Answer:
1. Computation of Budgeted amount of Merchandise Purchases
Particulars June July August
Ending Accounts Payable $130,000 $300,000 $120,000
Payments on account $1,500,000 $1,400,000 $1,400,000
$1,630,000 $1,700,000 $1,520,000
Beginning Accounts Payable $150,000 $130,000 $300,000
Purchases $1,480,000 $1,570,000 $1,220,000
2. Computation of Budgeted amount of Cost of Goods Sold
Particulars June July August
Beginning inventory $260,000 $500,000 $300,000
Purchases $1,480,000 $1,570,000 $1,220,000
Cost of goods AFS $1,740,000 $2,070,000 $1,520,000
Ending Inventory $500,000 $300,000 $330,000
Cost of goods sold $1,240,000 $1,770,000 $1,190,000
how have people responded to the pandemic in terms of successful managing event at this time?
Answer:
Find the explanation below.
Explanation:
The pandemic of 2019 which spread so fast in 2020 and caused the shut down of many business activities has been effectively managed and adapted to by many people. Given that the pandemic requires social distancing, regular handwashing, wearing of nose masks and some other hygienic practices aimed at quelling its effects, people have endeavored to avoid unnecessary social gatherings.
Business meetings, wedding events, and even the education of students are held virtually through video calling applications. This way events are still held while keeping to the rules guiding the pandemic.
You are thinking about the things that can go wrong on your trip home over the Thanksgiving break. You have booked a flight with US-Scareways. You know that in 38% of the cases the company has canceled the flight you were on. Should such a thing occur, there would be no other air travel option home for you. As a backup, your friend Walter has offered you a ride back. However, you know that Walter only has a seat in his car for you with 72% probability. What is the probability of you making it home for the holidays?
Answer:
The probability of you making it home for the holidays is:
= 45%.
Explanation:
a) Data and Calculations:
Probability of Scareways flights being canceled = 38%
Probability of successfully traveling with Scareways = 62% (100 - 38%)
Probability of getting a seat in Walter's car = 72%
Therefore, the probability of making it home for the holidays = the combined probabilities (either Scareways flight or Walter's car)
= 62% * 72%
= 0.62 * 0.72
= 0.4464
= 45%
Cost of Normal Spoilage
Frieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $1,900 and direct labor of $500. Overhead is applied at the rate of 140 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $400 and direct labor costing $100. Assume that the spoilage was due to carelessness by a Frieling worker and it is considered to be normal spoilage.
Required:
1. Calculate the cost of the Tramel job.
2. Make any needed journal entry to the overhead control account.
3. What if the additional rework required $200 of direct labor? What would be the effect on the cost of the Tramel job?
Answer:
See below
Explanation:
1. Cost of the Tramel Job
= Direct material cost + Direct labor cost + Overhead applied
= $1,900 + $500 + (140% × $500)
= $1,900 + $500 + $700
= $3,100
2. Journal entry to record the overhead cost
Overhead cost account Dr $500
To Material account Cr $400
To Labor account Cr $100
3. Effect of additional rework required $200 of direct labor on the cost of Tramel job
= Direct material cost + Direct labor cost + Overhead applied
= $1,900 + ($500 + $200) + (140% × $500)
= $1,900 + $700 + $700
= $3,300
The effect of additional rework required of $200 of direct labor cost is an increase of $200 on the cost of job for Tramel
_______regulation applies to specific industries, whereas _______economic social regulation applies to businesses throughout the economy. Governments commonly regulate the prices and quality of services provided by electric, gas, and other utilities, which traditionally have been considered____technological oligopolistic geographic natural monopolies. Governments also single out various nonmonopolistic industries, such as the financial and transportation industries, for special forms of ______ economic social regulation. Among the common forms of ____ economic social regulation covering all industries are the occupational, health, and safety rules that federal and state governments impose on producers.
Answer:
Economic; social; natural; economic; social.
Explanation:
Generally, economic regulation are only applicable to business firms or organizations in a specific industry while social regulation is generally applicable to all of the business firms established throughout the economy or country.
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
For example, a public power company is an example of a monopoly because they serve as the only source of power utility provider to the general public in a society.
Governments commonly regulate the prices and quality of services provided by natural monopolies.
The Occupational Safety and Health Administration (OSHA) is a federal agency saddled with the responsibility of assuring and ensuring safe and healthy working conditions for employees by setting and enforcing standards, providing education, trainings and assistance to various organizations.
Match each of the following terms with the correct definition:
a. additional paid-in capital
b. issued and outstanding
c. retained earnings
d. treasury stock
e. authorized share capital
f. par value
Correct Definitions:
A. The price at which each share is recorded in the company’sbooks
B. Held by investors
C. Cumulative amount of profits that have been plowed back
D. The difference between the amount of cash raised by anequity issue and the par value of the issue
E. The maximum number of shares that can be issued withoutshareholder approval
F. The amount that the company has spent
A college uses advisors who work with all students in all divisions of the college. The most useful allocation basis for the salaries of these employees would likely be: Multiple Choice number of classes offered in each division. student graduation rate. square footage of each division. number of students advised from each division. relative salaries of division heads.
Answer: number of students advised from each division
Explanation:
Question 9 TEME is a manufacturer of toy construction equipment. If it pays out all of its earnings as dividends, it will have earnings of 0.3 million per quarter in perpetuity. Suppose that the discount rate, expressed as an effective annual rate (EAR), is 16%. TEME pays dividends quarterly. What is the value of TEME if it continues to pay out all of its earnings as dividends
Answer:
8 million
Explanation:
I solved the question a short while ago
Module 4
Fundamentals of Finance
The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: A.Checks outstanding totaled $61,280. B.A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement.
Answer:
Missing word "The bank collected $42,000 on a $40,000 note, including interest of $2,000. A check for $7,600 returned with the statement had been incorrectly recorded by American Medical Co. as $760. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $240 had been erroneously charged by the bank as $420. Bank service charges for April amounted to $145. Instructions: Prepare a bank reconciliation."
Bank reconciliation statement
Particulars Amount ($)
Balance as per bank statement 388,600
Add: Deposit in transit 42,500
Add: Error in recording the check (420-240) 180 431,280
Less: Outstanding checks (61,280)
Adjusted balance as per Bank statement 370,000
Bank reconciliation statement
Particulars Amount ($)
Balance as per books 334,985
Add: Note collected 40,000
Add: Interest collected 2,000 376,985
Less: Error in recording check (7,600-760) (6,840)
Less: Service charges levied (145)
Adjusted balance as per books 370,000
Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data: Budgeted output units 8,000 units Budgeted machine-hours 24,000 hours Budgeted variable manufacturing overhead costs for 8,000 units $288,000 Actual output units produced 8,500 units Actual machine-hours used 23,750 hours Actual variable manufacturing overhead costs $250,000 What is the flexible-budget amount for variable manufacturing overhead
Answer:
$56,000 Favorable
Explanation:
The computation of the flexible-budget amount for variable manufacturing overhead is shown below
The Budgeted machine hours per unit os
= 24,000 ÷ 8,000
= 3
The Budgeted machine hours allowed for 8,500 units is
= 8,500 × 3
= 25,500
Now the Budgeted variable overhead rate per machine hour is
= $288,000 ÷ 24,000
= $12.00
Now
Flexible-budget amount is
= 25,500 × $12.00
= $306,000
So, the Flexible-budget variance is
= $250,000 - $306,000
= $56,000 Favorable
A company prints proceedings books for a trade show that are sold to attendees for $10 per book. The books cost the company $2 per book to make. Any books left over at the end of the trade show can be sold to a local paper mill for $0.50 each, but it costs the printing company $0.25 per book to haul them to the paper mill. What are the underage and overage costs for the books
Answer and Explanation:
Given that
Selling price = $10
Cost price = $2
Now
The Salvage Value (SV) = 0.50 - 0.25 = 0.25
So,
Underage penalty (Cu) = Selling price - Cost price
= $10 - $2
= $8
And,
Overage penalty (Co) = Cost price - Salvage Value
= $2 - $0.25
= $1.75
Hence, the same is to be conisdered
Paul & Griffon manufactures and markets many products you use every day. In 2016, sales for the company were $86,000 (all amounts in millions). The annual report did not report the amount of credit sales, so we will assume that all sales were on credit. The average gross profit percentage was 49.8 percent. Account balances for the year follow:
Beginning Ending Accounts receivable (net) $ 6,500 $ 6,900 Inventory 7,280 7,300
Required:
1. Compute the Receivables Turnover Ratio and Inventory Turnover Ratio.
2. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory.
Answer and Explanation:
The computation is shown below:
a. The receivables Turnover Ratio and Inventory Turnover Ratio is
receivables Turnover Ratio is
= Net credit sales ÷ average account receivable
= $86,000 ÷ ($6,500 + $6,900) ÷ 2
= $86,000 ÷ $6700
= 12.84 times
Inventory turnover ratio is
= Cost of goods sold ÷ average account receivable
= ($86,000 × (1 - 49.8%) ÷ ($7,280 + $7,300) ÷ 2
= $43,172 ÷ $7,290
= 5.92 times
b. The average days to collect receivables and inventory is
For receivables
= 365 ÷ 12.84 times
= 28.43 days
For inventory
= 365 ÷ 5.92
= 61.66 days
You are analyzing two assets: collectible LEGO sets, and stock of Apple. In the last 5 years, LEGOs have had an annual volatility of 5%, annual return of 6%, and a CAPM beta (the correlation coefficient between the asset and the market risk-premium) of 1.6. Apple has had an annual volatility of 10%, an annual return of 8%, and a CAPM beta of 1.2. Is the following statement true or false?
According to CAPM, Apple has a higher expected return than LEGO.
Answer:
No, Apple has lower rate of return than LEGOs.
Explanation:
Risk free rate is 2% and Market risk is 9%
Expected return can be calculated by :
E(r) = Rf + beta * (Rm - Rf)
E(r) LEGOs = 2 + 1.6 * (9 - 2)
E(r) LEGOs = 13.2%
E(r) Apple = 2 + 1.2 * (9 - 2)
E(r) Apple = 10.4%
PBYI’s current BID-ASK is $59.00 - $60.00. PBYI is going to release their annual report tomorrow; you have special skill in valuing biotech companies, and you believe that PBYI has an expected alpha tomorrow of 2% compared to the market’s current best estimate of fair value. Is the following statement true? PBYI is currently overpriced. True False 1 points QUESTION 8 If you purchased PBYI now then sold it tomorrow right before market close, what is your best estimate for your expected profit after taking transactions cost into account? (in %, rounded to 1 decimal place)
Answer:
PBYI is not over priced
expected profit = $0.18
Explanation:
BID - ASK price : 59.00 - 60.00
expected alpha = 2%
In this scenerio ( positive alpha ) you can buy the PBYI at $60.00
when you buy at $60 the value will increase to ; 60 + ( 2% * 60 ) = $61.2
when you resell the security ( PBYI ) you will get ; ( 61.2 )* (59/60) = $60.18
therefore your expected profit = 60.18 - 60 = $0.18
PBYI is not not currently Overpriced since you can buy and make profit after selling the next day
The Pastel Paint Company recently loaned $300,000 to KIX 96, a local radio station. The radio station signed a noninterest-bearing note requiring the $300,000 to be repaid in three years. As part of the agreement, the radio station will provide Pastel with a specified amount of free radio advertising over the three-year term of the note. The focus of this case is the valuation of the note receivable by Pastel Paint Company and the treatment of the "free" advertising provided by the radio station. Your instructor will divide the class into two to six groups depending on the size of the class. The mission of your group is to reach consensus on the appropriate note valuation and accounting treatment of the free advertising.
Required:
1. Each group member should deliberate the situation independently and draft a tentative argument prior to the class session for which the case is assigned.
2. In class, each group will meet for 10 to 15 minutes in different areas of the classroom. During that meeting, group members will take turns sharing their suggestions for the purpose of arriving at a single group treatment.
3. After the allotted time, a spokesperson for each group (selected during the group meetings) will share the group’s solution with the class. The goal of the class is to incorporate the views of each group into a consensus approach to the situation.
Answer:
Following are the queries to these question:
Explanation:
Reporting entering for recording the note received
Permissible notes (face amount)........................................................ [tex]\$300,000[/tex]
Cash................................................................................................... [tex]\$300,000[/tex]
Oriole Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 270 $30 $ 8,100 April 15 purchase 440 36 15,840 April 23 purchase 290 39 11,310 1,000 $35,250 Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Ending inventory $enter a dollar amount Cost of goods sold $enter a dollar amount
Answer:
. Ending inventory = $15,270
cost of goods sold = $19,980
Explanation:
FIFO means first in, first out. It means that it is the first purchased inventory that is the first to be sold
the cost of goods sold would be determined using the prices of inventories on April 1 and 15
cost of goods sold
270 x $30 = $8100
+
(600 - 270) x $36 = $11,880
cost of goods sold = $19,980
ending inventory would consist of the inventory not sold on April 15 and the inventory bought on April 23
inventory not sold on April 15 = 440 - (600 - 270) = 110
110 x 36 = $3960
+
290 x 39 = 11,310
total = $15,270
Oak Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Glover, and has always operated as a C corporation. However, at the beginning of this year, Glover made a qualifying S election for Oak Corp., effective January 1. Oak Corp. did not have any C corporation earnings and profits on that date. On June 1, Oak Corp. distributed $15,000 to Glover. What are the amount and character of gain Glover must recognize on the distribution, and what is his basis in his Oak Corp. stock in each of the following alternative scenarios?
a. At the time of the distribution, Glover’s basis in his Oak Corp. stock was $35,000.
b. At the time of the distribution, Glover’s basis in his Oak Corp. stock was $8,000.
c. At the time of the distribution, Glover’s basis in his Oak Corp. stock was $0.
Answer:
Oak Corp distributed $15,000 to Glover and we are required to compute the amount and character of gain Glover must recognize under the scenarios as stated in the question:
a. No gain will be recognized by Glover. Rather, his stock basis will be reduced from $35,000 to $20,000 ($35,000 basis - $15,000 cash distribution). So, gain recognized by him is $0.
b. Long term capital gain of $7,000 ($15,000 - $8,000) will be recognized by Glover and his stock basis will be reduced from $8,000 to $0.
c. The entire $15,000 ($15,000-$0) will be recognized as long term capital gain by Glover and his stock basis will remain $0.
Zeffer is a small but growing bottling company that competes with large soft drink heavy-hitters. To set itself apart, Zeffer has decided to develop a line of all-natural soft drinks that are believed to be healthier than typical high-calorie sodas. The company hopes that these soft drinks will become popular in various sectors of the U.S. market. Answer the following question based on the scenario described above. Zeffer executives have decided to focus marketing efforts on the ________ market, since this group is expected to grow more rapidly than
Answer:
Hispanic
Explanation:
In the United States Hispanic population has continued to be responsible for half of the total population growth since 2010 till date.
In this time Hispanics contributed 52% to the 18.9 million population growth in the United States.
Based on this trend Zeffer has decided to develop a line of all-natural soft drinks that are believed to be healthier than typical high-calorie sodas and targeting the Hispanic market will make their product popular rapidly.
Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution of investment land with a $14,750 basis and a $22,650 fair market value. On January 2 of this year, Kimberly has a $20,700 basis in her partnership interest, and none of her pre-contribution gain has been recognized. On January 2 Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $18,175 basis and an $26,075 fair market value.
a) What is the amount and character of Kimberly’s recognized gain or loss on the distribution?
b) What is Kimberly’s remaining basis in KST after the distribution?
c) What is KST’s basis in the land Kimberly contributed after Kimberly receives this distribution?
Answer: A) $3,425 B)$5,950 C)$18,175
Explanation:
a)Kimberly's capital gain = land's Fair market value -non contributed land's Fair market value = $26,075- $22,650= $3,425
b)Kimberly's basis after the distribution = basis in KST + gain - Carryover basis in land = $20,700 + $3, 425 - $18,175 = $5,950
c) KST's basis on the land =KST land's basis on contribution+ Kimberly's gain = $14,750+$3, 425 = $18,175
A foreign branch bank operates like a local bank, but legally Group of answer choices a branch bank is subject to only the banking regulations of its home country and not the country in which it operates. it is a part of the parent bank. a branch bank is subject to both the banking regulations of its home country and the country in which it operates. it is a part of the parent bank, and a branch bank is subject to both the banking regulations of its home country and the country in which it operates.
Answer:
Foreign branch
This is usually refered to as legal and operational section (part)of the parent bank. It is said that creditors of the branch have full legal rights on the bank's assets in all and also creditors of the parent bank have hold/claims on its branches' assets.
A foreign branch bank operates like a local bank, but is legally part of the the parent.
A branch bank is subject to both the banking regulations of home country and the country in which it operates (foreign country)
Explanation:
Foreign Branches
A foreign branch bank is a branch of a bank in other country. It usually operates like a local bank even though they are a section or part of the the parent legally. Thehy abide by the rules and regulations of the banking regulations of home country and also that of foreign country which their operating is based (branched)
They are commonly known to give a wide and broad range of services than a representative office. Branch Banks are used by U.S. banks to expand overseas.
Assume that Canada imports more goods and services than it exports. Which of the following is true of the Canadian balance of payments accounts?
(A) The current account balance must be negative.
(B) The current account balance must be positive
(C) The trade balance must be negative.
(D) The financial account (formerly called capital account) balance must be negative
(E) The financial account (formerly called capital account) balance must be positive
Answer:
(C) The trade balance must be negative.
Explanation:
The Balance of trade refers to the net amount payable or receivable
In the case when the net amount is receivable so the balance of trade comes in positive and when the net amount payable is high than the balance of trade is negative.
Now
When the country exports greater than imports so it is a positive balance of Trade and on the other hand When the country imports greater than exports then the balance of trade is negative.
QS 9-8 (Algo) Recording employer payroll taxes LO P3 Merger Co. has 10 employees, each of whom earns $1,700 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $132,900 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expense. (Round your answers to 2 decimal places.)
Answer:
Dr Payroll Tax Expense: $2,321
Cr FICA- Social security taxes payable $1,054
Cr FICA- Medicare taxes payable $247
Cr SUTA-State unemployment taxes payable $918
Cr FUTA- Federal unemployment taxes payable $102
Explanation:
Preparation of the March 31 journal entry to record the March payroll taxes expense
March 31
Dr Payroll Tax Expense: $2,321
($1,054+$247+$918+$102)
Cr FICA- Social security taxes payable $1,054
[($1,700*10)*6.2%]
Cr FICA- Medicare taxes payable $247
[($1,700*10)*1.45%]
Cr SUTA-State unemployment taxes payable $918
[($1,700*10)*5.4%]
Cr FUTA- Federal unemployment taxes payable $102
[($1,700*10)*0.6%]
(To record payroll taxes expense)
Iggy Company is considering three capital expenditure projects. Relevant data for the projects are as follows.
Project Investment Annual Income Life of Project
22A $243,500 $17,320 6 years
23A 271,400 20,600 9 years
24A 283,000 15,700 7 years
Annual income is constant over the life of the project. Each project is expected to have zero salvage value at the end of the project. Iggy Company uses the straight-line method of depreciation.
Determine the internal rate of return for each project. (Round answers 0 decimal places)
Answer:
22A = 19.98 %
Explanation:
the internal rate of return for each project.
Measuring actual performance can be done through:
a.
Assessing the behavior of employee
b.
Assessing the output of employee
c.
Both are correct
d.
Non are correct
Answer: c. Both are correct
Explanation:
Assessing the output of an employee shows some of the actual performance of that employee as it shows just how much they have contributed to the overall output of the company.
Assessing employee behavior also shows actual performance because behavior can influence output for example, how often the employee shows up to work and their work ethic when there. In the service industry as well, behavior can affect company sales as people react to how they are treated. It is therefore an important matric for actual performance evaluation.
Which of the following best describes the type of loss covered by the Spoilage Damage insuring agreement of the ISO Equipment Breakdown Protection Coverage Form? A. The spoilage of perishable goods resulting from breakdown of covered equipment. B. Costs to replace food labels resulting from breakdown of refrigeration equipment.
Answer:
A. The spoilage of perishable goods resulting from breakdown of covered equipment.
Explanation:
The ISO Equipment Breakdown Protection Coverage is used to compensate for losses that occur as a result of equipment breakdown. The cost covered by this type of insurance includes cost of repair of the equipment that failed along with the replacement not any property damaged as a result of equipment failure.
So when perishable goods get damaged because of breakdown of covered equipment, the ISO Equipment Breakdown Protection Coverage will cover for the loss
Frieda Inc. is considering a capital expansion project. The initial investment of undertaking this project is $105,500. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $22,500, $25,800, $33,000, $45,936 and $58,500 respectively. Frieda has a capital structure consisting of 20% debt and 80% equity. The after-tax cost of debt is 16% and the cost of equity is 18.5%.
What is Frieda%u2019s weighted average cost of capital?
a. 16%
b. 18%
c. 24%
d. 22%
Answer:
WACC = 0.18 or 18%
Option b is the correct answer.
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure that can contain one or more of the following components, namely debt, preferred stock and common equity. The formula to calculate the WACC is as follows,
WACC = wD * rD * (1-tax rate) + wP * rP + wE * rE
Where,
w represents the weight of each component D, P and E represents debt, preferred stock and common equity respectively r represents the cost of each componentrD * (1-tax rate) represents the after tax cost of debt
WACC = 0.2 * 0.16 + 0.8 * 0.185
WACC = 0.18 or 18%
When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is:
Answer:
Greater than the interest expense
Explanation:
Based on the information given the CASH PAID is GREATER THAN THE INTEREST EXPENSE reason been that at every subsequent interest payment date the CASH PAYMENT does not change which means that the CASH PAID tend to remains the same but interest expense on the other hand tend to decreases at every interest payment date which inturn means that CASH PAID will be greater than the interest expense as the time passed by.
There are different kinds of bond. When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is Less than the interest expense.
The effective interest method is often applied or used to discount, or write a bond off.The amount of the bond that is often discounted is said to be amortized to interest expense over the bond's life.
Therefore as a bond's book value increases, the amount of interest expense also increases.
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Shore Co. sold merchandise to Blue Star Co. on account, $112,000, terms FOB shipping point, 2/10, n/30. The cost of the merchandise sold is $67,200. Shore Co. paid freight of $1,800.
Journalize Shore Co.'s entry for the sale, purchase, and payment of amount due.
Answer:
See the journal entries below.
Explanation:
a. Journal entry for the sale
Particulars Debit ($) Credit ($)
Accounts receivable - Blues Star 112,000
Sales revenue 112,000
(To record sales of merchandise inventory.)
Cost of goods sold 67,200
Merchandise inventory 67,200
(To record cost of goods sold.)
Accounts receivable – Blues Star 1,800
Cash 1,800
(To record freight paid.)
b. Journal entry for the purchase
Particulars Debit ($) Credit ($)
Merchandise inventory 67,200
Accounts payable 67,000
(To record the purchase of Merchandise inventory on account.)
c. Journal entry for the payment of amount due.
Particulars Debit ($) Credit ($)
Cash (w.2) 111,560
Discount allowed (w.1) 2,240
Accounts receivable (w.3) 113,800
(To record cash received from debtors.)
Accounts payable 67,200
Cash 67,200
(To record cash paid to the creditor.)
Workings:
w.1. Discount allowed = Sales revenue * 2% = $112,000 * 2% = $2,240
w.2. Cash = Sales revenue + Freight paid – discount allowed = $112,000 + $1,800 - $2,240 = $111,560
w.3. Accounts receivable = Sales revenue + Freight paid = $112,000 + $1,800 = $113,800
A company is trying to estimate the cost of debt for a new project. For their estimate, they will find the yield to maturity on existing company bonds. They have one outstanding bond issue at the moment that will mature in 15.00 years. The bond pays an annual coupon of 9.00%, with a face value of $1,000. The bond currently trades at 92.00% of face value. What is the yield to maturity on the existing debt
Answer:
Yield to maturity =9.9%
Explanation:
The yield to maturity is the return on debt expressed in percentage. It can be used to worked as follows using the formula below
YTM =( C + F-P/n) ÷ ( 1/2× (F+P))
C- annual coupon,
F- face value ,
P- current price,
n- number of years to maturity
YM - Yield to maturity
C- 9%× 1000 =90 , P- 92×1000= 920, F- 1000
AYM = 90 + (1000-920)/15 ÷ 1/2× (1000+920)
= 95.33 ÷ 960
Yield to maturity =9.9%
Murray Exports (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 10,000 units per year at the yuan equivalent of $24,000 each. The Chinese yuan (renminbi) has been trading at Yuan8.20/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan9.00/$, after which it will remain at that rate for the foreseeable future. Based onthis forecast, Murray Exports faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. In both cases, direct costs per unit are 75% of the current U.S. sales price of $24,000.
A. What would be the short-run(one-year) impact of each pricing stragety?
B. Which do recommend?
Answer:
Murray Exports (U.S.)
A. The short-run impact of each pricing strategy is as follows:
Alternative 1 Alternative 2
Reduce Price to $21,867 Maintain Price at $24,000
Gross profit $38,670,000 $54,000,000
Reduction in Gross Profit $21,330,000 $6,000,000
B. (2) maintain the same dollar price of $24,000, raise the yuan price in China to Yuan 216,000 per unit to offset the devaluation, and experience a 10% drop in sales unit volume.
Explanation:
a) Data and Calculations:
Current exchange rate = Yuan 8.20/US$
Current exports of heavy crane equipment per year to China = 10,000
US unit price of printer in dollars = $24,000
Chinese unit price of crane equipment in Yuan equivalent = Yuan 196,800 ($24,000 * Yuan 8.20)
Unit price of crane equipment in Chinese Yuan when the currency is devalued = Yuan 216,000 ($24,000 * Yuan 9.00)
The reduced dollar price with devaluation, when Yuan price is maintained = $21,867 (Yuan 196,800/9.00)
Before Devaluation of Chinese Yuan:
Sales volume 10,000
Sales revenue $240,000,000 (10,000 * $24,000)
Direct costs 180,000,000 (10,000 * $18,000) (75% of $24,000)
Gross profit $60,000,000
Alternative 1 Alternative 2
Reduce Price to $21,867 Maintain Price at $24,000
Sales volume 10,000 units 9,000 (10,000 * 90%) units
Sales revenue $218,670,000 $216,000,000 ($24,000 * 9,000)
Direct costs 180,000,000 162,000,000 ($18,000 * 9,000)
Gross profit $38,670,000 $54,000,000 ($6,000 * 9,000)
Direct costs = $180m ($18,000 * 10,000) = $162m ($18,000 * 9,000)
Marigold Corp. purchased a new machine on May 1, 2012 for $558000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $22800. The company has recorded monthly depreciation using the straight-line method. On March 1, 2021, the machine was sold for $71400. What should be the loss recognized from the sale of the machine
Answer:
$18,300 loss
Explanation:
Profit or Loss on sale of an asset is calculated in the asset`s disposal account. Simply stated, Profit or Loss on sale is Cash Receipt from sale less Carrying Amount of an asset.
where,
Accumulated depreciation = $428,160 + 40,140 = $468,300
Carrying Amount = $558000 - $468,300 = $89,700
therefore
Profit or Loss on sale = $71400 - $89,700 = $18,300 loss
