Answer:
$343.75
Explanation:
The computation of amount of manufacturing overhead is shown below:-
For computing the amount of manufacturing overhead first we need to find out the predetermined overhead rate which is shown below:-
Predetermined overhead rate = Estimated manufacturing overhead costs ÷ Estimated machine hours
= $550,000 ÷ 8,000
= $68.75 per machine hour
Overhead allocated = Predetermined overhead rate × Machine hours
= $68.75 × 5
= $343.75
JJ Industries will pay a regular dividend of $2.50 per share for each of the next four years. At the end of the four years, the company will also pay out a liquidating dividend of $61 per share, and the company will cease operations. If the discount rate is 8 percent, what is the current value of the company’s stock
Answer:
$53.11
Explanation:
The computation of the current value of the common stock is shown below
Year Cash flow Discount rate at 8% Present Value
1 $2.5 0.92593 $2.31
2 $2.5 0.85734 $2.14
3 $2.5 0.79383 $1.98
4 $2.5 0.73503 $1.84
4 $61 0.73503 $44.84
Total $53.11
The discount is come from
= 1 ÷ 1 + 0.08^1
The same is applied for other years
We simply multiplies the dividend with its discount rate so that the present value or the current value could arrive
Vaughn Company provides for bad debt expense at the rate of 3% of accounts receivable. The following data are available for 2018: Allowance for doubtful accounts, 1/1/18 (Cr.) $ 11900 Accounts written off as uncollectible during 2018 9900 Ending accounts receivable 1197000 The Allowance for Doubtful Accounts balance at December 31, 2018, should be
Answer:
The Allowance for Doubtful Accounts balance at December 31, 2018, should be $35,613.
Explanation:
The question did not tell us whether the ending balance of accounts receivable had already been adjusted for with the write-off that happened during the year. If we assume, it was not adjusted for, the required journals would be:
Debit Allowance for doubtful accounts $9,900
Credit Accounts receivable $9,900
(To write-off accounts receivable)
The impact on accounts receivable is $1,197,000 - $9,900 = $1,187,100
The impact on Allowance for doubtful accounts is $11,900 - $9,900 = $2,000
3% of accounts receivable ($1,187,100) = $35,613
The required bad debt expense is $35,613 - $2,000 = $33,613
Debit Bad debt expense $33,613
Credit Allowance for doubtful accounts $33,613
(To record bad debt expense for the year)
A bond with a face value of $6,000 and an annual coupon rate of 12% convertible semiannually will mature in ten years for its face value. If the bond is priced using a nominal yield rate of 6% convertible semiannually, what is the amount of premium in this bond and what is the amount for amortization of premium in the 7th coupon
Answer:
Premium is $2,677.95
The premium amortization on the 7th payment is $119
Explanation:
In order to arrive at the premium on the bond,it is necessary to compute the issuing price of the bond,which can be done using the pv formula in excel as shown below:
=-pv(rate,nper,pmt,fv)
rate is the semi-annual yield to maturity on the bond which is 6%/2=3%
nper is the number of coupon interest payable by the bond,which is 10 years multiplied by 2=20
pmt is the semi-annual coupon payable by the bond i.e 12%/2*$6000=$360
fv is the face value of the bond which is $6,000
=-pv(3%,20,360,6000)
pv=$8,677.95
premium=issue price -face value
premium=$$8,677.95-$6,000
premium=$2,677.95
The premium amortization is the excess of coupon payment over the interest expense.
In the attached, I calculated the premium amortization on the 7th payment.
I started by taking the issue price of $8677.95 ,added interest expense at 3% semi-annually ,deducted the coupon payment of $360,thereby leaving the outstanding balance at end of the year.
Note that the premium amortization is the excess of coupon payment over interest expense as colored coded.
Bond priced at a premium. Requires further calculation to find exact premium and amortization in 7th coupon.
This scenario involves a bond priced at a premium due to a lower nominal yield (interest rate) compared to the coupon rate. We can calculate the premium and amortization of premium for the 7th coupon period.
Key Information:
Face Value (F) = $6,000Coupon Rate (C) = 12% annually (6% semiannually)Maturity = 10 years (20 semiannual periods)Nominal Yield (Y) = 6% annually (3% semiannually)Calculations:
Coupon Payment per Period (Cpt):
Cpt = F * (C / 2) = $6,000 * (6% / 2) = $180
Present Value of all Coupon Payments (PVcp):
We can use the formula for the present value of an annuity to calculate the PV of all coupon payments. However, a shortcut exists for constant coupon bonds:
PVcp = F * [ 1 - (1 + Y / 2)^(-N) ] / (Y / 2)
N = Number of periods (20)
Present Value of Face Value at Maturity (PVF):
PVF = F / (1 + Y / 2)^N
Bond Price (Pb):
Pb = PVcp + PVF
Premium:
Premium = Pb - F
Amortization Schedule:
The bond is priced at a premium because the nominal yield is lower than the coupon rate. This difference is amortized over the life of the bond, reducing the carrying value (book value) towards the face value at maturity.
Amortization of Premium in the 7th Coupon Period (Ap7):
Carrying Value at the Beginning of Period 7 (CVb7):
This depends on the amortization method used (straight-line or effective interest). We'll assume a straight-line method for simplicity.
CVb7 = Pb - (Number of Periods Completed * Coupon Payment)
Since we don't have the calculated value of Pb yet, we'll come back to this after calculating the bond price.
Scheduled Interest Payment (Sp7):
Sp7 = F * (Y / 2) = $6,000 * (3% / 2) = $90
Amortization of Premium (Ap7):
Ap7 = CVb7 - Sp7 - F / (1 + Y / 2)^n
n = Period number (7)
Solving for Bond Price and Amortization:
We need to solve for the bond price (Pb) first to determine the carrying value at the beginning of period 7 (CVb7). Then, we can calculate the amortization for the 7th coupon period (Ap7).
This typically involves iterative calculations using a financial calculator or spreadsheet. However, we can understand the concepts and the approach to solving this problem.
By calculating the present value of coupon payments and the face value at maturity, we can determine the bond's price and whether it's priced at a premium or discount. The amortization schedule tracks the reduction in premium over time.
Katie Pereira and Ferro Schwartz are employees of Free Star, Inc. In February 2017, Katie's gross pay was $8,500, and Ferro's gross pay was $10,900. All earnings are subject to FICAlong dash—OASDI Tax of 6.2% and FICAlong dash—Medicare Tax of 1.45%. Which of the following would be included in the entry to record the salaries expense for February?
Answer: credit to FICAlong dash —OASDI Taxes Payable for $1,202.80
Explanation:
Given the following ;
Katie's gross pay =$8, 500
Ferro's gross pay = $10,900
FICAlong dash—OASDI Tax = 6.2%
FICAlong dash—Medicare Tax = 1.45%
Total gross pay = Katie's gross pay + Ferro's gross pay
Total gross pay = $(8500 + 10900) = $19,400
FICAlong dash—OASDI Tax = 6.2% = 0.062
0.062 × $19400 = $1,202.80
credit to FICAlong dash —OASDI Taxes Payable for $1,202.80
No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $7.0 million in collections a day and requires a $450,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will each handle $3.5 million of collections a day, and each requires a compensating balance of $300,000. No More Books’ financial management expects that collections will be accelerated by one day if the eastern region is divided.
Answer:
A. NPV $6,850,000
B. $178,100
Explanation:
Bank collections = $7,000,000 per day
Required compensating balance = $300,000
Existing compensating balance = $450,000
Annual T-bill rate = 5%
NPV = bank collections – new compensating balance – existing compensating balance
= $7,000,000 – (2*$300,000 - $450,000)
=$7,000,000-($600,000-$450,000)
=$7,000,000-$150,000
= $6,850,000
The NPV shows that the company should proceed with the new system because it would allow No More Books Corporation to save money.
B.Net Savings (annually)
= NPV * Annual Interest Rate
= $6,850,000 * (0.026)
= $178,100
The Net Present Value is $6,850,000 and the Net Savings (annually) is $178,100.
Given Information
Bank collections = $7,000,000 per day
Required compensating balance = $300,000
Existing compensating balance = $450,000
Annual T-bill rate = 5%
NPV = Bank collections - New compensating balance - Existing compensating balance
NPV = $7,000,000 – (2*$300,000 - $450,000)
NPV =$7,000,000-($600,000-$450,000)
NPV = $7,000,000-$150,000
NPV = $6,850,000
Here, the NPV shows that the company should proceed with the new system because it would allow No More Books Corporation to save money.
B. Net Savings (annually) = NPV * Annual Interest Rate
B. Net Savings (annually) = $6,850,000 * (0.026)
B. Net Savings (annually) = $178,100
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A car rental agency uses 96 boxes of staples a year. The boxes cost $4 each. It costs $20 to order staples, and carrying costs are $0.80 per box on an annual basis.
1. Determine the annual cost of ordering and carrying the boxes of staples.
A. $55
B. $48
C. $196
D. $69
E. $20
Answer:
The correct answer is $55.42.
Explanation:
According to the scenario, the computation of the given data are as follows:
Boxes use = 96 boxes
Cost = $4 per box
Staple cost = $20
Carrying cost = $0.80
So, we can calculate the annual cost of ordering and carrying by using following formula:
Annual cost = (EOQ ÷ 2) × Carrying cost + (Boxes use ÷ EOQ) × Staple cost
Where, EOQ = ( 2 × 96 × 20 ÷ 0.80)^1/2 = 69.28
So, by putting the value, we get
Annual cost = ( 69.28 ÷ 2) × $0.80 + ( 96 ÷ 69.28) × $20
= $27.71 + $27.71
= $55.42
The total annual cost of ordering and carrying the boxes of staples would be $480.80 when considering the cost of the staples, ordering cost, and carrying cost. This value, however, is not represented in the listed options.
Explanation:In order to determine the annual cost of ordering and carrying the boxes of staples for the car rental agency, one should consider both the cost of the staples themselves, the ordering cost, and the carrying cost. The total cost of the staples per year is 96 boxes times $4 each, which comes to $384. The cost of ordering is a flat $20. Lastly, the carrying cost is $0.80 per box annually, so multiply 96 boxes by $0.80 which results to $76.80. Adding all these costs together will give the annual cost of the staples for the agency.
So, the annual cost of ordering and carrying the boxes of staples is $384 (cost of staples) + $20 (ordering cost) + $76.80 (carrying cost) = $480.80. This value isn't listed among the options provided, indicating a potential mistake in the problem statement or the given answers.
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An advantage of using "negotiated" transfer prices is: A. Both the selling and buying units have complete information about costs B. The market price will always be chosen C. Once the price is set, it never needs to be adjusted D. It may take more of managers' time than is beneficial for the company
Answer:
The correct option is A,both the selling and buying units have complete information about costs.
Explanation:
A negotiated transfer price is a price agreed between the selling and buying divisions having considered factors such the external purchase price,the opportunity costs of selling internally and externally ,whether or not there is surplus capacity and may more.
Negotiated transfer price is fairer to both divisions as opposed to a transfer price imposed by management which could result in low morale in the buying or selling division depending on whether the price was set too high or too low.
A credit collector calls Sam and his wife during their breakfast to ask about their past due balance. Sam is confused because he did not open a credit card account with the institution. Upon further investigation, he finds out that he and several other people who visited the same restaurant had their credit information compromised when they were swiped through a __________.
Answer:
Skimmer
Explanation:
A credit collector calls Sam and his wife during their breakfast to ask about their past due balance. Sam is confused because he did not open a credit card account with the institution. Upon further investigation, he finds out that he and several other people who visited the same restaurant had their credit information compromised when they were swiped through a skimmer
A skimmer is a device that is attached to an ATM or a payment machine by thieves to trick people who are swiping their credit cards or debit cards. Thieves can use to compromise your accounts, as in the case of Sam and his wife that their information was compromised by a skimmer
Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. The company expects sales of 10,000 units. Prepare a contribution margin income statement for the year ended December 31, 2019.
Answer:
Contribution margin income statement for the year ended December 31, 2019
Sales (10,000×$175) 1,750,000
Less Variable Costs (10,000×$116) (1,160,000)
Contribution 590,000
Less Fixed Costs (354,000)
Net Income/(loss) 236,000
Explanation:
Variable Costing Income = Contribution - Fixed Costs
To prepare a contribution margin income statement for Zhao Co., calculate the total sales, total variable costs, and total contribution margin. The income statement will show the company's revenue, costs, and profit for the year.
Explanation:To prepare a contribution margin income statement, you need to calculate the total sales, total variable costs, and total contribution margin. The contribution margin is the selling price per unit minus the variable cost per unit.
First, calculate the total sales: 10,000 units x $175 per unit = $1,750,000.
Next, calculate the total variable costs: 10,000 units x $116 per unit = $1,160,000.
Finally, calculate the contribution margin: Total sales - Total variable costs = $1,750,000 - $1,160,000 = $590,000.
Contribution Margin Income Statement:Sales: $1,750,000Variable Costs: $1,160,000Contribution Margin: $590,000Fixed Costs: $354,000Net Income: Contribution Margin - Fixed Costs = $590,000 - $354,000 = $236,000The contribution margin income statement shows the company's revenue, costs, and profit for the year.
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On July 4, Blossom's Restaurant accepts a Visa card for a $150 dinner bill. Visa charges a 2% service fee. Prepare the entry on Blossom’s books related to the transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
The journal entry is shown below.
Explanation:
According to the scenario, the journal entry for the given data are as follows:
Journal entry
Jul.4 Cash A/c Dr $147
Card charges A/c Dr. $3
To Sales revenue A/c $150
(Being card transaction is recorded)
Computation:
Cash = $150 - 2% × $150 = $147
Card charges = $150 × 2% = $3
Blossom Company took a physical inventory on December 31 and determined that goods costing $560,000 were on hand. Not included in the physical count were $8,000 of goods purchased from Sunland Corporation, f.o.b. shipping point, and $29,000 of goods sold to Ro-Ro Company for $40,000, f.o.b. destination. Both the Sunland purchase and the Ro-Ro sale were in transit at year-end. What amount should Blossom report as its December 31 inventory
Answer:
Blossom December 31 inventory $ 608,000
Explanation:
Blossom Company
Physical inventory on December 31 $560,000
Add goods purchased from Sunland Corporation $8,000
( the terms are f.o.b point they are buyer's inventory when the purchase was made)
Add goods sold to Ro-Ro Company for $40,000
( they will be added as it is f.o.b destination that is unless it reaches destination it is sellers' inventory)
Blossom December 31 inventory $ 608,000
F.O. B shipping point transfers the title to the buyer when the purchases is made.
F. O. B shipping destination are seller's goods until they reach their destination
When the sale is recorded the sales units are recorded in the ending inventory because of f.o.b destination but when the purchases are made the units are included in the ending inventory because of terms f.o.b point.
The following events apply to Gulf Seafood for the 2018 fiscal year.
1. The company started when it acquired $60,000 cash by issuing common stock.
2. Purchased a new cooktop that cost $40,000 cash.
3. Earned $72.000 in cash revenue.
4. Paid $25,000 cash for salaries expense.
5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.
Required:
a. Record the above transactions in a horizontal statements model like the following one. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and net change in cash (NC). The letters NA indicate that an element is not effected by the event. Enter any decreases to account balances and cash outflows with minus sign.)
Answer:
Gulf Seafood cash flow for the 2018 fiscal year
Amount in $ Operating Investing Financing
Issuance of stock 60,000 NA NA FA
Purchase of new cooktop -40,000 NA IA NA
Cash revenue 72,000 OA NA NA
Cash salaries -25,000 OA NA NA
Depreciation of cooktop 9,000 OA NA NA
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
Depreciation = (cost - residual value)/estimated useful life
= (40000 - 4000)/4
= $9,000
This depreciation is a non-cash item that may be added back to the net income in the operating segment of the cash flow.
Steve's utility for socks (91) and other goods (92) is given by U(21,92) = 10q1.1 q2.9 The price of the composite good is p2=1 and the price of a pair of socks is p1=2. Steve's income is Y=100. Every year, Steve's mom buys him 20 pairs of socks. Find the equivalent variation of the gift. What is the difference between the cost of the gift and the equivalent valuation cash amount?
Answer:
120
Explanation:
Look up attached file
The United Kingdom produces computers and sells them to Japan. At the same time Japan produces cars and sells them to the United Kingdom. Suppose there is an appreciation in the pound. This will cause:
A. An increase in imports into the United Kingdom and an increase in exports to Japan, which will cause an increase in aggregate demand and real GDP.
B. A decrease in imports into the United Kingdom and an increase in exports to Japan, which will cause an increase in aggregate demand and real GDP.
C. An increase in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP.
D. A decrease in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP.
Answer:
The United Kingdom produces computers and sells them to Japan. At the same time Japan produces cars and sells them to the United Kingdom. Suppose there is an appreciation in the pound. This will cause: an increase in imports into the United Kingdom and a decrease in exports to Japan, which will cause a decrease in aggregate demand and real GDP - Option C.
Explanation:
Option C is the correct answer choice, the reason being that an appreciation in the value of the pound will mean that the UK's goods will look more costly. This will mean that imports of foreign goods into the UK will rise whereas exports of UK goods will fall.
Spencer Chemical Corporation produces an oil-based chemical product which it sells to paint manufacturers. In 2013, the company incurred $344,000 of costs to produce 40,000 gallons of the chemical. The selling price of the chemical is $12.00 per gallon. The costs per unit to manufacture a gallon of the chemical are presented below:
Direct materials$6.00
Direct labor1.20
Variable manufacturing overhead.80
Fixed manufacturing overhead .60
Total manufacturing costs$8.60
The company is considering manufacturing the paint itself. If the company processes the chemical further and manufactures the paint itself, the following additional costs per gallon will be incurred: Direct materials $1.70, Direct labor $.60, Variable manufacturing overhead $.50. No increase in fixed manufacturing overhead is expected. The company can sell the paint at $15.50 per gallon.
Instructions
Determine the incremental per gallon increase in net income and the total increase in net income if the company manufactures the paint.
Answer:
incremental per gallon increase in net income = $18.30
the total increase in net income = $732,000
Explanation:
incremental per gallon increase in net income
Consider only the Incremental Costs and Revenues. Fixed manufacturing overheads are irrelevant for this decision.
Sales $15.50
Direct materials ($1.70)
Direct labor ($0.60)
Variable manufacturing overhead ($0.50)
Total $18.30
the total increase in net income
total increase = incremental per gallon × number of gallons
= $18.30 × 40,000
= $732,000
The following information relates to Carried Away Hot Air Balloons, Inc.: Advertising Costs $ 15 comma 800 Sales Salary 13 comma 800 Sales Revenue 650 comma 000 President's Salary 52 comma 000 Office Rent 66 comma 000 Manufacturing Equipment Depreciation 1 comma 000 Indirect Materials Used 8 comma 300 Indirect Labor 11 comma 100 Factory Repair and Maintenance 800 Direct Materials Used 22 comma 410 Direct Labor 35 comma 600 Delivery Vehicle Depreciation 940 Administrative Salaries 25 comma 000 How much was Carried Away's manufacturing overhead?
Answer:
$21,200
Explanation:
The computation of manufacturing overhead is shown below:-
Total manufacturing overhead = Indirect Labor + Indirect Materials + Factory Repair and Maintenance + Manufacturing Equipment Depreciation
= $11,100 + $8,300 + $800 + $1,000
= $21,200
Therefore for computing the total manufacturing overhead we simply added all relevant cost Indirect Labor, Indirect Materials, Factory Repair, and Maintenance, and Manufacturing Equipment Depreciation. The rest all cost is not relevant for total manufacturing cost.
Final answer:
Carried Away Hot Air Balloons, Inc.'s manufacturing overhead includes various indirect costs such as $15,800 for advertising, $1,000 for equipment depreciation, $8,300 for indirect materials, $11,100 for indirect labor, and $800 for factory repairs, totaling to $37,000.
Explanation:
To calculate Carried Away Hot Air Balloons, Inc.'s manufacturing overhead, we need to consider all the indirect costs associated with production that are not directly tied to the production of goods, such as direct material or direct labor. Manufacturing overhead includes costs like indirect materials used, indirect labor, and depreciation on manufacturing equipment along with other factory-related expenses such as repair and maintenance.
In the provided information, the following items are components of manufacturing overhead:
Advertising Costs: $15,800Manufacturing Equipment Depreciation: $1,000Indirect Materials Used: $8,300Indirect Labor: $11,100Factory Repair and Maintenance: $800The sum of these costs will give us the total manufacturing overhead, which can be calculated as follows:
$15,800 (Advertising Costs) + $1,000 (Manufacturing Equipment Depreciation) + $8,300 (Indirect Materials Used) + $11,100 (Indirect Labor) + $800 (Factory Repair and Maintenance) = $37,000.
Therefore, Carried Away's manufacturing overhead is $37,000.
The normal time for an entire process 155.2 minutes. The allowance factor for this process is set by a union contract and is equal to 14%. What is the approximate standard time for this process?
Answer: 180.47 minutes
Explanation:
The approximate standard time for a process is calculated by using the following formula,
Standard time = Normal time / (1- allowance fraction)
Standard time = 155.2/(1-0.14)
Standard time = 180.47 minutes
The approximate standard time for this process is 180.47 minutes .
Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $175 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $122 per unit. a. If a transfer price of $148 per unit is established and 50,000 units of materials are transferred, with no reduction in the Components Division’s current sales, how much would T_Kong Industries’ total income from operations increase? $ b. How much would the Instrument Division's income from operations increase? $ c. How much would the Components Division's income from operations increase?
Answer:
Multiple choices for the first question are:
a)$2,650,000
b)$ 1,350,000
c) $1,300,000
The correct answer to the first question is A,$2,650,000
Instrument's division net income from operations increases by $1,350,000
Component's division net income from operations increases by $1,300,000
Explanation:
Instruments' division
The increase in instrument's division net income is computed thus:
Outside purchase price $175
internal transfer price ($148)
Savings from buying internally $27
Total savings from buying internally(50,000*$27)=$1,350,000
The instrument's division income from operations would increase by $1,350,000 as a result of buying from the Components' division
Components' division
The increase in instrument's division net income is computed thus:
transfer price to instruments' division $148
variable cost of internal transfer ($122)
Increase in profits from operations per unit $26
Total increase in profits (50,000*$26)=$1,300,000
The component's division income from operations would increase by $1,350,000 as a result of selling to instruments' division
Total increase in T-kong industries=$1,350,000+$1,300,000=$2,650,000
Sedgwick Inc. is considering Plan 1 which is estimated to have sales of $40,000 and costs of $15,500. The company currently has sales of $37,000 and costs of $14,000. Compare plans using incremental analysis. If Plan 1 is selected, there would be incremental Choose your answer here in profit by $Type your answer here .
Answer:
If Plan 1 is selected, there would be 0.652 incremental profit by $1,500.
Explanation:
This can be calculated as follows:
Incremental sales revenue = Estimated sales revenue - Current sales revenue = $40,000 - $37,000 = $3,000
Incremental costs = Estimated cost - Current costs = $15,500 - $14,000 = $1,500.
Incremental profit = Incremental sales revenue - Incremental costs = $3,000 - $1,500 = $1,500
Profit from current operation = $37,000 - $14,000 = $23,000.
Percentage increase in profit = ($1,500/$23,000) * 100 = 6.52%, or 0.652
Therefore, if Plan 1 is selected there would be 0.652 incremental profit by $1,500
Marigold Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below: Cost Lower-of-Cost-or-Market 12/31/19 $355,570 $338,310 12/31/20 374,580 361,170 (a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 12/31/19 12/31/20 (b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used)
The Marigold Company should write down its inventory by $17,260 and $13,410 at the end of the years 2019 and 2020 respectfully. They record these losses on market decline by using journal entries to the account 'Allowance to Reduce Inventory to Market'.
Explanation:The given problem involves the concept of Lower-of-Cost-or-Market (LCM) valuation and the Last-In-First-Out (LIFO) inventory costing method. Here is a step-by-step explanation of creating the required journal entries:
Journal entries under LIFO-Cost-Or-Market valuation
Firstly, Marigold Company would have to write down its inventory at the end of each year to its market value, if the market value is less than the cost.
For December 31, 2019:
Date: 12/31/19
Debit: Loss due to Market Decline of Inventory $17,260
Credit: Allowance to Reduce Inventory to Market $17,260
(To record market decline of inventory at December 31, 2019)
For December 31, 2020:
Date: 12/31/20
Debit: Loss due to Market Decline of Inventory $13,410
Credit: Allowance to Reduce Inventory to Market $13,410
(To record market decline of inventory at December 31, 2020)
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Darrel&Co. makes electronic components. Chris Darrel, the president, recently instructed Vice President Jim Bruegger to develop a total quality control program. "If we don't at least match the quality improvements our competitors are making," he told Bruegger, "we'll soon be out of business." Bruegger began by listing various "costs of quality" that Darrel incurs. The first six items that came to mind were (Click the lcon to view the information.) Classify each item as a prevention cost, an appraisal cost, an internal failure cost, or an extenal failure cost. The, determine the total cost of quality by category. Begin by classifying each item as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost by entering each amount in the appropriate column, then, determine the total cost of quality by category. (If a box is not used in the table leave the box empty do not enter a zero.) Provention Cost Appraisal Cost Internal Failure Cost External Failure Cost C. Total More Info a. Costs incurred by Darrel customer representatives traveling to customer sites to repair defective products, $15,500 b. Lost profits from lost sales due to reputation for less-than-perfect products, $80,000 c. Costs of inspecting components in one of Darrels production processes, $32,500 d. Salaries of engineers who are redesigning components to withstand electrical overloads, $100,000. e. Costs of reworking defective components after discovery by company inspectors, $55,000. f. Costs of electronic components returned by customers, $70,000.
Prevention Cost Appraisal Cost Internal Failure External Failure
Cost cost
a 15,000
b 80,000
c 32,500
d 100,000
e 55,000
f 70,000
Total 100,000 32,500 55,000 165,000
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 300,000 Permanent difference (14,600 ) 285,400 Temporary difference-depreciation (19,000 ) Taxable income $ 266,400 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
a. $110,016.
b. $122,400.
c. $117,180
d.$120,681
Answer: $4,750
Explanation:
In calculating the deferred tax liability Tringali should use only the Temporary Difference as the Permanent difference is not considered and the temporary difference creates a difference in tax that will be paid later.
Doing that therefore will result in the following,
= 25% * 19,000
= $4,750
$4,750 is the amount that Tringali should report as its deferred income tax liability as of the end of its first year of operations.
I do not see it in the options but it is the correct answer.
During the current month, the Acme company had receivables of $16,590. It also had outgoing expenditures of $12,730. The company incurred a bank charge of $12.50 for a wire transfer, and the bank paid them interest of $2.37. How much should its balance have changed during this month?
Answer:
$3,849.87
Explanation:
The change in balance is the net of the receipts and the payments.
The receipts include the receivables and the interest paid by the bank while the payments include the outgoing expenditure and bank charge.
Balance change
= $16,590 - $12,730 -$12.50 + $2.37
= $3,849.87
Phipps Company borrowed $16,000 cash on October 1, 2014, and signed a six-month, 6% interest-bearing note payable with interest payable at maturity. Assuming that adjusting entries have not been made during the year, the amount of accrued interest payable to be reported on the December 31, 2014 balance sheet is which of the following?a $240.b $360.c $120.d $480.
Answer:
The accrued interest payable to be reported on December 31, 2014 will be $240 and option a is the correct answer.
Explanation:
The interest rate given on the notes payable is the annual rate. Following the accrual basis of accounting, the revenues and expenses for a period should be matched and recorded in their respective periods. Thus, the interest relating to the period from October to December will be recorded as an expense on 31 December 2014 and debited to interest expense and credited to interest payable as the interest will be paid at maturity.
The interest expense for the 3 month period from October to December is,
Interest expense = 16000 * 0.06 * 3/12 = $240
The entry will be,
31 Dec 2014 Interest expense $240 Dr
Interest Payable $240 Cr
Answer:
The amount of accrued interest payable to be reported on the December 31, 2014 balance sheet is a $240
Explanation:
Phipps Company borrowed $16,000, 6% interest rate.
The amount of the interest per year = 6% x $16,000 = $960
The amount of the interest per month = $960/12 = $80
On December 31, 2014, following 3 months borrowing, the amount Interest expense Phipps Company records:
$80 x 3 = $240
The adjusting entry:
Debit Interest expense $240
Credit Interest Payable $240
Sam is considering investing in a bond with a face value of $20,000. The bond pays an interest of 4% payable quarterly. If he expects to make a 1 ½ % return per quarter on this investment with a maturity of 20 years, determine the most he can pay for the bond ________. a. $18,102.65 b. $14,923.86 c. $15,355.40 d. $16,000
Final answer:
To calculate the maximum price Sam can pay for the bond, we need to discount the future quarterly interest payments and the face value repayment at the end of 20 years at the desired quarterly return rate, using the bond pricing formula. However, the options provided do not align with typical bond pricing results, suggesting there may be additional factors or a missing piece of the question.
Explanation:
The student is asking how to calculate the maximum price Sam should pay for a bond to achieve a desired return, given certain investment conditions. This is a typical present value problem in financial mathematics that necessitates understanding of bond pricing and the concept of the discount rate.
To calculate the most Sam can pay for the bond to achieve a 1 ½ % return per quarter, we need to discount each of the bond's future cash flows back to the present at the desired rate of return and sum them to find the present value. The bond pays 4% annual interest, which is 1% quarterly on its $20,000 face value (a payment of $200 every quarter). Over 20 years, or 80 quarters, the bond will pay this interest, then repay the face value at maturity.
Using the formula PV = C * [1 - (1 + r)^-n] / r + FV / (1 + r)^n, where PV is the present value of the bond, C is the quarterly interest payment, r is the quarterly discount rate, n is the total number of payments, and FV is the face value of the bond, we can solve for the present value of the bond, given Sam's required return. The calculation can be complex, so rather than detailing it here, we refer to a financial calculator or spreadsheet to compute the exact value.
Note that the options provided do not seem to match the result of a typical bond pricing equation, and it's possible that additional context or constraints from the question might be missing.
c. The most he can pay for the bond is $15,355.40.
Sam is considering investing in a bond with a face value of $20,000 paying an interest of 4% payable quarterly. He expects to make a 1.5% return per quarter on this investment with a maturity of 20 years. To determine the most he can pay for this bond, we need to calculate the bond's present value (PV) using the formula:
PV = C × \/(1 + r)^1 + C × \/(1 + r)^2 + ... + C × \/(1 + r)^n + M\/ (1 + r)^n
Where C = Quarterly coupon payment, r = required rate of return per quarter, and n = total number of quarters.
Given:
Face Value (M): $20,000Quarterly Coupon Payment (C): 0.04/4 × 20,000 = $200Required Quarterly Return (r): 0.015Total Quarters (n): 20 × 4 = 80Using the formula, we calculate PV as follows:
PV = $200 × [1 - (1 + 0.015)^-80] / 0.015 + $20,000 / (1 + 0.015)^80
After calculating, PV ≈ $15,355.40.
Therefore, the most Sam can pay for the bond is $15,355.40, which corresponds to option c.
Apple reports the following net sales (in $ millions) by product line in its fiscal year 2017 annual report.
Product line 2017 Sales 2016 Sales
iPhone $141,319 $136,700
iPad 19,222 28,628
Mac 25,850 22,831
Services 29,980 24,348
Other 12,863 11,132
1. If Apple assigns overhead costs to product lines based on sales, which product line would be assigned the highest amount of overhead costs for 2017?
2. If Apple assigns overhead costs to product lines based on sales, which product line would be assigned the lowest amount of overhead costs for 2017?
3. Which of Apple’s product lines had the largest percentage increase in sales from 2016 to 2017?
Answer:
1. iPhone
2.Others
3. Services
Explanation:
1. According to the question the product line of iPhone would have the highest amount which is $141,319 in 2017
2. According the second point the others product line based on sales would have the least amount which is $12,863 in 2017.
3. The increase in sales from 2016 to 2017 is shown below:-
Particulars 2017 (A) 2018 (B) Difference Percentage
C = A - B C ÷ B × 100
iPhone $141,319 $136,700 $4,619 3.4%
iPad $19,222 $28,628 ($1,406) (6.4%)
Mac $25,850 $22,831 $3,019 13.2%
Services $29,980 $24,348 $5,632 23.1%
Other $12,863 $11,132 $1,731 15.5%
Therefore Services has the highest sales from 2016 to 2017
Richards Corporation had net income of $275,132 and paid dividends to common stockholders of $48,300. It had 57,200 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $59 per share. The price-earnings ratio (rounded to two decimal places) is
Answer:
The Price-earnings ratio is 14.88 (to two decimal places)
Explanation:
The Price-earnings ratio (P/E ratio) is a measure of the relationship between a company's stock price and its earning per share of issued stock. Mathematically, P/E ratio is calculated by dividing a company's current stock price by its earnings per share:
P/E ratio = current stock price ÷ earnings per share
current stock price = $59 per share
Earning per share = ???
Next we are going to calculate the earnings per share (EPS) by using the following formula:
EPS = (net income - dividend paid) ÷ (number of shares outstanding)
EPS = (275,132 - 48,300) ÷ (57,200)
EPS = 3.966
∴ P/E ratio = current stock price ÷ Earning per share (EPS)
P/E ratio = 59 ÷ 3.966 = 14.876 = 14.88 (to two decimal places)
Lambert Company purchased $140,000 of goods in September and expects to purchase $130,000 of goods in October. Lambert typically pays for 20% of purchases in the month of purchase and 80% in the following month. In mid-October, Lambert expects to buy a new computer for $4,500 using the company credit card. Typically, the credit card bill is paid in full in the following month. September credit card purchases totaled $6,000. What are the total cash disbursements expected by Lambert during the month of October?
Answer:
Cash disbursements for October will be $144000
Explanation:
The cash disbursements for October will include 80% amount of September purchases and 20% amount of October purchases along with the payment for September's credit card bill.
The cash disbursements are,
80% of September's purchases = 0.8 * 140000 = $112000
20% of October's purchases = 0.2 * 130000 = $26000
Credit card bill for September = 6000
Cash Disbursements - October = 112000 + 26000 + 6000 = $144000
MV Corporation has debt with market value of $ 95 million, common equity with a book value of $ 101 million, and preferred stock worth $ 17 million outstanding. Its common equity trades at $ 51 per share, and the firm has 6.1 million shares outstanding. What weights should MV Corporation use in its WACC?
Answer:
The total market value of the firm is $423.1 million.
Debt is 22.44% of the total value, Preferred stock is 4.10%,
Common equity is 73.52%.
Explanation:
MV Corporation
Value of debt: $95 million
Value of preferred stock: $17 million
Market value of common equity: $51 per share × 6.1 million shares= $311.1million
Total market value of firm: $95 +17 +311.1 =$423.1 million
Weights for WACC calculation:
Debt = 95÷423.1
=22.45%
Preferred Stock 17÷423.1
=4.10%
Common Equity 311.1÷423.1
=73.52
Hence The total market value of the firm is $423.1million. Debt is 22.44% of the total value, preferred stock is 4.10%, and common equity is 73.52%.
"Ginny sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Ginny realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Eric and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Ginny knows that if they both work hard, Eric will earn $90 on the beach and Ginny will earn $180 at her stand, so they will each take home half of their total revenue: $90+$1802=$135 . If Eric shirks, he'll generate only $50 in earnings. Ginny does not know that Eric estimates his personal cost (or disutility) of working hard as opposed to shirking at $25."
Answer:
Explanation:
Once out of Ginny sight, Alex faces a dilemma: Work very hard (put in all effort) or shirk (put in little effort). If he works hard, he'll sell enough water to generate $90 in earnings (not including his personal cost). If he shirks, he'll only generate $50 in earnings. After the end of the work, he'll split his earnings with Ginny and also get half of what she earns at her stand. In terms of Eric's total utility, it is worse for him to work hard. Close A If Alex works hard, Alex and Sunita together earn $270 ($180 + $90), of which Eric keeps $120. However, he loses $20 worth of utility by working hard. Therefore his net earnings is $100. If he shirks, Eric and Ginny together earn $270 ($200+ $70), of which Eric will keeps $120, while his personal cost is zero. Therefore Alex, individually, is better off when he shirks. A more better way of finding the solution to the problem is to note that from Eric's view, the amount of money he gets from Ginny's sales from the stand does not rely on his own sales.