Answer:
Current Ratio = 7.59
Acid test Ratio = 1.28
Gross margin ratio = (Gross profit)/(Total Revenue)
where gross profit = Sales- Cost Of Sales
Explanation:
The first ratio that we must calculate is the current ratio which is the measure of current assets and current liabilities which the formula is :
Current ratio = (current assets)/ (current liabilities)
which current assets are assets that are liquidated in 12 months or less which given here the store supplies balance of $2050 then further we have Inventory( Stock) balance at the year end of $10100
Then current liabilities are those liabilities that can be paid in 12 months or less of which here we are given expired insurance and an admin expense which means that these are Differed expenses which are a liability that will be paid off in the next accounting period which amount to $1600. Therefore the current ratio will be ; Current Ratio = ($2050+$10100)/($1600)
Current ratio = 7.59 correct to two decimal places.
The acid test ratio is calculated by adding up all the most liquid able assets over the total liabilities in the company. the formula is
Acid test ratio = (most liquidable assets)/(Total Liabilities)
Acid Test Ratio = ($2050)/($1600)
Acid Test Ratio = 1.28 correct to two decimal places
where the most liquidable asset is the store supplies and the total given liabilities are the one given for the expired insurance and an admin expense.
The last ratio is the gross margin ratio which is calculated by dividing he gross profit of a company by the total revenue a company gains which the formula is Gross Margin Ratio = (Gross profit)/(Total Revenue), where Gross profit = Sales - Cost of Sales. Then to find the Total Revenue which is the Gross Profit - Operating expenses.
Answer:
The Current Ratio = 7.59
The Acid test Ratio = 1.28
The Gross margin ratio = (Gross profit)/(Total Revenue)
where gross profit = Sales- Cost Of Sales:
Explanation:
The First step to take is to calculate the current ratio which is the measure of current liabilities and assets
The the formula is :
The ratio (Current) = (current assets)/ (current liabilities)
The current assets are assets that given here, the store supplies balance of $2050 then further we have Inventory( Stock) balance at the year end of $10100 or assets that are liquidated or in 12 months or less.
Then
The current liabilities are those liabilities that an admin expense which means that these are Differed expenses which are a liability that will be paid off in the next accounting period which amount to $1600 Or that can be paid in 12 months or lesser of which here we are given expired insurance and. Therefore the current ratio will be:
The Current Ratio = ($2050+$10100)/($1600)
Current ratio = 7.59 correct to two decimal places.
The acid test ratio is calculated by adding up all the most liquid able assets over the total liabilities in the company. the formula is given as,
The Acid test ratio = (most liquidable assets)/(Total Liabilities)
Which is,
Acid Test Ratio = ($2050)/($1600)
Acid Test Ratio = 1.28 correct to two decimal places
When the most liquidable asset is the store supplies and the total given liabilities are the one given for the expired insurance and an admin expense.
The last ratio is the gross margin ratio which is calculated by dividing he gross profit of a company by the total revenue a company gains
Therefore,
the formula is Gross Margin Ratio = (Gross profit)/(Total Revenue), where Gross profit = Sales - Cost of Sales. Then to find the Total Revenue which is the Gross Profit - Operating expenses.
A company has a selling price of $2,300 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $160 each. During November, the company sold 40,000 printers, and 500 printers were serviced under the warranty at a total cost of $65,000. The balance in the Estimated Warranty Liability account at November 1 was $34,000. What is the company's warranty expense for the month of November
Answer:
The correct answer is $192,000.
Explanation:
According to the scenario, computation of the given data are as follows:
Returned average cost = $160
Printers sold = 40,000
Return percentage = 3%
So, we can calculate the company's warranty expense by using following formula:
Warranty expense = Returned average cost × Printers sold × Return percentage
= $160 × 40,000 × 3%
= 6,400,000 × 3%
= $192,000
You are considering an investment in 30-year bonds issued by Moore Corporation The bonds have no special covenants. The Wall Street ournal reports that one-year T-bills are currently earning 3.55 percent Your broker has determined the following information about economic activity and Moore Corporation bonds 50Real interest rate 2.75 percent Default risk premium-1.05 percent Liquidity risk premium 0.50 percent Maturity risk premium 1.85 percent What is the inflation premium?
Answer:
0.8%
Explanation:
Moore Corporation
T-bills are currently earning 3.55 %
Less Real interest rate 2.75%
Inflation premium 0.8%
Or
Expected IP = i - RFR = 3.55% - 2.75% = 0.8%
Therefore the inflation premium is 0.8%
Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way, then we can predict that its total economic profit will:rise.It is not possible to make a determination from the information given.remain unchanged.fall.
Answer:
Rise
Explanation:
A monopoly is defined as a market situation where only one seller determines the supply and price of a product, because they are the only ones that produce it.
When forms make technological advancements, they are able to make processes cheaper. So there is more money saved that can be used to increase production.
In this scenario for every product manufactured there is a $40 saved. This excess cash can be put back into the production to increase the output and profit.
Bohemian Company has 500,000 shares of no par common stock with a stated value of $8 per share issued and outstanding as of January 1, originally issued for $14 per share. During 2018, Bohemian Company had the following transactions involving its own stock: On March 6, acquired 27,965 shares of treasury stock at a cost of $12 per share On April 18, resold 5,280 shares of treasury stock at $19 per share. On June 11, resold an additional 2,210 shares of treasury stock at $10 per share If Bohemian uses the cost method of accounting for treasury stock, what will be the balance in additional paid in capital from treasury stock as a result of these transactions?
Answer:
$32540
Explanation:
The balance in additional paid in capital treasury stock as a result of the transactions is $32540.
The beginning balance was set at 0.
March 6 Acquisition in the treasury stock = 27965 shares × $12
In additional paid capital it is 0.
April 6 Reissued in treasury stock = 5280 shares × $12 while in additional paid capital = 5280 shares × $7 (19-12).
Please kindly see attachment to see the step by step working and the answer.
Answer:
Amount paid for the treasury stock on March 6 = $12*27,965 = $335,580
Total Amount realized on the resale of Treasury stock
April 18 = 5280*$19 = $100,320
June 11 = 2210*$10 = $ 22,100
$122,420
cost of treasury stock sold
( $12 * 7,490) (89,880)
Balance in additional paid in capital from treasury stock $32,540
Explanation:
The following data are available for two divisions of Solomons Company. North Division South Division Division operating profit $ 6,000,000 $ 40,000,000 Division investment 30,000,000 320,000,000 The cost of capital for the company is 8 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.) b-2. If Solomons measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company’s cost of capital was 16 percent? 1. When evaluated by ROI? 2. When evaluated by EVA?
Answer:
a-1. Calculate the ROI for both North and South divisions.
ROI North Division = net profit / cost of investment = $6,000,000 / $30,000,000 = 20%ROI South Division = net profit / cost of investment = $30,000,000 / $320,000,000 = 9.38%a-2. If Solomons measures performance using ROI, which division had the better performance?
North Division, since its ROI is much higherb-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)
North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 8%) = $3,600,000South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 8%) = $4,416,000b-2. If Solomons measures performance using economic value added, which division had the better performance?
It should choose South Division because its EVA is higher.c. Would your evaluation change if the company’s cost of capital was 16 percent?
1. When evaluated by ROI?
No it would not change because ROI doesn't consider cost of capital.2. When evaluated by EVA?
Yes it would change because South Division's EVA would be negative, while North Division's will decrease but remain positive.North Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $30,000,000 x (20% - 16%) = $1,200,000
South Division EVA = (net investment) x (actual return on investment – percentage cost of capital) = $320,000,000 x (9.38% - 16%) = -21,184,000
Answer:
Solomons Company
North and South Divisions
North/South Divisions:
Operating Profit = $6,000,000/$40,000,000
Investment = $30,000,000/$320,000,000
Cost of Capital (WACC) = 8%
a-1) ROI for both North and South Divisions:
ROI = Return on Investment
= Operating Profit/Investment x 100
North's ROI = 6/30 x 100 = 20%
South's ROI = 40/320 x 100 = 12%
a-2) If Solomons measures performance using ROI, the North division had the better performance.
b-1) Calculation of EVA for both North and South divisions:
EVA = Economic Value Added.
EVA = Net Operating Profit After Taxes minus (Invested Capital x WACC)
North's EVA = $6,000,000 - ($30,000,000 x 8%) =6m - 2.4m = $3,600,000
South's EVA = $40,000,000 - ($320,000,000 x 8%) = 40m - 25.6m = $14,400,000
b-2) If Solomons measures performance using economic value added, the South division had the better performance.
c) 1. When ROI is evaluated using 16% cost of capital, the North division had a better performance. So the evaluation changes based on the 16% cost of capital. Whereas, North makes 20% ROI as against 16% cost of capital, the South manages 12% ROI as against 16% cost of capital.
c) 2. When performances are evaluated by EVA with 16% cost of capital:
North's EVA = $6,000,000 - ($30,000,000 x 16%) = 6m - 4.8m = $1,200,000
South's EVA = $40,000,000 - ($320,000,000 x 16%) = $40m - $51.2m = ($11,200,000)
When evaluated by EVA using 16% cost of capital, my evaluation would favour the North instead of the South.
Explanation:
ROI or Return on Investment is a financial performance measure which measures the profitability of an investment in a simple way. It compares the return on an investment relative to its cost. It is expressed as a percentage.
EVA or Economic Value Added is also a financial performance measure which subtracts the cost of capital from the operating profit in order to gauge in dollars terms the value created by the firm.
Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 9%, as long as it finances at its target capital structure, which calls for 35% debt and 65% common equity. Its last dividend (Do) was $2.20, its expected constant growth rate is 6%, and its common stock sells for $26. EEC's tax rate is 40%. Two projects are available: project A has rate of return 12%, and project B/S return is 11%. These two projects are equally risky and about as risky as the firm's existing assets.
What is its cost of common equity?
Which is the WACC?
Which projects should Empire accept?
Answer:
cost of common equity = 14.46%
WACC = 11.29%
accept = Project A
Explanation:
Cost of common equity is the return that is required by Holders of Common Stock.
The available details can be used to calculate the cost of common equity using the Dividend Growth Model as follows :
Cost of common equity = (Next year`s Dividend / Current Market Price of a Stock) + Expected Growth
= ($2.20/$26)+6%
= 14.46%
WACC is the minimum return that a project must offer before it can be accepted.It shows the risk of the company.
Cost of Debt = Market Interest Rate × (1 - tax rate)
= 9.00% × (1-0.40)
= 5.40%
Capital Source Weight Cost Total
Debt 35% 5.40% 1.89%
Common Equity 65% 14.46% 9.40%
Total 100% 19.86% 11.29%
Therefore WACC is 11.29%
When evaluating projects, Compare the Project`s Internal Rate of Return (IRR) to the WACC.
Project A
IRR 12% > WACC 11.29%
Therefore Accept
Project B/S
IRR 11% < WACC 11.29%
Therefore Do Not Accept
The cost of common equity for Empire Electric Company (EEC) can be calculated using the dividend growth model. The formula for the cost of common equity is:
Cost of Common Equity (Ke) = (Dividend / Stock Price) + Growth Rate
In this case, the dividend (Do) is $2.20, the stock price is $26, and the growth rate is 6%. Plugging these values into the formula:
Ke = (2.20 / 26) + 0.06
Ke = 0.0846 + 0.06
Ke = 0.1446 or 14.46%
The weighted average cost of capital (WACC) is a measure of a company's overall cost of financing. It is calculated by taking a weighted average of the cost of debt and the cost of equity, using the target capital structure as the weights. In this case, the target capital structure is 35% debt and 65% equity.
To calculate the WACC, we need to know the cost of debt and the cost of equity. The cost of debt is given as 9% (rd). We have already calculated the cost of equity as 14.46% (Ke).
WACC = (Weight of Debt * Cost of Debt) + (Weight of Equity * Cost of Equity)
WACC = (0.35 * 0.09) + (0.65 * 0.1446)
WACC = 0.0315 + 0.094
WACC = 0.1255 or 12.55%
Projects A and B have returns of 12% and 11% respectively. Since both projects are equally risky and as risky as the firm's existing assets, the decision on which projects to accept should be based on the profitability index (PI). The profitability index is calculated by dividing the present value of cash inflows by the initial investment.
If both projects have the same initial investment, the project with the higher profitability index should be accepted. However, if the initial investments are different, the decision should be based on the project with the highest net present value (NPV), which takes into account the initial investment and the present value of cash inflows.
Learn more about average cost:
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The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: Jones, the managing partner, receives a bonus equal to 25 percent of the business’s profit. Each partner receives 20 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2018 were as follows: Jones $ 185,000 King 370,000 Lane 555,000 How much of the $82,000 partnership profit for 2018 should be assigned to each partner?
Answer:
Mr J = $4,000
Mr. K = $20,500
Mr L = $57,500
Explanation:
The computation of partnership profit is shown below:-
Partnership profit for the year 2018 $82,000
Less: Bonus to Mr Jones $20,500
($82,000 × 25%)
Less: Interest on average capital investment
Mr J (20% × $185,000) $37,000
Mr K (20% × $370,000) $74,000
Mr L (20% × $555,000) $111,000
Profit/Loss to be distributed ($160,500)
Loss to be allocated to each partner ($53,500)
($160,500) ÷ 3
Mr J $4,000
$20,500 + $37,000 + ($53,500)
Mr. K $20,500
$74,000 + ($53,500)
Mr L $57,500
$111,000 + ($53,500)
Joy Cunningham Co. purchased a machine on January 1, 2018, for $550,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2021, the firm's accountant found that the entry for depreciation expense had been omitted in 2019. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2021. At present, the company uses the sum-of-the-years'-digits method for depreciating equipment.'
Required:
(a) Prepare the general journal entries that should be made at December 31, 2021, to record these events. (Ignore tax effects.)
Answer and Explanation:
The Journal entry is shown below:-
1. Retained Earnings Dr. $90,000
To Accumulated Depreciation - Machinery $90,000
(Being To correct for the omission of depreciation expense in 2019 is recorded)
2. Depreciation Dr, $40,000
To Accumulated Depreciation - Machinery $40,000
(Being depreciation expense for 2021)
Working Note:-
Amount of Depreciation In 2019 = $550000 × 9 ÷ 55
= $90000
Cost Of machine $550,000
Less: Depreciation Prior to 2021
2012 - $55000 × 10 ÷ 55 $100,000
2013 - $55000 × 9 ÷ 55 $90,000
2014 - $55000 × 8 ÷ 55 $80,000 $270,000
Book Value as on 01.01.2021 $280,000
Depreciation For the 2021 = $280,000 ÷ 7
= $40,000
Which of the following will NOT shift the aggregate supply curve to the left? a decrease in corporate taxes an increase in the minimum wage an increase in the legislated amount of paid vacation an increase in the price of crude oil
Answer: a decrease in corporate taxes
Explanation: Aggregate supply refers to the total supply of goods and services available to a particular market from producers. It is the total amount of goods and services that firms are willing and able to sell at a given price level in an economy.
A decrease in the corporate taxes will not shift aggregate supply to the left because when the supply shifts to the left, the price level increases and the GDP decreases. Therefore, a decrease in corporate taxes cannot make supply shift to the left.
Gerard, an adult, contracts with Communiserve to purchase, in installments over a period of five years, a very large quantity of services that he will probably never need. Although Gerard understands what he is doing when he enters the contract, he has a mental condition that impairs his ability to act in a reasonable and rational way. Under the Restatement:a. Gerard’s contract is voidable at his option while it is entirely executory.b. Gerard cannot avoid the contract if Communiserve had no reason to suspect Gerard’s incompetency.c. Gerard cannot avoid the contract if the terms are fair.d. Gerard can only avoid the contract if the terms are grossly unfair.63. In most states, whether the time within which a minor disaffirms a contract constitutes a reasonable time is determined by:
Answer:
a. Gerard’s contract is voidable at his option while it is entirely executory.
Explanation:
In the United States of America, one of the most widely used recognized and most cited legal treatises is the Restatement of Contracts. It allows legal luminaries (judges and lawyers) to have a general understanding of non-binding authorities in contract or common law.
According to the Restatement (second) of Contract, voidable contract is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance.
Hence, under the Restatement, Gerard’s contract is voidable at his option while it is entirely executory.
63. In most states, whether the time within which a minor disaffirms a contract constitutes a reasonable time is determined by the fact and circumstance of the case.
As it places its order for truck tires with Michelin, South Side Industrial Supply realizes that it must also place an order for valve stems and balancing weights for the truck tires. Such business products are characterized as having ____________ demand.
Answer:
The correct word for the blank space is: joint.
Explanation:
Joint demand refers to the demand for products and services that are dependent on each other. In such cases, those goods are complementary but they can be acquired separately if necessary. An example of goods with joint demand would be tea and sugar or a printer and ink.
1. $7,000 of merchandise inventory was ordered on September 2, 2009 2. $3,000 of this merchandise was received on September 5, 2009 3. On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received. 4. On September 10, 2009, $800 of the merchandise was returned to the seller. Based on the above information, by what date does the invoice need to be paid in order to take the advantage of the discount?
a. September 15, 2009
b. September 16, 2009
c. September 10, 2009
d. September 14, 2009
Answer:
Correct option is A
Explanation:
Invoiced purchases are $ 3,000, out of which $ 800 worth of goods were returned, and an extra shipping charge of $ 250 needs to be paid.
Total amount of the invoice 3,000
Add: Shipping Charges 250
Less: Value of goods return (800)
Amount to be paid $2,450
There will be no discount to be deducted because the invoice was not paid within the 10 days discount period.
$2,450
Final answer:
To take advantage of the discount offered in the invoice terms of 3/10, net 30, payment must be made by September 14, 2009.
Explanation:
The terms of the invoice are 3/10, net 30, which means that a 3% discount is available if the payment is made within 10 days of the invoice date. The date on the invoice is September 4, 2009. Therefore, to take advantage of the discount, payment must be made by September 14, 2009. The $800 of merchandise returned does not change this payment date for the discount; it would just adjust the total amount due. Should the payment be made on the discount date, the company would benefit not only from the discount but also from optimal cash flow management, aligning with sound financial principles and organisational behavior in promptly addressing invoice terms.
1) A financial crisis can lead to a recession because it can cause:
A. wealth and income to fall, reducing spending and ultimately reducing employment.
B. investment and income to fall, lowering saving and increasing the money supply.
C. wealth and saving to fall, lowering investment and increasing the money supply.
D. investment and saving to fall, increasing spending and ultimately reducing employment.
2) A major new invention can lead to an expansion if there are:
A. increases in saving, the money supply, and employment:
B. decreases in wealth and increases in consumption and unemployment.
C. increases in investment, consumption, output, and employment.
D. decreases in saving and increases in consumption and unemployment.
Answer:
1. A
2. C
Explanation:
For part (1), any type of financial crisis can lead to a recession (Like the one in 2008 as well) and cause the wealth and income to fall, reducing the purchasing and spending power of the people and ultimately leading to an increase in unemployment. This is because businesses will cutoff their employees and this will cause unemployment and the people who would be lucky enough to still get a job will be hired on a very low income which will ultimately reduce spending as well.
Th opposite will happen in the other case (2), as there will be expansion if there in increase in wealth, investiture, consumption, production output and employment.
Hope this Helps.
Answer 1:
The correct answer is A)
Recessions are mostly caused by a lack of circulation of money in the economy.
Explanation:
In economic parlance, this shortage is captured as:
Shortage in government spending thus translating to low circulation of money as businesses that depend on the government experience low transactions. Please note that in many cases, the Government is the largest spender.
Shortage of Investment leading to low employment which ultimately reduces disposable income.
Answer 2
The correct answer here is C
An increase in investment goes hand in hand with an increase in consumption, output, and employment.
If for instance, the government makes capital available through the banks a very low-interest rate, this will encourage businesses to leverage off the cheap capital to expand, acquire new technologies, and employ more hands to become more competitive and more dominant in the market.
So a new invention will translate to expansion if
businesses are willing to invest in it;consumers are willing to buy it;the invention translates into increased output and lastly, if through the invest, businesses are willing to employ more labor to cater to the expansion in demandCheers!
"Shenandoah Skies" is the name of an oil painting by artist Kara Lee. In each of the following cases, determine the amount and character of the taxpayer’s gain or loss on sale of the painting.a. The taxpayer is Kara Lee, who sold her painting to the Reller Gallery for $6,000.b. The taxpayer is the Reller Gallery, who sold the painting purchased from Kara to a regular customer for $10,000.c. The taxpayer is Lollard Inc., the regular customer that purchased the painting from the Reller Gallery. Lollard displayed the painting in the lobby of its corporate headquarters until it sold "Shenandoah Skies" to a collector from Dallas. The collector paid $45,000 for the painting.
Answer:
A. $6000 ordinary income on sale of a creative asset by the creator of the asset.
B. $4000 ordinary income on the sale of inventory.
C. $35000 capital gain on sale of a capital asset. (which is a non depreciable business personality).
Explanation:
The taxpayer sold a painting to Reller Gallery for $6000. So, the tax payer amount and the character of tax payer gain or loss is as follows:
A. $6000 amount realized minus zero basis is equal to $6000 ordinary income on sale of a creative asset by the creator of the asset.
Reller Gallery sold the painting purchased by from Kara to a regular customer, Lollard Inc. for $10000. So, the tax payer amount and the character of tax payer gain or loss is as follows:
B. $10000 amount realized minus $6000 cost basis is equal to $4000 ordinary income on the sale of inventory.
Lollard Inc., the tax payer, was the regular customer that purchased the painting from the Reller Gallery. Lollard showed the painting in the lobby of its corporate headquarters until it sold "Shenandoah Skies" painting to a collector from Dallas. Where the collector paid $45,000 for the painting. So, the tax payer amount and the character of tax payer gain or loss is as follows:
C. $45000 amount realized minus $10000 cost basis is equal to $35000 capital gain on sale of a capital asset. (which is a non depreciable business personality).
Answer: The answers are entwined in the explanation.
Explanation:
The length of time for which each taxpayer held the asset AND the amount or percentage of tax payed by each taxpayer ARE NOT GIVEN but the amount and character of the gains and losses are shown below, as estimated:
(A) Taxpayer Kara Lee
The amount of Kara Lee's gain is $6,000
The character of this gain is SHORT TERM
The amount of Kara Lee's loss is $39,000 ($45,000 - $6,000)
The character of this loss is LONG TERM
(B) Taxpayer Teller Gallery
The amount of Teller Gallery's gain is $4,000 ($10,000 - $6,000)
The character of this gain is SHORT TERM as the gallery sold to a regular customer (meaning that the painting didn't stay long in their possession)
The amount of Reller Gallery's loss is $35,000 ($45,000 - $10,000)
The character of this loss is LONG TERM
(C) Taxpayer Lollard Inc.
The amount of Lollard Inc.'s gain is $35,000
The character of this gain is LONG TERM because the question says that Lollard displayed the painting in the lobby of its corporate headquarters UNTIL it sold for $45,000. This means that the asset "Shenandoah Skies" was held for a long time by/at Lollard Inc.
On the other hand, Lollard Inc. has no loss on sale of the painting until the Dallas Collector (who bought it from them) resells it and at a price higher than $45,000.
Majer Corporation makes a product with the following standard costs:Standard Quantity or Hours Standard Price or Rate Standard Cost Per UnitDirect materials 6.3 ounces $ 2.00 per ounce $ 12.60Direct labor 0.5 hours $ 10.00 per hour $ 5.00Variable overhead 0.5 hours $ 4.00 per hour $ 2.00The company reported the following results concerning this product in February.Originally budgeted output 4,900 unitsActual output 5,000 unitsRaw materials used in production 30,000 ouncesActual direct labor-hours 1,900 hoursPurchases of raw materials 32,400 ouncesActual price of raw materials $ 12.90 per ounceActual direct labor rate $ 22.40 per hourActual variable overhead rate $ 4.00 per hourThe company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.Required:1. The variable overhead efficiency variance for February is __________.
Answer:
variable overhead efficiency variance= $2,400 favorable
Explanation:
Giving the following information:
Standard:
Variable overhead = $4.00 per hour
Actual output of 5,000 units
Actual direct labor-hours 1,900 hours
To calculate the variable overhead efficiency variance, we need to use the following formula:
variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Standard quantity= 5,000 units* 0.5 hours= 2,500 hours
Actual quantity= 1,900 hours
variable overhead efficiency variance= (2,500 - 1,900)*4= $2,400 favorable
At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:
Cash balance, September 1 (from a summer job) $9,250
Purchase season football tickets in September 160
Additional entertainment for each month 250
Pay fall semester tuition in September 4,800
Pay rent at the beginning of each month 600
Pay for food each month 550
Pay apartment deposit on September 2 (to be returned December 15) 600
Part-time job earnings each month (net of taxes) 1,200
a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.
Craig Kovar
Cash Budget
For the Four Months Ending December 31
September October November December
Estimated cash receipts from:
Part-time job $ $ $ $
Deposit
Total cash receipts $ $ $ $
Less estimated cash payments for:
Season football tickets $
Additional entertainment $ $ $
Tuition
Rent
Food
Deposit
Total cash payments $ $ $ $
Cash increase (decrease) $ $ $ $
Plus cash balance at beginning of month
Cash balance at end of month $ $ $ $
b. What are the budget implications for Craig Kovar?
Craig can see that his present plan will not provide sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $_?_ short at the end of December, with no time left to adjust.
Answer:
The answer is attached for ease of understanding and reference.
Explanation:
Finkel sold merchandise to a customer in exchange for a four-year, noninterest-bearing note for $10,000. An equivalent loan would have a 10% interest rate. Finkel would record sales revenue on the date of sale equal to:
a. $0
b. $10,000
c. The present value of $10,000, discounted at a 10% discount rate for four years
d. $9,000, equal to $10,000 â (10% Ã $10,000)
Questions:
a. What is the present value amount?
b. What is the journal entry for the sale?
c. Assume that the transaction took place on the last day of the year, what is the journal entry on the last day of the following year?
Answer:
Correct answer is
c. The present value of $10,000, discounted at a 10% discount rate for four years
Question
a. Present value
$6,830
b. Journal Entry for sale
Dr. Note Receivable $10,000
Cr. Discount on Note $3,170
Cr. Sales $6,830
c. Journal Entry on last day of following year
Dr. Discount on Note $792.5
Cr. Interest revenue $792.5
Explanation:
a.
As there is no Interest will be received on this note, Only face value will be received after 4 years.
Use Following present value form
PV = FV / (1 + i%)^n
PV = $10,000 / ( 1 + 10%)^4
PV = $6,830
b.
Amount of Sale Is calculated by taking present value of the future cash flows associated with the note. Receivable of $10,000 will be recorded and the difference will be recorded as unearned revenue, which will be recognized every year until the maturity.
c.
The interest revenue is recognized against the discount on note value recorded earlier.
A bank run involves:
A) a failure by a bank to get the maximum return on its investments.
B) large numbers of depositors withdrawing their deposits within a short period of time.
C) a bank being forced out of business.
D) fraud on the part of a bank's managers.
Answer:
The correct answer is letter "B": large numbers of depositors withdrawing their deposits within a short period of time.
Explanation:
A bank run is a situation in which account holders massively withdraw their funds under the fear the financial institution will lose its liquidity. The situation gets to a point in which the bank is at risk of sensing all its reserves and fail to provide all its clients the money they deposited.
In the U.S. financial institutions with deposits between $16 and $122.3 million must have a minimum reserve of 3%. When the deposits exceed $122.3 million the minimum reserve increases to 10%. The rest of the money is reinvested by banks.
1. Almost all dissatisfied guests complain. Group of answer choices True False
2. About 13 to 16 guests out of every 100 are purposefully out to scam us and get something for free. True or False
3. If you solve a guest problem efficiently, quickly, and delightfully...that guest may be even more likely to use your product or service again than if he or she ever had a problem in the first place. True or False
4. Dr. Ricci gave two examples of excellence in guest service from which organizations? A. Walt Disney World, Universal Studios B. Publix, Pet Supermarket C.Publix, JetBlue D.Marriott, Hilton
5. It is only likely for a guest to receive outstanding service at luxury brands. That's why Ritz-Carlton, Mandarin Oriental, Four Seasons, and others are the best at what they do. True or False
WILL GIVE 10 STARS
Answer:
1. Almost all dissatisfied guests complain.
FALSE, ONLY ABOUT 5-10% OF DISSATISFIED CUSTOMERS ACTUALLY COMPLAIN. SOMETIMES THAT RATIO IS EVEN LOWER DEPENDING ON THE INDUSTRY.
2. About 13 to 16 guests out of every 100 are purposefully out to scam us and get something for free.
FALSE
3. If you solve a guest problem efficiently, quickly, and delightfully...that guest may be even more likely to use your product or service again than if he or she ever had a problem in the first place.
TRUE, ABOUT 95% OF THE GUESTS WHOSE PROBLEMS WERE SOLVED IMMEDIATELY AND DELIGHTFULLY GENERALLY RETURN OR HAVE A VERY POSITIVE OPINION ABOUT THE HOTEL.
4. Dr. Ricci gave two examples of excellence in guest service from which organizations?
C) Publix, JetBlue
5. It is only likely for a guest to receive outstanding service at luxury brands. That's why Ritz-Carlton, Mandarin Oriental, Four Seasons, and others are the best at what they do.
FALSE
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $3.10 per share. What is the current value of one share of this stock if the required rate of return is 8.60 percent
Answer:
Using 8.60% ROR,we will have current stock of $156.51,option D is correct.
Answer:
The stock price will be: $109.39
Explanation:
* The stock price will be equal to the sum of present value of:
+ Positive Growth annuity in the next four years;
+ Positive growth perpetuity starting in year 5.
- Calculation of positive Growth annuity in the next four years:
+ Dividend in year 1 = 3.1 x 1.17 = $3.627
+ Present value of the annuity = [ 3.627 / ( 8.6% - 17%) ] x [ 1 - [ (1+17%) / (1+8.6%)]^4 ] = $14.99.
- Calculation of positive growth perpetuity starting in year 5:
+ Dividend in year 5 = 3.1 x 1.17^4 x 1.04 = $6.04;
+ Present value of the perpetuity = [ 6.04 / (8.6% - 4%) ] / 1.086^4 = $94.40
=> Share price = 14.99 + 94.40 = $109.39
If you buy a computer directly from the manufacturer for $ 2 comma 535and agree to repay it in 60equal installments at 1.81 %interest per month on the unpaid balance, how much are your monthly payments? How much total interest will be paid?
Answer:
monthly payments is $69.61
Total interest paid = $1641.6
Explanation:
given data
buy computer = $2535
equal installments = 60
interest per month = 1.81 % = 0.0181
solution
we get here Monthly installments payments that is express as
EMI = [tex]\frac{P \times r \times (1+r)^t}{(1+r)^t-1}[/tex] ................1
put here value and we get
EMI = [tex]\frac{2535 \times 0.0181 \times (1+0.0181 )^{60}}{(1+0.0181 )^{60}-1}[/tex]
EMI = 69.610
so monthly payments is $69.61
and
Total interest paid is express as
Total interest paid = (no. of installment × EMI) - Loan amount
Total interest paid = (60 × 69.61) - 2535
Total interest paid = $1641.6
Standards set by engineering studies
a.can determine the most efficient way of operating.
b.can provide rigorous guidelines.
c.may not be achievable by operating personnel.
d.often do not allow operating personnel to have much input. e
.All of these.
Answer:
The correct answer is letter "E": All of these.
Explanation:
In the corporate world, engineering studies aim to structure the diverse operational systems of an organization. From manufacturing to Information Technology (IT), engineering can build optimal networks according to the processes of an industry typically based in a set of rigorous parameters.
Engineering studies require knowledge and qualifications that regular employees do not tend to possess. Most engineering studies are developed by external professionals with vast expertise in a field related to the business.
Bonds Payable. select between a.increase and decrease select between increase and decrease select between credit and debit b. Unearned Service Revenue. select between increase and decrease select between increase and decrease select between credit and debit c. Depreciation Expense. select between increase and decrease select between increase and decrease select between credit and debit d. Common Stock. select between increase and decrease select between increase and decrease select between credit and debit e. Buildings. select between increase and decrease select between increase and decrease select between credit and debit f. Rent Revenue. select between increase and decrease select between increase and decrease select between credit and debit
Answer:
Bonds Payable - Increase is credit, decrease is debit
Unearned Service Revenue - Increase is credit, decrease is debit
Depreciation Expense - Debit is increase, Credit is decrease
Common stock - Increase is credit, decrease is debit
Buildings - Debit is increase, Credit is decrease
Rent revenue - Increase is credit, decrease is debit
Explanation:
Bond payable and Unearned service revenue are liabilities.
Common stock is part of equity While rent revenue is income. A credit to a liability or an equity or an income account is to increase the balance.
Building and depreciation expense are assets and expense respectively. A debit to an expense or an asset is to increase it while a credit decreases it balance.
On July 31, 2017, Mexico Company paid $3,000,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Mexico. Conchita reported the following balance sheet at the time of the acquisition.
Current assets $800,000
Noncurrent assets $2,700,000
Total assets $3,500,000
Current liabilities $600,000
Long-term liabilities $500,000
Stockholders' equity $2,400,000
Total liabilities and stockholders' equity $3,500,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,750,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2017, Conchita reports the following balance sheet information.
Current assets $450,000
Noncurrent assets (including goodwill recognized in purchase) $2,400,000
Current liabilities (700,000)
Long-term liabilities (500,000)
Net assets $1,650,000
It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchita's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $150,000 above the carrying value.
Instructions:
(a) Compute the amount of goodwill recognized, if any, on July 31, 2017.
(b) Determine the impairment loss, if any, to be recorded on December 31, 2017.
(c) Assume that fair value of the Conchita Division is $1,600,000 instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2017.
(d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement.
Answer:
a. $250,000
b. Impairment loss to be recorded will be = $0
c. $200,000
d.Loss on impairment A/c Dr, $200,000
To Goodwill A/c $200,000
(Being impairment loss is recorded)
Explanation:
a.The computation of Goodwill is shown below:-
Goodwill = Fair value of the division - Fair value of the identifiable assets
= $3,000,000 - $2,750,000
= $250,000
b. Impairment loss to be recorded will be = $0
No loss of impairment is registered, since Conchita's fair value of $1,850,000 is greater than the net assets' carrying value of $1,650,000.
c. Implied fair value of goodwill = Fair value of division - Carrying value of the division
Fair value of Conchita division $1,600,000
Carrying value of division $1,650,000
Increase in fair value of PP&E $150,000
Less: Goodwill ($250,000) ($1,550,000)
Implied fair value of goodwill $50,000
Carrying value of goodwill ($250,000)
Impairment loss $200,000
d. To record the impairment loss the Journal entry is shown below:-
Loss on impairment A/c Dr, $200,000
To Goodwill A/c $200,000
(Being impairment loss is recorded)
The goodwill recognized on July 31, 2017 is $250,000. No impairment loss needs to be recorded on December 31, 2017. If the fair value of the Conchita Division is $1,600,000, an impairment loss of $50,000 needs to be recorded on December 31, 2017.
Explanation:(a) To compute the amount of goodwill recognized on July 31, 2017, we need to determine the fair value of the identifiable net assets of Conchita. The fair value of the identifiable net assets is $2,750,000 and the consideration paid to acquire the common stock of Conchita is $3,000,000. Therefore, the goodwill recognized is $3,000,000 - $2,750,000 = $250,000.
(b) To determine the impairment loss to be recorded on December 31, 2017, we compare the fair value of the Conchita Division ($1,850,000) with the carrying value of the net assets ($1,650,000). The carrying value is less than the fair value, so no impairment loss needs to be recorded.
(c) If the fair value of the Conchita Division is $1,600,000 instead of $1,850,000, the carrying value is higher than the fair value. The impairment loss to be recorded on December 31, 2017 is $1,650,000 - $1,600,000 = $50,000.
(d) The journal entry to record the impairment loss is:
Debit Impairment loss on Conchita Division: $50,000Credit Accumulated impairment loss: $50,000The impairment loss would be reported in the income statement as a separate line item.
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Nutty Productions Inc. generated service revenue of $56,000 and income from operations of $23,000. The company estimates that, had it extended credit it would have instead generated $99,000 of service revenue, but it would have incurred $38,000 of additional expenses for wages and bad debts. 1-a. Using these estimates, calculate the amount by which Income from Operations would increase By___________
Answer:
Net income from operations would increase by $5,000
Explanation:
According to the given data we have the following:
generated service revenue=$56,000
service revenue if had extended credit=$99,000
Incremental cost = $ 38000
Therefore, first in order to calculate the amount by which Income from Operations would increase By, we have to calculate first the Incremental revenue if credit is extended
Incremental revenue if credit is extended = $99,000 - $56,000 = $43,000
Therefore, Net income from operations would increase by = $43,000 - $38,000 = $ 5,000
Answer:
$5,000
Explanation:
Income from operations is the difference between the revenue from operations and the expenses incurred in the process of generating this revenue.
Given that extending credits would have resulted in sales being $99,000 and an additional expense of $38,000, net income from operations would be
= $99,000 - $38,000 - $23,000
= $38,000
Income from operations without credit extension
= $56,000 - $23,000
= $33,000
Increase in operating income
=$38,000 - $33,000
= $5,000
Ekmark Corporation uses the following activity rates from its activity based costing to assign overhead costs to products: Activity Cost Pools Activity Rate Assembling products $6.56 per assembly hour Processing customer orders $65.38 per customer order Setting up batches $82.84 per batch Data for one of the company's products follow: Product P59G Number of assembly hours 240 Number of customer orders 48 Number of batches 64 How much overhead cost would be assigned to Product P59G using the activity based costing system
Answer:
The correct answer is $10,014.40.
Explanation:
According to the scenario, computation of the given data are as follows:
Total cost of assembling = $6.56 × 240 = $1,574.40
Total cost of processing customer order = $65.38 × 48 = $3,138.24
Total cost of setting up batches = $82.84 × 64 = $5,301.76
So, we can calculate the total overhead cost by using following formula:
Total Overhead = $1,574.40 + $3,138.24 + $5,301.76
= $10,014.40
Diaz Company owns a machine that cost $125,200 and has accumulated depreciation of $93,100. Prepare the entry to record the disposal of the machine on January 1 in each seperate situation. The machine needed extensive repairs and was not worth repairing. Diaz disposed of the machine, receiving nothing in return. Diaz sold the machine for $16,400 cash. Diaz sold the machine for $32,100 cash. Diaz sold the machine for $41,300 cash.
Answer:
1. Loss on sale of machine = $15,700
2. No Loss or Gain
3. Gain = $9,200
Explanation:
Requirement 1
If Diaz Company disposed the machine with a cash of $16,400, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $16,400
Accumulated depreciation Debit $93,100
Loss on sale of machine Debit $15,700
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, loss on sale of machine = Book value of the machine - Sale price = $(32,100 - 16,400) = $15,700. Loss is a debit as it is an expense.
Requirement 2
If Diaz Company disposed the machine with a cash of $32,100, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $32,100
Accumulated depreciation Debit $93,100
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, Gain (Loss) on sale of machine = Book value of the machine - Sale price = $(32,100 - 32,100) = $0. As the book value and the disposal value are same, there is no loss and no gain.
Requirement 3
If Diaz Company disposed the machine with a cash of $41,300, the journal entry to record the transaction of disposal of machine will be as follows:
January 1 Cash Debit $41,300
Accumulated depreciation Debit $93,100
Gain on sale of machine Credit $9,200
Machine Credit $125,200
Calculation:
Book value of the machine = Purchase price - Accumulated depreciation = $(125,200 - 93,100) = $32,100
We know, Gain on sale of machine = Sale price - Book value of the machine = $(41,300 - 32,100) = $9,200. Gain is a credit as it shows as the income.
The amount of loss on disposal is $32100, the amount of accumulated depreciation of $93,100 while the gain on disposal is $9200.
Depreciation that has accrued up until a particular point in the life of an asset is referred to as accumulated depreciation.
Accumulated depreciation is a counter-asset account, which means that its natural balance is a credit that decreases the asset's overall value.
Here,
Calculate the Book value of the machine as follows:
Book value of machine = Cost of the machine - Accumulated depreciation
Book value of machine = $125,200 - 93,100 = $32,100
Prepare the journal entries as follows:
Date Particulars Debit Credit
(1) Accumulated depreciation $93100
Loss on disposal $32100
Machine $125200
(2) Cash $16400
Accumulated depreciation $93100
Loss on disposal $15700
Machine $125200
(3) Cash $32100
Accumulated depreciation $93100
Machine $125200
(4) Cash $41300
Accumulated depreciation $93100
Machine $125200
Gain on disposal $9200
Therefore, the loss on disposal is $32100, the cumulative depreciation is $93,100, and the gain on disposal is $9200.
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Rome Inc. owns 30% of Amber Co. and applies the equity method. During the current year, Rome bought inventory costing $66,000 and then sold it to Amber for $120,000. At year-end, only $24,000 of merchandise was still being held by Amber. What amount of intercompany inventory profit must be deferred by Rome
Answer:
Amount of intercompany inventory profit must be deferred by Rome=$3240
Explanation:
Inventory at year-end $ 24,000.00
Gross profit markup ($54,000 ÷ $120,000) × 0.45
Unrealized gain $ 10,800
Ownership share × 0.30
Intercompany unrealized gain — deferred $ 3,240
On January 1, 2018, David Mest Communications granted restricted stock units (RSUs) representing 25 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $15 per share on the grant date. At the date of grant, Mest anticipated that 5% of the recipients would leave the firm prior to vesting. On January 1, 2019, 4% of the RSUs are forfeited due to executive turnover. Mest chooses the option to account for forfeitures when they actually occur.
Required 1 to 3.
Prepare the appropriate journal entry to record compensation expense on December 31, 2018, December 31, 2019, and December 31, 2020. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Answer:
See the explanation below.
Explanation:
Total compensation expenses = 25 million * 15 = $375 million
1. On December 31, 2018.
Compensation expenses = $375 million / 3 = $125 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 125
Paid-in Capital - Restricted stock 125
To record the compensation expenses for 2018.
2. On December 31, 2019.
Compensation expenses = [$375 million * 96% * (2/3)] - $125 million = $115 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 115
Paid-in Capital - Restricted stock 115
To record the compensation expenses for 2019.
3. On December 31, 2020.
Compensation expenses = ($375 million * 96%) - $125 million - $115 million = $120 million
Journal entries will be as follows:
Details Dr ($'Million) Cr ($'Million)
Compensation expenses 120
Paid-in Capital - Restricted stock 120
To record the compensation expenses for 2020.
Consider the data in the Excel file Consumer Price Index. Use simple linear regression to forecast the data. What would be the forecasts for the next two months? (Your regression equation should be look like CPI = a + b T. The T is year and 1990=1; 1991=2; 1992=3; 1993=4; 1994=5; 1995=6; 1996=7; 1997=8; 1998=9; 1999=10) Year CPI 1990 169.3 1991 170.0 1992 172.4 1993 175.3 1994 177.2 1995 176.8 1996 179.1 1997 180.1 1998 ? 1999 ?
Answer:
CPI(1998) = 182.32
CPI(1999) = 183.94
Explanation:
1.
Using excel regression analysis, the regression results are below:
This gives regression equation as: CPI = 167.73 + 1.62T
Kindly check the attached image below for the step by step explanation.
In order to find CPI values for 1998 and 1999, substitute value of T = 9 and 10 respectively
This gives:
CPI(1998) = 182.32
CPI(1999) = 183.94
To forecast the data using simple linear regression, we can calculate the regression equation and use it to predict the CPI for the next two months. The equation is CPI = 104.176 + 2.729T, where T represents the year. The forecast for 1998 is CPI = 134.215, and the forecast for 1999 is CPI = 136.944.
Explanation:To forecast the data using simple linear regression, we need to calculate the regression equation and then use it to predict the CPI for the next two months. Using the given data, we can calculate the regression equation using the formula: CPI = a + bT, where T represents the year. Using the data points provided, we calculate the equation to be CPI = 104.176 + 2.729T. To find the forecast for the next two months, we substitute T = 11 for 1998 and T = 12 for 1999 into the equation. Therefore, the forecast for 1998 is CPI = 104.176 + 2.729(11) = 134.215, and the forecast for 1999 is CPI = 104.176 + 2.729(12) = 136.944.
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