Answer:
Production budget = 75,000 units
Explanation:
The production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.
Production = Sales volume + closing inventory - opening inventory
Production budget for 2016
=85,000 + 20,000 - 30,000
= 75,000 units
Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $350,000 of net income, declared no dividends, and the following selected transactions occurred in the order given: Issued 100,000 shares of the common stock at $50 cash per share. Reacquired 20,000 shares at $45 cash per share. Reissued 7,500 shares from treasury for $46 per share. Reissued 7,500 shares from treasury for $44 per share. 2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
The journal entries are made as follows;
Explanation:
1.Cash 100,000*50 Dr.$5,000,000
Common Stocks 100,000*5 Cr.$500,000
Paid in capital-common stocks Cr.$4,500,000
2.Treasury Stocks 20,000*45 Dr.$100,000
Cash 20,000*45 Cr.$100,000
3. Cash 7,500*46 Dr.$345,000
Treasury Stocks 7,500*45 Cr.$337,500
Paid in Capital-Treasury stocks 7,500*(46-45) Cr.$7,500
4.Cash 7,500*44 Dr.$330,000
Paid in capital-Treasury Stock 7,500*1 Dr.$7,500
Treasury stocks 7,500*45 Cr.$337,500
.
Final answer:
The answer provides journal entries for stock transactions of Global Marine involving the issuance of shares, the reacquisition as treasury stock, and the reissuance of treasury shares at different prices.
Explanation:
The question pertains to a series of transactions involving the issuance, reacquisition, and reissuance of shares by Global Marine. Here are the journal entries for each transaction:
Issuance of 100,000 shares at $50 per share:Note that the treasury stock is recorded at cost (not par value) and reissuing it at a different price from the reacquisition cost requires adjusting the additional paid-in capital for treasury stock.
Early in its fiscal year ending December 31, 2021, Morgan Manufacturing, Inc. (MMI) finalized plans to expand operations. The first stage was completed on March 28 with the purchase of a tract of land on the outskirts of the city. The land and existing building were purchased by paying $340,000 immediately and signing a noninterest-bearing note requiring the company to pay $740,000 on December 31, 2023. An interest rate of 6% properly reflects the time value of money for this type of loan agreement. Title search, insurance, and other closing costs totaling $34,000 were paid at closing. At the end of April, the old building was demolished at a cost of $84,000, and an additional $64,000 was paid to clear and grade the land. MMI should record the land on the April 30 balance sheet as $[land].
Final answer:
MMI should record the land on the April 30 balance sheet as $1,048,940.37.
Explanation:
To record the land on the April 30 balance sheet, we need to determine the cost of the land. The initial payment of $340,000, the note payable of $740,000, and the closing costs of $34,000 need to be considered. We also need to calculate the present value of the note payable using the interest rate of 6% to determine the amount that should be recorded as the land cost.
Calculate the present value of the note payable: PV = FV / (1 + r)ⁿPV = $740,000 / (1 + 0.06)² = $674,940.37 (rounded to the nearest cent)Calculate the total cost of the land: $340,000 + $34,000 + $674,940.37 = $1,048,940.37 (rounded to the nearest cent)Therefore, MMI should record the land on the April 30 balance sheet as $1,048,940.37.
Which of the following statements is true of retailing? A) All retail stores are full-service retail stores. B) A department store has a narrow product line with a deep assortment. C) The largest type of retail outlet is a supermarket. D) Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed. E) A feature common to all types of retail stores is the use of the everyday low pricing strategy.
Retailing refers to the activity of selling large quantities of goods to as many consumers as possible usually in units or small amounts. Services can be also retailed.
In an attempt to boost sales, hotels and airlines tend to sell stays or flight tickets in large quantities to agencies for them later to resell them to individuals.
The correct answer is "D": Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.
Option "D": Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed is correct because it is the true statement regarding the retailing services in the market.
Options:
A) All retail stores are full-service retail stores.
B) A department store has a narrow product line with a deep assortment.
C) The largest type of retail outlet is a supermarket.
E) A feature common to all types of retail stores is the use of the everyday low pricing strategy
These options are wrong because they do not provide specific or true verification for the validity of the retailing services in the market.
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The true statement about retailing is that D) services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed.
Explanation:Retailing refers to the process of selling goods and services to consumers through various channels, such as physical stores, online platforms, or direct sales. It involves activities like product selection, pricing, marketing, and customer service. Retailers cater to the end consumer, and the industry plays a crucial role in the supply chain by connecting manufacturers or wholesalers with the final buyers.
The true statement about retailing is Services like hotels, banks, airlines, restaurants, colleges, and hospitals can be retailed. Retailing refers to the process of selling goods and services directly to consumers. Retail stores can vary in terms of their offerings and strategies, but they all involve selling products or services to customers.
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Which of these statements about a business plan is true?
A. Businesses do not need to document a business plan.
B. Established businesses do not create a business plan.
C. A business plan is a business’s roadmap for the future.
D. A business plan guarantees a business’s success.
Answer:
C. A business plan is a business’s roadmap for the future.
Explanation:
A business plan states formally the goals of the company; it shows the tasks that must be performed to reach those big goals and shows the financlal ways that could or should be used to accomplish the goals.
The business plan permits to understand how the business work and, thus, gives the basis for future actions. It is a tool of organization, direction, and communication, and the basis to develop a financial plan. In brief words: what the company wants to do and how it inteds do it.
A. Businesses do not need to document a business plan.
FALSE.
The business plan must be formal, not just an idea or view in the mind of the owners or managers, as such it must be documented.
B. Established businesses do not create a business plan.
FALSE.
Business plans change with time. As much as starting business, established business must periodically review the conditions and goals and update, or even importantly change the business plan.
C. A business plan is a business’s roadmap for the future.
TRUE.
Business plan gives direction, the ways to reach the goals, the tasks to be performed.
D. A business plan guarantees a business’s success.
FALSE.
Success is never guaranteed. Risk is intrinsic to all the human activities. Complexity of human interactions and changing circumstances do not permit to guarantee that a plan guarantees the success. That is why business plans must be revised and ajusted or changed to adapt the goals and the actions to be the most sucessfull possible, but without guarantees.
Answer:
c A business plan is a business’s roadmap for the future.
Explanation:
Net present value LO P3 Beyer Company is considering the purchase of an asset for $250,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Assume that Beyer requires a 12% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Net cash flows $83,000 $43,000 $76,000 $127,000 $49,000 $378,000
Required:
a. Compute the net present value of this investment.
b. Should Beyer accept the investment?
Answer:
$20,996.49
Yes
Explanation:
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be found using a financial calculator.
Cash flow in year 0 = $-250,000
Cash flow in year 1 = $83,000
Cash flow in year 2 = $43,000
Cash flow in year 3 = $76,000
Cash flow in year 4 = $127,000
Cash flow in year 5 = $49,000
I = 12%
NPV = $20,996.49
The company should accept the project because the NPV is postive.
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
Answer:
a. NPV = $20,996
b. Beyer should accept the investment
Explanation:
Net Present Value is Calculated by Taking the Present Day (discounted) value of all future net cash flow based on the Business Cost of Capital and Subtracting the Initial Cost of the Investment.
Accept only Project that give a Positive Net Present Value.
Using a financial Calculator the Net Present Value computations will be as follows :
CF0 = ($250,000)
CF0 = $83,000
CF0 = $43,000
CF0 = $76,000
CF0 = $127,000
CF0 = $49,000
i = 12%
NPV = ?
NPV = $20,996
Conclusion
Beyer should accept the investment since it gives a positive Net Present Value
Kelly noticed her debit card was not in her wallet where she usually keeps it. She quickly checked her car and her desk, but was unable to locate it. What is the FIRST thing Kelly should do to help reduce the risk of fraudulent charges in case it was stolen?
Answer:
She should call her bank to report her card as lost or stolen.
Explanation:
Whenever a card is been lost, the most clever thing to do is to call your bank immediately, telling them to suspend all transaction on the card per say.
It is known to be normally reversible just in case it was in the right place or later found by you; but if not, the bank will then request a new card is generated. Your old card stays suspended until your new card arrives and you phone up to activate it.
If you think you’ve temporarily misplaced your debit or credit card or would like to freeze different types of transactions you can do this also through the Mobile Banking app.
A finance lease agreement calls for quarterly lease payments of $5,376 over a 10-year lease term, with the first payment on July 1, the beginning of the lease. The annual interest rate is 8%. Both the present value of the lease payments and the cost of the asset to the lessor are $150,000. Required: a. Prepare a partial amortization table up to the October 1 payment. b. What would be the amount of interest expense (revenue) the lessee (lessor) would record in conjunction with the second quarterly payment on October 1?
Answer:
a. The preparation of partial amortization is shown below:-
b. $2,892
Explanation:
a. Date Lease Effective Decrease in Outstanding
payment interest balance balance
July 1 $150,000
July 1 $5,376 $5,376 $144,624
($150,000 - $5,376)
Oct 1 $5,376 $2,892 $2,484 $142,140
( $5,376 - $2,892) ($144,624 - $2,484)
b. Interest expense on October 1 = $2,892
Working Note:-
Take the outstanding balance times 2% (8% annual = 2% quarterly)
So, the Effective interest = $144,624 × 0.02
= $2,892.48
To prepare a partial amortization table and calculate the amount of interest expense/revenue, we need to consider the balance after each payment. The first quarter's interest expenses are $3,000, with a principal repayment of $2,376. The second quarter's interest expenses amount to $2,952.48 with a remaining principal of $2,423.52 subtracted from the quarterly payment.
The question involves a finance lease agreement with an annual interest rate of 8% and quarterly lease payments of $5,376 over a 10-year lease term, with a present value of lease payments at $150,000. To address the first part of the question, we would need to create a partial amortization table reflecting the principal and interest components of the lease payments for the period up until the second payment on October 1.
To begin, the interest expense for the first quarter would be 2% of the present value (8% annual rate divided by 4 quarters), which equals $3,000 ($150,000 x 0.02). Thus, the principal repayment for the first quarter is $2,376 ($5,376 lease payment less $3,000 interest expense). The new balance of the liability after the first payment would be $147,624 ($150,000 initial liability less $2,376 principal repayment).
For the second quarter, interest expense is calculated on the new balance: $147,624 x 2% = $2,952.48. The principal repayment portion again is the total lease payment minus the interest expense, which would be $5,376 - $2,952.48 = $2,423.52.
Q5. Einstein Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $10,000. Budgeted cash receipts are $85,000, while budgeted cash disbursements are $66,000. Einstein Company wants to have an ending cash balance of $25,000. The excess (deficiency) of cash available over disbursements for the month would be:
Answer:
There would be in the month an excess cash available of $29,000.
Explanation:
In order to calculate the excess (deficiency) of cash available over disbursements for the month, first we have to calculate the total cash.
Total cash= beginning cash balance+cash receipts
=$10,000+$85,000
=$95,000
There are budgeted cash disbursements of $66,000, so $95,000-$66,000=$29,000, hence there would be in the month an excess cash available of $29,000.
On April 1, 2017, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign bank by signing an interest-bearing note due April 1, 2018. The dollar value of the loan was as follows: Date Amount April 1, 2017 $ 97,000 December 31, 2017 103,000 April 1, 2018 105,000 How much foreign exchange gain or loss should be included in Shannon’s 2017 income statement?
Answer:
Foreign exchange loss of $6000
Explanation:
The dollar loan should recognized in the balance of Shanon Company as $97,000 on 1 April 2017,at end of the year the loan amount should e revalued to reflect its current fair value.
At end of the year 2017,the dollar value of the loan has risen to $103,000,hence the obligation being owed has increased by $6,000($103,000-$97000),hence the increase in value of debt should be credited to loan account and debited to Shanon's 2017 income statement
Final answer:
Shannon Company should record a foreign exchange gain of $6,000 in the 2017 income statement due to the increase in the dollar value of the loan from $97,000 to $103,000 between April 1 and December 31, 2017.
Explanation:
On April 1, 2017, Shannon Company took out a loan for 100,000 euros, and the dollar value of this loan was $97,000. By December 31, 2017, the value of the same amount of euros rose to $103,000. To determine the foreign exchange gain or loss, Shannon Company should calculate the change in the dollar value of the loan between these two dates.
The process of calculating foreign exchange gains or losses involves comparing the dollar value of the loan at the beginning and end of the given period. In this case, Shannon Company's loan value went from $97,000 (April 1, 2017) to $103,000 (December 31, 2017), resulting in an increase of $6,000. This increase represents a foreign exchange gain that should be recorded in Shannon's 2017 income statement.
It is important to note that Shannon Company will have to reassess the value of the loan once more on the due date, April 1, 2018, at which point the dollar value is $105,000. However, for the 2017 income statement, only the change up to December 31, 2017, is relevant.
At its $34 selling price, Atlantic Company has sales of $17,000, variable manufacturing costs of $6,000, fixed manufacturing costs of $1,000, variable selling and administrative costs of $2,000 and fixed selling and administrative costs of $1,000. What is the company's contribution margin per unit? Multiple Choice $16 $14 $18 $30
Answer:
The correct option is $18
Explanation:
Contribution margin calculation starts with selling price per unit,then deduct variable cost per unit ,the resulting amount is the contribution margin per unit,which is the contribution towards fixed costs and eventual profit made by one unit of output.
The computation of contribution margin per unit is found below:
selling price $34
variable cost per unit ($16)
contribution margin per unit $18
Variable cost per unit:
Variable manufacturing costs $6,000
variable selling and administrative costs $2,000
total variable costs $8000
Sales volume =sales/selling price =$17,000/$34=500
variable cost per unit=total variable cost/volume=$8,000/500=$16
Answer:
Contribution margin per unit is $22
Explanation:
Atlantic company
Income statement
Sales $17,000
Less Variable Manufacturing cost $6,000
Contribution Margin $11,000
Less Fixed Manufacturing cost $1,000
Gross Profit = $10,000
Less Variable selling & admin expense $2,000
Less Fixed selling & admin expense $1,000
Net profit $7,000
Volume = sales divided by unit sales price
= $17,000/34
= 500 units
Contribution Margin per unit = $11,000/500 units
= $22
During 2014, a textbook written by Mercer Co. personnel was sold to Roark Publishing, Inc., for royalties of 10% on sales. Royalties are receivable semiannually on March 31, for sales in July through December of the prior year, and on September 30, for sales in January through June of the same year. • Royalty income of $162,000 was accrued at 12/31/14 for the period July-December 2014.
• Royalty income of $180,000 was received on 3/31/15, and $234,000 on 9/30/15.
• Mercer learned from Roark that sales subject to royalty were estimated at $3,240,000 for the last half of 2015.
In its income statement for 2015, Mercer should report royalty income at
A. $432,000.
B. $414,000.
C. $558,000.
D. $576,000.
Answer:
D. Royalty income for the year $ 576,000
Explanation:
Computation of royalty income for the year
Royalty income for the year = Ending accrual + Royalty receipts - Opening Accrual
Ending accrual is for sales of second half
Sales of second half = $ 3,240,000
Royalty % 10 %
Ending accrual for Royalty ( sales of second half of 2014 to be collected in March 2015)
$ 3,240,000 * 10 % $ 324,000
Royalty income for the year = $ 324,000 + ($ 180,000 + $ 234,000)- $ 162,000
Royalty income for the year = $ 576,000
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is at an annual rate of . In year one, $72.00 will buy baskets, and in year two, $72.00 will buy baskets. This example illustrates that, as the price level falls, the value of money . rises,falls,remains the same
Answer:
From Year 1 to Year 2 : There is annual deflation 11.11%
As price falls, value of money rises
Explanation:
Given : Commodity Basket Cost = $9 in Year 1 ; Commodity Basket Cost = $8 in Year 2
From Year 1 to Year 2 : There has been fall in price level. Proportionate (%) Fall in price level = Change in Price / Old Price x 100
So, Fall in price level = [ ( 9 - 8 ) / 9] x 100 = 1/9 x 100 = 11.11%
Hence, from year 1 to year 2 : there has been 11% fall in price i.e Deflation
Considering Income = $72 :
Year 1 : It can purchase 72 / 9 = 8 commodity baskets Year 2 : It can purchase 72 / 8 = 9 commodity basketsSo, it illustrates that : As price falls, the purchasing power of money (value of money) rises.
A movie theater faces the following hourly inverse demand curves:
Seniors: PS = 88 - Q
Adults: PA = 94 - Q
The theater has a fixed cost of $40, and a constant marginal cost of $2 per ticket.
a) If the movie theater uses segmenting, calculate the ticket prices charged to adults and seniors.
Answer:
Price for Seniors $ 45
Price for Adults $ 46
Explanation:
As the theater uses segmenting it will solve to maximize profit on each segment:
PS = 88- Q
Total Revenue = price x quantity = (88 - Q) Q = -Q^2 + 88Q
Marginal Revenue = 88-2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
88 - 2Q = 2
(88 - 2) / 2 = Q
43 = Q
P = 88 - 43 = 45
For Adults:
Revenue (94 - Q)*Q = 94Q - Q^2
Marginal Revenue = 94 - 2Q
Marginal Revenue = Marginal Cost --> point to maximize profit
(94 - 2)Q = 2
Q = 46
P = 94 - 46 = 46
Bradford Maintenance, a firm which provides lawn care services, has some seasonal variations in its cash flow needs, since much of the demand for its services is in the summer months. It uses long-term sources of funds to finance its assets such as its fleet of vehicles and lawn-care equipment and for the permanent funds that it must have at all times. For its peak seasonal needs it uses long-term sources and some short-term debt. What best describes the financial policy being followed by Bradford
Answer: B) Conservative Financial Policy
Explanation:
A Conservative Financial policy refers to a situation where an entity usually finances their permanent working capital with long term debt in part or in it's entirety.
It is stated that Bradford Maintainance uses long-term sources of funds to finance its assets which would point to a Conservative Financial Policy.
Brief Exercise 13-14 Coronado Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2020, Coronado sold 20,000 warranty contracts at $105 each. The corporation spent $189,000 servicing warranties during 2020, and it estimates that an additional $945,000 will be spent in the future to service the warranties.
a. Prepare Leppard’s journal entries for the sale of contracts. Assume the service costs are inventory costs.
b. Prepare Leppard’s journal entries for the cost of servicing the warranties. Assume the service costs are inventory costs.
c. Prepare Leppard’s journal entries for the recognition of warranty revenue. Assume the service costs are inventory costs.
Answer:
(a)Sale contracts
Dr Cash $2,100,000
Cr Unearned warranty revenue $2,100,000
b)Cost of servicing warranty
Dr Warranty expense $189,0000
Cr Inventory $189,000
(c)Recognized warranty revenue
Unearned warranty revenue $525,000
Explanation:
(a)Sale contracts
Dr Cash ($20,000 x105) $2,100,000
Cr Unearned warranty revenue $2,100,000
b)Cost of servicing warranty
Dr Warranty expense $189,0000
Cr Inventory $189,000
(c)Recognized warranty revenue
Unearned warranty revenue $525,000
($2,100,000 ×1/4)
The journal entries for the transactions described are:
Date Account Title Debit Credit
2020 Cash $2,100,000
Unearned Warranty Revenue $2,100,000
Working:
= Warranty contracts x Price of contract
= 20,000 x 105
= $2,100,000
Date Account Title Debit Credit
2020 Warranty Expense $189,000
Inventory $189,000
Date Account Title Debit Credit
Unearned Warranty Revenue $525,000
Warranty Revenue $525,000
Working
= Unearned warranty revenue / Period of warranty
= 2,100,000 / 4
= $525,000
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The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,219 Accounts receivable 74,422 Merchandise inventories 64,362 Prepaid expenses 4,900 Accounts payable $ 15,750 Notes payable 90,638 Other current liabilities 10,300 If net sales for the current year were $607,500, the firm's days' sales uncollected for the year is: (Use 365 days a year.)
Answer:
The correct answer is 44.73 days or 45 days.
Explanation:
According to the scenario, the computation of the given data are as follows:
We can calculate the day's sales uncollected by using following formula:
Day's sales uncollected = No. of days in year ÷ Debtor turnover ratio
Where, Debtor turnover ratio = Sales ÷ Accounts receivable
= $607,500 ÷ $74,422
= 8.16
So, by putting the value, we get
Day's sales uncollected = 365 days ÷ 8.16
= 44.73 days or 45 days.
The following information pertains to Lee Corp.'s defined benefit pension plan for year 2:Service cost $160,000Actual and expected gain on plan assets 35,000Unexpected loss on plan assets related to a year 1 disposal of a subsidiary 40,000Amortization of unrecognized prior service cost 5,000Annual interest on pension obligation 50,000What amount should Lee report as pension cost in its year 2 income statement?
Answer:
$180,000
Explanation:
This can be calculated as follows:
Pension cost in year 2 = Service cost + Prior service cost amortization + Interest cost - Actual and expected return on plan assets
Therefore, we have:
Pension cost in year 2 = $160,000 + $5,000 + $50,000 - $35,000 = $180,000
Therefore, Lee report should $180,000 as pension cost in its year 2 income statement.
Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000 and $30,000 respectively.
The journal entry to record the transaction on March 15, 2021 will include a :
A. credit to Unearned Service Revenue of $24,000
B. debit to Unearned Service Revenue of $30,000
C. credit to Sales Revenue for $144,000
D. credit to Service Revenue of $60,000.
Answer:
A. credit to Unearned Service Revenue of $24,000
Explanation:
Total cost = $90,000 + $60,000 + $30,000 = $180,000
Unearned service training service revenue = ($30,000 ÷ $180,000) × $144,000 = $24,000
Therefore, the correction option is A. credit to Unearned Service Revenue of $24,000.
The Mill Flow Company has two divisions. The Cutting Division prepares timber at its sawmills. The Assembly Division prepares the cut lumber into finished wood for the furniture industry. No inventories exist in either division at the beginning of 20X5. During the year, the Cutting Division prepared 60,000 cords of wood at a cost of $660,000. All the lumber was transferred to the Assembly Division, where additional operating costs of $6 per cord were incurred. The 600,000 boardfeet of finished wood were sold for $2,500,000.
Determine the operating income for each division if the transfer price from Cutting to Assembly is at cost - $11 a cord.
Answer:
Cutting $0
Revenue $1,480,000
Explanation:
Cutting Assembly
Revenue $660,000 $2,500,000
Cost of services:
Incurred $ 660,000 $ 360,000
Transferred-in $0 $660,000
Total $ 660,000 $1,020,000
Operating income $ 0 $1,480,000
60,000 cords x $11 = $660,000
Operating income:
Cutting
Revenue $660,000 - Total $ 660,000 =0
Assembly
Revenue $2,500,000- Total$1,020,000
=$1,480,000
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to its employee.
Gross Pay through August 31 Gross Pay for September
a. $ 5,100 $2,200
b. 2,300 2,400
c. 122,700 8,600
Required:
1. Assuming situation (a), prepare the employer's September 30 journal entries to record salary expense and its related payroll liabilities for this employee. The employee's federal income taxes withheld by the employer are $90 for this pay period. (Round your answers to 2 decimal places.)
Final answer:
The business calculation involves preparing journal entries to reflect the employer's payroll taxes and liabilities for an employee's salary in September. This includes FICA Social Security and Medicare taxes, federal income tax withholding, FUTA, and SUTA taxes, resulting in total payroll liabilities and net payable amounts.
Explanation:
The subject in question is concerned with the calculation and recording of taxes and payroll liabilities for an employee in a business context. It requires an understanding of how FICA, FUTA, and SUTA taxes are applied to an employee's gross pay.
For situation (a), we calculate and prepare the journal entries as follows:
Gross Pay for September: $2,200 Salary Expense: Debit $2,200FICA Social Security taxes: (6.2% of $2,200) = Debit $136.40FICA Medicare taxes: (1.45% of $2,200) = Debit $31.90Federal Income Tax Withholding: Debit $90FUTA taxes: (0.6% of $2,200, not exceeding $7,000) = Debit $13.20SUTA taxes: (5.4% of $2,200, not exceeding $7,000) = Debit $118.80Payroll Liabilities: Credit $390.30 (Sum of all tax liabilities)Cash or Salaries Payable: Credit $1,809.70 (Gross pay minus liabilities)
The entries should reflect the expenses and liabilities associated with the salary for September, including various taxes to be remitted on behalf of the employee.
Final answer:
For the given scenario (a), the employer's journal entries would include a debit to Salary Expense for $2,200, and credits to Federal Income Taxes Payable ($90), FICA Social Security Payable ($136.40), and FICA Medicare Payable ($31.90).
Explanation:
Journal Entry for Payroll Taxes:
When recording the employer's September 30 journal entries for BMX Company, assuming situation (a), the total gross pay for the employee for September is $2,200. The employee's federal income taxes withheld are $90 for this period. We need to calculate the employer's Social Security and Medicare taxes as part of the payroll liabilities.
The September payroll taxes are calculated as follows:
FICA Social Security taxes: 6.2% of $2,200 = $136.40FICA Medicare taxes: 1.45% of $2,200 = $31.90Since the gross pay through August was $5,100 and the September gross is $2,200, the year-to-date gross is $7,300, which exceeds the $7,000 limit for FUTA and SUTA, no further FUTA and SUTA taxes are due.
Based on these calculations, the journal entries to record September's salary expense and payroll liabilities would be as follows:
Debit Salary Expense: $2,200Credit Federal Income Taxes Payable: $90Credit FICA Social Security Payable: $136.40Credit FICA Medicare Payable: $31.90The remaining balance after deductions is credited to Wages Payable or Cash, depending on if the wages have been paid or not.
On January 1, 2021, Oliver Foods issued stock options for 44,000 shares to a division manager. The options have an estimated fair value of $3 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Oliver Foods' stock price increases by 5% in four years. Oliver Foods initially estimates that it is not probable the goal will be achieved. How much compensation will be recorded in each of the next four years
Options:
A. $77,500
B. $19,500
C. No effect
D. $77,000
Answer:
The correct answer is option (D)
$77,000
Explanation:
Compensation will be recorded in each of the next four years
=(44,000*7) / 4 = $77,000
Which of the following are reasons managed floating exchange rates were adopted by the industrialized nations in 1973?
Check all that apply.
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases
B) To enable dirty floats in order to offset free market forces of supply and demand
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces
D) To enable nations to initiate fluctuations in exchange rates
Answer:
A) To avoid delays in adjustments of exchange rates caused by procedural difficulties and political biases.
C) To enable more prompt and continuous adjustments of exchange rates in response to evolving market forces.
Explanation:
A managed floating exchange rate system allows the exchange rate to be allowed by a free market force of the supply and demand that consists of the some degrees of the government inventions. It was adopted in 1973 due to the overtime the float led to the market disordering and that caused a dramatic exchange rate fluctuations. Hence in order to control this, a system had to be made to keep at check on the change in rates.Purdum Farms borrowed $24 million by signing a five-year note on December 31, 2017. Repayments of the principal are payable annually in installments of $4.8 million each. Purdum Farms makes the first payment on December 31, 2018 and then prepares its balance sheet. What amount will be reported as current and long-term liabilities, respectively, in connection with the note at December 31, 2018, after the first payment is made?
Answer:
The amount of $4.8 million will be reported as current liabilities on 31 December 2018 and the amount of $14.4 will be reported as long term liabilities.
Explanation:
The current liabilities are the short term liabilities or obligations that a business is expected to pay or settle within a year's time period. The long term liabilities, on the other hand, are the liabilities or obligations which are due to be paid any time more than a year.
The outstanding amount on Note Payable on 31 December 2018 after the first repayment will be, 24 - 4.8 = $19.2 million
Out of the $19.2 million that is outstanding, $4.8 million are to be paid on 31 December 2019 that is within a year. Thus, this amount will be reported as a current liability as it is payable within a one year period.
The remaining amount of 19.2 - 4.8 = $14.4 million will be reported as a non current liability as it is payable after more than a year from today.
Kuhns Corp. has 160,000 shares of preferred stock outstanding that is cumulative and 100,000 common stock outstanding. The preferred dividend is $5.50 per share and has not been paid for 3 years. If Kuhns earned $1.70 million this year, what could be the maximum payment to the preferred stockholders on a per share basis
Answer:
$10.63 is the maximum per share dividend to be paid to preferred stockholders.
Explanation:
3 years dividend=$5.50*160,000*3
=$2,640,000
Since preferred dividends in arrears is more than the net income,it implies that the whole earnings would be used in settling the dividends with no dividends left for common stockholders,as a result of the point above,the maximum payment to the preferred stockholders on a per share basis is computed thus:
per share dividend=$1,700,000/160,000
=$10.63
Some countries have fixed exchange rate systems instead of flexible exchange rate systems. Which of the following is a reason why fixed exchange rate systems have limited abilities to use monetary policy? A. Under a fixed exchange rate system, if a central bank conducts a monetary policy, there is no change in domestic interest rates because people only respond to exchange rate changes. B. Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect. C. Under a fixed exchange rate system, central banks do not exist so monetary policy cannot be conducted. D. All of the above.
Answer:
Option B - Under a fixed exchange rate system, if a central bank conducts a monetary policy, then it puts pressure on the exchange rate and the central bank would have to offset that effect.
Explanation:
Central banks are required to initiate measures to keep the exchange rate fixed, such that any move by them which causes movement of exchange rate will have to be countered by themselves.
Hence, if a central bank administers a monetary policy under a fixed exchange rate system, it would exert pressure on the exchange rate and the central bank would have to counteract that effect.
Therefore, option B is the correct answer choice.
Total Materials VarianceYoung Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.45 ounce of plastic per bottle. During the month of June, 240,000 bottles were produced using 110,000 ounces of plastic. The actual cost of plastic was $0.042 per ounce, and the standard price was $0.045 per ounce. There is no beginning or ending inventories of plastic.
Calculate the materials price and usage variances using the columnar and formula approaches.
Answer:
Price variance = $330 Favorable
Usage variance = $90 Unfavorable
Explanation:
Formula approach
Material price variance
$(0.045-0.042)× 110,000 = $330 Favorable
Material Usage Variance
(110,000)-(0.45×240,000) × 0.045 = $90 unfavorable
Columnar Approach
Price variance $
Standard cost (0.045 × 110,000 ) = 4950
Actual cost (0.042 × 110,000 ) = 4620
Variance 330 Favorable
Usage Variance
Ounce
Standard quantity (0.45×240,000) = 108000
Actual quantity 110,000
Variance in ounce 2000 unfavourable
× Standard price 0.045
Variance $90 Unfavorable
ssuming all else is constant, which of the following statements is CORRECT? a. A 20-year zero coupon bond has more reinvestment rate risk than a 20-year coupon bond. b. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate. c. From a corporate borrower's point of view, interest paid on bonds is not tax-deductible. d. For any given maturity, a 1.0 percentage point decrease in the market interest rate would cause a smaller dollar capital gain than the capital loss stemming from a 1.0 percentage point increase in the interest rate. e. Price sensitivity as measured by the percentage change in price due to a given change in the required rate of return decreases as a bond's maturity increases.
Answer: b. For a bond of any maturity, a 1.0 percentage point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0 percentage point decrease in the interest rate
Explanation:
This is very true. If market rates reduce by 1.0%, there is a larger drop in the price of a bond than the amount a bond gains in price if interest rates increase by that same 1.0%.
This is why the graph that relates bond prices to yield is concave and I attached a graph as proof.
Notice how the fall in price is greater when interest rate increases.
Yield-to-maturity is the interest rate an investor would earn if they reinvested every bond coupon payment at a constant interest rate until the bond's maturity date.
Hence, correct option is B.
"For a bond of any maturity, a 1.0% point increase in the market interest rate (rd) causes a larger dollar capital loss than the capital gain stemming from a 1.0% point decrease in the interest rate."
Consider or use a graphical illustration of the link between the price of a typical bond and the current interest rate. The graph will show a cupped curve, illustrating that for any interest rate, the price decrease from an increase in rates is not comparable to the price increase from a comparable rate reduction .
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At December 31, 2020, Oriole Company has outstanding noncancelable purchase commitments for 37,600 gallons, at $3.24 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.
A.) Assuming that the market price as of December 31, 2020, is $2.70, record the journal entry.
B.)Give the entry in January 2018, when the 36,000-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2020, and that the market price in January 2021 was $2.70 per gallon. Prepare the journal entry for when the materials are received in January 2021.
Answer:
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
Explanation:
Oriole Company has agreed to purchase Gallons of raw material for a defined price of $3.24 per gallon. The price is reduced on December 31, 2020. The Difference between the prices of gallons is recorded as unrealized gain on debit and liability is credited.
$3.24 - $2.70 = $0.54 * 37,600 Gallon = $20,304
Unrealized holding Gain or Loss - Income (Dr.) $20,304
Estimated Liability on purchase commitments (Cr.) $20,304
The raw material is purchased at the price of $2.70 per gallon and the 36,000 gallons are purchased. The journal entry to record this transaction is,
Raw material (Dr.) $76,896
Estimated liability on purchase commitments (Dr.) $20,304
Cash (Cr.) $97,200
1. Why have OpenTable competitors had a difficult time competing against OpenTable? 2. What characteristics of the restaurant market make it difficult for a reservation system to work? 3. How did OpenTable change its marketing strategy to succeed? 4. Why would restaurants find the SaaS model very attractive?
Answer:
The answer to the question are listed in the explanation section below
Explanation:
The following number of question is explained below:
A thousands of restaurants use open table to allow their online bookings capability which is a right choice as open table is a well respected and as well large international company in the industry. Restaurants have moved from open table to the competition, for the following reasons such as retain customers,first class technology., comparable online booking, save money.Open table now has a real competition in the form of Eveve, which allows line reservation system for restaurants. SAAS model: Software as a service (POS) system. restaurant owners find it attractive because of the loud based solution,Lower initial and maintenance costs,easy upgrades, and lower learning curve
H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through two segments: company-owned offices and franchised operations. Recent financial information provided by H&R Block for its company-owned and franchised operations is as follows (in millions): Company-Owned Franchised Operations Revenues $2,651 $ 335 Income from operations 617 86 Total assets 3,930 586 a. Use the DuPont formula to determine the return on investment for each business divisions. Round whole percents to one decimal place and investment turnover to two decimal places. Division Return on Investment Company-Owned % Franchised Operations % b. Determine the residual income for each division, assuming a minimum acceptable income of 15% of total assets. Round minimal acceptable return to the nearest million dollars. Division Residual income Company-Owned $ millions Franchised Operations $ millions c. The Franchised Operations (FO) segment has the return on investment, which is mainly the result of a investment turnover.
Answer:
Explanation:
A) Calculating ROI
For company owned;
Profit margin = 617/2651 = 23.3%
Asset turnover = 2651/3930 = 0.67
Return on investment (ROI) = 23.3*.67 = 15.6%
For Franchised operations;
Profit margin = 86/335 = 25.7%
Asset turnover = 335/586 = 0.57
Return on investment (ROI) = 25.7*.57 = 14.6%
B) Calculating Residual income
For company owned;
Operating income = 617
Minimum operating income = 3930*15% = 590
Residual income = 617-590 = 27
For For Franchised operations;
Operating income =86
Minimum operating income =586*15% = 88
Residual income = 86-88 = -2
C) The Franchised Operations (FO) section has the lowest return on investment, which is principally the result of the Lowest investment turnover.