Exercise 16-05 a-b (Video) In Waterway Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion costs, and production data for its Sterilizing Department in selected months during 2020 are as follows. Beginning Work in Process Ending Work in Process Month Units Conversion Cost% Units Transferred Out Units Conversion Cost% January 0 — 11,100 3,100 63 March 0 — 12,300 3,400 40 May 0 — 15,400 7,860 80 July 0 — 10,200 2,200 46 Compute the physical units for January and May. January May Units to be accounted for Beginning work in process Started into production Total units Units accounted for Transferred out Ending work in process Total units Compute the equivalent units of production for (1) materials and (2) conversion costs for each month. Materials Conversion Costs January March May July

Answer:

$13,296

Explanation:

Federal unemployment tax rate = 0.8% of 96,000 = 768

State unemployement tax rate = 5.4% of 96,000 = 5,184

Social security tax rate+medicare tax rate = 6.2%+1.45% = 7.65%

7.65% of 96,000 = 7,344

So total tax expense = 768+5,184+7,344 = $13,296

So answer is $13,296

Final answer:

The question asks for the percentage price change of bonds with coupon rates of 5% and 11% when interest rates rise by 2%. Bond prices fall when interest rates rise, with bonds having lower coupon rates being more affected. Exact calculations require more information and complex financial formulas.

Explanation:

The question asks about the percentage price change of two bonds with different coupon rates when the interest rates rise by 2 percent. Both bonds have the same years to maturity and yield to maturity (YTM), but because Bond J has a lower coupon rate of 5% and Bond K a higher coupon rate of 11%, their sensitivity to interest rate changes will differ.

When interest rates increase, the price of existing bonds typically falls. This is because new bonds are issued at the new higher rates, making the existing bonds with lower rates less attractive. Since Bond J has a lower coupon rate, it is more sensitive to interest rate changes, and its price will decrease more significantly than Bond K's, which has a higher coupon rate.

To determine the exact percentage price change, you would need to perform a bond price calculation using the new yield to maturity, which would be the original YTM plus the 2% increase. However, this requires additional information and more complex financial formulas which go beyond the scope of this explanation.

Answer:

26%

Explanation:

MV=Do(1+g)/(Ke-g)

Where MV is market value=$36

Do is current dividend per share=$6

g is growth rate=8%

Ke=?  

By putting above values we get;

36=6(1+.08)/(Ke-.08)

36Ke-2.88=6+.48

36Ke=2.88+6+.48

Ke=9.36/36

Ke=26%

Answer:

B. Available for sale securities

Explanation:

Available for sale securities refer to debt or equity instrument. They are purchased with a pre defined aim of selling them before their maturity, for  profit earning. Such profit is usually a 'quick capital gain'. Apart from profit, they also assist for liquidity, repaying needs of companies.

These equities are reported at 'fair value'. This implies that unrealised gains & losses are not included in earnings. They are rather recorded in a specific segregated item head 'accumulated other comprehensive income' of shareholder's equity.

Final answer:

To prepare a schedule of cash receipts for September, calculate the cash received from cash sales, credit sales collected in September, and credit sales written off. Cash receipts: $57,000 (cash sales) + $104,500 (credit sales collected) + $28,500 (written off) = $190,000 (total cash receipts).

Explanation:

To prepare a schedule of cash receipts for September, we need to calculate the cash received from different types of sales. According to the sales forecast, the total sales for September are $190,000. Based on the given information, 30% of the sales are cash sales. Therefore, the cash receipts from cash sales would be 30% of $190,000, which is $57,000.

For the credit sales, we know that 55% of them are collected in the month following the sale. So, the cash receipts from credit sales collected in September would be 55% of $190,000, which is $104,500.

Finally, 15% of the credit sales are written off as uncollectible. Therefore, the cash receipts from credit sales written off would be 15% of $190,000, which is $28,500.

Adding up all the cash receipts, the schedule of cash receipts for September would look like:

Cash sales: $57,000

Credit sales collected in September: $104,500

Credit sales written off: $28,500

Total cash receipts: $190,000

Complete Question :

A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow:

January 1, 2017          $0.15 = 1 won

April 1, 2017                0.16 = 1

June 1, 2017                0.17 = 1

December 31, 2015     0.19 = 1

Assume that the won is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2017?

a. Marketable equity securities = $16,000 and Inventory = $16,000.

b. Marketable equity securities = $17,000 and Inventory = $17,000.

c. Marketable equity securities = $19,000 and Inventory = $16,000.

d. Marketable equity securities = $19,000 and Inventory = $19,000.

Answer:

Step 1 of 4

A business combination is the union of the small business units into one. The new combined unit is known as business combination. This is done for various purposes. A business combination generally increases the efficiency and productivity while reducing the costs.

Consolidated financial statements are those statements in which the financial statements of both the parent and all its subsidiaries are shown as a single entity.

Translated adjustments are those adjustments which are made in the income statement to incorporate the fluctuations in the exchange rates.

Step 2 of 4

The exchange rate is the exchange of the currencies of the two countries. There is a certain fee while changing the currency between two countries.

Translated adjustments are made because of the fluctuations in the different currencies. This generally affects all the aspects in the income statement and the balance sheet like assets, liabilities and equity. If the adjustment is positive then it means that the company is gaining from the currency fluctuations and vice versa.

Step 3 of 4

Since the functional currency is the foreign currency, hence the translation will be done at the current rate method. Hence, all the assets will be translated at the current rate. The current rate in this case is $0.19.

Step 4 of 4

[Find the attachments]

Answer:

(a) Prepare DU Journeys' journal entries for 2016, 2017, and 2018.

Date            Account Title and Explanation    Debit($)     Credit($)

31/12/2016  Right of Use asset                          15,000

                   Lease Liability                                                    15,000

(to record lease of asset)

31/12/2017  Interest Expense                             1,200

                  Lease Liability                                 4,352.82

                  Cash                                                                    5,552.82

(to record interest expense and lease payment)

31/12/2017  Amortization Expense                     5,000

                  Right of use Asset                                               5,000

(to record amortization expense for right of use asset)

31/12/2018 Interest Expense                               851.77

                 Lease Liability                                   4,978.69

                 Cash                                                                      5,830.46

(to record interest expense and lease payment)

31/12/2018 Amortization Expense                      5,000

                 Right of use Asset                                                 5,000

(to record amortization expense for right of use asset)

Date: 31/12/2016

Annual Payment: -

Interest Expense: -

Reduction of Lease Liability: -

Lease Liability: $15,000

Depreciation Expense: -

Date: 31/12/2017

Annual Payment: $5,552.82

Interest Expense: $1,200

Reduction of Lease Liability: 4352.82

Lease Liability: 10647.18

Depreciation Expense: $5,000

Date: 31/12/2018

Annual Payment: $5,830.46

Interest Expense: 851.7744

Reduction of Lease Liability: 4978.6856

Lease Liability: -44331.5056

Depreciation Expense: $5,000

Date: 31/12/2019

Annual Payment: $6,121.98

Interest Expense: -3546.520448

Reduction of Lease Liability: - 44331.5056

Lease Liability: 0

Depreciation Expense: $5,000

(b) Consumer Price index means: book the same amount year to year for payment. The increase in CPI may be booked as an expense when incurred.

The journal entries for DU Journeys' lease agreement pertain to recognizing the leased asset and liability, accounting for lease payments, interest expense, and depreciation. If payments were tied to CPI, they would be variable and changes would be accounted for in profit or loss in the period of the change.

Based on the details of the problem, it seems we have a matter of accounting for a finance lease agreement with DU Journeys as the lessee. This question falls under the scope of financial accounting, more specially lease accounting. The calculations and entries would change if lease payments were tied to CPI, which would then mean that lease payments are variable and not fixed as in the given scenario.

For the year 2016, the first entry would be to record the right to use the leased car. On December 31, 2016, DU Journeys would debit 'Leased Vehicles' for $15,000 representing the fair value of the vehicle or leased asset, and Credit 'Obligation under Finance Lease' for $15,000. This establishes the initial recognition of the leased asset and the liability. For subsequent years 2017 and 2018, DU Journeys will need to make entries for lease payments, interest expense, and depreciation. However, without a clear understanding of the context and connections to the numbers and tables presented, more specific entries couldn't be made.

If instead, the annual lease payments were tied to CPI, it would be considered a variable lease payment. If lease payments are variable (i.e., tied to an index or rate such as CPI), then changes in lease payments due to changes in the index or rates are accounted for in profit or loss in the period of the change. Thus, the payments would not be included in the initial measurement of the lease liability and right-of-use asset, affecting the numbers DU Journeys would record.

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Answer:

a. $408,334.39

b. $3,457.40

Explanation:

r = rate per period = 8% = 0.08

P = Initial Value of Gift = $10,000

t = time = 30 - 5 = 25, As received after 5 years.

[tex]A = P (1 + r)^{t}[/tex]

[tex]A = $10,000 (1 + 0.08)^{25}[/tex]

[tex]A = $10,000 x 1.08^{25}[/tex]

A = $10,000 x 6.8485

A = $68,484.75

[tex]FV of annuity = P [\frac{(1 + r)^{n} - 1}{r} ][/tex]

P = Periodic Payment = $3,000

a.

n = number of periods = 30

[tex]FV of annuity = 3,000 [\frac{(1 + 0.08)^{30} - 1}{0.08} ][/tex]

[tex]FV of annuity = 3,000 [\frac{(1.08)^{30} - 1}{0.08} ][/tex]

[tex]FV of annuity = 3,000 [\frac{10.0627 - 1} {0.08} ][/tex]

[tex]FV of annuity = 3,000 [\frac{9.0627} {0.08} ][/tex]

FV of annuity = $3,000 x 113.2832

FV of annuity = $339,849.63

Accumulated value of money can be calculated as follows;

$68,484.75 + $339,849.63

$408,334.39

b.

If they wish to retire with $800,000 savings, they need to save additional amount of money every year to provide additional amount of money, as follows;

$800,000 - $68,484.75

$731,515.24

The extra annual savings can be calculated as follows;

[tex]731,515.24 = P [\frac{(1 + 0.08)^{30} - 1 }{0.08} ][/tex]

$731,515.24 = P x 113.28

Divide the above equation by 113.28 we get;

[tex]P = \frac{731,515.24}{113.28}[/tex]

P = $6,457.40

They are already paying $3,000, So the extra saving they need make every year is calculated as follows;

$6,457.40 - $3,000

$3,457.40

Answer:

The budgeted $ amount is  $13,680.88  

Explanation:

The purchasing power parity formula gives us an idea what an exchange spot rate would be in future period using the below formula:

Future spot rate=current spot rate*(1+US inflation)/(1+French inflation)

current spot rate=$1.3620

US inflation rate is 2.50%

French inflation is 3.50%

Future spot rate=$1.3620*(1+2.5%)/(1+3.5%)

future spot rate=$1.3488

The weekly cost of vacation would also be adjusted for inflation rate in France as follows:

Adjusted price=9800*(1+3.5%)=10143

Hence the cost of the one week rental would be 10143  multiplied by the future spot exchange rate of 1.3488 i.e $ 13,680.88   (10143*1.3488)

Answer: Anchoring bias

Explanation: Anchoring bias is described as the tendency to focus on one value or idea known as the “anchor” and not adjust away from it sufficiently (the simple act of thinking of the first number strongly influences the second, even though there is no logical connection between them); It is also defined as the tendency of people to place subsequently refined answers to a given question close to the initially estimated answer, giving unduly weight to the initial answer, such as adjusting the initial estimate of 10% to 20% when 90% would have been more appropriate.

Some examples of anchors might include: real estate listing prices, initial cost estimates for development projects, salary of your last job etc.  

Answer:

a) Inflation =     = 20%

b) Inflation = -4.3

c) Deflation

Explanation:

The rate of change in the consumer price index is used to measure the movement in price level . An increase in the price level is termed inflation and a decrease is termed deflation.

a)

Inflation =( Current CPA/previous CPI) -1  ×  100

           = (168/140) - 1 × 100

            = 20%

b)

Inflation = (134-140)/140 × 1   = -4.3%

c) The second outcome is called deflation

The answer provides calculations for the rates of inflation in two scenarios and explains the term economists use for the second outcome.

a. What is this year’s rate of inflation?

b. What is this year’s rate of inflation?

c. What term do economists use to describe this second outcome?

Answer:

Analysts measure the cost of a bundle of goods representative of overall spending at two points in time and compare the difference in cost.

Explanation:

Inflation refers to a situation in which there is a rise in the price level of the goods in an economy at a particular point of time.

For determining inflation, we need to compare the cost of buying certain baskets of goods in the current year and the cost of buying same basket of goods in the previous year. So that we are able to find the exact rise in the price level of the goods.

We need to analyse the cost of the same basket of goods for the two different periods. Hence, we will get the most appropriate values of the inflation.

Final answer:

Inflation is typically measured using the Consumer Price Index (CPI), which compares the cost of a representative bundle of goods and services at different points in time. The CPI is considered the standard measure of inflation, although it is important to acknowledge some of its limitations and biases.

Explanation:

Measuring Inflation

The method that most accurately characterizes the calculation of inflation is where analysts measure the cost of a bundle of goods representative of overall spending at two points in time and compare the difference in cost. This approach is embodied in the calculation of the Consumer Price Index (CPI), which is the most commonly cited measure of inflation. The CPI is crafted by statisticians at the U.S. Bureau of Labor Statistics and uses a basket of goods and services that reflects the purchases of an average family. Despite the prominence of the CPI, it's important to consider the distinction between the cost of living and the CPI, as well as addressing biases such as the substitution bias and the quality/new goods bias. Additionally, other measures like the GDP deflator and the Core Inflation Index provide alternative views on price changes in the economy.

Answer:

Please kindly check explaination for the details.

Explanation:

a.

Decision variables:

Let

X1 = no of units of product X1

X2 = no of units of product X2

X3 = no of units of product X3

Objective function is to maximize profits

Max Z = 20X1 + 6X2 + 8X3

Constraints:

8X1 + 2X2 + 3X3 <= 800

4X1 + 3X2 <= 480

2X1 + X3 <= 320

X1, X2, X3>=0

b.

please see attachment for the excel solutions.

c.

X1 = 0

X2 = 160

X3 = 160

Z = 2240

Answer:

The project cost is a cost required to procure all the needed products, services and resources to deliver the project successfully.

Explanation:

Analogous estimation: involves comparing a past similar project to your current project and the use of analogy to estimate cost.

Parametric Estimation: This estimation uses the historical data based on the real data and saves lots of time to calculate the cost estimation.  

Bottom-up approach: also called definitive technique breaks up all activities of the project to the micro level in order to conduct comprehensive cost estimation.

The issues in project cost estimation include cost overruns, inefficiencies and project surprise. To effectively mitigated them, Bottom-up approach should be applied. It is an expensive but very reliable method.

Answer:

The correct answer is letter "A": goal achievement.

Explanation:

Performance appraisals are evaluations employers conduct based on a standard established by their companies where workers' performance is tested. It is useful to determine if the employees are fulfilling the expectations of the firm and if they are actually accomplishing the goals of why employees were hired for.

If a performance appraisal is focused on meeting customers' demands and delivering clients' products on time, the evaluation is likely to be focused on goal achievement or the ability to reach achievements in time and form based on what consumers may ask for.

Answer:

1.A representative quantity from a probability distribution arrived at by multiplying each outcome times the associated probability and summing up the products.

2.The relative convertibility of short-term assets to cash.

3.Assets that are assumed to be long term in nature.

4. Computer terminals in retail stores that may be used for inventory control or other purposes.

5. Assets that are converted to cash within the normal operating cycle of the firm.

6.Financing provided by sellers or suppliers in the normal course of business.

7.Equal monthly production used to smooth out production schedules and employ manpower and equipment more efficiently.

Explanation:

On January 30, the due date of the note, Wright will record the payment with a debit to Interest Expense in the amount of $100.

Explanation:

Answer:

Dr. Cash                                      $124,200

Dr. Accumulated Depreciation $118,800

Dr. Loss on Disposal                 $16,200

Cr. Equipment                            $259,200

Explanation:

Depreciation is the recording of asset expense due to its use. It is due to use of fair value of the asset after use. The expense value reduces the asset value over useful life period.

As per given data

Cost of Asset = $259,200

Useful life= 5 years

Salvage Value = $43,200

Asset is purchased on January 1, 2020 and on September 30, 2022 depreciation of only 2 years and 9 months has charged.

Depreciation per year =  (Cost of Asset - Salvage Value) / Useful life = ($259,200 - $43,200) / 5 = $43,200

Accumulated Depreciation as on September 30, 2022 = ($43,200 x 2) + $43,200 x 9/12 = $118,800

Book value of the asset is the net of accumulated depreciation of the asset. The accumulated depreciation on September 30, 2022, is as follow:

Net Book value of Asset = 259,200 - $118,800 = $140,400

Complete question:

Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:

Standard Quantity or Hours Standard Price or Rate Standard  Cost

Direct materials 4.6 pounds $ 2.50 per pound $ 11.50

Direct labor 0.2 hours $ 12.00 per hour $ 2.40

During the most recent month, the following activity was recorded:

a. Eleven thousand two hundred pounds of material were purchased at a cost of $2.90 per pound.

b. The company produced only 1,120 units, using 10,080 pounds of material. (The rest of the material purchased remained in raw materials inventory.)

c. Five hundred and forty eight hours of direct labor time were recorded at a total labor cost of $6,576.

Solution:

Direct Material price Variance

= (Actual Price - Standard price) x Actual Quantity

= ($2.90 - $2.50) x 10,080 = $4032 (F)

Standard Quantity = 1,120 x 4.6 = 5,152 pounds

Direct Material Quantity Variance

= (Actual Quantity - Standard Quantity) x Standard Price

= (10,080 - 5,152  ) x $2.50 = $12,320 (U)

Answer:

B. average total cost does not change when output changes

Explanation:

A firm can experience increasing or decreasing return to scale and constant return to scale, it depends on various factors from the average total cost to output changes. If a firm experiences constant return to scale it means that the average total cost does not change when output changes. If the average total cost increases that mean increasing return to scale and if it decreases than decreasing return to scale

Answer:

a. Cost of Goods Sold (COGS) amounts to $21,100

Explanation:

a.

Computing the Cost of Goods Available for Sale as:

Cost of Goods Available for Sale = Beginning Finished Goods Inventory + Cost of Goods Manufactured

where

Cost of Goods Manufactured is $18,600

Beginning Finished Goods Inventory is $15,000

So, putting the values above:

Cost of Goods Available for Sale = $18,600 + $15,000

Cost of Goods Available for Sale = $33,600

Computing the COGS (Cost of Goods Sold) as:

Cost of Goods Sold (COGS) = Cost of Goods Available for Sale - Ending Finished goods Inventory

where

Cost of Goods Available for Sale  is $33,600

Ending Finished goods Inventory is $12,500

So, putting the values above:

Cost of Goods Sold (COGS) = $33,600 - $12,500

Cost of Goods Sold (COGS) = $21,100

Answer: DR Cash of 1,296 ; CR Revenue $1200 ; CR Sales Tax Payable $96

Explanation:

When accounting for taxes paid on revenue, you must account for them separately.

You add the tax to the sales and DEBIT it to Cash then you take just the sales figure without the tax and CREDIT Revenue. The tax is sent to the Sales Tax Payable Account as a CREDIT.

Answer:

Overestimate inflation between the two years.

Explanation:

If there is an increase in the cost of automobile tire and no adjustment is made in the mileage, and then CPI would be overestimated between the two years. This is because as there is no improvement in mileage and hence it is estimated that there is no increase in variable costs in the process of improving the quality.  

Therefore, the correct answer is overestimate inflation between the two years.

Answer:

Adams Corporation

a) Ending Balances of:

i) Raw Materials:

a) Opening balance = $54,600

b) Purchases = $239,200

Cost of Available Raw Materials = $293,800 (a+b)

less c) Cost of Raw Materials Issued = $248,600

Closing Raw Materials = $45,200

ii) Work in Process (WIP):

a) Opening WIP = $83,400

b) Materials Issued = $248,600

c) Labour applied = $323,000

d) Overhead applied = $46,300

Total cost of WIP available for production = $701,300 (a+b+c+d)

less Cost of Finished Goods = $611,700

Closing WIP = $89,600

iii) Finished Goods:

a) Opening Finished Goods = $27,400

b) Cost of Finished Goods = $611,700

c) Finished Goods available for sale = $639,100 (a+b)

d) less Cost of Goods Sold = $601,100

e) Closing Finished Goods = $38,000

B-1) A schedule of Cost of Goods Manufactured

Opening Inventory of Materials = $54,600

Opening WIP = $83,400

Purchases of Materials = $239,200

Labour = $323,000

Overhead = $46,300

Total Cost = $746,500

Less Closing Inventory of Materials = $45,200

Less Closing WIP = $89,600

Total Cost of Finished Goods = $611,700

B-2) Schedule of  Cost of Goods Sold:

a) Opening Finished Goods = $27,400

b) Cost Finished Goods = $611,700

c) Cost of Goods Available for sale = $639,100 (a+b)

d) less Closing Finished Goods = $38,000

e) Cost of Goods Sold = $601,100 (c - d)

B-3) Income Statement

Sales = $800,600

less cost of sales = $601,100

Gross Profit = $199,500

less Selling and Administrative Expenses = $70,200

Net Income before Interests and Taxes = $129,300

Explanation:

a) Closing Inventory of Raw Materials, WIP, and Finished Goods can be obtained by adding opening inventory to purhcases, transferred to production, or finished goods to obtain the costs of raw materials available for production, cost of materials in WIP, and cost of finished goods available for sale respectively.

b) With the costs of materials in WIP, labour and overhead costs are applied to obtain the costs of production.

c) When the closing WIP is subtracted from (b) above, we have the cost of finished goods for the period.

d) The difference between Sales and Cost of Sales is the Gross Profit.

e) The Selling and Administrative expenses are then deducted from the gross profit to get the net income or profit before interests and taxes.

Answer:

See explaination

Explanation:

The detailed step by step solution of the given problem is sent across as an attached file.

please kindly check attachment

Answer:

b. A cash Flow from non capital financing activity

Explanation:

It is a cash flow from non capital financing activity since no shares have been issued thus option c. is not applicable

The City of Tutland has obtained financing, so it is not cash generated from operating activities.

This transaction is also not an investing activity since this is as source if fund and no long term assets are procured in this transaction

Answer: c. A cash flow from capital and related financing activities

Explanation:

It is Cash flow from Capital and financing related activities because first of all, the funds are to be used to refurbish of the Town's water utility fund equipment which is a Capital Expense.

Also it relates to the raising of funds on the capital market which goes into the Finance portion of the Cash Flow statement.

With these considerations in mind, the activity will be recorded as a cash flow from capital and related financing activities.

If you need any clarification do react or comment.

To calculate the net present value (NPV) of the project with given after-tax cash flows and beta

The net after-tax cash flows for the project are as follows:

To calculate the net present value (NPV) of the project, we need to discount these cash flows by the project's required rate of return, which can be calculated using the Capital Asset Pricing Model (CAPM) formula:

r = rf + beta * (E(rM) - rf)

Given rf = 4%, beta = 1.9, and E(rM) = 14%, we can calculate the required rate of return (r) and then apply it to the cash flows to determine the NPV.

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To calculate the net after-tax cash flows for the project, multiply each cash flow by (1 - tax rate).

In order to calculate the net after-tax cash flows for the project, we need to consider the cash flows for each year and apply the tax rate. The given cash flows are: Year 0: -30 million, Year 1-9: 15 million, Year 10: 30 million.

To calculate the after-tax cash flows, we multiply each cash flow by (1 - tax rate). Let's assume the tax rate is 20%. The after-tax cash flows will be: Year 0: -30 million, Year 1-9: 15 million * 0.8 = 12 million, Year 10: 30 million * 0.8 = 24 million.

Therefore, the net after-tax cash flows for the project are: Year 0: -30 million, Year 1-9: 12 million, Year 10: 24 million.

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Granite Company purchased a machine costing $132,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $3,200. The machine requires special mounting and wiring connections costing $11,200. When installing the machine, $2,700 in damages occurred.The Total cost recorded to get the ready to use:  $ 147,780

Explanation:

From the above question we get the following information

Equipment cost: 132,000 x (1 - 1%) = 130,680

shipping cost:                                        3,200

special wiring connections                 11,200

installation cost                                      2,700  

Total cost to get the machinery  ready to use:      $ 147,780

It is important to note that the  cost incurred to get the equipment ready for usage  and production must be included while calculating the equipment cost.

Answer:

$4,000 under accural method and $12,000 under cash method.

Explanation:

Monthly rent = $1,000

A) In accural method, Mike can only deduct up to 4 months rent. Revenue is to be recognised on accural basis, not on receipt. ==> 4 x $1,000 ==> $4,000

B) In cash method, Mike can deduct 12 months rent when he applies 12 month concept. ==> 12 x $1,000 ==> $12,000

Answer:

$5,800 under accural method and $17,400 under cash method.

Explanation:

Monthly rent = $1,450

A) In accural method, Mike can only deduct up to 4 months rent. Revenue is to be recognised on accural basis, not on receipt. ==> 4 x $1,450 = $5,800

B) In cash method, Mike can deduct 12 months rent when he applies 12 month concept. ==> 12 x $1,450 ==> $17,800.

Answer:

See the explanation below.

Explanation:

Fair value of expired option = 60,000 * $1 * 10% = $6,000

Journal entries will be as follows:

Details                                                                 Dr ($)           Cr ($)  

Paid-in capital - stock options                           6,000

Paid-in capital - expiration to stock options                        6,000

To record the expiration of stock option