Answer:
The sales volume at which revenues equal total cost plus an operating profit of zero
Explanation:
Break even point cover first the variable costs and then the fixed overhead. Thus it is the point at which revenues equal total cost plus an operating profit of zero.
On June 3, Ivanhoe Company sold to Chester Company merchandise having a sale price of $4,200 with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling $94, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company. Collapse question part (a) Prepare journal entries on the Ivanhoe Company books to record all the events noted above under each of the following bases. (1) Sales and receivables are entered at gross selling price. (2) Sales and receivables are entered at net of cash discounts
Answer:
On June 3: Debit Account receivable with $4,200; and Credit Sales revenues also wit $4,200.
On June 12: Debit Cash with $4,116, Debit Sales discount with $84; and Credit Account receivable with $4,200.
Explanation:
Ivanhoe Company
Date Details Dr ($) Cr ($)
June 3 Account receivable 4,200
Sales revenues 4,200
To record sales on terms to Chester Company
June 12 Cash 4,116
Sales discount 84
Account receivable 4,200
To record cash paid and sales discount to Chester
Note:
Chester Company paid within the discount period of 10 days. Therefore, he is entitled to discount of 2% and the cash paid and discount are calculated as follows:
Discount = $4,200 * 2% = 84%
Cash paid = $4,000 - $84 = $4,116
Flapjack Corporation had 7,680 actual direct labor hours at an actual rate of $12.45 per hour. Original production had been budgeted for 1,100 units, but only 960 units were actually produced. Labor standards were 7.2 hours per completed unit at a standard rate of $13.00 per hour. Round your answer to the nearest cent. The direct labor time variance is $4,208.64 unfavorable $4,208.64 favorable $9,984.00 unfavorable $9,984.00 favorable
Final answer:
To calculate the direct labor time variance, subtract the standard cost from the actual cost. The actual cost of $95,616 exceeds the standard cost of $89,856, resulting in an unfavorable labor time variance of $5,760.
Explanation:
The student's question refers to calculating the direct labor time variance in a manufacturing setting. This variance measures the difference between the actual labor hours worked at the actual rate and the standard labor hours expected to be worked at the standard rate for the number of units produced. To find out whether the variance is favorable or unfavorable, we'll start by computing the standard hours for actual production, which is 960 units multiplied by the standard rate of 7.2 hours per unit, resulting in 6912 standard hours. We'll then multiply these standard hours by the standard rate of $13.00 per hour to get the standard cost, which is $89,856.
The actual cost is the actual hours worked multiplied by the actual rate per hour. Therefore, 7680 actual hours at $12.45 per hour result in an actual cost of $95,616. The labor time variance is found by subtracting the standard cost from the actual cost. Since the actual cost is higher, the variance is unfavorable. Calculating the difference ($95,616 - $89,856) yields $5,760 as the unfavorable labor time variance.
Final answer:
The direct labor time variance for Flapjack Corporation is $5,760 unfavorable. This was calculated by comparing the standard labor cost for actual production, which was $89,856, against the actual labor cost incurred, totaling $95,616.
Explanation:
To calculate the direct labor time variance, we need to compare the standard labor cost for actual production to the actual labor cost incurred. The standard labor cost is determined based on the labor standards set for the production of units. In this case, Flapjack Corporation had a labor standard of 7.2 hours per unit at a standard rate of $13.00 per hour. The actual production was 960 units.
Step 1: Calculate standard labor hours for actual production.
Standard hours = Actual units produced × Standard hours per unit
Standard hours = 960 units × 7.2 hours/unit = 6,912 hours
Step 2: Calculate standard labor cost for actual production.
Standard cost = Standard hours × Standard rate per hour
Standard cost = 6,912 hours × $13.00/hour = $89,856
Step 3: Calculate actual labor cost incurred.
Actual cost = Actual hours × Actual rate per hour
Actual cost = 7,680 hours × $12.45/hour = $95,616
Step 4: Calculate direct labor time variance.
Labor time variance = Actual cost - Standard cost
Labor time variance = $95,616 - $89,856 = $5,760
The direct labor time variance is $5,760 unfavorable because the actual labor cost exceeded the standard labor cost.
Perine Company has 2,392 pounds of raw materials in its December 31, 2019, ending inventory. Required production for January and February of 2020 are 4,600 and 6,000 units, respectively. 2 pounds of raw materials are needed for each unit, and the estimated cost per pound is $9. Management desires an ending inventory equal to 26% of next month’s materials requirements.
Prepare the direct materials budget for January.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Beginning inventory= 2,392 pounds
Production:
January= 4,600 units
February= 6,000 units
2 pounds of raw materials are needed for each unit
The estimated cost per pound= $9.
Management desires an ending inventory equal to 26% of next month’s materials requirements.
To calculate the purchases for January, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
First, we will determine the pounds needed for January.
Budgeted Direct material:
Production= 4,600*2= 9,200 pounds
Ending inventory= (6,000*2)*0.26= 3,120 punds
Beginning inventory= (2,392) pounds
Total= 9,928 pounds
Total direct material cost= 9,928*9= $89,352
Lisa Company uses the periodic inventory system and had 100 units in beginning inventory at a total cost of $10,000. The company purchased 200 units at a total cost of $26,000. At the end of the year, Lisa had 80 units in ending inventory.
Required:
a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers to 0 decimal places, e.g. 1,250.)
Answer:
FIFO $10,400
LIFO $8,000
AVERAGE COST $9,600
Explanation:
Lisa Company
(1) FIFO
Purchases during the period:
100 units at $100 = $10,000
200 units at $130 = $26,000
Units sold during the period = 220
Cost of units sold
=100*$100+120*130=$25,600
Value of ending inventory
=10,000+26,000-25,600
=$10,400
(2) LIFO
Purchases during the period:
100 units at $100 = $10,000
200 units at $130 = $26,000
Units sold during the period = 220
Cost of units sold
=20*$100+200*130=$28,000
Value of ending inventory
=10,000+26,000-28,000
=$8,000
(3) average-cost
Purchases during the period:
100 units at $100 = $10,000
200 units at $130 = $26,000
average cost per unit
=(10,000+26,000)/300
=$120 per unit
Units sold during the period = 220
Cost of units sold
=220 * $120
=$26,400
Value of ending inventory
=36,000-26,400
=$9,600
Each visor requires a total of $4.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $1.50 each. Shadee wants to have 32 closures on hand on May 1, 22 closures on May 31, and 28 closures on June 30 and variable manufacturing overhead is $2.00 per unit produced. Suppose that each visor takes 0.80 direct labor hours to produce and Shadee pays its workers $10 per hour.
Bugeted Production in Units: May 585, June 410
Required:
1. Determine Shadee’s budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $1.90.) (Round your answer to 2 decimal places.)
2. Compute the Shadee’s budgeted cost of goods sold for May and June.
The budgeted manufacturing cost per visor is $16.40, calculated by summing direct materials, direct labor, variable overhead, and fixed overhead. The budgeted cost of goods sold for May is $9,594.00, and for June, it is $6,724.00.
Budgeted Manufacturing Cost Per Visor
To calculate the budgeted manufacturing cost per visor, we need to add together the direct materials, direct labor, and both variable and fixed manufacturing overhead costs per unit. Direct materials cost $4.50 per visor, including the cost of closures. Direct labor is calculated by multiplying the labor hours per visor by the hourly wage, which in this case is 0.80 hours multiplied by $10, equaling $8.00. The variable manufacturing overhead is given as $2.00 per unit. The fixed overhead per unit is indicated as $1.90.
To determine the total cost per visor, we sum these amounts:
Direct Materials: $4.50Direct Labor: $8.00 (0.80 hours x $10/hour)Variable Manufacturing Overhead: $2.00Fixed Manufacturing Overhead: $1.90Total cost per visor = $4.50(materials) + $8.00(labor) + $2.00(variable overhead) + $1.90(fixed overhead) = $16.40.
Budgeted Cost of Goods Sold (COGS) for May and June
To compute the budgeted cost of goods sold (COGS) for May and June, we multiply the total cost per visor by the number of units produced in each month:
For May (585 units): COGS = 585 units x $16.40/unit = $9,594.00For June (410 units): COGS = 410 units x $16.40/unit = $6,724.00
"Which of the following are advantages to being a shareholder: 1.The expected returns for equities are higher than debt securities. 2.Equities have prices listed on major exchanges and are marketable. 3.Equities typically earn their expected return. 4. Equities that do not pay a dividend are tax efficient."
Answer:
The answer is 1, 2 and 4
Explanation:
Because equity holders usually have long-term interest in the company and they are concerned about increasing the value of the company and that they are at the greatest risk when the company goes bankruptcy, the expected returns for equities for shareholders are higher than debt securities for bondholders or banks.
Equity securities, both current and non-current, are listed at the lower value of cost or market on stock exchange.
Some companies dont pay dividends and some do buy but the equity that do not pay a dividend are tax efficient.
On January 2, 2018, Baltimore Company purchased 14,000 shares of the stock of Towson Company at $13 per share. Baltimore obtained significant influence as the purchase represents a 40% ownership stake in Towson Company. On August 1, 2018, Towson Company paid cash dividends of $21,000. Baltimore Company intended this investment to a long-term investment. On December 31, 2018, Towson Company reported $75,000 of net income for FY 2018. Additionally, the current market price for Towson Company's stock increased to $21 per share at the end of the year. Use this information to determine, how much Baltimore Company should report for its investment in Towson Company on December 31, 2018. (Round to the nearest dollar.)
Answer:
$315,600
Explanation:
Ownership = 40%
Investment = $182,000
Share of dividends = 40%*21,000 =8400
Share of income = 40%*75000 = 30000
Increase in share price = $21-$13= $8
investment
Dr Cr
Investment $182,000
Dividend received $8400
Income received $30,000
Increase in share price $112,000
324,000 315,600
Baltimore Company should report $294,000 as its investment in Towson Company on December 31, 2018.
Explanation:To determine how much Baltimore Company should report for its investment in Towson Company on December 31, 2018, we need to consider the initial purchase price, dividends received, and the change in market price of the stock. Baltimore Company purchased 14,000 shares of Towson Company at $13 per share, representing a 40% ownership stake. This initial purchase cost would be 14,000 x $13 = $182,000.
Since Baltimore Company has significant influence over Towson Company, they should use the equity method of accounting. Under this method, Baltimore Company accounts for its investment by adjusting the initial cost with its share of net income/loss and dividends received. In this case, since Baltimore owns 40% of the shares, it should report 40% of Towson Company's net income as its share. Therefore, Baltimore Company should report $75,000 x 40% = $30,000 as its share of Towson Company's net income.
Moreover, Baltimore Company received cash dividends of $21,000 from Towson Company. To calculate the investment amount on December 31, 2018, we need to add the dividends received to the initial purchase cost: $182,000 + $21,000 = $203,000. Additionally, since Towson Company's stock price increased to $21 per share, the market value of Baltimore Company's investment would be 14,000 x $21 = $294,000.
Therefore, Baltimore Company should report $294,000 as the investment in Towson Company on December 31, 2018.
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Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership in which both partners are active owners). Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the remaining 60% interest. Anna's property was encumbered by qualified nonrecourse financing of $100,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year. Sales $560,000 Utilities, salaries, depreciation, and other operating expenses 360,000 Short-term capital gain 10,000 Tax-exempt interest income 4,000 Charitable contributions (cash) 8,000 Distribution to Suzy 10,000 Distribution to Anna 20,000 During the current tax year, Suz-Anna refinanced the land and building (i.e., the original $100,000 debt was repaid and replaced with new debt). At the end of the year, Suz-Anna held recourse debt of $100,000 for partnership accounts payable (recourse to the partnership but not personally guaranteed by either of the partners) and qualified nonrecourse financing of $200,000. a. What is Suzy's basis in Suz-Anna after formation of the partnership
Answer:
Explanation:
a.
What is Suzy’s basis after formation of the partnership? Anna’s basis?
Suzy’s beginning basis in her partnership interest is $240,000, calculated as follows:
Basis in contributed business-related assets $200,000
Share of partnership nonrecourse debt 40,000
Total beginning basis $240,000
Anna’s beginning basis in her partnership interest is $340,000, calculated as follows:
Basis in contributed business-related assets $380,000
Relief of debt assumed by the partnership (100,000)
Share of partnership nonrecourse debt 60,000
Total beginning basis $340,000
b.
What income and separately stated items does the partnership report on Suzy’s Schedule K-1?What items does Suzy report on her tax return?
The partnership reports ordinary income of $200,000.
Separately stated items include the short-term capital gain($10,000),
tax-exempt interest income ($4,000), and
charitable contributions ($8,000).
Suzy’s Schedule K-1 shows the following items: Ordinary income $80,000
Short-term capital gain 4,000
Tax-exempt interest income 1,600
Charitable contributions 3,200Distribution received by Suzy 10,000
On her tax return,
Suzy reports the $80,000 of ordinary income on Schedule E. She reports the short-term capital gain ($4,000) with her capital transactions on Form 8949 and Schedule D. She reports the charitable contributions ($3,200) on Schedule A with her personal charitable contributions. The tax-exempt interest income and the distribution she receives are not taxable
c) Suzy's new basis should be the old basis , plus income, debt, STCG and interest, less distributions and charitable donations.
which implies
$240000 + $80000+ $40000 + $4000 + $1600 - $10000-$3200
= $352,400
There is no important area of human activity than management since its task is that of getting things done through people". Discuss.
Yes, there is no important area of human activity compare to management because it helps in getting things done through people.
Management can be regarded as the process of making use of available resources as well as controlling a group of people so that the goals of the organization can be achieved.
The general function of management entails ;
planningorganizingleading controlling.We can conclude that there is no important area of human activity compare to management because it encompass the process of getting things done.
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The concept of management is crucial as it involves organizing and guiding teams toward achieving objectives, a concept evident from historical bureaucracy to modern business structures. The evolution of management theory, from Taylor's economic efficiency drives to McGregor's leadership styles and Clifton's strengths-focused management, illustrates the ongoing development of techniques to maximize both organizational and employee potential.
Explanation:The significance of management in various areas of human activity is immense, as it involves the coordination and structuring of tasks and people to achieve desired goals. This can be understood through the history of bureaucracy which emerged as a means to manage large groups and achieve efficiency within political units, surpassing the limitations of managing through personal relationships alone.
Frederick Taylor's The Principles of Scientific Management expounded on the importance of increasing economic efficiency and productivity through the redesign of the workplace and utilization of time-motion studies. This form of management focused on maximizing employer profits and optimizing employee outcomes through specific training and development.
Further, management theories evolved with Douglas McGregor's Theory X and Theory Y, outlining differing perceptions of employee motivation and managerial styles. In contrast, Donald Clifton's strengths-based management emphasizes focusing on an individual's strengths to boost organizational performance, although this approach requires balancing against potential neglect of weaknesses.
Efficient management is also witnessed in modern businesses, such as restaurants, which compartmentalize tasks to various specialized roles, including culinary staff, servers, and business managers, to ensure smooth operations and financial oversight.
A monopolist is able to maximize its profits by a. producing output where MR = MC and charging the price corresponding to that output level on the demand curve. b. setting output at MR = MC and setting price at the demand curve's highest point. c. producing maximum output where price is equal to its marginal cost. d. setting the price at the level that will maximize its per-unit profit.
Answer:
A) producing output where MR = MC and charging the price corresponding to that output level on the demand curve.
Explanation:
In order for a monopolist to maximize their accounting profit, they should produce and sell an output level where marginal revenue (MR) = marginal cost (MC). When MR = MC, output should be at the equilibrium point.
This profit maximizing rule applies to all businesses, including perfect competition markets and monopolistic competition.
For a monopolist to maximize its profits, it b. sets output at MR = MC and sets prices at the demand curve's highest point.
The monopolist's MR or Marginal Revenue and the MC (marginal cost) must be equal to maximize profits. However, if he sets the selling price at the highest point, he achieves maximum profits.
Characteristics of a MonopolistDominates and controls the market. There is a lack of competition.There is a lack of substitute goods or services.The monopolist can set high prices.It decides the quantity to produce.Thus, the monopolist can maximize its profits by choosing Option B.
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) Suppose that monetary policymakers employ the Taylor rule to set the fed funds rate. Assume that the weights on both the inflation and output gaps are 0.5, the equilibrium real fed funds rate is 2%, the inflation rate target is 2%, and the output gap is 1%. Suppose half of Fed economists forecast inflation to be 3%, and half of Fed economists forecast inflation to be 5%. If the Fed uses the average of these two forecasts as its measure of inflation, then at what target should the fed funds rate be set according to the Taylor rule
Answer:
Case 1. Federal funds rate target is 9%
Case 2. Federal funds rate target is 9%
Explanation:
As we know that:
Federal funds rate target = Inflation rate + Equation real fed funds rate +
1/2 * Inflation Gap + 1/2 * (Output Gap)
Here
Equation real fed funds rate is 2%
Output Gap is 1%
Case 1. Inflation rate target is 3%
So
Inflation Gap = 3% - 2% = 1%
So by putting values, we have:
Federal funds rate target = 3% + 2% + 1/2 * (1%) + 1/2 * (1%)
= 6%
Case 2. Inflation rate target is 5%
So
Inflation Gap = 5% - 2% = 3%
So by putting values, we have:
Federal funds rate target = 5% + 2% + 1/2 * (3%) + 1/2 * (1%)
= 9%
Answer:
The Federal Reserve seeks to control inflation by influencing interest rates. When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down.
Explanation:
Grouper Corporation’s management wants to maintain a minimum monthly cash balance of $9,120. At the beginning of September, the cash balance is $13,988, expected cash receipts for September are $110,808, and cash disbursements are expected to be $131,100. How much cash, if any, must Grouper borrow to maintain the desired minimum monthly balance? Determine your answer by using the basic form of the cash budget. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Answer:
The answer is attached;
Explanation:
The loan will be required.
PB10-1 Determining Financial Effects of Transactions Affecting Current Liabilities with Evaluation of Effects on the Debt-to-Assets Ratio [LO 10-2, LO 10-5] Tiger Company completed the following transactions. The annual accounting period ends December 31. Jan. 3 Purchased merchandise on account at a cost of $24,000. (Assume a perpetual inventory system.) Jan. 27 Paid for the January 3 purchase. Apr. 1 Received $80,000 from Atlantic Bank after signing a 12-month, 5 percent promissory note. June 13 Purchased merchandise on account at a cost of $8,000. July 25 Paid for the June 13 purchase. July 31 Rented out a small office in a building owned by Tiger Company and collected eight months’ rent in advance amounting to $8,000. Dec. 31 Determined wages of $12,000 were earned but not yet paid on December 31 (Ignore payroll taxes). Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent. Required: For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. For each item, indicate whether the debt-to-assets ratio is increased or decreased or there is no change. (Assume Tiger Company’s debt-to-assets ratio is less than 1.0.)
Answer:
TIGER COMPANY
Jan 3 : Liabilities( Creditors) increase by $24,000
Asset( Inventory ) Increase by $24,000
debt - to asset ratio not affected
Jan 27: Asset (Cash ) will decrease by $24,000
Liabilities ( Creditors ) will decrease by $24,000
debt - to asset ratio not affected
April 1 : Liabilities will increasec by $80,000
Asset ( Cash) will increase by $80,000
debt - to asset ratio not be affected
June 13 : Liabilities ( Creditors) will increase by $8,000
Asset(Inventory) will increase by $8,000
debt - to asset ratio not be affected
July 25: Assee(Cash) will decrease by $8,000
Liabilities( Creditors) will decrease by $8,000
debt - to asset ratio not be affected
July 31: Cash( Asset) increase by $8,000
Liabilities( Deferred income ) will increase by $8,000
debt - to= asset ratio not be affected
Dec 31: Income will decrease by $12,000
Liabilities will decrease by $12,000
debt-to-asset ratio will be increased
Explanation:
Exercise 19-9 Income statement under absorption costing and variable costing LO P1, P2 IThe following information applies to the questions displayed below.J Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36.000 units at a price of $140 per unit. Manufacturing costs 60 Direct materials per unit Direct labor per unit 22 Variable overhead per unit $528,000 Fixed overhead for the year Selling and administrative cost Variable selling and administrative cost per unit 105,000 Fixed selling and administrative cost per year
Answer:
When you are calculating variable costing, COGS only includes variable costs. All fixed costs are included as period costs at the end. Fixed costs are not carried forward either.
Income Statement (variable costing) - J Cool Sky
total sales $140 x 36,000 units sold = $5,040,000
variable COGS ($3,240,000)
variable direct costs ($60 + $22) x 36,000 = ($2,952,000)
variable overhead ($8 x 36,000) ($288,000)
manufacturing margin $1,800,000
variable administrative and selling costs ($11 x 36,000) = ($396,000)
contribution margin $1,404,000
fixed costs ($633,000)
fixed overhead = ($528,000)
administrative and selling = ($105,000)
net income $771,000
In order to prepare the income statement using absorption costing, we must first determine COGS = [(total variable manufacturing costs + total fixed manufacturing costs) / total output] x units actually sold
COGS = {[($60 + $22 + $8) x 44,000] + $528,000} / 44,000] x 36,000 = [($3,960,000 + $528,000) / 44,000] x 36,000 = $102 x 36,000 = $3,672,000
Income Statement (absorption costing) - J Cool Sky
total sales $140 x 36,000 units sold = $5,040,000
COGS ($3,672,000)
gross profit $1,368,000
variable administrative and selling costs $11 x 36,000 = ($396,000)
fixed administrative and selling costs ($105,000)
net income $867,000
The difference between both accounting methods is that variable costing includes all fixed manufacturing costs during the period and the ending inventory is carried forward only at a lower cost since it only includes variable costs. Absorption costing calculates ending inventory using the total fixed costs, that is why COGS is lower.
For each good listed below, discuss whether the good is likely to entail either an external cost or an external benefit. In addition, discuss whether the private market is likely to provide more or less than the socially optimal quantity of the good.a. Vaccinations b. cigarettesc. abtibiotics
Answer:
Vaccinations : external benefit - the invention of a vaccine benefits a lot of people. It helps to cure for diseases and reduces the death rate in the society.
The private market is likely to produce less than the socially optimal quantity. This is because the cost associated with producing vaccinations are high and the private market would be unwilling to produce it as the aim of the private market would be to maximise profit.
cigarettes : external cost
Smoking cigarettes produces smoke which is harmful to other people apart from the smoker. Those around the person smoking can inhale the smoke and this can adversely affect their health. This is known as second hand smoking.
The private market is likely to provide more than social optimal Quanitity. This is because there's little or no cost associated with smoking.
antibiotics :
External benefit - antibiotics creates external benefit. It helps to cure for diseases and reduces the death rate in the society. It also reduces the rate at which others can be infected.
The private market is likely to produce less than the socially optimal quantity. This is because the cost associated with producing antibiotics are high and the private market would be unwilling to produce it as the aim of the private market would be to maximise profit.
Explanation:
Postive externality is when the benefits of economic activities to third parties exceeds the costs.
Activities that generate positive externality are usually under produced in the economy. The government can encourage production of goods and services that generate positive externality by giving subsidies. This would reduce cost of production.
When the cost of economic activities to third parties is greater than the benefits. Activities that generate negative externality are over produced in the economy. The government can discourage activities that generates negative externality by taxation. Imposing tax increases cost and discourages such activities.
I hope my answer helps you
Final answer:
Vaccinations create a positive externality leading to under-provision in the absence of government intervention, while cigarettes and antibiotics create negative externalities, often resulting in over-provision. Subsidies for vaccines and regulations or taxes for cigarettes and antibiotics can help correct these market failures and reach social optimization.
Explanation:
When discussing goods like vaccinations, cigarettes, and antibiotics, it is important to consider the externalities they may entail. Vaccinations tend to involve a positive externality, as they not only protect the individual but also reduce the potential of transmission to others, leading to a healthier society overall. In the absence of government intervention, the private market is likely to provide less than the socially optimal quantity of vaccinations because individuals do not account for the benefits their vaccination provides to others.
Cigarettes, on the other hand, have a negative externality through secondhand smoke and health-related costs that affect society. Consequently, the private market may provide more than the socially optimal quantity of cigarettes because the market price does not include these external costs borne by others. Similarly, antibiotics have a complex externality issue. The overuse leads to antibiotic resistance, which is a negative externality resulting in future treatments being less effective for others. Hence, without government regulation, the market might also over-supply antibiotics.
Government interventions such as subsidies for vaccinations can help reach a socially optimal level, reflecting the marginal social benefit. This does not only apply to flu shots but to vaccinations in general. Conversely, imposing taxes or restrictions on cigarettes and antibiotic prescriptions can help to address the negative externalities and bring the market closer to the socially optimal quantity of these goods.
It is not uncommon for magazine publishers to run multiple print jobs of the same magazine, in which each job contains changes in advertising copy to suit the target market requirements of various advertisers. In trade terms, what is the publisher creating?
Answer:
The correct answer is letter "D": split runs.
Explanation:
Split runs are magazines, newspapers, or any form of print communication media that includes two different versions of the same edition each one with different advertisements to find out which of the two has greater results. It is a marketing approach that looks for discarding promotional strategies that bring no revenue to the advertisers.
Final answer:
Magazine publishers create 'regional' or 'demographic editions' of magazines with varied advertising copy to meet the specific needs of different advertisers and markets, maintaining print media relevance in a digital age.
Explanation:
When magazine publishers run multiple print jobs of the same magazine with changes in advertising copy to suit the target market requirements of various advertisers, they are creating regional editions or demographic editions. This practice allows advertisers to tailor their messages to specific audiences, maximizing the impact and relevance of their advertising campaigns. In the context of a shifting media landscape where traditional print sources face challenges from new media, such as digital platforms, the ability to create targeted advertising through these editions helps to maintain the viability of print media in the competitive advertising market.
A worker is assigned three tasks, A, B, and C, each having a duration of 10 days. One approach to completing these tasks would be to focus on one at a time, complete it, and then move to the second, followed by the third. One multitasking approach would call for dividing each task in half and rotating from one to the other so that the first halves of A, B, and C are completed before the second halves of A, B, and C are completed (always in this order). What is the difference in the average completion times for the multitasked activities when compared to the one at a time approach
Answer:
There is no difference in the average completion times for the multitasked activities when compared to the one at a time approach
Explanation:
Let's consider the first approach, which involves focusing on one task at a time, complete it, and then move to the second, followed by the third. It will the worker 10 days to complete task A, another 10 days for task B and thereafter 10 days for C. So total number of days required to complete all three tasks using first approach is 10 days + 10 days + 10 days = 30 days
Let's consider the second approach which is the multitasking approach. The first task, one half of A takes 10 days/2 = 5 days, 5 days is spent next on Task B and then another 5 days on Task C. Therefore, during first 15 days one half of each task (A, B, and C) is completed. The next 15 days, following the same order of work the remaining half of each task is completed.
Total number of days to complete each tasks = Duration of completion of first half of each task + Duration of completion of the remaining second half of each task
Total number of days to complete each tasks = 15 days + 15 days = 30 days.
Therefore, the first approach and multitasking approach require the same number of days to complete each task. Therefore, there is no difference in the average completion times for the multitasked activities when compared to the one at a time approach
Final answer:
The difference in average completion times between the multitasking approach and focusing tasks one at a time is 5 days, with the multitasking approach leading to a longer average completion time of 25 days compared to 20 days for the sequential completion.
Explanation:
The scenario involves a worker assigned three tasks, A, B, and C, each with a duration of 10 days. To determine the difference in the average completion times when multitasking and focusing on tasks one at a time, we perform a simple calculation. Under the one-at-a-time approach, each task is completed sequentially, resulting in completion times of 10, 20, and 30 days for A, B, and C, respectively.
For the multitasking approach, the tasks are split in half and worked on in rotation. Thus, the first halves of A, B, and C would take 5, 10, and 15 days respectively, and the second halves would take an additional 5 days each, resulting in completion times of 20, 25, and 30 days for the full tasks of A, B, and C respectively.
To find the average completion time, you sum the completion times and divide by the number of tasks. The one-at-a-time approach has an average completion time of (10 + 20 + 30) / 3 = 20 days, while for multitasking it’s (20 + 25 + 30) / 3 = 25 days. Therefore, the difference in average completion time is 5 days, with multitasking taking longer.
In order to encourage employee ownership of the company’s $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 14% discount. During March, employees purchased 95,000 shares at a time when the market price of the shares on the New York Stock Exchange was $40 per share.
Required:
Prepare the appropriate journal entry to record the March purchases of shares under the employee share purchase plan.
Answer:
Dr Cash $3,268,000.00
Dr Compensation expense $532,000.00
Cr Common stock equity($1*95,000) $95,000
Cr paid-in capital in excess of par($40-$1)*95,000 $3,705,000
Explanation:
The cash received from employees as a result of the options is computed thus:
cash proceeds from options=$40*(1-14%)*95,000
=$40*(1-0.14)*95,000
=$40*0.86*95,000
=$3,268,000.00
The 14% discount on share price is to be treated as compensation expense as shown thus:
discount (compensation expense)=14%*$40*95,000
=$532,000.00
The appropriate entries would to debit cash with $3,268,000.00 as the increase in cash flows and debit of $532,000 to compensation expense.
The credit would be shown in common stock equity and paid-in capital in excess of par
Galaxy Co. distributes wireless routers to Internet service providers. Galaxy procures each router for $75 from its supplier and sells each router for $125. Monthly demand for the router is a normal random variable with a mean of 100 units and a standard deviation of 20 units. At the beginning of each month, Galaxy orders enough routers from its supplier to bring the inventory level up to 100 routers. If the monthly demand is less than 100, Galaxy pays $15 per router that remains in inventory at the end of the month. If the monthly demand exceeds 100, Galaxy sells only the 100 routers in stock. Galaxy assigns a shortage cost of $30 for each unit of demand that is unsatisfied to represent a loss-of-goodwill among its customers. Management would like to use a simulation model to analyze this situation.
a. What is the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month?
b. What percentage of total demand is satisfied?
Answer:
Simulation results:
- the average monthly profit resulting from its policy of stocking 100 routers at the beginning of each month is $4237.
- percentage of total demand is satisfied: 92%.
Explanation:
We have to consider three factors to calculate the profit:
Sales. Every unit sold adds (125-75)=$50 to the profit. We have to consider the condition that the maximum amount of units that can be sold is 100 units.The remains cost. If the monthly demand is under 100 units, the profit is reduced by $15 per each remaining unit.The shortage cost. For each unit demanded that exceeds the 100 units, the profit is reduced by $30.The equation can be expressed as:
[tex]Profit=50*Max(Q;100)-15*Max(100-Q;0)-30*Max(Q-100;0)[/tex]
A simulation with 10,000 trials is done, and the average monthly profit calculated for this policy is $4237.
The demand was calculated with the Excel function INT(NORMINV(RAND(),100,20)), to mimic a normal distribution with mean 100 and standard deviation 20.
b) The satisified demand is calculated for each trial as the minimum value between Q (quantity demanded) and 100, as if Q is bigger than 100, only 100 units of the demand are satisfied.
The percentage of total demand satisfied is:
[tex]\%Satisfied=\dfrac{Q_{satisf}}{Q}=\dfrac{918759}{997005}=0.9215=92\%[/tex]
Galaxy Co. distributes wireless routers to Internet service providers and stocks 100 routers at the beginning of each month. The average monthly profit and the percentage of total demand satisfied can be calculated based on the different scenarios. The profit and satisfaction percentage depend on the monthly demand, which is a normally distributed random variable with a mean of 100 units and a standard deviation of 20 units.
Explanation:Galaxy Co. distributes wireless routers to Internet service providers. Each router is procured for $75 and sold for $125. The monthly demand for the router is normally distributed, with a mean of 100 units and a standard deviation of 20 units. The company stocks 100 routers at the beginning of each month and incurs a cost of $15 for each router that remains in inventory at the end of the month if the demand is less than 100. If the demand exceeds 100, only the 100 routers in stock are sold. The shortage cost of $30 is assigned for each unit of unsatisfied demand.
a. The average monthly profit resulting from this policy can be calculated by considering the different scenarios:
If the monthly demand is 100 units or less, the profit is ($125 - $75) x 100 - $15 x (100 - demand);If the monthly demand is more than 100 units, the profit is ($125 - $75) x 100 - $15 x 0 - $30 x (demand - 100);If the demand is normally distributed, the average monthly profit can be calculated by considering the probabilities of different demand levels and corresponding profits. Using the mean and standard deviation of the demand, the average monthly profit can be determined.b. The percentage of total demand that is satisfied can be calculated by considering the different scenarios:
If the monthly demand is 100 units or less, the percentage of total demand satisfied is 100%;If the monthly demand is more than 100 units, the percentage of total demand satisfied is 100 / demand x 100; If the demand is normally distributed, the average percentage of total demand satisfied can be determined by considering the probabilities of different demand levels and corresponding percentages of total demand satisfied. Using the mean and standard deviation of the demand, the average percentage of total demand satisfied can be calculated.In 2018, preferred shareholders elected to convert 4.58 million shares of preferred stock ($39 million book value) into common stock. Rather than issue new shares, the company granted 4.58 million shares held in treasury stock to the preferred shareholders, with a total cost of $33 million.
a. Prepare a journal entry to illustrate how this transaction would have been recorded.
Answer:
The answer is given below;
Explanation:
Preferred Stock Dr.$39,000,000
Common Stock Cr.$33,000,000
Paid in capital in excess of par-Common stock (39,000,000-33,000,000) Cr.$6,000,000
As the book value of preferred stock is greater than the price paid at the time of conversion into common stock,therefore excess amount is paid in capital in excess of par for common stocks.As the preferred stock is reduced by their book value,therefore it is debited and common stock is credited with its cost.
Final answer:
Preferred shareholders converted their stock into common stock, using treasury shares for the transaction. The necessary journal entry debits Preferred Stock for $39 million, credits Common Stock for $33 million, and credits Additional Paid-in Capital for $6 million.
Explanation:
In 2018, the company's preferred shareholders elected to convert preferred stock into common stock. Given that the book value of the preferred stock being converted was $39 million and that treasury shares totaling $33 million were used for the conversion, the journal entry would be as follows:
This entry removes the preferred stock at its book value and recognizes the issuance of common stock at its carry amount, with any excess recorded in additional paid-in capital.
The records of Norton, Inc. show the following for July: Standard labor-hours allowed per unit of output 2.0 Standard variable overhead rate per standard direct labor-hour $ 35 Good units produced 60,000 Actual direct labor-hours worked 121,000 Actual total direct labor $ 5,551,000 Direct labor efficiency variance $ 45,000 U Actual variable overhead $ 4,041,000 Required: Compute the direct labor and variable overhead price and efficiency variances.
Answer:
(a) $106,000 Unfavorable
(b) $194,000 Favorable
(c) $35,000 Unfavorable
Explanation:
Given that,
Standard labor-hours allowed per unit of output = 2.0
Standard variable overhead rate per standard direct labor-hour = $ 35
Good units produced = 60,000
Actual direct labor-hours worked = 121,000
Actual total direct labor = $ 5,551,000
Direct labor efficiency variance = $45,000 U
Actual variable overhead = $4,041,000
Firstly, we need to calculate the standard rate. It is calculated by using the formula for Direct labor efficiency variance:
Direct labor efficiency variance = (Standard hour - Actual hour) × Standard rate
-$45,000 = (Standard hour* - Actual hour) × Standard rate
-$45,000 = (120,000 - 121,000) × Standard rate
($45,000 ÷ 1,000) = Standard rate
$45 = Standard rate
*Standard hours:
= Standard labor-hours allowed per unit of output × No. of units produced
= 2 × 60,000
= 120,000
(a) The direct labor rate variance is calculated by the following formula:
= (Standard rate × Actual direct labor-hours worked) - Actual total direct labor
= ($45 × 121,000) - $ 5,551,000
= $5,445,000 - $5,551,000
= $106,000 Unfavorable
(b) The variable overhead rate variance is calculated by the formula below:
= (Standard variable overhead rate per standard direct labor-hour × Actual direct labor-hours worked) - Actual variable overhead
= ($35 × 121,000) - $4,041,000
= $4,235,000 - $4,041,000
= $194,000 Favorable
(c) The Variable overhead efficiency variance is calculated by the following formula:
= (Standard hours - Actual direct labor-hours worked) × Standard Variable Overhead rate per hour
= (120,000 - 121,000) × $35
= $35,000 Unfavorable
Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1.) Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
2.) Prepare journal entries to record depreciation of the machine at December 31.
(a) Its first year in operations.
(b) The year of its disposal.
3.) Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
(a) It is sold for $20,500 cash.
(b) It is sold for $82,000 cash.
(c) It is destroyed in a fire and the insurance company pays $31,000 cash to settle the loss claim.
Answer:
Requirement 1
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
Requirement 2
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
Requirement 3(a)
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
Requirement 3(b)
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
Requirement 3(a)
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)
Explanation:
Requirement 1
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
Requirement 2
Depreciation Charge = (Cost - Salvage Value)/Useful Life
=(($152,000+$1,600)-$17,280)/6
=$22,720
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
Requirement 3(a)
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
Requirement 3(b)
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
Requirement 3(a)
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)
The initial cost of the machine was $153,600, with an annual depreciation of $22,720. In the event of a sale or a loss, there are different entries for each outcome; being sold for $20,500 or $82,000, and if it's destroyed with insurance reimbursing $31,000.
Explanation:The total initial cost of the machine for Onslow Co. can be calculated by summing up the purchase price, the cost to prepare it for use, and the cost of its installation platform. That will be $144,000 + $8,000 + $1,600 = $153,600.
1. Journal entries for machine's purchase, and costs to ready and install:
Debit: Machinery $153,600 Credit: Cash $153,600
Annually, the depreciation expense for the machine would be calculated by subtracting the salvage value from the total initial cost, and then dividing it by the useful life in years, which would be ($153,600-$17,280)/6 = $22,720
2. Journal entries for machine's depreciation on December 31:
Debit: Depreciation Expense $22,720 Credit: Accumulated Depreciation $22,720
For the fifth year, the accumulated depreciation would be $22,720 * 5 years = $113,600
3. Journal entries for machine's disposal under each assumption:
(a) Debit: Cash $20,500, Accumulated Depreciation $113,600, Loss on Disposal $19,500; Credit: Machinery $153,600 (b) Debit: Cash $82,000, Accumulated Depreciation $113,600, Gain on Disposal $41,400; Credit: Machinery $153,600 (c) Debit: Cash $31,000, Accumulated Depreciation $113,600, Loss on Disposal $9,000; Credit: Machinery $153,600 Learn more about Entries here:
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Branson works for a firm that is expanding into a completely new line of business. He has been asked to determine an appropriate WACC for an averageminusrisk project in the expansion division. Branson finds two publicly traded standminusalone firms that produce the same products as his new division. The average of the two firm's betas is 1.40. Further, he determines that the expected return on the market portfolio is 11.00% and the riskminusfree rate of return is 3.00%. Branson's firm finances 70% of its projects with equity and 30% with debt, and has a beforeminustax cost of debt of 8% and a corporate tax rate of 20%. What is the WACC for the new line of business?
Answer:
11.86%
Explanation:
First we need to calculate the return on equity(Re).
re = rf + B(rm-rf)
re = 0.03 + (1.4)*(0.11-0.03) => 0.142 or 14.2%.
Now the formula for WACC is,
WACC = (re * %of Equity) + ((rd * %of Debt)(1-tax rate))
Hence this is calculated as,
WACC = (0.70*0.142)+((0.30*0.08(1-0.20))
WACC = 11.86% or 0.1186.
Hope this helps. Goodluck.
Answer:
the WACC for the new line of business is 14.80%
Explanation:
Weighted Average Cost of Capital is the minimum return that a project must offer before it can be accepted.
Capital Source Weight Cost Total
Equity 70% 18.40% 12,88%
Debt 30% 6.40% 1,92%
Total 100% 14.80%
Calculation of Cost of Equity
The details available allow us to use the Capital Asset Pricing Model to find the Cost of Equity.
Cost of Equity = Risk Free Rate + Beta × Risk Premium
=3.00%+ 1.40×11.00%
= 18.40%
Calculation of Cost of Debt
We use the after tax Cost of Debt as follows :
Cost of Debt = Market Interest Rate × (1-tax rate)
= 8% × (1-0.20)
= 6.40%
A plant asset was purchased on January 1st for $50,000 with an estimated salvage value of $10,000 at the end of its useful life. The current year's Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is ________ years.
Answer:
The remaining useful life of the plant asset is 4 years.
Explanation:
Under the straight line method of depreciation, the depreciation expense charged every year on the asset remains constant. The formula for depreciation expense per year under straight line method is,
Depreciation expense = (Cost - salvage value) / estimated useful life
Using the available figures, we calculate the estimated useful life of the plant asset o be,
5000 = (50000 - 10000) / estimated useful life
Estimated useful life = 40000 / 5000
Estimated useful life is = 8 years
The accumulated depreciation tells the total depreciation that has been charged on the asset.
The numbers of years for which depreciation has already been charged are = 20000 / 5000 = 4 years
The remaining useful life of the plant asset = 8 - 4 = 4 years
Stefan Ceramics is in the business of selling ceramic vases. It has two departments, molding and finishing. Molding department purchases tungsten carbide and produces ceramic vases out of it. Ceramic Vases are then transferred to finishing department, which designs it as per the requirement of the customers. During the month of July, molding department purchased 720 kgs of tungsten carbide at $280 per kg. It started manufacture of 4,200 vases and completed and transferred 3,800 vases during the month. It has 400 vases in the process at the end of the month. It incurred direct labor charges of $1,500 and other manufacturing costs of $1,300, which included electricity costs of $300. Stefan had no inventory of tungsten carbide at the end of the month. It also had no beginning inventory of vases. The ending inventory was 50% complete in respect of conversion costs. Which of the following journal entry would record the tungsten carbide purchased and used in production during July?
Answer:
The following entries would be made.
Stefan Ceramics
Sr. No Particulars Debit credit
1 Merchandise Inventory 291600
Accounts Payable/ Cash 291600
For purchase of 720 kgs of tungsten carbide at $280 per kg (720*280=291600)
Accounts Payable or cash depending on whether material was purchased for cash or through accounts payable( creditors).
2 Work In Process 291600 Dr
Merchandise Inventory 291600 Cr
For use of 720 kgs of tungsten carbide . As there is no ending inventory the whole of the material is charged to production.
In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how many units are produced and sold. Variable costs, on the other hand, fluctuate directly with sales volume. The more you produce, the higher your variable costs. Let's try this out. Using your client’s crystal soap business, indicate which costs are fixed and which are variable by dragging them onto the correct side of the ledger.
The cost are as follows:
rent, raw materials, production, utilities, shipping, insurance,
Answer:
Fixed cost> rent, insurance, utilities
Variable cost> raw materials, production cost, shipping cost
Explanation:
Remember, it was mentioned that Fixed costs are costs that must be paid regardless of how many units are produced and sold; which implies that they do not change so frequently.
Thus, we would expect rent paid by Crystal soap to be fixed overtime, her insurance payments as well as utilities she pays for like power etc would also fall under fixed cost.
Variable costs, on the other hand, fluctuate directly with sales volume. Therefore, Crystal soap business would incur varying cost amount for raw materials, production cost, and their shipping cost.
What are equivalent units of production (EUP) for conversion costs? Hint: There are several questions about the process cost summary. Prepare the process cost summary in its entirety before attempting to answer the questions. Beginning work in process inventory (50 units): Units are 100% complete for materials and 60% complete for conversion Direct materials Conversion costs Total cost in beginning inventory $ 50 150 $ 200 Costs added this period: Direct materials (for 250 units started) Conversion costs Total costs added this period $850 1,920 $2,770
Answer:
Equivalent units of production for conversion cost is 180
Explanation:
An equivalent unit of production is an expression of the amount of work done by a manufacturer on units of output that are partially completed at the end of an accounting period. Equivalent units of production are the units in production multiplied by the percentage of those units that are complete (100 percent) or those that are in process.
Beginning work in progress (units) = 50
Units added this period = 250
Here we assume that all units are completed and transferred as there is no information on ending work in progress.
Direct material cost in the beginning inventory = $50
Direct material cost added this period = $850
Total direct material cost = 50 + 850 = $900
Conversion cost is given by direct labour plus overhead.
Conversion cost in the beginning inventory = $150 + $1920 = $2070
Conversion cost added this period = $200 + $2770
Total conversion cost = $5040
Equivalent units for direct materials = 300 (100% of 300)
Equivalent units for conversion cost = 60% of 300 = 180
Cost per equivalent unit :
Direct materials = 900/300 = $3
Conversion cost = 5040/180 = $28
Exercise 15-14 Presented below are two independent situations. 1. Flinthills Car Rental leased a car to Jayhawk Company for one year. Terms of the operating lease agreement call for monthly payments of $300. 2. On January 1, 2017, Throm Inc. entered into an agreement to lease 20 computers from Drummond Electronics. The terms of the lease agreement require three annual rental payments of $26,000 (including 11% interest) beginning December 31, 2017. The present value of the three rental payments is $63,536. Throm considers this a capital lease. Prepare the appropriate journal entry to be made by Jayhawk Company for the first lease payment.
Answer:
Part 1
Dr Lease rentals $300........ Expense
Cr Cash Account $300
Part 2
Dr Leased Equipment $63,536
Cr Finance Lease Liability $63,536
Explanation:
Part 1. Under the operating leases the lessee pays the monthly rentals which must be accounted for as an expense and the double entry is as under:
Dr Lease rentals $300........ Expense
Cr Cash Account $300
Part 2. Under the finance lease agreement, the lessee pays the value of the asset and the interest as well. So after the date of agreement when the asset is handed over the journal entry would be recording of the equipment received, which would written at its fair value or present value of the payments made. The journal entry would be:
Dr Leased Equipment $63,536
Cr Finance Lease Liability $63,536
The journal entry to be made by Jayhawk Company for the first lease payment under an operating lease agreement would be a debit to Lease Expense and a credit to Cash (or Accounts Payable), reducing the company's cash or payable balance by $300.
Explanation:The subject of the question pertains to accounting for lease payments, specifically in the context of operating leases and capital leases. In the given situation, Jayhawk Company has entered into an operating lease agreement with Flinthills Car Rental for a car. Each month, Jayhawk Company has to pay a lease amount of $300 under this agreement.
The journal entry to be made by Jayhawk Company for the first lease payment would be a debit to Lease Expense and a credit to Cash (or Accounts Payable, depending on when the payment is actually made). This can be represented as follows:
Lease Expense..........300
.......Cash..........300
This entry reflects the payment of the lease amount, thus increasing the company's expenses but decreasing its cash or payable balance. This also follows the matching principle in accounting, which stipulates that an expense should be recognized in the period it is incurred.
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(b) The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2020. Opposite each of the following transactions indicate the account title to which each expenditure should be debited. No. Expenditures Plant Assets 1. Paid $5,000 of accrued taxes at time plant site was acquired. select an account title 2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. select an account title 3. Paid $850 sales taxes on new delivery truck. select an account title 4. Paid $17,500 for parking lots and driveways on new plant site. select an account title 5. Paid $250 to have company name and advertising slogan painted on new delivery truck. select an account title 6. Paid $8,000 for installation of new factory machinery. select an account title 7. Paid $900 for one-year accident insurance policy on new delivery truck. select an account title 8. Paid $75 motor vehicle license fee on the new truck.
Answer:
Please see explanation below
Explanation:
1. Paid $5,000 of accrued taxes at time plant site was acquired. - Debit accrued taxes account $5000, credit cash expenses account $5000.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit. - Debit freight and insurance in transit $200, credit cash expenses $200.
3. Paid $850 sales taxes on new delivery truck. - Debit sales tax $850, credit expenses $850.
4. Paid $17,500 for parking lots and driveways on new plant site. - Debit land improvements $17,500, credit cash expenses $17,500.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck. - Debit advertisement $250, credit cash expenses $250.
6. Paid $8,000 for installation of new factory machinery. - debit installation costs (under plants and machinery $8000.
7. Paid $900 for one-year accident insurance policy on new delivery truck. - Debit insurance $900, credit cash expenses $900.
8. Paid $75 motor vehicle license fee on the new truck. - Debit licensing fees $75, credit cash expenses $75.
Answer:
Refer to the attached file for the detailed breakdown:
Hi-Tech, Inc., reports net income of $66.0 million. Included in that number are depreciation expense of $5.6 million and a loss on the sale of equipment of $1.6 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.6 million, $3.6 million, and $4.6 million, respectively. What are Hi-Tech's net cash flows from operating activities? (List cash outflows and any decrease in cash as negative amounts. Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).)
Answer:
Net cash flows from operating activities$69.6
Explanation:
Hi-Tech, Inc
Cash Flows from Operating Activities
Net income $66
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation expense 5.6
Loss (on sale of equipment)1.6
Increase in accounts receivable(2.6)
Increase in inventory(4.6)
Increase in accounts payable 3.6
Net cash flows from operating activities$69.6
Therefore Hi-Tech's net cash flows from operating activities will be $69.6
Answer:
Hi-Tech's net cash flows from operating activities is $69.6 million
Explanation:
Prepare the Cash Flow from Operating Activities Section Using the Indirect method as follows :
Cash Flow from Operating Activities
Net income $66.0 million
Adjustment of Non-cash items :
depreciation $5.6 million
loss on the sale of equipment $1.6 million
Adjustment of Working Capital Items :
Increase in accounts receivable ( $2.6 million)
Increase in accounts payable $3.6 million
Increase in accounts inventory ( $4.6 million)
Net Cash Flow from Operating Activities $69.6 million