Answer:
a. $85,000 in raw materials were purchased on account.
Dr Raw materials inventory 85,000
Cr Accounts payable 85,000
b. $83,000 in raw materials were used in production. Of this amount, $73,000 was for direct materials and the remainder was for indirect materials.
Dr Work in process 73,000
Dr Manufacturing overhead 10,000
Cr Raw materials inventory 85,000
c. Total labor wages of $120,500 were paid in cash. Of this amount, $102,800 was for direct labor and the remainder was for indirect labor.
Dr Work in process 102,800
Dr Manufacturing overhead 17,700
Cr Cash 120,500
d. Depreciation of $195,000 was incurred on factory equipment.
Dr Manufacturing overhead 195,000
Cr Accumulated depreciation - factory equipment 195,000
Sweeties, Inc., manufactures a sugar product by a continuous process, involving three production departments-Refining, Sifting, and Packing. Assume that records indicate that direct materials, direct labor, and applied factory overhead for the first department, Refining, were $369,000, $146,000, and $97,600, respectively. Also, work in process in the Refining Department at the beginning of the period totaled $30,200, and work in process at the end of the period totaled $28,400.
Required:
A1) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct materials.
A2) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct labor.
A3) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for factory overhead.
B. On September 30, journalize the entry to record the transfer of production costs to the second department, Sifting.
Answer:
A1) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct materials.
Dr Work-in process: Refining Department 369,000
Cr Materials inventory 369,000
A2) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for direct labor.
Dr Work-in process: Refining Department 146,000
Cr Wages payable 146,000
A3) On September 30, journalize the entry to record the flow of costs into the Refining Department during the period for factory overhead.
Dr Work-in process: Refining Department 97,600
Cr Manufacturing overhead: Refining Department 97,600
B. On September 30, journalize the entry to record the transfer of production costs to the second department, Sifting.
Dr Work-in process: Sifting Department 614,400
Cr Work-in process: Refining Department 614,400
$30,200 - $28,400 + $369,000 + $146,000 + $97,600 = $614,400
Several years ago, Macro Riders issued preferred stock with a stated annual dividend of 5% of its $600 par value. Preferred stock of this type currently yields 10%. Assume dividends are paid annually. a. What is the estimated value of Macros preferred stock
Answer: $300
Explanation:
The Value of a Preferred Stock is derived like a perpetuity in that it is calculated by dividing the annual cash return received by the annual yield/interest.
The stated annual dividend is 5% of $600;
= 5% * 600
= $30
Value of the Preferred Stock = [tex]\frac{Annual Cash Return}{Annual Yield}[/tex]
= [tex]\frac{30}{0.10}[/tex]
= $300
Vibgyor Inc., a manufacturer of smartphones, has entered into a 15-year partnership with a software company to develop sophisticated operating systems and innovative mobile applications for its cell phones. This would mean that both the companies will have to mutually share their resources, knowledge, and capabilities to develop a superior product. What is the relationship between Vibgyor and the software company best referred to as in this scenario?
Answer: b. A Strategic Alliance
Explanation:
A Strategic Alliance refers to two or more entities agreeing to work together and involves them sharing their resources, knowledge, and capabilities to develop a superior product or other objectives that might not be tangible.
The Companies will remain independent while this is done.
The relationship between Vibgyor and the software company can therefore best be referred to as a Strategic Alliance.
Your coworker just finished a formal report for her manager. You notice the report has the title page on top with a staple in the upper left-hand corner. What advice can you give her
Answer:
Enclose the report in a binder made of vinyl or hard paper
Explanation:
Remember, this report isn't some casual document to anyone, but a formal report to a respectable personality–the manager.
Professionally such reports are binded so as to enclose them properly with vinyl or hard paper, instead of simply using a staple. Also, I'll recommend that she places the the title page after the cover before the main contents of the report.
Sharon transfers to Russ a life insurance policy with a cash surrender value of $30,000 and a face value of $100,000 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $14,000 in premiums, and he collects the $100,000 face value. How much of the proceeds, if any, are taxable to Russ?
Answer: $56,000
Explanation:
When a life insurance policy is transferred the taxable amount at death is the value of proceeds that the policy gives less the Cash surrender value and the premiums that have already been paid by the formula;
Taxable Proceeds = Total Proceeds received - (Cash Surrender Value + Premiums paid)
Taxable Proceeds = 100,000 - (30,000 + 14,000)
Taxable Proceeds = $56,000
"The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its variable cost per unit is $30, and its fixed cost per unit is $11. Top management of Kobe International would like the Heating Division to transfer 14,900 heating units to another division within the company at a price of $33. Assume that the Heating Division has sufficient excess capacity to provide the 14,900 heating units to the other division. What is the minimum transfer price that the Heating Division should accept
Answer: $30
Explanation:
The formula to determine the transfer price is;
Transfer price = Differential cost to selling division + Opportunity cost of selling internally
The Differential cost is the Variable cost of producing the heating units so is $30.
The Opportunity cost of selling internally refers to if any sales will be foregone outside by selling inside. As the Heating Division has sufficient excess capacity, outside sales will not be affected so this cost is $0.
Transfer Price = 30 + 0
= $30
Blossom Company issued 3,000 shares of common stock. Prepare the entry for the issuance under the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,675. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (a) The stock had a par value of $9.25 per share and was issued for a total of $51,500. (b) The stock had a stated value of $9.25 per share and was issued for a total of $51,500. (c) The stock had no par or stated value and was issued for a total of $51,500. (d) The stock had a par value of $9.25 per share and was issued to attorneys for services during incorporation valued at $51,500. (e) The stock had a par value of $9.25 per share and was issued for land worth $51,500.
Answer:
Blossom Company
Issue of 3,000 Common Stock Shares on the following assumptions:
(a) The stock had a par value of $9.25 per share and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $27,750
Credit Paid-in In Excess of Par $23,750
To record the issue of 3,000 shares of $9.25 par value.
(b) The stock had a stated value of $9.25 per share and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $27,750
Credit Additional Paid-in Capital $23,750
To record the issue of 3,000 shares of $9.25 stated value.
(c) The stock had no par or stated value and was issued for a total of $51,500:
Debit Cash Account $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares.
(d) The stock had a par value of $9.25 per share and was issued to attorneys for services during incorporation valued at $51,500:
Debit Incorporation Cost (Attorneys Fees) $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares for attorneys' services
(e) The stock had a par value of $9.25 per share and was issued for land worth $51,500.
Debit Land $51,500
Credit Common Stock $51,500
To record the issue of 3,000 shares for land.
Explanation:
Shares of Blossom Company can be issued to settle debts or expenses or in exchange for other assets than cash. They can also be issued at par value, above par value, or below par value, depending on prevailing circumstances. Some shares have a par value, which is the nominal value of the shares as authorized. Some are issued at a stated value without par. Others have no par or stated values. Their different accounting treatments are indicated above for Blossom Company.
National Chemical Company manufactures a chemical compound that is sold for $55 per gallon. A new variant of the chemical has been discovered, and if the basic compound were processed into the new variant, the selling price would be $78 per gallon. National expects the market for the new compound variant to be 8,300 gallons initially and determines that processing costs to refine the basic compound into the new variant would be $157,700. Required: a. What would be the effect on total profit if National produces the new compound variant?
Answer:
National Chemical Company
New Variant of a Chemical Compound:
The effect on total profit if National produces the new compound variant is that total profit increases by $33,200
Explanation:
a) Data:
Selling price of old chemical = $55
Selling price of fined chemical = $78
Initial demand for the new compound = 8,300 gallons
Refining costs for the new compound = $157,700
b) Calculations:
Profit from new fined chemical = $23 ($78 - 55)
Differential Sales revenue = $190,900 ($23 x 8,300)
Differential processing costs $157,700
Effect on total profit = $33,200
c) Refining a chemical always add some value to the chemical. The additional value added is the differential sales revenue that National generates minus the additional processing costs involved to get the chemical refined.
A firm expects to sell 25,200 units of its product at $11.20 per unit and to incur variable costs per unit of $6.20. Total fixed costs are $72,000. The total contribution margin is:
Answer:
The answer is $126,000
Explanation:
Contribution Margin is calculated as selling price minus the variable cost. It measures the ability of the sales price to cover the variable cost incurred on the goods produced.
Selling price per unit - $11.20
Variable cost per unit - $6.20
Contribution margin = $11.20 - $6.20
= $5
Total contribution margin is
$5 x 25,200 units
= $126,000
Which of the followings is a good source for gathering competitive information about senior managers' responsibilities, their background, their education, and highlights of their achievements to date? Group of answer choices government market research firms company websites business and trade publications
Answer:
business and trade publications
Explanation:
A trade publication is a type of publications that specifically share information between and about personnels or individuals, often experts, within a particular industry for the purpose of improving their business or field and to actively keep current or updated on market trends.
Hence, BUSINESS AND TRADE PUBLICATIONS is a good source for gathering competitive information about senior managers' responsibilities, their background, their education, and highlights of their achievements to date.
The company websites is a good source for gathering of competitive information about senior managers' responsibilities, background, education,and highlights of their achievements to date
T ypically, a flourishing organization will publish the full information of their teams on its official website for different official reasons.
The Information does features the managers and other staffs personal details like phone numbers, background, education, achievement, experiences etc.
Hence, those information can be gathered and used by competitors.
In conclusion, the company websites is a good source for gathering of competitive information about senior managers
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First, spend a couple of sentences summarizing the Concepts in Action video you watched this week. Then, answer the following. In the Concepts in Action video you watched this week, the speaker mention that for a small business, having payment terms is like using "free money" for a while. What do you think this means
Answer with its Explanation:
Free Money means the money that has to be paid back to the money lender within a reasonable time. The money lender usually is a trader who sells his product at credit allowing his customer a reasonable period to payback. Furthermore, the free money is termed free because they are interest free lendings.
In real life, free money is can be availed by purchasing products from the suppliers if you are acting as a middle man in the distribution channel or you are a small customer and your borrowings doesn't impact the supplier. Almost all of the businesses lend free money in the form of products because allowing credit increases the sales of the organizations.
2020 Melissa, Nicole, and Ben are equal partners in the Opto Partnership (calendar year-end). Melissa decides she wants to exit the partnership and receives a proportionate distribution to liquidate her partnership interest on January 1. The partnership has no liabilities and holds the following assets as of January 1: Tax Basis FMV Cash $ 19,890 $ 19,890 Accounts receivable 0 26,520 Stock investment 8,760 15,150 Land 36,300 48,600 Totals $ 64,950 $ 110,160 Melissa receives one-third of each of the partnership assets. She has a basis in her partnership interest of $29,095. (Leave no answer blank. Enter zero if applicable.) a. What is the amount and character of any recognized gain or loss to Melissa
Answer and Explanation:
According to the given situation, the amount and the character of any recognized gain or loss made to Melissa should be zero or in another word she did not recognize any loss or gain on the distribution instead of this she would adjusted the basis of assets that are to be distributed
Hence, nothing would be recognized
The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions's job cost sheets show the following total costs accumulated on three furniture jobs. Job 602 Job 603 Job 604 Direct materials $ 1,500 $ 3,300 $ 2,700 Direct labor 800 1,420 2,100 Overhead 400 710 1,050 Job 602 was started in production in May, and these costs were assigned to it in May: direct materials, $600; direct labor, $180; and overhead, $90. Jobs 603 and 604 were started in June. Overhead cost is applied with a predetermined rate based on direct labor costs. Jobs 602 and 603 are finished in June, and Job 604 is expected to be finished in July. No raw materials are used indirectly in June. (Assume this company’s predetermined overhead rate did not change over these months.) Required: 1. What is the cost of the raw materials used in June for each of the three jobs and in total
Answer:
June Costs of the raw materials used for each of the three jobs and in total.
Job 602 Job 603 Job 604 Total
Direct materials $ 900 $ 3,300 $ 2,700 6900
Explanation:
Business Solutions
Job 602 Job 603 Job 604
Direct materials $ 1,500 $ 3,300 $ 2,700
Direct labor 800 1,420 2,100
Overhead 400 710 1,050
Job 602 May: Costs
Direct Materials, $600;
Direct Labor, $180;
Overhead, $90
June Costs of the raw materials used for each of the three jobs and in total.
Job 602 Job 603 Job 604 Total
Direct materials $ 900 $ 3,300 $ 2,700 6900
Job 602 total costs are $ 1500 and raw materials costs in May are $ 600. The remaining $ 900 is consumed in June.
Raw materials Job 603 and 604 are consumed in June in full amount
Carla Vista Company has the following information available for September 2020.
Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
1. Compute the unit contribution margin.
2. Prepare a CVP income statement that shows both total and per unit amounts.
3. Compute Carla Vista’ break-even point in units.
4. Prepare a CVP income statement for the break-even point that shows both total and per unit amounts.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Unit selling price of video game consoles $410
Unit variable costs $328
Total fixed costs $36,900
Units sold 600
First, we need to determine the unitary contribution margin:
Unitary contribution margin= 410 - 328= $82
Contribution margin income statement:
Sales= 600*410= 246,000
Total variable cost= 600*328= (196,800)
Total contribution margin= 49,200
Fixed costs= (36,900)
Net operating income= $12,300
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 39,200/82
Break-even point in units= 478 units
Finally, the income statement for the break-even point:
Sales= 478*410= 195,980
Total variable cost= 478*328= (156,784)
Total contribution margin= 39,196
Total fixed costs= (39,200)
Net operating income= (4)
Four reasons why firms strategically keep dogs in their business portfolio
Answer:
Keeping Dogs in Business Portfolio
Four Reasons:
1. Dogs may be complementing or boosting the sales of other star products. They are good companions.
2. Dogs may be new products. It will take time for them to become star performers. They learn about their environment well, but it takes some time.
3. Dogs may have marginal prices that are better than the marginal cost of new products. As always, most pet owners prefer Dogs to Cats as they are easier to relate with.
4. Dogs have been developed unlike new products that are still undergoing development, which will take some time to go to market. Humans are more accustomed to petting dogs than cats.
Explanation:
Dogs are in one of the quadrants of the BCG Growth-Share Matrix that discusses how an entity's products can be categorized according to their market share. Dogs are always at the center of divestiture. But, some entities still find it difficult to let go of their cherished and sensitive companions due to the reasons enumerated above.
The demand curve is Qd = 1,600 – 50P and the supply curve is Qs = 1,200 + 150P. Calculate the equilibrium quantity. Group of answer choices
Answer:
Equilibrium quantity is 1500
Explanation:
The equilibrium quantity is achieved at a point where the quantity demanded equals quantity supplied.
Qd=Qs
Qd=1,600 – 50P
Qs== 1,200 + 150P
1,600 – 50P=1,200 + 150P
We need to collect like terms
1600-1200=150P+50P
400=200P
P=400/200
P=2
We need substitute 2 for P in any of Qd or Qs
Qs=1200+(150*2)=1500
James just received an $8,000 inheritance check from the estate of his deceased rich uncle. James wants to set aside enough money to pay for a trip in five years. If the trip is expected to cost $5,000, how much of the $8,000 must James deposit now if the rate of return is 12% per year in order to have the $5,000 in five years
Answer:
$2831.13
Explanation:
The computation of the present value of 5,000 in five years is shown below:-
Present Value of 5,000 in five years = Expected cost ÷ (1 + Rate of return)^Number of years
= $5,000 ÷ (1 + 12%)^5
= $
5,000 ÷ (1.12)^5
= $2831.13
Therefore for computing the present value of 5,000 in five years we simply applied the above formula.
Tucker Company makes chairs. Tucker has the following production budget for January - March.
January February March
Units Produced 9666 11971 9743
Each chair produced uses 4 board feet of wood. Management wants ending inventory levels of raw materials to equal 20% gf the production needs (in wood) for the next month.
How many board feet of wood does Tucker need to purchase in February? Round your answer to the nearest whole number.
Answer: 46,101 board feet of wood
Explanation:
Purchases can be calculated using the formula;
Purchases = Total Production Needs + Ending Inventory - Beginning Inventory
Total Production Needs
= Units produced * boards required per unit
= 11,971 * 4
= 47,884 units needed.
Ending Inventory.
This should be 20% of production needs for the next month
= 20% * (9,743 * 4)
= 7,794 units
Beginning Inventory
This will be the ending inventory of January. The ending inventory of January is 20% of February needs.
= 20% * 47,884
= 9,577 units.
Purchases for February = 47,884 + 7,794 - 9,577
= 46,101 board feet of wood
BBQ Corporation has a target capital structure that is 70 percent equity, 30 percent debt. The flotation costs for equity issues are 15 percent of the amount raised; the flotation costs for debt are 8 percent. If BBQ needs $150 million for a new manufacturing facility, what is the cost when flotation costs are considered
Answer:
$172,215,844 is the cost when flotation costs are considered
Explanation:
flotation
Weighted average flotation cost = {(Flotation cost debt * Weight debt) + (Flotation cost equity * Weight equity)
= (8% * 0.30) + (15% * 0.70)
=0.024 + 0.105
= 0.129
= 12.9%
Calculation of the cost of funds
Cost of funds = Amount raised / (1 - Weighted average floatation cost)
= $150,000,000 / (1-0.129)
= $150,000,000 / (0.871)
=$172,215,844
Therefore, the cost of raising fund is $172,215,844
Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the double-declining-balance method.
Answer:
Annual depreciation= $48,000
Explanation:
Giving the following information:
Purchasing price= $135,000
Salvage value= $15,000
Useful life= 5 years
To calculate the depreciation expense under the double-declining method, we need to use the following formula:
Annual depreciation= 2*[(book value)/estimated life (years)]
Annual depreciation= 2*[(135,000 - 15,000) / 5]
Annual depreciation= $48,000
Tailoring movies slightly to appeal to different markets, such as editing Iron Man 3 for China, best reflects which kind of international strategy?
Answer:
Transnational strategy
Explanation:
This best explains transnational strategy. A transnational strategy is a well defined set of actions undertaken by a company to have operations in markets internationally or abroad. It applies to all methods and structures that a business would use to start functioning in other countries even as they continue operating centrally at a particular location. Large fast food restaurant use this strategy
Which of the following is not a related party for constructive ownership purposes under § 267? a.The taxpayer's grandmother. b.A corporation owned more than 50% by the taxpayer. c.The taxpayer's brother. d.The taxpayer's aunt. e.None of these choices are correct.
Answer:
A). The taxpayer's aunt.
Explanation:
Constructive ownership is demonstrated as the allocation of stock ownership from one to another taxpayer by the integrity of their relationship. For example, the parents own the stocks of their children constructively. As per the section (c) of constructive ownership under § 267, the party that cannot be a related part for constructive ownership purposes would be 'the aunt' of the taxpayer as she is not related to the taxpayer with blood either half or whole. Thus, she would not have any ownership right over the stock or shares and hence, option C is the correct answer.
Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $420,000 and $169,000, respectively, common stock outstanding of $91,000, and retained earnings of $160,000. The book values and fair values of Scrub’s assets and liabilities were identical except for land, which had increased in value by $21,000, and inventories, which had decreased by $6,000.
a. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Mason acquired its ownership of Best for $291,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the basic consolidation entry
2. Record the excess value (differential reclassifcation entry)
b. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Mason acquired its ownership of Best for $262,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the basic consolidation entry.
2. Record the excess value (differential) reclassification entry.
Answer:
a. See the journal entries in the explanation below.
Retained Earnings is $175,000
Goodwill is $25,000
b. See the journal entries in the explanation below.
Retained Earnings is $175,000
Capital Reserve is $4,000
Explanation:
Note: There are mistakes the names of the companies in the requirements a anb b. These correctly restated before answering the question by as follows:
a. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $291,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the basic consolidation entry
2. Record the excess value (differential reclassification entry)
b. Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $262,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the basic consolidation entry.
2. Record the excess value (differential) reclassification entry.
The answers and explanation are therefore given as follows:
a. Prepare the following consolidation entries required when Consideration is $291,000
1. Record the basic consolidation entry
Accounts Dr ($) Cr ($)
Common Stock 91,000
Retained Earnings (w.1) 175,000
Goodwill (w.2) 25,000
Investment in Scrub Company 291,000
(To record the elimination of investment and stockholder equity.)
2. Record the excess value (differential reclassification entry)
Note that $25,000 is transferred to Goodwill account in part 1 above.
The $25,000 is transferred to Goodwill because when the consideration is greater than the net asset value which is calculated as the of Common Stock and Retained Earnings, the difference is the Goodwill.
When Net Consideration is more than the net asset value (Stockholder Equity), then the difference is to be transferred to Goodwill.
Workings:
w.1: Calculation of retained earning to be eliminated
Particulars $
Retained Earnings Balance 160,000
Increase in land value 21,000
Decrease in inventories values (6,000)
Fair Value retained earnings to be eliminated 175,000
w.2: Calculation of Goodwill to be recognized
Particulars $ $
Consideration paid for acquisition 291,000
Assets of Scrub:
Asset book value 420,000
Increase in land value 21,000
Decrease in inventories values (6,000)
Assets 435,000
Liabilities (169,000)
Net asset value of Scrub (266,000)
Goodwill to be recognized 25,000
b. Prepare the following consolidation entries required when Consideration is $262,000
1. Record the basic consolidation entry
Accounts Dr ($) Cr ($)
Common Stock 91,000
Retained Earnings (w.3) 175,000
Investment in Scrub Company 262,000
Capital reserve (w.4) 4,000
(To record the elimination of investment and stockholder equity.)
2. Record the excess value (differential reclassification entry)
Note that $4,000 is transferred to Capital Reserve in part 1 above.
The $4,000 is transferred to Capital Rserve because when the consideration is less than the net asset value which is calculated as the of Common Stock and Retained Earnings, the difference is Capital Reserve.
When Net Consideration is less than the net asset value (Stockholder Equity), then the difference is to be transferred to Capital reserve.
Workings:
w.3: Calculation of retained earning to be eliminated
Particulars $
Retained Earnings Balance 160,000
Increase in land value 21,000
Decrease in inventories values (6,000)
Fair Value retained earnings to be eliminated 175,000
w.4: Calculation of Goodwill to be recognized
Particulars $ $
Consideration paid for acquisition 262,000
Assets of Scrub:
Asset book value 420,000
Increase in land value 21,000
Decrease in inventories values (6,000)
Assets 435,000
Liabilities (169,000)
Net asset value of Scrub (266,000)
Capital reserve to be recognized (4,000)
The most recent financial statements for Fleury Inc., follow. Sales for 2012 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets, and accounts payable increase spontaneously with sales.
Fleury,Inc.
2011 Income Statement
Sales $751,000
Costs $586,000
Other expenses $22,000
Earnings before interest and taxes $143,000
Interest paid $18,000
Taxable income $125,000
Taxes (40%) $50,000
Net Income $75,000
Dividends $30,000
Addition to retained earnings $45,000
Fleury,Inc
Balance Sheet of December 31,2011
Assets Liabilities and owners' Equity
Current Assets Current liabilities
Cash $21,040 Accounts payable $55,200
Accounts receivable $33,360 notes payable $14,400
Inventory $70,320 Total $69,600
Total $124,720 Long -term debt $134,000
Fixed Assets owners' Equity
Net plant and equipment $240,000 Common Stock and paid-in surplus $120,000
Retained Earnings $41,120
Total Assets $364,720 Total liabilities and owners' Equity $364,720
What is the EFN if the firm was operating at only 80 percent of capacity in 2011? Assume that fixed assets are sold so that the company has a 100 percent asset utilization.
Answer:
Explanation:
Present 20% growth
Sales 751,000 901,200
Cost 586,000 703,200
Other Expenses 22,000 26,400
EBIT 143,000 171,600
Interest paid 18,000 18,000
Taxable income 125,000 153,600
Taxes 50,000 61,440
Net income 75,000 92160
Dividends 30,000 36,864
Transfer to retained Earn 45,000 55,296
The new retained earning = 55,296+41,120 = 96,416
Proforma Balanced sheet
Current asset
Cash = 21040*1.2 25,248
Account receivables 33,360*1.2 40,032
Inventory 70,320*1.2 84,384
Total 149,664
Non current asset
Fixed asset
Plant & equipment 240000*1.2 288,000
Total assets 437,664
Total Liabilities & owners equity
Current liabilities
Accounts payable= 55,200*1.2 66,240
Note payable 14,400
Total current liabilities 80,640
Non current liabilities
Long term debts 134,000
Total non current liabilities 134,000
Shareholders equity
Common stock 120,000
Retained earnings 96,416
Total shareholder equity 216,416
Total liabilities & equities 431,056
EFN = total asset - total liabilities
437,664 - 431,056 =$ 6,608
Wang Co. manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the contribution margin ratio.
Answer:
contribution margin ratio= 0.4
Explanation:
Giving the following information:
Selling price per unit= $450
Unitary variable costs=$270
To calculate the contribution margin ratio, we need to use the following formula:
contribution margin ratio= contribution margin/selling price
contribution margin ratio= (450 - 270) / 450
contribution margin ratio= 0.4
On July 1, 2021, a company loans one of its employees $20,000 and accepts a ten-month, 9% note receivable. Calculate the amount of interest revenue the company will recognize in 2021 and 2022
Answer:
Interest in 2021=900
Interest in 2022=600
Explanation:
Calculatation of the amount of interest revenue the company will recognize in 2021 2022
Month in 2021 - July To December
Interest in 2021 = 20,000*9%*6/12
Interest in 2021=900
Month in 2022 - January To April
Interest in 2022 = 20,000*9%*4/12
Interest in 2022=600
Therefore the amount of interest revenue the company will recognize in 2021 will be 900 while 2022 will be 600
Answer:
2021:900
2022:600
Explanation:
Month in 2021 - July To December
Interest in 2021 = 20,000x0.0%x(6/12)
Interest in 2021=900
Month in 2022 - January To April
Interest in 2022 = 20,000x0.09x(4/12)
Interest in 2022=600
Therefore the answer for 2021 will be 900 and for 2022 will be 600
Bedford had this info at the end of 2015, its first year of operations: No other permanent or temporary differences exist. The litigation item will be paid in 2018. The depreciation will reverse evenly over the next three years. Tax rate is 30%. Future net income is probable. The 12/31/15 Income Tax Payable is:
Answer: $150,000
Explanation:
Seeing as the litigation expense will only be paid in 2018, it should be added back to income for 2015.
= 900,000 + 100,000
= $1,000,000
As the depreciation will reverse evenly over the next three years and with future income probable, it should be removed from income.;
= 1,000,000 - 300,000
= $700,000
Municipal Bonds have the advantage of being Tax-exempt so their interest income should be removed to calculate how much tax should be paid.
= 700,000 - 200,000
= $500,000
2015 Income Tax Payable = 500,000 * 30%
= $150,000
Builtrite bonds have the following: 5 ½% coupon, 11 years until maturity, $1000 par and are currently selling at $1054. If you want to make an 5% return, what would you be willing to pay for the bond?
Answer:
$1,041.53
Explanation:
The price that a rational investor would pay for the bond yearning for 5% rate of return can be determined using excel pv function below:
=-pv(rate,nper,pmt,fv)
rate is the yield expected by the investor
nper is the number of annual coupons remaining i.e 11
pmt is the amount of annual coupon=face value*coupon rate=$1000*5.5%=$55
fv is the face value of $1000
=-pv(5%,11,55,1000)=$1,041.53
Prepare journal entries to record the following four separate issuances of stock. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has a $1 per share stated value. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has no stated value. A corporation issued 2,000 shares of $100 par value preferred stock for $247,000 cash.
Answer:
Journal Entries
1. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash:
Debit Cash Account $192,000
Credit Common Stock $160,000
Credit Paid-in In Excess of Par $32,000
To record the issue of 8,000 shares of $20 par value.
2. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has a $1 per share stated value:
Debit Retained Earnings $4,000
Credit Common Stock $4,000
To record the issue of 4,000 shares of $1 stated value.
3. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $47,000. The stock has no stated value:
Debit Retained Earnings $47,000
Credit Common Stock $47,000
To record the issue of 4,000 shares of no stated value.
4. A corporation issued 2,000 shares of $100 par value preferred stock for $247,000 cash:
Debit Cash $247,000
Credit Preferred Stock $200,000
Credit Paid-in In Excess of Par $47,000
To record the issue of 2,000 shares of $100 par value.
Explanation:
Shares can be issued at par value, above, or below par value. When they are issued at par value, the Cash Account or Retained Accounts or Asset Account is debited, while the Stock account is credited. If they are above par value, the difference in at par and above is credited to the Paid-in In Excess of Par account or Additional Paid-in Capital account. When they are issued below the par value, the difference between cash received and the stock account is debited to Paid-in In Excess of Par account.
The stated value of a share is like the par value. Some shares have no stated value and are recorded at whichever value is prevailing at the time of the issue.
Suppose you are committed to owning a $230,000 Ferrari. If you believe your mutual fund can achieve an annual return of 10.95 percent, and you want to buy the car in 12 years on the day you turn 30, how much must you invest today
Answer:
$66,101.45
Explanation:
To find the amount of money that you must invest today, you have to use the formula to calculate the present value:
PV=FV/(1+i)^n
PV= present value
FV= future value= 230,000
i= interest rate= 10.95%
n= number of periods of time= 12
PV=230,000/(1+0.1095)^12
PV=230,000/(1.1095)^12
PV=230,000/3.4795
PV=66,101.45
According to this, the answer is that you must invest today $66,101.45.
Answer:
The amount to be invested today, present value = $66,099.80 Explanation:
The amount to be invested today is the present of an investment of 12 years which would produce a future value of $230,000 where interest rate is 10.95%.
The formula below would be of help;
PV = FV× (1+r)^(-n)
PV - Present Value, FV- Future value, n- number of years
PV = ?, FV- 230,000 , r- 10.95%, n- 12
PV = 230,000 × (1.1095)^(-12)
PV = 66,099.80
The amount to be invested today, present value = $66,099.80