Answer:
Total estimated costs = Suncoast incurred costs + estimated future costs
= $380,000 + $570,000
= $950,000
Contract price = $900,000
Loss = Total estimated costs - Contract price
= $950,000 - $900,000
= $50,000
The project is unprofitable.
[tex]Percentage\ of\ completion\ method=\frac{Costs\ incurred}{Total\ estimated\ costs}[/tex]
[tex]Percentage\ of\ completion\ method=\frac{380,000}{950,000}[/tex]
= 0.4
= 40%
Construction revenue in 2017 = contract price × percent complete
= $900,000 × 40%
= $360,000
The entire loss is recognized under two methods for an unprofitable project.
The journal entries are as follows:
(a) Construction expense A/c Dr. $410,000
To Construction in process $50,000
To Construction Revenue $360,000
(To record entire loss on overall unprofitable contract)
(b) Loss from contract A/c Dr. $50,000
To Construction in process $50,000
(To record entire loss on overall unprofitable contract)
Retained earnings at the beginning and ending of the accounting period were $650 and $1,400, respectively. Revenues of $2,500 and dividends paid to stockholders of $550 were reported during the period. What was the amount of expenses reported for the period?
Answer:
The amount of expenses reported for the period is $1,200
Explanation:
For computing the amount of expense, we have to apply the formula which is shown below:
Ending retained earning balance = Beginning retained earning balance + revenues earned - cash dividend paid - expenses incurred
$1,400 = $650 + $2,500 - $550 - expenses incurred
$1,400 = $2,600 - expenses incurred
So, the expenses incurred would be
= $2,600 - $1,400
= $1,200
In the context of supply chain management, which of the following is true of adaptability?
a. It helps in overcoming short-term fluctuations in the supply chain.
b. It can be enhanced by making a series of make-or-buy decisions.
c. It involves aligning the interests of various elements in the supply chain.
d. It focuses on achieving power and trust.
Answer: In the context of supply chain management "b. It can be enhanced by making a series of make-or-buy decisions." is TRUE of adaptability.
Explanation: Adaptability is basically how the company has to adapt the changes, to new technologies so as not to be left behind in addition to obtaining multiple financial and administrative benefits.
Alumbat Corporation has $800,000 of debt outstanding, and it pays an interest rate of 10 percent annually on its bank loan. Alumbat's annual sales are $3,200,000; its average tax rate is 40 percent; and its net profit margin on sales is 6 percent. If the company does not maintain a TIE ratio of at least 4 times, its bank will refuse to renew its loan, and bankruptcy will result. What is Alumbat's current TIE ratio?
Answer:
The company's TIE is 5
Which is above the requirement of the bank.
Explanation:
TIE = income before interest and taxes / interest expense
The first step, is calculate the interest expense:
debt outstanding x debt rate
interest expense: 800,000 x 10% = 80,000
(if there were more than one type of debt, then we should calculate all the interest expense and add them together)
Then we calculate the EBIT (earnings before interest and taxes)
3,200,000 sales
x 6% profit margin:
192,000 net income.
This is the income after taxes and interest
we need to discount this figures.
(EBIT - interest expense) x ( 1 - tax-rate) = net income
(EBIT - 80,000) x ( 1 - 40%) = 192,000
EBIT - 80,000 = 192,000/0.6
EBIT = 320,0000 + 80,000 = 400,000
Now we are able to calculate the TIE ratio:
400,000/80,000 = 5
Final answer:
Alumbat Corporation's current TIE ratio is 4. This is calculated by first determining the EBIT from the annual sales and net profit margin, and then dividing by the annual interest expenses.
Explanation:
Calculation of Alumbat's Current TIE Ratio
To calculate Alumbat Corporation's Times Interest Earned (TIE) ratio, we first need to determine its earnings before interest and taxes (EBIT). The net profit margin on sales is 6%, which gives us a net income (NI) of 6% of $3,200,000. We can calculate EBIT by dividing NI by (1 - tax rate), as EBIT * (1 - tax rate) = NI. Subsequently, we use the formula TIE ratio = EBIT / interest expenses to find out the TIE ratio.
The interest expenses for Alumbat are 10% of the $800,000 debt, which is $80,000 annually. With an annual sales figure of $3,200,000 and a net profit margin of 6%, Alumbat's net income is $192,000.
EBIT = $192,000 / (1 - 0.40) = $320,000
Therefore, Alumbat's current TIE ratio is calculated as follows:
TIE ratio = EBIT / Interest Expenses = $320,000 / $80,000 = 4
With a TIE ratio of 4, Alumbat Corporation meets its bank's requirement to maintain a TIE ratio of at least 4 times.
Tyler Corporation was organized in 2014. It’s corporate charter authorized the issuance of 50,000 shares of common stock, par value $5 per share, and 10,000 shares of 8% preferred stock, per value $25 per share.
Prepare journal entries for each of the following transactions:
January 1 Sold and issued 45,000 shares of common stock for cash at $ 25 per share
February 1 Sold and issued 5,000 shares of preferred stock for cash of $75 per share.
June 1 Purchased 7,500 shares of common stock in the open market at $24 per share.
August 1 Sold 1,000 shares of the treasury stock at $26 per share.
October 1 Sold another 1,500 shares of the treasury stock at $23 per share.
December 1 Declared dividends totaling $100,000.
Allocations of the dividend to preferred and common stockholders.
December 31 Paid the dividends that were declared.
Answer& Explanation:
cash 1,125,000 (45,000 x 25)
common stock 225,000 (45,000 x 5)
additional paid-in 900,000 (1,125,000 - 225,000)
cash 375,000 ( 5,000 x 75)
common stock 25,000 (5,000 x 5)
additional paid in 50,000 ( 75,000 - 25,000)
Treasury Stock 180,000 ( 7,500 x 24)
Cash 180,000
Cash 26,000
Treasury Stock 24,000 ( 1,000 x 24)
Asdditional paid in TS 2,000 ( 26,000 - 24,000)
Cash 34,500 ( 1,500 x 23)
Additional Paid-in TS 1,500
Treasury Stock 36,000 ( 1,500 x 24)
Dividends 100,000
Dividneds payable 100,000
Dividends payable 100,000
cash 100,000
Workers and management agree on a contract that gives a 5% wage increase for each of the next three years. Everyone expected 3% inflation but inflation turned out to be 5% per year. Then at the end of three years...
a. real wages will be higher than was expected.
b. real wages will have fallen
c. nominal and real wages will have changed by the same percentage.
d. real wages will be lower than was expected.
Answer:
The correct option is (d)
Explanation:
Real wages are nominal wages less inflation. Nominal wage is not adjusted for inflation. Everyone had expected an inflation of 3% per year while increase in wages per year is 5%. This implied that they will expect real wage of 2% (5% - 3%) per year.
However, it turned out that inflation was 5% per year. This means that real wages were actually 0% (5% - 5%). There was no increase in real wages at all. So, they received lower real wage (actually nil) as against expected real wage of 3% per year.
Compute the future value of $2,000 compounded annually for 20 years at 6 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Compute the future value of $2,000 compounded annually for 15 years at 9 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
A) FV= 6414.27
B) FV=2000*(1.09^15)= 7284.97
Explanation:
Giving the following information:
A) Present value= $2,000
Compounded annually for 20 years at 6 percent.
n= 20
i=0.06
B) Present value= $2,000
Compounded annually for 15 years at 9 percent.
n=15
i= 0.09
To calculate the Final Value we need to use the following formula:
FV= Present value*(1+interest rate)^n
A) FV= 2000*(1.06^20)
FV= 6414.27
B) FV=2000*(1.09^15)= 7284.97
Identify each of the following accounts of Dispatch Services Co. as asset, liability, owner's equity, revenue, or expense, and state in each case whether the normal balance is a debit or a credit: Item Type of Account Debit or Credit a. Accounts Payable Asset b. Accounts Receivable c. Ashley Griffin, Capital d. Ashley Griffin, Drawing e. Cash f. Fees Earned g. Office Equipment h. Rent Expense i. Supplies j. Wages Expense
Answer:
Explanation:
In this question, we apply the golden rule of accounting. There are three accounts which are dealing in it
Real account - It deals with the assets, liabilities, and equity side of the balance sheet
Nominal account - It deals with the expenses, losses and income and gains
Personal account - It deals with the person's needs like - for debtors, creditors, suppliers, etc
a. Account payable - liability - credit side.
b. Account receivables - an asset - debit side
c. Ashley Griffin, capital - owner equity - credit side
d. Ashley Griffin, Drawing - owner equity - debit side
e. Cash - an asset - debit side
f. Fees Earned - revenue - credit side
g. Office Equipment - an asset - debit side
h. Rent Expense - expense - debit side
i. Supplies - asset - debit side
j. Wages Expense - expense - debit side
Accounts of Dispatch Services range across different types including liabilities, assets, owner's equity, revenue, and expenses, each of them carrying a normal balance either as a debit or a credit.
Explanation:The accounts of Dispatch Services Co can be classified as follows: a. Accounts Payable (Liability, Credit), b. Accounts Receivable (Asset, Debit), c. Ashley Griffin, Capital (Owner's Equity, Credit), d. Ashley Griffin, Drawing (Owner's Equity, Debit), e. Cash (Asset, Debit), f. Fees Earned (Revenue, Credit), g. Office Equipment (Asset, Debit), h. Rent Expense (Expense, Debit), i. Supplies (Asset, Debit), j. Wages Expense (Expense, Debit). These classifications help in understanding the entire financial health of the Ashley's Dispatch Services company.
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A lottery claims its grand prize is $5 million, payable over 5 years at $1 comma 000 comma 000 per year. If the first payment is made immediately, what is the grand prize really worth? Use an interest rate of 4%.The real value of the grand prize is $nothing. (Round your response to the nearest dollar.)
Answer:
present value of the prize: 4,451,822 dollars
Explanation:
we will calcualte the present value of an annuity-due of 5 payment of 1,000,000 discount at 4%
[tex]C \times \frac{1-(1+r)^{-time} }{rate}(1+r) = PV\\[/tex]
C 1,000,000
time 5
rate 0.04
[tex]1000000 \times \frac{1-(1+0.04)^{-5} }{0.04}(1+0.04) = PV\\[/tex]
PV $4,451,822.3310
This will be the present value of the prize today
When the store hires two workers, they are able to serve 16 customers per hour. When the store hires three workers they are able to serve 22 customers per hour. Each customer spends an average of $4 in the store. What is the marginal benefit of hiring the third worker? Enter a whole number, with no dollar sign.
Answer: $24
Explanation:
Given that,
Two workers serve = 16 customers per hour
Three workers serve = 22 customers per hour
Each customer spends an average of $4 in the store.
Total revenue from Two workers = 16 × $4
= $64
Total revenue from Three workers = 22 × $4
= $88
Therefore, the marginal benefit of hiring the third worker would be:
= Total revenue from Three workers - Total revenue from Two workers
= $88 - $64
= $24
Adam is a 25-year old Millennial who is considered a super-star manager at a technology company. He has been asked to hire a team of IT specialists to launch a new product. While reviewing the stack of applications, he noted only one candidate, Jason, who has work experience of over 20 years. Adam realizes that this candidate is probably his dad's age and he considers his dad outdated, with poor IT skills, and slow to learn new skills. All the other candidates cite 1 to 3 years of work experience after college. Adam decides not to interview Jason. What is the likely basis for Adam's decision?
Answer:
The correct answer would be, Stereotyping is the likely basis for Adam's decision.
Explanation:
Adam is a young adult of age 25. He is a successful manager in a technology firm. He is asked to hire a team of IT specialists. When reviewing the stack of applications for the desired post, he notices only one candidate who has an experience of over 20 years. He realizes that this person is almost the age of his father. And because he considers his father's IT and other learning skills as slow and outdated, he applies the same thinking and concept to that person and decides not to interview that person, just on the basis of his age and his thinking about old people. His thinking that old people are slow in learning and are not aware of the new IT trends and are outdated is called as Stereotyping, which means the image of someone or something based upon some own's assumption.
Answer:
Stereotyping
Explanation:
Since Adam is considered a super-star manager he might suffer from over confidence and he might not actually contemplate others into what he is doing or ask for second opinions, since he is stereotyping Jason inot the category of old and not easy adaptable because that is how his dad is and he thinks that all older people are like that, that is a huge mistake on behalf of Adam, who should know that talent and abilities come in very different packages.
Transactions The selected transactions below were completed by Cota Delivery Service during July: Indicate the effect of each transaction on the accounting equation by choosing the appropriate letter from the following list: Increase in an asset, decrease in another asset. Increase in an asset, increase in a liability. Increase in an asset, increase in stockholders' equity. Decrease in an asset, decrease in a liability. Decrease in an asset, decrease in stockholders' equity. 1. Received cash in exchange for common stock, $35,000. c 2. Purchased supplies for cash, $1,100. 3. Paid rent for October, $4,500. b 4. Paid advertising expense, $900. 5. Received cash for providing delivery services, $33,000. 6. Billed customers for delivery services on account, $58,000. 7. Paid creditors on account, $2,900. 8. Received cash from customers on account, $27,500. 9. Determined that the cost of supplies on hand was $300 and $8,600 of supplies had been used during the month. 10. Paid cash dividends, $2,500.
Final answer:
The given transactions impact Cota Delivery Service's accounting equation by affecting its assets, liabilities, and stockholders' equity in various ways, demonstrating basic principles of accounting.
Explanation:
The question involves understanding the effect of various transactions on the accounting equation. It asks for indicating how each transaction affects the accounting elements such as assets, liabilities, and stockholders' equity. Here are the effects of the given transactions:
1. Received cash in exchange for common stock, $35,000. - Increase in an asset, increase in stockholders' equity.2. Purchased supplies for cash, $1,100. - Increase in an asset, decrease in another asset.3. Paid rent for October, $4,500. - Decrease in an asset, decrease in stockholders' equity.4. Paid advertising expense, $900. - Decrease in an asset, decrease in stockholders' equity.5. Received cash for providing delivery services, $33,000. - Increase in an asset, increase in stockholders' equity.6. Billed customers for delivery services on account, $58,000. - Increase in an asset, increase in stockholders' equity.7. Paid creditors on account, $2,900. - Decrease in an asset, decrease in a liability.8. Received cash from customers on account, $27,500. - Increase in an asset, decrease in another asset.9. Determined that the cost of supplies on hand was $300 and $8,600 of supplies had been used during the month. - Decrease in an asset, decrease in stockholders' equity (expense recognition).10. Paid cash dividends, $2,500. - Decrease in an asset, decrease in stockholders' equity.
Honda Motor Company is considering offering a $ 1 comma 800 rebate on its minivan, lowering the vehicle's price from $ 30 comma 200 to $ 28 comma 400. The marketing group estimates that this rebate will increase sales over the next year from 42 comma 000 to 53 comma 900 vehicles. Suppose Honda's profit margin with the rebate is $ 5 comma 650 per vehicle. If the change in sales is the only consequence of this decision, what are its costs and benefits? Is it a good idea?
Answer:
Taking into consideration only the income, the increase in unit sales will not increase the income of Honda. It can impact in other ways, like a decrease in inventory.
Explanation:
Giving the following information:
Honda Motor Company is considering offering an $1800 rebate on its minivan
New price $30200
Old price $28400.
The marketing group estimates that this rebate will increase sales over the next year from 42000 to 53900 vehicles.
Honda's profit margin with the rebate is $5650 per vehicle.
Normal price:
Income= (5650+1800)*42000= $312,900,000
New price:
Income= 5650* 53900= $304,535,000
Taking into consideration only the income, the increase in unit sales will not increase the income of Honda. It can impact in other ways, like a decrease in inventory.
During the late nineteenth century, the United States experienced a period of sustained deflation, or a falling price level. Explain in terms of the quantity theory of money how a deflation is possible. Is it necessary for the quantity of money to decline for deflation to occur?
Answer:
It is not necessary a decline in quantity of money for deflation to occur.
The quantity theory of money states that if money supply and velocity of circulation don't change economic growth (positive change in GDP) will result in declining price levels
Explanation:
The quantity of money theory states that
[tex]M\times V=P\times Y[/tex]
where M is the money supply, V is the velocity of circulation, P is the price level and Y is the GDP
We can put this equation in terms of percentage changes, which gives
[tex]\hat{M}+\hat{V}=\hat{P}+\hat{Y}[/tex]
where the [tex]\hat{M}[/tex] denotes the percentage change in the money supply, and similarly for the other variables.
Then for the percentage change in prices to be negative we have that
[tex]\hat{P}<0\hat{M}+\hat{V}-\hat{Y}[/tex]
since
[tex]\hat{P}= \hat{M}+\hat{V}-\hat{Y}[/tex]
[tex]\hat{M}+\hat{V}-\hat{Y}<0[/tex]
So if the there's no change in circulation velocity or gdp, then inflation can occur if there's a decline in money supply (percentual change in M is negative).
But it also could be other scenarios:
1. money supply or output did not change and velocity of circulation decreased
2. money supply and velocity remained constant but GDP grew
The following information relates to Carried Away Hot Air Balloons, Inc.:Advertising Costs $16,800Sales Salary 15,200Sales Revenue 570,000President's Salary 51,000Office Rent 55,000Manufacturing Equipment Depreciation 1,500Indirect Materials Used 5,700Indirect Labor 10,300Factory Repair and Maintenance 860Direct Materials Used 23,710Direct Labor 34,600Delivery Vehicle Depreciation 930Administrative Salaries 22,400How much was Carried Away's manufacturing overhead?
The manufacturing overhead of Carried Away Hot Air Balloons, Inc. is calculated by summing up all the indirect costs associated with manufacturing, which amounts to $18,360.
Explanation:To calculate the manufacturing overhead of Carried Away Hot Air Balloons, Inc., we need to sum up all the indirect costs associated with the production, ignoring any expenses that don't apply directly to the manufacturing process. In this question, the components of manufacturing overhead are Indirect Materials Used ($5,700), Indirect Labor ($10,300), Factory Repair and Maintenance($860), and Manufacturing Equipment Depreciation ($1,500).
Adding these four expenses together, we get:
$5,700 + $10,300 + $860 + $1,500 = $18,360
Hence, Carried Away's manufacturing overhead is $18,360.
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The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt of $2.5 million, and the 2015 balance sheet showed long-term debt of $2.65 million. The 2015 income statement showed an interest expense of $100,000. What was the firm’s cash flow to creditors during 2015?The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt of $2.5 million, and the 2015 balance sheet showed long-term debt of $2.65 million. The 2015 income statement showed an interest expense of $100,000. What was the firm’s cash flow to creditors during 2015?
Answer:
Total CashFlow to creditors : ($50.000).
Explanation:
Total Cash flow to creditors it's = I - E + B, where I it's Interest, E it's Ending Long Term Debt and B it's Beginning Long Term Debt.
With this, it means we get money from creditors instead of a payment to them.
Answer:
50000
Explanation;
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed long-term debt of $2.5 million, and the 2015 balance sheet showed long-term debt of $2.65 million. The 2015 income statement showed an interest expense of $100,000. What was the firm’s cash flow to creditors during 2015?
Particulars Amount$
Interest Paid(a) 100,000
Less
Net new borrowings
Long Term debt at the end Of 2015 2650000
Less:Long Term debts in the beginning 2500000
Net new borrowings(b) 150000
Cash flow to creditors(a)-(b) 50000
cash flow to credits during 2015 is 50000
An uncontrollable aspect of the domestic environment that can have a direct effect on the success of a foreign venture is:
level of technology. structure of distribution. economic climate. cultural forces. geography and infrastructure.
Answer: Economic climate
Explanation: In simple words, the view of economists, businesses and investors on the economic conditions of a country is its economic climate. It constitutes factors such as job market, stock market and credit availability etc.
These factors are domestic and could not be controlled by any authority completely. The fluctuations in such factors exist in every economy.
These factors could affect any venture from foreign. The needs of resources for such a venture like capital or customers etc is highly dependent on the constituents of economic climate.
Thus, the correct answer is economic climate.
Chang, Inc.'s balance sheet shows a stockholders' equity-book value (total common equity) of $750 comma 500. The firm's earnings per share is $3.00, resulting in a price/earnings ratio of 12.25X. There are 50 comma 000 shares of common stock outstanding. What is the price/book ratio? What does this indicate about how shareholders view Chang, Inc.?
Answer:
The price/book ratio is 2.45
This price/book ratio indicates that the Chang, Inc company has 2.45 higher market value of the stock than the book value of the equity
Explanation:
For computing the price/book ratio, we have to apply the formula which is shown below:
= Market price of equity ÷ book value of equity
where,
the market value of equity = firm's earnings per share × price/earnings ratio × number of outstanding common stock shares
= $3.00 × 12.25 × 50,000 shares
= $1,837,500
And, the book value of equity is $750,500
Now put these values to the above formula
So, the answer would be equal to
= $1,837,500 ÷ $750,500
= 2.45
This price/book ratio indicates that the Chang, Inc company has 2.45 higher market value of the stock than the book value of the equity
Conner Enterprises issued $120,000 of 10%, 5-year bonds with interest payable semi annually. Determine the issue price of the bonds are priced to yield (a) 10%, (b) 8%, and (c) 12%. Use financial calculator or Excel to calculate answers. Round answers to the nearest whole number.
The price of bonds issued by Conner Enterprises will vary based on the market yield. A bond with a 10% coupon rate will be sold at a premium if the market yield is 8%, at par if the yield is 10%, and at a discount if the yield is 12%.
Explanation:The student's question is about the pricing of bonds issued by Conner Enterprises at different yield rates. When the yield rate matches the coupon rate, the bond is sold at face value. However, if the market interest rates are lower than the coupon rate, the bonds will sell for a premium; conversely, if market rates are higher, the bonds will sell at a discount.
For a bond with a 10% coupon rate and a market yield of 10%, the price would be at par, meaning the issue price would equal the face value, or $120,000. If the bonds were priced to yield 8%, the price would be higher than $120,000 because the bond's fixed interest payments are more attractive compared to the market rate. Conversely, if the bonds were priced to yield 12%, the issue price would be less than $120,000, as the coupon rate is no longer as attractive as the new market rate.
Using the example of the water company bond, if interest rates rise, the bond will be sold for less than its face value due to the lower interest rate compared to the market rate. Similarly, if we calculate the price for a bond at an interest rate of 9% using the formula given, we can determine the actual price someone would be willing to pay for it.
Cornerstone, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative? A. Sell "as is," $125,000. B. Clean and ship to outlet center, $23,000. C. Clean and ship to outlet center, $103,000. D. Clean and ship to outlet center, $148,000. E. Neither alternative is desirable, as both produce a loss for the firm
Answer:
It is better to cleaned and shipped to the firm's outlet center at a cost of $23,000 to be sold at $80,000
Explanation: In alternative A) the firm loss is $80,000 ($125,000-$45,000)
In alternative E) all $125,000 is lost
In alternative B, C and D) the loss is $68,000 ($125,000-$80,000+$23,000)
Relevant costs are those evitable, that are cause of a manager decision related to an specific business decision.
The only cost that can be avoided in these example is the cost of $23,000 so the goods can be cleaned and shipped to the firm's outlet center
To determine the more desirable alternative, we compare costs and revenues for each option. Option B is more desirable with a relevant cost of $23,000. The correct option is B.
Explanation:To determine which alternative is more desirable, we need to compare the costs and revenues associated with each option. Option A is to sell the inventory 'as is' for $45,000. Option B is to clean and ship the goods to the outlet center at a cost of $23,000 and sell them for $80,000.
For option A, the relevant cost is the cost of carrying the inventory, which is $125,000.
For option B, the relevant cost is the cost of cleaning and shipping, which is $23,000.
Comparing the relevant costs, option B is more desirable. The relevant cost for option B is $23,000. The correct option is B.
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In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. Jacob and Katy agree that some of the inventory is obsolete. The inventory account is decreased before Erin is admitted. Erin invests $38,000 for a one-fifth interest. What are the capital balances of Jacob and Katy after Erin is admitted into the partnership?
Jacob Katy
A. $140,000 $40,000
B. $134,000 $36,000
C. $123,200 $28,800
D. $118,400 $25,600
Answer:
C. $123,200 $28,800
Explanation:
Provided information, we have:
Existing capital = $140,000 + $40,000 = $180,000
Admission of Erin for 1/5th share = $38,000
Total capital as per Erin share = $38,000 [tex]\times[/tex] 5 = $190,000
But actual total capital = $180,000 + $38,000 = $218,000
Therefore, inventory written off = $218,000 - $190,000 = $28,000
Jacob = $28,000 [tex]\times[/tex] 3/5 = $16,800
Katy = $28,000 [tex]\times[/tex] 2/5 = $11,200
Therefore,
Jacob's balance = $140,000 - $16,800 = $123,200
Katy's Balance = $40,000 - $11,200 = $28,800
Various financial data for the past two years follow. LAST YEAR THIS YEAR Output: Sales $ 200,100 $ 202,100 Input: Labor 30,100 40,100 Raw materials 35,100 45,100 Energy 5,010 6,050 Capital 50,010 49,750 Other 2,010 2,875 (a) Calculate the total productivity measure for this company for both years
Answer: $1.637; $1.404
Explanation:
Given that,
Last year:
Output - Sales = $200,100
Input:
Labor = 30,100
Raw materials = 35,100
Energy = 5,010
Capital = 50,010
Other = 2,010
Input = 30,100 + 35,100 + 5,010 + 50,010 + 2,010
= 122,230
Total Productivity = [tex]\frac{output}{input}[/tex]
= [tex]\frac{200,100}{122,230}[/tex]
= $1.637
This year:
Output - Sales = $202,100
Input:
Labor = 40,100
Raw materials = 45,100
Energy = 6,050
Capital = 49,750
Other = 2,875
Input = 40,100 + 45,100 + 6,050 + 49,750 + 2,875
= 143,875
Total Productivity = [tex]\frac{output}{input}[/tex]
= [tex]\frac{202,100}{143,875}[/tex]
= $1.404
Final answer:
Total productivity measure is calculated by dividing total sales by total input costs for each year. For Last Year, total productivity is approximately 1.64, and for This Year, it is approximately 1.40, indicating the efficiency of resource use over time.
Explanation:
To calculate the total productivity measure for the company, we must first sum up all the inputs (labor, raw materials, energy, capital, and other costs) for each year and then divide the total sales output by this sum. For Last Year, the total input costs are $30,100 (labor) + $35,100 (raw materials) + $5,010 (energy) + $50,010 (capital) + $2,010 (other) = $122,230. Total productivity is hence $200,100 (sales) ÷ $122,230 (total inputs) = 1.64 approx. For This Year, the total input costs are $40,100 (labor) + $45,100 (raw materials) + $6,050 (energy) + $49,750 (capital) + $2,875 (other) = $143,875. The total productivity for This Year is thus $202,100 (sales) ÷ $143,875 (total inputs) = 1.40 approx. These calculations allow us to understand the total efficiency with which resources are being transformed into sales revenue over time.
Mr. E, a petroleum engineer, earns an $72,500 annual salary, while Mrs. E, a homemaker, has no earned income. Under current law, the couple pays 20 percent in state and federal income tax. Because of recent tax law changes, the couple’s future tax rate will increase to 28 percent. If Mrs. E decides to take a part-time job because of the rate increase, how much income must she earn to maintain the couple’s after-tax disposable income? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)
Answer:
It will require an income for 80,556 before taxes
Explanation:
Fiorst, we will calculate the current tafter tax income:
72,500 x 20% = 14,500 tax expense
72,500 - 14,500 = 58,000 after-tax income
Now, we will calculate the pre-tax income to keep the same after-tax income with the new rate:
pretax income x ( 1 - new tax rate) = 58,000
pretax income x ( 1 - 0.28) = 58,000
pretax income = 58,000/0.72 = 80,555.56
At this level, Mr E will obtain the same after-tax income
Final answer:
To maintain the couple's disposable income after the tax rate change from 20% to 28%, Mrs. E must earn an additional $8,056 based on the calculation of their current after-tax income and the shortfall created by the increased tax rate.
Explanation:
To calculate how much income Mrs. E must earn to maintain the couple's after-tax disposable income after the tax rate increase from 20% to 28%, we must first determine their current after-tax income. With Mr. E's current salary of $72,500 and a tax rate of 20%, the after-tax income is calculated as follows:
Calculate the total tax paid: $72,500 * 20% = $14,500.Determine after-tax income: $72,500 - $14,500 = $58,000.Next, we calculate the new after-tax income with the increased tax rate of 28%:
Calculate the total tax paid under the new rate: $72,500 * 28% = $20,300.Determine after-tax income with the new tax rate: $72,500 - $20,300 = $52,200.Now, to maintain their original after-tax income of $58,000, we need to find out how much Mrs. E needs to earn:
Calculate the shortfall due to the new tax rate: $58,000 - $52,200 = $5,800.Find out how much gross income is needed to cover the shortfall, considering the new 28% tax rate. If $X is the income needed, then $X - ($X * 28%) = $5,800.Solve for $X: $X = $5,800 / (1 - 0.28) = $5,800 / 0.72 = $8,055.55, which when rounded to the nearest whole dollar is $8,056.Therefore, Mrs. E must earn an additional $8,056 to maintain the couple's after-tax disposable income at the current level, accounting for the tax rate increase to 28%.
Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 21 percent marginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for a client. Upon satisfactory completion of the services, the client will pay $85,000 cash. Compute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the services to the client. Compute the after-tax cash from the contract assuming that Company J is the party to the contract and provides the services to the client. Compute the after-tax cash from the contract assuming that Company J is the party to the contract, but Company G actually provides the services to the client.
The after-tax cash for Company G and Company J, given the contract value of $85,000 and their respective tax rates, are $59,500 and $67,150. Even if Company G performs the service under the contract of J, the tax is accounted based on J's rate, thus the after-tax cash remains the same for both companies.
Explanation:The after-tax cash that the two companies will get is computed by subtracting the taxes from the total contract value. Company G has a 30 percent marginal tax rate. If it is the party to the contract and provides the services to the client, the tax will be $85,000 * 0.3 = $25,500. Therefore, the after-tax cash for Company G will be $85,000 - $25,500 = $59,500.
Now, let's consider Company J. It has a 21 percent marginal tax rate. If it is the party to the contract and provides the services, the tax will be $85,000 * 0.21 = $17,850. Therefore, the after-tax cash for Company J will be $85,000 - $17,850 = $67,150.
If Company J is the party to the contract, but Company G actually provides the services, the tax will still be calculated based on Company J's marginal tax rate. Thus, the after-tax cash from the contract for these companies remains the same at $67,150.
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On January 1, 2018, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2019, the truck was exchanged for a new truck valued at $60,000. Jacob received a trade allowance of $35,000 on the exchange with the remaining $25,000 paid in cash. What amount of gain or loss should Jacob Inc. record on December 31, 2019?
A. Loss, $18,000.
B. Gain, $5,000.
C. Loss, $38,000.
D. Loss, $3,000.
Answer:
option (D) loss, $3,000
Explanation:
Given:
price of the truck = $48,000
estimated residual value = $8,000
Exchange price of the truck = $60,000
Trade allowance = $35,000
Since, straight line depreciation is given, thus,
Total depreciation = [tex]\frac{\textup{48,000−8,000}}{\textup{8}}[/tex]
or
Total depreciation = $5,000 per year
Therefore,
the book value after two years
= Price of truck - total depreciation in two years
or
= $48,000 − ($5,000 × 2 years)
= $38,000
Now,
a trade allowance received ( i.e $35,000 ) is less than the book value
therefore a loss is recorded
The amount of loss = (Book value - trade allowance received)
or
The amount of loss = $38,000 - $35,000 = $3,000
Hence, correct answer is option (D) loss, $3,000
The US Securities and Change Commission (SEC), a US federal agency, is considered to be an investor’s advocate. Its purpose is to protect investors, maintain market integrity, and facilitate capital formation. Under the Sarbanes–Oxley Act of 2002, the SEC requires CFOs to certify that the firm’s:
(A) Growth plans are on track
(B) Shareholders are protected
(C) Financial statements are audited
(D) Earnings numbers are accurate
Answer:
(D) Earnings numbers are accurate
Explanation:
Under the Sarbanes–Oxley Act of 2002, the SEC requires CFOs to certify that the firm’s financial statements should represent true and accurate amounts. It does contain any false commitment which affects the overall shareholder decisions.
Moreover, the top manager of the company checks the accuracy of the financial reports which contains important and valuable information about the company.
So, all options are incorrect except D.
In its second year of business, a company has a net income of $120,000. The following table provides year-end account information. Account Year 1 Year 2 Accounts payable $5,000 $4,000 Accumulated depreciation $65,000 $85,000 Prepaid expenses $20,000 $15,000 Fixed assets $250,000 $255,000 The company uses the indirect method to prepare a statement of cash flows for Year 2. How much should the company report as net cash provided by operating activities
Answer:
Net cash provided by operating activities is 149.000
Explanation:
The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.
First we have to see if each account increase o decrease by resting value of year 1 to the year 2
Decrease/ Increase =year 2 - year 1
For example Accounts payable
year 1 $5,000
year 2 $4,000
Accounts payable decrease 1000 ($4,000-$5,000 )
Once we have this information we make the adjustments.
It depends on the account if it is added or subtracted to net income. Below you will find the added account with a plus (+) and the subtracted ones with a minus (-)
Notice the amounts of any decreases are in parentheses.
Net income 120.000
Adjustment to reconcile the net income to cash
- Decrease in accounts payable (1.000)
+ Depreciation expense 20000
+ Decrease Prepaid expenses 5.000
+ Decrease in Fixed assets 32.400
Net cash 149.000
Bowyer Driving School’s 2014 balance sheet showed net fixed assets of $3 million, and the 2015 balance sheet showed net fixed assets of $3.7 million. The company’s 2015 income statement showed a depreciation expense of $200,000. What was net capital spending for 2015? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer: $900,000
Explanation:
Net fixed assets(2014) = $3 million
Net fixed assets(2015) = $3.7 million
Depreciation expense = $200,000
Net capital spending for 2015 = closing balance of 2015 - opening balance of assets + depreciation for the year
= $3,700,000 - $3,000,000 + $200,000
= $900,000
Therefore, the net capital spending for the year 2015 is $900,000.
Due to a recession, expected inflation this year is only 4.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 4.25%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 0.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places.
Answer:
inflation rate after 1 year is 5.00%
Explanation:
expected inflation = 4.25%
risk-free rate (r) = 3.5%
Treasury bonds = 1-year yield plus 0.5%
to find out
what inflation rate is expected after Year 1
solution
we say that yield on 1st year treasury bond is here
r1 = r + inflation rate = 3.5 + 4.25 = 7.75 %
and in 3rd year bond bond value is
r3 = r1 + 0.5% = 7.75 + 0.5 = 8.25 %
and
r3 = r + inflation3
so inflation3 = 8.25 - 3.5 = 4.75 %
so
for 1st year inflation is = 4.25 %
and for 2nd year inflation is = I
and for 3rd year inflation is = I
so mean of these
[tex]\frac{4.28 + I + I}{3} = 4.75[/tex]
so I = 5.00 %
so
inflation rate after 1 year is 5.00%
If the interest rate is 7.5 percent, then what is the present value of $4,000 to be received in 6 years?
a. $3,040.63
b. $2,420.68
c. $2,996.33
d. $2,591.85
Answer:
d. $2,591.85
Explanation:
To solve we can use the present value formula defined by
[tex]PV=\frac{FV}{(1+r)^t}[/tex]
where PV is present value, FV is future value, t is time and r is the interest rate , we can replace the values given in the question. Where 4000 is the future value, the time is t=6 years, and the interest rate is r=0.075, so we get
[tex]PV=\frac{4000}{(1+0.075)^6}=2,591.85[/tex]
The present value of $4,000 to be received in 6 years at a 7.5 percent interest rate is approximately $2,556.05, with the closest answer choice being option d, $2,591.85.
Explanation:To calculate the present value of $4,000 to be received in 6 years at an interest rate of 7.5 percent, we apply the present value formula: Present Value = Future Value / (1 + r)^n, where 'r' is the interest rate and 'n' is the number of years. Plugging our numbers into the formula gives us Present Value = $4,000 / (1 + 0.075)^6.
Performing the calculation:
Present Value = $4,000 / (1.075)^6 = $4,000 / 1.5648 approximately.
Present Value = $2,556.05 approximately.
Although none of the provided options exactly match this result, the closest to this computed value is option d, $2,591.85.
On January 1, 2016, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2018, Jacob Inc. sold the truck for $30,000. What amount of gain or loss should Jacob Inc. record on December 31, 2018?
A.Loss, $3,000.
B.Loss, $18,000.
C.Gain, $22,000.
D.Gain, $5,000.
Answer:
Gain= $5000
Explanation:
Giving the following information:
On January 1, 2016, commercial truck for $48,00
Straight-line depreciation method.
Useful life of eight years.
Residual value of $8,000.
On December 31, 2018, Jacob Inc. sold the truck for $30,000.
Annual depretiation= (purchase value-residual value)/useful years
Annual depretiation= (48000-8000)/8=5000
Accumulated depreciation= 5000*2 years= 10000
Book value at second year= purchase value-accumulated depreciation= 38000
Gain/Loss= Sell price- book value= 43000-38000= $5000