SNC is considering working with Nutrilife on a half-size contract for its herbal nutraceutical product line, with an incremental sales benefit to the top line of $2 million (a one-time 20% increase). In addition, Ayurveda Naturals, the India-based supplier of herbs for the Nutrilife contract, is offering very favorable payment terms: 2/30 net 60. In other words, SNC could lower its accounts payable liability to $153,000 by paying Ayurveda Naturals within 30 days, thereby realizing a 2% discount on raw materials. What would you like to do about this opportunity?Accept or Decline2013 2014 2015 Post 2015Incremental Summary Income Statement ($ in thousands)Sales $2,000 $2,000 $2,000 $2,000Cost of Sales $1,833 $1,833 $1,833 $1,833EBIT $167 $167 $167 $167Incremental Balance Sheet ($ in thousands)Accounts Receivable $603 $603 $603 $603Inventories $452 $452 $452 $452Accounts Payable $151 $151 $151 $151
Answers
Answer and Explanation:
Answer and explanation attached
Related Questions
An investor buys 100 shares of a stock for $20,000. After 5 years the stock is sold for $32,000. If interest is compounded continuously, what annual nominal rate of interest did the original $20,000 investment earn? Round the final answer to the nearest hundredth.
Answers
Answer: 9.4%
Explanation:
From the question,
Investment, Po = 20000
The formula to use will be:
P = Po × e^rt
where r = rate
t = time
Check the attachment for further details and explanation.
Ang Electronics, Inc., has developed a new DVDR. If the DVDR is successful, the present value of the payoff (when the product is brought to market) is $24 million. If the DVDR fails, the present value of the payoff is $8.5 million. If the product goes directly to market, there is a 50 percent chance of success. Alternatively, the company can delay the launch by one year and spend $1.2 million to test market the DVDR. Test marketing would allow the firm to improve the product and increase the probability of success to 80 percent. The appropriate discount rate is 11 percent.
Required:
Calculate the NPV of going directly to market and the NPV of test marketing before going to market.
Answers
Answer:
NPV of going directly to the market:
Expected value of future cash flows = ($24 x 50%) + ($8.5 x 50%) = $16.25 million
There is a 50/50 chance of being a success or a failure, so to determine the expected value you just multiply each option by 50% and add them.
NPV of test marketing before going directly to the market:
Expected value of future cash inflows = ($24 x 80%) + ($8.5 x 20%) = $20.9 (but delayed by 1 year)
PV of expected cash flows = -1.2 (marketing costs) + $20.9/1.11 = $17.80 million
In the run up to the war in Iraq that began in 2003, one of the many concerns raised was that a war could result in a decrease in the supply of oil. At the same time, the U.S. economy was having a hard time recovering from the recession of 2001 and, as a result, incomes of many consumers had decreased (due to layoffs, wage cuts, and so forth). All else constant, it was reasonable to predict, with certainty, that the combination of these two factors would cause the equilibrium:__________
a. quantity of oil to decrease.
b. quantity of oil to increase.
c. price of oil to increase.
d. price of oil to decrease.
Answers
A rise in demand will result in an increase in a good's equilibrium price and output. Hence option C is correct .
What is equilibrium ?According to formal definitions, equilibrium is a condition of balance or rest brought on by the equal activity of opposing forces. Supply and demand are these forces in economics. We shall see that when there is an imbalance between supply and demand, economic forces will operate until the equilibrium is restored.
Depicts the hot dog market's competitive nature, with aggregate supply in yellow and aggregate demand in blue. Hot dog demand decreases as price increases, while supply increases. This diagram contains two crucial details. Equilibrium quantity comes first (QE). QE occurs when the amount supplied and the quantity required are equal.
It is crucial to understand the means through which we arrive at this value. Only one price, known as equilibrium price, can be correlated with equilibrium quantity (PE). The question of how to achieve equilibrium still stands. Let's start by thinking about what happens when the price is too high.
Learn more about Equilibrium here
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Barth Interior provides decorating advice to its clients. Three recent transactions of the company include:
a. Providing decorating services of $500 on account to one of its clients.
b. Paying $1,200 for an employee's salary in the current period.
c. Purchasing office equipment for $2,700 by paying cash.
Required: Write a memo to your instructor describing each step of the six-step measurement process presented in Illustration 2-1 in the book specifically for each of the three transactions. To emphasize, your memo should be specific to the three transactions indicated above..
Answers
Answer:
Memo Describing Each Step of the Six-Step Measurement Process
To: Ms. Teagantigan, PhD, Financial Accounting
From: Okwukwe Faith, Financial Accounting Student
Subject: The Six-Step Measurement Process
Date: October 11, 2020
Find below the description you requested on the above subject.
1st Step: Identifying the accounts involved using the source documents:
For the provision of decorating services of $500 to a client, the invoice for the service will be reviewed for the accounts involved in the transaction. It will show that Accounts receivable and Service Revenue are involved. A review of the payroll check will also show the payment of salary to an employee, in which Cash Account and Salaries Expense account are involved. Similarly, a review of the purchasing invoice will show that Office Equipment and Cash Account are involved for the purchase of equipment.
2nd Step: Analysis of the impact on the accounting equation: For a) Accounts Receivable and Service Revenue will increase by $500 respectively. Cash Account will decrease while Salaries Expense account will increase by $1,200 for b). For c) Office Equipment will increase and Cash will decrease by $2,700.
3rd Step: Assessing the accounts to be debited or credited: For a) Accounts Receivable will be debited and Service Revenue credited. For b) Salaries Expense will be debited and Cash credited. For c) Office Equipment will be debited and Cash credited.
4th Step: With the above identification, the journal will be recorded for transactions a - c as detailed above.
5th Step: The above transactions will then be posted to the general ledger in their respective accounts.
6th Step: At the end of the period, the accounts will be balance and a list of balances extracted in the Trial Balance.
I hope I have understood the steps enough.
Regards,
Okwukwe Faith
Explanation:
We have detailed above the six-step measurement process for evaluating business transactions and events. These steps help to identify the accounts involved in each business event and determine how the events are recorded in the accounting books.
On November 1, Arvelo Corporation had $38,500 of raw materials on hand. During the month, the company purchased an additional $71,500 of raw materials. During November, $82,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $4,300. Prepare journal entries to record these events. Use those journal entries to answer the following questions:
The credits to the Raw Materials account for the month of November total:_________
Answers
Answer:
$73,400
Explanation:
The computation of Raw Materials account for the month of November total is shown below:-
Raw Materials account for the month of November = Work in progress inventory - Manufacturing overheads
= ($82,000 - $4,300) - $4,300
= $77,700 - $4,300
= $73,400
Therefore for computing the raw materials we simply applied the above formula.
South Texas Luxury Apartments reports pretax financial income of $68,400 for 2019. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $17,000. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $21,000. 3. Fines for pollution appear as an expense of $10,300 on the income statement. South Texas Luxury Apartments tax rate is 40% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2019.
Required:
Prepare a reconciliation between Financial Income and Taxable Income and then prepare the journal entry to record income taxes.
Answers
Answer:
Pretax financial income for 2017 $68,400
Excess Depreciation tax -$17,000
Excess rent collected $21,000
Nondeductible fines $10,300
Taxable income $82,700
Enacted tax rate 40% 0.4
Income tax payable $33,080
Date Account Title Debit Credit
Income Tax expense $31,480
Deferred tax asset $8,400
(21,000*40/100)
Income tax payable $33,080
Deferred tax liability $6,800
(17,000*40/100)
Compute, Disaggregate, and Interpret RNOA of CompetitorsHalliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.$ millions HAL SLBTotal revenue $23,995 $32,815Pretax net nonoperating expense 653 426Net income 1,657 2,177Average operating assets 23,361 67,836Average operating liabilities 5,888 16,499Marginal tax rate 22% 19%Return on equity 18.56% 5.86%a. Compute return on net operating assets (RNOA) for each company.b. Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for each company.Do not round until your final answer. Round answers to two decimal places (percentage example: 0.12345 = 12.35%). HAL SLBRNOA Answer AnswerNOPM Answer AnswerNOAT Answer Answer
Answers
Answer:
a. Return on net operating assets (RNOA) = Net Operating Income after tax / Average Net Operating Assets
Net Operating Income after Tax HAL SLB
Net Income (before tax) 2,124 2,688
Add : Pre tax net non operating Expense 653 426
Net Operating Income before Tax 2,777 3,114
Marginal Tax Rate 22% 19%
Less Tax Expense -611 -592
Net Operating Income after tax 2,166 2,522
Net Income before tax = (Net Income (after tax)*1/(1 -Tax Rate)
Hal = 1,657 * 1/(1 - 22%)
= $2,124
SLB = 2,177 1/(1 - 22%)
= $2,688
HAL SLB
Average Operating Assets 23,361 67,836
Average Operating Liability 5,888 16,499
Average Net Operating Assets 17,473 51,337
Return on net operating assets (RNOA) 12.40% 4.91%B. Net Operating Profit Margin = Net Operating Profits after tax/ Total Revenue
HAL SLB
Net Operating Income after tax 2,166 2,522
Total Revenue 23,995 32,815
Net Operating Profit Margin 9.03% 7.69%Net Operating Asset Turnover = Total Revenue/ Average Net Operating Assets
HAL SLB
Total Revenue 23,995 32,815
Average Net Operating Assets 17,473 51,337
Net Operating Asset Turnover 1.37 times 0.64 timesStar Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directly to Star, and after the games are repaired, Star bills the game manufacturer for cost plus a 20 percent markup. In the month of February, purchases of parts (replacement parts) by Star amounted to $97,000, the beginning inventory of parts was $38,500, and the ending inventory of parts was $15,250. Payments to repair technicians during the month of February totaled $52,500. Overhead incurred was $121,000. a. What was the cost of materials used for repair work during the month of February
Answers
Answer:
The correct answer is "$120,250".
Explanation:
The given values are:
Opening inventory
= $38,500
Closing inventory
= $15,250
Purchases
= $97,000
Now,
The cost of materials used during the month of February will be:
= Opening Inventory + Purchases - Closing Inventory
On putting the estimated values in the above formula, we get
= [tex]38,500+97,000-15,250[/tex]
= [tex]120,250[/tex] ($)
On January 1, 2020, Pearl Company sold 11% bonds having a maturity value of $400,000 for $415,163, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature January 1, 2025, with interest payable December 31 of each year. Pearl Company allocates interest and unamortized discount or premium on the effective-interest basis.
A. Prepare a schedule of interest expense and bond amortization for 2020-2022.
Date Account Titles and Explanation Debit Credit
January 1, 2020 Cash 518,953
Bonds Payable 500,000
Premium on Bonds Payable 18953
B. Prepare the journal entry to record the interest payment and the amortization for 2020.
Schedule of Interest Expense and Bond Premium Amortization
Effective-Interest Method
Date Cash Interest Premium Carrying Amount
Paid Expense Amortized of Bonds
1/1/20
12/31/20 55000
12/31/21 55000
12/31/22 55000
C. Prepare the journal entry to record the interest payment and the amortization for 2022.
Date Account Titles and Explanation Debit Credit
December, 31 51895
Premium on Bonds Payable
Cash
Answers
Answer:
I will start with B and C)
The journal entry to record bond issuance:
January 1, 2020, bonds issued at a premium
Dr Cash 415,163
Cr Bonds payable 400,000
Cr premium on bonds payable 15,163
December 31, 2020, first coupon payment
Dr Interest expense 41,616.30
Dr Premium on bonds payable 2,383.70
Cr Cash 44,000
amortization of bond premium = (415,163 x 10%) - 44,000 = 2,383.70
December 31, 2021, second coupon payment
Dr Interest expense 41,277.93
Dr Premium on bonds payable 2,722.07
Cr Cash 44,000
amortization of bond premium = (412,779.30 x 10%) - 44,000 = 2,722.07
December 31, 2023, third coupon payment
Dr Interest expense 41,005.72
Dr Premium on bonds payable 2,994.28
Cr Cash 44,000
amortization of bond premium = (410,057.23 x 10%) - 44,000 = 2,994.28
A) I used an excel spreadsheet to prepare the amortization schedule
Consulting life (10 points) Mt. Kinley is a strategy consulting firm that divides its consultants into three classes: associates, managers, and partners. The firm has been stable in size for the last 20 years, ignoring growth opportunities in the 90s, but also not suffering from a need to downsize in the recession at the beginning of the 21st century. Specifically, there have been -- and are expected to be -- 200 associates, 60 managers, and 20 partners. The work environment at Mt. Kinley is rather competitive. After four years of working as an associate, a consultant goes ``either up or out''; that is, becomes a manager or is dismissed from the company. Similarly, after six years a manager either becomes a partner or is dismissed. The company recruits MBAs as associate consultants; no hires are made at the manager or partner level. A partner stays with the company for another 10 years (a total of 20 years with the company).a. How many new MBA graduates does Mt. Kinley have to hire every year? b. What are the odds that a new hire at Mt. Kinley will become partner (as opposed to being dismissed after 4 years or 10 years).
Answers
Answer:
A. 50
B. 4%
Explanation:
We can easily find out how many new MBA graduates do Mt. Kinley has to hire every year by calculating the flow rate of associates by dividing the average inventory of associates by flow time of associates.
Requirement A:
The flow rate of associates = Average inventory of associates / Flow time of associates
The flow rate of associates = 200/4
The flow rate of associates = 50
Therefore the firm should assign 50 new MBAs every year.
Requirement B
Probability of associate becoming a partner = 20% x 20%
Probability of associate becoming a partner = 4%
The chances that a new hire at Mt. Kinley will become partner are 4%
Working
The flow rate of manager = Average inventory of manager/ Flow time of manager
The flow rate of manager = 60/6
The flow rate of manager = 10 managers/year
The flow rate of partner = Average inventory of partner/ Flow time of partner
The flow rate of manager = 20/10
The flow rate of manager = 2 partners/year
probability of becoming a manager = 10/50
probability of becoming a manager = 20%
Probability of becoming a partner = 2/10
Probability of becoming a partner = 20%
Peanut Company acquired 90 percent of Snoopy Company’s outstanding common stock for $270,000 on January 1, 20X8, when the book value of Snoopy’s net assets was equal to $300,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows:
Peanut Company Snoopy Company
Debit Credit Debit Credit
Cash $158,000 $80,000
Accounts Receivable 165,000 65,000
Inventory 200,000 75,000
Investment in Snoopy
Stock 319,500 0
Land 200,000 100,000
Buildings and
Equipment 700,000 200,000
Cost of Goods Sold 200,000 125,000
Depreciation Expense 50,000 10,000
Selling & Administrative
Expense 225,000 40,000
Dividends Declared 100,000 20,000
Accumulated
Depreciation 450,000 20,000
Accounts Payable 75,000 60,000
Bonds Payable 200,000 85,000
Common Stock 500,000 200,000
Retained Earnings 225,000 100,000
Sales 800,000 250,000
Income from Snoopy 67,500 0
Total $2,317,500 $2,317,500 $715,000 $715,000
Required:
A. Prepare any equity method entry(ies) related to the investment in Snoopy Company during 20X8.
B. Prepare a consolidated worksheet on the acquisition date, January 1, 2018.
Answers
Answer:
Investment in Snoopy co : 270000
Cash : 270000
Initial investment in snoopy co
investment in snoopy co : 67500
income from snoopy co : 67500
Peanut co's 90% share of snoopy co's 20x8 income
Cash : 18000
investment in snoopy co : 18000
Explanation: prepare any equity method entriesInvestment in Snoopy co : 270000
Cash : 270000
Initial investment in snoopy co
investment in snoopy co : 67500
income from snoopy co : 67500
Peanut co's 90% share of snoopy co's 20x8 income
Cash : 18000
investment in snoopy co : 18000
attached below are the equity entries
At the beginning of 2013, the Harding Construction Company received a contract to build an office building for $10 million. Harding will construct the building according to specifications provided by the buyer, and the project is estimated to take three years to complete. According to the contract, Harding will bill the buyer in installments over the construction period according to a prearranged schedule. Information related to the contract is as follows:
2013 2014 2015
Cost incurred during the year $2,300,000 $3,600,000 $2,100,000
Estimated costs to complete 5,300,000 2,000,000 0
Billings during the year 1,700,000 4,000,000 4,300,000
Cash collections during the year 1,600,000 3,600,000 4,300,000
Calculate the following:
Gross profit : Percentage of completion Completed contract
recognized Method Method
2013
2014
2015
Total gross profit:
Answers
Answer:
gross profit percentage of completion method:
2013: 726,300
2014: 841,700
2015: 432,000
completed contract
we recognize the profit at the end:
2013: zero
2014: zero
2015: 2,000,000
Explanation:
percentage of completion
2013:
we incurred 2,300,000
over a total cost of 2,300,000 + 5,300,000 = 7,600,000
the percentage complete will be:
2,300,000 / 7,600,000 = 30.263% percentage of completion
we multiply this be the revenue:
$10,000,000 x 30,263% = $3,026,300
less 2,300,000 cost
gross profit: 726,300 dollars
2014:
we incurred 3,600,000
so far we have cost for 2,300,000 + 3,600,000 = 5,900,000
for a total cost of 7,900,000
5,900,000 / 7,900,000 = 74.68% percentage of completion
we multiply this but, subtract previous revenue recognized:
10,000,000 x (74.68% - 30,263%) = 4,441,700 revenue
less 3,600,000 cost: 841,700 gross profit
2015:
we complete the project so we recognize the rest of the revenue.
10,000,000 x (100% - 74.68%) = 2,532,000
cost of the year 2,100,000
gross profit: 432,000
completed contract:
10,000,000 contract value less cost:
2013 2,300,000
2014 3,600,000
2015 2,100,000
total 8,000,000
gross profit 2,000,000
Financial Management 317
Financial Statements
Bombay Energy recently reported (in million USD) $12,500 of Sales, $9,500 of Operating Costs other than Depreciation, and $925 of Depreciation. The company had $3,900 of outstanding bonds that carry a 6% Interest Rate, and its Federal-plus-State Income Tax Rate was 37%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to make $1,500 of Capital Expenditures on new fixed assets and to invest $450 in Net Operating Working Capital. Calculate Bombay's Net Income and Free Cash Flow.
2. Tangent Corporation, recently reported the following information:
• Net Income - $756,000
• Tax Rate -37% Interest Expense - $300,000
• Total Investor Supplied Capital - $10.5 million
• Weighted Average Cost of Capital -10%
What is the company's EVA?
Answers
Answer:
Bombay Energy and Tangent Corporation
1. Bombay Energy
a) Net Income:
Sales $12,500
Operating Costs $9,500
Gross profit $3,000
Depreciation $925
EBIT $2,075
Interest Expense $234
EBT $1,841
Taxes (37%) (681)
Net Income $1,160
b) Free Cash Flow:
= $283
2. Tangent Corporation
a) EVA:
= -$762,720
Explanation:
a) Bombay Data:
Sales $12,500
Operating Costs $9,500
Depreciation $925
Outstanding bonds = $3,900
Interest Rate on bonds = 6%
Interest expense = $234 ($3,900 * 6%)
Federal and State Income Tax Rate = 37%
Capital expenditures = $1,500
Net Operating Working Capital investment = $450
b) Bombay' Free Cash Flow equals its earnings before interest and taxes multiplied by (1 − tax rate), add depreciation and amortization, and then subtract changes in working capital and capital expenditure.
EBIT $2,075 (1 - 37%)
Depreciation 925
Capital expenditure (1,500)
Net working capital (450)
Free Cash Flow $283
= $1,307 + 925 - ($1,500 + 450)
= $283
c) Tangent Data:
Net Income - $756,000
Interest Expense - $300,000
Income before tax $456,000
Tax Rate -37% (168,720)
NOPAT $287,280
Total Investor Supplied Capital - $10.5 million
Weighted Average Cost of Capital -10%
The formula for calculating EVA is:
EVA = NOPAT - (Invested Capital * WACC)
Where:
NOPAT = Net operating profit after taxes
Invested capital = Debt + capital leases + shareholders' equity
WACC = Weighted average cost of capital
= $287,280 - ($10,500,000 * 10%)
= $287,280 - 1,050,000
= -$762,720
During April, the production department of a process manufacturing system completed a number of units of a product and transferred them to finished goods. Of these transferred units, 60,000 were in process in the production department at the beginning of April and 240,000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of April, 82,000 additional units were in process in the production department and were 80% complete with respect to materials and 30% complete with respect to conversion.Compute the number of units transferred to finished goods.
Answers
Answer: $320,000
Explanation:
Number of Units transferred to Finished Goods = Beginning Work in Process in April + Units started and Completed in April
= 60,000 + 240,000
= $320,000
Following are the merchandising transactions of Dollar Store.
Nov. 1 Dollar Store purchases merchandise for $2,200 on terms of 2/5, n/30, FOB shipping point, invoice dated November 1.
5 Dollar Store pays cash for the November 1 purchase.
7 Dollar Store discovers and returns $200 of defective merchandise purchased on November 1, and paid for on November 5, for a cash refund.
10 Dollar Store pays $110 cash for transportation costs for the November 1 purchase.
13 Dollar Store sells merchandise for $2,376 with terms n/30. The cost of the merchandise is $1,188.
16 Merchandise is returned to the Dollar Store from the November 13 transaction. The returned items are priced at $295 and cost $148; the items were not damaged and were returned to inventory.
Required:
Journalize the above merchandising transactions for the Dollar Store assuming it uses a perpetual inventory system and the gross method.
Answers
Answer and Explanation:
The Journal entries are given below:-
1. Merchandise Inventory Dr, $2,200
To Accounts Payable $2,200
(Being merchandise purchase on account is recorded)
2. Accounts Payable Dr, $2,200
Merchandise Inventory Dr, $44 ($2,200 × 2%)
To Cash $2,244
(Being cash paid is recorded)
3. Cash Dr, $196 ($200 - ($200 × 2%)
To Merchandise Inventory $196
(Being cash received is recorded)
4. Merchandise Inventory Dr, $110
To Cash $110
(Being cash paid is recorded)
5. Accounts Receivable Dr, $2,376
To Sales $2,376
(Being sales is recorded)
6. Cost of goods sold Dr, $1,188
To Merchandise Inventory $1,188
(Being cost of goods sold is recorded)
7. Sales Returns and allowances Dr, $295
To Account Receivables $295
(Being sales return is recorded)
8. Merchandise Inventory Dr, $148
To Cost of goods sold $148
(Being cost return is recorded)
Ellyn Kole is the assistant chief accountant at Doman Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter. Ellyn is hurriedly trying to prepare a transaction analysis to assist her in preparing the financial statements. The total of the liabilities and owner's equity exceeds the total assets by $1,000. In order to meet the 4 pm deadline, Ellyn decides to force the transaction analysis into balance by adding the amount of the difference to the Equipment account. She chooses Equipment because it is one of the larger account balances; percentage-wise, it will be the least misstated. Ellyn "plugs" the difference! She believes that the difference will not affect anyone's decisions. She wishes that she had another few days to find the error but realizes that the final information is already late.
In your discussion posting address ALL questions but not limit to the following questions:
a. Who are the stakeholders in this situation?
b. What are the ethical issues involved in this case?
c. What are Ellyn's alternatives?
Answers
Answer and Explanation:
A. Stakeholders in the situation are:
1. Ellyn
2. The company
3. People using the financial statements
B. Ethical issues include:
1. Ellyn being dishonest by adding $1000 to the equipment asset and mistating the numerical value. This could cause loss as the $1000 could be from a liability account
C. Alternatives:
1. Creating a suspense account for the difference of $1000
2. Postponing finalisation and escalating the issue to a senior accountant to find out where the difference is from
a. The name of the stakeholders mentioned in the context are:
Ellyn The company People using the financial statements
b. Misstatement or the manipulation of the data records is the ethical issue that has been involved in the case mentioned over the context.
c. The final alternative that has been in the hand of Ellyn is to create the suspense account of the misstated amount and also extend the finalization date of the data.
a. The stakeholders are termed as the person who is also a member of the company and are included in the roles, operations, and functions of the company.
In this context, Ellyn, the company, and the People using the financial statements are the owners of the company and also the stakeholders of the company. these have purchased or invested in part of the company and have their part of share in the firm.
b. The ethical issues in the firm are termed as the issues that arose because of not following the laid norms of the firm.
In this context, Ellyn has misstated the amount of $1000 and decided to adjust it in the equipment account as it carries a high amount. This is the ethical issue of manipulation of the data.
c. The alternative that Ellyn has is she needs to adjust the difference amount in the suspense account that is created in order to adjust the unknown amount or the mistaken amount.
In order to get the time to correct the mistake of the data, she also has options to extend the date of the finalization of the data.
To know more about the questions regarding the context, refer to the link below:
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Chris owns his own business restoring antique cars. Last year, he restored 24 cars, which he sold for $1,100,000. The parts and supplies necessary for the restoration totaled $400,000. He paid $360,000 to his six employees and a salary of $110,000 to himself. The rent and utilities on his building were $80,000. Recently, Chris received an offer to work as Jay Leno’s personal auto restorer, at a salary of $275,000. Chris also received a $180,000 offer to host a car-related reality TV show for the Discovery Channel. Chris can only work one job.
1. What is Chris's accounting cost?
a. $950,000.
b. $1,115,000.
c. $760,000.
d. $840,000.
What is his accounting profit?
a. $15,000.
b. $260,000.
c. $340,000.
d. -$150,000. .
2. What is Chris's economic cost?
a. $1,115,000.
b. $345,000.
c. $165,000.
d. $950,000.
What is his economic profit?
a. $755,000.
b. $935,000.
c. $150,000.
d. -$15,000.
3. Comparing what Chris earns in his current job—both his salary and his company's accounting profit—with his best outside offer, you can conclude that economic profits and losses show:_____.
a. how much an individual would earn in the individual's next best alternative minus how much he or she currently earns?
b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative?
Answers
Answer:
a. $950,000.$150,000.a. $1,115,000.d. -$15,000.b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative.Explanation:
1. Chris's accounting cost
The accounting cost is the explicit cost of the business. The normal costs so to speak;
= Parts and supplies necessary for the restoration + Salaries to employees + Salary to himself + Rent and utilities
= 400,000 + 360,000 + 110,000 + 80,000
= $950,000
2. Chris's accounting profit
= Revenue - Accounting cost
= 1,100,000 - 950,000
= $150,000
3. Chris's economic cost
These are explicit + implicit (opportunity) cost.
The opportunity cost is the next best alternative which would have been the $275,000 if he had worked at Jay Leno’s personal auto restorer.
He would therefore forfeit the salary he earns now of $110,000.
= Accounting cost + Salary foregone - Salary
= 950,000 + 275,000 - 110,000
= $1,115,000
4. Chris's economic profit
= 1,100,000 - 1,115,000
= -$15,000
5. b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative.
Aruba Company had a checkbook balance on December 31,
Problem 1-18 (AICPA Adapted)
2,000,000
2020 of P8,000,000 and held the following items in the safe
Check payable to Araba, dated January 5, 2021,
included in December 31 checkbook balance
Check payable to Araba, deposited December 20,
and included in December 31 checkbook balance,
but returned by bank on December 30, stamped
"NSF.The check was redeposited January 2, 2021,
and deared January 3, 2021
500,000
Check drawn on Aruba's account and payable to a vendor,
dated and recorded December 31 but not mailed
until January 15, 2021
1,500,000
Cash on hand - undeposited collections
Change fund
Time deposit for plant expansion
Treasury bill
Money market placement
Postage stamps unused
400.000
40,000
1,000,000
2,500,000
3,000,000
10,000
1. What total amount should be reported as cash on
December 31, 2020?
a 7,400,000
b. 7,440,000
c. 8,440,000
d. 7,450,000
2. What total amount should be reported as cash
equivalents on December 31, 2020?
a. 6,500,000
b. 3,000,000
c. 5,600,000
d. 2,500,000
Answers
Answer:
$7,440,000$5,500,000Explanation:
1. Checkbook balance of $8,000,000 in December 2020.
Check payable to Aruba of $2,000,000 has not yet being deposited so it should be removed from cash balance
Check payable that was returned by the bank of $500,000 should not be included either because it did not clear.
Check drawn on Aruba account of $1,500,000 was recorded but not yet mailed so it should be added back.
Cash on hand - undeposited collections and Change fund are actual cash that should be added as well.
= 8,000,000 - 2,000,000 - 500,000 + 1,500,000 + 400,000 + 40,000
= $7,440,000
2. Cash equivalents are those instruments that can be easily converted to cash. They typically mature within 3 months.
The Cash equivalents here are Treasury bills and Money Market placements
= 2,500,000 + 3,000,000
= $5,500,000
The total amount to be reported as cash on December 31, 2020 is $7,440,000 and the total amount to be reported as cash equivalents on December 31, 2020 is $5,600,000.
1. CASH = Checkbook balance of $8,000,000 + Check payable to Aruba of $2,000,000 + Check payable $500,000 + Check drawn $1,500,000 + Cash on hand - Undeposited collections
CASH = 8,000,000 - 2,000,000 - 500,000 + 1,500,000 + 400,000 + 40,000
CASH = $7,440,000
Cash equivalents = Treasury bills + Money Market placements
Cash equivalents = 2,500,000 + 3,000,000
Cash equivalents = $5,500,000
In conclusion, the total amount to be reported as cash on December 31, 2020 is $7,440,000 and the total amount to be reported as cash equivalents on December 31, 2020 is $5,600,000.
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Suppose that you are working as a financial analyst in Bank of America Merrill Lynch. Your boss have just asked to analyze three different money market instrument yields and to suggest investment advice to its rich clients. Which of following instruments is the most desirable to invest in ? A six month T-bill rate of 1.9 % A six moth Eurodollar deposit of 1.9% A six month CD rate of 1.9 %
Answers
Answer: A six month T-bill rate of 1.9 %
Explanation:
As all the instruments are similar in terms of maturity period and return rate, the most desirable will be in terms of the one with the lowest risk.
The United States T-bill is one of the safest instruments in the world as it is backed by the full faith of the United States Government which has technically never defaulted on debt. This is therefore the lowest instrument listed and is therefore the most desirable.
Cost of Goods Sold, Cost of Goods Manufactured
Glenville Company has the following information for April:
Cost of direct materials used in production $52,000
Direct labor 67,000
Factory overhead 21,000
Work in process inventory, April 1 38,000
Work in process inventory, April 30 48,000
Finished goods inventory, April 1 22,000
Finished goods inventory, April 30 17,000
Required:
a. For April, determine the cost of goods manufactured.
b. For April, determine the cost of goods sold.
Answers
Answer:
cost of goods manufactured= $130,000
COGS= $135,000
Explanation:
To calculate the cost of goods manufactured, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 38,000 + 52,000 + 67,000 + 21,000 - 48,000
cost of goods manufactured= $130,000
Now, we can determine the cost of goods manufactured:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 22,000 + 130,000 - 17,000
COGS= $135,000
Schweser Satellites Inc. produces satellite earth stations that sell for$70,000 each. The firm's fixed costs, F, are $3 million, and 50 earth stations are produced and sold each year. Profits total $100,000 , and the firm's assets (all equity financed) are $4 million. The firm estimates that it can change its production process, adding $3 million to assets and $200,000 to fixed operating costs. This change will reduce variable costs per unit by $5,000 and increase output by 30 units. However, the sales price on all units must be lowered to $45,000 to permit sales of tile additional output. The firm has tax loss carryforwards that render its tax rate zero, its cost of equity is 16%and it uses no debt.
Required:
a. What is the incremental profit?
b. Would the firms break-even point increase or decrease if it made the change?
c. Would the new situation expose the firm to more or less business risk than the old one?
Answers
Answer:
Please see attached explanations
Explanation:
a Incremental profit would be
= $160,000 - $100,000
= $60,000
b. The firm's break even point will increase by 27.8 units if it makes the change.
c. The new situation would have more business risk than the old one due to;
• Increase in fixed costs
• Business risk will also increase in new situations due to increase in break even point.
Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Milling Customizing
Machine-hours 26,000 29,000
Direct labor-hours 11,000 5,000
Total fixed manufacturing overhead cost $153,400 $18,500
Variable manufacturing overhead per machine-hour $1.30
Variable manufacturing overhead per direct labor-hour $5.00
During the current month the company started and finished Job A319. The following data were recorded for this job:
Job A319: Milling Customizing
Machine-hours 70 30
Direct labor-hours 50 60
Direct materials $450 $190
Direct labor cost $580 $570
If the company marks up its manufacturing costs by 20% then the selling price for Job A319 would be closest to:_____.
a. $563.
b. $2,816.
c. $3,379.
d. $4,055.
Answers
Answer:
Selling price= $3,379.2
Explanation:
First, we need to calculate the predetermined overhead rate for each department:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Milling= (153,400/26,000) + 1.3= $7.2 per machine hour
Customizing= (18,500/5,000) + 5= $8.7 per direct labor hour
Now, we can allocate overhead and calculate the total cost:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Milling= 7.2*70= $504
Customizing= 8.7*60= $522
Total cost= (450 + 190) + (580 + 570) + (504 + 522)
Total cost= $2,816
Finally, the selling price:
Selling price= 2,816*1.2= $3,379.2
Pro forma balance sheet Peabody & Peabody has 2019 sales of $10 million. It wishes to analyze expected performance and financing needs for 2021, which is 2 years ahead. Given the following information, respond to parts a and b.
1. The percent of sales for items that vary directly with sales are as follows: Accounts receivable, 12% Inventory, 18% Accounts payable, 14% Net profit margin, 3%
2. Marketable securities and other current liabilities are expected to remain unchanged.
3. A minimum cash balance of $480,000 is desired.
4. A new machine costing $650,000 will be acquired in 2020, and equipment costing $850,000 will be purchased in 2017. Total depreciation in 2017 is forecast as $290,000, and in 2017 $390,000 of depreciation will be taken.
5. Accruals are expected to rise to $500,000 by the end of 2017.
6. No sale or retirement of long-term debt is expected.
7. No sale or repurchase of common stock is expected.
8. The dividend payout of 50% of net profits is expected to continue.
9. Sales are expected to be $11 million in 2017 and $12 million in 2017.
10. The December 31, 2017, balance sheet follows
Peabody & Peabody Balance Sheet December 31, 2017 ($000)
Assets:
Cash 400
Marketable securities 200
Accounts receivable 1200
Inventories 1800
Total current assets 3600
Net fixed assets 4000
Total assets 7600
Liabilities and Stockholders equity:
Accounts payable 1400
Accruals 400
Other current liabilities 80
Total current liabilities 1880
Long-term debt 2000
Total liabilities 3880
Common equity 3720
Total liabilities and stockholders’ equity $7,600
Required:
a. Prepare a pro forma balance sheet dated December 31, 2017.
b. Discuss the financing changes suggested by the statement prepared in part a.
Answers
Answer:
Peabody & Peabody
a. Peabody & Peabody
Pro Forma Balance Sheet
December 31, 2021 ($000)
Cash 480
Marketable securities 200
Accounts receivable 1,440
Inventories 2,160
Total current assets 4,280
Net fixed assets 4,820
Total assets 9,100
Liabilities and Stockholders equity:
Accounts payable 1,680
Accruals 500
Other current liabilities 80
Total current liabilities 2,260
Long-term debt 2,000
Total liabilities 4,260
Common equity 3,900
Total liabilities and stockholders’ equity $8,160
Required Finance 940
b. From the statement prepared in part a, it is clear that Peabody & Peabody requires new financing of $940,000 for 2020 to meet the projected assets base.
Explanation:
a) Data and Calculations:
2019 Sales = $10 million
Pro Forma Balance Sheet
December 31, 2017 ($000)
Assets:
Cash 400
Marketable securities 200
Accounts receivable 1,200
Inventories 1,800
Total current assets 3,600
Net fixed assets 4,000
Total assets 7,600
Liabilities and Stockholders equity:
Accounts payable 1,400
Accruals 400
Other current liabilities 80
Total current liabilities 1,880
Long-term debt 2,000
Total liabilities 3,880
Common equity 3,720
Total liabilities and stockholders’ equity $7,600
Purpose: To analyze expected performance and financing needs for 2021.
1. Percent of Sales ($12 million)
Accounts receivable, 12% $1,440
Inventory, 18% $2,160
Accounts payable, 14% $1,680
Net profit margin, 3% $360
2. Market securities $200
3. Cash balance (desired minimum) $480
4. Net fixed assets 4,000
New equipment in 2020 650
Depreciation, 2020 (290)
New equipment in 2021 850
Depreciation, 2021 (390)
Net fixed assets $4,820
5. Accruals $500
8. Dividend payout = 50% of $360 = $180
Retained Earnings (current) = $180
Common Equity:
2019 3,720
Income 180 (Retained Earnings)
2020 3,900
Rick Wing, salesperson for Wave Soldering Systems, Inc. (WSSI), has provided you with a proposal for improving the temperature control on your present machine. The machine uses a hot-air knife to cleanly remove excess solder from printed circuit boards; this is a great concept, but the hot-air temperature control lacks reliability. According to Wing, engineers at WSSI have improved the reliability of the critical temperature controls. The new system still has the four sensitive integrated circuits controlling the temperature, but the new machine has a backup for each. The four integrated circuits have reliabilities of 0.88, 0.90, 0.92, and 0.94. The four backup circuits all have a reliability of 0.88.
The overall reliability of the new temperature controller = nothing% (enter your response as a percentage rounded to two decimal places).
Answers
Answer:
The answer is "A, B , C, D is now considered a single one".
Explanation:
[tex]\to (A = 0.84) \\\\ \to (B=0.86)\\\\ \to (C = 0.88)\\\\ \to (D =0.90)\\\\[/tex]
In the question, the components will be in series throughout or they must both work while the machine operates. The inability of one part fails. ABCD In each adjacent component is assisted and if those modules stop running the system works.
This device for one central ingredient and then one back up becomes perpendicular from each circuit throughout the given problem. For example, Is the device with two adjacent components
Parallel sequence method
Some modules were replicated in parallel here and in sequence. The whole four-circuit welding system is one.
Consistency in parallel systems
The probability each component would fail
The formula for calculating the Probability:
[tex]\text{Probability (single failed component) = 1-(component reliability)}[/tex]
Probability (A-key IC component failure)=1-(component reliability)=1-0.84
Probability (B-key IC component failure) = 1-(component reliability) = 1-0.86
Probability (C-key IC component failure) = 1-(component reliability) = 1-0.88
Probability (D-key IC component failure) = 1-(component reliability) = 1-0.90
Probability (backup fails)=1-0.84
Device stable = probability (at least one part works)
Using the approach as a supplement,
P (The function of at least one component)
= 1-Probability (Failure in all parts)
= 1- The result of single potential error probabilities
= 1-[Probability (Main IC-Fails) \times Probability \times (Backup-Fails)]
The Durability of A[tex]=1- [ (1-0.84)(1-0.84)] \\\\[/tex]
[tex]= 1- 0.256\\\\=0.9744[/tex]
The Durability of B [tex]=1- [ (1-0.86)(1-0.84)]\\[/tex]
[tex]=1- [ (0.14)(0.16)]\\\\=1- 0.0224\\\\= 0.9776[/tex]
The Durability of C [tex]=1- [ (1-0.88)(1-0.84)]\\\\[/tex]
[tex]=1- [ (0.12)(0.16)]\\\\=1- [0.0192]\\\\= 0.9808[/tex]
The Durability of D [tex]=1- [ (1-0.90)(1-0.84)]\\\\[/tex]
[tex]=1- [ (0.10)(1-0.16)]\\\\= 1- 0.016\\\\=0.984[/tex]
Durability of the system sequence
Durability of Device = consumer durability of series components
[tex]=0.9744\times 0.9766 \times 0.9808 \times 0.9840 \\\\=0.9184 \ \ or\ \ 91.84 \% \ \ reliability[/tex]
Note:
Any single part A, B , C, D is now considered a single one
Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year:
Beginning Balance Ending Balance
Raw materials $14,350 $22,350
Work in process $27,350 $9,350
Finished Goods $62,350 $77,350
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,350 machine-hours and incur $256,795 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, $315,350. Raw materials were requisitioned for use in production, $307,350 ($280,650 direct and $26,700 indirect). The following employee costs were incurred: direct labor, $377,350; indirect labor, $96,350; and administrative salaries, $172,350. Selling costs, $147,350. Factory utility costs, $10,350. Depreciation for the year was $148,000 of which $131,000 is related to factory operations and $17,000 is related to selling, general, and administrative activities. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,070 machine-hours. Sales for the year totaled $1,267,000.
Required:
a. Prepare a schedule of cost of goods manufactured.
b. Was the overhead underapplied or overapplied? By how much?
c. Prepare an income statement for the year. The company closes any underapplied or overapplied overhead to Cost of Goods Sold.
Answers
Answer:
A. $938,339
B. $2,061 Underapplied
C. $4,900
Explanation:
a. Preparation of a schedule of cost of goods manufactured.
Baab Corporation
Schedule of Cost of Goods Manufactured
DIRECT MATERIAL
Opening 14,350
Add Purchased 315,350
Total Raw Material Available 329,700
Less: Closing Raw Material (22,350)
Less: Indirect Raw Material used in Production (26,700)
Raw Material used in production (A) 280,650
DIRECT LABOR (B) 377,350
FACTORY OVERHEAD APPLIED
($7.7*34070) (C ) 262,339
TOTAL MANUFACTURING COSTS (A+B+C) 920,339 (280,650+377,350+262,339)
Add Opening Work in Progress 27,350
Less: Closing Work in Progress (9,350)
Cost of goods manufactured 938,339
Calculation for Factory Overhead Recovery Rate using this formula
Factory Overhead Recovery Rate = Budgeted Factory Overhead/Machine Hours
Let plug in the formula
Factory Overhead Recovery Rate=256,795/33,350
Factory Overhead Recovery Rate= $ 7.70
2. Calculation for the overhead underapplied or overapplied
First step is to compute for Total Manufacturing Overhead
Computation of Manufacturing Overhead Incurred
Indirect Material 26,700
Indirect Labour 96,350
Factory Utilities Cost 10,350
Depreciation 131,000
Total Manufacturing Overhead 264,400
Second step is to Compute for Manufacturing Overhead Under or Over applied using this formula
Let plug in the formula
Manufacturing Overhead Under or Over applied = Actual Manufacturing Overhead Incurred - Manufacturing Overhead applied
Manufacturing Overhead Under or Over applied= 264,400 - 262,339
Manufacturing Overhead Under or Over applied= $2,061 Underapplied
3. Preparation of an income statement for the year.
Baab Corporation Income Statement
Sales 1,267,000
Add: Closing Finised Goods 77,350
Less: Opening Finished Goods (62,350)
Less: Selling & Administrative Expense:
Administrative Salaries 172,350
Depreciation relating to the selling, general & administrative activities 17,000
Selling Costs 147,350
Total Selling & Administrative Expense(336,700)
Less: Underapplied Overheads (2,061)
Less: Cost of Goods Manufactured (938,339 )
Profit/Loss $4,900
The following trial balance of Wanda Landowska Company does not balance. Your review of the ledger reveals the following.
a. Each account had a normal balance.
b. The debit footings in Prepaid Insurance, Accounts Payable, and Property Tax Expense were each understated $100.
c. A transposition error was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $2,750 and $6,690, respectively.
d. A debit posting to Advertising Expense of $300 was omitted.
e. A $1,500 cash drawing by the owner was debited to Owner's Capital and credited to Cash.
Debit Credit
Cash 4,800
Accounts Receivable 2,570
Prepaid Insurance 700
Equipment 8,000
Accounts payable 4,500
Property Taxes Payable 560
Owner Capital 11,200
Service Revenue 6,960
Salaries and Wages Expense 4,200
Advertising Expense 1,100
Property Tax Expense 800
20,890 24,500
Required:
Prepare a corrected trial balance.
Answers
Answer:
Debit Credit
Cash $4,800
Accounts Receivable $2,750
Prepaid Insurance $800
Equipment $8,000
Account Payable(debit understated) $4,500
Property Taxes Payable $560
Owner Capital(Overstated by $1,500) $12,700
Drawings $1,500
Service Revenue $6,690
Salaries and Wages Expense $4,200
Advertising Expense(omission) $1,400
Property Tax Expense(understa..) $900
Totals $24,350 $24,350
Marc and Michelle are married and earned salaries this year of $64,000 and $12,000, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $500 from corporate bonds. Marc contributed $2,500 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $1,500 (under a divorce decree effective June 1, 2005). Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $6,000 of expenditures that qualify as itemized deductions and they had a total of $3,500 in federal income taxes withheld from their paychecks during the year. (Use the tax rate schedules)
A. What is Marc and Michelle’s gross income?
B. What is Marc and Michelle’s adjusted gross income?C. What is the total amount of Marc and Michelle’s deductions from AGI?D. What is Marc and Michelle’s taxable income?E. What is Marc and Michelle’s taxes payable or refund due for the year?
Answers
Answer:
Since we are not given any specific year, I will use the 2020 tax schedule:
Marc and Michelle's gross income = Marc's and Michelle's salaries + interest from corporate bonds = $64,000 + $12,000 + $500 = $76,500
they should choose the standard deduction since it is higher than their itemized deductions = ($24,400)
contribution to IRA = ($2,500)
alimony payment = ($1,500) the divorce agreement was settled before 2019
Marc and Michelle's taxable income = $48,100
Marc and Michelle's tax liability = $1,975 + [12% x ($48,100 - $19,750)] = $5,377
Interests on municipal bonds is not taxable.
The amount of taxes that they owe = $5,377 - $3,500 (federal tax withholdings) = $1,877
Since they are allowed a $2,000 child tax credit, that will wipe out any taxes owed and result in a $2,000 - $1,877 = $123 refund.
On June 30, 2012, Oriole Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. Oriole Company uses straight-line amortization. Interest payment dates are December 31 and June 30.Instructions:
a. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021.
b. Prepare the entry required on December 31, 2021, to record the payment of the first 6 months' interest and the amortization of premium on the bonds.
Answers
Answer:
A. OLD BOND REDEMPTION :
June 30, 2021
Dr 12% Bonds payable 770,000
Dr Loss on retirement of bonds 31,570
Cr Cash 793,100
Cr Discount on bonds 8,470
NEW BOND ISSUE:
June 30, 2021
Dr Cash 1,020,000
Cr 10% Bonds payable 1,000,000
Cr Premium on bonds 20,000
B. Dec 31, 2021
Dr Interest expense 49,500
Dr Premium on bonds payable 500
Cr Cash 50,000
Explanation:
a. Preparation of the journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021.
OLD BOND REDEMPTION :
June 30, 2021
Dr 12% Bonds payable 770,000
Dr Loss on retirement of bonds 31,570
Cr Cash 793,100
(103*770,000)
Cr Discount on bonds 8,470
(To record redemption of old bonds)
NEW BOND ISSUE:
June 30, 2021
Dr Cash 1,020,000
(1,000,000 * 102/100)
Cr 10% Bonds payable 1,000,000
(1,000,000 * 100/100)
Cr Premium on bonds 20,000
(1,000,000 * 2/100)
(To record issue of new bonds at premium)
CALCULATION for unamortized discount :
Discount at the time of issue 15,400
(2%*770,000)
Less: Discount amortised till june 30, 2021 (15,400 / 40 * 18) (6,930)
Unamortized discount 8,470
We made use of 18 because the interest was been given twice in a year which is December 31 and June 30
CALCULATION for loss on redemption :
Redemption of bonds 793,100
(103*770,000)
Less: Carrying value (761,530)
(770,000 - 8,470)
Loss on redemption 31,570
b. Preparation of the entry required on December 31, 2021, to record the payment of the first 6 months' interest and the amortization of premium on the bonds.
Dec 31, 2021
Dr Interest expense 49,500
(50,000-500)
Dr Premium on bonds payable 500
(20,000 / 40)
Cr Cash 50,000
(1,000,000 * 10% * 6/12)
(To record the interest expense for 6 months)
answer:
Credit Card Interest Charges January-June 2012
The bank that issues Card X
✔ exceeded
the legal interest rate for five of the six months.
Because of this, the bank that issues Card X is likely to be investigated by the
✔ CFPB
.
Which term describes all of the money circulating in a country's economic
system?
A. Fiat money
B. Near money
C. Measure of Value
D. Monetary base
Answers
Answer:
D, monetary base
Explanation:
just got it right:)
Monetary base describes all of the money circulating in a country's economic system. Therefore, option D is correct.
What is monetary base?Monetary base refers to the total amount of currency in circulation in a country, including physical currency, reserves held by banks at the central bank, and any other money that is considered part of the country's money supply. It is also referred to as the "money base" or "high-powered money".
The monetary base is controlled by the central bank of a country, which can influence it through its monetary policy decisions, such as setting interest rates and buying or selling government securities.
By controlling the monetary base, the central bank can affect the supply of money in the economy, which can in turn impact factors such as inflation, economic growth, and employment levels.
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At Wiki Co., all supply purchases were recorded as Supplies Expenses upon purchase. The balance sheet on 12/31/2017 reports a balance for Supplies in the amount of $800. During the year the firm purchased $2,000 supplies. On 12/31/2018, actual supplies on hand amounted to $1,250. Provide the adjusting entry on 12/31/2018. For account names, please use the following account names exactly as it is spelled (you can use copy/paste): Supplies Expenses; Supplies; Cash; Supplies Payable; Other. For amounts, please do not use $ or . (decimal points) or , (1000 separator); just put down the number.