + $4,136
= $10,201
Tax Liability for Morgan is $10,201 for 2019
c. Only 2 out of 3 dependent quality for Dependent Credit, therefore, Morgan's dependent tax credit = $500 * 2 = $1,000
Kirk, Spock and Bones were partners in a company that sold TV memorabilia, aptly named Memorabilia Partnership. The memorabilia business was not as popular as it had once been, so Kirk decided to withdraw from the partnership and duly notified the other members. Memorabilia Partnership was an at-will partnership and the members agreed to dissolve the partnership and parted amicably. They posted a notice in the local newspaper of the dissolution of Memorabilia Partnership. Ed decided that he would like to host a Star Trek convention. Part of Ed’s idea was to put a piece of TV memorabilia in the hands of the first 500 people at the convention. Ed had, in the past, conducted business with Memorabilia Partnership several times to buy memorabilia for special events. Ed did not see the newspaper notice and was not informed of the dissolution of Memorabilia Partnership. Ed approached Kirk to make a deal. Ed placed an order, gave a substantial down payment to Kirk, and received a receipt on Memorabilia Partnership stationery from him. Kirk left the country with the down payment. Spock and Bones, the other former members of Memorabilia Partnership, failed to honor the contract. Ed sued the other former members of Memorabilia Partnership. Discuss Spock and Bone’s potential liability.
Answer:
In this case, Spock and Bone's potential liability is nothing and they cannot be held responsible for non honoring of contract of Memorabilia Partnership with Ed. This is because, Memorabilia Partnership was dissolved and Spock and Bone's cannot be held responsible for Kirk's actions. Since Kirk fled the country with down payment money, hence he is liable for suitable punishment and fine but since Spock and Bones were not involved in this crime, hence they cannot be held liable for anything.
Allmond Corporation, organized on January 3, 2021, had pretax accounting income of $23 million and taxable income of $29 million for the year ended December 31, 2021. The 2021 tax rate is 25%. The only difference between accounting income and taxable income is estimated product warranty costs. Assume that expected payments and scheduled tax rates (based on recently enacted tax legislation) are as follows:
2022 $4 million 30%
2023 1 million 30%
2024 1 million 30 %
2025 2 million 25%
Required:
a. Determine the amounts necessary to record Allmond’s income taxes for 2021 and prepare the appropriate journal entry.
b. What is Allmond’s 2021 net income?
Answer:
$15.75 million
Explanation:
The Income tax necessary to record in almond's income taxes for 2021 can be calculated by reversing all the warranty cost in 2022 and onwards. The warranty cost will be recorded as a deferred tax asset.
Requirement A
Warranty costs reversing in:
Date Amount Tax rate Tax
2022 $4m x 30% = $1.2 Deferred tax Assets
2023 $1m x 30% = $0.3 Deferred tax Assets
2024 $1m x 30% = $0.3 Deferred tax Assets
2025 $2m x 25% = $0.5 Deferred tax Assets
Total deferred tax amount $2.3 Deferred tax Assets
Income tax Payable = Taxabe income x tax rate
Income tax Payable = $29m x 25%
Income tax Payable = $7.25m
Accounting Entry:
DEBIT CREDIT
Income tax expense $7.25
Deferred tax asset $2.3
Income taxes payable $9.55
Requirement B
Net income for 2021 = Pretax income - Income tax expense
Net income for 2021 = $23M - $7.25
Net income for 2021 = $15.75 million
Financial Statements of a Manufacturing Firm The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes:
• Purchased $605,700 of materials.
• Used $520,900 of direct materials in production.
• Incurred $448,000 of direct labor wages.
• Applied factory overhead at a rate of 80% of direct labor cost.
• Transferred $1,274,200 of work in process to finished goods.
• Sold goods with a cost of $1,211,400.
• Revenues earned by selling bikes, $2,168,400.
• Incurred $520,900 of selling expenses.
• Incurred $193,800 of administrative expenses.
a. Prepare the income statement for Rushmore Biking Inc. for the month ending February 28. Assume that Rushmore Biking Inc. uses the perpetual inventory method.
Rushmore Biking Inc.
Income Statement
For the Month Ended February 28
Selling and administrative expenses:
Total selling and administrative expenses
b. Determine the inventory balances on February 28, the end of the first month of operations,
Materials inventory, February 28
Work in process inventory, February 28
Finished goods inventory, February 28
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Answer:
a.Net Income $ 242,300
Materials inventory, February 28= $ 84,800
Work in process inventory, February 28= $ 53,100
Finished goods inventory, February 28= $ 62800
Explanation:
Rushmore Biking Inc.
Income Statement
For the Month of February
Debit Credit
Sales Revenue $ 2,168,400
Direct Materials $520,900
Direct Labor $448,000
Applied factory overhead $ 358,400
Total Manufacturing Costs $ 1327,300
Less Closing Work In Process $ 53,100
Cost Of Goods Manufactured $1,274,200
Less Finished Goods Ending Inventory $ 62800
Cost Of Goods Sold ($1,211,400)
Gross Profit $ 957,000
Less
Selling Expenses $520,900
Administrative Expenses $193,800 ( $ 714,700)
Net Income $ 242,300
b.
Materials inventory, February 28= Purchased Less Used
= $605,700- $520,900 = $ 84,800
Work in process inventory, February 28= Total Manufacturing Costs Less Cost Of Goods Manufactured
$ 1327,300-$1,274,200= $ 53,100
Finished goods inventory, February 28 = Cost Of Goods Manufactured Less Cost Of Goods Sold
$1,274,200 - $1,211,400= $ 62800
Suppose someone offered to sell you a note calling for the payment of $1,000 15 months from today. They offer to sell it to you for $850. You have $850 in a bank time deposit which pays a 7% effective annual interest rate (compounding), and you plan to leave the money in the bank unless you buy the note. The note is not risky--you are sure it will be paid on schedule. Should you buy the note?
Check the decision in three ways:
a. By comparing your future value if you buy the note versus leaving your money in the bank.
b. By comparing the PV of the note with your current bank account.
c. By comparing the EFF% on the note with that of the bank account.
Answer:
1. The future value = 1000
Now we are to calculate the future value of bank savings
= 850x(1+0.07)^15/12
= 850x1.07^1.25
=$925.0147
So it is better to buy note.
2. Present value = 1000/(1.07^15/12)
= 1000/1.08825252622
= $918.9
For one to get same amount of money then savings would have to be increased. So we choose note
3. EAR = EFF%
= 1000/(850^12/15)-1
= 13.88%
We have EAR on bank as 7% and that of note as 13.88%. note is higher so we choose note
Presented below is information for Pharoah Company for the month of January 2017.
Cost of goods sold $204,700 Rent expense $34,200
Freight-out 9,600 Sales discounts 8,200
Insurance expense 13,400 Sales returns and allowances 19,300
Salaries and wages expense 63,300 Sales revenue 396,000
Income tax expense 5,400 Other comprehensive income (net of $400 tax) 2,000
Required:
Prepare an income statement using the multi-step format.
Answer:
Pharaoh Company
Income Statement
For the month ended January 31, 2017
Sales $390,000
Sales discounts ($8,200)Sales returns and allowances ($19,300) ($27,500)Net sales $362,500
Cost of goods sold ($204,700)
Gross profit $157,800
Operating expenses:
Selling expense
Salaries and wages expense ($63,300)Rent expense ($34,200 )Insurance expense ($13,400)Freight-out ($9,600) ($120,500)Operating income $37,300
Income tax expense (5,400)
Net operating income $31,900
Other comprehensive income (net of $400 tax) $2,000
Net income $33,900