Answer:
the estimated direct labor-hours at the beginning of the year used to calculate the predetermined overhead rate was 22,250 hours
Explanation:
Manufacturing overheads are allocated to production on a predetermined basis as no business can wait to know its profit to properly allocate costs to the products sold.
It is usually based on a certain predetermined activity level (usually direct labour hours) which is then coated into the product material and labor costs to determine its manufacturing costs.
We are told the Actual overhead was over applied by $18,000, and the Actual Manufacturing overhead was $373,620.
This implies the Overhead charged to production was;
$373,620 + $18,000 = $391,620
At an activity level of 30,500 direct labor hours.
The Predetermine direct labour rate is:
$391,620 / 30,500 = $12.84
And this implies the direct labor hours at the beginning of the year is
$285,690 divided by $12.84 = 22,250 hours
Suppose at the end of the lease term, Sheridan receives the asset and determines that it actually has a fair value of $1,450 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Sheridan at the end of the lease term. (
Answer:
Asset under lease (Dr.) $1,450
Revaluation reserve (Cr.) $1,450
Explanation:
Capital lease is a situation where the lessee has the option to buy the asset at the end of lease term. The Sheridan receives the asset when the lease term is ended. The actual fair value of asset is $1,450 higher than anticipated value. To record the increase in fair value the asset value is debited with the amount of fair value rise. The asset is recorded at fair value in the balance sheet.
arris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 116 Units in beginning inventory 0 Units produced 9,000 Units sold 8,600 Units in ending inventory 400 Variable costs per unit: Direct materials $ 19 Direct labor $ 61 Variable manufacturing overhead $ 7 Variable selling and administrative expense $ 11 Fixed costs: Fixed manufacturing overhead $ 135,000 Fixed selling and administrative expense $ 8,900 What is the net operating income for the month under absorption costing
Answer:
$12,500
Explanation:
Absorption costing consider all the cost incurred in production either variable or fixed as production cost and all the operating costs as the period costs. It calculates the gross profit after deducting the cost of goods sold from the net sales and net income after deduction the operating costs from the gross profit.
First of all we need to calculate the product cost.
Manufacturing cost
Direct materials $19
Direct labor $61
Variable manufacturing overhead $7
Fixed manufacturing overhead $15
($135,000/9,000)
Total Product cost $102
Now We will calculate the Net Income
Sales (8,600 x $116) $997,600
Less: Cost of goods sold (8,600 x $102) $877,200
Gross Profit $120,400
Less:
Variable selling & admin expense $99,000
($11 x 9,000)
Fixed selling and admin expense $8,900
Net Income $12,500
On January 1, 20X8, William Company acquired 30 percent of eGate Company's common stock, at underlying book value of $100,000. eGate has 100,000 shares of $2 par value, 5 percent cumulative preferred stock outstanding. No dividends are in arrears. eGate reported net income of $150,000 for 20X8 and paid total dividends of $72,000. William uses the equity method to account for this investment. Based on the preceding information, what amount of investment income will William Company report from its investment in eGate for the year?$45,000$42,000$62,000$35,000
Answer:
The answer is $42,000
Explanation:
William Company's Investment will be 30 percent of eGate shares.
William company holds a non-controlling interest in eGates since the percentage holding is less than 50 percent
Share of net income is $45,000(30 percent of $150,000)
Preferred stock is 5 percent on 100,000 shares at $2 par value is $10,000
William company share out of the $10,000 is $3,000(30 percent of $10,000)
Therefore its total Investment in eGate is $42,000($45,000 - $3,000)
William Company will report $45,000 as the investment income from its 30% investment in eGate Company for the year 20X8. This is calculated by taking 30% of eGate's net income ($150,000), since there were no dividends paid to common shareholders.
William Company needs to determine the amount of investment income from its 30% stake in eGate Company. To calculate this, we first exclude preferred dividends from eGate's total dividends, since William only participates in common dividends as a common stock investor. eGate has 100,000 preferred shares with a 5% cumulative dividend on a $2 par value, which equals $100,000 total preferred dividends ($2 x 5% x 100,000). The common dividends paid are therefore $72,000 minus $100,000, which leads to negative dividends for common shareholders (showing that common dividends were not paid).
Since there were no dividends distributed to common shareholders, the equity method dictates that William's share in net income directly influences the investment income. William's share is 30% of eGate's $150,000 net income, which is $45,000 ($150,000 x 30%). So, the investment income reported by William Company from its investment in eGate for 20X8 is $45,000.
XS Supply Company is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:
Current Year Previous Year
Balance Sheet at December 31
Cash $ 35,370 $ 30,450
Accounts Receivable 36,600 28,800
Inventory 42,600 38,800
Equipment 133,000 108,000
Accumulated Depreciation—Equipment (31,600 ) (25,800 )
Total Assets $ 215,970 $ 180,250
Accounts Payable $ 37,600 $ 27,800
Salaries and Wages Payable 970 1,250
Note Payable (long-term) 45,200 52,000
Common Stock 93,400 73,400
Retained Earnings 38,800 25,800
Total Liabilities and Stockholders’ Equity $ 215,970 $ 180,250
Income Statement
Sales Revenue $ 128,000
Cost of Goods Sold 74,000
Other Expenses 41,000
Net Income $ 13,000
Additional Data:
a. Bought equipment for cash, $25,000. Paid $6,800 on the long-term note payable.
b. Issued new shares of stock for $20,000 cash.
c. No dividends were declared or paid.
Other expenses included depreciation, $5,800; salaries and wages, $20,800; taxes, $6,800; utilities, $7,600.
Accounts Payable includes only inventory purchases made on credit. Because there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.
Required:
1. Prepare the statement of cash flows for the current year. Using the indirect method.
2. Evaluate the statement of the cash flows.
Answer:
B.) The net cashflow from operating activities stands at $16,720 while that from investing activities was ($25,000) for equipment purchase. The net cash from financing activities is $13,200 giving a total net cash increase of $4920 for the year. With the total cash balance at end totaling $35,370 including the beginning cash balance of $30,450
Explanation:
Kindly check attached picture for detailed statement of cash flow
1. The preparation of XS Supply Company's Statement of Cash Flows, using the indirect method is as follows:
XS Supply Company's
Statement of Cash Flows
For the Current Year Ended December 31
Operating Activities:
Net Income $13,000
Non-Cash Expense:
Depreciation 5,800
Cash from operations $18,800
Changes in working capital:
Accounts Receivable (7,800)
Inventory (3,800)
Accounts Payable 9,800
Salaries & Wages Payable (280)
Net Cash Flows from operations $16,720
Financing Activities:
Issuance of new stock $20,000
Long-term note payable payment (6,800)
Net Cash Flows from financing $13,200
Investing Activities:
Equipment Purchase ($25,000)
Net Cash Flows: investing ($25,000)
Net Cash Flows $4,920
Reconciliation of Cash:
Beginning Cash balance $ 30,450
Net Cash Flows $4,920
Ending Cash balance $ 35,370
2. The Statement of Cash Flows shows that the cash inflows increased positively from $30,450 to $35,370. This increase was boosted by the issuance of new stock for $20,000 and an appreciably increase in cash from operations of $18,800. The investment in new Equipment reduced these increases by $25,000.
Data and Calculations:
Current Year Previous Year Changes
Balance Sheet at December 31
Cash $ 35,370 $ 30,450 +$4,920
Accounts Receivable 36,600 28,800 +7,800
Inventory 42,600 38,800 +3,800
Equipment 133,000 108,000 +25,000
Accumulated Depreciation—Equipment (31,600 ) (25,800 ) +5,800
Total Assets $ 215,970 $ 180,250
Accounts Payable $ 37,600 $ 27,800 +$9,800
Salaries and Wages Payable 970 1,250 -280
Note Payable (long-term) 45,200 52,000 -6,800
Common Stock 93,400 73,400 +20,000
Retained Earnings 38,800 25,800 +13,000
Total Liabilities & Stockholders’ Equity $ 215,970 $ 180,250
Income Statement
Sales Revenue $ 128,000
Cost of Goods Sold 74,000
Other Expenses 41,000
Net Income $ 13,000
Additional Data:
a. Payments:
Equipment Purchase $25,000
Long-term note payable $6,800
b. Issuance of new shares of stock = $20,000
c. No dividends were declared or paid.
d. Other expenses:
Depreciation, $5,800
Salaries and wages, $20,800
Taxes, $6,800
Utilities, $7,600
Thus, overall, XS Supply Company performed creditably with regard to its cash flows in the current year.
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When incorporating, a business
a. must incorporate in the state in which it does the most business.
b. must receive the secretary of state's permission to incorporate in any state other than the one in which its corporate headquarters will be located.
c. must incorporate in the state in which its headquarters are located.
d. may incorporate in any state it chooses.
Answer:
May incorporate in any state it chooses.
Explanation:
Incorporation can be defined as the creation of a new business which will have equal rights as that of an individual.
The different steps for incorporation include:
- Proper documentation of the reports of incorporation.
- Choosing a suitable name for the business.
- Documenting the various operational agreements.
- Appointing managers to supervise the daily activities.
- Getting a federal employment identification number.
- Opening accounts for keeping the revenues that will be generated by the company.
- Employing diffetents workers to carry out various activities in the company.
Western Wear Clothing issues 1,200 shares of its $0.01 par value common stock to provide funds for further expansion. Assuming the issue price is $12 per share, record the issuance of common stock. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
The journal entry is made as follows;
Explanation:
Bank (1,200*12) Dr.$ 14,400
Common Stock (1,200*.01) Cr.$12
Paid up capital in excess of par-common stocks (14,400-12) Cr.$14,388
Scenario 13-10 Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each. Refer to Scenario 13-10. An accountant would calculate the total cost for one photo frame to be: a. $5. b.$10. c. $15. d. $25.
Answer:
Option D is correct.
$25
Explanation:
An accountant would calculate the total cost for one photo frame to be $25
Accounting profit = Sale price - cost spent on materials
= 30 - 5
= $25
The Mega Millions claims its grand prize is $500 million, payable over 5 years at $100,000,000 per year. If the first payment is made immediately, what is this grand prize really worth today? Use an interest rate of 4%.
Answer:
The prize is worth $462.9895 million or 462,989,522.4 today.
Explanation:
The equal payments every period over a defined period of 5 years show that this is an annuity. The first payment is received today that is at start so it is an annuity due. We will calculate the present value of this annuity using the formula for Present value of annuity due.
Present value of Annuity due:
Using the formula, the present value is:
Present value = 100m + 100m * [(1 - (1+0.04)^-(5-1)) / 0.04]
Present value = $462.9895 million or 462,989,522.4
Sarah, a famous pianist, is told that she will have to undergo brain surgery that could result in partial paralysis of her right arm and leg. Before she enters the hospital, Sarah gives her Steinway piano to a good friend who is also a pianist and has the piano transported to the friend's home. The surgery is successful, and Sarah suffers no paralysis of any kind as a result of the surgery. Can Sarah revoke the gift to her friend? Explain.
Answer:
Yes, Sarah can revoke the gift to her friend.
Explanation:
Gift is the transfer of property from one person, usually the donor(giver) to another person, donee(receiver) without expecting any thing like compensation in return. Gift can be given or transfered to either an individual or organization.
A gift can be revoked by the donor in law. Such gift is called Causa Mortis Gift.
Causa Mortis Gift is a gift given or transfered in expectation of death of the donor. Where a donor gives out his/her gift during the course of undergoing major surgery, such could also be called Causa Mortis Gift. This type of gift can be revoked anytime before the donor's death or recovery from surgery or illness and cannot be revoked after his/her death.
1. Working with Numbers and Graphs Q1 The marginal utility for the fourth unit of X is 38 utils, and the marginal utility for the fifth unit of X is 19 utils. Assume that, in this case, utility can only take on whole number, integer, values measured in utils. If the law of diminishing marginal utility holds, the minimum total utility of consuming five units of X is utils.
Answer:
177 utils
Explanation:
Given that,
Marginal utility for the fourth unit of X = 38 utils
Marginal utility for the fifth unit of X = 19 utils
Law of diminishing marginal utility states that as a consumer is consuming more and more units of a commodity, the utility obtained from the additional unit goes on diminishing.
It states that,
Marginal utility of 4th unit is less than the marginal utility of 3rd unit.
Therefore, the minimum marginal utility of 3rd unit will be at least 39 utils,
the minimum marginal utility of 2nd unit will be at least 40 utils,
the minimum marginal utility of 1st unit will be at least 41 utils,
Total utility is the sum of all the marginal utilities.
Minimum total utility of consuming five units of X:
= 1st unit + 2nd unit + 3rd unit + 4th unit + 5th unit
= 41 + 40 + 39 + 38 + 19
= 177 utils
The law of diminishing marginal utility states that satisfaction decreases as more of a good or service is consumed. In this scenario, the minimum total utility of consuming 5 units of X, given the marginal utilities for the fourth and fifth units of 38 and 19 utils respectively, would be 57 utils.
Explanation:The law of diminishing marginal utility signifies that as the consumption of a particular good or service increases, the additional satisfaction received from the next unit decreases. In terms of utils, it means that the difference between total utilities before and after the consumption of new unit lessens. As for your question, if the marginal utility for the fourth unit of X is 38 utils and for the fifth unit is 19 utils, the total utility for the consumption of five units of X would be at least 38 + 19 which equals 57 utils. However, this is a minimum value, the actual total utility of consuming five units of X will be higher because you have not included the utility derived from the first three units of X in your calculations.
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Assume that the market is perfectly competitive. If the cost function for John's Shoe Repair is �(�) = 100 + 10� − �) + 3 4 �4, what is the firm's marginal cost function? What is its profit-maximizing condition if the market price is p? What is its short-run supply curve?
Answer:
Explanation:
C(q) = 100+10q-q^2+(1/3)q^3
To find the firm marginal cost function:
Take the derivative with respect to q
MC = 10 - 2q + q^2
Assuming that the market price is p , then the profit maximising condition is:
MR = MC
p = 10 - 2q + q^2
The short-run supply curve is the marginal cost curve that lies above the average variable cost.
The average variable cost is:
AVC =VC/Q
AVC = (10q-q^2+(1/3)q^3)/Q
AVC = 10 - q + (1/3)*q^2
So, the short-run supply curve is:
SRS = 10 - 2q + q^2 if p > 10 - q + (1/3)*q^2
Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $175,000. The equipment will have an initial cost of $500,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $10,000, what is the accounting rate of return?
Answer:
35%
Explanation:
Accounting rate of return =Average annual net income*100/Average investment
Average investment = (500000+10000/2) = 255000
Accounting rate of return = 175000*100/255000 = 68.63%
Accounting rate of return = 175000*100/500000 = 35%
The selling price is $50 per unit, and variable costs amount to $20 per unit. Sultan's fixed costs per month total of $80,000. How many units must be sold each month to earn a monthly operating income of $25,000?
Answer:
3,500 units
Explanation:
The computation of the break even units to attain monthly operating income is shown below:
= (Fixed expenses + target profit) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $50 - $20
= $30
And, the other items values would remain the same
Now put these values to the above formula
So, the value would equal to
= ($80,000 + $25,000) ÷ ($30)
= ($105,000 ÷ ($30)
= 3,500 units
s flour in 15-pound bags. Panera Bread uses 5000 bags of flours each year. Carrying/holding costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that Panera Bread Chicago bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of flour to be filled. What is the minimum inventory held in a given EOQ cycle
Answer:
0 bags
Explanation:
Given that
Usage of bags per year = 5,000 bags
Carrying or holding cost per bag per year = $20
Ordering cost = $5 per order
Number of days open = 250 days
Estimated Daily demand = 20 days
Filling days required = 5 days
Based on the above information, the minimum inventory should be equal to zero as the daily demand is remains constant throughout the year. Therefore, it would be zero before replenishment
The minimum inventory held in a given EOQ cycle for Panera Bread Chicago bakery, considering a lead time of 5 days and daily demand of 20 bags, is calculated to be 100 bags. This is based on the need to have a safety stock that covers the demand during the lead time.
Explanation:The question refers to the Economic Order Quantity (EOQ) model, which is used to determine the optimal order quantity that minimizes total inventory costs, including ordering and holding costs. The EOQ model is a fundamental concept in supply chain management and operations research. To answer this question, we must calculate the EOQ and then use it to find the minimum inventory held in a given EOQ cycle. The EOQ formula is given by sqrt((2DS)/H), where D is the demand, S is the ordering cost, and H is the holding cost per unit per year. In this scenario, D=5000 bags per year, S=$5 per order, and H=$20 per bag per year. This leads to an EOQ of sqrt((2*5000*5)/20), which simplifies to sqrt(25000) or approximately 158 bags.
The minimum inventory level (also referred to as the safety stock) is dependent on the lead time and the daily demand. Given a lead time of 5 days and a daily demand of 20 bags, the minimum inventory, which serves as a buffer against variability in demand and lead time, can be calculated as daily demand multiplied by lead time. Hence, it is 20 bags/day * 5 days = 100 bags. This is not directly the result of the EOQ calculation but is related to the replenishment policy and lead time considerations in inventory management.
Nelson Corporation sells three different products.The following information is available on December 31: Ch6_Q150 When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be? $6,900 $6,450 $7,950 $6,600
Answer:
$6,450
Explanation:
The computation of the ending inventory balance using the lower of cost or market rule to each item is shown below:
Items Cost Market value Lower cost Units Cost
per unit per unit per unit
X $4 $3.50 $3.50 300 $1,050
Y $2 $1.50 $1.50 600 $900
Z $3 $4 $3 1,500 $4,500
Total ending inventory balance $6,450
Final answer:
The lower of cost or market rule is used to value inventory at its lower cost or market value. Nelson Corporation would compare the cost and market values of each product to determine the total ending inventory balance.
Explanation:
The lower of cost or market rule is a method used to value inventory. Under this rule, inventory is valued at the lower of its cost or its market value. It ensures that inventory is not overstated on the financial statements.
To calculate the total ending inventory balance, Nelson Corporation would compare the cost and market values of each product and choose the lower value for each item. Then, they would add up the cost values of all the items to determine the total ending inventory balance. The specific amounts for each product have not been provided in the question, so it is not possible to determine the exact total ending inventory balance. Therefore, none of the given answer options can be confirmed as the correct answer.
For several years, CSK Auto, Inc., fraudulently reported inflated earnings. During this period, Maynard Jenkins was CEO. He was not involved in the fraud, however, and was never charged with a crime. Nonetheless, the SEC sought to claw back some of his earnings during this period. Is Jenkins financially responsible for the fraud that occurred on his watch, even though he did not participate? Should he be liable?
Jenkins, though not personally involved in the fraud, may be held financially responsible under the Sarbanes-Oxley Act of 2002 as the CEO during the period of misconduct. Yes, he will be held liable
Under the Sarbanes-Oxley Act of 2002, the U.S. Securities and Exchange Commission (SEC) has the authority to claw back bonuses and profits from CEOs and CFOs of companies that restate financials due to misconduct, regardless of the executive's involvement in the fraud. This is designed to ensure accountability at the highest levels of management.In the CSK Auto, Inc. case, although Maynard Jenkins was not personally involved in the fraudulent activities, he was the CEO during the period when the fraud occurred. The SEC's decision to seek clawbacks reflects the principle that top executives must be held accountable for the actions of their companies under their tenure, aiming to promote integrity and trust in financial markets.Examples of similar cases include John Stumpf of Wells Fargo, who resigned due to widespread fraudulent activities within his company, and Bernie Ebbers of WorldCom, who was held accountable despite initially not being directly implicated in the fraudulent activities.A producer of outdoor clothing used a focus group to obtain information about the demand for fleece jackets with built-in battery operated warming panels. At prices of $100, $90, $80, $70, $60, and $50, the focus group demanded 23, 31, 40, 44, 48, and 60 jackets, respectively. Is price statistically significantly different from zero at the 0.05 level of significance? (Hint: Use Excel's LINEST tool or, if you have the Window's version, the regression tool.)
Answer:
Yes, price is statistically different from zero at 0.05 level of significance
Explanation:
Given Data:
Price Quantity
$100 23
$90 31
$80 40
$70 44
$60 48
$50 60
These are two variables, price and quantity. The quantity is dependent variable and price is the independent variable.
Finding the regression using excel:
--In excel, click on data analysis tool button in the data tab. Within that, select regression. A box will appear. Here, fill in the following:
1. Input Y range: Cell with demand data
2. Input X range: Cell with price data
3. Select the label button and line fit plot and then click ok.
4. This will give regression result for this data.
Find attached of the regression output
Hypothesis:
H₀ : The price is not statistically different at 0.05 level of significance
HA : The price is statistically different from 0.05 level of significance
From the attached file, p-value = 0.0002∠0.05
Hence, reject H₀ and conclude that price is statistically different from zero at 0.05 level of significance
MoveIt Corporation is the world’s leading express-distribution company. In addition to its 643 aircraft, the company has more than 57,000 ground vehicles that pick up and deliver packages. Assume that MoveIt sold a delivery truck for $26,000. MoveIt had originally purchased the truck for $43,000 and had recorded depreciation for three years. Prepare the journal entry to record the disposal of the truck, assuming that Accumulated Depreciation was (a) $17,000, (b) $12,000, and (c) $19,000. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
1. No loss or No Gain
2. Loss = $5,000
3. Gain = $2,000
Explanation:
Requirement 1
If the accumulated depreciation of the machine was $17,000, the journal entry to record the transaction of disposal of machine will be as follows:
December 31 Cash Debit $26,000
Accumulated depreciation Debit $17,000
Machine Credit $43,000
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 17,000) = $26,000
We know, Gain (Loss) on sale of machine = Book value of the machine - Sale price = $(26,000 - 26,000) = $0. As the book value and the disposal value are same, there is no loss and no gain.
Requirement 2
If the accumulated depreciation of the machine was $12,000, the journal entry to record the transaction of disposal of machine will be as follows:
December 31 Cash Debit $26,000
Accumulated depreciation Debit $12,000
Loss on sale of equipment Debit $5,000
Machine Credit $43,000
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 12,000) = $31,000
We know, Loss on sale of machine = Sale price - Book value of the machine = $(31,000 - 26,000) = $5,000. Loss is a debit as it shows as the expense.
Requirement 3
If the accumulated depreciation of the machine was $19,000, the journal entry to record the transaction of disposal of machine will be as follows:
December 31 Cash Debit $26,000
Accumulated depreciation Debit $19,000
Gain on sale of machine Credit $2,000
Machine Credit $43,000
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(43,000 - 19,000) = $24,000
We know, Gain on sale of machine = Sale price - Book value of the machine = $(26,000 - 24,000) = $2,000. Gain is a credit as it shows as the income.
Because the book value and the disposal value are same, there is no loss and no gain.
As the Loss is a debit as it shows as the expense, its equals the sum of $5,000.
As the Gain is a credit, its equals the sum of $2,000
Requirement 1If the accumulated depreciation of the machine was $17,000,
Book value of the machine = Purchase price - Accumulated depreciation
Book value of the machine = $(43,000 - 17,000)
Book value of the machine = $26,000
Journal entry to record the transaction of disposal of machine will be as follows:
Date Account titles Debit Credit
December 31 Cash $26,000
Accumulated depreciation $17,000
Machine $43,000
Requirement 2If the accumulated depreciation of the machine was $12,000,
Book value of the machine = Purchase price - Accumulated depreciation
Book value of the machine = $(43,000 - 12,000)
Book value of the machine = $31,000
Loss on sale of machine = Sale price - Book value of the machine
Loss on sale of machine = $(31,000 - 26,000)
Loss on sale of machine = $5,000.
Journal entry to record the transaction of disposal of machine will be as follows:
Date Account titles Debit Credit
December 31 Cash $26,000
Accumulated depreciation $12,000
Loss on sale of equipment $5,000
Machine $43,000
Requirement 3If the accumulated depreciation of the machine was $19,000,
Book value of the machine = Purchase price - Accumulated depreciation
Book value of the machine $(43,000 - 19,000)
Book value of the machine $24,000
Gain on sale of machine = Sale price - Book value of the machine
Gain on sale of machine = $(26,000 - 24,000)
Gain on sale of machine = $2,000
Journal entry to record the transaction of disposal of machine will be as follows:
Date Account titles Debit Credit
December 31 Cash $26,000
Accumulated depreciation $19,000
Gain on sale of machine $2,000
Machine $43,000
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The following information is from White Mountain Furniture Company's financial records:
Month Sales Purchases
July $180,000 $105,000
August $165,000 $120,000
September $150,000 $90,000
October $195,000 $135,000
All sales are made on account. Collections from customers are normally 70 percent in the month of sale, 20 percent in the month following the sale, and 9 percent in the second month following the sale. The balance is expected to be uncollectible.
All purchases are on account. Management takes full advantage of the 2 percent discount allowed on purchases paid by the tenth of the following month.
Purchases for November are budgeted at $150,000, and sales for November are budgeted at $165,000.
Cash disbursements for expenses are expected to be $36,000 for the month of November. The company's cash balance on November 1 was $55,000.
Calculate the excepted cash balance on November 30
A) $34,000
B) $79,000
C) $37,000
D) $15,000
E) $54,700
Answer:
E) $54,700
Explanation:
Cash Balances are determined from Cash Budgets. Thus Prepare a cash Budget as follows :
November
Receipts :
Cash Sale (70%×165,000) $115,500
Credit Sale - October (20%) $39,000
Credit Sale - September (9%) $13,500
$168,000
Payments :
Purchases ($135,000×98%) ($132,300)
Cash disbursements ($36,000)
($168,300)
Reconciliation of Balances
Net Cash Movement ($300)
Opening Balance $55,000
Closing Balance $54,700
The expected cash balance on November 30, considering sales collections, purchases, and cash disbursements, is $34,350.
Explanation:To calculate the expected cash balance on November 30, we need to consider the sales collections and purchases for the months of November and the following months. First, we calculate the expected collections from customers for November sales. Since 70% of sales are collected in the month of sale, 20% in the following month, and 9% in the second month following the sale, we can calculate the expected collections as follows:
Next, we calculate the expected purchases for November, considering the 2% discount if they are paid by the tenth of the following month:
To calculate the expected cash balance on November 30, we start with the cash balance on November 1 and subtract cash disbursements for expenses, add the collections from customers, and subtract the purchases paid:
Now, let's calculate the expected cash balance:
The expected cash balance on November 30 is $34,350, which is closest to option A) $34,000.
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Bee Company issued 5-year, 7% bonds with a par value of $95,000. The company received $92,947 for the bonds. Using the straight-line method to amortize the discount, the amount of interest expense for the first semiannual interest period is: $6,650.00. $7,060.60. $3,530.30. $3,119.70. $3,325.00.
On January 1, a company issues bonds dated January 1 with a par value of $200,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $208,531. The journal entry to record the issuance of the bond is:
Debit Cash $208,531; credit Discount on Bonds Payable $8,531; credit Bonds Payable $200,000.
Debit Bonds Payable $200,000; debit Bond Interest Expense $8,531; credit Cash $208,531.
Debit Cash $208,531; credit Bonds Payable $208,531.
Debit Cash $200,000; debit Premium on Bonds Payable $8,531; credit Bonds Payable $208,531.
Debit Cash $208,531; credit Premium on Bonds Payable $8,531; credit Bonds Payable $200,000.
On January 1, a company issues bonds dated January 1 with a par value of $270,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $280,420. The journal entry to record the first interest payment using straight-line amortization is:
Debit Bond Interest Expense $15,892.00; credit Premium on Bonds Payable $1,042.00; credit Cash $14,850.00.
Debit Interest Payable $14,850.00; credit Cash $14,850.00.
Debit Bond Interest Expense $15,892.00; credit Discount on Bonds Payable $1,042.00; credit Cash $14,850.00.
Debit Bond Interest Expense $13,808.00; debit Premium on Bonds Payable $1,042.00; credit Cash $14,850.00.
Debit Bond Interest Expense $13,808.00; debit Discount on Bonds Payable $1,042.00; credit Cash $14,850.00.
Answer:
A) $3,530.3
B)
Debit Cash $200,000; debit Premium on Bonds Payable $8,531; credit Bonds Payable $208,531.
C)
Debit Bond Interest Expense $13,808.00; debit Premium on Bonds Payable $1,042.00; credit Cash $14,850.00.
Explanation:
discount:
95,000 - 92,947 = 2,053
This amount is distribute equally among all interest paymeny:
2,053 / 10 payment = 205.3
cash outlay + amortization on discount = interest expense
95,000 x 7% x 1/2 + 205.3 = $3,530.3
B)
debit the cash received
we credit the bond payable for their face value
we adjust using premium when lower and premium when higher
C)
we calcualte the premium and divide oer total payment to get the amortization:
280,420 - 270,000 = 10,420 / 10 = 1,042
cash outlay - amortization on premium = interest expense
270,000 x 11% x 1/2 - 1,042 = 13,808
A business cycle is the period of time in which: a. a business is established and ceases operations. b. there are four phases: peak, recession, trough and expansion. c. the price level varies with real GDP. d. expansion and contraction of economic activity are equal. e. none of the above are true.
Answer:
The correct answer is letter "B": there are four phases: peak, recession, trough and expansion.
Explanation:
The business cycle refers to the fluctuations that an economy faces throughout the economic activity. It consists of economic expansions or periods of growth and contractions or periods of economic decline. When the expansion reaches its peak there is usually a downturn followed by a contraction in the economy. The point where the economy starts to recover is called trough after which expansion takes place repeating the cycle.
On June 30, 2018, Adams Company’s total current assets were $504,500 and its total current liabilities were $278,000. On July 1, 2018, Adams issued a short-term note to a bank for $40,200 cash. Required Compute Adams’s working capital before and after issuing the note. Compute Adams’s current ratio before and after issuing the note. (Round your answers to 2 decimal places.)
Answer:
Old Current Ratio = 1.815
New Current Ratio = 1.712
Explanation:
Working Capital = Current Assets - Current Liabilities
Given : Current Assets = 504500 , Current Liabilities = 278000
Current Ratio = Current Assets / Current Liabilities
= 504500 / 278000 = 1.815
Issue of short term note (current liability) to bank for 40200 cash (current asset) leads to following change in working capital :-Current Assets = 504500 + 40200 = 544700
Current Liabilities = 278000 + 40200 = 318200
Current Ratio = Current Assets / Current Liabilities
= 544700 / 318200 = 1.712
A rain barrel is a container that captures and stores rainwater for landscape and garden use during dry periods. As a result, rain barrels benefit the community through water conservation. If homeowners do not consider this external benefit of rain barrels, then a. the socially optimal quantity of rain barrels will be larger than the equilibrium quantity of rain barrels. b. the socially optimal quantity of rain barrels will be smaller than the equilibrium quantity of rain barrels. c. the socially optimal price of rain barrels will be lower than the equilibrium price of rain barrels. d. the market for rain barrels would benefit from a tax on rain barrels.
Answer:
A. The socially optimal quantity of rain barrels will be larger than the equilibrium quantity of rain barrels.
Explanation:
Rain barrels capture water from a roof and hold it for later use such as on lawns, gardens or indoor plants. Collecting roof runoff in rain barrels reduces the amount of water that flows from your property. It's a great way to conserve water and it's free water for use in your landscape. The rain has it's own benefits which can be seen as follows;
1. Save Money. Reduce your water bill with a rain barrel's water catch. ...
2. Reduce Runoff Pollution & Erosion. Runoff from rains pick up soil, oil, pesticides, fertilizers and push them to other areas. ...
3. Promote Plant & Soil Health. ...
4. Conserve Water. ...
5.Wash Cars & Windows.
The socially optimal quantity of rain barrels is larger than the equilibrium quantity because homeowners often do not consider the external benefits like water conservation and reduced stormwater runoff. This leads to underinvestment in rain barrels. Therefore, the correct answer is option a.
A rain barrel is a system that captures and stores rainwater, offering benefits such as water conservation and reduced stormwater runoff. If homeowners do not account for these external benefits, the market fails to achieve the socially optimal quantity of rain barrels.
The correct answer to this question is: a. the socially optimal quantity of rain barrels will be larger than the equilibrium quantity of rain barrels. This is because the external benefits are not included in the decision-making of individual homeowners, leading to underinvestment in rain barrels from a societal perspective.Examples of these benefits are reduced reliance on municipal water systems and improved watershed habitats due to less stormwater runoff. Thus, without considering these benefits, fewer rain barrels are installed than what is socially optimal.You are the CFO of a US firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. What actions, if any, should you take
Answer:
Explanation:
When the Peso depreciates by 30%, the firm can save money on the costs of production as the inputs would be less costly but the market for the firm in Mexico would be affected negatively as the depreciation of the peso would mean that now, the consumer can buy more goods with the same amount of money which will increase the demand. The loans that the subsidiary has taken would also be affected as it has to pay more for the collateral.
If the company reduces the inventory and stock the foreign receivables before the depreciation occurs to minimize the loss. Before the depreciation happens, the firm can convert the pesos denomination to the dollar so that its value doesn't fall.
Analyzing the situation where the Mexican peso is expected to depreciate against the dollar, several actions can be taken such as converting the US dollar loans into peso loans, hedging currency risk through forward contracts, and potential business expansion owing to cheaper foreign investments in Mexico.
Explanation:As the CFO of a firm with a subsidiary in Mexico that is anticipated to face a depreciation of the Mexican peso by 30 percent against the dollar, you might need to consider some strategic moves. Generally, expected depreciation in a currency can lead investors to divest themselves of that currency, leading to an increase in currency supply and a decrease in demand, thus reducing the currency's value.
In this specific case, the expected depreciation of the peso might increase your operational costs since your company would need more pesos to repay its US dollar-based loans. One potentially beneficial action can be, if possible, converting US dollar loans into peso loans before the depreciation occurs. This way, even if the peso depreciates, the subsidiary firm can pay back its loans in weaker pesos.
Another strategy could be to hedge your currency risk. For instance, using forward contracts to lock in today's exchange rate for future transactions, can be particularly helpful if the currency is indeed going to depreciate.
Moreover, as the peso depreciates, foreign investments in Mexico and exports from Mexico would become cheaper for foreign entities, presenting an opportunity to potentially expand your business further in Mexico.
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Camping Supply Company has developed a new camping lamp that runs on solar power. The solar cells charge in the sun all day and then the lamp is ready to run when the sun goes down. The company has a standard costing system to help control costs and has established the following standards related to the new camping lamp:
Direct materials: 3 small solar cells per lamp at $0.60 per cell
Direct labour: 0.75 hours per lamp at $12 per hour
During March, the company produced 4,000 camping lights. Production data for March are as follows:
Direct materials: 20,000 small solar cells were purchased at a cost of $0.65 per cell; 6,000 of these were still in inventory at the end of the month (there was no opening inventory).
Direct labour: 3,100 direct labour-hours were worked at a cost of $35,000.
Required:
1. Compute the direct materials price and quantity variances for March. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
2. Compute the direct labour rate and efficiency variances for March.(Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Answer:
1. $1,000 Unfavorable
2. $1,200 Unfavorable
3. $2,200 Favorable
4. $1,200 Unfavorable
Explanation:
Actual Quantity purchased = 20,000
Actual price per cell = $0.65
Standard Price per cell = $0.60
Direct Materials Price Variance = Actual Quantity Purchased × (Actual Price - Standard Price)
= 20,000 × ($0.65 - $0.60)
= $1,000 Unfavorable
Standard Price per cell = $0.60
Actual Quantity used = Actual quantity purchased - Ending inventory
= 20,000 - 6,000
= 14,000
Standard Quantity = 3 × 4,000
= 12,000
Direct Materials Quantity Variance = Standard Price × (Actual Quantity Used - Standard Quantity)
= $0.60 × (14,000 - 12,000)
= $1,200 Unfavorable
2. Actual hours = 3,100
Actual Direct labor cost = $35,000
Standard Rate = $12 per hour
Direct Labor Rate Variance = Actual Direct labor cost - Actual Hours × Standard Rate
Direct Labor Rate Variance
= $35,000 - 3,100 × $12
= $2,200 Favorable
Standard Rate = $12.00 per hour
Standard hours = 0.75 × 4,000
= 3,000
Actual hours = 3,100
Direct Labor Efficiency Variance = Standard Rate × (Actual hours - Standard hours)
= $12.00 × (3,100 - 3,000)
= $1,200 Unfavorable
Variance analysis is the measurement tool that determines the gap between the actual and the budgeted or the standard figures determined by the management as per the past records.
1.
The direct material price variance is $1,000 UnfavorableThe direct material quantity variance is $1,200 Unfavorable2.
The direct labor rate variance is $2,200 FavorableThe direct labor efficiency variance is $1,200 UnfavorableComputation:
1.
Given:
Actual Quantity purchased =20,000Actual price =$0.65Standard price =$0.60[tex]\text{Direct Material Price Variance}=\text{Actual Quantity Purchased}\\\times(\text{Actual Price-Standard Price})\\\\=20,000\times(\$0.65-\$0.60)\\\\=20,000\times\$0.05\\\\=\$1,000\;(\text{U})[/tex]
[tex]\text{Direct Material Quantity Variance}=\text{Standard Price}\\\times(\text{Actual Quantity used-Standard Quantity})\\\\=\$0.60\times(14,000-12,000)\\\\=\$0.60\times2,000\\\\=\$1,200\;(\text{U})[/tex]
Working Note:
Computation of Actual Quantity used:
[tex]\text{Actual Quantity used}=\text{Actual quantity purchased-Ending inventory}\\\\=20,000-6,000\\\\=14,000[/tex]
2.
Given:
Actual hours =3,100Actual Direct labor cost =$35,000Standard rate =$12 per hour[tex]\text{Direct Labor rate Variance}=\text{Actual Direct labor cost}\\-(\text{Actual Hours}\times\text{Standard rate})\\\\=\$35,000-(3,100\times\$12)\\\\=\$2,200\;(\text{F})[/tex]
[tex]\text{Direct Labor Efficiency Variance}=\text{Standard rate}\\\times(\text{Actual Hour-Standard Hour})\\\\=\$12\times(3,100-3,000)\\\\=\$1,200\;(\text{U})[/tex]
Working note:
Computation of standard hour:
[tex]\text{Standard hour}=\text{Direct labor hour}\times\text{Units produced}\\\\=0.75\times4,000\\\\=3,000[/tex]
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Gothic Architecture is a new chain of clothing stores specializing in the color black. Gothic issues 1,000 shares of its $1 par value common stock at $10 per share. Record the issuance of the stock. How would the entry differ if Gothic issued no-par value stock? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
There will be a $10,000.00 capital account Journal entry and a subsequent credit of common stock journal entry about the no par value.
Explanation:
Funds from the sale of par value stock are divided between the common stock account and the paid-in capital account. For example Gothic Architecture issued a 1,000 shares of $1 par value at $10 par share means that it offered the stock for $1 par share but with the market price of $10 which depicts $10,000.00 will be realised as equity from the sales of the shares.
The only financial effect of a no par value issuance is that any equity funding generated by the sale of no par value stock is credited to the common stock account.
There is a journal entry required for the transactions because the aforementioned entry notwithstanding, there should also be a corresponding Asset entry on the Balance Sheet of Gothic Architecture for both transactions.
Bickford Company plans to sell 135,000 units in November and 180,000 units in December. Bickford's policy is that 10% of the following month's sales must be in ending inventory. On November 1, there were 14,000 units in inventory. It takes 30 minutes of direct labor time to make one unit. Direct labor wages average $17 per hour. Variable overhead is applied at the rate of $5 per direct labor hour. Fixed overhead is budgeted at $56,500 per month. What is the budgeted overhead for November
The budgeted overhead for November is $1,541,500, calculated by adding the fixed overhead cost, direct labor cost, and variable overhead cost.
Explanation:To calculate the budgeted overhead for November, we need to consider the direct labor cost and the variable overhead cost. First, we will calculate the direct labor cost. Since it takes 30 minutes of direct labor time to make one unit and there were 135,000 units planned to be sold in November, the total direct labor hours required will be 135,000 units x 30 minutes/unit ÷ 60 minutes/hour = 67,500 hours.
Next, we'll calculate the direct labor cost by multiplying the total direct labor hours by the labor wage rate of $17 per hour. The direct labor cost will be 67,500 hours x $17/hour = $1,147,500.
Now, let's calculate the variable overhead cost. Since the variable overhead rate is $5 per direct labor hour, the variable overhead cost will be 67,500 hours x $5/hour = $337,500.
Finally, to calculate the budgeted overhead for November, we'll add the fixed overhead cost of $56,500 per month to the direct labor cost and the variable overhead cost for November. The budgeted overhead for November will be $56,500 + $1,147,500 + $337,500 = $1,541,500.
Choose the multiple choice answers which, when strung together, create an accurate definition of GDP. The U.S. nominal gross domestic product is all final goods all goods and services all final goods and services all intermediate goods and services legally produced by residents of the United States within the territorial boundaries of the United States under the auspices of the U.S. government by entities owned by the citizens of the United States within a given presidential administration business cycle time period year and valued at the benefit the good or service provides to all of society. the price of the item adjusted for inflation. the prices at which the goods or services are sold. values set by the Congressional Budget Office.
Nominal GDP reflects the total market value of all final goods and services produced in a nation in a year, avoiding double counting and measured at market prices. Real GDP is adjusted for inflation to indicate true economic growth.
Explanation:The U.S. nominal gross domestic product (GDP) is the current value of all final goods and services produced within a nation in a year. It includes only final goods to avoid the mistake of double counting, where output is counted more than once as it moves through various stages of production. This calculation ensures the value of intermediate goods, like the tires on a truck, are not included separately from the final product, the truck itself. Hence, GDP is measured at the prices at which goods and services are sold, reflecting the market value of all final products and services within an economy. It’s essential to note that when referring to real GDP, the values are adjusted for inflation, providing an accurate picture of economic growth.
Suppose that a department store added domestically-produced refrigerators to its inventory in June 2016 because it expected an increase in demand for them. The store miscalculated the preferences of its customers, however, and was not able to sell the refrigerators until January 2017. The refrigerators added to the store's inventory in June 2016:1.will be counted in 2017 GDP because they were sold that year.2.will not be counted in 2016 GDP because they were intermediate goods that year.3.will be counted in 2016 GDP as part of consumption (C).4.will be counted in 2016 GDP as part of investment (I).
Answer:
1. will be counted in 2017 GDP because they were sold that year.
Explanation:
Remember, mention was made that it was in the following year the domestically-produced refrigerators weree sold by the departmental store which were bought in 2016.
Based on the definition of Gross domestic product; a measure in monetary terms of the total number of goods and services produced in a country in a period of one year, thus the monetary value was transferred when the refrigerators were sold, which is 2017.
Explain which of the following is a fixed cost or a variable cost for General Motors. a) The cost of aluminum used for its automobiles b) The property taxes on its Bowling Green, Kentucky assembly plant c) The cost of labor for its assembly line workers. d) The yearly payments for naming rights for the General Motors Centre sports arena in Oshawa, Ontario, Canada. e) The salary paid to Mary Barra, the Chief Executive Officer of General Motors. f) The cost of tires it purchases from Goodyear for its trucks and SUVs
Answer:
a) The cost of aluminum used for its automobiles (variable costs - because there is a specific unit and quality of aluminium used per car)
b) The property taxes on its Bowling Green, Kentucky assembly plant (Fixed costs - the business is expected to pay irrespective of sales)
c) The cost of labor for its assembly line workers. (Variable costs - because it can be pre-planned at a certain labor costs per labour hour)
d) The yearly payments for naming rights for the General Motors Centre sports arena in Oshawa, Ontario, Canada. (Fixed costs - the business is expected to pay irrespective of sales)
(E) The salary paid to Mary Barra, the Chief Executive Officer of General Motors(Fixed costs - the business is expected to pay irrespective of sales)
f) The cost of tires it purchases from Goodyear for its trucks and SUVs (variable costs - it can be easily varied by unit of car)