Business College

Finch Company began its operations on March 31 of the current year. Finch Co. has the following projected costs: April May June Manufacturing costs(1) $156,800 $195,200 $217,600 Insurance expense (2) $1,000 $1,000 $1,000 Depreciation expense $2,000 $2,000 $2,000 Property tax expense(3) $500 $500 $500 (1) 3/4 of the manufacturing costs are paid for in the month they are incurred. 1/4 is paid in the following month. (2) Insurance expense is $1,000 a month, however, the insurance is paid four times yearly in the first month of the quarter, i.e. January, April, July, and October. (3) Property tax is paid once a year in November. The cash payments for Finch Company in the month of June are:

Answers

Answer 1

Answer:

The cash payments for Finch Company in the month of June is $185,600.

Explanation:

Cash payment : Cash payment is that payment which is deals only in cash or the payment is only paid in cash.

So,

To compute the cash payment for June month, the following things is need to be considered.

1. Manufacturing cost of April and May

All other cost like - insurance cost, property tax is not need to be considered because it is not related to may month.

So,

= 3÷4 of May month + 1÷4 of April month

= 3÷4 × $195,200 + 1÷4 × $156,800

= $146,400 + $39,200

= $185,600

Hence, The cash payments for Finch Company in the month of June is $185,600.

Related Questions

Households receive a total income of $5 million. Of this, $3.5 million are wages received for laborservices, $1 million are rental payments, and $250,000 are interest payments received. What arethe costs of production and profits equal to respectively?

Answers

Answer:

profit = 250,000

Explanation:

Factor Income is derived from the sum of the Factor of Production

Labor, Land, Capital and Enterprise

Income = wages + rent + interest + profit

To get profit, which is the retribution for the entrepreneur we post our know values and solve for p.

5,000,000 = 3,500,000 wages + 1,000,000 rent + 250,000 interest + p

5,000,000 - 3,500,000 - 1,000,000 - 250,000 = p

p = 250,000

Which of the following statements is CORRECT?
a. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than equity, and thus the after-tax cost of debt is always greater than the cost of equity.
b. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes.
c. If a company assigns the same cost of capital to all of its projects regardless of each project’s risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.
d. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt.
e. Higher flotation costs tend to reduce the cost of equity capital.

Answers

Answer:

c. If a company assigns the same cost of capital to all of its projects regardless of each project’s risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.

Explanation:

(A) and (B)

Financiation through debt provides a certain shield tax. The interest expense of the debt decrease the income tax expense. If those funds were from equity, the interest expense would not exist and the income tax expense will be higher.

Therefore, after-tax debt is lower than the pretax debt.

And referring to the relationship between the cost of debt and cost of equity, that is not set in stone, the rates change over time.

(D)the retained earnings are part of the capital, they will be expected to yield the cost of capital rate, not the cost of debt.

(E) the flotation cost increases the cost of equity capital

(C) The company must adjust his cost of capital for each project because there is a project which may be safer than others.

There is a trade-off between yields and risk, so each project should be evaluated with a rate according to his own risk.

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet? Measuring asset impairment. Classifying extraordinary items. Sale and leaseback gain recognition. Measuring salaries expense. Prior service cost recognition for pension amendments.

Answers

Answer: the correct answer is measuring salaries expense

Explanation: US GAAP means Generally Accepted Accounting Principles.

The primary difference between the two systems is that GAAP is rules-based and IFRS is principles-based. GAAP does not allow for inventory reversals, while IFRS permits them under certain conditions. Another key difference is that GAAP requires financial statements to include a statement of comprehensive income.

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