Answer:
The correct option is A,both the selling and buying units have complete information about costs.
Explanation:
A negotiated transfer price is a price agreed between the selling and buying divisions having considered factors such the external purchase price,the opportunity costs of selling internally and externally ,whether or not there is surplus capacity and may more.
Negotiated transfer price is fairer to both divisions as opposed to a transfer price imposed by management which could result in low morale in the buying or selling division depending on whether the price was set too high or too low.
The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,219 Accounts receivable 74,422 Merchandise inventories 64,362 Prepaid expenses 4,900 Accounts payable $ 15,750 Notes payable 90,638 Other current liabilities 10,300 If net sales for the current year were $607,500, the firm's days' sales uncollected for the year is: (Use 365 days a year.)
Answer:
The correct answer is 44.73 days or 45 days.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the day's sales uncollected by using following formula:
Day's sales uncollected = No. of days in year ÷ Debtor turnover ratio
Where, Debtor turnover ratio = Sales ÷ Accounts receivable
= $607,500 ÷ $74,422
= 8.16
So, by putting the value, we get
Day's sales uncollected = 365 days ÷ 8.16
= 44.73 days or 45 days.
The sales of Carephase Company for the year are as given below: Quarter 1 $400,000 Quarter 2 $360,000 Quarter 3 $620,000 Quarter 4 $580,000 Fifty percent of the sales of the company are paid in cash. Of the sales on account, 60 percent are collected in the quarter of sale, the remaining 40 percent are collected in the quarter following the sale. Calculate the cash receipts for Quarter 4.
Answer:
The correct answer is $588,000.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the cash receipts for Quarter 4 by using following formula:
Cash receipts for Quarter 4 = Cash Sales + Cash collected from credit sales in Qtr 4 + Accounts receivable of Qtr 3
Where, Cash sales = $580,000 × 50% = $290,000
Cash collected from credit sales in Qtr 4 = ($580,000 × 50%) ×60% = $174,000
Accounts receivable of Qtr 3 = ($620,000 × 50%) × 40% = $124,000
By putting the value, we get
Cash receipts = $290,000+$174,000+$124,000
= $588,000
Final answer:
Quarter 4 cash receipts for Carephase Company are calculated by summing 50% of the Quarter 4 sales, 60% of Quarter 4 sales on account, and 40% of Quarter 3 sales on account. The total cash receipts for Quarter 4 are $588,000.
Explanation:
To calculate the cash receipts for Carephase Company in Quarter 4, we need to consider the cash sales and the collections from sales made on account in both Quarter 3 and Quarter 4. According to the information given, 50% of the sales are paid in cash, and of the sales on account, 60% are collected in the quarter of the sale and the remaining 40% in the following quarter.
So for Quarter 4, the cash receipts from cash sales would be 50% of Quarter 4 sales, which is 50% of $580,000, equating to $290,000. In addition, 60% of the sales on account from Quarter 4 (50% of $580,000) will be collected, amounting to $174,000. Furthermore, 40% of the sales on account from Quarter 3 will be collected in Quarter 4, which is 40% of $310,000 (being 50% of $620,000 as sales on account for Quarter 3), yielding $124,000.
Summing these up gives us the total cash receipts for Quarter 4: $290,000 (cash sales) + $174,000 (Quarter 4 collections on account) + $124,000 (Quarter 3 collections on account) = $588,000.
A movie theater faces the following hourly inverse demand curves:
Seniors: PS = 88 - Q
Adults: PA = 94 - Q
The theater has a fixed cost of $40, and a constant marginal cost of $2 per ticket.
a) If the movie theater uses segmenting, calculate the ticket prices charged to adults and seniors.
Answer:
Price for Seniors $ 45
Price for Adults $ 46
Explanation:
As the theater uses segmenting it will solve to maximize profit on each segment:
PS = 88- Q
Total Revenue = price x quantity = (88 - Q) Q = -Q^2 + 88Q
Marginal Revenue = 88-2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
88 - 2Q = 2
(88 - 2) / 2 = Q
43 = Q
P = 88 - 43 = 45
For Adults:
Revenue (94 - Q)*Q = 94Q - Q^2
Marginal Revenue = 94 - 2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
(94 - 2)Q = 2
Q = 46
P = 94 - 46 = 46
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is at an annual rate of . In year one, $72.00 will buy baskets, and in year two, $72.00 will buy baskets. This example illustrates that, as the price level falls, the value of money . rises,falls,remains the same
Answer:
From Year 1 to Year 2 : There is annual deflation 11.11%
As price falls, value of money rises
Explanation:
Given : Commodity Basket Cost = $9 in Year 1 ; Commodity Basket Cost = $8 in Year 2
From Year 1 to Year 2 : There has been fall in price level. Proportionate (%) Fall in price level = Change in Price / Old Price x 100
So, Fall in price level = [ ( 9 - 8 ) / 9] x 100 = 1/9 x 100 = 11.11%
Hence, from year 1 to year 2 : there has been 11% fall in price i.e Deflation
Considering Income = $72 :
Year 1 : It can purchase 72 / 9 = 8 commodity baskets Year 2 : It can purchase 72 / 8 = 9 commodity basketsSo, it illustrates that : As price falls, the purchasing power of money (value of money) rises.
Cala Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $224,000 for the lot plus $119,000 for the old building. The company pays $37,000 to tear down the old building and $54,696 to fill and level the lot. It also pays a total of $1,829,209 in construction costs—this amount consists of $1,720,600 for the new building and $108,609 for lighting and paving a parking area next to the building. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer:
Land $434,696
Land improvements $108,609
Building $1,720,600
To Cash $2,263,905
(Being the amount paid in cash is recorded)
Explanation:
The journal entry is shown below:
Land $434,696
Land improvements $108,609
Building $1,720,600
To Cash $2,263,905
(Being the amount paid in cash is recorded)
The land, land improvements and the building increases the assets so it is debited while the cash is credited as the cash is paid
The computation of the land is shown below:
= Purchase price of the land + purchase price for the old building + paid amount for tear down the old building + cost to fill and level the lot
= $224,000 + $119,000 + $37,000 + $54,696
= $434,696
H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised operations. Recent financial information provided by H&R Block for its company-owned and franchised operations is as follows (in millions): Company-Owned Franchised Operations Revenues $2,651 $ 335 Income from operations 617 86 Total assets 3,930 586 a. Use the DuPont formula to determine the return on investment for each business divisions. Round whole percents to one decimal place and investment turnover to two decimal places. Division Return on Investment Company-Owned % Franchised Operations % b. Determine the residual income for each division, assuming a minimum acceptable income of 15% of total assets. Round minimal acceptable return to the nearest million dollars. Division Residual income Company-Owned $ millions Franchised Operations $ millions c. The Franchised Operations (FO) segment has the return on investment, which is mainly the result of a investment turnover.
Answer:
Explanation:
A) Calculating ROI
For company owned;
Profit margin = 617/2651 = 23.3%
Asset turnover = 2651/3930 = 0.67
Return on investment (ROI) = 23.3*.67 = 15.6%
For Franchised operations;
Profit margin = 86/335 = 25.7%
Asset turnover = 335/586 = 0.57
Return on investment (ROI) = 25.7*.57 = 14.6%
B) Calculating Residual income
For company owned;
Operating income = 617
Minimum operating income = 3930*15% = 590
Residual income = 617-590 = 27
For For Franchised operations;
Operating income =86
Minimum operating income =586*15% = 88
Residual income = 86-88 = -2
C) The Franchised Operations (FO) section has the lowest return on investment, which is principally the result of the Lowest investment turnover.
Q5. Einstein Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $10,000. Budgeted cash receipts are $85,000, while budgeted cash disbursements are $66,000. Einstein Company wants to have an ending cash balance of $25,000. The excess (deficiency) of cash available over disbursements for the month would be:
Answer:
There would be in the month an excess cash available of $29,000.
Explanation:
In order to calculate the excess (deficiency) of cash available over disbursements for the month, first we have to calculate the total cash.
Total cash= beginning cash balance+cash receipts
=$10,000+$85,000
=$95,000
There are budgeted cash disbursements of $66,000, so $95,000-$66,000=$29,000, hence there would be in the month an excess cash available of $29,000.
Which of the following are reasons managed floating exchange rates were adopted by the industrialized nations in 1973?
Check all that apply.
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases
B) To enable dirty floats in order to offset free market forces of supply and demand
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces
D) To enable nations to initiate fluctuations in exchange rates
Answer:
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases.
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces.
Explanation:
A managed floating exchange rate system allows the exchange rate to be allowed by a free market force of the supply and demand that consists of the some degrees of the government inventions. It was adopted in 1973 due to the overtime the float led to the market disordering and that caused a dramatic exchange rate fluctuations. Hence in order to control this, a system had to be made to keep at check on the change in rates.You are attempting to value a call option with an exercise price of $105 and one year to expiration. The underlying stock pays no dividends, its current price is $105, and you believe it has a 50% chance of increasing to $122 and a 50% chance of decreasing to $88. The risk-free rate of interest is 10%. Calculate the call option’s value using the two-state stock price model.
Final answer:
Using the two-state stock price model, the value of a call option with a strike price of $105 given the provided stock price scenarios and a risk-free rate of 10% is $7.73.
Explanation:
The question asks us to value a call option using the two-state stock price model, sometimes referred to as the binomial option pricing model. This model considers two possible future outcomes for the stock price at the expiration of the option: it can either go up or down. Here, we'll calculate the value of a call option with a strike price of $105, an expiration of one year, a current stock price of $105, and a risk-free rate of 10%. The stock has a 50% chance to increase to $122 (the up-state) and a 50% chance to decrease to $88 (the down-state), and it pays no dividends.
First, calculate the payoff in each state. If the stock price goes up to $122, the option will be worth $122 - $105 = $17 because this is the amount by which the stock price exceeds the exercise price. If the stock price goes down to $88, the option will be worthless because the stock price is below the exercise price. We then calculate the expected value of the option at expiration, which is (0.5 * $17) + (0.5 * $0) = $8.50.
Next, we discount this expected payoff back to the present value using the risk-free rate. The formula for the present value is $8.50 / (1 + 0.10) = $7.73. Therefore, the value of the call option today, according to the two-state stock price model, is $7.73.
At December 31, 2020, Oriole Company has outstanding noncancelable purchase commitments for 37,600 gallons, at $3.24 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.
A.) Assuming that the market price as of December 31, 2020, is $2.70, record the journal entry.
B.)Give the entry in January 2018, when the 36,000-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2020, and that the market price in January 2021 was $2.70 per gallon. Prepare the journal entry for when the materials are received in January 2021.
Answer:
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
Explanation:
Oriole Company has agreed to purchase Gallons of raw material for a defined price of $3.24 per gallon. The price is reduced on December 31, 2020. The Difference between the prices of gallons is recorded as unrealized gain on debit and liability is credited.
$3.24 - $2.70 = $0.54 * 37,600 Gallon = $20,304
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
The raw material is purchased at the price of $2.70 per gallon and the 36,000 gallons are purchased. The journal entry to record this transaction is,
Raw material (Dr.) $76,896
Estimated liability on purchase commitments (Dr.) $20,304
Cash (Cr.) $97,200
Kuhns Corp. has 160,000 shares of preferred stock outstanding that is cumulative and 100,000 common stock outstanding. The preferred dividend is $5.50 per share and has not been paid for 3 years. If Kuhns earned $1.70 million this year, what could be the maximum payment to the preferred stockholders on a per share basis
Answer:
$10.63 is the maximum per share dividend to be paid to preferred stockholders.
Explanation:
3 years dividend=$5.50*160,000*3
=$2,640,000
Since preferred dividends in arrears is more than the net income,it implies that the whole earnings would be used in settling the dividends with no dividends left for common stockholders,as a result of the point above,the maximum payment to the preferred stockholders on a per share basis is computed thus:
per share dividend=$1,700,000/160,000
=$10.63
Some countries have fixed exchange rate systems instead of flexible exchange rate systems. Which of the following is a reason why fixed exchange rate systems have limited abilities to use monetary policy? A. Under a fixed exchange rate system, if a central bank conducts a monetary policy, there is no change in domestic interest rates because people only respond to exchange rate changes. B. Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect. C. Under a fixed exchange rate system, central banks do not exist so monetary policy cannot be conducted. D. All of the above.
Answer:
Option B - Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect.
Explanation:
Central banks are required to initiate measures to keep the exchange rate fixed, such that any move by them which causes movement of exchange rate will have to be countered by themselves.
Hence, if a central bank administers a monetary policy under a fixed exchange rate system, it would exert pressure on the exchange rate and the central bank would have to counteract that effect.
Therefore, option B is the correct answer choice.
Northwestern Bells stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 38,948 units. Northwestern estimates its annual holding cost for this item to be $25 per unit per year. The cost to place and process an order from the supplier is $4.26. The company operates 300 days per year, and the lead time to receive an order from the supplier is 2 working days. What is the economic order quantity?
Answer:
115 units
Explanation:
The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
where,
Annual demand is 38,948 units
Ordering cost is $4.26 per order
And, the carrying cost or holding cost is $25 per unit per year
Now placing these values to the above formula
So,
[tex]= \sqrt{\frac{2\times \text{38,948}\times \text{\$4.26}}{\text{\$25}}}[/tex]
= 115 units
We simply applied the above formula so that the economic order quantity could come
Emily Turnbull, president of Aerobic Equipment Corporation, is concerned about her employees’ well-being. The company offers its employees free medical, dental, and life insurance coverage. It also matches employee contributions to a voluntary retirement plan up to 6% of their salaries. Assume that no employee’s cumulative wages exceed the relevant wage bases. Payroll information for the biweekly payroll period ending January 24 is listed below.
Wages and salaries $2,300,000
Employee contribution to voluntary retirement plan 115,000
Medical insurance premiums paid by employer 46,000
Dental insurance premiums paid by employer 16,100
Life insurance premiums paid by employer 8,050
Federal and state income tax withheld 494,500
FICA tax rate 7.65%
Federal and state unemployment tax rate 6.20%
1. Record the employee salary expense, withholdings, and salaries payable (or say No journal entry required.)
2. Record the employer-provided fringe benefits (or say No journal entry required.)
3. Record the employer payroll taxes (or say No journal entry required.)
Answer:
1. Salary expense = $2,300,000
Withholdings = $494,500
Salary payable = $1,805,500
2. Total fringe benefits = $185,150
3. Payroll tax = $494,500
Explanation:
1. Employee salary expense is given as $2,300,00
Withholdings is given as $494,500. This is the sum total of federal and state FICA taxes and unemployment tax.
Salaries payable is employee salary expense less withholdings.
Salaries payable = 2,300,000 - 494,500
= $1,805,500
2. Employer-provided fringe benefits includes medical insurance, dental insurance, life insurance and voluntary retirement plan contribution. The corporation matches employee contributions to a voluntary retirement plan up to 6% of their salaries and employee contribution to voluntary retirement plan is $115,000. Since this amount is 5% of salaries, the corporation will contribute an equal amount.
Medical insurance premiums paid by employer = $46,000
Dental insurance premiums paid by employer = $16,100
Life insurance premiums paid by employer = $8,050
Employer contribution to voluntary retirement plan = $115,000
Total fringe benefits = $185,150
3. Employer payroll taxes includes Federal and state FICA taxes and unemployment tax.
Federal FICA tax (rate of 7.65%) = (7.65/100) * 2300000 = $175,950
State FICA tax (rate of 7.65%) = (7.65/100) * 2300000 = $175,950
Unemployment tax (rate of 6.20%) = (6.20/100) * 2300000 = $142,600
Total pay roll tax = 175950 + 175950 +142600
= $494,500
No journal entry required. The employer-provided fringe benefits include medical insurance, dental insurance, and life insurance. The employer payroll taxes include FICA tax, federal unemployment tax, and state unemployment tax.
Explanation:No journal entry required.The employer-provided fringe benefits are:
Medical insurance premiums paid by employer: $46,000Dental insurance premiums paid by employer: $16,100Life insurance premiums paid by employer: $8,050The employer payroll taxes are:
FICA tax: $176,145Federal unemployment tax: $28,600State unemployment tax: $28,600Learn more about Employer-provided fringe benefits and payroll taxes here:https://brainly.com/question/32558788
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Carson Lee, a staff accountant, is a working on some research for his partner, Joe Davis. Joe has asked Carson to find the proper citation providing guidance on when the acquisition of equipment is reported in the operating section of the statement of cash flows. Using the authoritative literature, locate the correct guidance.
The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 230-10-45-12 provides guidance on when the acquisition of equipment is reported in the operating section of the statement of cash flows. This is generally when the resources have been procured from revenue operations. An example is when a company buys machinery with money from its core business activities.
Explanation:The guidance for when the acquisition of equipment is reported in the operating section of the statement of cash flows can be traced to the Generally Accepted Accounting Principles (GAAP), specifically the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 230-10-45-12. This standard stipulates that generally, purchases of equipment are a part of investing activities. Nonetheless, if the resources have been acquired from revenue operations, it may be considered an operating activity.
For example, let's presume a company purchases a substantial machine using cash from its operating activities - the money that comes from the core business operations. According to the ASC 230-10-45-12, these expenditures should be revealed in the Statement of Cash Flows under the operating activities section.
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Farmer and Taylor formed a partnership with capital contributions of $250,000 and $300,000, respectively. Their partnership agreement calls for Farmer to receive a $80,000 per year salary. The remaining income or loss is to be divided equally. Assuming net income for the current year is $195,000, the journal entry to allocate net income is:
Answer:
The journal entry is made as follows;
Explanation:
Net Income $195,000
Salary of farmer ($80,000)
Net distributive income $115,000
Per partner share $115,000/2=$57,500
Income Summary Dr.$115,000
Farmer Capital Cr.$57,500
Taylor Capital Cr.$57,500
On April 1, 2017, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2018. The dollar value of the loan was as follows: Date Amount April 1, 2017 $ 97,000 December 31, 2017 103,000 April 1, 2018 105,000 How much foreign exchange gain or loss should be included in Shannon’s 2017 income statement?
Answer:
Foreign exchange loss of $6000
Explanation:
The dollar loan should recognized in the balance of Shanon Company as $97,000 on 1 April 2017,at end of the year the loan amount should e revalued to reflect its current fair value.
At end of the year 2017,the dollar value of the loan has risen to $103,000,hence the obligation being owed has increased by $6,000($103,000-$97000),hence the increase in value of debt should be credited to loan account and debited to Shanon's 2017 income statement
Final answer:
Shannon Company should record a foreign exchange gain of $6,000 in the 2017 income statement due to the increase in the dollar value of the loan from $97,000 to $103,000 between April 1 and December 31, 2017.
Explanation:
On April 1, 2017, Shannon Company took out a loan for 100,000 euros, and the dollar value of this loan was $97,000. By December 31, 2017, the value of the same amount of euros rose to $103,000. To determine the foreign exchange gain or loss, Shannon Company should calculate the change in the dollar value of the loan between these two dates.
The process of calculating foreign exchange gains or losses involves comparing the dollar value of the loan at the beginning and end of the given period. In this case, Shannon Company's loan value went from $97,000 (April 1, 2017) to $103,000 (December 31, 2017), resulting in an increase of $6,000. This increase represents a foreign exchange gain that should be recorded in Shannon's 2017 income statement.
It is important to note that Shannon Company will have to reassess the value of the loan once more on the due date, April 1, 2018, at which point the dollar value is $105,000. However, for the 2017 income statement, only the change up to December 31, 2017, is relevant.
Variable and Absorption Costing During its first year, Walnut, Inc., showed a $14 per-unit profit under absorption costing but would have reported a total profit $16,000 less under variable costing. If production exceeded sales by 1,000 units and an average contribution margin of 62.5% was maintained, what is the apparent: Fixed cost per unit? Sales price per unit? Variable cost per unit? Unit sales volume if total profit under absorption costing was $168,000?
Answer and Explanation:
The computation is shown below:
Fixed cost per unit is
= Higher Profit under Absorption costing ÷ units exceeded than sales
= $16,000 ÷ 1,000 units
= $16 per unit
Sales price per unit
= Contribution Margin Per Unit ÷ Contribution Margin Ratio
= ($16 + $14) ÷ (62.50%)
= $48
Variable Cost Per Unit is
= Sales Price Per Unit - Contribution Margin Per Unit
= $48 - $30
= $18 per unit
Unit sales volume is
= Total Profit under Absorption costing ÷ profit per unit
= $168,000 ÷ $14 per unit
= 12000 units
We simply applied the above formulas
The fixed cost per unit is $16. The sales price per unit is $22.40, the variable cost per unit is $8.40 and the unit sales volume of total profit under absorption costing is 10,857 units.
Explanation:If Walnut Inc. had a full-year profit of $168,000 under absorption costing, they would have had a total profit of $152,000 under variable costing (which is $16,000 less). The difference between variable costing and absorption costing profit gives us insight into the fixed manufacturing overhead per unit. Since production exceeds sales by 1,000 units, the fixed cost per unit would be $16 (the $16,000 difference divided by the 1,000 units).
Since the contribution margin is 62.5% and under absorption costing the profit per unit is $14, the selling price per unit is $14 divided by 62.5% which is $22.40. Therefore, the variable cost per unit would be the selling price minus profit per unit, which means $22.40 - $14 = $8.40.
To find the unit sales volume, we'll subtract the difference between absorption and variable costing profits from the absorption costing total profit and divide that result by the profit per unit under absorption costing. Hence, ($168,000 - $16,000) ÷ $14 = 10,857 units (rounded to the nearest whole number).
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Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax.
Required:
a. The amount recorded as the cost of this equipment is ____________.
Answer:
$12,546
Explanation:
Invoice price $11,500 × 0.98 =$11,270
Add: Delivery charge $160
Installation charge $185
Sales tax $931
Cost of equipment $12,546
Therefore the amount recorded as the cost of this equipment is is $12,546
At the beginning of 2014, Aristotle Company acquired a mine for $845,160. Of this amount, $96,400 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,890,000 units of the ore appear to be in the mine. Aristotle incurred $163,880 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $38,560. During 2014, 2,570,000 units of ore were extracted and 2,189,000 of these units were sold.
(a) Compute the total amount of depletion for 2014.
(b) Compute the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014.
Answer:
a. Total amount of depletion for 2014 - $ 29,168,862
b. Charged as expenses for minerals sold = $ 24,844,607
Explanation:
Computations
Depreciable cost
Total cost of acquisition $ 845,160
Add: Development costs of mine $ 163,880
Add: Land reusable costs $ 38,560
Total depletable costs of minerals $ 1,047,600
Estimated ore recovery 11,890,000 tons
Cost of ore per ton $ 11.35 per ton
Total amount of depletion for 2014
$ 11.35 per ton * 2,570,000 tons $ 29,168,862
Charged as expenses on ore sold
Mineral ore sold - 2,189,000
Charged as expenses
$ 11.35 per ton * 2,189,000 $ 24,844,607
Answer:
(a) Compute the total amount of depletion for 2014.
$205,600(b) Compute the amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014.
COGS = $175,120Explanation:
mine's cost:
purchase price $845,160
- land value $96,400
+ development costs $163,880
+ reparation costs $38,560
total cost = $951,200
depletion cost per ton of ore = $951,200 / 11,890,000 = $0.08 per ton
During 2014, 2,570,000 tons were extracted = 2,570,000 x $0.08 = $205,600
2,189,000 tons were sold x $0.08 = COGS = $175,120
Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year. To receive a normal profit, the firm described above would have to___________.
Answer:
The firm earns revenues of $360,000 per year. To receive a normal profit, the firm described above would have to earn additional revenue of $90,000
Explanation:
As per the information provided in the question, the current profit/loss after deducting all expenditure from income is as follows:
Particular Amount ($)
Revenue 360,000
Less: Wages and Salaries (200,000)
Less: Materials (75,000)
Less: New Equipment (30,000)
Less: Rented Property (20,000)
Less: Interest Costs (35,000)
Profit/Loss 0
As confirmed from the calculation above currently no profit is being earned even after the owner/manager not receiving income from the firm. Therefore, the firm should generate additional revenue of $90,000 in order to earn normal profit.
On January 1, 2021, Oliver Foods issued stock options for 44,000 shares to a division manager. The options have an estimated fair value of $3 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Oliver Foods' stock price increases by 5% in four years. Oliver Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years
Options:
A. $77,500
B. $19,500
C. No effect
D. $77,000
Answer:
The correct answer is option (D)
$77,000
Explanation:
Compensation will be recorded in each of the next four years
=(44,000*7) / 4 = $77,000
On January 1, Year 1, the Mahoney Company borrowed $168,000 cash from Sun Bank by issuing a five-year 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan based on the present value of annuity factor would be $40,725.The amount of principal repayment included in the December 31, Year 1 payment is:Multiple Choice$13,440.$37,467.$40,725.$27,285.
Answer:
The correct option is $27,285.
Explanation:
Annual interest =$168,000*8%
annual interest =$13,440.00
Annual repayment=$40,725.00
Principal repayment=Annual repayment-interest repayment
principal repayment=$40,725.00-$13,440.00
principal repayment=$ 27,285.00
The correct option is last option.
The first option is wrong because it is the interest repayment,not principal repayment.
The third option is also wrong because it comprises both interest and principal repayments
The option is $37,467 does not feature in the computation in anyway
Answer:
Principal paid= $27,285
Explanation:
The loan repayment is structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan and the accrued interest. This is called amortization.
The amount of principal = Annual installment - interest due
Annual installment = $40,725
Interest due = interest rate × principal amount
= 8%× 168,000 = $13,440
The amount of principal = $40,725 - $13,440
= $27,285
1. Why have OpenTable competitors had a difficult time competing against OpenTable? 2. What characteristics of the restaurant market make it difficult for a reservation system to work? 3. How did OpenTable change its marketing strategy to succeed? 4. Why would restaurants find the SaaS model very attractive?
Answer:
The answer to the question are listed in the explanation section below
Explanation:
The following number of question is explained below:
A thousands of restaurants use open table to allow their online bookings capability which is a right choice as open table is a well respected and as well large international company in the industry. Restaurants have moved from open table to the competition, for the following reasons such as retain customers,first class technology., comparable online booking, save money.Open table now has a real competition in the form of Eveve, which allows line reservation system for restaurants. SAAS model: Software as a service (POS) system. restaurant owners find it attractive because of the loud based solution,Lower initial and maintenance costs,easy upgrades, and lower learning curve
The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000 1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024. 2. It is estimated that the litigation liability will be paid in 2024. 3. Rent revenue will be recognized during the last year of the lease, 2024. 4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024. Instructions (a) Prepare a schedule of future taxable and (deductible) amounts. (b) Prepare a schedule of the deferred tax (asset) and liability at the end of 2020. (c) Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit). (d) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020
Answer:
income tax expense 156,000 debit
deferred income tax liability 70,000 credit
income tax payable 86,000 credit
schedule:
2021 2022 2023 2024
depreciation 120,000 120,000 120,000 120,000
litigation (70,000)
rent revenue 60,000
taxable income 120,000 120,000 120,000 110,000
2021 2022 2023 2024
beginning 70,000 46,000 22,000 (2,000)
dep adjustment (24,000) (24,000) (24,000) (24,000)
rent revenue 12,000
litigation 14,000
ending 46,000 24,000 (2,000)* 0
Explanation:
pretax income 800,000
permanent difference:
municipal bonds interest (20,000)
accounting taxable income 780,000
temporary difference:
depreciation expense (480,000)
litigation 70,000
rent revenue 60,000
taxable income 430,000
480,000 / 4 = 120,000
we have income tax payable: 430,000 x 20% = 86,000
income tax expense 780,000 x 20% = 156,000
deferred tax income laibility 156,000 - 86,000 = 70,000
*on the tax schedule as the value switches to negative we no longer have a tax liability but asset.
the municipal bonds are not considered into calcualtikon as they are tax exempt therefore do not create temporary difference.
a. Deductible Amounts:
- Excess Tax Depreciation (reversal): 120,000 ($480,000 / 4)
- Litigation Accrual (payment): 0
- Unearned Rent Revenue (recognition): 60,000
Taxable Amounts:
- Excess Tax Depreciation (reversal): 120,000 annually
- Litigation Accrual (payment): 0 annually
- Unearned Rent Revenue (recognition): 0 annually
- Interest Income from New York Municipal Bonds: 20,000 annually
b. Deferred Tax Asset:
- Excess Tax Depreciation (reversal): 120,000
Deferred Tax Liability:
Net Deferred Tax Liability: 14,000 (Liability) + 12,000 (Liability) - 120,000 (Asset) = 6,000 (Liability)
c. Net Deferred Tax Expense (Benefit) = 6,000 (Liability)
d. Deferred Tax Expense (Income Statement) = 6,000 (from part c)
Income Taxes Payable (Balance Sheet) = 160,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 154,000
Journal Entry:
- Debit Income Tax Expense: 160,000
- Debit Deferred Tax Expense: 6,000
- Credit Income Taxes Payable: 154,000
Schedule of Future Taxable and (Deductible) Amounts:
Year 2020:
Taxable Amounts:
- Pretax Accounting Income: 8,00,000
- Interest Income from New York Municipal Bonds: 20,000
Deductible Amounts:
- Excess Tax Depreciation (reversal): 1,20,000 (4,80,000 / 4)
- Litigation Accrual (payment): 0
- Unearned Rent Revenue (recognition): 60,000
Year 2021-2024 (Estimates):
Schedule of Deferred Tax (Asset) and Liability at the End of 2020:
Deferred Tax Liability:
- Litigation Accrual (payment): 14,000 (70,000 x 20%)
- Unearned Rent Revenue (recognition): 12,000 (60,000 x 20%)
Since there is no beginning deferred tax asset or liability, the Net Deferred Tax Expense (Benefit) for 2020 is equal to the change in the deferred tax liability:
Net Deferred Tax Expense (Benefit) = Change in Deferred Tax Liability
Net Deferred Tax Expense (Benefit) = 6,000 (Liability)
Journal Entry to Record Income Tax Expense, Deferred Taxes and Income Taxes Payable for 2020:
Income Tax Expense (Income Statement) = 8,00,000 (Pretax Accounting Income) x 20% = 1,60,000
Deferred Tax Expense (Income Statement) = 6,000 (from part c)
Income Taxes Payable (Balance Sheet) = 1,60,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 1,54,000
This entry records the income tax expense for 2020, the deferred tax expense and the income taxes payable for the year.
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Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $350,000 of net income, declared no dividends, and the following selected transactions occurred in the order given: Issued 100,000 shares of the common stock at $50 cash per share. Reacquired 20,000 shares at $45 cash per share. Reissued 7,500 shares from treasury for $46 per share. Reissued 7,500 shares from treasury for $44 per share. 2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
The journal entries are made as follows;
Explanation:
1.Cash 100,000*50 Dr.$5,000,000
Common Stocks 100,000*5 Cr.$500,000
Paid in capital-common stocks Cr.$4,500,000
2.Treasury Stocks 20,000*45 Dr.$100,000
Cash 20,000*45 Cr.$100,000
3. Cash 7,500*46 Dr.$345,000
Treasury Stocks 7,500*45 Cr.$337,500
Paid in Capital-Treasury stocks 7,500*(46-45) Cr.$7,500
4.Cash 7,500*44 Dr.$330,000
Paid in capital-Treasury Stock 7,500*1 Dr.$7,500
Treasury stocks 7,500*45 Cr.$337,500
.
Final answer:
The answer provides journal entries for stock transactions of Global Marine involving the issuance of shares, the reacquisition as treasury stock, and the reissuance of treasury shares at different prices.
Explanation:
The question pertains to a series of transactions involving the issuance, reacquisition, and reissuance of shares by Global Marine. Here are the journal entries for each transaction:
Issuance of 100,000 shares at $50 per share:Note that the treasury stock is recorded at cost (not par value) and reissuing it at a different price from the reacquisition cost requires adjusting the additional paid-in capital for treasury stock.
Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000 and $30,000 respectively.
The journal entry to record the transaction on March 15, 2021 will include a :
A. credit to Unearned Service Revenue of $24,000
B. debit to Unearned Service Revenue of $30,000
C. credit to Sales Revenue for $144,000
D. credit to Service Revenue of $60,000.
Answer:
A. credit to Unearned Service Revenue of $24,000
Explanation:
Total cost = $90,000 + $60,000 + $30,000 = $180,000
Unearned service training service revenue = ($30,000 ÷ $180,000) × $144,000 = $24,000
Therefore, the correction option is A. credit to Unearned Service Revenue of $24,000.
The following information pertains to Lee Corp.'s defined benefit pension plan for year 2:Service cost $160,000Actual and expected gain on plan assets 35,000Unexpected loss on plan assets related to a year 1 disposal of a subsidiary 40,000Amortization of unrecognized prior service cost 5,000Annual interest on pension obligation 50,000What amount should Lee report as pension cost in its year 2 income statement?
Answer:
$180,000
Explanation:
This can be calculated as follows:
Pension cost in year 2 = Service cost + Prior service cost amortization + Interest cost - Actual and expected return on plan assets
Therefore, we have:
Pension cost in year 2 = $160,000 + $5,000 + $50,000 - $35,000 = $180,000
Therefore, Lee report should $180,000 as pension cost in its year 2 income statement.
The following price quotations are for exchange-listed options on Primo Corporation common stock. Company Strike Expiration Call Put Primo 61.12 55 Feb 7.25 0.48 With transaction costs ignored, how much would a buyer have to pay for one call option contract. Assume each contract is for 100 shares.
Answer: $725
Explanation:
One call option is valued at $7.25.
We are to find the value of a Call Option contract which is assumed to have a 100 shares in it.
If therefore, 1 call option is $7.25, then 100 call options is,
= 7.25 * 100
= $725
A buyer would have to pay $725 for one call option contract.
If you need any clarification do react or comment.
The cost for one call option contract for Primo Corporation common stock, ignoring transaction costs, would be $725.
Explanation:In the provided question, we're given data on exchange-listed options for Primo Corporation common stock. The price quotation for the call option is listed as $7.25. An options contract typically represents 100 shares of the underlying stock, unless otherwise specified. Therefore, ignoring transaction costs as mentioned in the question, the cost for one call option contract would be the price of the call option times 100. In this case, the cost for one contract would be 7.25 x 100, hence $725.
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A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1?
Answer:
a. The preparation of partial amortization is shown below:-
b. $2,892
Explanation:
a. Date Lease Effective Decrease in Outstanding
payment interest balance balance
July 1 $150,000
July 1 $5,376 $5,376 $144,624
($150,000 - $5,376)
Oct 1 $5,376 $2,892 $2,484 $142,140
( $5,376 - $2,892) ($144,624 - $2,484)
b. Interest expense on October 1 = $2,892
Working Note:-
Take the outstanding balance times 2% (8% annual = 2% quarterly)
So, the Effective interest = $144,624 × 0.02
= $2,892.48
To prepare a partial amortization table and calculate the amount of interest expense/revenue, we need to consider the balance after each payment. The first quarter's interest expenses are $3,000, with a principal repayment of $2,376. The second quarter's interest expenses amount to $2,952.48 with a remaining principal of $2,423.52 subtracted from the quarterly payment.
The question involves a finance lease agreement with an annual interest rate of 8% and quarterly lease payments of $5,376 over a 10-year lease term, with a present value of lease payments at $150,000. To address the first part of the question, we would need to create a partial amortization table reflecting the principal and interest components of the lease payments for the period up until the second payment on October 1.
To begin, the interest expense for the first quarter would be 2% of the present value (8% annual rate divided by 4 quarters), which equals $3,000 ($150,000 x 0.02). Thus, the principal repayment for the first quarter is $2,376 ($5,376 lease payment less $3,000 interest expense). The new balance of the liability after the first payment would be $147,624 ($150,000 initial liability less $2,376 principal repayment).
For the second quarter, interest expense is calculated on the new balance: $147,624 x 2% = $2,952.48. The principal repayment portion again is the total lease payment minus the interest expense, which would be $5,376 - $2,952.48 = $2,423.52.