Answer:
c. $1,290
Explanation:
FIFO assumes that the units to arrive first are the first to be sold. This means that the cost of sales is based earlier prices.
Step 1 : Units Sold
Units Sold =Units available for sale - Units in Inventory
= 700 - 250
= 450
Step 2 : Cost of Sales
Cost of Sales = $390 + $585 + 100/200 x $630
= $390 + $585 + $315
= $1,290
Using the FIFO inventory method, the amount allocated to cost of goods sold for June is $1,290
Suppose your client wishes to purchase an annuity that pays $50,000 each year for 5 years, with the first payment 4 years from now. At an interest rate of 10%, how much would the client need to invest now
Answer:
The amount the client would need to invest now is $182,143.58.
Explanation:
This can be calculated using the following two steps:
Step 1: Calculate the present value (PV) of the amount invested 4 years from now
This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:
PV4 = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)
Where;
PV4 = Present value of the amount invested 4 years from now = ?
P = Annual payment = $50,000
r = Interest rate = 10%, or 0.10
n = number of years the annual payment will be received = 5
Substitute the values into equation (1), we have:
PV4 = $50,000 * ((1 - (1 / (1 + 0.10))^5) / 0.10)
PV4 = $189,539.34
Step 2: Calculate the amount the client would need to invest now
This can be calculated using the present value formula as follows:
PV = PV4 / (1 + r)^n …………………………. (2)
Where:
PV = Present value or the amount the client would need to invest now = ?
PV4 = Present value of the amount invested 4 years from now = $189,539.34
r = Interest rate = 10%, or 0.10
n = number of years of PV4 from now = 4
Substituting the relevant values into equation one, we have:
PV = $189,539.34 / (1 + 0.01)^4
PV = $182,143.58
Therefore, the amount the client would need to invest now is $182,143.58.
On November 1, Alan Company signed a 120-day, 12% note payable, with a face value of $10,800. What is the maturity value of the note on March 1? (Use 360 days a year.)
a) $11,016
b) $10,800
c) $11,088
d) $11,232
e) $10,944
Answer: $11232
Explanation:
The maturity value of the note on March 1 will be calculated as thus:
Face value = $10800
Interest on note = $10800 × 12% × 120/360 = $432
Maturity value will now be:
= Face value + Interest on note
= $10800 + $432
= $11232
A firm is currently unlevered with 1,000,000 shares each price at $50. The firm is debating of changing its capital structure by taking $20 million in debt that matures in 4 years and repurchasing shares. It will pay down this debt by $5 million every year. If the tax rate is 21% and cost of debt is 7.5%, what is the firm value of the restructured firm
Answer:
its would be 50,000 dont really know
Below are amounts (in millions) from three companies' annual reports. Beginning Accounts Receivable Ending Accounts Receivable Net Sales WalCo $ 1,625 $ 2,572 $ 303,427 TarMart 5,216 5,744 48,878 CostGet 439 475 49,963 Required: 1. Calculate the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet
Answer:
1. Accounts Receivable Turnover
Walco 144.59 Times
Tarmart 8.9 Times
Costget 109.33 Times
Average collection period
Walco 2.52 Days
Tarmart 41.01 Days
Costget 3.34 Days
2. Walco
Explanation:
1. Calculation to determine the receivables turnover ratio and the average collection period for WalCo, TarMart and CostGet
ACCOUNTS RECEIVABLE TURNOVER
Using this formula
Accounts Receivable Turnover=Net Sales/Average Accounts receivable
Walco=$ 303,427/($ 1,625+2,572)/2
Walco=$ 303,427/$2,098.5
Walco =144.59 Times
Tarmart= 48,878/(5,216 + 5744)/2
Tarmart= 48,878/5480
Tarmart= 8.9 Times
Costget= 49,963/(439 + 475)/2
Costget= 49,963/457
Costget= 109.33 Times
Therefore the receivables turnover ratio is :
Walco 144.59 Times
Tarmart 8.9 Times
Costget 109.33 Times
AVERAGE COLLECTION PERIOD
Using this formula
Average collection period=Average Collection Period
365 /Receivables turnover ratio
Let plug in the formula
Walco= 365.00/144.59 Walco=2.52 Days
Tarmart= 365.00/8.9
Tarmart= 41.01 Days
Costget= 365.00/109.33
Costget=3.34 Days
2. Based on the above calculation the company that appears MOST EFFICIENT in collecting cash from sales is WALCO 144.59 Times.
Consider the markets for tap water, bottled water, cola, and beer. Assume there is only one provider of tap water, bottled water manufacturers use advertising to differentiate their products, cola producers engage in strategic pricing behavior, and the beer market is largely controlled by only a few firms. Classify the market for each of the following drinks as either monopoly, oligopoly, monopolistic competition, or perfect competition.
Monopoly Oligopoly Monopolistic Competition Perfect Competition
Tap water
Bottled water
Cola
Beer
Answer:
Tap water ⇒ Monopoly
In a monopoly, there is only one supplier of a certain good or service. Tap water is therefore a monopoly as only one provider supplies it.
Bottle water ⇒ Monopolistic competition
In a monopolistic competition, similar but differentiated products are supplied. As bottled water is differentiated by advertising, it must exist in a monopolistic competition.
Cola ⇒ Oligopoly
An oligopoly is controlled by a few firms who have to engage in strategic planning behavior in order to sell their goods. This means that they would either lower prices to match competitors or collude with them to ensure stable prices.
Beer ⇒ Oligopoly
In an oligopoly, the market is controlled by a few firms who have an incentive to collude to set a certain price because a price war would be bad for all the firms involved.
The following data for a production department relate to two accounting periods:
Activity(machine-hours)....... 17,000 18,500
Department costs................... $246,500 $251,750
The best estimate of fixed department cost is closest to:________.
Answer:
Fixed costs= $187,000
Explanation:
Giving the following information:
Activity(machine-hours): 17,000 18,500
Department costs: $246,500 $251,750
To calculate the fixed and variable cost, we need to use the high-low method:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (251,750 - 246,500) / (18,500 - 17,000)
Variable cost per unit= $3.5
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 251,750 - (3.5*18,500)
Fixed costs= $187,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 246,500 - (3.5*17,000)
Fixed costs= $187,000
Merchandise inventory: A. Is a long-term asset. B. Is a current asset. C. Includes supplies. D. Is classified with investments on the balance sheet. E. Must be sold within one month.
Merchandise Inventory is classified into the financial statements of a company as a current asset.
What is a current asset?The kind of asset whose benefits are fully utilized by the company within a year and do not last for more than a year in the company's financial statements are known as current assets.
Hence, option B states about current assets.
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A standard cost _____ indicates the amount of direct labor, direct materials and overhead for one unit of product. Multiple choice question. card variance rate report
Answer:
card
Explanation:
A standard cost card can be regarded as card that encompass all the itemization or list of overhead, labor and standard amounts of materials, which is required in creating one unit of a product. This card can multiplies quantities that is been required to get to the total standard cost of a product and standard cost of each of the items.
It should be noted that standard cost
card indicates the amount of direct labor, direct materials and overhead for one unit of product.
Global Tek plans on increasing its annual dividend by 15 percent a year for the next four years and then decreasing the growth rate to 2.5 percent per year. The company just paid its annual dividend in the amount of $.20 per share. What is the current value of one share of this stock if the required rate of return is 17.4 percent
Answer:
2.02
Explanation:
year 1 dividend = 0.2 x 1.15 = 0.23
year 2 dividend = 0.2 x (1.15^2)= 0.26
year 3 dividend = 0.2 x (1.15^3) = 0.30
year 4 dividend = 0.2 x (1.15^4) = 0.35
divdend value in the second stage
0.35 x 1.025 / (0.174 - 0.025) = 2.41
Determine the present value of the cash flows
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
year 1 dividend = 0.2 x 1.15 = 0.23
year 2 dividend = 0.2 x (1.15^2)= 0.26
year 3 dividend = 0.2 x (1.15^3) = 0.30
year 4 dividend = 0.2 x (1.15^4) = 0.35 + 2.41
i = 17.4
To find the NPV using a financial calculator:
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
Which of the following is NOT one of the components of a firm's business model?
A. strategic resources
B. the industry competitors
C. core strategy
D. customer interface
E. partnership network
Answer: the industry competitors
Explanation:
A business model simply refers to the strategy that a company will use in making profit and achieving its goals.
The components of the business model of a company include the strategic resources, core strategy, partnership network, and the customer interface.
It should be noted that the industry competitors isn't among the components.
The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $5,400,000 $30,000,000 Commercial Division 6,250,000 25,000,000 Internet Division 1,800,000 12,000,000 a. Compute the return on investment for each division.
Answer:
Retail Division = 18 %
Commercial Division = 25 %
Internet Division = 15 %
Explanation:
Return on Investment = Net Income / Assets employed x 100
therefore,
Retail Division = $5,400,000 / $30,000,000 x 100
= 18 %
Commercial Division = $6,250,000 / $25,000,000 x 100
= 25 %
Internet Division = $1,800,000 / $12,000,000 x 100
= 15 %
Promotional expenses at the maturity stage of the product life cycle are often designed to Multiple Choice maintain market share. create a sense of nostalgia. attract more price-conscious consumers. thwart the growing number of competitors that have entered the market. convince those who have abandoned the brand to try it again.
Answer:
maintain market share.
Explanation:
A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.
A product life cycle can be defined as the stages or phases that a particular product passes through, from the period it was introduced into the market to the period when it is eventually removed from the market.
Generally, there are four (4) stages in the product-life cycle;
1. Introduction.
2. Growth.
3. Maturity.
4. Decline.
Maturity is the stage in which product experiences a peak in sales growth and then eventually slows as the product reaches more customers, and lastly price competition is fierce.
Promotional expenses that are incurred at the maturity stage of the product life cycle are often designed by marketers to maintain market share. This is usually achieved through further product differentiation and finding new buyers (consumers).
Anya owns land with an adjusted basis of $305,000, subject to a mortgage of $175,000. Anya sells her land subject to the mortgage for $325,000 in cash, and a note for $300,000. What is Anya's amount realized on this sale
Answer: $800,000
Explanation:
Alice's realized amount from the sale is a sum of all the amounts that the seller gets it for as well as any mortgages assumed.
Alice therefore realized:
= Mortgage assumed by seller + Cash + Note
= 175,000 + 325,000 + 300,000
= $800,000
Your friend was injured in an accident, and the insurance company has offered him the choice of $25,000 per year for 15 years, with the first payment being made today, or a lump sum. If a fair return is 7.5%, how large must the lump sum be to leave him as well off financially as with the annuity
Answer:
PV=$237,228.84
Explanation:
Giving the following information:
Annual payment= $25,000
Number of periods= 15 years
Interest rate= 7.5%
To calculate the value of the payments today (PV), we need to use the following formula:
PV= A*{(1/i) - 1/[i*(1 + i)^n]} * (1+i)
PV= 25,000*{(1/0.075) - 1/ [0.075*(1.075^15)]} * 1.075
PV=$237,228.84
Classifying Liability-Related Accounts into Balance Sheet or Income Statement Indicate the proper financial statement classification (balance sheet or income statement) for each of the following liability-related accounts. Account Financial Statement a. Gain on Bond Retirement Answer Income statement b. Discount on Bonds Payable Answer Balance sheet c. Mortgage Notes Payable Answer Balance sheet d. Bonds Payable Answer Balance sheet e. Bond Interest Expense Answer Income statement f. Bond Interest Payable (due next period) Answer Balance sheet g. Premium on Bonds Payable Answer Balance sheet h. Loss on Bond Retirement Answer Income statement Check
Answer:
Income Statement:
Gains and expenses for the period go to the income statement so the accounts that go here include:
a. Gain on Bond Retirement
e. Bond Interest Expense
h. Loss on Bond Retirement
Balance sheet:
All liabilities go to the Balance sheet.
b. Discount on Bonds Payable
c. Mortgage Notes Payable
d. Bonds Payable
f. Bond Interest Payable (due next period)
g. Premium on Bonds Payable
The beginning inventory of BG Action Figures is understated by $7 million at December 31, 20x8. What is the effect on 20x8 cost of goods sold? Group of answer choices $7 million overstated $7 million understated no effect none of the above
Answer:
$7million understated
Explanation:
Based on the information given the effect on 20x8 COST OF GOODS SOLD will be UNDERSTATED by $7 million reasons been that since the OPENING INVENTORY IS UNDERSTATED by $7 million which means that the COST OF GOODS SOLD will as well be UNDERSTATED by the same amount based on the fact that opening inventory adds to Cost of goods sold.
By participating in _____, sellers can automate the fulfillment function of business-to-business (B2B) e-commerce.
Answer:
Buyer-side marketplaces
Explanation:
Joe is currently selling 873 hamburgers per month at $5 per hamburger for total monthly sales of $4,365. The restaurant manager feels that a $1,000 monthly advertising budget would increase monthly sales by $3,000 to a total of 1,473 hamburgers. Should Joe add advertising
Answer:
Yes
Explanation:
Yes, as long as Joe is able to recover the money that he has spent on advertising and still increase his profit, then he should advertise. In this scenario, he wants to spend a fixed $1000 monthly on ads. If these ads generate an increase monthly sales of $3,000 as expected, then this means that Joe's restaurant will increase their total profits by $2,000 after recovering what they spent on the ads. This is what ads are for.
Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result, these countries have
Answer:
attracted both trade and foreign direct investment.
Explanation:
The free market reforms that took place in the newly industrialized countries (NICs) as in some Asian and Latin American countries, provided the attraction of foreign direct investment and increased trade.
This was due to the fact that lesser trade restrictions and free market reforms were significant incentives for foreign countries to seek investment opportunities in a country that could offer significant advantages, such as tax incentives, cheaper labor and conquering new markets. It also stimulated commercial activity by local and foreign investors, who saw new opportunities to implement activities locally that would bring competitive and economic advantage.
On July 1, 2020 Garcia Corporation issued 5%, 10-year bonds with a face value of $8,000,000 at 96. Interest is paid on Jan 1 and July 1, with any premiums or discounts amortized on a straight-line basis. Bond interest expense reported on the December 31, 2020 income statement of Garcia Corporation would be
Answer:
Garcia Corporation
Bond interest expense reported on the December 31 2020 income statement of Garcia Corporation would be:
= $216,000.
Explanation:
a) Data and Calculations:
Face value of bonds issued = $8,000,000
Issue price at 96 = 7,680,000 (96% * $8,000,000)
Discount on bonds = $320,000
Coupon rate of interest = 5% or 2.5% semi-annually
Maturity period = 10 years
Period of bonds = 20 (10 * 2)
Interest payment = Jan 1 and July 1 (semi-annually)
Amortized semi-annual discounts = $16,000 ($320,000/20)
Interest payment = $200,000 ($8,000,000 * 2.5%)
Interest expense = $216,000 ($200,000 + $16,000)
Analysis on December 31, 2020:
Interest expense $216,000
Interest payable $200,000
Amortized discounts $16,000
Which of the following is the plan of action used by management to identify how resources will be allocated, how the company will market in its competitive environment, and how the firm will attain its goals?
A. Strategy
B. Organizational structure
C. Competitive advantage
D. Market analysis
E. Action plan
Answer:
A. Strategy
Explanation:
Strategy is basically a planning in which it tells how the things can be done. It is the planning action that applied by the management for identifying the resources that need to be distributed, how it can be in the competitive environment and how the company is able to achieve its goals and objectives
So, the option a is correct
Rizio Co. purchases a machine for $9,600, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $192 discount. Transportation costs of $217 were paid by Rizio. The machine required mounting and power connections costing $664. Another $313 is paid to assemble the machine and $40 of materials are used to get it into operation. During installation, the machine was damaged and $245 worth of repairs were made.
Required:
Compute the cost recorded for this machine.
Answer:
$10,642
Explanation:
Computation to determine the cost recorded for this machine.
Amount included in the cost of equipment
Invoice price of machine $9,600
Less: Discount (9600 x 2%) ($192)
Net purchase price $9,408
($9,600-$192)
Freight charges $217
Mounting and power connections $664
Assembly $313
Materials used in adjusting $40
Total cost to be recorded $10,642
Therefore the cost recorded for this machine is $10,642
what is the primary benefit people receive in exchange for paying premiums to an insurance company
Answer:
The insurance company will pay for covered expenses
With premium rates from insurance companies, the overall protection is much more guaranteed than a regular, and perhaps the insurance will cover more than regular insurance.
A benefit that people receive in exchange for paying premiums is that insurance company B.will pay for covered expenses.
What is insurance?The insurance can be regarded as a process of insuring one's property or life in case of danger or any future problems.
The insurance company pays you or someone you choose if something bad happens to you. If you have no insurance and an accident happens, you may be responsible for all related costs.
Therefore, option B is correct because, when people pay their premiums, the company will be available to covered expenses.
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Market efficiency is probably the most controversial concept in finance. Even recent winners of the Nobel Prize in Economics come down on opposite sides of the issue. Nonetheless, it is important for you to grapple with this idea. It has very important practical implications for investment decisions, including (especially) for your personal investment decision. In particular, should you pursue active or passive strategies
Answer:
Active strategies should be pursued when the market is more volatile, with larger fluctuations over a shorter period of time, that require a more active management of a portfolio, in order to take advantage of fast changing positions in different assets, and also in order to avoid possible losses due to staying in particular positions for too long.
Passive strategies is more long-term focused, and should be pursued when the economy is more stable. Passive strategies should be analyzed carefully before execution because once the passive investment is made, the idea is to keep the position for a long period of time instead of buying and selling constantly as in a active strategy.
A rate-making method designed to adjust a premium to reflect the actual loss experience of an insured during the policy period is known as:_______.
a. retrospective rating,
b. experience rating,
c. premium discount,
d. all of the above
Answer:
a. retrospective rating
Explanation:
Retrospective Rating can be regarded as a rating plan which is able to give
adjustments to it's premium, this rating can be subjected to a certain minimum as well as maximum, the rating is able to reflect or state the current loss experience of the insured. This rating give combination of actual losses as well as graded expenses so that produce a premium that reflects the current experience of the insured accurately can be produced. It should be noted that retrospective rating is a rate-making method designed to adjust a premium to reflect the actual loss experience of an insured during the policy period
The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for December 2016:
Estimated sales for December:
Bird house 3,200 units at $50 per unit
Bird feeder 3,000 units at $70 per unit
Estimated inventories at December 1:
Direct materials:
Wood 200 ft.
Plastic 240 lbs.
Finished products:
Bird house 320 units at $27 per unit
Bird feeder 270 units at $40 per unit
Desired inventories at December 31:
Direct materials:
Wood 220 ft.
Plastic 200 lbs.
Finished products:
Bird house 290 units at $27 per unit
Bird feeder 250 units at $41 per unit
Direct materials used in production:
In manufacture of Bird House:
Wood 0.80 ft. per unit of product
Plastic 0.50 lb. per unit of product
In manufacture of Bird Feeder:
Wood 1.20 ft. per unit of product
Plastic 0.75 lb. per unit of product
Anticipated cost of purchases and beginning and ending inventory of direct materials:
Wood $7.00 per ft.
Plastic $1.00 per lb.
Direct labor requirements:
Bird House:
Fabrication Department 0.20 hr. at $16 per hr.
Assembly Department 0.30 hr. at $12 per hr.
Bird Feeder:
Fabrication Department 0.40 hr. at $16 per hr.
Assembly Department 0.35 hr. at $12 per hr.
Estimated factory overhead costs for December:
Indirect factory wages $75,000
Depreciation of plant and equipment 23,000
Power and light $6,000
Insurance and property tax 5,000
Estimated operating expenses for December:
Sales salaries expense $70,000
Advertising expense 18,000
Office salaries expense 21,000
Depreciation expense—office equipment 600
Telephone expense—selling 550
Telephone expense—administrative 250
Travel expense—selling 4,000
Office supplies expense 200
Miscellaneous administrative expense 400
Estimated other income and expense for December:
Interest revenue $200
Interest expense 122
Estimated tax rate: 30%
1. Prepare asales budget for December.
2. Prepare a production budget for December.
Answer:
1. Sales Budget:
Bird House 3,200 units * $50 per unit = $160,000
Bird feeder 3,000 units * $70 per unit = $210,000
Total Revenue = $370,000
Explanation:
2. Production Budget:
Bird House
Expected units to be sold = 3,200
Less: Desired ending finished goods = 290
Total Units to be produced = 3,490
Less: Beginning Units = 320
Units to be produced = 3,170
Bird Feeder
Expected units to be sold = 3,000
Less: Desired ending finished goods = 250
Total Units to be produced = 3,250
Less: Beginning Units = 270
Units to be produced = 2,980
Acme Company is considering investing in a new machine that costs $126,594 and that has a useful life of 12 years with no salvage value. The machine will generate $19,500 annually in net cash inflows. The internal rate of return on the investment is: (Round your intermediate calculations to 3-decimals and your internal rate of return calculations to the nearest whole percent.)
Answer: 11%
Explanation:
The internal rate of return is the rate that will equate the cash inflows with the cost of investment.
It is therefore the discount rate used to find the present value of an annuity because the inflows are stable and are therefore annuities.
Present value of annuity = Annuity * Present value factor of annuity, 12 years, %?
126,594 = 19,500 * Present value of annuity factor
Present value of annuity factor = 126,594 / 19,500
= 6.492
Go to a present value of annuity factor table and find the interest rate that intersects with 12 years to give a factor of 6.492:
Rate is 11%
Which of the following expressions correctly describes economic profits? A. Marginal revenuesexplicit costs. B. Total revenuesexplicit costs. C. Total revenuesimplicit costsexplicit costs. D. Marginal revenuesimplicit costsexplicit costs.
Answer:
C. Total revenuesimplicit costsexplicit costs.
Explanation:
The formula to compute the economic profits is shown below:
The economic profit is
= Total revenue - (explicit cost + implicit cost)
or
= Total revenue - explicit cost - implicit cost
So based on the above formula, the option c is correct
And, the rest of the options are incorrect
Agreement and disagreement among economists
Suppose that Raphael, an economist from an AM talk radio program, and Susan, an economist from a nonprofit organization on the West Coast, are arguing over saving incentives. The following dialogue shows an excerpt from their debate:
Yvette: I think it's safe to say that, in general, the savings rate of households in today's economy is much lower than it really needs to be to sustain the improvement of living standards.
Sean: I think a switch from the income tax to a consumption tax would bring growth in living standards.
Yvette: You really think households would change their saving behavior enough in response to this to make a difference? Because I don't.
1. The disagreement between these economists is most likely due to (differences in values, differences in perception versus reality, differences in scientific judgments) .
2. Despite their differences, with which proposition are two economists chosen at random most likely to agree?
A. Lawyers make up an excessive percentage of elected officials.
B. Minimum wage laws do more to harm low-skilled workers than help them.
C. Tariffs and import quotas generally reduce economic welfare.
Answer:
Differences in values C. Tariffs and import quotas generally reduce economic welfare.Explanation:
Yvette and Sean most likely have a difference in values because they believe that one thing is better for the economy than the other. This means that when it comes down to the economy, they value a certain approach over other approaches.
Economist don't usually find common ground on many things but there are some things where they have a general consensus and one of them is that tariffs and import quotas are bad for the economy. They believe that people stand more to gain from free trade than restricted trade.
Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:
Crazy Mountain Outfitters Co.
Unadjusted Trial Balance
April 30, 2018
Debit
Balances Credit
Balances
Cash 11,400
Accounts Receivable 72,600
Supplies 7,200
Equipment 112,000
Accounts Payable 12,200
Unearned Fees 19,200
Common Stock 20,000
Retained Earnings 117,800
Dividends 10,000
Fees Earned 305,800
Wages Expense 157,800
Rent Expense 55,000
Utilities Expense 42,000
Miscellaneous Expense 7,000
475,000 475,000
For preparing the adjusting entries, the following data were assembled:
Required:
Supplies on hand on April 30 were $1,380.
Fees earned but unbilled on April 30 were $3,900.
Depreciation of equipment was estimated to be $3,000 for the year.
Unpaid wages accrued on April 30 were $2,475.
The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. before the adjusting entries.
Revenues $
Expenses
Net income $
3. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries.
Revenues $
Expenses
Net income $
4. Determine the effect of the adjusting entries on Retained Earnings.
Retained Earnings increases by $.
Answer:
1. Dr Supplies expense $5,820
Cr Supplies $5,820
Dr Accounts receivable $3,900
Cr Earned fees $3,900
Dr Depreciation expense $3,000
Cr Accumulated depreciation $3,000
Dr Wages expense $2,475
Cr Wages payable $2,475
Dr Unearned fees $14,140
Cr Fees earned $14,140
2. Revenues $305,800
Expenses $261,800
Net income $44,000
3. Revenue $323,840
Expense $261,800
Net income $50,745
4. $6,745 Increase
Explanation:
1. Preparation of the journal entries necessary on April 30. 2019
Dr Supplies expense $5,820
Cr Supplies $5,820
($7,200-$1,380)
(To record supplies used)
Dr Accounts receivable $3,900
Cr Earned fees $3,900
(To record accrued fees Earned)
Dr Depreciation expense $3,000
Cr Accumulated depreciation $3,000
(To record equipment Depreciation)
Dr Wages expense $2,475
Cr Wages payable $2,475
(To record accrued wages)
Dr Unearned fees $14,140
Cr Fees earned $14,140
(To record fees earned)
2. Calculation to Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries.
REVENUE
Fees earned $305,800
EXPENSE:
Wages Expense $157,800
Rent Expense $55,000
Utilities Expense $42,000
Miscellaneous Expense $7,000
Expense $261,800
NET INCOME $44,000
($305,800-$261,800)
Therefore the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries will be:
Revenues $305,800
Expenses $261,800
Net income $44,000
3. Calculation to Determine the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries.
REVENUE
Fees Earned $305,800
Fees earned but unbilled $3,900
Unearned fees $14,140
Revenue $323,840
EXPENSE
Wages Expense $157,800
Rent Expense $55,000
Utilities Expense $42,000
Miscellaneous Expense $7,000
Supplies expense $5,820
Depreciation of equipment $3,000
Unpaid wages accrued $2,475
Expense $273,095
NET INCOME $50,745
($323,840-$273,095)
Therefore the revenues, expenses, and net income of Crazy Mountain Outfitters Co. after the adjusting entries will be:
Revenue $323,840
Expense $261,800
Net income $50,,745
4. Calculation to Determine the effect of the adjusting entries on Retained Earnings.
Effect of the adjusting entries=$50,745-$44,000
Effect of the adjusting entries=$6,745
Therefore the effect of the adjusting entries on Retained Earnings is Retained Earnings increases by $6,745
