Answer:
Organic Foods Co.
Bank Reconciliation
August 31
Bank Statement
Bank Statement Balance $6,210
Add:
Deposit in transit $2,740
Correction of bank error $230
Deduct;
Outstanding Checks $2,620
Adjusted Bank Balance $6,560
Cash Book
Book Balance $7,000
No Additions;
Deduct;
NSF Check $270
Bank Service Charges $170
Adjusted Book Balance $6,560
Performance Gloves, Inc. produces three sizes of sports gloves: small, medium and large.
A glove pattern is first stenciled onto leather in the Pattern Department.
The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together.
Performance Gloves uses tha multiple production department factory overhead rate method of allocating factory overhead costs.
Its factory overhead costs were budgeted as follows:
Pattern Department overhead $165,200
Cut and Sew Department overhead $273,000
Total $438,200
The direct labor estimated for each production department was as follows:
Pattern Department 2,900 direct labor hours
Cut and Sew Department 3,500
Total 6,300 direct labor hours
Direct labor hours are used to allocate the production department overhead to the products.
The direct labor hours per unit for each product for each production department were obtained from the engineering records as follows:
Production Departments Small Glove Medium Glove Large Glove
Pattern Department 0.04 0.05 0.06
Cut and Sew Department 0.08 0.10 0.12
Direct labor hours per unit 0.12 0.15 0.18
If required, round all per unit answers to the nearest cent.
Required:
a. Determine the two production department factory overhead rates.
b. Use the above production department factory overhead rates to determine the factory overhead per unit for each product.
Answer:
A.Pattern Department 57 per DLH
Cut and Sew Department 78 per DLH
B.Small glove 8.52
Medium glove 10.65
Large glove 12.78
Explanation:
a) Calculation to Determine the two production department factory overhead rates.
Pattern Department = 165,200/2,900
= 56.9 Approximately 57 per DLH
Cut and Sew Department = 273,000/3,500
= 78 per DLH
Therefore two production department factory overhead rates will be :
Pattern Department 57 per DLH
Cut and Sew Department 78 per DLH
b) Calculation of the factory overhead cost per unit
Small glove (57*.04+78*.08)=8.52
Medium glove (57*.05+78*.10)=10.65
Large glove (57*.06+78*.12)=12.78
Therefore the factory overhead per unit for each product will be: Small glove 8.52
Medium glove 10.65
Large glove 12.78
Stanley Systems completed the following stock issuancetransactions:
May 19 Issued 1,200 shares of $2 par value common stock for cash of $12.00 per share.
Jun. 3 Isssued 500 shares of $8, no-par preferred stock for $25,000 cash.11 Received equipment with a market value of $70,000 in exchange for 4,000 shares of the $2 par value common stock
Requirements
1. Journalize the transactions. Explanations are not required.
2. How much paid-in capital did these transactions generate for
StanleyStanley
Systems?
Date
Accounts
Debit
Credit
May 19
Cash
Common Stock—$2 Par Value
Paid-In Capital in Excess of Par—Common
And if possible please help me with,
Pioneer Amusements Corporation had the following stockholders' equity on November 30:
Stockholders' Equity
Paid-In Capital:
Common Stock—$5 Par Value; 1,300 shares
authorized, 150 shares issued and outstanding $
750
Paid-In Capital in Excess of Par—Common 2,250
Total Paid-In Capital 3,000
Retained Earnings 56,000
Total Stockholders' Equity $
59,000
(Click the icon to view the stockholders' equity.) On December 30,Pioneer purchased 100 shares of treasury stock at $ 14 per share.
Read the requirements
1. Journalize the purchase of the treasury stock.
2. Prepare the stockholders' equity section of the balance sheet at December 31,
20182018.
Assume the balance in retained earnings is unchanged from
NovemberNovember
3030.
3. How many shares of common stock are outstanding after the purchase of treasury stock?
Date
Accounts and Explanation
Debit
Credit
Dec. 30
Treasury Stock—Common
1000
Cash
1000
Purchased treasury stock.
Answer:
cash 14,400 debit
common stock 2,400 credit
additional paid-in CS 12,000 credit
--to record May 19th transactions--
cash 12,500 debit
preferred stock 4,000 credit
additional paid-in PS 8,500 credit
--to record June 3th transactions--
Equipment 70,000 debit
common stock 8,000 credit
additional paid-in CS 62,000 credit
--to record third transactions--
Total paid-in afterl these three transactions:
12,000 + 8,500 + 62,000 = 82,500
Explanation:
1,200 shares x $12 each = $14,400 cash received
1,200 shares x $ 2 each = $ 2,400 common stock
Additional paid-in $ 12,000
500 shares x $25 = $12,500 cash received
500 shares x $ 8 = $ 4,000 preferred stock
addtional paid-in $ 8,500
70,000 equipment
common stock 4,000 shares x $2 = 8,000
additional paid-in 70,000 - 8,000 = 62,000
You usually go to the theater to see a lot of movies. Now you are considering buying a DVD player and renting movies instead. You currently pay $9 per movie when you go to the theater but if you buy the DVD player you will have to pay only $5 per movie rental. You estimate that the DVD player will cost $400 (at t = 0) and will last 3 years. Except for cost, you are indifferent to seeing movies at home or in the theater. Assume that the cost of theater tickets and rental payments occur at the end of each month and that you use the DVD player only to watch movies. Assume that you watch the same number of movies every month. Your discount rate is 1% per month. Assume that there is no inflation. How many movies per month must you watch for the DVD player purchase to be a smart purchase?
Answer:
You must watch minimum of 200 movies per month for the DVD player purchase to be a smart purchase.
Explanation:
Let assume that you watch 100 movies in a month:
For going to theater:
$9 × 100 = $900
For renting movies and using the DVD Player:
Renting = $5 × 100 = $500
DVD Player cost: $400
Total spent in a month = $500 + $400 = $900
Therefore, in a month, the amount spent going to theater = the amount spent using DVD Player and renting the Film.
Let assume you watch 200 movies in a month:
For going to theater:
$9 × 200 = $1800
For renting movies and using the DVD Player:
Renting = $5 × 200 = $1000
DVD Player cost: $400
Total spent in a month = $1000 + $400 = $1400
Therefore, amount spent using DVD Player and renting movies is cheaper than going to theater to watch movies in a month.
It is safe to conclude that for the DVD Player to be a smart purchase by you, you must watch minimum of 200 movies in a month.
A Plus Appliances sells dishwashers with a fouryear warranty. In 2019, sales revenue for dishwashers is . The company estimates warranty expense at % of revenues. What is the total estimated warranty payable of A Plus Appliances as of December 31, 2019? A Plus Applicances began operating in 2019. (Round your final answer to the nearest dollar.)
A Plus Appliances sells dishwashers with a four-year warranty. In 2019, sales revenue for dishwashers is $94,000. The company estimates warranty expense at 4.5% of revenues. What is the total estimated warranty payable of A Plus Appliances as of December 31,2019? A Plus Appliances began operating in 2019. (Round your final answer to the nearest dollar.)
Answer:
$4230
Explanation:
Given that, the sales revenue to the dishwashers is equal to $94,000
Also the company estimated warranty expense cost is equal to 4.5% of revenues,
Thus, the estimated warranty payable can be determined by the following formula:
Annual sales revenue for the dishwashers * warranty expense revenues
= $94,000 * 4.5% = $94,000 * 0.045
= $4230
Hence, the total estimated warranty payable of A Plus Appliances as of December 31, 2019 = $4230
Which of the following statements are true?
A. Different companies will use different charts of accounts based on individual company need.
B. The chart of accounts contains the balance of all the accounts in the ledger.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
D. The general ledger and the chart of accounts can be ordered in any sequence because they are not formal financial systems.
Answer:
TRUE: A. Different companies will use different charts of accounts based on individual company need.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
Explanation:
A. Different companies will use different charts of accounts based on individual company need.
A chart of accounts is the combination of all the accounts of an organization in an organized and structured model whose objective is to establish a codification so that there is a standardization of the company's financial information to assist the work of the accounting sector.
Therefore, each company will have a model chart of accounts referring to its activities and processes.
C. The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.
The general ledger can be defined as the set of all accounts held in the organization in detail.
Through the information in the accounts, the organization is able to correctly separate each one by type and carry out the organizational financial statement.
Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow:
Mercon Wurcon
Direct materials cost per unit $ 9.00 $ 7.00
Direct labor cost per unit $15.00 $ 17.00
Direct labor-hours per unit 0.40 4.80
Number of units produced 4,000 8,000
These products are customized to some degree for specific customers.
Required:
1. The company's manufacturing overhead costs for the year are expected to be $1,600,000. Using the company's conventional costing system, compute the unit product costs for the two products.
2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year:
Mercon Wurcon Total
Engineering design time (in hours) 8,000 8,000 16,000
Compute the unit product costs for the two products using the proposed ABC system.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Mercon Wurcon
Direct materials cost per unit $ 9.00 $ 7.00
Direct labor cost per unit $15.00 $ 17.00
Direct labor-hours per unit 0.40 4.80
Number of units produced 4,000 8,000
A. First, we need to calculate the predetermined overhead rate:
Total direct labor hours= 0.4*4,000 + 4.8*8,000= 40,000
Overhead= 1,600,000
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,600,000/40,000
Predetermined manufacturing overhead rate= $40 per direct labor hour
Now, we can determine the unitary product cost.
Mercon= 9 + 15 + 40*0.4= $37
Wurcon= 7 + 17 + 4.8*40= $216
B.
Mercon Wurcon Total
Engineering design time (in hours) 8,000 8,000 16,000
Now, we have two different allocation rates:
Direct-labor hours= 800,000/40,000= $20 per direct labor hour
Engineer desing= 800,000/16,000= $50 per engineer desing hour
Finally, we can determine the unitary product cost:
Engineer design per unit:
Mercon= 8,000/4,000= 2
Wurcon= 8,000/8,000= 1
Mercon= 9 + 15 + (20*0.4 + 50*2) = $132
Wurcon= 7 + 17 + (20*4.8 + 50*1)= $170
Moss County Bank agrees to lend the Cullumber Company $695000 on January 1. Cullumber Company signs a $695000, 6%, 9-month note. What entry will Cullumber Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30
Answer:
The interest on notes is calculated as follows
Interest payable = Face value of bonds * Interest rate * (Time of maturity / 12 months)
= $695,000 * 6% * 9/12
=$31,275
Cullumber company will pay the face value of the notes as the notes are payable at par, along with interest rate of 6% for the period of 9 months. This will result in outflow of cash, thereby crediting cash account. The liability on account of notes payable and interest payable will be settles, thereby debiting the payable account
General Entry
Date Account Title and Explanation Debit Credit
30 Sep. Notes payable $695,000
Interest payable $31,275
Cash $726,275
(To record the amount to be paid at maturity)
Gullett Corporation had $26,000 of raw materials on hand on November 1. During the month, the Corporation purchased an additional $75,000 of raw materials. The journal entry to record the purchase of raw materials would include a:
Answer:
debit to Raw Materials of $75,000
Explanation:
In this scenario, the journal entry to record the purchase of raw materials would include a debit to Raw Materials of $75,000. A debit is an entry recording a sum owed, listed on the left-hand side or column of an account. Therefore in accounting, since Gullet Corporation's purchase was for an "additional" $75,000 worth of raw material, they owe that money to the company and must make it up through sales that those materials should generate in the future. That is why it is recorded as a debit.
A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used five workers, who produced an average of 77 carts per hour. Workers receive $11/hour and machine cost was $47 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $14 per hour while output increased by four carts per hour.
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment. (Round to 4 decimal places)
b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places
Answer:
Multifactor productivity MFP before buying new equipment = 0.7549 carts/dollar cost
Growth in productivity between the Prior and after buying the new equipment. = 31.49%
Explanation:
Given that:
the number of workers before buying new equipment = 5
average cart production per hour = 77
worker's wage = $11
Cost of the machine = $47
After buying the new equipment;
number of worker is now = 4 since it is possible to transfer one of their worker to another department
average cart production per hour = $(77 +4) = $81
worker's wage = $11
Cost of the machine = $(47+14) = $61
The objective of this question is to "
a. Compute the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment.
Multifactor productivity MFP= Carts produced / (Labor cost + Equipment cost)
where;
Labor Cost = (Number of workers × Worker wage)
Multifactor productivity MFP = Carts produced / ((Number of workers × Worker wage) + Equipment cost)
We are to find just only the multifactor productivity(MFP) (labor plus equipment) under the Prior to buying the new equipment.
i.e before buying the new equipment.
Multifactor productivity MFP = 77/ (5 × 11) + 47)
Multifactor productivity MFP = 77/ (55+ 47)
Multifactor productivity MFP = 77/ (102)
Multifactor productivity MFP = 77/ (102)
Multifactor productivity MFP = 0.7549 carts/dollar cost
b. Compute the % growth in productivity between the Prior and after buying the new equipment. (Round to 2 decimal places
Growth in productivity = (Labor New productivity - Labor Old productivity) / Labor Old productivity] × 100
where;
Labor Productivity = Number of carts produced per hour / Number of workers
Labor Productivity (before buying new equipment) = 77/5
Labor Productivity (before buying new equipment) = 15.4 carts/worker/hour
Labor Productivity ( after buying the new equipment) = 81/4
Labor Productivity ( after buying the new equipment) = 20.25 carts/worker/hour
Growth in productivity = (20.25 - 15.40 /15.40) × 100
Growth in productivity = (4.85 / 15.40 )× 100
Growth in productivity = 0.3149 × 100
Growth in productivity = 31.49%
What are the three major elements that include in presentation?
Answer:
The three major elements that are included in a presentation are:
a) The introduction
b) The body
c) The Conclusion
Explanation:
1. The introduction kickstarts the presentation with an introduction suitable to the topic. It is usually a summary of the topic (the problem being addressed), the presenter, the venue or location, the purpose, and the date of the presentation.
2. The body of the presentation presents balanced information about the topic to address each requirement, including the supporting and opposing views. It also includes the presentation of observations, evidence, and calculated data to support the viewpoints expressed.
3. The conclusion summarizes the presentation in such a manner that the recommendations that offer possible solutions to the identified problem(s) are distinctly outlined.
Department 1 completed and transferred out 450 units and had ending work in process inventory of 60 units. The ending inventory is 20% complete for materials and 60% complete for labor and overhead. The equivalent units of production for labor and overhead is ______ units.
Answer:
Equivalent units= 486 units
Explanation:
Giving the following information:
Units completed= 450
Ending work in process= 60 units
The ending inventory is 20% complete for materials and 60% complete for labor and overhead.
To calculate the equivalent units of production, we need to use the following formula:
Units started and completed = units completed - beginning WIP
Ending work in process completed= Ending WIP* %completed
=Number of equivalent units
Units started and completed = 450 - 0= 450
Ending work in process completed= 60*0.6= 36
= 486 units
Answer:462
Explanation:
A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in dollars is:
Answer:
Break-even point (dollars)= $275,040
Explanation:
Giving the following information:
Selling price per unit $120
Variable cost per unit $90
Fixed expense per month $68,760
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 68,760 / [(120 - 90)/120]
Break-even point (dollars)= $275,040
Cheryl's marginal rate of substitution between apples and bananas is four apples for one banana. If apples are on the vertical axis and bananas are on the horizontal axis, the slope of Cheryl's indifference curve is
Answer:
The correct answer is: -4 (minus four).
Explanation:
To begin with, the concept of "Marginal Rate of Substitution" indicates how much of a good a consumer is willing to sacrifice to obtain a unit more of another good without changing the total satisfaction of the consumer. Therefore that this term is explained as the difference between one good and the other and that is why that the concept comprehends the slope of the indifference curve. That is why that if Cheryl's MRS of apples for banas is four then she is willing to sacrifice four apples for one banana and that indicates that the slope of the indiference curve is minus four (-4) because the result is always negative because it shows the sacrifice.
Choose an example of a type of new company you could start, and then use this company idea to answer the questions below. You might choose to open a hair salon, a babysitting service, a record store, or many other things. This can be the same type of company you chose in assignment 8, or it can be different.
a. Describe the type of company you chose.
b. If you needed to get funding for your company, would you prefer to get debt funding or equity funding? Explain why you would prefer this type.
Answer:
Find the explanation below.
Explanation:
1. The company I chose to operate would be Celebrity Hair Salon. The Celebrity Hair Salon is a standard salon with comfortable furnishings and state-of-the-art equipment intended to tend to the needs of celebrities. Clients are expected to make appointments for their services which the salon strictly adheres to.
2. I would prefer to fund this new business through debt financing. Debt funding entails borrowing funds from Creditors with the intention of paying back at a later time with the attached interest. Equity funding entails giving an investor a certain percentage of the company's returns thus making him a co-owner of the company. This affords him the right to make decisions for the business. Detaching the investor from this business is difficult because it requires buying him out.
I would prefer debt financing because I wish to retain sole ownership of the business. I can also go through some government agencies to obtain funds at lower interest rates. Moreso, there is a fixed debt repayment plan that I can set a target to meet until the debt is paid. Finally, I can regain my freedom after the payment is completed, thus regaining my business and not entitling me to anyone.
Lenore, Inc. gathered the following information from its accounting records and the October bank statement to prepare the October bank reconciliation: Ending cash balance per books, 10/31$7,000 Deposits in transit 300 Interest received from bank 1,700 Bank service charge for check printing 60 Outstanding checks 4,000 NSF check of T. Owens 350 The up-to-date ending cash balance on October 31 is:_______
A. $7,940
B. $4,590
C. $8,290
D. $5,290
Answer:The up-to-date ending cash balance on October 31 is: $8,290---C
Explanation:
A bank Reconciliation statement helps to match a company's book record to its bank record and adjust discrepancies, If any.
Here, the deposits in transit and outstanding checks fall under the bank's accounting records and will not be involved in the company's additions or deductions in the accounting book balance records.
Ending cash balance as per books = $7,000
Add:
Interest received from Bank = +$1,700
subtotal $8,700
Deduct
Bank Service charge = -$60
NSF check = -$350
Up-to-date ending cash balance = $8,290
The up-to-date ending cash balance on October 31 is: C. $8,290.
Using this formula
Up-to-date ending cash balance = Ending cash balance per books + Interest received from the bank − Bank service charge − NSF check of T. Owens
Let plug in the formula
Up-to-date ending cash balance = $7,000 + $1,700 − $60 − $350
Up-to-date ending cash balance = $8,290
inconclusion the up-to-date ending cash balance on October 31 is: C. $8,290.
Learn more about ending cash balance here:https://brainly.com/question/24979735
c. Using the midpoint formula, a decrease in price from $60 to $50 per bathing suit represents a(n) ______ decrease in price.
Answer: 18.18% decease
Explanation:
The Midpoint formula uses the average Price (as denominator) to calculate the change in price instead of the original price by the following formula;
% Decrease in price = Change in price / Average price
= (50 - 60) / ((60 + 50)/2)
= -10 / (55)
= -0.1818
= -18.18%
Using the midpoint formula, a decrease in price from $60 to $50 per bathing suit represents an 18.18% decrease in price.
Using the midpoint formula, a decrease in price from $60 to $50 per bathing suit represents a 18.18% decrease in price.
The Midpoint Formula
It calculates the percentage change in price of a good by dividing change in price to the average price of the good.
Following is the formula
% Decrease in price = Change in price / Average price
Solution:
old price = 60, new price = 50, Change in price = -10
⇒ (50 - 60) / ((60 + 50)/2)
⇒ -10 / (55)
⇒ -0.1818
⇒ -18.18%
Hence, by using the midpoint formula, we can say that bathing suit represents a -18.18% decrease in price.
Learn More about The Midpoint Formula here:
https://brainly.com/question/5016495
The Book of Mormon is one of the biggest musical hits on Broadway. It has received many awards including Tony and Grammy Awards. According to Wikipedia, "High attendance coupled with aggressive pricing allowed the financial backers to recoup their investment of $11.4 million after just nine months of performances." While the highest ticket price was $477, the average price is $170. What is the variable cost per ticket
Answer:
variable cost per ticket = $129.60
Explanation:
some information is missing and I looked it up:
30 performances per month
1,100 seats in the theater and 95% occupancy rate
number of tickets sold during the first 9 months = 30 x 9 x 1,100 x 0.95 = 282,150 tickets
total revenue during the first 9 months = 282,150 x $170 = $47,965,500
variable costs = total revenue - fixed costs = $47,965,500 - $11,400,000 = $36,565,500
variable cost per ticket = $36,565,500 / 282,150 tickets = $129.5959 ≈ $129.60
A stock has a beta of 1.15, the expected return on the market is 10.3 percent, and the risk-free rate is 3.8 percent. What must the expected return on this stock be
Answer:
11.28%
Explanation:
A stock has a beta of 1.15
The expected return on the market is 10.3%
The risk-free rate is 3.8%
Therefore, the expected return on the stock can be calculated as follows
Expected return= Risk-free rate+beta(expected return on the market-risk-free rate)
= 3.8%+1.15(10.3%-3.8%)
= 3.8%+(1.15×6.5)
= 3.8%+7.475
= 11.28%
Hence the expected return on the stock is 11.28%
The online retailer Lands' End communicates a remarkable commitment to its ________ with these unconditional words: "We accept any return, for any reason. Guaranteed Period."
Answer:
Customers
Explanation:
By making such statements the online retailer is trying to build trust with customers. And to satisfy their purchase experience about the value they will derive from the product. It is a good marketing strategy employed by some businesses today.
Journalize the following transactions in the accounts of Simmons Company:
Mar. 1 Received a $60,000, 60-day, 6% note dated March 1 from Bynum Co. on account.
18 Received a $25,000, 60-day, 9% note dated March 18 from Solo Co. on account.
Apr. 30 The note dated March 1 from Bynum Co. is dishonored, and the customer’s account is charged for the note, including interest.
May 17 The note dated March 18 from Solo Co. is dishonored, and the customer’s account is charged for the note, including interest.
July 29 Cash is received for the amount due on the dishonored note dated March 1 plus interest for 90 days at 8% on the total amount debited to Bynum Co. on April 30.
Aug. 23 Wrote off against the allowance account the amount charged to Solo Co. on May 17 for the dishonored note dated March 18.
Answer and Explanation:
The journal entries are shown below:
On Mar 1
Notes Receivable $60,000
To Accounts Receivable $60,000
(Being the note receivable is recorded)
On Mar 18
Notes Receivable $25,000
To Accounts Receivable $25,000
(Being the note receivable is recorded)
On Apr 30
Accounts Receivable $60,600
To Notes Receivable $60,000
To Interest Revenue ($60,000 × 2 ÷ 12 × 6%) $600
(Being the note receivable and interest revenue is recorded)
On May 17
Accounts Receivable $25,375
To Notes Receivable $25,000
To Interest Revenue ($25,000 × 9% × 2 ÷ 12) $375
(Being the note receivable and interest revenue is recorded)
On Jul 29
Cash $61,812
To Accounts Receivable $60,600
To Interest Revenue (60,600 × 8% × 90 ÷ 360) $1,212
(Being the note receivable and interest revenue is recorded)
On Aug 23
Allowance for Doubtful Accounts $25,375
To Accounts Receivable $25,375
(Being the allowance for doubtful debts is recorded)
Assume that the parent company acquires its subsidiary by exchanging 55,000 shares of its Common Stock, with a market value on the acquisition date of $40 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except for a building that it feels is undervalued by $500,000, an unrecorded License Agreement that the parent values at $250,000, and an unrecorded Customer List owned by the subsidiary that the parent values at $100,000.
Any further discrepancy between the purchase price and the book value of the subsidiary's Stockholders' Equity is attributed to expected synergies to be realized by the consolidated company as a result of the acquisition.
Given the following acquisition-date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated balance sheet?
Balance Sheet
Parent Subsidiary
Assets
Cash $910,500 $201,600
Accounts receivable 384,000 417,600
Inventory 582,000 536,400
Equity investment 2,200,000
Property, plant and equipment (PPE), net 2,799,600 992,400
$6,876,100 $2,148,000
Liabilities and stockholders' equity
Accounts payable $188,100 $127,000
Accrued liabilities 220,800 221,000
Long-term liabilities 1,000,000 600,000
Common stock 220,000 120,000
APIC 3,740,000 150,000
Retained earnings 1,507,200 930,000
$6,876,100 $2,148,000
Answer:
Consolidated Balance Sheet:
Balance Sheet
Parent Subsidiary Consolidated
Assets
Cash $910,500 $201,600 $1,112,100
Accounts receivable 384,000 417,600 801,600
Inventory 582,000 536,400 1,118,400
Equity investment 2,200,000 0
Property, plant and
equipment (PPE), net 2,799,600 1,492,400 4,292,000
License Agreement 250,000 250,000
Customer List 100,000 100,000
Goodwill 1,000,000
Total Assets $6,876,100 $2,998,000 $8,674,100
Liabilities & stockholders' equity
Accounts payable $188,100 $127,000 315,100
Accrued liabilities 220,800 221,000 441,800
Long-term liabilities 1,000,000 600,000 1,600,000
Unrealized gain from fair value:
Building 500,000 500,000
License Agreement 250,000 250,000
Customer List 100,000 100,000
Common stock 220,000 120,000 220,000
APIC 3,740,000 150,000 3,740,000
Retained earnings 1,507,200 930,000 1,507,200
Total liabilities and equity $6,876,100 $2,998,000 $8,674,100
Explanation:
a) Data:
Balance Sheet
Parent Subsidiary
Assets
Cash $910,500 $201,600
Accounts receivable 384,000 417,600
Inventory 582,000 536,400
Equity investment 2,200,000
Property, plant and
equipment (PPE), net 2,799,600 992,400
Total Assets $6,876,100 $2,148,000
Liabilities & stockholders' equity
Accounts payable $188,100 $127,000
Accrued liabilities 220,800 221,000
Long-term liabilities 1,000,000 600,000
Common stock 220,000 120,000
APIC 3,740,000 150,000
Retained earnings 1,507,200 930,000
Total liabilities and equity $6,876,100 $2,148,000
b) For the consolidated balance sheet, the assets and liabilities of the parent and subsidiary are consolidated based on their fair values. The investment in the subsidiary is eliminated. If the assets increased in their fair values, unrealized gains on fair values are created for the revalued assets. On the equity side, the subsidiary's equity is eliminated. Any difference is attributed to Goodwill on acquisition.
Given no cash leakage and zero excess reserves held by banks, if reserves increase by $8 billion and the required reserve ratio is 9 percent, what is the resulting change in the money supply?
Answer:
The answer is $88,880,000
Explanation:
Multiplier effect = 1 / required reserve ratio
Required reserve ratio = 9 percent
Multiplier effect is therefore;
1/0.09
=11.11
Change is money supply is increase in reserve multiplied by multiplier effect
Increment in reserve = $8milion
11.11 x 8million
=$88,880,000
So, resulting change in the money supply is $88,880,000
g Profit maximazation for a monopolist and a perfect competitor occurs where marginal revenue equals marginal cost. At this profit-maximizing output, the monopolist will charge a price ________ marginal revenue and a perfect competitor will charge a price ________ marginal revenue.
Answer: Higher than; Equal to
Explanation:
Profit maximazation for a monopolist and a perfect competitor occurs where marginal revenue equals marginal cost.
The Marginal Revenue curves are different for either of them though and this impacts what price they sell at. This is because the price the good will be sold at depends on where the maximising output touches the demand curve.
The Monopolist has a Marginal Revenue curve that is lower than the Demand Curve. Therefore the point where Marginal Revenue and Marginal Cost intersect, will not be on the demand curve but lower than it. The price charged will therefore be the point where the maximising output touches the Demand Curve.
The Perfectly Competitive Firm however is in a market where Price is equal to the Demand curve and equal to the Marginal Revenue curve as well. The point where the Marginal Cost intersects with Marginal Revenue will also be the point where the maximising output touches the Demand curve so the price will be the same as the Marginal Revenue.
Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantity Unit Cost Unit Replacement Cost Unit Selling Price A 1,000 $ 26 $ 28 $ 32 B 500 31 27 34 C 900 19 18 24 D 900 23 20 22 E 800 30 28 29 The cost to sell for each product consists of a 10 percent sales commission. The normal profit for each product is 35 percent of the selling price. Required: 1. Determine the carrying value of inventory at December 31, 2021, assuming the lower of cost or market (LCM) rule is applied to individual products. 2. Determine the carrying value of inventory at December 31, 2021, assuming the LCM rule is applied to the entire inventory. 3. Assuming inventory write-downs are common for Forester, record any necessary year-end adjusting entry based on the amount calculated in requirement 2.
Answer:
A)
A 1,000 x $26.00 = $ 26,000
B 500 x $30.60 = $ 15,300
C 900 x $ 19.00 = $ 17,100
D 900 x $ 19.80 = $ 17,820
E 800 x $26.10 = $ 20,880
Total $ 97,100
B)
102,240
C)
Write-down at NRV 1,060 debit
Inventory 1,060 credit
Explanation:
We have to calculate the net realizable value(NRV) for each item and compare with the historic cost:
Units// Cost /// NRV
A 1,000 $ 26 $ 32(1 - 0.1) = 28.8
B 500 $ 31 $ 34(1-0.1) = 30.60
C 900 $ 19 $ 24(1-0.1) = 21.60
D 900 $ 23 $ 22(1-0.1) = 19.80
E 800 $ 30 $ 29(1-0.1) = 26.10
We will always pick the lowest to valuate the goods:
A 1,000 x $26.00 = $ 26,000
B 500 x $30.60 = $ 15,300
C 900 x $ 19.00 = $ 17,100
D 900 x $ 19.80 = $ 17,820
E 800 x $26.10 = $ 20,880
Total $ 97,100
Total Cost:
1,000 x 26
+ 500 x 31
+ 900 x 19
+ 900 x 23
+ 800 x 30
103,300
Total NRV
1,000 x 28.80
+ 500 x 30.60
+ 900 x 21.60
+ 900 x 19.80
+ 800 x 26.10
102,240
Comparing at the entire inventory level we get the following adjustment
103,300 - 102,240 = 1,060
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows:
1 Sales $10,800,000.00
2 Manufacturing costs:
3 Direct materials $6,400,000.00
4 Direct labor 1,600,000.00
5 Variable manufacturing cost 1,280,000.00
6 Fixed manufacturing cost 320,000.00 9,600,000.00
7 Selling and administrative expenses:
8 Variable $1,080,000.00
9 Fixed 180,000.00 1,260,000.00
Required:
1. Prepare an income statement based on the absorption costing concept.*
2. Prepare an income statement based on the variable costing concept.*
3. Explain the reason for the difference in the amount of income from operations reported in (1) and (2).
Answer:
1. Absorption Costing Income Statement
For the month ended May 31, 2016
Sales $10,800,000
Cost of goods sold
Beginning inventory -
Cost of goods manufactured $9,600,000
Ending Inventory $960,000
Cost of goods sold $8,640,000
Gross margin $2,160,000
Selling and administrative expenses
$1,080,000 + $180,000 $1,260,000
Income from operation $900,000
2. Variable Costing Income Statement
For the month ended May 31, 2016
Sales $10,800,000
Variable cost of goods sold
Beginning Inventory -
Variable cost of goods manufactured $9,280,000
Ending Inventory $928,000
Variable cost of goods sold $8,352,000
Manufacturing margin $2,448,000
Variable selling and administrative $1,080,000
expenses
Contribution margin $1,368,000
Fixed Cost:
Fixed manufacturing cost $320,000
Fixed selling and administrative $180,000
expenses
Total fixed cost $500,000
Income from operation $868,000
3. The reason for difference of amount for income from operation is $32,000 ($900,000 - $868,000). It is due to fixed manufacturing cost which is included for ending inventory under absorption costing (320,000 / 80,000 * 8,000). Hence, income under absorption costing is higher by $32,000 as compared to income under variable costing.
Assume the economy is at full employment but planned investment exceeds saving. Other things being equal, what fiscal policy actions would best address this problem?
Answer:
Increase taxes and decrease government spending
Explanation:
Fiscal policy is used to bring an economy back to normal.
When the economy is at full investment and planned investment is greater than savings, the best policy action would be to Increase taxes and decrease government spending. By increasing taxes there would be a fall in disposable income and household spending would decrease.
Changes in fiscal policy has effects on GDP, unemployment, and inflation. In this question this would be contractionary fiscal policy. Aggregate demand would fall and there would be lower output, lower employment and lower price level
Calculate the earnings of workers A, B and C under the Straight Piece
Rate System and Merrick’s Differential Piece Rate System from the
following particulars.
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units.
Working hours per day are 8
Answer:
Earnings of Workers:
Rates Systems
Worker Straight Piece Merrick's Differential Piece
A $35.10 $28.08
B $40.50 $32.40
C $54.00 $64.80
Explanation:
a) Data:
Normal rate per hour: Rs. 5.40
Standard time per unit: 1 minute
Output per day is as follows.
Worker A – 390 units
Worker B – 450 units
Worker C – 600 units
Working hours per day are 8
b) Calculations:
i) Standard units per day = 8 x 60 minutes = 480 units
ii) Earnings per day is as follows.
Worker A – 390 units :
Straight piece Wages = 390 / 60 x $5.40 = $35.10
Merrick's Earnings = 390/60 x $5.40 x 0.8 = $28.08
Worker B – 450 units :
Straight piece Wages = 450 / 60 x $5.40 = $40.50
Merrick's Earnings = 450/60 x $5.40 x 0.8 = $32.40
Worker C – 600 units:
Straight piece Earnings = 600 / 60 x $5.40 = $54
Merrick's Earnings = 600/60 x $5.40 x 1.2 = $64.80
c) The factor for multiplying the rate is obtained by dividing the units produced by the number of minutes in an hour, in order to convert output to a rate based on the hour.
d) The standard output per day helps Merrick in calculating the weights to be assigned to each worker and differentiate the slow worker from the superior worker (hence, the name: Merrick's Differential Piece Rate). The slow workers (those who produce below the standard output) are paid a rate lower than the standard rate by adding a weight of 0.8 as a punishment while the superior worker is assigned a weight of 1.20 as a reward for good performance. Meanwhile, a standard performer who produced 480 units will be paid the normal rate or weighed as 1.0.
Suppose that two things happen simultaneously in the market for fish. First, a new technology allows fishing boats to catch more fish while using the same number of crew-members. At the same time a new study shows that eating fish at least three times a week helps prevent heart attacks. How will the market for fish respond?
A. Equilibrium quantity will increase but the effect on the equilibrium price is unknown without more information.
B. Equilibrium price and quantity will both increase.
C. Equilibrium quantity will decrease but the effect on the equilibrium price is unknown without more information.
D. Equilibrium price will decrease but equilibrium quantity will increase.
E. Equilibrium price will increase but the effect on the equilibrium quantity is unknown without more information.
Answer:
Option A, Equilibrium quantity will increase but the effect on the equilibrium price is unknown without more information, is the right answer.
Explanation:
Option A is correct because the change in technology allows the person to catch more fish with the same crew. Thus, this will increase the supply, and the supply curve will shift rightwards. Moreover, the new study shows that a reduction in heart attack will cause an increase in the demand for fish. So the demand curve will shift rightwards. Here, we can see the increase in equilibrium quantity but we can not explain the effect on price due to lack of information. Therefore, option A will be right.
Suppose a bank has $500 million in deposits and $35 million in required reserves, and it is holding no excess reserves. What is the required reserve ratio
Answer:
The required reserve ratio is $17500 million.
Explanation:
The given deposit with the banks = $500 million
Required reserves = $35 million
We already have the deposits with the bank and the required reserves. Now we have to calculate the required reserve ratio and it can be calculated by multiplying the bank deposit with required reserves.
Required reserve ratio = Bank deposits × Required reserve
= 500 × 35
= $17500 million
Pearls, Pearls, Pearls! manufactures and sells jewelry. The total variable cost of goods sold this month is $72,490. Variable selling and administrative cost is $22 per unit sold. If 350 units are produced and 314 units are sold this month, the total variable cost reported on the income statementforthe month is $:___________
Answer:
Total variable cost= $71,940.54
Explanation:
Giving the following information:
The total variable cost of goods sold this month is $72,490.
Variable selling and administrative cost is $22 per unit sold.
350 units are produced and 314 units are sold this month.
First, we need to calculate the unitary variable cost per unit:
Unitary production cost= 72,490/350= $207.11
Now, we can calculate the total variable cost:
Total variable cost= (207.11 + 22)*314= $71,940.54