umpkin Company sells lamps and other lighting fixtures. The purchasing department manager prepared the following inventory purchases budget. Lumpkin’s policy is to maintain an ending inventory balance equal to 10 percent of the following month’s cost of goods sold. April’s budgeted cost of goods sold is $40,000. Required Complete the inventory purchases budget by filling in the missing amounts.
Determine the amount of cost of goods sold the company will report on its first quarter pro forma income statement.
Determine the amount of ending inventory the company will report on its pro forma balance sheet at the end of the first quarter.
Answers
Answer
The answer and procedures of the exercise are attached in the following image.
Explanation
Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.
Without additional data, it's not possible to calculate Lumpkin Company's cost of goods sold for Q1. However, given the company's policy and the provided cost of goods sold for April, their ending inventory at the end of Q1 would be $4,000.
Explanation:To find the amount of cost of goods sold that the Lumpkin Company will report on its first quarter pro forma income statement, we would need the company's sales forecast and direct cost of the goods for the first quarter. However, as you only provided April's budgeted cost of goods sold ($40,000), we can't calculate the first quarter cost of goods sold without additional information.
Regarding the ending inventory, Lumpkin's policy is to maintain an ending inventory balance equal to 10 percent of the following month's cost of goods sold. Again, to compute the ending inventory for the end of Q1, we would need the company's projected cost of goods sold for April (the month following Q1) which you've mentioned as $40,000. Thus, using this, Lumpkin's ending inventory for Q1 would be $40,000 * 10% = $4,000.
Remember, the above solution is based on the information available and any additional data may affect the result.
Learn more about Inventory Management here:https://brainly.com/question/33751079
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Related Questions
Carlos purchased an apartment building on November 16, 2017, for $3,000,000. Determine the cost recovery for 2017.a. $9,630b. $11,910c. $13,950d. $22,740e. None of the above
Answers
Answer:
e. None of the above
Explanation:
Statement showing Computations
Paticulars Amount
Cost of building 3,000,000.00
Cost recovery deduction 3,000,000 *.00455
the cost recovery for 2017 is 13,650.00
Accounting Equation Shannon Cook is the stockholder and operator of Personality Shine LLC, a motivational consulting business. At the end of its accounting period, December 31, 2017, Personality Shine has assets of $836,000 and liabilities of $201,000. Using the accounting equation, determine the following amounts:a. Stockholders' equity as of December 31, 2017?b. b. Stockholders' equity as of December 31, 2018, assuming that assets decreased by $159,000 and liabilities decreased by $48,000 during 2018
Answers
Answer:
a. Stockholders' equity as of December 31, 2017: $635,000
b. Stockholders' equity as of December 31, 2018: $524,000
Explanation:
Please find the below for detailed explanation and calculations:
We have the Accounting Equation as: Total Asset = Total Liabilities + Total Equity <=> Total Equity = Total Asset - Total Liabilities
Applying the Accounting Equation to find the Stockholder's Equity at the two point of time require, we have the calculation as below:
* December 31, 2017:
Total Asset = $836,000; Total Liabilities = $201,000
=> Total Stockholder's Equity = $836,000 - $201,000 =$635,000
*December 2018:
Total Asset = $836,000 - $159,000 = $677,000; Total Liabilities = $201,000 - $48,000 = $153,000
=> Total Stockholder's equity = $677,000 - $153,000 = $524,000
A company's old machine, which cost $45,000 and had accumulated depreciation of $34,500, was traded in on a new machine of like purpose having an estimated 20-year life with an invoice price of $55,000. The company also paid $48,000 cash, along with its old machine to acquire the new machine. The value of new machine should be recorded at:
Answers
Answer:
Total Value of New Machine = $58500
Explanation:
given data
old machine cost = $45,000
accumulated depreciation = $34,500
invoice price = $55,000
cash paid = $48,000
to find out
new machine should be recorded
solution
we get here first value of Old Machine after Depreciation is
value of Old Machine after Depreciation = Old Machine Value-Depreciation .............1
put here value
value of Old Machine after Depreciation = $45,000 - $34,500
value of Old Machine after Depreciation = $10500
and
Total Value of New Machine = Cash Paid + Balance Value of Old Machine .......2
Total Value of New Machine = $48,000 + $10500
Total Value of New Machine = $58500
Another bank is also offering favorable terms, so Rahul decides to take a loan of $18,000 from this bank. He signs the loan contract at 10% compounded daily for three months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)
Answers
Answer:
The total amount that Rahul owes the bank at the end of the loan's term is $18,455.61
Explanation:
Hi, in order to find the total amount that Rahul will owe the bank in 3 months, we need to use the following formula (this is for a compounded daily rate).
[tex]FutureValue=PresentValue(1+\frac{r}{365} )^{\frac{n*365}{12} }[/tex]
Where:
r = compounded rate (in our case, 10% compounded daily)
n = time in months of the loan
PresentValue = $18,000
Everything should look like this.
[tex]FutureValue=18,000(1+\frac{0.10}{365} )^{\frac{3*365}{12} }[/tex]
[tex]FutureValue=18,000(1+0.000273973 )^{91.25 }=18,455.61[/tex]
So, the total amount that Rahul owes the bank at the end of the loan's term is $18,455.61
Best of luck
Joann finances her purchase of a $250,000 house with a 7/23 balloon payment mortgage. She pays 30 percent down on her home, and finances the 2% closing costs with the same loan (i.e., add the closing costs to the loan amount). The initial interest rate on this 7/23 mortgage is 4.2 percent. After the initial period, the renewed interest rate is 5.6% for the remaining life of the mortgage loan. Calculate (a) the monthly payment and (b) the interest portion of the first monthly payment, after the 7/23 mortgage loan is renewed.
Answers
Answer:
(a) $880.23 and (b) $1526.84
Explanation:
Please see attachment .
In general, it is possible to eliminate ________ risk by holding a large portfolio of assets.
A) unsystematic
B) systematic
C) unsystematic and systematic
D) market specific
Answers
Answer:
Letter A is correct. Unsystematic.
Explanation:
Unsystematic risk is that inherent in a specific sector of the market or company. The inherent risks of investing in only one company or industry may include the entry of new competitors, which may cause market loss, regulatory changes, managerial changes, withdrawal from the market and other uncertainties that are not always foreseeable by investors. .
Ideally to avoid this kind of risk is to invest in a diversified equity portfolio.
Horton Industries’ shareholders’ equity included 180 million shares of $1 par common stock and a balance in paid-in capital—excess of par of $1,440 million. Assuming that Horton retires shares it reacquires (restores their status to that of authorized but unissued shares), by what amount will Horton’s total paid-in capital decline if it reacquires 5 million shares at $7.00 per share?
Answers
Answer:
$35 million
Explanation:
The computation of the total paid-in capital declined is shown below:
= Number of reacquired shares × per share price
= 5 million shares × $7
= $35 million
We simply multiplied the number of acquired shares with the price of each share so that the correct amount can come.
All other information which is given is not relevant. Hence, ignored it
Consider a market of risk averse decision makers, each with a utility function U=√I Each decision maker has an income of $90,000, but faces the possibility of a catastrophic loss of $50,000 in income. Each decision maker can purchase an insurance policy that fully compensates her for her loss. This insurance policy has a cost of $5,900. Suppose each decision maker potentially has a different probability p of experiencing the loss.a. What is the smallest value of p so that a decision maker purchases insurance? Show your work.b. What would happen to this smallest value of p if the insurance company were to raise the insurance premium from $5,900 to $27,500?
Answers
Answer:
Please see attachment .
Explanation:
Please see attachment .
Final answer:
The smallest value of probability p for which a decision maker purchases insurance is found by comparing the expected utility of having insurance versus not having it, based on their utility function and the costs involved. The value of p at which insurance becomes beneficial increases as the cost of the premium increases, suggesting that higher premiums make insurance appealing only to those expecting a higher risk of loss.
Explanation:
Considering a market of risk-averse decision makers, where each has a utility function U=√I and faces a risk of catastrophic loss, we aim to find the smallest value of probability p that makes purchasing insurance worthwhile, and how this value changes with an increase in insurance premium.
Let I represent income and p the probability of experiencing the loss. The expected utility without insurance is E[U_without] = pU($40,000) + (1-p)U($90,000). With insurance costing $5,900, the expected utility becomes E[U_with] = U($84,100). A decision maker will purchase insurance if E[U_with] ≥ E[U_without]. This inequality allows us to solve for the minimum p at which buying insurance becomes beneficial.
If the insurance premium increases to $27,500, resulting in a new insured income of $62,500, the decision makers’ willingness to purchase insurance would be affected due to the significantly higher cost. Generally, as the premium increases, the minimum p at which insurance makes sense increases as well, meaning only those with a higher perceived risk of loss would find the insurance worth its cost.
Torrid Romance Publishers has total receivables of $3,160, which represents 20 days’ sales. Total assets are $73,000. The firm’s operating profit margin is 6.0%. Find the firm's ROA and asset turnover ratio. (Use 365 days in a year. Do not round intermediate calculations. Round the asset turnover ratio to 2 decimal places. Enter the ROA as a percent rounded to 2 decimal places.)
Answers
Answer:
4.74%
Explanation:
Data provided in the question:
Total receivables = $3,160
Day's sales in receivables = 20
Total assets = $73,000
Operating profit margin = 6.0%
Now,
Total sales = Total receivables × [365 ÷ Day's sales in receivables ]
= 3,160 × [ 365 ÷ 20 ]
= $57,670
Assets turnover ratio = Total sales ÷ Total assets
= $57,670 ÷ $73,000
= 0.79
Therefore,
ROA = Assets Turnover ratio × Profit margin
= 0.79 × 6.0%
= 4.74%
Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs:
A. do not affect, and are not affected by, the quantity the firm produces
B. only charge when production changes
C. only change in the short run
D. affect, and are affected by, the quantity the firm produces
Answers
Answer:
A. do not affect, and are not affected by, the quantity the firm produces
Explanation:
In a short run shutdown, regardless of the production of volume or if there is any production at all, fixed costs still have to be paid in full and therefore are irrelevant in the decision about whether to shut down production in the short run.
Thus, the answer is A. do not affect, and are not affected by, the quantity the firm produces.
Which one of the following is true about risk and return?A) Riskier assets will, on average, earn lower returns.B) The reward for bearing risk is known as the standard deviation.C) Based on historical data, there is no reward for bearing risk.D) An increase in the risk of an investment will result in a decreased risk premium.E) In general, the higher the expected return, the higher the risk.
Answers
Answer:
E) In general, the higher the expected return, the higher the risk.
Explanation:
In order to attract potential investors, investments that bear a higher risk must offer a higher expected return. This is known as the risk-return tradeoff principle. Abiding by that same logic, investments with lower associated risk tend to offer lower expected returns since they are a "safe bet".
Therefore, the answer is E) In general, the higher the expected return, the higher the risk.
Schwartz Industry is an industrial company with 100 million shares outstanding and a market capitalization (equity value) of $4 billion. It has $2 billion of debt outstanding. Management have decided to delever the firm by issuing new equity to repay all outstanding debt.
a) How many new shares must the firm issue?
b1) Suppose you are a shareholder holding 100 shares, and you disagree with this decision. Assuming a perfect capital market, how much should you borrow to hold the same amount of levered equity?
b2) How many new shares should you buy?
Answers
GDP: Is It Counted and Where? For each of the following items, write one of the following in the space provided: C if the item is counted as consumption spending, T if the item is counted as investment spending, G if the item is counted as government spending, NX if the item is counted as net exports, and NC if the item is not counted in GDP. 1. You spend $7.00 to attend a movie. __ 2. A family pays a contractor $100,000 for a house he built for them this year. __ 3. A family pays $75,000 for a house built three years ago. __ 4. An accountant pays a tailor $175 to sew a suit for her. __ 5. The government increases its defense expenditures by $1,000,000,000. __ 6. The government makes a $300 Social Security payment to a retired person. __ 7. You buy General Motors Corp. stock for $1,000 in the stock market. __ 8. At the end of a year, a flour-milling firm finds that its inventories of grain and flour are $10,000 above the amounts of its inventories at the beginning of the year. __ 9. A homemaker works hard caring for her spouse and two children. __ 10. Ford Motor Co. buys new auto-making robots. __ 11. You pay $300 a month to rent an apartment. __ 12. Apple Computer Co. builds a new factory in the United States. __ 13. R.J. Reynolds Co. buys control of Nabisco. __ 14. You buy a new Toyota that was made in Japan. __ 15. You pay tuition to attend college. __ We count only the final retail price of a new good or service in GDP. Why? A purely financial transaction will not be counted in GDP. Why? When a homeowner does home-improvement work, the value of the labor is not counted in GDP. Why?
Answers
Answer:
Check the following solutions.
Explanation:
(1) C
Money spent for movie ticket is personal consumption.
(2) I
Purchase of new residential house is included in GDP under fixed residential investment.
(3) NC
Purchase of used good is not counted (to avoid double counting).
(4) C
Money spent for suit is personal consumption.
(5) G
Defense spending is included in government purchase of goods and services.
(6) NC
Social security, being a transfer payment, is excluded from GDP.
(7) NC
Purchase of stocks is excluded from GDP.
(8) I
Unintended inventory is included under Gross private domestic investment.
(9) NC
Unpaid services are excluded from GDP since market value cannot be precisely computed.
(10) I
The robots are physical capital for Ford's business.
(11) C
Rental payment is personal consumption.
(12) I
Building new factory is fixed non-residential business investment.
(13) NC
Transfer of corporate ownership is excluded from GDP.
(14) NX
Purchase of Japanese car is an Import, included under NX.
(15) C
Tuition payment is personal consumption.
While ________ seems to be a reasonable measure of risk when evaluating a large portfolio, the
________ of an individual security does not explain the size of its average return.
A) volatility, volatility
B) the mean return, standard deviation
C) mode, volatility
D) mode, mean return
Answers
Answer:
A) volatility, volatility
Explanation:
Volatility refers to the change in returns as measured with the standard deviation with change in trading price series.
When we evaluate a large portfolio with various kinds of securities and investment, the volatility helps the best to access the risk factor present in it.
Whereas the risk can not be measured through the volatility of an individual security, as there will not be major effect of change in prices, on other securities.
As the volatility factor is in correspondence of other factors, as well.
A group of manufacturers of LCD screens for computers and cell phones met together monthly in private conference rooms in hotels to discuss their markets and kept notes with phrases such as "Must act together with the Korean makers in order to reap success," and "Extremely confidential. Must not distribute." The result was that the LCD screen producers were able to command high prices for their products, prices that were non-negotiable. Which of the following statements is correct about their conduct?
a. The manufacturers had engaged in a per se violation of antitrust laws.
b. The manufacturers violated the Sherman Act.
c. The manufacturers violated the Clayton Act.
d. both a and b
e. all of the above
Answers
Answer: a. The manufacturers had engaged in a per se violation of antitrust laws.
Explanation: The Sherman and Clayton Acts would apply to US companies. The group of manufacturers of LCD screens were not specified as US companies. But by virtue of the fact of colluding with Korean makers they would have per se been violating the the Monopoly Regulation and Fair Trade Act (MRFTA) of Korea.
Sheridan Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 280 $17 $ 4,760 April 15 purchase 420 20 8,400 April 23 purchase 300 22 6,600 1,000 $19,760 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
Answers
Answer:
Closing inventory - $10,160
Costs of goods sold - $9,600
Explanation:
Under the LIFO Method, the cost of good sold equals to
= April 23 units × cost per unit + Remaining units × cost per unit
= 300 units × $22 + 150 units × $20
= $6,600 + $3,000
= $9,600
Since the firm has sold 450 units, so out of which 300 units sold at a price of $22 and the remaining 150 units sold at a price of $20
The ending inventory equals to
= Remaining units × cost per unit + April 1 × cost per unit
= 270 units × $20 + 280 units × $17
= $5,400 + $4,760
= $10,160
Since on April 23, the 420 units were purchase, out of which 150 units are transferred to the cost of good sold and the remaining units 270 units at $20 is transferred to the ending inventory
Final answer:
Using LIFO, the April cost of goods sold for the Sheridan Company is $9,600, and the ending inventory at April 30 is valued at $10,160.
Explanation:
When using the Last In, First Out (LIFO) inventory valuation method, Sheridan Company will calculate the cost of goods sold (COGS) and ending inventory based on the assumption that the most recently purchased items are sold first. The April cost of goods sold is calculated by adding the cost of the units sold, starting with the most recent purchase, until reaching the total number of units sold (450 units). The April 30 inventory is then determined by subtracting the sold units' cost from the total cost of available inventory.
Let's calculate:
COGS for the 300 units from April 23 purchase: 300 units x $22 = $6,600The remaining 150 units sold come from the April 15 purchase: 150 units x $20 = $3,000Total COGS for April (sum of #1 and #2): $6,600 + $3,000 = $9,600April 30 inventory calculation starts with the total cost of inventory: $19,760Subtract the total COGS from the total cost of inventory for the end of the month inventory: $19,760 - $9,600 = $10,160Thus, the April 30 inventory is $10,160, and the April cost of goods sold is $9,600.
True or False? Given that so many countries around the world already use care management and evidence-based medicine in their health systems, there is little interest in US MCOs' expertise in this area.
Answers
The answer Is false I'm 93% positive that's the answer
. Assume that the dollar-Euro exchange rate (E$/€) = 1.1, the U.S. interest rate is 4% and the Euro interest rate is 1%, and that covered interest parity holds. a. How many Euros will an American investor with $1,000 have a year from now? b. What is the forward exchange rate (F$/€) ?
Answers
Answer:
1) €918
2) E$/€)= 1.13
Explanation:
1) the dollar-Euro exchange rate (E$/€) if 1.1 means that from one Euro you can buy 1.1 dollars. So if an American investor invests $1,000 today in Euros he will get 1000/1.1= 909.09 Euros. Then if he invests 909.09 euros at an interest rate of 1% he will have (909.09*1.01)=918 euros.
The formula for forward exchange rate is
FWD= Spot price *(1+Interest rate of variable currency *Days/Annual Base)/(1+interest rate of base currency *days/annual base)
In this case the spot price is 1.1, the euro is the base currency and the dollar is the variable currency. The annual base is 365 and the days are also 365 since the we to find 1 year forward rate so days/annual base is 1.
FWD= 1.1*(1.04*1)/(1.01*1)= 1.13
This means that in a one year forward one Euro will cost $1.13
If unions help workers secure pension benefits, so that those workers are less dependent on government social assistance after their retirement, then
a. the for-profit unionized industries will be less productive.
b. the for-profit unionized industries will be harmed.
c. the union is economically harmful.
d. the union is economically beneficial.
Answers
Answer:
The correct answer is (D)
Explanation:
Employees and staff elect few people to represent them; individual elected members form a union. The central role of the union is to work for the collective benefit of employees and staff. They are the ones who negotiate to gain a fair outcome through cooperative debate. They discuss everything from a retirement plan to a holiday package.
Unions that help workers secure pension benefits contribute to decreasing workers' dependence on government social assistance, which could lead to economic benefits by reducing government burdens and reallocating funds. The correct answer is d. the union is economically beneficial.
The question at hand explores the relationship between unions and their economic impact, particularly related to pension benefits and dependence on government social assistance after retirement.
If unions help workers secure pension benefits so that these workers are less dependent on government social assistance after their retirement, the implication is that workers will have a more secure financial foundation upon which to sustain themselves. Therefore, rather than being economically harmful, unions in this case could be considered economically beneficial.
By ensuring that workers have the necessary resources for retirement, unions contribute to reducing the long-term financial burden on government social assistance programs. This can have a positive economic effect by potentially reducing taxes or reallocating government spending to other areas of need.
Moreover, the assumption that unionized industries will be less productive or harmed is not necessarily a given and indeed is a separate issue from the discussion of union impact on pension benefits and government assistance.
In conclusion, the most likely answer to the student's question would be that the union is economically beneficial.
A project has an installed cost of $500,000 and requires an additional working capital investment of $100,000. The project replaces an existing piece of equipment that has an estimated salvage value of $7000 and has a book value of $2000. The firm’s marginal tax rate is 40 percent. What is the Initial Outlay for this project?
Answers
Answer:
Please see attachment .
Explanation:
Please see attachment
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.6 million in anticipation of using it as a warehouse and distribution site, but the company has since decided to rent these facilities from a competitor instead. If the land were sold today, the company would net $4.9 million. The company wants to build its new manufacturing plant on this land; the plant will cost $12.1 million to build, and the site requires $730,000 worth of grading before it is suitable for construction. What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating this project?
Answers
Answer:
$17,730,000
Explanation:
The computation of the proper cash flow amount is shown below:
= Land sale value + new manufacturing plant on this land + grading cost before it is suitable for construction
= $4,900,000 + $12,100,000 + $730,000
= $17,730,000
We simply added the land sale value, new manufacturing plant on this land, and the grading cost before it is suitable for construction so that the correct amount can come
All other information which is given is not relevant. Hence, ignored it
1. Executive Chalk is financed solely by common stock and has outstanding 25m shares with a market price of $10 per share. It now announces that it intends to issue $160m old debt and to use the proceeds to buy back common stock (from Brealey, Myers, and Allen.) a. How is the market price of the stock affected by the announcement? b. How many shares can the company buy back with the $160m of new debt that it issues? c. What is the market value of the firm (equity plus debt) after the change in capital structure? d. What is the debt ratio (D/E) after the change in structure? e. Who (if anyone) gains or loses?
Answers
Answer:
a. $10 per share
b. 16 million shares
c. $250 million
d. 64%
e. No one gain or loss
Explanation:
a. The expected market price of the common stock is same as given in the question i.e $10 per share
b. The buy back shares would be
= New debt value ÷ market price per share
= $160 million ÷ $10
= 16 million shares
c. The market value of the firm would be
= (Outstanding shares - buy back shares) × market price per share + debt value
= (25 million shares - 16 million shares) × $10 + $160 million
= $90 million + $1260 million
= $250 million
d. The debt ratio would be
= Debt value ÷ market value of the firm
= $160 million ÷ 250 million
= 64%
e. No one gain or loss
Ivorycoast, Inc. purchased a van on January 1, 2017, for $890,000. Estimated life of the van was five years, and its estimated residual value was $98,000. Ivorycoast uses the straight-line method of depreciation. Calculate the book value of the van at the end of 2017.
Answers
Answer:
$731,600
Explanation:
For computing the book value, first we have to determine the depreciation expense which is shown below:
So, under the straight-line method, the depreciation expense would be
= (Original cost - residual value) ÷ (useful life)
= ($890,000- $98,000) ÷ (5 years)
= ($792,000) ÷ (5 years)
= $158,400
In this method, the depreciation is same for all the remaining useful life
Now the book value would be
= Acquired value of an asset - depreciation expense
= $890,000 - $158,400
= $731,600
In each of the following pairs of bonds, select the bond that has the highest duration or effective duration: a. Bond A is a 6% coupon bond, with a 20-year time to maturity selling at par value. Bond B is a 6% coupon bond, with a 20-year time to maturity selling below par value.
Answers
Answer:
Please see attachment .
Explanation:
Please see attachment .
Which of the following statement is incorrect concerning standard costing and/or variance calculations? A. Price (rate) standards represent the expected cost per unit of input. B. Standards are used at the beginning of the period during to budget and at the end of the period to evaluate performance. C. Variances falling outside of an acceptable range of outcomes do not require investigation. D. A price (rate) variance calculates the difference between what a company paid and what it expected to pay for its production input. E. A favorable quantity (efficiency) variance indicates that a company used less input than allowed for the actual level of output.
Answers
Answer:
C. Variances falling outside of an acceptable range of outcomes do not require investigation.
Explanation:
The purpose of any business is to generate profit which is the difference between the revenues and all cost related to business.
In order to define suitable selling price and acceptable cost, all figures are to be set in standard range; any variance outside the standard, even lower or higher, must be investigated then the company can make proper adjustments.
In the end, the right standard is not only achievable but also maximize for the profit set.
So while other statements are true about standard and variance, the statement (C) is totally wrong because it said “Variances falling outside of an acceptable range of outcomes do not require investigation”
Farmer Corp. owned 20,000 shares of Eaton Corp. purchased in 2009 for $300,000. On December 15, 2012, Farmer declared a property dividend of all of its Eaton Corp. shares on the basis of one share of Eaton for every 10 shares of Farmer common stock held by its stockholders. The property dividend was distributed on January 15, 2013. On the declaration date, the aggregate market price of the Eaton shares held by Farmer was $500,000. The entry to record the declaration of the dividend would include a debit to Retained Earnings of
Answers
Answer:
Debited to Retained Earnings of $500,000.
Explanation:
At the time of declaration of the dividend, the journal entry is recorded which is shown below:
Retained earning A/c Dr $500,000
To Dividend payable A/c $500,000
(Being cash dividend declared)
On the declaration date, the dividend amount is recorded. So while recording we debited the retained earning account and credited the dividend payable account
All other information which is given is not relevant. Hence, ignored it
The Dell Corporation borrowed $ 10,000,000 at 5% interest per year, which must be repaid in equal EOY amounts (including both interest and principal) over the next seven years. How much must Dell repay at the end of each year? How much of the total amount repaid is interest?
Answers
Answer:
- Dell must repay $1,728,198.18 at the end of each year.
- $2,097,387.29 out of the total repaid amount is interest expense.
Explanation:
- EOY equal repayment calculation:
We apply the present value formula for annuity to calculate the equal repayment amount Dell needs to make in the next 7 years.
Denote C is equal repayment, PV is present value of the loan which is $10 million, i is interest rate which is 5%, n is the number of repayments which is 7.
We have: C = (PV x i) / [ 1 - (1+i)^-n] => C = (10,000,000 x 5%) / ( 1 -1.05^(-7)) = $1,728,198.18.
- Interest expense calculation:
Total repayment made: 1,728,198.18 x 7 = $12,097,387.29.
Total interest expense = Total repayment made - principal amount = 12,097,387.29 - 10,000,000 = $2,097,387.29
Nieto Company's budgeted sales and direct materials purchases are as follows. Budgeted Sales Budgeted D.M. Purchases January $200,000 $30,000 February 220,000 36,000 March 250,000 38,000 Nieto's sales are 30% cash and 70% credit. Credit sales are collected 10% in the month of sale, 50% in the month following sale, and 36% in the second month following sale; 4% are uncollectible. Nieto's purchases are 50% cash and 50% on account. Purchases on account are paid 40% in the month of purchase, and 60% in the month following purchase.
Instructions
(a) Prepare a schedule of expected collections from customers for March.
(b) Prepare a schedule of expected payments for direct materials for March
Answers
Answer
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Explanation
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The schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.
Schedule of expected collections from customersa.Schedule of expected cash collection
Cash sales $75,000
($250,000×30%)
Collection from credit sales
January $50,400
($200,000×70%×36%)
February $77,000
($220,000×70%×50%)
March $17,500
($250,000×70%×10%)
Toatl cash collection $219,900
b. Schedule of expected payment for direct materials
Cash purchases $19,000
($38,000×50%)
Payment for credit sales
January $10,800
($36,000×50%×60%)
February $7,600
($38,000×50%×40%)
Total cash payment $37,400
Inconclusion the schedule of expected collections from customers for March is $219,900 and the schedule of expected payments for direct materials for March is $37,400.
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The standard number of hours that should have been worked for the output attained is 8000 direct labor hours and the actual number of direct labor hours worked was 8300. If the direct labor price variance was $4150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?
A. $9.00 per direct labor hourB. $9.50 per direct labor hourC. $8.50 per direct labor hourD. $7.50 per direct labor hour
Answers
Answer:
B. $9.50 per direct labor hour
Explanation:
Expected labor hours (EL) = 8000
Actual labor hours (AL) = 8300
Labor price variance (LV) = $4150 unfavorable
Standard rate (r) = $9 per hour
The expected labor price (LP) is given by
[tex]ELP = AL*r = 8300*9\\ELP = \$74700[/tex]
Since thre is an unfavorable labor price variance, the actual labor price (ALP) is:
[tex]ALP = ELP + LV\\ALP = 74700+4150\\ALP=78850[/tex]
The actual rate of pay is:
[tex]AR = \frac{ALP}{AL} =\frac{78,850}{8300}\\AR=\$9.50[/tex]
The actual rate of pay for direct labor is $9.50 per direct labor hour.
Harvey Automobiles uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $50,000 and variable costs of $110,000. The company can buy the part from an outside supplier for $3.00 per unit, and avoid 30% of the fixed costs. If Harvey Automobiles makes the part, how much will its operating income be?
Answers
Answer:
$55,000
Explanation:
The computation of the change in operating income is shown below:
= Buying cost - making cost
where,
Buying cost = Cost of producing parts × outside supplier per unit
= 60,000 parts × $3
= $180,000
And, the making cost would be
= Variable cost + fixed cost × given percentage
= $110,000 + $50,000 × 30%
= $110,000 + $15,000
= $125,000
So, the operating income would be
= $180,000 - $125,000
= $55,000