Answer:
Standard
Explanation:
The committee wants Ford to establish emission control standard.
Emission standard is a legal requirement that governs all forms of air pollutants which are released by a company's product into the atmosphere. Quantitative limits are set on specific air pollutants that have permission to be released at specific time periods.
Sustainability means addressing the current demands without compromising the generations' ability to meet their own.
We require social and economic resources due to organic resources. Environmentalism isn't the only aspect of sustainability.
The correct word for the blank is Standard
An environmental regulation is a governmental requirement that covers all types of air pollutants discharged into the environment by a specific product. Quantitative limitations are established for specific air pollutants that are allowed to be discharged for specific timeframes.
It is necessary to control the air pollutants and adapt the environment-friendly methods for the production and manufacturing of the goods and services for the fullfillment of the customer in the market at the prevailing demand of the goods and services.
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If the month-end bank statement shows a balance of $54,000, outstanding checks are $15,000, a deposit of $6,000 was in transit at month end, and a check for $900 for non-sufficient funds charged by the bank against the account, the correct balance in the adjusted balance per bank at month end is Group of answer choices $45,000. $44,100. $62,100. $75,000.
Answer:
A. $45,000
Explanation:
We have to use bank reconciliation statement to find the adjusted balance per bank at the end of month. Although we do not have cash balance, we will use the bank part to adjust the bank balance.
Bank balance as per month end $54,000
Add: Deposit in transit $6,000
$60,000
Less: Outstanding check $(15,000)
Adjusted bank balance $45,000
Note: Non-sufficient funds will be deducted from cash book.
Therefore, option A is the answer.
On October 10, the stockholders’ equity of Sherman Systems appears as follows. Common stock–$10 par value, 77,000 shares authorized, issued, and outstanding $ 770,000 Paid-in capital in excess of par value, common stock 241,000 Retained earnings 904,000 Total stockholders’ equity $ 1,915,000 1. Prepare journal entries to record the following transactions for Sherman Systems. Purchased 5,500 shares of its own common stock at $30 per share on October 11. Sold 1,125 treasury shares on November 1 for $36 cash per share. Sold all remaining treasury shares on November 25 for $25 cash per share. 2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.
Answer:
See the explanation below:
Explanation:
1. Prepare journal entries to record the following transactions for Sherman Systems
a. Purchased 5,500 shares of its own common stock at $30 per share on October 11.
Details Dr ($) Cr ($)
Treasury Stock (5,500 × 30) 165,000
Cash 165,000
To record the repurchase of own common stock
b. Sold 1,125 treasury shares on November 1 for $36 cash per share.
Details Dr ($) Cr ($)
Cash (1,125 × 36) 40,500
Treasury Stock (1,125 × 30) 33,750
Paid-in Capital from Sale of Treasury Stock 6,750
To record the sale of treasury stock.
c. Sold all remaining treasury shares on November 25 for $25 cash per share.
Details Dr ($) Cr ($)
Cash (4,375 × 25) 109,375
Paid-in Capital from Sale of Treasury Stock 6,750
Retained Earnings 15,125
Treasury Stock 99,000 (4,375 × 30) 131,250
To record the sale of the remaining treasury shares
Kindly note that there is a balance of $6,750 in the Treasury Stock Paid-in Capital account. Since it is utilized, the remaining deficit will show in Retained Earnings.
2. Prepare the stockholders' equity section after the October 11 treasury stock purchase.
Details $
77,000 issued authorized common stock–$10 par value 770,000
Paid-in capital in excess of par value, common stock 241,000
Retained earnings 904,000
Treasury stock (165,000)
Total stockholders’ equity 1,750,000
1. Here, we are preparing the journal entries to record the following transactions for Sherman Systems
a. Date Account titles and Explanation Debit Credit
Treasury Stock (5,500 * 30) $165,000
Cash $165,000
(To record the repurchase of own common stock)
b. Date Account titles and Explanation Debit Credit
Cash (1,125 × 36) $40,500
Treasury Stock (1,125 × 30) $33,750
Paid-in Capital from Sale of T. Stock $6,750
(To record the sale of treasury stock)
c. Date Account titles and Explanation Debit Credit
Cash (4,375 × 25) $109,375
Paid-in Capital from Sale of T. Stock $6,750
Retained Earnings $15,125
Treasury Stock (4,375 × $30) $131,250
(To record the sale of the remaining treasury shares)
2. Particulars Amount
issued authorized common stock (77,000*$10) $770,000
Paid-in capital in excess of par value $241,000
Retained earnings $904,000
Treasury stock ($165,000)
Total stockholders’ equity $1,750,000
Thanks to his firm's decentralization and use of responsibility accounting, Matt has more time to review a proposed new joint venture with one of the firm's business partners. What advantage of decentralization does this illustrate?
Answer:
Encourage the top echelon of the management focus on strategic decisions.
Explanation:
To begin, Decentralization is one of the tools of management aimed at delegating tasks to the lower level of staffs. Decision in an organization is often at:
1. Strategic level
2. Tactical level
3. Operational level
Strategic decisions are often reserved for the top management. However, being the top management, they are responsible for the activities done at all levels of decision taking. Hence, decentralization has become a tool through which management delegate otherwise important functions to trusted and competent staff.
Now, with the decentralization, Matt now has more time to review proposed new joint venture - a strategic function, with one of the business partners. This is one of the advantages of decentralization, as a competitive advantage has thus been created in the time and resources used in reviewing the new joint venture.
Answer:
It encourages top level management to concentrate and focus on strategic and profitable decisions.
Explanation:
As organizations expand, decentralization becomes very necessary and crucial. This is because responsibilities increase for top managers/group of managers who run the entire organization as a result of increase in products and services offered by the organization.
As organizations expand, the need for strategic decision-making for organization's progress increases. As decentralization plays in,
1. it helps to make quicker strategic decisions
2. develops performance measures
3. it motivates local managers who are given more responsibility and the control necessary to manage their responsibility
4. it helps to refocus top management on issues important to specific segment and on broader organization-wide issues.
5. it increases expertise as local managers who have expertise are delegated with decision-making authority in specific products.
As decentralization and responsibility accounting played in, Matt and one of the firm's business partners now had more time to strategically plan and make profitable decisions for the proposed new joint venture.
Thom owes $7,200 on his credit card. The credit card carries an APR of 18.4 percent compounded monthly. If Thom makes monthly payments of $225 per month, how long will it take for him to pay off the credit card assuming that he makes no additional charges
Answer: 45 months
Explanation:
Credit owed $7200
Monthly payment $225
APR annaully 18.4%
Monthly APR = 18.4/12 = 1.533%
SOLUTION
1st Month interest payment
1.533% x $7200 / 100 = $110.40
Principal paid (monthly payment - interest paid) = $225 - $110.40 = $114.60
Balance ( principal - principal paid) = 7200 - 114.60 = $7085.40
2nd Month interest payment
1.533% x $7085.40 / 100 = $108.64
Principal paid (monthly payment - interest paid) = $225 - $108.64 = $116.36
Balance ( principal - principal paid) = $7085.40 - $116.36 = $6969.04
By following this step up to the 45th month you get $74.74 as the monthly payment this sums up to.
Month interest payment
1.533% x $74.74 / 100 = $1.15
Principal paid (monthly payment - interest paid) = $75.88 - $1.15 = $74.74
Balance ( principal - principal paid) = $74.74 - $74.74 = $0
The payment would be completed at exactly 45months
Cala Manufacturing purchases land for $477,000 as part of its plans to build a new plant. The company pays $40,700 to tear down an old building on the lot and $60,165 to fill and level the lot. It also pays construction costs $1,535,600 for the new building and $96,932 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.
Answer:
(A) Record the Total Costs of the plant assets.
Transaction General Journal Debit Credit
1 Land 477000
Dismantling cost 40700
Leveling cost 60165
Construction cost 1535600
Lighting & Paving Area 96932
Cash 2210397
Note:
1. According to IAS 16 Cost of asset consists of expense which has endurs future economic benefit.
2. Cost of Asset includes construction cost ,development cost , Dismantling cost and lighting & paving area etc.
Final answer:
To record Cala Manufacturing's expenditure on the new plant, the accounting journal entry would debit Land for $577,865, Buildings for $1,535,600, and Furniture and Fixtures for $96,932. Credit would be made to Cash for the total sum of $2,210,397.
Explanation:
To record the costs incurred by Cala Manufacturing for its new plant construction and related expenses, a single journal entry would be made in their accounting system. This includes the purchase of land, site preparation costs, construction costs of the new building, and costs for lighting and paving a parking area.
The journal entry would follow this format:
Debit Land for \$477,000 + \$40,700 + \$60,165 = \$577,865.Debit Buildings for the construction costs of \$1,535,600.Debit Furniture and Fixtures (if applicable for lighting and paving as they are not specifically categorised) for \$96,932.Credit Cash for the total amount of \$2,210,397 (The sum of all debits).Ceteris paribus, a price-discriminating firm will charge less to the customers who: a. have the lowest incomes. b. have the least elastic demand for its product. c. are the most elastic in their demand for a product. d. are the most rational in making their decisions.
Answer:
. are the most elastic in their demand for a product.
Explanation:
Price discrimination is when a producer sells the same good at different prices to consumers.
Elasticity of demand measures the responsiveness of quantity demanded to changes in price.
The more elastic demand is, the more sensitive demand is to changes in price.
The less elastic demand is, the less sensitive demand is to changes in price.
A price discriminating seller who wants to maximise profits would charge higher prices to the consumer with a less elastic demand and a lower price to a consumer with a more elastic demand.
I hope my answer helps you
Answer:
Option C is the correct one.
Are the most elastic in their demand for a product.
Explanation:
Ceteris paribus, a price-discriminating firm will charge less to the customers who are the most elastic in their demand for a product.
Consumers with more elastic demand are more price sensitive so they might not purchase if price is higher. Hence a less price is charged from consumers with elastic demand.
June sales were $30,000, while projected sales for July and August were $52,000 and $74,000, respectively. Sales are 60% cash and 40% credit. All credit sales are collected in the month following the sale. Calculate expected collections for July.
Answer:
Collections for July = $43200
Explanation:
Sales on cash are generally collected immediately, hence if the sale occurs in June, it would be collected in June itself. Sales on credit on the other hand, is where the debtor can pay for the goods or services on a later date. In this case, it is paid in the next month after the sale.
According to the information cash collections are 60%. Hence in July, 60% of $52,000 would be obtained, which is - $52,000 x 60% = $31,200.
At the same time, the sales on credit made in June would be collected in July. Since sales on credit amount to 40% of total sales of the month, it would be - $30,000 x 40% = $12,000.
Total collections for July = $12,000 + $31,200 = $43,200.
"The Total collections for July is = $12,000 + $31,200 = $43,200. To understand more calculation check below".
Calculation of Collections of Sales
Sales on cash are generally collected immediately, thus, if the sale occurs in June, it would be collected in June itself. When the Sales on credit, on the different pointer, is where the debtor can pay for the goods or services at a later date. In case of, it is paid in the next month after the sale.
According to the information cash collections are 60%. Therefore, in July, 60% of $52,000 would be obtained, which is - $52,000 x 60% = $31,200.
At the same time, When the sales on credit made in June would be collected in July. When the sales on credit amount to 40% of total sales of the month, it would be - $30,000 x 40% = $12,000.
Therefore, the Total collections for July is = $12,000 + $31,200 = $43,200.
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TravelToday, Inc., disclosed the following rounded amounts (in thousands) concerning the Allowance for Doubtful Accounts on its Form 10-K annual report.
Allowance for Doubtful Accounts
(dollars in thousands)
Beginning Increases for Decreases for Ending
Year Balance Bad Debt Expense Write-Offs Balance
2016 $ 9,300 $ 4,150 $ ? $ 1,350
2015 8,300 4,750 3,750 9,300
2014 12,800 1,050 5,550 8,300
Required:
1-a. Prepare a T-account for the Allowance for Doubtful Accounts and enter into it the 2014 amounts from the above schedule. The balance at the beginning of each year in the Allowance for Doubtful Accounts is a credit balance.
1-b. Write the T-account in equation format to prove the above items account for the changes in the account.
2. Record summary journal entries for 2015 related to (a) estimating Bad Debt Expense and (b) writing off specific customer account balances.
3. Supply the missing information for 2016.
4. If TravelToday had written off an additional $33 of Accounts Receivable during 2016, by how much would Net Receivables have decreased? How much would Net Income have decreased?
Answer:
Kindly refer to the attached document for answers 1 to 3
4. If $33 was written off additionally
Then transfer to receivables in the year would have declined to $1,317 from $1,350 and the receivables balance would then be $16,167 from $16,200
Net income will not be affected by the $33 additional write off
To address the student's question, the T-account for 2014 was prepared, the equation was used to prove the changes in the Allowance for Doubtful Accounts, summary journal entries for 2015 were recorded, and the missing write-offs for 2016 were calculated. It was also determined that an additional write-off of $33 would decrease Net Receivables but not affect Net Income.
Understanding Allowance for Doubtful Accounts
To prepare a T-account for the Allowance for Doubtful Accounts using the 2014 amounts, you would note the beginning balance as a credit (since it is a contra asset account), add the increases for the year as credits, and the decreases as debits. By the end of 2014, the transactions will reflect a credit balance of $8,300.
T-account for 2014:
Beginning balance (Credit): $12,800
Bad Debt Expense (Credit increase): $1,050
Write-offs (Debit decrease): $5,550
Ending balance (Credit): $8,300
To write the T-account in equation format:
Beginning balance + Increases (Bad Debt Expense) - Decreases (Write-offs) = Ending balance
$12,800 + $1,050 - $5,550 = $8,300
Summary Journal Entries for 2015:
(a) Bad Debt Expense
Debit: Bad Debt Expense $4,750 (Expense increases)
Credit: Allowance for Doubtful Accounts $4,750 (Contra asset increases)
(b) Write-Offs
Debit: Allowance for Doubtful Accounts $3,750 (Contra asset decreases)
Credit: Accounts Receivable $3,750 (Asset decreases)
Missing Information for 2016:
To find the missing write-offs for 2016, we can use the equation format:
$9,300 (Beginning balance) + $4,150 (Bad Debt Expense) - Write-offs = $1,350 (Ending balance)
Write-offs = $9,300 + $4,150 - $1,350 = $12,100
Effect of Additional Write-Offs:
If Travel Today had written off an additional $33 in Accounts Receivable during 2016, the Net Receivables would decrease by $33, and there would be no effect on Net Income, as write-offs affect only the balance sheet accounts and have no impact on the income statement once the allowance for doubtful accounts has been adjusted for the Bad Debt Expense.
Cassy Budd Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $80,000; service cost, $18,500; interest cost, $5,500; benefits paid for the year, $9,500; ending PBO, $94,500; the expected return on plan assets, $10,500; and cash deposited with pension trustee, $18,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a credit to the PBO for:
Answer:
Credit to the PBO for $13,500
Explanation:
Defined benefit pension plan is a pension structure adopted by a company in which an employee is guaranteed payments in the future for example after retirement. Since the payments are given far into the future, complex calculations are required to compute how to account for annual expenses and changes in pension obligation.
Now, under the above plan, the amount of the future benefits that will be paid for by the company depends on a multitude of factors such length of time served, an employee lifespan. The annual expense needs to match the recognition of the related expense in the period in which the particular employee renders the service for which they will be paid in the future.
So, the formula for Periodic (Annual) Pension Expense is Interest Costs (Interest incurred on the beginning Projected Benefit Obligation) + Service Costs (Present Value of the projected retirement benefits earned in the current period) - Actual Return on Plan Assets (the returns provided by the assets held under the Company's pension plan) + Amortization of Prior Service Costs (changes to pension expense as a retroactive amendments to the pension plan) +/- Amortization of Actuarial Gains or Losses (the change in the PBO as a result of changes in assumptions used to calculate the PBO).
The question provides us with the interest costs, the services costs, and the expected return on plan assets with other costs being nil.
Therefore, annual pension expense is Service Costs + Interest Costs - Expected Return on Plan Assets = 18,500 + 5,500 - 10,500 = 13,500.
The journal entry is a credit to the PBO of the amount of the expense and a debit to the Pension Expense. Note that the difference between ending PBO and beginning PBO is NOT equivalent to annual expense since other items such as company's contribution and changes in fair value of the liability also impact the PBO.
Answer:
$24,000
Explanation:
It is shown in the file attached
Company requires a minimum cash balance of $ 3,100. When the company expects a cash deficiency, it borrows the exact amount required on the first of the month. Expected excess cash is used to repay any amounts owed. Interest owed from the previous month's principal balance is paid on the first of the month at 14% per year. The company has already completed the budgeting process for the first quarter for cash receipts and cash payments for all expenses except interest. Hoppy does not have any outstanding debt on January 1. Complete the cash budget for the first quarter for Hoppy Company. Round interest expense to the nearest whole dollar. Begin by preparing the cash budget for January, then prepare the cash budget for February and March. Finally, prepare the totals for the quarter. (Complete all answer boxes. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the nearest whole dollar.
Answer:
January February March Total
Beginning Cash Balance 3,100 3,100 3,100 9,300
Cash Receipts 22,500 28,000 42,500 93,000
Cash Available 25,600 31,100 45,600 102,300
Cash Payments:
All Expenses except interest 32,000 33,000 38,000 103,000
Interest 0 87 134 221
Total Cash Payments 32,000 33,087 38,134 103,221
Ending Cash Balance before (6,400) (1,987) 7,466 (921)
Financing
Minimum Cash Balance Desired (3,100) (3,100) (3,100) (9,300)
Projected Cash Excess (Deficiency) (9,500) (5,087) 4,366 (10,221)
Financing:
Borrowing 9,500 5,087 - 14,587
Principal Payments 0 0 (4,366) (4,366)
Total effects of Financing 9,500 5,087 (4,366) 10,221
Ending Cash Available 3,100 3,100 3,100 9,300
It is mentioned that the company will raise the exact amount of deficiency at the beginning of next month so any deficiency in January will be raised on 1st of February and any excess cash will be used to repay the principal amount.
Interest = Amount raised * Rate * Month
Interest due in Feb. = 9,500(Raised) * 14% * 1/12 months
Interest due in Feb. = 9,500(Raised) * 0.14 * 1/12 months = $110.83
Interest Due in March = (9,500+5,087) * 14% * 1/12 months
Interest Due in March = 14,587 * 0.14 * 0.083 months = $169.5
Sales budget LO P1 Scora, Inc., is preparing its master budget for the quarter ending March 31. It sells a single product for $50 per unit. Budgeted sales for the next three months follow. January February March Sales in units 1,000 3,000 1,700 Prepare a sales budget for the months of January, February, and March.
Answer:
Total Budgeted unit sales$5,700
Total budgeted unit price $50
Budgeted total sales $285,000
Explanation:
Sales budget for the months of January, February, and March.
Budgeted unit sales × Budgeted unit price =Budgeted total sales
January $1,000 ×50=$50,000
February $3,000×50=$150,000
March $1,700×50=$85,000
Total Budgeted unit sales=$1,000+$3,000+$1,700=$5,700
Total Budgeted unit price $50
Budgeted total sales=$50,000+$150,000+$85,000
=$285,000
Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, as well as direct fixed expenses unique to each model of $30,000 (Tingler), $79,500 (Shocker), and $34,300 (Stunner). The common costs will be incurred regardless of how many models are produced. The direct fixed expenses would be eliminated if that model is phased out.
Answer and explanation:
Attached is a comprehensive solution
in a well formatted excel table
Question: The question is not complete. Find below the complete quesion and the answer.
Cawley Company makes three models of tasers. Information on the three products is given below.
Tingler Shocker Stunner
Sales $300,000 $500,000 $200,000
Variable expenses 150,000 200,000 145,000
Contribution margin 150,000 300,000 55,000
Fixed expenses 120,000 230,000 95,000
Net income $ 30,000 $70,000 $(40,000)
Fixed expenses consist of $300,000 of common costs allocated to the three products based on relative sales, and additional fixed expenses of $30,000 (Tingler), $80,000 (Shocker), and $35,000 (Stunner). The common costs will be incurred regardless of how many models are produced. The other fixed expenses would be eliminated if a model is phased out. James Watt, an executive with the company, feels the Stunner line should be discontinued to increase the company.
1. Compute current net income for Crawley company
2. Compute net income after dropping the stunner line model
Answer:
1. Current net income = $60,000
2. net income = $40,000
Explanation:
See the attached file for the calculation
Problem 13-140 Brewer Company is considering purchasing a machine... Brewer Company is considering purchasing a machine that would cost $537,600 and have a useful life of 9 years. The machine would reduce cash operating costs by $82,708 per year. The machine would have a salvage value of $107,520 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) Payback period years b. Compute the simple rate of return for the machine. (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Simple rate of return %
Answer:
Payback is 6.5 years
simple rate of return is 6.50%
Explanation:
The payback period for the investment is the number of years it would take the initial capital outlay of $537,600 to recoup itself,which is given by the formula below:
payback period=initial investment/annual incremental savings
initial investment is $537,600
annual incremental savings is $82,708
payback period=$537,600/$82,708= 6.5 years
Simple rate of return =annual savings-depreciation/initial investment
depreciation=($537,600-$107,520)/9=$47,786.67
simple rate of return=($82,708-$47,786.67)/$537,600=6.50%
The market value of Firm L’s debt is $200,000 and its cost of debt is 7%. The firm’s equity has a market value of $400,000, its earnings are growing at a 4% rate, and its tax rate is 40%. A similar firm with no debt has a cost of equity of 12%. Use the APV model to calculate the value of Firm L if it had no debt.
Answer: $530000
Explanation:
Debt $200000.
Equity $400000
rd=7%.
rd for equity =12%
Taxrate= 40%
Earning rate for equity= 4%
Firm L has a total of $200000+ $400000= $600000
A similar firm with no debt should have a smaller value.
The calculation is as follows.
VTotal= Vu + Vts
Make Vu the subject of the formula
So,
Vu= VTotal - Vts
= Debt + Equity(S) - Vts
Firstly, we need to calculate Vts
Value tax shelter (Vts)
=rdTD(rsU-G)
= 0.07(0.40)(200000)/(0.12-0.04)
=5600/0.08
= $80,000
Therefore,
Vu= $200000 + $400000- $70000
Vu= $600000 - $70000
Vu= $ 530000
In conclusion
The value of Firm L if it has no debt is $530000
Answer:
$530,000
Explanation:
Debt: $200,000
rd: 7%
T: 40%
Equity: $400,000
rsU: 12%
g: 4%
Firm L has a total value of $200,000 + $400,000 = $600,000. A similar firm with no debt should therefore have a smaller value.
VTotal= VU+ VTS
Therefore VU= VTotal−VTS= D + S −VTS.
Value tax shelter = VTS= rdTD/(rsU−g)
= 0.07(0.40)($200,000)/(0.12 −0.04)
=$5,600/0.08
= $70,000
VU= $400,000 + $200,000 −$70,000
$600,000-$70,000 = $530,000
VU= $530,000
The value of Firm L if it had no debt is $530,000
Blossom Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year period and requires equal annual payments of $32,207 at the beginning of each year. The first payment is received on January 1, 2020. Blossom had purchased the machine during 2016 for $146,000. Collectibility of lease payments by Blossom is probable. Blossom set the annual rental to ensure a 6% rate of return. The machine has an economic life of 10 years with no residual value and reverts to Blossom at the termination of the lease.
Compute the amount of the lease receivable.
Prepare all necessary journal entries for Blossom for 2020.
Suppose the collectibility of the lease payments was not probable for Blossom. Prepare the necessary journal entry for the company in 2020.
Suppose at the end of the lease term, Blossom receives the asset and determines that it actually has a fair value of $1,470 instead of the anticipated residual value of $0. Record the entry to recognize the receipt of the asset for Blossom at the end of the lease term.
Answer:
Explanation:
Check the attached file for well formatted answer
Amount of the lease receivable = $211,999
Journal entries for Blossom for 2020 are as follows :-
Date Account Titles and Explanation Debit Credit
1/1/20 Lease receivable A/c Dr. $211,999
Cost of goods sold A/c Dr. $146,000
To Sales A/c $211,999
To Inventory A/c $146,000
(To record the lease)
Cash A/c Dr. $32,207
To Lease receivable A/c $32,207
(To record the first lease payment)
12/31/20 Interest receivable A/c Dr. $10787.52
To Interest revenue A/c
[($211,999 - $32,207) × 6% rate]
$10,787.52
(To record interest receivable on the amount after first annual payments)
1/1/2020 Cash A/c Dr. $32,207
To Deposit Liability A/c $32,207
( To record the collectibility of the lease payments was not probable for Blossom)
1/1/2020 Inventory A/c Dr. $1,470
To Gain on Lease A/c $1,470
The computed lease receivable for Blossom is $201,108.44. Journal entries will include recording the lease payment and the interest revenue. If collectability is not probable, only lease revenue is recognized as payments are received. If at the end of the lease the machine has a fair value of $1,470, an entry is made to recognize this.
Explanation:The lease receivable represents the current value of the lease payments that Blossom Company expects to receive over the 8-year lease term. The lease payments are an annuity due as they are received at the beginning of each year. As such, the amount of the lease receivable can be calculated as follows:
Lease Receivable = Lease Payment * ((1 - (1 + Interest Rate) ^ - Lease Term) / Interest Rate)
Plugging in the given values:
Lease Receivable = $32,207 * ((1 - (1 + 6%) ^ -8) / 6%) = $201,108.44.
The necessary journal entries for Blossom in 2020 will include:
January 1, 2020: Debit Lease Receivable $32,207, Credit Cash $32,207 (to record the receipt of the lease payment)December 31, 2020: Debit Interest Receivable $12,066.51 (6% of $201,108.44), Credit Interest Revenue $12,066.51 (to record the interest earned on the lease receivable).However, if the collectability of the lease payments was not probable for Blossom, the company would only recognize revenue as the payments are received. Thus, the only journal entry in 2020 would be:
January 1, 2020: Debit Cash $32,207, Credit Lease Revenue $32,207.
Finally, at the end of the lease term, if Blossom finds that the machine has a fair value of $1,470, the company would make the following entry:
Debit Equipment $1,470, Credit Gain on Return of Leased Equipment $1,470 (assuming Blossom had fully depreciated the machine by this time).
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etrus Framing's cost formula for its supplies cost is $1,760 per month plus $10 per frame. For the month of March, the company planned for activity of 616 frames, but the actual level of activity was 624 frames. The actual supplies cost for the month was $8,420. The activity variance for supplies cost in March would be closest to:
Answer:
$80 U
Explanation:
Flexible budget [$1,760 + ($10 × 624)]
$1,760+$6,240= $8,000
Planning budget [$1,760 + ($10 × 616)]
$1,760+$6,160= $7,920
Flexible budget-Planning budget= Activity variance
$8,000-$7,920=$80
Activity variance $80 U
Therefore the flexible budget is greater than the planning budget, the variance is unfavorable (U)
When Sony launched its new PS4 gaming system, the product was sold as a package that included the game console, game controllers, wireless headset, and one video game. This is an example of
Answer:
Bundling
Explanation:
Bundling a strategy in which two or more products are packaged together and sold as a single combined unit, often for a lower price than they would charge customers to buy each item separately.
This strategy has a distinct feature which entails that The products and services are usually related, but they can also consist of dissimilar items which appeal to one group of customers.
In the bundling marketing strategy, the strategy of companies offering discounts can stimulate demand, lifting revenues often at the expense of profit margins.
It enables companies roll out different productsat the same time and selling at a discounted price while still making huge profit.
Answer:
Explanation:
When Sony launched its new PS4 gaming system, the product was sold as a package that included the game console, game controllers, wireless headset, and one video game. This is an example of price bundling
Price bundling is putting together as a unit several products or services into a single comprehensive package for a total packaged reduced price. Thins type of price bundling has the capability to increase profits because it promotes the purchase of more than one item which, had it been sold seperately might not be as affordable as that. For Sony to sell a total package of the new PS4 gaming system, game console, game controllers, wireless headset, and one video game at a reduced price is favorable to the customers and a good price bundle.
In a wildly successful first year in business that started and ended with no required cash, your firm has operating income of $989,000, net income of $637,000, current assets of $900,000, current liabilities of $659,000, net capital expenditures were $690,000, and depreciation was $460,000. The firm has never financed itself with debt. What was your equity valuation cash flow
Answer:
The correct answer is $166,000
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the Equity Valuation Cash Flow by using following formula:-
Equity valuation cash flow = Net income - (Change in non cash - Cash working capital) - (Capital expenditure - Depreciation) + (New debt issued - Debt repayment)
By putting the value, we get
= $637,000 - ($900,000 - $659,000) - ($690,000 - $460,000) + 0
= $637,000 - $241,000 - $230,000
=$166,000
According to the analysis, the equity valuation cash flow is $166,000.
Final answer:
The equity valuation cash flow for the company is $407,000, calculated by adding depreciation to net income and subtracting net capital expenditures.
Explanation:
To calculate the equity valuation cash flow for a company that started and ended with no required cash, operating income of $989,000, net income of $637,000, current assets of $900,000, current liabilities of $659,000, net capital expenditures of $690,000, and depreciation of $460,000, we need to adjust the net income for non-cash expenses and investments in long-term assets. The cash flow relevant to equity valuation will be the net income plus depreciation (a non-cash expense) minus the net capital expenditures (investment in long-term assets).
Let's calculate the equity valuation cash flow:
Start with net income: $637,000Add back depreciation: + $460,000 (non-cash expense)Subtract net capital expenditures: - $690,000 (investment in long-term assets)Equity Valuation Cash Flow = Net Income + Depreciation - Net Capital ExpendituresEquity Valuation Cash Flow = $637,000 + $460,000 - $690,000 = $407,000
Enrique has a 60-month fixed installment loan, with a monthly payment of $77.86. The amount he borrowed was $3500. Instead of making his 36th payment, Enrique is paying the remaining balance on the loan. How much interest will Enrique save (use the actuarial method)
Answer:
Total interest saved = $ 774.9
Explanation:
Formula for total interest saved:
Total interest save = total interest in one month + Total interest at 36th month
Calculating total interest in one month:
As Enrique has a 60-month fixed installment loan, with a monthly payment of $77.86 so
1st payment in one month = 60 × 77.86
1st payment in one month = $4,671.6
As the amount he borrowed was $3500.
Therefore
Total interest = 4,671.6 - 3,500
Total interest = $1,171.6
Calculating total interest at 36th month:
Total interest at 36th month = ( 60 - 35 )× 77.86
Total interest at 36th month = 1,946.5
Therefore by putting the values in the above formula, we get
Total interest saved = $1,946.5- $1,1716
Total interest saved = $ 774.9
Final answer:
Enrique will save approximately $102.42 in interest.
Explanation:
To calculate the interest saved using the actuarial method, we first find the total interest paid over the course of the loan by subtracting the principal amount borrowed from the total amount paid (monthly payment multiplied by the number of payments). Then, we calculate the remaining balance on the loan after 35 payments using the present value of an annuity formula. Finally, we subtract this remaining balance from the total amount paid to find the interest saved. By performing these calculations, we determine that Enrique will save approximately $102.42 in interest by paying off the remaining balance on the loan instead of making the 36th payment. This represents the interest that would have been paid on the remaining balance over the remaining loan term.
Windsor, Inc. sells merchandise on account for $3700 to Morton Company with credit terms of 2/10, n/30. Morton Company returns $800 of merchandise that was damaged, along with a check to settle the account within the discount period. What entry does Windsor, Inc. make upon receipt of the check?
Answer:
Dr. Cash $2,842
Dr. Discount Expense $58
Cr. Account Receivable $2,900
Explanation:
Terms 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.
Sales = $3,700
Returns = $800
Amount Due = $3,700 - $800 = $2,900
As the payment is made within discount period, so discount will be availed
Discount = $2,900 x 2% = $58
Cash Paid = $2,900 - $58 = $2,842
The owner of a bicycle repair shop forecasts revenues of $188,000 a year. Variable costs will be $57,000, and rental costs for the shop are $37,000 a year. Depreciation on the repair tools will be $17,000.a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.INCOME STATEMENTRevenueVariable costsRental costsDepreciationPretax profitTaxesNet incomeb. Calculate the operating cash flow for the repair shop using the three methods given below:Now calculate the operating cash flow.Dollars in minus dollars out.Adjusted accounting profits.Add back depreciation tax shield.Methods of Calculation Operating Cash Flowi. Dollars in Minus Dollars Out ii. Adjusted Accounting profits iii. After tax Operating Cash flow
Answer:
A) Net income = $61,600
B)
I. Dollars in Minus Dollars Out = $94,000
II. Adjusted Accounting profit = $77,000
III. After tax Operating Cash flow = $78,600
Explanation:
a) Below is the income statement for the bicycle repair shop
Revenue:
Revenues = $188,000
Total Revenue = $188,000
Expenses:
Variable costs = $57,000
Rent (of shop) = $37,000
Total Expenses = $94,000
Gains:
Gain = $0
Losses:
Depreciation (of repair tools) = $17,000
Income Before Tax = $77,000
Income Tax (at 20%) = $15,400
Net Income = $61,600
b) We calculate Operating Cash Flow using 3 methods:
I. Dollars in Minus Dollars Out = Revenue - Expenses = $(188,000 - 94,000)
Dollars in Minus Dollars Out = $94,000
II. Adjusted accounting profits = Total monetary revenue - Total costs
Total costs = Total Expenses + Depreciation = $(94,000 + 17,000)
Total costs = $111,000
Accounting profit = $(188,000 - 111,000)
Accounting profit = $77,000
III. Add back depreciation tax shield = Net Income + Depreciation
Add back depreciation tax shield = $(61,600 + 17,000)
Add back depreciation tax shield = $78,600
Final answer:
An income statement for the bicycle repair shop shows a net income of $61,600 after accounting for variable costs, rental costs, depreciation, and taxes. Operating cash flow can be calculated using three methods: 'Dollars in minus Dollars out' yields $94,000, 'Adjusted Accounting profits' is $78,600, and 'After tax Operating Cash flow' is $64,400.
Explanation:
To create an income statement for the bicycle repair shop, we'll begin by subtracting the variable costs, rental costs, and depreciation from the revenues to determine the pretax profit. We then calculate the taxes by taking 20% of the pretax profit and subtracting it to find the net income. Next, we'll calculate the operating cash flows using the provided methods.
Income Statement
Revenue: $188,000Variable costs: -$57,000Rental costs: -$37,000Depreciation: -$17,000Pretax profit: $77,000Taxes (20%): -$15,400Net income: $61,600Operating Cash Flow Calculations
Dollars in minus Dollars out: We calculate this by taking the Revenue and subtracting the Variable and Rental costs (not taking depreciation into account since it's a non-cash expense).Adjusted Accounting profits: We start with the Net income and then add back the Depreciation because it's a non-cash charge.After tax Operating Cash flow: Calculate the taxes saved from the Depreciation tax shield by multiplying the Depreciation with the tax rate, then add this amount to the Net income.The specific calculations for the operating cash flow are as follows:
Method i (Dollars in minus Dollars out): $188,000 - $57,000 - $37,000 = $94,000Method ii (Adjusted Accounting profits): $61,600 + $17,000 = $78,600Method iii (After tax Operating Cash flow): $61,600 + ($17,000 * 20%) = $64,400The Endot Manufacturing Company, a manufacturer and wholesaler of widgets, has provided you with the following financial information. The Company has asked you to make an analysis of the firm’s financial condition. In addition to the information given below, you have been informed that the firm has no lease payments but has principal payments of $2 million per year on its Long-term debt. Endot uses a 365-day year in preparing its ratios. Endot has 5,000,000 common shares outstanding. Endot’s financial statements are as follows:Balance Sheet as of December 31, 2014 (Millions of Dollars)Cash 45Accounts Payable 45Marketable Securities 33Notes Payable 45Accounts Receivable 66Other Current Liabilities 21Inventory 159Total Current Liabilities 111Total Current Assets 303Total Long Term Liabilities 24Total Liabilities135Gross Fixed Assets 225Less Depreciation 78Common Stock 114Net Fixed Assets 147Retained Earnings 201Total Shareholder Equity 315Total Assets 450Total Liabilities and Equity 450Statement of Income and Expenses for Year Ended December 31, 2014 (Millions of Dollars)Net Sales 795.0Costs of Goods Sold 660.0Gross Profit 135.0Fixed Expense 73.5EBITDA 61.5Depreciation Expense 12.0EBIT 49.5Interest Expense 4.5EBT 45.0Taxes (40%) 18.0Net Income 27.0What was Endot's Quick (Acid Test) Ratio? a. 0.37 b. 1.30c. 1.73d. 2.00e. 2.73
Quick ratio = 1.30 (Option C)
Explanation:
Quick ratio or acid test ratio is calculated as follows:
(Cash plus marketable securities plus accounts receivable ) divide by total current liabilities
In our question, we have been given with the data:
Cash = 45 million
Marketable securities = 33 million, accounts receivable = 66 million, total current laibailities = 111 million
So, let us now put the given values in the above stated formula:
Quick ratio = ( 45 plus 33 plus 66) divide by 111
After calculating we get, 1.30
Therefore, the quick ratio is 1.30
A machine purchased three years ago for $309,000 has a current book value using straight-line depreciation of $187,000; its operating expenses are $38,000 per year. A replacement machine would cost $235,000, have a useful life of nine years, and would require $8,000 per year in operating expenses. It has an expected salvage value of $64,000 after nine years. The current disposal value of the old machine is $72,000; if it is kept 9 more years, its residual value would be $18,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced
Answer:
a)
Opportunity Cost (Purchase value less Salvage Value)
Old Machine = $72,000 - $18,000 = $54,000
New Machine =$235,000 - $64,000 = $171,000
Operating Costs
Old Machine = $38,000 * 9 = $342,000
New Machine = $8,000 * 9 = $72,000
Total Cost = Opportunity cost + Operating Cost
Old machine Total Cost = $54,000 + $342,000 = $396,000
New Machine Total Cost = $171,000 + $72,000 = $243,000
b)
Should the old machine be replaced? YES
The cost of keeping the old machine is more than the cost of buying and operating the new machine, therefore it is advisable to replace the old machine.
Answer:
the machine should be replaced
Explanation:
First, the cost of old machinery is sunk cost and no more relevant for our calculations as it would not affect our decision making at this point.
The following numbers hold value for the purpose of taking a decision as to whether the company should keep or replace the old machinery with a new one at this point and time.
Cost of a new machinery (if purchased)
Change in operating expenses (if machine is replaced)
Current disposal value of old machine
The company must see whether there is positive change to net income with the replacement. If there is a negative change it will not be replaced.
Step 2
1. Cost of new machinery= $ 235000
2. Changes in the operating expense/s=
Operating expense with old machine=$38000 per year for 9 years= 38000 x 9= 342000
Operating expense with new machine= $ 8000 per year for 9 years = 8000 x 9= 72000
Hence the savings in operating expenses is = $ 342000- $72000= $270000
3. Current Disposal value of old machine= $ 72000
Step 3
Putting together the numbers calculated in step 2-
Items----- --------------------------------Effect ----------------------------------Amount in $
Cost of new machine--- cash outflow -235000
Saving in operating expenses--- Cash inflow 270000
Current disposal value of old machine----- Cash inflow 72000 answer 107000
From the above calculation, it can be seen that there is a positive / net income flow of $ 107000 which is favourable to the company
In conclusion we can therefore, the machinery should be replaced with the new machinery.
Mette Badminton Equipment Co. wants to raise $7 million to expand operations. To accomplish this, it plans to issue 20-year bonds with a face value of $1,000. The coupon rate is set at 9% and the couponds will be paid semi-annually. The bonds are priced at a yield-to-maturity of 10%. What is the minimum number of bonds the firm must sell to raise the $7 million
Answer:
7,657 bonds
Explanation:
In order to determine the minimum number of bonds first we have to find out the present value of the bond which is to be shown in the attached spreadsheet.
Data provided in the question
Future value or Face value = $1,000
PMT = $1,000 × 9% ÷ 2 = $45
Rate of interest = 10% ÷ 2 = 5%
NPER = 20 years × 2 = 40 years
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value of the bond is $914.20
Now the raise amount is $7 million
So, the number of minimum number of bonds is
= $7,000,000 ÷ $914.20
= 7,657 bonds
Logistics Solutions provides order fulfillment services for dot merchants. The company maintains warehouses that stock items carried by its dot clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours. In the most recent month, 120,000 items were shipped to customers using 4,100 direct labor-hours. The company incurred a total of $11,480 in variable overhead costs. According to the company’s standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $2.85 per direct labor-hour. Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 120,000 items? How much does this differ from the actual variable overhead cost? (Round labor-hours per item and overhead cost per hour to 2 decimal places.)
Solution:
Number of items shipped 120,000
Standard direct labor-hours per item x 0.03
Total direct labor-hours allowed 3,600
Standard variable overhead cost per hour x 2.85
Total standard variable overhead cost 10,260
Actual variable overhead cost incurred 11,480
Total standard variable overhead cost (above) 10,260
Total variable overhead variance 1220 (Favourable)
Anand purchased a 30 year mortgage at 6.00% convertible monthly. The amount of the loan is for $200,000. Anand plans to make the required monthly payments. The first month that his outstanding balance is $100,000 or less, he plans to purchase a larger home. How many monthly payments will Anand need to make?
Answer:
252
Explanation:
In this question we use the PMT and the NPER formula which is to be shown in the attachment below:
Given that,
Present value = $200,000
Future value or Face value = $0
RATE = 6% ÷ 12 = 0.5%
NPER = 30 years × 12 months = 360 months
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, the pmt is $1,199.10
Now NPER is
Given that,
Present value = $200,000
Future value or Face value = $100,000
RATE = 6% ÷ 12 = 0.5%
PMT = $1,199.10
The formula is shown below:
= NPER(RATE;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the pmt is 251.82
A one-year bond has an interest rate of 5% today. Investors expect that in one year, a one-year bond will have an interest rate equal to 7%. Investors expect that in two years, a one-year bond will have an interest rate equal to 9%. According to the expectations theory of the term structure of interest rates, in equilibrium, a three-year bond today will have an interest rate equal to
Answer:
6%
Explanation:
Current interest rate on one year bond = 5%
Forward interest rate on one year bond = 7%
To Calculate the interest rate on two year bond we use this:
Interest rate = [Current interest rate on one year bond + Forward interest rate on one year bond]/2
Interest rate = [5 + 7]/2 = 12/2 = 6%
Therefore,
The interest rate on two-year bond is equal to 6%.
Answer:
A one-year bond has an interest rate of 5% today. Investors expect that in one year, a one-year bond will have an interest rate equal to 7%. Investors expect that in two years, a one-year bond will have an interest rate equal to 9%. According to the expectations theory of the term structure of interest rates, in equilibrium, a three-year bond today will have an interest rate equal to 7%.
Explanation:
The current interest rate on one year bond = 5%
The forward interest rate on one year bond = 7%
The forward interest rate on one year bond = 9%
We can now calculate the interest rate on a three-year bond as below:
Interest rate = [Current interest rate on one year bond + Forward interest rate (7%) on one year bond + Forward interest rate (9%) ]/3
Interest rate = [5 +7+9]/3 = 21/3 = 7%
Therefore,
The interest rate on a three-year bond is equal to 7%.
The attractiveness test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether A. E) there are attractive strategic fits between the value chains of the company's present businesses and the value chain of the new business it is considering entering. B. B) the potential diversification move will boost the company's competitive advantage in its existing business. C. A) conditions in the target industry allow for profits and return on investment that is equal to or better than that of the company's present business(es). D. D) key success factors in the target industry are attractive. E. C) shareholders will view the contemplated diversification move as attractive.
Answer:
A) conditions in the target industry allow for profits and return on investment that is equal to or better than that of the company's present business(es).
Explanation:
Remember, the key word here is about whether diversification into a particular industry would likely increase shareholders value.
Thus, any company wanting to test this out would consider whether conditions in the target industry allow for profits and return on investment that is equal to or better than that of the company's present business(es).
This option is better because improved profits implies better shareholder value.
Wattan Company reports beginning inventory of 11 units at $65 each. Every week for four weeks it purchases an additional 11 units at respective costs of $66, $67, $70, and $75 per unit for weeks 1 through 4. Compute the cost of goods available for sale and the units available for sale for this four-week period. Assume that no sales occur during those four weeks.
Solution:
Activity Units Units cost Cost of Goods Available
Beginning Inventory 11 $65.00 $715
1st week purchase 11 $66.00 $726
2nd week purchase 11 $67.00 $737
3rd week purchase 11 $70.00 $770
4th week purchase 11 $75.00 $825
Units available for sale 55
Cost of goods available for sale $3,773
Suppose Jacques and Kyoko are playing a game in which both must simultaneously choose the action Left or Right. The payoff matrix that follows shows the payoff each person will earn as a function of both of their choices. For example, the lower-right cell shows that if Jacques chooses Right and Kyoko chooses Right, Jacques will receive a payoff of 5 and Kyoko will receive a payoff of 3Kyoko Left Right 3,72,6 4,5 Left Jacques Right 3,8 The only dominant strategy in this game is for to choose The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses_and Kyoko chooses
Answer: 1. Jacques picks Right
2. Jacques picks Right and Kyoko picks Right.
Explanation:
Hello.
I wasn't quite clear on your question so I added an attachment with the full question.
1. The only dominant strategy in this game is for ____Jacques____ to choose ___Right____.
The Dominant strategy for a player is that strategy that will result in the highest payoff independent of the actions of the other player.
If Jacques plays Right, they will have more or equal payouts but never less than Left regardless of what Kyoko does. Therefore choosing Right is Jacques's Dominant strategy.
2. The outcome reflecting the unique Nash equilibrium in this game is as follows: Jacques chooses___Right_______and Kyoko chooses ____Right_____.
Jacques will go with their dominant strategy of picking Right. This will make Kyoto pick the alternative of Right that results in the higher payoff. They make a payoff of 8 if they pick Right as well so that is what they will do.
If you need any clarification do comment. Cheers.