Answer:
FV= $29,333
Explanation:
Giving the following information:
Number of periods= 5 years
Annual investmemnt= $5,000
Interest rate= 0.08
To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {5,000*[(1.08^5) - 1]} / 0.08
FV= $29,333
During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,285,000, $535,000, and $420,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provision and assume interest expense is fully deductible.)
a. What is the company’s net income?
b. What is its operating cash flow?
c. Explain your results in parts (a) and (b)
Answer:
a. -$210,000
b. $455,000
Explanation:
a. Company's net income
Sales. 2,275,000
Less:
Cost of goods sold
1,285,000
Administrative and selling expenses
535,000
Depreciation expense
420,000
EBIT
35,000
Less interest
245,000
Taxable income
-$210,000
Taxes 21%
Nil
Net income
-$210,000
b. The operating cash flow for the year
OCF = EBIT + depreciation - taxes
OCF = 35,000 + 420,000 - 0
OCF = $455,000
c. Net income was negative due to the deductibility of interest expense and depreciation.
The actual operating cash flow was positive due to the fact that depreciation is a non cash expense, and also interest is a financing and not an operating expense.
Consider the market for hamburgers in an economy where the market equilibrium is characterized by a quantity of hamburgers of 50 million and a price of $5.00 per hamburger.
1. Suppose that currently 50 million hamburgers are being produced and sold at a price of $5.00. This outcome in the market for hamburgers is economically___________ because:
a. Some hamburgers that are valued more highly by consumers than their opportunity cost of production are not being produced and sold.
b. Some hamburgers produced incur opportunity costs of production that exceed their value or marginal benefit to consumers.
c. The opportunity cost of producing the last hamburger equals the marginal benefit of consumption.
2. Which Of the following must be true for a market to be able to achieve an efficient outcome?
a. The market price is determined solely by the forces Of supply Of and demand for a good.
b. Firms can freely enter Or exit the market without any barriers.
c. Private property rights are well-defined and enforced.
3. Which of the following must be true fora market to be able to achieve an efficient outcome?
a. The market price is determined solely by the forces of supply of and demand for a good.
b. Firms can freely enter or exit the market without any barriers.
c. Private property rights are well-defined and enforced.
Answer and Explanation:
1. Is economically efficient because the opportunity cost of producing the last hamburger equals the marginal benefit of consumption
the economy is efficient since the equilibrium quantity is exactly produced at the equilibrium price
2 and 3.
a. The market price is determined solely by the forces Of supply Of and demand for a good.
b. Firms can freely enter Or exit the market without any barriers.
c. Private property rights are well-defined and enforced.
The above can all be seen as characteristics of an efficient market. Private property rights is included here since it is one of the bedrocks of capitalist economies which are fundamental for an efficient market
Urban Window Company had gross wages of $309,000 during the week ended July 15. The amount of wages subject to social security tax was $278,100, while the amount of wages subject to federal and state unemployment taxes was $39,000. Tax rates are as follows:
Social security 6.0%
Medicare 1.5%
State unemployment 5.4%
Federal unemployment 0.6%
The total amount withheld from employee wages for federal taxes was $61,800.
Required:
a. Journalize the entry to record the payroll for the week of July 15.
b. Journalize the entry to record the payroll tax expense incurred for the week of July 15.
Answer:
a. Debit Wages expense for $309,000; Credit Social Security tax payable ($278,100 * 6%) for $16,686; Credit Medicare tax payable ($278,100 * 1.5%) for $4,172; Credit Employees federal Income tax payable for $61,800; and Credit Wages payable for $226,343.
b. Debit Payroll tax expense for $23,198; Credit Social Security tax payable ($278,100 * 6%) for $16,686; Credit Medicare tax payable ($278,100 * 1.5%) for $4,172; Credit State Unemployment tax payable ($39,000 * 5.4%) for $2,106; and Credit Federal Unemployment tax payable ($39,000 * 0.6%) for $234.
Explanation:
a. Journalize the entry to record the payroll for the week of July 15.
Note: See the the part a of the attached excel file for the journal entries.
In the attached excel file, we have:
Wages payable = Wages expense - Social Security tax payable - Medicare tax payable - Employees federal Income tax payable = $309,000 - $16,686 - $4,172 - $61,800 = $226,343
b. Journalize the entry to record the payroll tax expense incurred for the week of July 15
Note: See the the part b of the attached excel file for the journal entries.
In the attached excel file, we have:
Payroll tax expense = Social Security tax payable + Medicare tax payable + State Unemployment tax payable + Federal Unemployment tax payable = $16,686 + $4,172 + $2,106 + $234 = $23,198
What Limo servie do you use in Los Angeles for Prom Night?
Answer:
uhhhh one with good reviews lol
Explanation:
Answer:
HI
Explanation:
In what ways do goals and objectives help managers control various processes within an organization? How do specific and measurable goals affect employees and promote organizational performance? Provide an example from your own experience of when a specific goal or objective provided beneficial control over a process. Explain what the beneficial control was and how did it positively impact organizational performance.
Textbook: Principles of Management-v.1.1
Answer:
In what ways do goals and objectives help managers control various processes within an organization?
Goals establish the basis of the corporate strategy. Without clear goals, managers cannot devise and implement a corporate strategy, and without a corporate strategy, the firm does not have a clear path of action.
As we can see, goals are very important for an organization because they determine what the company should achieve, and what actions and policies the company should implement in order to achieve it.
How do specific and measurable goals affect employees and promote organizational performance?
Employees become motivated because they can actually see what their performance is like, and how it can be improved upon in case its not meeting the organizational performance standards.
However, managers should be careful when setting these measurable goals, and should also be flexible: if an employee does not meet these goals in his first attempt, they should try to understand why, and work with the employee so that he or she can improve their performance.
Specific and measurable goals and objectives can allow managers to make more practical decisions and better control over employees to achieve goals. Practical decisions mean that the goals are realistic, and the goals are time-based and measurable.
Furthermore, goals and objectives can offer a form of control as they provide communication opportunities about how effectively or poorly the company is executing its plans.
Finally, managers can emphasize positive practices in the organization to employees because they understand what to do, what must be achieved, and when to achieve it.
To illustrate how a specific goal or objective provides useful control over a process, I will explain through my experience as a tour guide. Our goal can be as simple as making the trip enjoyable. So I have to set a specific and observable objective for my members in terms of goal sections. I gave them a checklist to make sure that they had taken everything in their package, such as license, visa, local currency, and that they had to do it by the time they left the house and arrived at the gathering point on time.
As a result, my members know what to do, and we do not have to waste time because something is missing. As I said, I explained the goals for each move to ensure that everything was under control. If I had not arranged a meeting time and place, they would not be sure when or where they can come.
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According to its annual report, P&G's billion-dollar brands include Pampers, Tide, Ariel, Always, Pantene, Bounty, Charmin, Downy, Olay, Crest, Vicks, Gillette, Duracell, and others. The following are items taken from its recent balance sheet and income statement. Note that different companies use slightly different titles for the same item. Select each item in the following list as an asset, liability, or stockholders' equity item that would appear on the balance sheet or a revenue or expense item that would appear on the income statement.
1) Accounts receivable2) Cash and cash equivalents3) Net sales4) Debt due within one year5) Taxes payable6) Retained earnings7) Cost of products sold8) Selling, general, and administrative expense9) Income taxes10) Accounts payable11) Trademarks and other intangible assets12) Property, plant, and equipment13) Long-term debt14) Inventories15) Interest expense
Answer and Explanation:
The categorization is shown below:
1. Assets
2. Assets
3. Revenue
4. Liability
5. Liability
6. Stockholder equity
7. Expense
8. Expense
9. Expense
10. Account payable
11. Assets
12. Assets
13. Liability
14. Assets
15. Expense
This shows the each item classified in the financial statement whether it is an asset, expense, liability, stockholder equity
At the beginning of the year, accounts receivable were $146,000 and the allowance for bad debts was $11,700. During the year, sales (all on account) were $602,000, cash collections were $582,000, bad debts expense totaled $14,800, and $12,200 of accounts receivable were written off as bad debts.
Required:
Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts. (Hint: Use T-accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)
Ending balance
Accounts Receivable
Allowance for Bad Debts
Answer:
Ending balance Accounts Receivable $153,800 Ending balance Allowance for Bad Debts $14,300
Net Accounts Receivable at end of year $139,500
Explanation:
Calculation for the balances at the end of the year for both Accounts Receivable and Allowance for Bad Debts accounts
T ACCOUNT
ACCOUNT RECEIVABLE
DEBIT SIDE
Beginning balance $146,000
Sales on account $602,000
Total $748,000
Ending balance $153,800
($748,000-$594,200)
CREDIT SIDE
Cash collections $582,000
Bad Debts written off $12,200
Total $594,200
T ACCOUNT
ALLOWANCE FOR BAD DEBT
DEBIT SIDE
Bad Debts written off $12,200
Total $12,200
CREDIT SIDE
Beginning balance $11,700
Bad debts expense $14,800
Total $26,500
Ending balance $14,300
($26,500-$12,200)
Calculation for Net Accounts Receivable at end of year:
Net Accounts Receivable at end of year = ($153,800-$14,300)
Net Accounts Receivable at end of year=$139,500
Therefore the Ending balance for Accounts Receivable is $153,800 and Allowance for Bad Debts is $14,300 while the Net Accounts Receivable at end of year is $139,500
The Moto Hotel opened for business on May 1, 2017. Here is its trial balance before adjustment on May 31.
MOTO HOTEL Trial Balance May 31, 2017
Debit Credit
Cash $2,523
Supplies 2,600
Prepaid Insurance 1,800
Land 15,023
Buildings 67,600
Equipment 16,800
Accounts Payable $4,723
Unearned Rent Revenue 3,300
Mortgage Payable 33,600
Common Stock 60,023
Rent Revenue 9,000
Salaries and Wages Expense 3,000
Utilities Expense 800
Advertising Expense 500
$110,646 $110,646
Other data:
1. Insurance expires at the rate of $450 per month.
2. A count of supplies shows $1,140 of unused supplies on May 31.
3. (a) Annual depreciation is $2,880 on the building.
(b) Annual depreciation is $2,280 on equipment.
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
5. Unearned rent of $2,510 has been earned.
6. Salaries of $880 are accrued and unpaid at May 31.
Required:
Journalize the adjusting entries on May 31.
Answer:
1. Insurance expires at the rate of $450 per month.
Dr Insurance expense 450
Cr Prepaid insurance 450
2. A count of supplies shows $1,140 of unused supplies on May 31.
Dr Supplies expense 1,460
Cr Supplies 1,460
3. (a) Annual depreciation is $2,880 on the building.
Dr Depreciation expense 240
Cr Accumulated depreciation, building 240
(b) Annual depreciation is $2,280 on equipment.
Dr Depreciation expense 240
Cr Accumulated depreciation, equipment 190
4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
Dr Interest expense 168
Cr Interest payable 168
5. Unearned rent of $2,510 has been earned.
Dr unearned revenue 2,510
Cr Rent revenue 2,510
6. Salaries of $880 are accrued and unpaid at May 31.
Dr Wages expense 880
Cr Wages payable 880
The Devon Motor Company produces automobiles. On April 1st the company had no beginning inventories and it purchased 7,390 batteries at a cost of $145 per battery. It withdrew 6,800 batteries from the storeroom during the month. Of these, 100 were used to replace batteries in cars being used by the company’s traveling sales staff. The remaining 6,700 batteries withdrawn from the storeroom were placed in cars being produced by the company. Of the cars in production during April, 90 percent were completed and transferred from work in process to finished goods. Of the cars completed during the month, 30 percent were unsold at April 30th.
1. Determine the cost of batteries that would appear in eachof the following accounts at April 30.
a. raw materials
b. work in process
c. finished goods
d. cost of goods sold
e. selling expanse
2. Specify whether each of the above accounts would appear onthe balance sheet or on the income statement at April 30.
Answer:
1. a. Raw Materials
Materials left in storeroom
= (7,390 - 6,800) * $145
= $85,550
b. Work in Process
90% were completed so 10% was left. 100 batteries were removed from the 6,800 batteries.
= 10% * (6,700 * 145)
= $97,150
c. Finished goods
Unsold goods are 30%.
= 6,700 * 90% * 30% * 145
= $262,305
d. Cost of goods sold
Sold goods were therefore 70%
= 6,700 * 90% * 70% * 145
= $612,045
e. Selling expense
= 100 batteries used in sales staff cars * 145
= $14,500
2.
Raw materials - Balance Sheet Work in process - Balance Sheet Finished goods - Balance Sheet Cost of goods sold - Income statementSelling expanse - Income statementD'Anconia Copper is an all-equity firm with 60 million shares outstanding, which are currently trading at $20 per share. Last month, d'Anconia announced that it will change its capital structure by issuing $300 million in debt. The $200 million raised by this issue, plus another $200 million in cash that d'Anconia already has, will be used to repurchase existing shares of stock. Assume that capital markets are perfect.
1. At the conclusion of this transaction, what will be the value of a share of Anconia Copper will be closest to:
a. $18.33
b. $20.00
c. $25.00
d. $27.50
2. Suppose you are a shareholder in d'Anconia Copper holding 300 shares, and you disagree with the decision to lever the firm. You can undo the effect of this decision by:
a. borrowing $2,000 and buying 100 shares of stock.
b. selling 100 shares of stock and lending $2,000.
c. borrowing $1,200 and buying 60 shares of stock.
d. selling 60 shares of stock and lending $1,200
Answer:
20m
Explanation:
To calculate the number of outstanding shares we need to calculate market capitalization value first. After calculating market capitalization value we are going to divide the difference in market capitalization value by share price.
DATA
share price = $20
Debt involved = 200m
Cash = 200m
Solution
Number of outstanding shares (after the transaction of shares repurchase) = Difference in market capitalization / Per share price.
Number of outstanding shares = (1200m - 800m) / 20
Number of outstanding shares = 400m / 20
Number of outstanding shares = 20m
Working
Market capitalization (after the repurchase of existing shares) = Shareholders' funds - Debt involved - Cash.
Market capitalization = (60m * 20) - 200m- 200m.
Market capitalization = 1200m - 200m - 200m
Market capitalization = $800m.
At the beginning of the period, the Cutting Department budgeted direct labor of $139,000, direct materials of $152,000 and fixed factory overhead of $13,000 for 7,700 hours of production. The department actually completed 11,700 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting
Answer:
$461,920
Explanation:
The computation of the appropriate total budget for the department is shown below:-
Total cost = Direct labor + Direct material + Fixed Factory overhead
= $139,000 + $152,000 + $13,000
= $304,000
the cost of 1 hr of production = $304,000 ÷ 7,700
= $39.48
Therefore in order to extend it to 11,700 we need 4,000 more hrs of production = 4,000 × $39.48
= $157,920
Total budget for the department = $304,000 + $157,920
= $461,920
Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing.
2019 2020 2021
Sales revenue $290,000 $360000 $410,000
Sales returns and allowances (11,000) (13,000) (20000)
Net sales 279000 347,000 390000
Beginning inventory 20,000 32,000 37000
Ending inventory 32000 37000 44000
Purchases 242000 260,000 298,000
Purchase returns and
allowances (5,000) (8,000) (10,000)
Freight-in 8,000 9,000 12,000
Cost of goods sold (233,000) 256000 (293,000)
Gross profit on sales 46,000 91,000 97,000
Answer:
2019
Net Sales = Sales revenue - Allowances = 290,000 - 11,000 = $279,000
Ending Inventory = 2020 Beginning balance = $32,000
Purchases = Cost of goods sold + Ending inventory + Purchase returns - Beginning inventory - freight-in
= 233,000 + 32,000 + 5,000 - 20,000 - 8,000
= $242,000
2020
Sales revenue = Sales returns + Net sales = 13,000 + 347,000 = $360,000
Cost of goods sold = Net sales - Gross profit = 347,000 - 91,000 = $256,000
Ending Inventory = Beginning inventory + Purchases + Freight in - Purchase returns - Cost of goods sold
= 32,000 + 260,000 + 9,000 - 8,000 - 256,000
= $37,000
2021
Net sales = Cost of goods sold + gross profit = 293,000 + 97,000 = $390,000
Sales returns = Sales - Net Sales = 410,000 - 390,000 = $20,000
Beginning Inventory = 2020 ending inventory = $37,000
Ending inventory = Beginning inventory + Purchases + Freight in - Purchase returns - Cost of goods sold
= 37,000 + 298,000 + 12,000 - 10,000 - 293,000
= $44,000
The missing amount for the year 2019,2020, and the year 2020 should be calculated below,
Calculation of missing amounts:For 2019
Net Sales = Sales revenue - Allowances
= 290,000 - 11,000
= $279,000
Ending Inventory = 2020 Beginning balance = $32,000
So,
Purchases = Cost of goods sold + Ending inventory + Purchase returns - Beginning inventory - freight-in
= 233,000 + 32,000 + 5,000 - 20,000 - 8,000
= $242,000
For 2020
Sales revenue = Sales returns + Net sales
= 13,000 + 347,000
= $360,000
Cost of goods sold
= Net sales - Gross profit
= 347,000 - 91,000
= $256,000
So,
Ending Inventory = Beginning inventory + Purchases + Freight in - Purchase returns - Cost of goods sold
= 32,000 + 260,000 + 9,000 - 8,000 - 256,000
= $37,000
For 2021
Net sales = Cost of goods sold + gross profit
= 293,000 + 97,000
= $390,000
Sales returns = Sales - Net Sales
= 410,000 - 390,000
= $20,000
Beginning Inventory = 2020 ending inventory = $37,000
Ending inventory = Beginning inventory + Purchases + Freight in - Purchase returns - Cost of goods sold
= 37,000 + 298,000 + 12,000 - 10,000 - 293,000
= $44,000
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Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $168,120. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $22,500 at the beginning of each period Economic life of asset 2 years Fair value of asset $168,120 Implicit interest rate 8% (Also lessee’s incremental borrowing rate)
Required:
Prepare a lease amortization schedule and appropriate entries for Manufacturers Southern from the beginning of the lease through January 1, 2022. Amortization of the right-of-use asset is recorded at the end of each fiscal year (December 31) on a straight-line basis.
Please see attachment for full question
Answer and Explanation:
See attachment for amortization schedule prepared with explanation
Greenstream Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June that is correct on the basis of information considered.
GREENSTREAM INSURANCE AGENCY
Income Statement
For the Month Ended June 30
Revenues
Service Revenue $40,000
Expenses
Salaries and Wages Expense $12,000
Advertising Expense 800
Rent Expense 4,200
Depreciation Expense 2,800
Total Expenses 19,800
Net Income 20,200
Additional Data: When the income statement was prepared, the company accountant neglected to take into consideration the following information:
1. A utility bill for $1,200 was received on the last day of the month for electric and gas service for the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $10,000. The agency billed the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were $2,500. The agency purchased additional supplies during the month for $1,500 in cash and $1,200 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for $24,000 cash. The car will depreciate $6,000 per year.
5. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on July 5.
Instructions:
Prepare a corrected income statement.
Answer:
Net Income $12,400
Explanation:
Preparation of a corrected income statement.
GREENSTREAM INSURANCE Agency Income Statement For the Month Ended June 30
RevenuesService Revenue $42,000
[$40,000 +(20%* $10,000).]
Expenses:
Salaries and Wages Expense $17,300
($12,000 + $5,300)
Rent Expense 4,200
Depreciation Expense 3,300
($2,800 + $500)
Supplies Expense 2,800
($0 + $2,800)
Utilities Expense 1,200
($0 + $1,200)
Advertising Expense 800
Total expenses 29,600
Net Income $12,400
(42,000-29,600)
Therefore the net income for the corrected income statement will be $12,400
Crawford corporation incurred the following transactions.
1. Purchased raw materials on account of $54,900.
2. Raw Materials of $42,500 were requisitioned to the factory, An analysis of the materials requisition slips indicated that $8,400 was classified as an individual.
3. labor costs incurred were $67,100, of which $50,800 pertained to factory wages payable and $16,300 pertained to employer payroll taxes.
4. Time tickets indicated that $54,300 was direct labor and $12,800 was indirect labor.
5. Manufacturing overhead costs incurred on account were $84,300.
6. Depreciation on the company's office building was $8,600.
7, Manufacturing overhead was applied at the rate of 150% of direct labor cost.
8. Goods costing $90,400 were completed and transferred to finished goods.
9. Finished goods costing $82,300 to manufacture were sold on account for $112,700.
Journalize the transactions. (credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer: See explanation and attachment
Explanation:
The journal entry for the transactions incurred by Crawford corporation has been attached.
It should be noted that in (7):
Work In Process Inventory:
= 54300 × 150%
= 54300 × 1.5
= 81450
Check the attachment
Shen is skilled at making both necklaces and earrings. Shen has no preference between making necklaces or earrings since he earns the same amount from the two activities. If the selling price of earrings decreases from $20 to $10, then Shen's opportunity cost of making necklaces____________ and making necklaces is now__________ profitable than making earrings.
Suppose that the necklaces market consists of several suppliers like Shen who are skilled at making both necklaces and earrings. Which of the following is likely to happen to the supply curve of necklaces when the price of a earrings decreases?
a. It shifts to the left
b. It shifts to the right
c. It does not change
Answer:
decrease and more and shift to the right side
Explanation:
If the selling price of bracelets decreases and all suppliers of earring and bracelets are like ShenShen's opportunity cost of making necklaces decrease and making necklaces is now more profitable than making earringsIf all suppliers decide to make more earrings, then the total supply increases, which appears to shift to the right side of the supply curve (in the demand and supply graph) (the quantity supplied is greater for each price).Adjusting Entries Journalize the adjusting entry needed at December 31 for each situation. Record debits first, then credits. Check your spelling carefully and do not abbreviate. Use account names exactly as given in the Chart of Accounts. Accrued Salaries Expense of $2,300. Accrued Salaries Expense of $2,300. Date Accounts Debit Credit Dec. 31 correct correct correct correct correct correct correct Depreciation in the amount of $200 was recorded on the furniture. Depreciation in the amount of $200 was recorded on the furniture. Date Accounts Debit Credit Dec. 31 correct incorrect correct correct correct correct correct Prepaid Insurance for the month expired. Remember, a four month insurance policy of $1,800 was paid for on December 1. Prepaid Insurance for the month expired. Remember, a four month insurance policy of $1,800 was paid for on December 1. Date Accounts Debit Credit Dec. 31 correct correct correct correct correct correct correct Office Supplies used during the month, $80.
Answer:
Date Accounts Titles Debit Credit
Dec-31 Salaries expense $2,300
Salaries payable $2,300
Dec-31 Depreciation expense $200
(Furniture )
Accumulated depreciation $200
(Furniture)
Dec-31 Insurance expense $450
Prepaid Insurance $450
Dec-31 Supplies expense $80
Supplies $80
On June 1 of year 1, Riverside Corp. (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,629,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $485,000 of the goodwill had been impaired and wrote down the goodwill by $485,000 for book purposes.
Required:
a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary?
b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary?
Answer:
a. $63,350 temporary and favorable difference.
b. $376,400 temporary and unfavorable difference.
Explanation:
According to Federal tax codes, Goodwill is amortized for 180 months (15 years) on a straight line basis.
a. Company was purchased on June 1 which means that for year 1, 7 months would have gone by at year end.
Amortization = 1,629,000 * 7/180
= $63,350
Riverside will not deduct this from Goodwill in the books however.
In Year 1 therefore, the book-tax difference will be a favorable and temporary difference of $63,350
b. Amortization = 1,629,000 * 12/180
= $108,600
Riverside wrote down Goodwill by $485,000 for book purposes.
Temporary tax difference = 485,000 - 108,600
= $376,400
This is unfavorable.
Fit & Slim (F&S) is a health club that offers members various gym services.
Assume F&S offers a deal whereby enrolling in a new membership for $1,100 provides a year of unlimited access to facilities and also entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $1,140, and a one-year enrollment in yoga classes sells for an additional $600. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10% discount on all one-year enrollments in classes as part of its normal promotion strategy.
Required:
a. Indicate whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.
b. Prepare the journal entry to recognize revenue for the sale of a new membership.
Answer:
a. they are separate performance obligations
normal price of annual membership = $1,140
one yer enrollment in yoga = $600 x (30% - 10%) = $120 x 50% = $60
total $1,200
% of price allocated to:
annual membership = ($1,140 / $1,200) x $1,100 = $1,045
discount voucher = $1,100 - $1,045 = $55
b. the journal entry should be
Dr Cash 1,100
Cr Unearned revenue, membership fees 1,045
Cr Unearned revenue, discount voucher 55
Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 26,000 direct labor-hours would be required for the period’s estimated level of production. The company also estimated $525,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $3.00 per direct labor-hour. Harris’s actual manufacturing overhead cost for the year was $658,321 and its actual total direct labor was 26,500 hours.
Required:
Compute the company's predetermined overhead rate for the year.
Answer:
$23.2 per direct labor hour
Explanation:
Harris fabrics computes its plantwide determined overhead rate annually in the basis of direct labor hours
Predetermined Overhead rate= Total estimated overhead cost/Total estimated allocation base
The total estimated overhead cost can be calculated as follows
= $525,000 + 3×26,000
= $525,000 + 78,000
= $603,000
Therefore the predetermined overhead rate for the year can be calculated as follows
= $603,000/26,000
= $23.2 per direct labor hour
Blue Spruce’s Miniature Golf and Driving Range Inc. was opened on March 1 by Bob Dean. These selected events and transactions occurred during March.
Mar. 1 Stockholders invested $58,000 cash in the business in exchange for common stock of the corporation.
3 Purchased Snead’s Golf Land for $38,200 cash. The price consists of land
$24,900, building $8,460, and equipment $4,840.
5 Advertised the opening of the driving range and miniature golf course,
paying advertising expenses of $1,940 cash.
6 Paid cash $4,750 for a 1-year insurance policy.
10 Purchased golf clubs and other equipment for $5,950 from Tahoe Company,
payable in 30 days.
18 Received golf fees of $1,850 in cash from customers for golf services
performed.
19 Sold 100 coupon books for $25 each in cash. Each book contains 10
coupons that enable the holder to play one round of miniature golf or to hit
one bucket of golf balls.
25 Paid a $540 cash dividend.
30 Paid salaries of $850.
30 Paid Tahoe Company in full for equipment purchased on March 10.
31 Received $880 in cash from customers for golf services performed.
Journalize the March transactions. Friendley's records golf fees as service revenue.
Answer:
Blue Spruce's Miniature Golf and Driving Range, Inc.
Journal Entries:
March 1:
Debit Cash Account $58,000
Credit Common Stock $58,000
To record the investment of cash by stockholders.
March 3:
Debit Land $24,900
Debit Building $8,460
Debit Equipment $4,840
Credit Cash Account $38,200
To record the purchase of land, building, and equipment.
March 5:
Debit Advertising Expense $1,940
Credit Cash Account $1,940
To record the payment of advertising expense.
March 6:
Debit Prepaid Insurance $4,750
Credit Cash Account $4,750
To record the prepayment of insurance policy for one year.
March 10:
Debit Golf Clubs and Equipment $5,950
Credit Accounts Payable (Tahoe Company) $5,950
To record the purchase of golf clubs and equipment on account.
March 18:
Debit Cash Account $1,850
Credit Service Revenue $1,850
To record the receipt of golf fees.
March 19:
Debit Cash Account $2,500
Credit Deferred Service Revenue $2,500
To record the sale of 100 coupon books for $25 each.
March 25:
Debit Dividend $540
Credit Cash Account $540
To record the payment of cash dividend.
March 30:
Debit Salaries Expense $850
Credit Cash Account $850
To record the payment of salaries.
March 30:
Debit Accounts Payable (Tahoe Company) $5,950
Credit Cash Account $5,950
To record the payment of cash on account.
March 31:
Debit Cash Account $880
Credit Service Revenue $880
To record the receipt of cash for golf services performed.
Explanation:
The above journal entries are made on a daily basis as business transactions and events take place. Journal entries are the initial records of business transactions and events. They identify the accounts to be debited and the accounts to be credited in the general ledger.
Selma operates a contractor's supply store. She maintains her books using the cash method. At the end of 2020, her accountant computes her accrual basis income that is used on her tax return. For 2020, Selma had cash receipts of $1,400,000, which included $200,000 collected on accounts receivable from 2019 sales. It also included the proceeds of a $100,000 bank loan. At the end of 2020, she had $250,000 in accounts receivable from customers, all from 2020 sales.
Required:
a. Compute Selma's accrual basis gross receipts for 2020
b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2014 was $1.3 million. At the end of 2019, she had merchandise on hand with a cost of $150,000. At the end of 2020, the cost of merchandise on hand was $300,000. Compute Selma's gross income from merchandise sales for 2020.
Answer:
a. $1,350,000
b. $200,000
Explanation:
a. Selma's accrual basis gross receipts for 2020
= cash receipts + accounts receivables - cash collected from 2019 sales - bank loan
= $1,400,000 + $250,000 - $200,000 -
$100,000
= $1,350,000
b. Selma's gross income from merchandise sales 2020.
We need to calculate first the cost of goods sold during 2020.
The cost of goods sold during 2020
= Total purchase made during 2020 + ending inventory 2019 - ending inventory 2020
= $1,300,000 + $150,000 - $300,000
= $1,150,000
The Gross profit for 2020
= Gross receipts - Cost of goods sold
= $1,350,000 - $1,150,000
= $200,000
An Introduction to Cost Terms and Purposes Cost of goods manufactured, income statement, manufacturing company Consider the following account balances (in thousands) for the Carolina Corporation:
Carolina Corporation
Beginning of 2017 End of 2017
Direct materials inventory 124,000 73,000
Work-in-process inventory 173,000 145,000
Finished-goods inventory 240,000 206,000
Purchases of direct materials 262,000
Direct manufacturing labor 217,000
Indirect manufacturing labor 97,000
Plant insurance 9,000
Depreciation-plant, building, and equipment 45,000
Plant utilities 26,000
Repairs and maintenance-plant 12,000
Equipment leasing costs 65,000
Marketing, distribution, and customer-service costs 125,000
General and administrative costs 71,000
Required:
1. Prepare a schedule for the cost of goods manufactured for 2017.
2. Revenues for 2017 were 1300000 .Prepare an income statement for 2017.
Answer:
1. Cost of goods manufactured for for 2017 is $812,000
2. Net income for 2017 is $258,000
Explanation:
Please find attached cost of goods manufactured schedule for 2017 and income statement statement for 2017.
The final value for cost of goods manufactured is $812,000 , while the net income is $258,000.
Use the information in the adjusted trial balance presented below to calculate current assets for Taron Company, Inc.:
Account Title Debit Credit
Cash 23,000
Accounts receivable 16,000
Prepaid insurance 6,600
Equipment 100,000
Accumulated Depreciation-Equipment 50,000
Land 95,000
Accounts Payable 17,000
Interest Payable 2,400
Unearned revenue 5,000
Long-term notes payable 30,000
Common stock 1,000
Retained earnings 135,200
Totals 240,600 240,600
a) $24,400
b) $45,600
c) $41,200
d) $95,600
e) $21,200"
Answer:
b) $45,600
Explanation:
Current assets = Cash account + Accounts receivable account + Prepaid insurance
Current assets = $23,000 + $16,000 + 6,600
Current assets = $45,600
Haynes, Inc. obtained 100 percent of Turner Company's common stock on January 1, 2017, by issuing 10,000 shares of $10 par value common stock. Haynes's shares had a $15 per share fair value. On that date, Turner reported a book value of $100,000 (consisting of Common Stock $10,000, Additional Paid-In Capital $50,000, and Retained Earnings $40,000). However, its equipment (with a 5-year remaining life) was undervalued by $5,000 in the company's accounting records. Also, Turner had developed a customer list with an assessed value of $30,000, although no value had been recorded on Turner's books. The customer list had an estimated remaining useful life of 10 years.
The following figures come from the individual accounting records of these two companies as of December 31, 2017:
Haynes Turner
Revenues $(600,000) $(230,000)
Expenses 440,000 120,000
Investment income Not given 0
Dividends declared 80,000 50,000
The following balances come from the individual accounting records of these two companies as of December 31, 2018:
Haynes Turner
Revenues $(700,000) $(280,000)
Expenses 460,000 150,000
Investment income Not given 0
Dividends declared 90,000 40,000
Equipment 500,000 300,000
Required:
a. What is the consolidated equipment balance as of December 31, 2018?
b. Would this answer be affected by the investment method applied by the parent?
Answer:
a. $848,000
b. No
Explanation:
a. The calculation of consolidated equipment balance as of December 31, 2018 is shown below:-
Consolidated equipment balance = Equipment balance of Haynes + Equipment balance of Turner + Allocation based on fair value - Depreciation
= $500,000 + $300,000 + $5,000 - (($5,000 ÷ 5 × 2)
= $500,000 + $300,000 + $5,000 - $2,000
= $848,000
2. No it will not affect by the investment method applied by the parent.
Scenario D. Jimena works for a small company that makes nut butters from ingredients like cashews and macadamia nuts, and jams from mixtures of tropical fruits. She reports to the CFO. It is her job to predict the costs of raw materials for the next five years. She uses various research sources, including the news, to learn who the competitors are and what they have been doing. In fact, she subscribes to an analyst e-newsletter that tells her about crop availability and weather conditions all around the globe. Every month she develops a spreadsheet for her boss indicating the likely costs of fruits and nuts given the type of weather conditions expected in each area of the world and thus the availability of particular crops. She is also involved in a team that is investigating how to cut production costs. They have recently met with Spicy Sides, a company that produces jars of condiments. Spicy Sides is considered the top company in the condiment industry, especially in its knowledge of how to pack food products in jars. Jimena's team is comparing their processes to those of Spicy Sides to see how they might improve.The information Jimena is using to compete in a better way is calledA. mission statement.B. organizational database.C. knowledge document.D. best-case scenario.E. competitive intelligence.
Answer:
D. best-case scenario.
Explanation:
This is true because, there are two scenarios involved in the production- Jimenas' company's production method and Spicy Sides company's method. She is trying to compare the two production methods and comes up with the best case scenario that leads to low cost of production.
Let’s say there is an investment product whose Annual Percentage Rate (APR) is 8%. If this investment product compounds quarterly (that is, four times a year), what will be the Effective Annual Interest Rate (EAR)?
Answer:
Effective annual interest rate= 8.24%
Explanation:
Giving the following information:
Interest rate= 8% compounded quarterly
First, we need to calculate the nominal quarterly interest rate:
i= 0.08/4= 0.02
Now, the effective annual interest rate:
effective annual interest rate= (1+i)^n - 1
effective annual interest rate= 1.02^4 - 1
effective annual interest rate= 0.824 = 8.24%
The following transactions occurred during March 2018 for the Wainwright Corporation.
The company owns and operates a wholesale warehouse. Issued 45,000 shares of common stock in exchange for $450,000 in cash.
Purchased equipment at a cost of $55,000. $17,500 cash was paid and a notes payable to the seller was signed for the balance owed.
Purchased inventory on account at a cost of $108,000. The company uses the perpetual inventory system.
Credit sales for the month totaled $195,000. The cost of the goods sold was $85,000.
Paid $6,500 in rent on the warehouse building for the month of March.
Paid $7,500 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021.
Paid $85,000 on account for the merchandise purchased in 3.
Collected $70,000 from customers on account.
Recorded depreciation expense of $2,500 for the month on the equipment.
Prepare journal entries to record each of the transactions listed above.
Answer and Explanation:
The Journal entries are shown below:-
1. Cash Dr, $450,000
To common stock $450,000
(Being issuance of common stock is recorded)
2. Equipment Dr, $55,000
To cash $17,500
To notes payable $37,500
(Being equipment purchased is recorded)
3. Merchandise inventory Dr, $108,000
To accounts payable $108,000
(Being inventory is purchased on the account is recorded)
4. Accounts receivable Dr, $195,000
To sales revenue $195,000
(Being credit sales is recorded)
5. Cost of goods sold Dr, $85,000
To Merchandise inventory $85,000
(Being cost of goods sold is recorded)
6. Rent expense Dr, $6,500
To cash $6,500
(Being cash paid is recorded)
7. Prepaid insurance Dr, $7,500
To cash $7,500
(Being cash paid is recorded)
8. Accounts payable Dr, $85,000
To cash $85,000
(Being cash paid is recorded)
9. Cash Dr, $70,000
To accounts receivable $70,000
(Being cash paid is recorded)
10. Depreciation expense Dr, $2,500
To accumulated depreciation- equipment $2,500
(Being depreciation expense is recorded)
The bookkeeper for Sunland Company asks you to prepare the following accrual adjusting entries at December 31. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
(a) Interest on notes payable of $370 is accrued.
(b) Services performed but unbilled totals $1,830
(c) Salaries of $900 earned by employees have not been recorded
No. Date Account Titles and Explanation Debit Credit
(a) Dec. 31
(b) Dec. 31
(c) Dec. 31
Answer:
(a) Dec 31:
Dr Interest Expense 370
Cr Interest Payable 370
(b) Dec 31:
Dr Account Receivable 1,830
Cr Service Revenue 1,830
(c) Dec 31:
Dr Salaries & wages expense 900
Cr Salaries & wages payable 900
Explanation:
Preparation of Journal entries
(a) Based on the information given we were told that Interest on notes payable of the amount of $370 was accrued which means that the Journal entry will be:
Dec 31
Dr Interest Expense 370
Cr Interest Payable 370
(To record accrued interest on note payable)
(b) Based on the information given we were told that Services was performed but unbilled totals of the amount of $1,830 which means that the Journal entry will be :
Dec 31
Dr Account Receivable 1,830
Cr Service Revenue 1,830
(To record unbilled service revenue)
(c) Based on the information given we were told that Salaries of the amount of $900 earned by employees have not been recorded which means that the Journal entry will be :
Dec 31
Dr Salaries & wages expense 900
Cr Salaries & wages payable 900
(To record salaries earned but not recorded)
Variable manufacturing costs are $150 per unit and fixed manufacturing costs are $75,000. Sales are estimated to be 6,000 units. How much would absorption costing income from operations differ between a plan to produce 6,000 units and a plan to produce 7,500 units?
Answer:
If 7,500 units are produced, income will increase by $2.5 per unit
Explanation:
Giving the following information:
Variable manufacturing costs are $150 per unit and fixed manufacturing costs are $75,000.
We need to determine the difference in income if 7,500 units are produced instead of 6,000.
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The difference is in the unitary fixed manufacturing overhead.
For 6,000 units:
unitary fixed manufacturing overhead= 75,000/6,000= $12.5
For 7,500 units:
unitary fixed manufacturing overhead= 75,000/7,500= $10
If 7,500 units are produced, income will increase by $2.5 per unit