Answer:
Interest on borrowed = $237,900
Actual interest paid = $1,351,200
Explanation:
As per the data given in the question,
Marigold Inc. borrowed = $3,600,000 at 13 % payable annually
Expenditure related to the building :
March 1 = $432,000
June 1 = $720,000
July 1 = $1,800,000
December 1 = $1,800,000
As per the formula,
Weighted avg = (Amount × no. of months ) ÷ months in a year
Amounts no. of months months in a year weighted avg
Mar 1 $432,000 10 12 $360,000
June 1 $720,000 7 12 $420,000
July 1 $1,800,000 6 12 $900,000
Dec 1 $1,800,000 1 12 $150,000
Total weighted avg = $1,830,000
Interest on borrowed = $1,830,000 × 13%
= $237,900
Actual interest paid :
$3,600,000 × 13% = $468,000
$4,800,000 × 14% = $672,000
$1,920,000 × 11% =$211,200
So, total Actual interest paid = $1,351,200
Final answer:
To determine the amount of interest capitalized in 2020 for the construction of the building, calculate the weighted-average accumulated expenditures and multiply by the interest rate. The amount of interest to be capitalized is $394,500. The journal entry to record the capitalization of interest and recognition of interest expense is provided.
Explanation:
In order to determine the amount of interest capitalized in 2020 in relation to the construction of the building, we need to calculate the weighted-average accumulated expenditures for the period. The formula to calculate the weighted-average accumulated expenditures is:
Weighted-Average Accumulated Expenditures = (Expenditure 1 x Time 1) + (Expenditure 2 x Time 2) + ... + (Expenditure n x Time n)
Once we have the weighted-average accumulated expenditures, we can calculate the amount of interest to be capitalized using the formula:
Interest to be Capitalized = Weighted-Average Accumulated Expenditures x Interest Rate
Based on the given information, the amount of interest to be capitalized in 2020 in relation to the construction of the building is $394,500.
The journal entry to record the capitalization of interest and the recognition of interest expense at December 31, 2020, would be:
Date Account Titles and Explanation
December 31, 2020 Building-in-Progress $394,500
Interest Payable $394,500
A company has already incurred $5,600 of costs in producing 6,050 units of Product XY. Product XY can be sold as is for $27 per unit. Instead, the company could incur further processing costs of $11 per unit and sell the resulting product for $31 per unit. Should the company sell Product XY as is or process it further? (Any loss amount should be indicated with minus sign.)
Answer:
The company should sell product XY
Explanation:
The computation of given question is shown below:-
Particulars Sell as is Process Further Incremental Amount
Selling Price
Per unit $27 $31 -$4
Additional processing
Cost per unit $11 $11
Total $27 $20 -$7
Therefore, as we can see that the negative amount came so we sell and if we proceed the company will go to the loss.
Production Budget
Assume that Stillwater Designs produces two automotive subwoofers: S12L7 and S12L5. The S12L7 sells for $475, and the S12L5 sells for $300. Projected sales (number of speakers) for the coming five quarters are as follows:
S12L7 S12L5
First quarter, 20X1 1,120 1,820
Second quarter, 20X1 3,080 1,960
Third quarter, 20X1 7,840 7,420
Fourth quarter, 20X1 6,440 5,460
First quarter, 20X2 1,260 1,680
The vice president of sales believes that the projected sales are realistic and can be achieved by the company.
Stillwater Designs needs a production budget for each product (representing the amount that must be outsourced to manufacturers located in Asia). Beginning inventory of S12L7 for the first quarter of 20X1 was 340 boxes. The company's policy is to have 20% of the next quarter's sales of S12L7 in ending inventory. Beginning inventory of S12L5 was 170 boxes. The company's policy is to have 30% of the next quarter's sales of S12L5 in ending inventory.
Required:
a.Prepare a production budget for each quarter for 20X1 and for the year in total.
Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced
b. Prepare a production budget for each quarter for 20X1 and for the year in total. If required, round your answers to nearest whole value.
Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
Sales
Desired ending inventory
Total needs
Less: Beginning inventory
Units produced
Answer:
Stillwater Designs
Production Budget for S12L7
For the Year Ended December 31, 20X1
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Sales 1,120 3,080 7,840 6,440
Desired ending inventory 616 1,568 1,228 252
Total needs 1,736 4,648 9,068 6,692
Less: Beginning inventory (340) (616) (1,568) (1,228)
Units produced 1,396 4,032 7,500 5,464
Stillwater Designs
Production Budget for S12L5
For the Year Ended December 31, 20X1
1,680
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Sales 1,820 1,960 7,420 5,460
Desired ending inventory 588 2,220 1,638 504
Total needs 2,408 4,180 9,058 5,964
Less: Beginning inventory (170) (588) (2,220) (1,638)
Units produced 2,238 3,592 6,838 4,326
Explanation:
Production Budget shows the quantities of finished goods that must be produced to meet expected sells plus any increase of inventory levels that might be required.
Final answer:
The production budget for Stillwater Designs is calculated by considering the projected sales, desired ending inventory, and beginning inventory for both S12L7 and S12L5 subwoofers. Production budgets determine units to be produced each quarter. Additionally, economies of scale imply that producing larger quantities can lead to lower average costs until a limit is reached.
Explanation:
The production budget for Stillwater Designs' automotive subwoofers, the S12L7 and S12L5, must take into account projected sales, desired ending inventory, and beginning inventory to determine the units produced each quarter. For the S12L7, with beginning inventory of 340 units and a 20% ending inventory policy, we calculate units produced by first determining the necessary ending inventory and total needs for each quarter, then subtracting current inventory. The S12L5 follows a similar process but begins with 170 units and maintains a 30% ending inventory policy.
On the topic of economies of scale, the decision by a manager of an automobile assembly plant on whether to produce cars or SUVs, given equal input quantities, should also consider potential cost reductions at higher production levels. As production quantity increases, average costs may decrease due to economies of scale, up to a certain point where these cost benefits plateau or diminish.
Thomas purchased 200 shares of stock A for $23 a share and sold them more than a year later for $ 19 per share. Be purchased 600 shares of stock B for $41 per share and sold them for $57 per share after holding them for more than a year. Both of the sales were in the same year. If Thomas is in a 35% tax bracket, what will his capital gains tax be for the year
Answer:
Capital gain tax = $1,540.
Explanation:
As per the data given in the question,
For stocks of A
Profit = (selling price - purchasing price) × units
= ($19 - $23) × 200
= -$800
For stocks of B
Profit = ($57-$41) × 600
= $9,600
Total profit = profit for stock A + profit for stock B
= -$800 + $9,600
= $8,800
Therefore, capital gain for both year = $8,800
Tax rate = 35%
Capital gain tax = Capital gain × Tax rate
= $8,800 × 35%
=$3,080
As share holds for more than a year,
So, Capital gain tax = $3,080 ÷ 2 = $1,540.
Selling, general, and administrative expenses were $69,000; net sales were $313,500; interest expense was $7,400; research and development expenses were $32,700; net cash provided by operating activities was $82,200; income tax expense was $7,900; cost of goods sold was $171,600. Required: a. Calculate operating income for the period. b. Calculate net income for the period.
Answer:
Operating income is $40,200
Net income is $24,900
Explanation:
The operating income is the net sales minus the costs of goods sold, the selling,general and administrative expenses,research and development expenses.This is known as earnings before interest and tax(EBIT).
The net income is the operating income minus the interest expense as well as the tax expense for the year,which is known as earnings after tax.
Net sales $313,500
Costs of goods sold ($171,600)
Gross profit $141,900
Selling,general and administrative expenses ($69,000)
Research and development expenses ($32,700)
Operating income $40,200
Interest expense ($7,400)
income tax expense ($7,900)
net income $24,900
The operating income for the period is calculated as $40,200, and net income for the period comes out to be $24,900.
Explanation:To begin with, the operating income can be calculated using the following formula: Net sales - Cost of goods sold - Selling, General and Administrative expenses - Research and Development expenses. So, using the given numbers, operating income will be $313,500(net sales) - $171,600 (cost of goods sold) - $69,000 (selling, general and administrative expenses) - $32,700 (research and development expenses) = $40,200.
Moving on to net income, it can be calculated by subtracting the interest expense and the income tax expense from the operating income. So, the net income will be $40,200 (operating income) - $7,400 (interest expense) - $7,900 (income tax expense) = $24,900.
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Suppose the S&R index is 800, the continuously compounded risk-free rate is 5%, and the dividend yield is 0%. A 1-year 815-strike European call costs $75 and a 1- year 815-strike European put costs $45. Consider the strategy of buying the stock, selling the 815-strike call, and buying the 815-strike put. a. What is the rate of return on this position held until the expiration of the options? b. What is the arbitrage implied by your answer to (a)? c. What difference between the call and put prices would eliminate arbitrage? d. What difference between the call and put prices eliminates arbitrage for strike prices of $780, $800, $820, and $840?
Answer:
a) the rate of return on this position held until the expiration of the options is r = 0.05638
b) $5.52
c) C - P = $24.748
d)
C - P = $4.748 C - P = $24.748 C - P = $44.748 C - P = $64.748Explanation:
a) Assume that, we are buying the stock, selling the 815-strike call , and buying the 815 strike put, the rate of return on this position held until the expiration of the options can be determined as follows:
solving for the cost first; we have:
(- $800 + $75 - $45) = $770
After 1-year ; the compounded rate of return (r) can be expressed as:
[tex]770e^r = 815[/tex]
[tex]e^r = \frac{815}{770} \\ \\ e^r = 1.058 \\ \\ e = In(1.058) \\ \\ r = 0.05638[/tex]
Thus, the rate of return on this position held until the expiration of the options is r = 0.0564
b)
What is the arbitrage implied by your answer to (a)?
The return rate on this position shows more interest than the risk-free interest rate. However, there is need to borrow money at 5% (0.05) in order to purchase a large amount of the rate of return position of (a), resulting into a sure return of 0.64%. In essence, $770 is being borrowed from the bank to buy and secure one position; Therefore , after 1-year; the bank is being owed:
$[tex]770e^{0.05}[/tex] = $809.48
Thus, the arbitrage implied by the answer to (a) is:
$815 - $809.48 = $5.52
c) . What difference between the call and put prices would eliminate arbitrage? To eliminate arbitrage; it is crucial that the call and put prices should be on hold. This implies that:
C - P = [tex]S_o - Ke^{-rT}[/tex]
C - P = [tex]800 - 815 e^{-rT}[/tex]
C - P = [tex]800 - 815 e^{-0.05*1}[/tex]
C - P = $24.748
d). What difference between the call and put prices eliminates arbitrage for strike prices of $780, $800, $820, and $840?
C - P = [tex]S_p - Ke^{-rT}[/tex]
where [tex]S_p[/tex] is the spike prices
when [tex]S_p[/tex] = $780
C - P = [tex]780 - 815 e ^{-0.05*1[/tex]
C - P = $4.748
when [tex]S_p[/tex] = $800
C - P = [tex]800 - 815 e^{-0.05*1}[/tex]
C - P = $24.748
when [tex]S_p[/tex] = $820
C - P = [tex]820 - 815 e^{-0.05*1}[/tex]
C - P = $44.748
when [tex]S_p[/tex] = $840
C - P = [tex]840 - 815 e^{-0.05*1}[/tex]
C - P = $64.748
Cullumber, Inc. acquired 30% of Marigold Corporation's voting stock on January 1, 2021 for $890000. During 2021, Marigold earned $367000 and paid dividends of $228000. Cullumber's 30% interest in Marigold gives Cullumber the ability to exercise significant influence over Marigold's operating and financial policies. During 2022, Marigold earned $467000 and paid cash dividends of $128000 on April 1 and $128000 on October 1. On July 1, 2022, Cullumber sold half of its stock in Marigold for $627000 cash.
Required:
1. What should the gain be on sale of this investment in Cullumber's 2022 income statement?
Answer:
The gain on the sale of investment is $145,325
Explanation:
In determining the gain on the sale of half of the stock,the first thing to do would be determine the cost of the stock sold such that the cost can then be compared with the proceeds from the sale of the investment so as to determine the gain therein.
The total investment should be valued in such a way that the share of profits should be added to the investment while the dividends received would be deducted.
Jan,1 2021 $890,000
Share of profit($367,000*30%) $110,100
less dividends(since it already received in cash
($228,000*30%) ($68,400 )
Value of investment at 31 Dec,2021 $931,700
Share of profit(30%*$467000)*6/12 $70,050
Dividends(30%$128,000) ($38,400 )
Value of investment as at 1 july 2022 $963,350
Note that as at I july 2022 Marigold Corporation is only entitled to half year profits on the investment as well as half year dividends
Cost of half of investment=$963,350*1/2=$ 481,675.00
Gain= proceeds-cost=$627,000- 481,675 =$145,325
QUESTION 1 The Assembly Department started the month with 19,000 units in its beginning work in process inventory. An additional 103,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 29,400 units in the ending work in process inventory of the Assembly Department. How many physical units were transferred to the next processing department during the month
Answer:
Transferred out units is 93,100 units
Explanation:
The number of physical units can be determined as follows:
opening inventory + newly introduced units - closing inventory
= 19,000 + 103,500 - 29,400. =93,100 units
Note that we have to deduct the closing inventory units because they represent the quantity of work that are yet to be completed as the end of the end of the period
Physical units transferred out to the next processing department is 93,100 units
Required initormation Potential Misstatements in the Revenue Cycle Read the overview below and complete the activities that follow. The revenue cycle is a major cycle for most companies. Accounts receivable, revenue, and other accounts are tested through this cycle. Often there are misstatements found, including errors and/or fraud by the client.
CONCEPT REVIEW: It is important in testing any cycle, especially revenue, to realize that misstatements will occur and to try to distinguish between errors and fraud
1. Many instances of misstatement are based on the inappropriate recognition of __________
2. One way to avoid misstatement of revenue is to ensure the client has proper ________
3. Revenues are deemed to be earned when the company has ____________what it must do to fulfill its obligation
4.Side ___________ can substantially alter the terms of a sale.
5. __________ needs to be assured in order to recognize revenue.
1.controls,errorsmisstatementrevenuerisk2. cutoff policiesinsurance policiesliability policiesrisk policiessecurity policies3. accomplishedanticipatedauditedconsidereddiscovered4. agreementsauditscompaniesinventoriespolicies5. collectabilitycompletionconfirmationinventoryshipping
Answer:
Many instances of misstatement are based on the inappropriate recognition of controls, errors,misstatement,revenue and risk.One way to avoid misstatement of revenue is to ensure the client has proper cutoff policies,insurance policies,liability policies,risk policies and security policies.Revenues are deemed to be earned when the company has accomplished,anticipated,audited,considered and discovered what it must do to fulfil its obligation. Side agreements,audits,companies,inventories and policies can substantially alter the terms of a sale.Collectability,completion,confirmation,inventory and shipping needs to be assured in order to recognize revenue.
Culver Corporation purchased machinery on January 1, 2022, at a cost of $288,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $33,800. The company is considering different depreciation met Prepare separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line rate.
Answer:
Please Kindly check the attach picture, the full working is there.
Explanation:
Pension plans are required to report two schedules, a schedule of funding progress and a schedule of employer contributions as required supplementary information (RSI) in their stand-alone financial reports and in pension plan financial information reported in the CAFR of sponsoring government. True False
Answer:
Pension plans are required to report two schedules, a schedule of funding progress and a schedule of employer contributions as required supplementary information (RSI) in their stand-alone financial reports and in pension plan financial information reported in the CAFR of sponsoring government - Both statements are true.
Explanation:
Pension plans are required to report two schedules, a schedule of funding progress, and a schedule of employer contributions as required supplementary information (RSI) in their stand-alone financial reports -This statement is correct.
Pension plan financial information is reported in the CAFR of sponsoring government - This statement is also correct.
Therefore, both statements are true.
In 2020, Martinez Corporation had pretax financial income of $173,000 and taxable income of $118,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 20%.Compute the amount to be reported as income taxes payable at December 31, 2020.Income taxes payable at December 31, 2020
Answer:
The correct answer is $23,600.
Explanation:
According to the scenario, computation of the given data are as follows:
Pretax financial income = $173,000
Taxable income =$118,000
Tax rate = 20%
So, we can calculate the income taxes payable by using following formula:
Income taxes payable = Taxable income × Tax rate
= $118,000 × 20%
= $23,600
Hence, the amount to be reported as income taxes payable at December 31, 2020 is $23,600.
Waterway uses LIFO inventory costing. At January 1, 2020, inventory was $277,680 at both cost and market value. At December 31, 2020, the inventory was $353,340 at cost and $332,280 at market value. Prepare the necessary December 31 entry under (a) the cost-of-goods-sold method and (b) loss method
Answer:
a)
Dr Cost of Goods Sold $21,060
Cr Allowance to Reduce Inventory to Market
$21,060
b)
Dr Loss Due to Market Decline of Inventory $21,060
Cr Allowance to Reduce Inventory to Market $21,060
Explanation:
Waterway uses LIFO inventory costing as at January 1, 2020
a)
Dr Cost of Goods Sold $21,060
Cr Allowance to Reduce Inventory to Market
$21,060
($353,340 – $332,280)
b)
Dr Loss Due to Market Decline of Inventory $21,060
Cr Allowance to Reduce Inventory to Market $21,060
Final answer:
The necessary December 31 entries for the student's LIFO inventory scenario would adjust the inventory value down using the cost-of-goods-sold method and the loss method, because market value is less than the cost.
Explanation:
The student is asking how to make a journal entry for inventory at the year end using two different methods assuming the company uses the LIFO (Last-In, First-Out) inventory costing method. For the cost-of-goods-sold method, if the market value of the inventory is lower than its cost, we create a journal entry that debits Cost of Goods Sold and credits Inventory for the difference to bring down the reported value of inventory to market value. Under the loss method, the entry would involve debiting a Loss account and crediting Inventory to reflect the diminished market value.
If the cost at the end of the year is $353,340 and the market value is $332,280, these entries will adjust the inventory value downward by $21,060 (the difference between cost and market value).
Journal Entries:
Cost-of-Goods-Sold Method: Debit Cost of Goods Sold $21,060; Credit Inventory $21,060.
Loss Method: Debit Loss due to Market Decline of Inventory $21,060; Credit Inventory $21,060.
Gail works in a flower shop, where she produces 10 floral arrangements per hour. She is paid $8 an hour for the first eight hours she works and $16 an hour for each additional hour she works. What is the firm's cost function?
Answer:
Y= 16x -64
Explanation:
The cost function would be derived as follows
let Y represent the total cost and X the total number of hours
Y = 8(8) + 16(x-8)
Y = 64 + 16x - 128
Y = -64 + 16x
Y= 16x - 64
The firm's cost function:
Y= 16x -64
The cost function of the firm is [tex]\text{F= 16x -64}[/tex]. The formula for the cost function is explained below:
This is necessary in order to forecast costs for the following operating term at the planned activity level.
[tex]\text{C(x)= F + V(x), where;}\\\text{C = Production cost}\\\\\text{F = Total fixed costs}\\\text{V = Variable cost}\\\text{x = Number of units}[/tex]
The following is the cost function based on Gail's working hours.
Assume F is the total cost and X is the total number of hours:
[tex]\text{F = 8(8) + 16(x-8)\\F = 64 + 16x - 128\\F = -64 + 16x\\F= 16x - 64}\\\text{The firm's cost function:}\\\text{F= 16x -64}[/tex]
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Canine Supply Company’s budgeted sales for January, February, and March are $120,000, $160,000, and $140,000, respectively. Based on past experience, ABC expects that 25% of a month’s sales will be collected in the month of sale, 65% in the following month, and 9% in the second month following the sale. Budgeted cash receipts for the month of March would be
Answer:
$149,800
Explanation:
- 25% will be received the same month = 140000*0.25 = 35000.
- 65% will be received the following month = 160000*0.65 = 104000.
- 9% will be received the second month after = 120000*0.09 = 10800.
Hence total receipt will be = 35000+104000+10800 = 149800.
Hope this helps.
Good Luck.
Enya Corp. adopted the dollar-value LIFO method on January 1, 2008. Its inventory on that date was $160,000. On December 31, 2008, the inventory at prices existing on that date amounted to $140,000. The price level at January 1, 2008, was 100, and the price level at December 31, 2008, was 112.
Instructions
(a) Compute the amount of the inventory at December 31, 2008, under the dollar-value LIFO method.
(b) On December 31, 2009, the inventory at prices existing on that date was $172,500, and the price level was 115. Compute the inventory on that date under the dollar-value LIFO method.
Answer:
Option (a) =$28750 option (b) = $28750
The value of the inventory is= $153750
Explanation:
From the given question we solve for the options (a) and (b) below.
Date 1 January 2008
Inventory at the end of year prices = $160,000
Price Index = 100
Inventory at Base year prices =$160,000
Change from previous year = 0
December 31st 2008
Inventory at the end of year prices =$140,000
Price Index = 112
Inventory at Base year prices =$125000
Change from previous year = (35000)
31 December 2018
Inventory at the end of year prices = $172500
Price Index = 115
Inventory at Base year prices= $150000
Change from previous year = 25000
Now we solve for,
(a) Inventory at 31 December 2008
In the year 2008 there is LIFO liquidation (35000), so the inventory value under dollar value LIFO method;
$125000 x 1 = $125000
(b)Inventory at 31 December 2009:
$125000 x 1 = $125000
$25000 x 1.15 = $28750
Thus value of inventory ($125000 + $28750) = $153750
Green Planet Corp. has (a) 5,800 shares of cumulative 11% preferred stock with a $2 par value and (b) 22,000 shares of common stock with a $0.01 par value. During its first two years of operation, Green Planet declared and paid the following total cash dividends. Compute the dividends paid each year to each of the two classes of stockholders: preferred and common.
Answer:
Find attached complete question:
Year 1:
Preferred stock dividends is $760
common stock is $0
Year 2:
Preferred stock dividends is $1,792
Common stock dividends is $408
Explanation:
The dividends paid as found in the attached were:
Year 1 $760
Year 2 $2,200
Preferred stock dividends =$2*5800*11%=$1276
Hence in the year the $760 would be paid preferred stockholders leaving a balance of $516 ($1,276-$760) to be paid next year.
preferred stock dividends in the second year=$516+$1276=$1,792
Common stock dividends in year 2=$2,200-$1,792=$408
The Computation of the Dividends Paid to Preferred and Common Stockholders is as follows:
Preferred Common
Stockholders Stockholders
Year 1 $760 $0
Year 2 $1,792 $408
Data and Calculations:
5,800 shares, 11% Cumulative Preferred Stock at $2 par value = $11,600
22,000 shares, Common Stock at $0.01 par value = $220
Year 1 Cash Dividends = $760
Year 2 Cash Dividends = $2,200
The Computation of the Dividends Paid to Preferred and Common Stockholders is as follows:
Preferred Stockholders Common Stockholders
Arrears Amount Paid
Year 1 $1,276 ($11,600 x 11%) $516 $760 $0 ($760 - $760)
Year 2 $1,276 ($11,600 x 11%) $1,792 $1,792 $408 ($2,200 - $1,792)
Thus, only cumulative preferred stockholders received dividends in Year 1 with their Year 1 balance cumulating in Year 2.
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Rhett made his annual gambling trip to Uwin Casino. On this trip Rhett won $250 at the slots and $1.200 at poker. Also this year, Rhett made several trips to the racetrack, but he lost $700 on his various wagers. What amount must Rhett include in his gross income? Multiple Choice
a. 08 Zero - gambling winnings are not included in gross income
b. $1,450
c. $250
d. $750
d. $1,200
Answer:
b. $1,450
Explanation:
Data provided as per the question
Winnings in slot = $250
Winnings in poker = $1,200
The computation of gross income is shown below:-
Total amount in Gross Income = Winnings in slot + Winnings in poker
= $250 + $1,200
= $1,450
Therefore for computing the total amount in gross income we simply add winning in slot with winning in poker.
On December 31, 2015, Beta Company had 340,000 shares of common stock issued and outstanding. Beta issued a 6% stock dividend on June 30, 2016. On September 30, 2016, 29,000 shares of common stock were reacquired as treasury stock. What is the appropriate number of shares to be used in the basic earnings per share computation for 2016?a. 353,150.b. 391,140.c. 367,650.d. 360,400.
Answer:
A. 353,150
Explanation:
To get The appropriate number of shares to be used in the basic earnings per share for 2016,
You subtract the stock that was acquired in September from the Beta company shares.
Thus
(340,000*1.06) - (29,000*3/12) = 353,150.
353,150 is the number of shares to be used for computing September 2016 shares.
A company estimates the following manufacturing costs for the next period: direct labor, $500,000; direct materials, $181,000; and factory overhead, $122,000. Required: 1. Compute its predetermined overhead rate as a percent of direct labor. 2. Compute its overhead cost as a percent of direct materials.
Answer:
1) 24.4%
2) 67.4%
Explanation:
The basis on which overheads are to be applied is considered under 'denominator' value.
1)
Numerator = Estimated factory $122,000
Denominator = Direct Labor $500,000
Overhead Rate = 122,000 / 500,000 = 0.244 ==> 24.4%
2)
Numerator = Estimated factory overhead $122,000
Denominator = Direct Material $181,000
Overhead Rate = 122,000 / 181,000 = 0.674 ==> 67.4%
Anthonia is a senior manager at Buxley Corp., a motorcycle manufacturer. Buxley has entered an equity alliance with Supremo, a moped manufacturer. "Don't worry, Anthonia," her counterpart at Supremo tells her. "I'm going to send you all our guidelines and documentation for manufacturing catalytic converters, and then you'll be all set." What else should Anthonia request from Supremo?
A) personnel exchanges to share tacit knowledge
B) a gradual change from an equity alliance to a non-equity alliance to show greater commitment
C) nothing, because the information transfer described is complete and appropriate
D) a licensing agreement so that Buxley can exchange codified knowledge with Supremo
Answer: A) personnel exchanges to share tacit knowledge
Explanation:
Buxley has entered an EQUITY ALLIANCE with Supremo, meaning that they are now both shareholders in each other's Companies as they both acquired minority stakes in the other company.
Anthonia should definitely request personnel exchanges to share tacit knowledge. Tacit knowledge refers to knowledge that is better passed in person as it can be quite difficult to transfer by writing or otherwise. Buxley and Supremo could stand to gain from knowing the strategies that they both employ if they have personnel on ground to actually show them how they do certain things.
Vibrant Company had $850,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $500,000 in each of those years. It also maintained a $250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements as $230,000 rather than the correct $250,000. Required: 1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3.
Answer:
The correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3 is $350,000.
Explanation:
Gross profit is the earning of the company from the direct sales of the products or services. It is calculated by deducting the cost of goods sold from sales.
Cost of Goods sols is the production or purchase cost of an item or service sold during the period. Cost of Goods sold can be calculated by adding purchases for the period in beginning inventory and deducting the closing inventory.
Correct Gross Profit
Sales $850,000
less: Cost of Goods Sold
Beginning Inventory $250,000
+ Purchases $500,000
- Ending Inventory $250,000
$500,000
Gross Profit $350,000
As each years values of sales, purchases and beginning and Ending Inventory are same the gross profit will also be the same.
Marigold Corp. had 1,000,000 shares of common stock issued and outstanding at December 31, 2017. On July 1, 2018 an additional 1,000,000 shares were issued for cash. Marigold also had stock options outstanding at the beginning and end of 2018 which allow the holders to purchase 292000 shares of common stock at $21 per share. The average market price of Marigold’s common stock was $28 during 2018. The number of shares to be used in computing diluted earnings per share for 2018 is
Answer:
1,573,000 shares
Explanation:
The computation of the shares computing diluted earnings per share for 2018 is shown below:
= 1,000,000 shares × 6 months ÷ 12 months + 2,000,000 shares × 6 months ÷ 12 months + [($28 - $21) ÷ 28 ] × 292,000 shares
= 500,000 shares + 1,000,000 shares + 73,000 shares
= 1,573,000 shares
The 2,000,000 shares is come from
= 1,000,000 shares + 1,000,000 shares
= 2,000,000 shares
Preparing a Direct Labor Budget Tulum Inc. makes a Mexican chocolate mix. Planned production in units for the first 3 months of the coming year is: January 24,700 February 22,000 March 30,200 Each box of chocolate mix takes 0.4 direct labor hour. The average wage is $17 per hour. Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter.
Answer:
Jan = $306 in direct labour costs
Feb = $272 in direct labour costs
March = $357 in direct labour costs
Total for the quarter = $935 in direct labour costs
Explanation:
0.4 hours is 24 minutes
January
= 24 700 units / 24 minutes = 1029
1029 minutes would be required for 24 700 units
1029 minutes / 60 = 17.15 hours. We round up to 18 hours
18 hours* $17 per hour = $306
Therefore, $306 in direct labour costs in January
February
= 22 000 units / 24 minutes = 917
917 minutes would be required to produce 22 000 units
917 minutes / 60 = 15.3 hours. We round up to 16 hours
16 hours * $17 per hour = $272
Therefore, $272 in direct labour costs in February
March
= 30 200 units / 24 minutes = 1258
1258 minutes would be required to produce 30 200 units
1258 minutes / 60 = 20.97 hours. We round up to 21 hours
21 hours * $17 per hour = $357
Therefore, $357 in direct labour costs in March
Total for the quarter = 306 + 272 + 357 = 935
$935 in direct labour costs for the first quarter
Answer:
The direct labor costs for January ,February and March are $ 167960
$ 149600 and $ 205360 and total is $ 522,920
The direct labor hours for January ,February and March are 9880 8800 and 12080 . Total Direct Labor hours are 30760
Explanation:
Tulum Inc.
Direct Labor Budget
January February March Total
Units 24,700 22,000 30,200 76,900
DLH per unit 0.4 0.4 0.4
DLHs 9880 8800 12080 30760
Wage/hr $ 17 $ 17 $ 17
Wages $ 167960 $ 149600 205360 $ 522,920
The direct labor costs for January ,February and March are $ 167960
$ 149600 and $ 205360 and total is $ 522,920
The direct labor hours for January ,February and March are 9880 8800 and 12080 . Total Direct Labor hours are 30760
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately at the beginning of the month. The going rate on such annuities is 5.25%. How much would it cost him to buy the annuity today? Round to the nearest dollar.
Answer:
It cost $915,166.69
Explanation:
R=75,000
i=j/m, j=0.0525, m=1 - annually
i=0.0525
n=mt
n=20
An=R[1-(1+i)^-n] : i
An=(75,000x[1-(1+0.0525)^-20]) : 0.0525
An=$ 915,166.69
True or false?
The foreign exchange market serves two main functions. The first is to convert the currency of one country into the currency of another, and the second is to provide some insurance against foreign exchange risk. When two companies are trying to provide some insurance against foreign exchange risk, they can either exchange the currency immediately, which is called spot exchange, or at a specific date in the future, which is called a forward exchange rate.
Answer:
true.
Explanation:
called sopt exchange, or at a specific date in the future, which is called a forward exchange rate.
Final answer:
True. The foreign exchange market serves two main functions: currency conversion and providing insurance against foreign exchange risk. Companies can choose to exchange currency immediately or at a specified future date.
Explanation:
True. The foreign exchange market serves two main functions. The first function is to convert the currency of one country into the currency of another. This is done through trading in the market, where one currency is bought using another currency. The second function is to provide insurance against foreign exchange risk. When two companies want to protect themselves from potential changes in exchange rates, they can either exchange the currency immediately in the spot exchange or agree to exchange at a specified future date using a forward exchange rate.
Doyle Company issued $381,000 of 10-year, 7 percent bonds on January 1, Year 1. The bonds were issued at face value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the bond issue in land. The land was leased for an annual $73,500 of cash revenue, which was collected on December 31 of each year, beginning December 31, Year 1. Required a. Prepare the journal entries for these events, and post them to T-accounts for Year 1 and Year 2.
Answer:
Year 1:
Issue of bonds:
Dr Cash $381,000
Cr Bonds payable $381,000
Purchase of land:
Dr Land $381,000
Cr Cash $381,000
Receipt of lease rental:
Dr Cash $73,500
Cr Lease revenue $73,500
Payment of coupon interest:
Dr interest expense $26,670
Cr Cash $26,670
Year 2
Receipt of lease rental:
Dr Cash $73,500
Cr Lease revenue $73,500
Payment of coupon interest:
Dr interest expense $26,670
Cr Cash $26,670
Find attached t accounts.
Explanation:
Upon the issue of bonds for $381,000 the cash account would be debited with $381,000 while bonds payable account is credited with $381,000.
However,when the cash proceeds is invested in land,the land account would be debited with $381,000,while the cash account is credited with $381,000.
Besides,on receipt of annual lease rental the cash account is debited with $73,500 while the lease revenue is credited with $73,500.
The coupon interest is $381,000*7%=$26670
This would necessitate debiting interest expense with $26,670 while cash is credited with same amount.
Statutory employees :a. Include common law employees.b. Report their expenses as miscellaneous itemized deductions.c. Claim their expenses as deductions for AGI.d. Are subject to income tax withholdings.e. None of these choices are correct.
Answer:
c Claim their expenses as deductions for AGI.
Explanation:
Their costs are specified in Schedule C, not Form 2106 (Option). Although subject to Social Security tax, they are not subject to income tax withholding (option). Legitimate employees are not common law employees (selected). Costs for AGI will be reduced
Considering that Holmes and Balwani are the only ones charged by the SEC and the only ones facing criminal charges, what, if any, moral responsibility should be placed on the board of directors, investors, and employees? In other words, should those that enabled Holmes to continue to lie also be held accountable for their actions? Why or why not? Be sure to include moral argumentation to support your position.
Answer:
Explanation:
The investors, board of directors and employees for Theranos are not likely to have been completely free of fault in the more than a decade long fraud. The press has called the firm 'secretive' as it struggled to find any pertinent information about the it due to their closely guarded secrets. The firm operated a website that didn't have much on it and seemed to gag its directors, investors and others from talking to the press. These alone should have been a red flag to the investors and board. The PR person also refused interviews, neglected to answer questions about the owners/founders and turned down multiple overtures by the press to try and find out what was going on behind closed doors at Theranos. This encouraged the general perception that the firm was trying to control and minimise risk and possibly to retain an air of mystery. All of which was actually designed to hide the true workings of the firm, and this should have been questioned by all the people involved in the firm.
(Leuty, 2013)
The board as illustrious as theirs would have asked for supporting documentation and reviews for all the key aspects of the company and these would have needed to be audited periodically to ensure that the board can choose the best people in key roles and to enable good decision-making.
Investors also would have done a background check on all material aspects such as legal, ethical etc. before handing over large sums of money.
Employees involved in the actual fraud - falsifying results, using other tools to get the results that their tools were supposed to generate etc. were also aware of the issues with the firm likely from the very beginning.
All three groups possibly knew some or all of the aspects of the fraud and yet they did not come forward to disclose the same to the authorities or their customers as they should have. This points to a serious moral lapse amongst all three groups. They each as a group and as individuals in that group needed to take moral responsibility for the fraudulent activities being perpetrated by the couple. As the law goes, the prime players only end up being held accountable however it would have been ethically right for all parties that knew of the fraud to come forward and expose it.
Leaving aside the monetary considerations such as fleecing investors and customers alike, the products were related to the medical field, which above all others has a responsibility to maintain a higher standard of ethics. This fraud caused countless incorrect results that would have been used in medical therapies and diagnoses leading to wrong medication allocations and patient treatments. This in turn would have led to pain and anguish of the physical kind for so many patients, all of whom are the silent sufferers in this fraud.
Legally, pain and suffering cannot be quantified (just estimated) while this is the primary damage that the couple should have actually been charged with. This extremity of damage cannot be adequately presented in a court of law however and that brings us to discussing the morality of the situation. For all of the reasons stated above, the couple and everyone involved in enabling them in the fraud - the board of directors, employees and investors, should definitely be held accountable, if not in a court of law, then at least in the court of public opinion so that fraudsters like them do not get away without paying a price for their actions. All actions have consequences and their actions or lack there of should be accounted for.
References :
Leuty, Ron (2013) Secretive Theranos emerging (partly) from shadows. San Francisco Business Times.
The moral responsibility of the board of directors, investors, and employees within a corporation extends beyond legal liability to encompass a broad ethical obligation to prevent harm and foster an ethical corporate culture. This includes diligent oversight, immediate investigation of unethical behavior, and a commitment to ethical decision-making at all levels.
The question of moral responsibility within a corporation, particularly in light of the charges against Holmes and Balwani, delves into the broader ethical considerations of how those in various positions of power and influence within a company--from the board of directors to investors and employees--contribute to or enable unethical behavior. The principle of vicarious liability highlights the idea that organizations, and by extension the individuals who act on their behalf, can be held accountable for actions taken within the scope of their employment or association. This extends beyond legal liability to encompass moral responsibility as well.
Board members, as stewards of corporate governance, possess a distinct moral and ethical duty to safeguard the interests of shareholders, employees, and other stakeholders. The realization or suspicion of unethical behavior should prompt immediate and thorough investigation, as well as corrective action, to prevent further harm. For instance, the board of directors at companies like WorldCom were critiqued for their failure to detect and address egregious accounting irregularities, indicating a neglect of their oversight responsibilities.
Investors and employees, while perhaps less directly involved in governance, still share a moral responsibility when it comes to raising concerns about unethical practices they observe or become aware of. Their actions or inactions contribute to the cultural and ethical fabric of an organization. Consequently, in a climate where ethical considerations are often secondary to legal technicalities, all parties within a corporation should engage in constant self-reflection and evaluation of their actions, striving towards an ethical climate that goes beyond mere compliance with the law.
Dome Metals has credit sales of $270,000 yearly with credit terms of net 90 days, which is also the average collection period. Assume the firm adopts new credit terms of 2/15, net 90 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 12 percent. The new credit terms will increase sales by 20% because the 2% discount will make the firm's price competitive.
a. If Dome earns 15 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted? (Use a 360-day year.)
Answer:
Net change in income = $8,100
Explanation:
Given:
Current credit sales= $270,000 per year.
Average collection period= 90 days
A 2/15, net 90 means a 20℅ discount if payment is made within 15 days.
Which means new credit terms increase will be
(90/15) * 20℅ = 120℅
We now find the following:
•Revised sales will be = (current sales * new credit terms increase)
= $270,000 * 120℅ = $324,000
•Increase in sales = ( new sales - current sales)
=$324,000 - $270,000 = $54,000
•Profit increase = (profit percent * Increase in sales)
= 15℅ * $54,000 = $8,100
• Average receivable under existing policy =
= $270,000 * (90/360) = $67,500
• Average under new policy =
$325,000 * (15/360) = $13,500
• Receivable reduction= $67,500 - $13,500 = $54,000
• Interest savings
= $54,000 * 12℅ = $6,480
• Cost of discount =
$324,000 * 2℅ = $6,480
Therefore the net change in income if new credit terms are adopted will be = (increase in profit + interest savings - cost of discount)
= $8,100+$6,480-$6,480
= $8,100
The net increase in income, if the new credit terms are adopted, would be $69,120. This is computed by calculating the net income after discounts and then adding the interest saved due to a reduced bank loan.
Explanation:The first thing to note is that the new credit terms increase sales by 20%. Thus, credit sales increase to $270,000 * 1.20 = $324,000. The gross income from the sales is then $324,000 * 15% = $48,600.
Next, we calculate the cost of the discount. All customers are taking the discount, so we know that 2% of total credit sales will be deducted. This is $324,000 * 2% = $6,480.
Subtracting the discount cost from the gross income gives us the net earnings after discounts of $48,600 - $6,480 = $42,120.
Finally, we calculate the savings from repaying part of the bank loan with the reduction in accounts receivable. The total amount that is freed up by the shorter average collection period is $270,000 / 90 days * (90 - 15) days = $225,000. The firm is saving $225,000 * 12% = $27,000 on loan interest.
Adding the savings from interest reduction to the net income, we have $42,120 + $27,000 = $69,120. This will be the net change in income if the new credit terms are adopted.
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Wolf Den Craft Beers projects that it will need $50 million in total assets to meet the sales projection of $65 million. The pro forma balance sheet shows accounts payable, $8 million, accrued expenses, $2 million, longminusterm debt, $10 million and equity, $25 million. If Wolf Den decides to meet discretionary financing needs with 5 year notes payable, how much will it need to borrow?
Answer:
$5 million
Explanation:
As we know the asset is financed from two capital sources equity and liability.
Using Accounting equations as follow
Assets = Equity + Liabilities
Total Assets Value = Equity Value + ( Account Payable + Accrued expenses + Long-Term Debt )
As we both sides are not equal, asset are more that the sum of equity and liabilities so we need more borrowing to finance the assets.
$50 million = $25 millions + ( $8 million + $2 million + $10 million ) + Additional Borrowing
$50 million = $25 millions + $20 million + Additional Borrowing
$50 million = $45 millions + Additional Borrowing
Additional Borrowing = $50 million - $45 millions
Additional Borrowing = $5 million
Wolf Den Craft Beers needs to borrow $5 million to meet its assets requirement of $50 million after accounting for its existing liabilities and equity.
Wolf Den Craft Beers needs to calculate the amount that it will need to borrow in order to meet its discretionary financing needs based on the projected total assets and liabilities. The company projects it will need $50 million in total assets to meet a sales projection of $65 million. The pro forma balance sheet indicates current liabilities: accounts payable of $8 million, accrued expenses of $2 million, long-term debt of $10 million, and equity of $25 million. To calculate the discretionary financing needed, we start by adding up the liabilities and equity, which totals to $45 million ($8 million + $2 million + $10 million + $25 million). Since the total assets needed are $50 million, Wolf Den will need to borrow the difference, which is $5 million ($50 million - $45 million) using 5-year notes payable.