The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2020, its first year of operations. The enacted income tax rate is 20% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000 1. Excess tax depreciation will reverse equally over a four-year period, 2021-2024. 2. It is estimated that the litigation liability will be paid in 2024. 3. Rent revenue will be recognized during the last year of the lease, 2024. 4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2024. Instructions (a) Prepare a schedule of future taxable and (deductible) amounts. (b) Prepare a schedule of the deferred tax (asset) and liability at the end of 2020. (c) Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit). (d) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2020

Answers

Answer 1

Answer:

income tax expense 156,000 debit

   deferred income tax liability  70,000 credit

   income tax payable               86,000 credit

schedule:

                      2021          2022    2023   2024

depreciation 120,000 120,000 120,000 120,000

litigation                                                     (70,000)

rent revenue                                                60,000

taxable income 120,000 120,000 120,000 110,000

                        2021       2022      2023           2024

beginning          70,000   46,000   22,000        (2,000)

dep adjustment (24,000) (24,000)  (24,000)   (24,000)

rent revenue                                                         12,000

litigation                                                               14,000

ending                46,000   24,000     (2,000)*             0

Explanation:

pretax income                         800,000

permanent difference:

municipal bonds interest        (20,000)

accounting taxable income   780,000

temporary difference:

depreciation expense (480,000)

litigation                          70,000

rent revenue                   60,000

taxable income                      430,000

480,000 / 4 = 120,000

we have income tax payable: 430,000 x 20% = 86,000

income tax expense 780,000 x 20% = 156,000

deferred tax income laibility 156,000 - 86,000 = 70,000

*on the tax schedule as the value switches to negative we no longer have a tax liability but asset.

the municipal bonds are not considered into calcualtikon as they are tax exempt therefore do not create temporary difference.

Answer 2

a. Deductible Amounts:

- Excess Tax Depreciation (reversal): 120,000 ($480,000 / 4)

- Litigation Accrual (payment): 0

- Unearned Rent Revenue (recognition): 60,000

Taxable Amounts:

- Excess Tax Depreciation (reversal): 120,000 annually

- Litigation Accrual (payment): 0 annually

- Unearned Rent Revenue (recognition): 0 annually

- Interest Income from New York Municipal Bonds: 20,000 annually

b. Deferred Tax Asset:

- Excess Tax Depreciation (reversal): 120,000

Deferred Tax Liability:

Net Deferred Tax Liability: 14,000 (Liability) + 12,000 (Liability) - 120,000 (Asset) = 6,000 (Liability)

c. Net Deferred Tax Expense (Benefit) = 6,000 (Liability)

d. Deferred Tax Expense (Income Statement) = 6,000 (from part c)

Income Taxes Payable (Balance Sheet) = 160,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 154,000

Journal Entry:

- Debit Income Tax Expense: 160,000

- Debit Deferred Tax Expense: 6,000

- Credit Income Taxes Payable: 154,000

Schedule of Future Taxable and (Deductible) Amounts:

Year 2020:

Taxable Amounts:

- Pretax Accounting Income: 8,00,000

- Interest Income from New York Municipal Bonds: 20,000

Deductible Amounts:

- Excess Tax Depreciation (reversal): 1,20,000 (4,80,000 / 4)

- Litigation Accrual (payment): 0

- Unearned Rent Revenue (recognition): 60,000

Year 2021-2024 (Estimates):

Schedule of Deferred Tax (Asset) and Liability at the End of 2020:

Deferred Tax Liability:

- Litigation Accrual (payment): 14,000 (70,000 x 20%)

- Unearned Rent Revenue (recognition): 12,000 (60,000 x 20%)

Since there is no beginning deferred tax asset or liability, the Net Deferred Tax Expense (Benefit) for 2020 is equal to the change in the deferred tax liability:

Net Deferred Tax Expense (Benefit) = Change in Deferred Tax Liability

Net Deferred Tax Expense (Benefit) = 6,000 (Liability)

Journal Entry to Record Income Tax Expense, Deferred Taxes and Income Taxes Payable for 2020:

Income Tax Expense (Income Statement) = 8,00,000 (Pretax Accounting Income) x 20% = 1,60,000

Deferred Tax Expense (Income Statement) = 6,000 (from part c)

Income Taxes Payable (Balance Sheet) = 1,60,000 (Income Tax Expense) - 6,000 (Deferred Tax Expense) = 1,54,000

This entry records the income tax expense for 2020, the deferred tax expense and the income taxes payable for the year.

For similar questions on Tax

https://brainly.com/question/28798067

#SPJ3


Related Questions

A fire destroyed a large percentage of the financial records of a health system. You have the task of piecing together information to prepare a financial report. You have found the profit margin to be 5.4 percent. The sales were $4 million on total assets of $2 million and the debt financing was $800,000. Using the Du Pont equation, what was the organization's return on equity?

Answers

Answer:

18.0

Explanation:

Net income = profit margin * sales = 5.4% * 4 million = 0.216 million

Equity = total assets - debt = 2 million - 800,000 = 1.2 million

ROE = net income / equity = 0.216 / 1.2 = 18%

So answer is 18.0%

"An entity has two long-term construction contracts, one of which qualifies for revenue recognition over time and the other which does not (and so requires revenue recognition upon completion of the contract). For either of these two contracts, what account would be debited when preparing the journal entry to record billings
Qualifies Doesn't qualify
a. Billings Construction Receivable Cash
b. Construction Receivable Construction Receivable
C. Cash Billings Construction in Progress
d. Constructions in Progress Constructions in Progress
Pc Multiple Choice
A) Option a
B) Option c
C) Option d

Answers

Answer:

b. Construction Receivable Construction Receivable

Explanation:

Construction Receivable will be debited in both situations to record the billings.

Silver​ Crafts, Inc. purchases and sells bracelets. The following information summarizes the​ company's operating activities for the​ year: Selling and Administrative Expenses $ 5 comma 500 Purchases 159 comma 000 Sales Revenue 788 comma 000 Merchandise​ Inventory, January 1 2 comma 300 Merchandise​ Inventory, December 31 38 comma 900 If the company sold 7 comma 800 units of bracelets during the​ year, how much is the cost for one​ bracelet?

Answers

Answer:

$15.69

Explanation:

The computation of cost for one​ bracelet is shown below:-

Total cost = Beginning inventory + Purchases - Ending inventory

= $2,300 + $159,000 - $38,900

= $122,400

Now,

Cost for one​ bracelet = Total cost ÷ Units of Bracelets

= $122,400 ÷ $7,800

= $15.69

So, for computing the cost of one bracelet we simply divide total cost by units of bracelet.

Suppose the 2014 financial statements of 3M Company report net sales of $21.9 billion. Accounts receivable (net) are $3.43 billion at the beginning of the year and $3.51 billion at the end of the year.1?Compute 3M’s receivable turnover. (Round answers to 1 decimal place, e.g. 12.5.)Accounts receivable turnover ratio ______Suppose the 2014 financial statements of 3M Ctimes2)Compute 3M’s average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)Average collection period Suppose the 2014 financial statements of 3M C________days

Answers

Answer:

The answer is attached for ready reference.

Explanation:

The menu at Joe​'s coffee shop consists of a variety of coffee​ drinks, pastries, and sandwiches. The marginal product of an additional worker can be defined as the number of customers that can be served by that worker in a given time period. Joe has been employing one​ worker, but is considering hiring a second and a third. Explain why the marginal product of the second and third workers might be higher than the first. The marginal product of the

Answers

Answer:

The marginal product of the second and third workers might be increasing because workers can take advantage of existing machinery which would cause output to increase at an alarming rate.

"The correct explanation is that the marginal product of the second and third workers might be higher than the first due to the concept of increasing marginal returns.

When Joe hires the first worker, that worker can only handle a certain number of tasks at once, given the constraints of time and resources. However, when a second worker is added, the two workers can specialize and divide tasks more efficiently, leading to an increase in the total output (number of customers served) that is greater than the output of the first worker alone. This is because the second worker not only contributes their own productivity but also enhances the productivity of the first worker by allowing for a better division of labor and reduced idle time.

Similarly, when a third worker is added, the potential for specialization and division of labor increases further. The third worker can take on additional tasks or support the first two workers in serving more customers, which can lead to another increase in total output. The marginal product of the third worker might still be high if there is enough work to be done and if the additional worker does not lead to overcrowding or coordination problems.

However, it's important to note that the principle of increasing marginal returns does not hold indefinitely. After a certain point, adding more workers will lead to diminishing marginal returns, where the additional output from each new worker starts to decrease. This happens because each new worker contributes less to the total output as the law of diminishing returns sets in due to factors such as limited space, equipment, and coordination challenges among a larger number of workers.

In summary, the marginal product of the second and third workers can be higher than the first due to the benefits of specialization and division of labor, which lead to increasing marginal returns up to a certain point. Beyond that point, the marginal product of additional workers will likely decrease due to the law of diminishing returns."

Norma Company had 10,000 units in work in process at January 1 that were 50 percent complete. During January, 25,000 units were completed. At January 31, 6,000 units remained in work in process that were 80 percent complete. Using the average cost method, the equivalent units for January were:
a. 31,000.
b. 29,800.
c. 35,000.
d. 36,000.

Answers

Answer:

b. 29,800.

Explanation:

Number of units out in January =  25,000 units completed during month  + 80% of 6,000 units completed at month end  

= 25,000 + 4,800  

= 29,800  

Answer:

the equivalent units for January were: b. 29,800.

Explanation:

Equivalent units concept is the measurement of physical units of output in terms of their completion percentage on work done on them.

Calculation of equivalent units for January

Units were completed ( 25,000 units×100%)                  =  25,000

Units of ending work in process ( 6,000 units ×80%)    =     4,800

Total                                                                                   =   29,800

Bill Amends, owner of Bonita Estate Inc., buys and sells commercial properties. Recently, he sold land for $2,950,000 to the Blackhawk Group, a developer that plans to build a new shopping mall. In addition to the $2,950,000 sales price, Blackhawk Group agrees to pay Bonita Estate Inc. 1% of the retail sales of the mall for 10 years. Blackhawk estimates that retail sales in a typical mall project is $960,000 a year. Given the substantial increase in online sales that are occurring in the retail market, Bill had originally indicated that he would prefer a higher price for the land instead of the 1% royalty arrangement and suggested a price of $3,180,000. However, Blackhawk would not agree to those terms.
Required:
1. What is the transaction price for the land and related royalty payment that Bonita Estate Inc. should record?

Answers

Answer:

The transaction price for the land and related royalty payment is $2,950,000

Explanation:

Transaction cost is a fixed and certain cost where an exchange is made. Here the specific cost is $2,950,000 only, since this is the undefined selling cost. 1% commission ought not be considered here, on the grounds that it depends on deals and the deal figure may change in future. In this manner, the measure of commission isn't sure.  Therefore, the transaction cost is $2,950,000

Answer: $3,046,000

Explanation: Selling price = $2,950,000

Annual sales in the mall = $960,000

Amount owed Bill in royalty = 1% of yearly sales in the next 10years

Amount proposed by bill instead of royalty based system = $3,180,000.

Royalty owed Bill yearly

= 1 × $960,000 / 100

= $9600

Royalty owed Bill in 10year

= Yearly royalty × 10years

= $9600 × 10

= $96,000

transaction price for the land and related royalty payment that Bonita Estate Inc. should record.

This would be selling price + royalty due for 10years

= $2,950,000 + $96,000

= $3,046,000

Franklin Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 185,000 shares of stock outstanding. Under Plan II, there would be 135,000 shares of stock outstanding and $1.92 million in debt outstanding. The interest rate on the debt is 7 percent and there are no taxes. Use MM Proposition I to find the price per share.

Answers

Answer:

The correct answer is $38.40.

Explanation:

According to the scenario, the computation of the given data are as follows:

Plan 1 shares = 185,000 shares

Plan 2 Shares = 135,000 shares

Debt = $1,920,000

So, we can calculate the price per share by using following formula:

Price per share = Debt ÷ ( Plan 1 shares - plan 2 shares)

= $1,920,000 ÷ ( 185,000 - 135,000)

= $1,920,000 ÷ 50,000

= $38.40

Goodday is merging with Baker, Inc. Goodday has debt with a face value of $80 and Baker has debt with a face value of $40. The pre-merger values of the firms given two economic states with equal probabilities of occurrence are as follows: Picture What will be the gain or loss to the current shareholders of Goodday if the merger provides no synergy?

Answers

Answer:

Therefore  the gain or loss to the current shareholders of Goodday if the merger provides no synergy is -$10

Explanation:

Given:

The Total debt remains same after merger at Pre-merger value = $80 + $40 = $120

The  Value of entities together in Economic state 1 = $160 + $20 = $180

Net equity in economic state 1 = Value of entities – total debt

= $180 - $120 = $60

Then,

The Value of entities in Economic state 2 = $40 + $80 = $120

Net equity in economic state 2 =

= $120 - $120 = $0

The Both states are equally possible.

Expected value of combined entity = ($60 + $0)/2 = $30

Market value of Goodday equity before merger = $40

Synergy effect = Expected value of combined entity - Market value of Goodday equity before merger= $30 - $40 = -$10

NNR Inc.'s balance sheet showed total current assets of $1,875,000 plus $4,225,000 of net fixed assets. All of these assets were required in operations. The firm's current liabilities consisted of $475,000 of accounts payable, $375,000 of 6% short-term notes payable to the bank, and $150,000 of accrued wages and taxes. Its remaining capital consisted of long-term debt and common equity. What was NNR's total investor-provided operating capital?

Answers

Answer:

$5,475,000

Explanation:

The computation of the total investor provided operating capital is shown below:

Total investor provided operating capital = Long term Debt & Equity + short term note payable

where,

Long term debt & equity = Total assets - current liabilities

where,

Total assets = Current assets + net fixed assets

= $1,875,000 + $4,225,000

= $6,100,000

And, the current liabilities = Account payable + short term note payable + accrued wages and taxes

= $475,000 + $375,000 + $150,000

= $1,000,000

So, the long term debt & equity is

= $6,100,000 - $1,000,000

= $5,100,000

Now the total investor-provided operating capital is

= $5,100,000 + $375,000

= $5,475,000

We simply applied the above formula

A firm has 5,000,000 shares of common stock outstanding, each with a market price of $8.00 per share. It has 25,000 bonds outstanding, each selling for $1,100 with a $1,000 face value. The bonds mature in 12 years, have a coupon rate of 9 percent, and pay coupons semi-annually. The firm's equity has a beta of 1.4, and the expected market return is 15 percent. The tax rate is 35 percent and the WACC is 14 percent. Calculate the risk-free rate. Group of answer choices 2.05 percent 1.19 percent 20.18 percent 15.27 percent

Answers

Answer:

2.05 percent

Explanation:

WACC is given by:

= weight of equity*cost of equity + weight of debt*cost of debt  

total = $67500000

weight of equity is given by:

= $40000000/(5000000*$8.00 + 25000*$1100)

= ($40000000/$67500000)*100

= 59.26%

weight of debt = ($27500000/$67500000)*100

                         = 40.74%

after tax cost of debt = cost of debt(1 - tax rate)

                                   = 0.09(1 - 0.35)

                                   = 5.85%

WACC = (0.5926*cost of equity) + (0.4074*5.85%)

0.14 = (0.5926*cost of equity) + 0.0238329

cost of equity = 0.14 - 0.0238329 /0.5926

                       = 19.60%

cost of equity = risk free rate + beta(market return - risk free rate)

          19.60% = risk free rate + 1.4(15% - risk free rate)          

          19.60% = risk free rate +21% - 1.4*risk free rate

0.4*risk free rate = 1.40%

      risk free rate = 1.40%/0.4

      risk free rate = 2.05%

Therefore, The risk-free rate is 2.05%

Northwoods Backpackers is a retail catalog store in Vermont that specializes in outdoor clothing and camping equipment. Phone orders are taken each day by a large pool of computer operators, some of whom are permanent and some temporary. A permanent operator can process an average of 76 orders per day, whereas a temporary operator can process an average of 53 orders per day. The company averages at least 600 orders per day. The store has 10 computer workstations. A permanent operator processes about 1.3 orders with errors each day, whereas a temporary operator averages 4.1 orders with errors daily. The store wants to limit errors to 24 per day. A permanent operator is paid $81 per day, including benefits, and a temporary operator is paid $50 per day. The company wants to know the number of permanent and temporary operators to hire to minimize costs.


Formulate an integer programming model for this problem and solve it by using the computer.

Answers

Final answer:

The integer linear programming model for the question can be formed as Minimize Z = 81P + 50T subject to the constraints 76P + 53T >= 600, 1.3P + 4.1T <= 24, and P + T <= 10. This problem is then solved using a computer software tool.

Explanation:

This problem can be approached with linear programming, a mathematical method used for optimizing resource allocation. In this case, the resources are the permanent and temporary operators, and the goal is to minimize costs while meeting business constraints.

Let 'P' represent the number of permanent operators and 'T' the number of temporary operators,The Constraint for orders: 76P + 53T >= 600,The Constraint for errors: 1.3P + 4.1T <= 24, andThe Constraint for Workstations: P + T <= 10.

A linear programming problem considering the above factors can be formed to minimize cost, i.e., Minimize Z = 81P + 50T Given the constraints.

You can then solve this integer linear programming problem using computer software like Excel Solver, LINGO, or similar tools to obtain optimal values of P and T, i.e., the number of permanent and temporary operators to hire.

Learn more about linear programming here:

https://brainly.com/question/34674455

#SPJ11

An integer programming model was formulated to minimize costs for Northwoods Backpackers. The model incorporates constraints for order processing, error limits, and workstations. Integer values for permanent and temporary operators are determined using a solver to find the optimal solution.

To determine the optimal number of permanent and temporary operators to minimize costs while meeting order and error constraints, we can set up an integer programming model:

Objective Function:

Minimize Cost: 81P + 50T

Constraints:

Order capacity: 76P + 53T ≥ 600Error limit: 1.3P + 4.1T ≤ 24Workstation limit: P + T ≤ 10Non-negativity: P, T ≥ 0 (P and T are integers)

Definitions:

P = number of permanent operatorsT = number of temporary operatorsUsing a solver or specialized software, find integer values of P and T that minimize the cost function, 81P + 50T, while satisfying all constraints.

When a recessionary gap occurs,

a. Real output exceeds the natural level of output, and unemployment exceeds its natural rate
b. Real output exceeds the natural level of output, and unemployment is less than its natural rate.
c. Real output is less than the natural level of output, and unemployment exceeds its natural rate.
d. Real output is less than the natural level of output, and unemployment is less than its natural rate.

Answers

Answer: Real output is less than the natural level of output, and unemployment exceeds its natural rate. (C)

Explanation:

The recessionary gap is a term in macroeconomic which describes an economy that is operating at a level which is below its full-employment equilibrium. The recessionary gap is also known as a contractionary gap, it is the difference between the potential gross domestic product of a country at full employment and its current employment level which puts pressure on the price in the long run.

The recessionary gap is seen during economic downturn and usually associated with increase in unemployment.

The accounting depmiment at Aglaya Telecom records an average of 5,000 transactions per hour. By cost-benefit analysis, managers have concluded that the maximum acceptable loss of data in the event of a system failure is 50,000 transactions. The firm's recovery point objective is therefore (by relying on redundant systems) ________.

Answers

Answer:

10 hours

Explanation:

A recovery point objective (RPO) is the maximum acceptable amount of data loss measured in time. It is the age of the files or data in backup storage required to resume normal operations if a computer system or network failure occurs. It helps system administrators to determine appropriate disaster recovery policies and procedures and decide which backup and recovery technologies to employ.

Worst case RPO =  Maximum Acceptable Loss/Average Transactions per hour

Worst case RPO = 50,000 / 5000 = 10

The firm's recovery point objective is therefore 10 hours.

The ledger of Sage Hill Inc. at the end of the current year shows Accounts Receivable $78,000; Credit Sales $855,000; and Sales Returns and Allowances $36,000. (a) If Sage Hill uses the direct write-off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Sage Hill determines that Matisse’s $750 balance is uncollectible. (b) If Allowance for Doubtful Accounts has a credit balance of $1,150 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 9% of accounts receivable. (c) If Allowance for Doubtful Accounts has a debit balance of $450 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 7% of accounts receivable.

Answers

Answer and Explanation:

The journal entries are shown below:

(a) Bad debt expense $750  

           To Accounts receivable  $750

(Being the bad debt expense is recorded)

(b) Bad debt expense $5,870  

           To Allowance for doubtful accounts  $5,870

(Being the allowance is recorded)

The computation is below:

Bad debt expense = Accounts receivable × estimated percentage - credit balance in allowance for doubtful accounts

= $78,000 × 9% - $1,150

= $5,870

(c) Bad debt expense $5,910  

        To Allowance for doubtful accounts  $5,910

(Being the allowance is recorded)

The computation is below:

Bad debt expense = Accounts receivable × estimated percentage + debit balance in allowance for doubtful accounts

= $78,000 × 7% + $450

= $5,910

Zellars, Inc. is considering two mutually exclusive projects. A and B. Project A costs $75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 in year one, $37,000 in year two, $26,000 in year three and $25,000 in year four. Zellars, Inc. required rate of return for these projects is 10%. The net present value for Project B is:


A. $18, 097

B. $42,000

C. $34,238

D.$21,378

Answers

Answer:

A. $18, 097 

Explanation:

The net present value is the present value of after tax cash flows from an investment less the amount invested.

The npv can be calculated using a financial calculator

Cash flow in year 0 = $-80,000

Cash flow in year 1 = $34,000

Cash flow in year 2 = $37,000

Cash flow in year 3 = $26,000

Cash flow in year 4 = $25,000

I = 10%

NPV = $18,097.12

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

Transactions for Jayne Company for the month of June are presented below.
June 1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work done
Journalize the transactions.

Answers

Answer and Explanation:

The Journal entry is shown below:-

June 1

Cash Dr,                  $5000  

        To Common stock        $5000

(Being issue of common stock for cash is recorded)  

June 2

Equipment Dr,          $1100  

    To Accounts payable      $1100

(Being purchase of equipment on credit is recorded)  

June 3

Rent expense Dr,     $740  

       To Cash                       $740

(Being rent expense is recorded)  

June 12

Accounts receivable Dr,   $700  

       To Welding service revenue $700

(Being welding service revenue is recorded)

Final answer:

The given transactions can be journalized as common stock issuance, equipment purchase, rent payment, and bill sent for welding work.

Explanation:

The given transactions can be journalized as follows:

June 1: Common Stock Dr. $5,000, Cash Cr. $5,000

June 2: Equipment Dr. $1,100, Accounts Payable Cr. $1,100

June 3: Rent Expense Dr. $740, Cash Cr. $740June 12: Accounts Receivable Dr. $700, Service Revenue Cr. $700

In the first transaction, common stock is issued in exchange for $5,000 in cash. In the second transaction, equipment is purchased on account for $1,100. In the third transaction, the rent of $740 is paid. Finally, in the fourth transaction, a bill for welding work done is sent to Wil Wheaton for $700.

Learn more about Journalizing transactions here:

https://brainly.com/question/30273292

#SPJ12

Troy Engines, Ltd., Manufactures A Variety Of Engines For Use In Heavy Equipment. The Company Has Always Produced All Of The Necessary Parts For Its Engines, Including All Of The Carburetors. An Outside Supplier Has Offered To Sell One Type Of Carburetor To Troy Engines, Ltd., For A Cost Of $31 Per Unit. To Evaluate This Offer, Troy Engines, Ltd., ...
This problem has been solved!
See the answer
Troy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced all of the necessary parts for its engines, including all of the carburetors. An outside supplier has offered to sell one type of carburetor to Troy Engines, Ltd., for a cost of $31 per unit. To evaluate this offer, Troy Engines, Ltd., has gathered the following information relating to its own cost of producing the carburetor internally:



Per Unit 15,000 Units
Per Year
Direct materials $ 9 $ 135,000
Direct labor 11 165,000
Variable manufacturing overhead 2 30,000
Fixed manufacturing overhead, traceable 6* 90,000
Fixed manufacturing overhead, allocated 13 195,000
Total cost $ 41 $ 615,000
*40% supervisory salaries; 60% depreciation of special equipment (no resale value).


Required:
1a.
Assuming that the company has no alternative use for the facilities that are now being used to produce the carburetors, compute the total cost of making and buying the parts. (Round your Fixed manufacturing overhead per unit rate to 2 decimals.)

Answers

Answer:

Total relevant cost for making the parts =$387,400

Total relevant cost for buying the parts = $465,000

Explanation:

The computation of total cost of making and buying the parts is shown below:-

                                           Make         Buy

Cost of purchasing             0               $465,000

                                                            (15,000 × $31)

Direct material                $135,000     0

Direct labor                     $165,000     0

Variable manufacturing

overhead                          $30,000     0

Fixed manufacturing

overhead                          $57,240     0

Total relevant cost           $387,400     $465,000

Which of the following statements do not correctly describe push manufacturing? (1). The serial operations are independently optimized (2). Compared to pull, push manufacturing is a relatively new concept (3). Forecasts of demands is a significant factor in deciding on material flow (4). It focuses on maximizing inventory investment

Answers

Answer:

Option 3                      

Explanation:

Simply put, Push manufacturing doesn't even use consumer's demand for manufacture and continues to manufacture the content, thereby growing the inventory cost. Thus demand projections are not an important basis for determining on product flow. Hence, from the above we can conclude that the correct option is 3.

Prepare the journal entries to record the following transactions on Ivanhoe Company’s books using a perpetual inventory system. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) (a) On March 2, Ivanhoe Company sold $882,900 of merchandise to Metlock Company on account, terms 3/10, n/30. The cost of the merchandise sold was $527,900. (b) On March 6, Metlock Company returned $107,600 of the merchandise purchased on March 2. The cost of the merchandise returned was $66,800. (c) On March 12, Ivanhoe Company received the balance due from Metlock Company.

Answers

Final answer:

To record the transactions in Ivanhoe Company's books, you would make the following journal entries:

Accounts Receivable     882,900

         Sales Revenue                                  882,900          

    2.  Cost of Goods Sold        527,900

          Inventory                                          527,900  

     3. Metlock Company           107,600

        Accounts Receivable                          107,600

     4. Inventory                          66,800

         Cost of Goods Sold                             66,800  

    5. Cash                                 813,645
          Sales Discount                  21,255        

          Accounts Receivable                          835,900

Explanation:(a) Journal entry to record the sale:
Accounts Receivable: Metlock Company     882,900
     Sales Revenue                 882,900
  Cost of Goods Sold                       527,900
     Inventory                                527,900(b) Journal entry to record the return:
Metlock Company                             107,600
     Accounts Receivable                 107,600
  Inventory                                          66,800
     Cost of Goods Sold                        66,800(c) Journal entry to record the payment:
Cash                                                        813,645
     Sales Discount                                          21,255
     Accounts Receivable: Metlock Company  835,900

Learn more about Preparing journal entries here:

https://brainly.com/question/28764701

#SPJ6

Pauline Found​ Manufacturing, Inc., is moving to kanbans to support its telephone​ switching-board assembly lines. Determine the size of the kanban for subassemblies and the number of kanbans needed. Setup cost ​$30 Annual holding cost ​$100 per subassembly Daily production 25 subassemblies Annual usage 4 comma 500 ​(50 weekstimes5 days eachtimesdaily usage of 18 ​subassemblies) Lead time 16 days Safety stock 2 ​days' production Kanban container size​ = 98 units ​(round your response to the nearest whole​ number). Number of kanbans needed​ = 3 kanbans ​(round your response to the nearest whole​ number).

Answers

Answer:

Container size = 52

Number of kanbans required ≈ 7 kanbans

Explanation:

Given the data in the question, to find the Kanban container size, we calculate the economic order quantity (EOQ) using the formula below :

[tex]EOQ = \sqrt{(2*annual usage A*setup cost S)/annual holding cost H}[/tex]

Where

Annual usage A = 4500

Setup cost S = $30

Annual holding cost H = $100

Container size = √{(2×4500×30)÷100}  = √2700 = 51.96 ≈ 52

Container size = 52

Number of Kanbans required = (demand during lead time + safety stock) / container size

Where:

Demand during lead time = lead time (16) * daily usage (18)

Demand during lead time = 16*18 = 288

Safety stock = 2 days production, where daily production is 25 subassemblies.

Safety stock = 2*25 = 50 units

Container size = 52 units

Imputing the data into the equation, we obtain :

Number of kanbans required = (288 + 50)/52 = 338/50 = 6.5

Number of kanbans required ≈ 7 kanbans

Safety stock is a word used by logicians to define a quantity of additional stock kept on hand to avoid stock outs due to supply and demand fluctuations.

Container size = 52Number of kanbans required ≈ 7 kanbans

Given the data in the question, to find the Kanban container size, we calculate the economic order quantity (EOQ) using the formula below :

[tex]EOQ=\sqrt{(2*annualusage*setup cost)/annualholding cost}[/tex]

Where,

Annual usage A = 4500

Setup cost S = $30

Annual holding cost H = $100

Container size = √{(2×4500×30)÷100}  = √2700 = 51.96 ≈ 52

Container size = 52

Number of Kanbans required = (demand during lead time + safety stock) / container size

Where,

Demand during lead time = lead time (16) * daily usage (18)

Demand during lead time = 16*18 = 288

Safety stock = 2 days production, where daily production is 25 sub assemblies.

Safety stock = 2*25 = 50 units

Container size = 52 units

Imputing the data into the equation, we obtain :

Number of kanbans required = (288 + 50)/52 = 338/50 = 6.5

Number of kanbans required ≈ 7 kanbans

To know more about safety stock, refer to the link:

https://brainly.com/question/19132349

It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 x 14 BSW.

A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data: Cost per tire $55 each

Holding cost 25 percent of tire cost per year
Demand 1,200 per year
Ordering cost $40 per order
Standard deviation of daily demand 4 tires
Delivery lead time 5 days

Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 90 percent. Assume the demand occurs 365 days per year.

a. Determine the order quantity. (Round your answer to the nearest whole number.) Order quantity tires
b. Determine the reorder point. (Round your answer to the nearest whole number.) Reorder point tires

Answers

Answer:

a. 84 units

b. 27.81

Explanation:

The computation is shown below:

a. For economic order quantity

[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]

[tex]= \sqrt{\frac{2\times \text{1,200}\times \text{\$40}}{\text{\$13.75}}}[/tex]

= 84 units

The carrying cost or holding cost is calculated below:

= $55 × 25%

= $13.75

b. The reorder point is

= Demand × lead time + probability × standard deviation × square root of lead time

where, Demand equal to

= Expected demand ÷ total number of days in a year

= 1,200 ÷ 365 days

= 3.28

So, the reorder point would be  

= 3.28 × 5 +  1.28 × 4 × sqrt(5)

= 16.4 + 11.41

= 27.81

The 1.28 is a service level of 90% probability

Final answer:

The order quantity for Michelin tires is calculated as 169 tires using the EOQ formula, and the reorder point is 28 tires, calculated by considering the average daily demand, lead time, and a service probability of 90%.

Explanation:

To calculate the order quantity and reorder point for Michelin tires, we will use the Economic Order Quantity (EOQ) formula and the reorder point formula considering the lead time and service level desired.

Economic Order Quantity (EOQ):

The formula for EOQ is √((2DS)/H), where D is the annual demand, S is the ordering cost per order, and H is the holding cost per unit per year. In this case:

D (Demand) = 1,200 tires per yearS (Ordering cost) = $40 per orderH (Holding cost) = 25% of $55 (cost per tire) = $13.75 per tire per year

Therefore, EOQ = √((2 × 1,200 × 40) / 13.75) ≈ 169 tires (rounded to the nearest whole number).

Reorder Point:

The reorder point is calculated as (average daily demand × delivery lead time) + safety stock. For a service probability of 90%, a z-score from the standard normal distribution is approximately 1.28.

Average daily demand = D/365 days = 1200/365 ≈ 3.29 tiresDelivery lead time = 5 daysStandard deviation of daily demand = 4 tiresSafety stock = z-score × standard deviation of daily demand × √(lead time) = 1.28 × 4 × √5 ≈ 11.44 tires

Thus, reorder point = (3.29 × 5) + 11.44 ≈ 27.89 tires, rounded to 28 tires (rounded to the nearest whole number).

In May​ 2013, the value of the Consumer Price Index​ (CPI) in a certain​ country, Polonia, reached an​ all-time high of 239 index points and per capita nominal GDP was ​$52,200. In January​ 1950, the CPI was at its lowest at 45 index points. Per capita nominal GDP in 1950 was ​$10,300.

For the people of Polonia, satisfaction was likely higher in The level of satisfaction hinges on the correlation between happiness and real GDP per capita. Surveys done by social scientists indicate between satisfaction and real GDP per capita ______

A. an indeterminate relationship
B. a robust positive relationship
C. a weak positive relationship
D. a negative relationship

Answers

Answer:

B

Explanation:

In May​ 2013, the value of the Consumer Price Index​ (CPI) in a certain​ country, Polonia, reached an​ all-time high of 239 index points and per capita nominal GDP was ​$52,200. In January​ 1950, the CPI was at its lowest at 45 index points. Per capita nominal GDP in 1950 was ​$10,300.

For the people of Polonia, satisfaction was likely higher in The level of satisfaction hinges on the correlation between happiness and real GDP per capita. Surveys done by social scientists indicate between satisfaction and real GDP per capita a robust positive relationship.

During March, 80,000 units of a standard product were produced. The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound. If there was a favorable direct material quantity variance of $40,000 for March, the actual quantity of direct material used must have been Multiple Choice 168,000 pounds 152,000 pounds 84,000 pounds 76,000 pounds

Answers

Answer: 152,000 pounds

Explanation:

Right. Variance is refered to as the difference between the Actual units it took to produce and the budgeted/ standard unit it took

When the Actual units are less than the standard units, the Variance is said to be Favourable. The reverse is true.

So first we will calculate the standard quantity of direct material.

The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound with 80,000 units produced,

Calculating therefore would give us,

= 80,000 * 5 * 2

= $800,000

$800,000 was the standard variance.

It was said that the variance is favourable meaning that the Standard Variance is more than the actual.

So subtracting the variance we have,

= 800,000 - 40,000

= $760,000

$760,000 is the actual quantity amount so we have to convert to pounds,

= 760,000 / $5 per pound

= 152,000 pounds

The actual quantity of direct material used for March must have been $152,000 pounds.

The money supply is $6,000,000, currency held by the public is $2,000,000 and the reserve-deposits ratio is 0.25. Find deposits, bank reserves, the monetary base and the money multiplier. PART 2: In a different economy, vault cash is 1,000,000, deposits by depository institutions at the central bank are 4,000,000 the monetary base is 10,000,000 and bank deposits are 20,000,000. Find bank reserves, the money supply, and the money multplier

Answers

Answer:

Please find the detailed answer below.

Explanation:

PART 1:.

a. Deposit = money supply - currency held

$6,000,000 - $2,000,000

= $4,000,000

b. Bank reserve is reserve-deposit ratio x deposit

0.25 x $4,000,000

=$1,000,000

c. Monetary base = currency held + bank reserve

$2,000,000 + $1,000,000

=$3,000,000

d. Money multiplier= money supply/monetary base

$6,000,000/$3,000,000

=2

PART 2.

a. Bank reserve

$4,000,000 + $1,000,000

=$5,000,000

b. Money supply= currency held + bank deposit

Currency held= base - reserve

$10,000,000 - $5,000,000

= $5,000,000

Therefore money supply is

$5,000,000 + $20,000,000

=$25,000,000

c. Money multiplier= money supply/monetary base

$25,000,000/$10,000,000

=2.5

Sales returns: Multiple Choice Refer to merchandise that customers return to the seller after the sale. Refer to reductions in the selling price of merchandise sold to customers. Represent cash discounts. Represent trade discounts. Are not recorded under the perpetual inventory system until the end of each accounting period.

Answers

Answer:

Refer to the merchandise that customer return to the seller after the sale.

Explanation:

Sales return is a option given by a seller to its customers to return the product purchased due to some other reasons. The sales returns are received by sellers and the invoice is then adjusted. The seller records the sales return under the account sales return and allowances. Customers usually return the products to sellers if they are not satisfied with either the quality or quantity.

Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $8,300 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.

Answers

Answer:

Please find the journal entries in the explanation section

Explanation:

March 11

Dr Bad expense $8,300

Cr Accounts Receivable ---------------------------------------Leer Co. $8,300

(Being the write off of uncollectible accounts receivable)

March 29

Dr Accounts Receivable-- Leer Co $8,300

Cr Bad expense $8,300

(Being the reversal of the previous account write off)

March 29

Dr Cash $8,300

Cr Accounts Receivable------------------------------------------Leer Co$8,300

(Being cash receipt from the accounts receivable)

Final answer:

The question relates to accounting, specifically the direct write-off method and recovery of bad debts. Dexter Company will first write off the uncollected $8,300 from Leer Co., then record the subsequent unexpected payment from Leer Co.

Explanation:

The subject of this question is the field of accounting, specifically related to the direct write-off method and recovery of bad debts. The direct write-off method, is a way businesses account for bad debts – amounts that customers fail to pay. The 'write-off' in this method refers to the action taken to remove such uncollectable amounts from the accounts receivable.

Let's look at the transactions for Dexter Company:

When Dexter determines it can't collect $8,300 from Leer Co. on March 11, the journal entry would be: Bad Debt Expense $8,300 (Debit), Accounts Receivable – Leer Co. $8,300 (Credit)Then, if Leer Co. unexpectedly pays its account in full to Dexter on the 29th, the entries would be: Accounts Receivable – Leer Co. $8,300 (Debit), Cash $8,300 (Credit)– to recognise receipt of cash, and Recovery of Bad Debts $8,300 (Debit), Bad Debt Expense $8,300 (Credit) – to reduce the previously recognized bad debt expense.

Learn more about Direct Write-off Method here:

https://brainly.com/question/31858400

#SPJ3

Waterway Industries records purchases at net amounts. On May 5 Waterway purchased merchandise on account, $82000, terms 2/10, n/30. Waterway returned $7000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how much should the account payable be adjusted on May 31

Answers

Answer:

$1,500

Explanation:

The computation of the amount adjusted on May 31 is shown below:

= (Purchase value of the merchandise - returned goods) × discount rate

= ($82,000 - $7,000) × 2%

= $1,500

The terms 2/10, n/30 represent the 2% discount is given if the payment is made within 10 days and the net days provided is 30 days

So, the amount adjusted is $1,500

Bruce Corporation makes four products in a single facility. These products have the following unit product costs: Products A B C D Direct materials $ 15.10 $ 11.00 $ 11.80 $ 11.40 Direct labor 20.20 28.20 34.40 41.20 Variable manufacturing overhead 5.10 3.50 3.40 4.00 Fixed manufacturing overhead 27.30 35.60 27.40 38.00 Unit product cost $ 67.70 $ 78.30 $ 77.00 $ 94.60 Additional data concerning these products are listed below. Products A B C D Grinding minutes per unit 4.60 6.10 5.10 4.20 Selling price per unit $ 76.90 $ 94.30 $ 88.20 $ 105.00 Variable selling cost per unit $ 3.00 $ 2.00 $ 4.10 $ 2.40 Monthly demand in units 4,800 4,800 3,800 2,800 The grinding machines are potentially the constraint in the production facility. A total of 54,400 minutes are available per month on these machines. Direct labor is a variable cost in this company. How many minutes of grinding machine time would be required to satisfy demand for all four products? Multiple Choice 82,500 54,400 19,480 60,420

Answers

Answer:

82,500

Explanation:

The computation of the minutes of grinding machine required to satisfy demand is shown below

= (4,800 units × 4.60 + 4,800 units  × 6.10 + 3,800 × 5.10 + 2,800 × 4.20)

= 22,080 + 29,280 + 19,380 + 11,760

= 82,500

We simply multiplied the Grinding minutes per unit with the Monthly demand in units and the same is to be considered above

Cepeda Manufacturing Company is considering three new projects, each requiring an equipment investment of $22,000. Each project will last for 3 years and produce the following cash inflows.

Year AA BB CC
1 $ 7,000 $ 9,500 $11,000
2 9,000 9,500 10,000
3 15,000 9,500 9,000
Total $31,000 $28,500 $30,000

The equipment's salvage value is zero. Cepeda uses straight-line depreciation. Cepeda will not accept any project with a payback period over 2 years. Cepeda's minimum required rate of return is 12%.

Compute each project paybeck period.

Answers

Answer:

Payback period

Project AA= 2 years 4.8 months

Project BB = 2 years 3.8 months

Project CC = 2 years 1.3 months

Explanation:

Project AA

Cash inflow for after 2 years = 7000 + 9000 =16000

Balance to recover initial cost = 22,000 -16000 = 6,000

Payback period

=  2 years + (6000/15000)× 12 months

= 2 years 4.8 months

Project BB

Cash inflow for after 2 years = 9500 +9500 =19,000

Balance to recover initial cost = 22,000 -19000 = 3,000

Payback period

=  2 years + (3000/9,500)× 12 months

= 2 years 3.8 months

Project CC

Cash inflow for after 2 years = 11,000 + 10,000 =21,000

Balance to recover initial cost = 22,000 -21,000 = 1,000

Payback period

=  2 years + (1,000/9,000)× 12 months

= 2 years 1.3 months

The payback of project AA is 2.4 years.

The payback of project BB is 2.3 years.

The payback of project CC is 2.1 years.

Payback calculates how long it take to recover the investment ina project from its cumulative cash flows.

Project AA

Amount recovered in year 1 = $-22,000 + $7,000 = $-15,000

Amount recovered in year 2 = $-15,000 + $9,000 = $-6,000

Amount recovered in year 3 = 6000 / 15,000 = 4 years

Payback = 2.4 years

Project BB

Payback period = $22,000 / $9,500 = 2.3 years

Project CC

Amount recovered in year 1 = $-22,000 + $11,000 = $11,000

Amount recovered in year 2 = $-11,000 +$10,000 = $-1000

Amount recovered in year 3 = $-1,000 / $9000 = 0.11

Payback period = 2.1 years

To learn more about the payback period, please check: https://brainly.com/question/25716359

Other Questions
Are the names pony boy and soda pop nicknames in the book the outsiders explain? In the _____ phase of the decision-making process, the objective is to define criteria for the decision, generate alternatives for meeting the criteria, and define associations between the criteria and the alternatives. A uniform electric field, with a magnitude of 650 N/C, is directed parallel to the positive x-axis. If the potential at x = 3.0 m is 1 700 V, what is the potential at x = 1.0 m? Solve (x + 5)3 = 4 for x.Question 9 options:A) 17B) 23C) 613 D) 7 Was the Treaty of Versailles a direct cause of World War II? Why is a large civil service needed to do policy work? An alpha particle (q = +2e, m = 4.00 u) travels in a circular path of radius 4.29 cm in a uniform magnetic field with B = 1.53 T. Calculate (a) its speed, (b) its period of revolution, (c) its kinetic energy, and (d) the potential difference through which it would have to be accelerated to achieve this energy. immediately after the French named Louis-Philippe king, more people were allowed to do what Find the value of 1/3 divided by 1/2 how many sex chromosomes would be present in an individual with 80 chromosomes? A)2 B)1 C)39 D)40 State and federal governments actively support education at the primary, secondary, and collegiate levels. While they mandate education at the primary and secondary levels, the federal government only subsidizes and guarantees loan at the collegiate level. Of the key rationales for public provision of education, which likely underlies this differential treatment of these levels of education? PLEASE HELP REALLY EASY!!!!!!!!!!!!The equation, y=16x^2+32x+64, represents the height, in feet, of a firework x seconds after it is launched.What is the maximum height of the firework? Dans aquarium holds 6 quartz of water more than Stevens aquarium. Dans aquarium holds 7 gallons. How much does Steves aquarium hold? Please help me Im lost Determine the slope of the line that has the following coordinates: (1.5, 6) (3.75, -12)A. 18/2.25B. -18/5.25C. -6/2.25D. -18/2.25 What is the molarity of the solution if 1.50 grams of CaCl2 is dissolved to make 0.095 liters of solution? 1. Which figure is portrayed more positively: George Washington or Thomas Jefferson? The National Health and Social Life Survey, conducted to gather information about the eating habits of U.S. adults between the ages of 18 and 59, is an example of _____, in that every member of the larger group has an equal chance of being selected for inclusion in the sample. Scoring Scheme: 3-3-2-1 Part III. For each trial, enter the amount of heat gained by the chemical system of ammonium nitrate, qrxn. The specific heat of water is 4.184 J/goC. Report your answer using 4 digits. Trial Describe the living and nonliving things that define the area or region in which you live. In your area, are there any organisms with which you interact?