Answer:
A
Explanation:
The following steps would be taken to determine the answer
Calculate depreciation expense given the initial information calculate the accumulated depreciation by the third year. Accumulated depreciation is sum of depreciation expensesubtract the accumulated depreciation from the cost price of the asset. This would give the book value calculate the depreciation expense using the new information and the book valueStraight line depreciation expense = (Cost of asset - Salvage value) / useful life
($100,000 - $10,000) / 12 = $7500
Depreciation expense each year is $7500
Accumulated depreciation = $7500 x 2 = $15,000
Book value at the beginning of year 3 = $100,000 - $15,000 = $85,000
($85,000 - $2800) / 4 = $20,550
g Sunk costs are: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices extra costs associated with one more unit of something. financial costs any costs associated with making the decision to do something instead of doing the next best alternative. costs that have been incurred and cannot be reversed
Answer:
costs that have been incurred and cannot be reversed.
Explanation:
Sunk cost can be defined as a cost or an amount of money that has been spent on something in the past and as such cannot be recovered. Thus, because a sunk cost has been incurred by an individual or organization it can't be recovered and as such it is irrelevant in the decision-making process such as investments, projects etc.
Basically, sunk costs are referred to as fixed costs.
Sunk costs are the opposite of relevant costs because they can't be changed or recovered, as they've been spent or contracted in the past already. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.
Hence, sunk costs are costs that have been incurred and cannot be reversed.
For example, ABC investors decide to acquire land and develop residential houses at a location X. This decision is informed on the fact that the government had recently enacted a policy that led to an increase in demand for residential properties in that location. 6 months into construction of the residential houses, the government reviews and rescinds the policy. This leads to a sharp decline in property values in location X. ABC investors had already incurred 10 million dollars in the project. The 10 million dollars is considered sunk cost.
What is double-entry accounting?
Answer:
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Double-entry bookkeeping, in, is a system of where every entry to an account requires a corresponding and opposite entry to a different account. The double-entry system has two equal and corresponding sides known as. The left-hand side is debit and the right-hand side is credit. Wikipedia
Inventor
An investor thought that market interest rates were going to decline. He paid $19,000 for a corporate bond with a face value of $20,000. The bond has an interest rate of 10% per year payable annually. If the investor plans to sell the bond immediately after receiving the 4th interest payment, how much will he have to receive in order to make a return of 14% per year? Solve using:
a. tabulated factors
b. the GOAL SEEK tool on a spreadsheet.
Answer:
Answer is explained in the explanation section below.
Explanation:
a. In this part, we need to calculate the present worth using the formula to calculate the sale price of the bond.
As the coupon rate = 10% per year
So,
The Annual dividend will = 2000 = 10% x 20,000
19000 = 2000 (P/A, 14%,4) + B(P/F,14%,4)
19000 = 2000 (2.9137) + B (0.592)
Solving for B = Desired sales price of the bond
B = [tex]\frac{19000 - 5827.4}{0.592}[/tex]
B = 22251
b. Part b of this question is to solve using GOAL SEEK feature of a spreadsheet so, I have attached it in the attachment. Please refer to the attachment for the solution of part b.
A company pays its employees $3,850 each Friday, which amounts to $770 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
Answer:
$3080
Explanation:
Calculation to determine what the amount of salaries earned but unpaid at the end of the accounting period is:
Salaries earned but unpaid at the end of the accounting period =3850-$770
Salaries earned but unpaid at the end of the accounting period =$3080
At the beginning of Year 2, the Redd Company had the following balances in its accounts:
Cash $ 16,800
Inventory 9,000
Land 3,900
Common stock 17,000
Retained earnings 12,700
During Year 2, the company experienced the following events:
Purchased inventory that cost $13,100 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $990 were paid in cash.
Returned $900 of the inventory it had purchased from Ross Company because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
Paid the amount due on its account payable to Ross Company within the cash discount period.
Sold inventory that had cost $12,500 for $21,500 on account, under terms 2/10, n/45.
Received merchandise returned from a customer. The merchandise originally cost $2,150 and was sold to the customer for $3,000 cash. The customer was paid $3,000 cash for the returned merchandise.
Delivered goods FOB destination in Event 4. Freight costs of $880 were paid in cash.
Collected the amount due on the account receivable within the discount period.
Sold the land for $7,300.
Recognized accrued interest income of $650.
Took a physical count indicating that $5,100 of inventory was on hand at the end of the accounting period. (Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down.)
Record the events in general journal format. Assume that the perpetual inventory method and gross method is used.
Answer:
Redd Company
Journal Entries:
1. Debit Inventory $13,100
Credit Accounts payable (Ross Company) $13,100
To record the purchase of inventory on account, terms 2/10, n/30.
2. Debit Freight-in Expense $990
Credit Cash $990
To record the payment for freight.
3. Debit Accounts payable (Ross Company) $900
Credit Inventory $900
To record the return of goods to supplier.
4. Debit Accounts payable (Ross Company) $12,200
Credit Cash $11,956
Credit Cash Discounts $244
To record the payment on account.
5. Debit Accounts receivable $21,500
Credit Sales Revenue $21,500
To record the sale of goods on account, terms 2/10, n/45
Debit Cost of goods sold $12,500
Credit Inventory $12,500
To record the cost of goods sold.
6. Debit Sales Returns $3,000
Credit Cash $3,000
To record the payment of cash for returned goods.
Debit Inventory $2,150
Credit Cost of goods sold $2,150
To record the cost of goods returned.
7. Debit Freight-out Expense $880
Credit Cash $880
To record the payment of freight.
8. Debit Cash $18,130
Debit Cash Discounts $370
Credit Accounts Receivable $18,500
To record the receipt of cash on account.
9. Debit Cash $7,300
Credit Land $7,300
To record the sale of land for cash.
10. Debit Interest Receivable $650
Credit Interest Revenue $650
To accrue interest income.
11. Debit Cost of goods sold $5,750
Credit Inventory $5,750
To record the cost of inventory write down.
Explanation:
a) Data and Analysis:
1. Inventory $13,100 Accounts payable (Ross Company) $13,100, terms 2/10, n/30.
2. Freight-in Expense $990 Cash $990
3. Accounts payable (Ross Company) $900 Inventory $900
4. Accounts payable (Ross Company) $12,200 Cash $11,956 Cash Discounts $244
5. Accounts receivable $21,500 Sales Revenue $21,500, terms 2/10, n/45
Cost of goods sold $12,500 Inventory $12,500
6. Sales Returns $3,000 Cash $3,000
Inventory $2,150 Cost of goods sold $2,150
7. Freight-out Expense $880 Cash $880
8. Cash $18,130 Cash Discounts $370 Accounts Receivable $18,500
9. Cash $7,300 Land $7,300
10. Interest Receivable $650 Interest Revenue $650
11. Cost of goods sold $5,750 Inventory $5,750
Inventory write down:
Beginning $9,000
Purchase 13,100
Return (900)
Sold (12,500)
Return 2,150
Net $10,850
Ending 5,100
Write down $5,750
Cream 424,000 at $130 per gallon Liquid skim 344,500 at $115 per gallon The cost of purchasing 820,000 gallons of direct materials and processing it up to the split-off point to yield a total of 797,500 gallons of good product was $2,350,000. When using a physical-volume measure, what is the approximate amount of joint costs that will be allocated to cream and liquid skim
Question Completion:
Production:
Cream = 443,000 gallons
Liquid skim = 354,500 gallons
Total production = 797,500 gallons
Answer:
The approximate amount of joint costs that will be allocated to cream and liquid skim =
Cream = $1,305,392
Liquid skim = $1,044,608
Explanation:
a) Data and Calculations:
Direct materials purchased = 820,000 gallons
Total yield at split-off = 797,500
Joint costs = $2,350,000
Cream Liquid Skim
Sales units at split-off 424,000 344,500 gallons
Selling price per unit $130 $115
Production Cream 443,000 354,500 gallons
Allocation of joint costs, using a physical volume measure:
Cream = $2,350,000 * 443,000/797,500 = $1,305,392
Liquid Skim = $2,350,000 * 354,500/797,500 = $1,044,608
describe how posts on social media can portray poor ethics to an employer. (answer in a complete sentence)
Answer:
Posts on social media can portray poor ethics to an employer, because if you post something that goes against what they work for or towards it can get in the way of what they believe!
Explanation:
Hope this helps! :)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the cost of the sale by selecting all of the correct actions below.
a. Debit Merchandise Inventory $500.
b. Credit Cost of Goods Sold $500.
c. Credit Merchandise Inventory $500.
d. Debit Cost of Goods Sold $500.
Answer:
d. Debit Cost of Goods Sold $500.
c. Credit Merchandise Inventory $500.
Explanation:
The journal entry to record the cost of the sale is shown below:
Cost of Goods Sold $500
To Merchandise inventory $500
(To record the cost of the sale)
Here the cost of goods sold is debited as it increased the expenses and credited the merchandise inventory as it reduced the assets
The correct options for the journal entry are under the perpetual inventory system are:
Debit Cost of Goods Sold $500.Credit Merchandise Inventory $500.What is the perpetual inventory system?A perpetual inventory system is a system of recording inventory transactions on a real-time basis. The book inventory, therefore, shows the real stock.
The perpetual inventory system debits COGS upon each sale transaction and credits the inventories.
Therefore the correct options are c and d.
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eating small amounts of sweet desserts can satisfy one's urge or craving for healthier food. true or false?
Answer:
I think eating healthier food would be better. Eating sweet desserts would be healthier than eating a lot, but you should still cut down and eat healthier foods. False
Explanation:
Ingersoll Company has a bond currently outstanding. The bond has a face value of $1,000 and matures in 10 years. The bond makes no coupon payments for the first three years, then pays $45 every six months over the subsequent four years, and finally pays $100 every six months over the last three years. If the required return on these bonds is 5.8% percent compounded semiannually, what is the current price of the bond
Answer:
$1,196.01
Explanation:
What is the current price of the bond
Face value of Bond = $1000
Term (maturity time) = 10 years
periods = 10 *2 = 20 ( semiannual compound of interest )
Yield = 5.8%. semiannual yield = 5.8% / 2 = 2.9% = 0.029
Next : calculate the value of bond using the relationship below
Discounting factor = 1/(1 + r)^n
n = number of payments
note : payments are made semiannually
attached below is a Table showing the discounting factor and present value starting from the 4th year ( Biannually )i.e. when payment commenced
payments discounting factor present value
45 0.818638898 36.83875
45 0.795567442 35.800535
45 0.773146203 34.791579
45 0.751356854 33.811058
45 0.730181588 32.858171
45 0.709603098 31.932139
45 0.689604566 31.032205
45 0.670169646 30.157634
100 0.651282455 65.128245
100 0.632927556 63.292756
100 0.615089947 61.508995
100 0.597755051 59.775505
100 0.580908698 58.09087
100 0.564537122 56.453712
1000 0.564537122 564.53712
Total of present value = 1196.0093
Mt Kinley is a strategy consulting firm that divides its consultants into three classes, associates, managers, and partners. The firm has been stable in size for the last 20 years, ignoring growth opportunities in the 90s, but also not suffering from a need to down-size in the recession. Specifically, there have been – and are expected to be – 200 associates, 60 managers, and 20 partners. The work environment at Mt Kinley is rather competitive. After 4 years of working as an associate, a consultant goes "either up or out", i.e. becomes a manager or is dismissed from the company. Similarly, after 6 years a manager either becomes a partner or is dismissed. The company recruits MBAs as associate consultants, no hires are made at the manager or partner level. A partner stays with the company for another 10 years (total of 20 years with the company). How many new MBA graduates does Mt Kinley have to hire every year? What is the probability that an incoming MBA graduate would make partner at Mt Kinley?
Answer:
1. 50 consultants per year
2. 4%
Explanation:
1. Calculation to determine How many new MBA graduates does Mt Kinley have to hire every year
Using this formula
Flow Rate of associates= Inventory / Flow Time
Let plug in the formula
Flow Rate of associates = 200 consultants / 4 years
Flow Rate of associates= 50 consultants per year
Therefore the numbers of MBA graduates that Mt Kinley have to hire every year is 50 consultants per year
2. Calculation to determine the probability that an incoming MBA graduate would make partner at Mt Kinley
First step is to calculate the Flow Rate of managers using this formula
Flow Rate of manager= Inventory / Flow Time
Let plug in the formula
Flow Rate of manager = 60 consultants / 6 years
Flow Rate of manager =10 consultants per year
Second step is to calculate the flow rate of partner using this formula
Flow rate of partner = Inventory/ Flow time
Let plug in the formula
Flow rate of partner = 20/10
Flow rate of partner = 2 partners per year
Third step is to calculate the probability of becoming a manager
Probability (Manager) = 10/50
Probability (Manager) = 20%
Fourth step is to calculate Probability of becoming a partner
Probability (Partner) = 2/10
Probability (Partner) = 20%
Now let calculate the probability that an incoming MBA graduate would make partner at Mt Kinley
Probability of MBA graduate becoming a partner = 20% x 20%
Probability of MBA graduate becoming a partner = 4%
Therefore the probability that an incoming MBA graduate would make partner at Mt Kinley is 4%
Match the following empires:
1. Established relatively peaceful trading relationship with Native Peoples and never established large permanent population throughout the colony.
2. After attempting several times to find a Northwest Passage to the Pacific, they established a comparably small presence in North America. However, through their alliance with the Huron and other Native peoples, they were able to maintain a vast claim stretching between the St. Lawrence River, the Ohio River, and the Mississippi River to Louisiana.
3. Originally in search of timber and gold, established a presence in North America for the purpose of colonizing. In order to do this, they depended on the depopulation of Native Peoples throughout the colonies.
4. Given a special decree from the Pope which granted them the ability to conquer all of the lands in the Western Hemisphere in which no Christians resided. After conquering the Aztecs and the Incas, they established new colonial centers as extensions of the empire.
A. Spanish.
B. English.
C. Dutch.
D. French.
Answer:
1 ----> Matches with ----->C
2 ----> Matches with ----->D
3 ----> Matches with ----->B
4 ----> Matches with ----->A
Explanation:
This question is very easy and interesting. In this question, we just need to match the specific empires with the description given in the question. So, Let's Start.
1. The first description matches with the Dutch Empire. (C)
2. The second description matches with obviously the French Empire (D)
3. The third description matches with the English Empire. (B)
Lastly,
4. The forth description clearly matches with the Spanish Empire. (A)
So, Correct Combination will be:
1 ----> Matches with ----->C
2 ----> Matches with ----->D
3 ----> Matches with ----->B
4 ----> Matches with ----->A
Chen Company's Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Chen then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $5.20
Variable cost per unit $10.81
Selling price per unit $34.55
Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division. (Round answer to 2 decimal places.)
Minimum transfer price $ per unit
Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the small motor to the Household Division. (Round answer to 2 decimal places.)
Answer:
See below
Explanation:
1. If the small motor division has excess capacity,
Minimum transfer price = Variable cost + Opportunity cost
Variable cost per unit = $10.81
Add:
Opportunity cost per unit = $0.00 (Because the company has sufficient excess capacity)
Minimum transfer price = $10.81
2. If the small motor division has excess capacity,
Minimum transfer price = Variable cost + Opportunity cost
Variable cost per unit = $10.81
Add:
Opportunity cost per unit = $23.74 (As the company has no excess capacity, contribution lost is the opportunity cost)
Minimum transfer price = $34.55
N.B
Contribution lost = Selling price per unit - Variable cost per unit
= $34,55 - $10.8 = $23.74
Multipoint pricing occurs when a company buys products at a cheaper rate in one country to sell at a higher price in another country. allows markets to determine the pricing of a product. aggressively prices in one market to elicit a competitive response from a rival in another market. prices its products at a loss in order to drive out competitors from the market. prices two similar products at low and high prices in order to boost sales of the lower priced products.
Answer:
aggressively prices in one market to elicit a competitive response from a rival in another market.
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
One of the importance associated with the pricing of products is that, it improves the image of a business firm.
Multipoint pricing occurs when a company aggressively prices in one market to elicit a competitive response from a rival in another market.
This ultimately implies that, a company's pricing strategy in one market is likely to impact the pricing strategy of its rival in another market.
Anthony Thomas Candies (ATC) reported the following financial data for 2021 and 2020:
2021 2020
Sales $ 314,000 $ 290,000
Sales returns and allowances 8,000 4,700
Net sales $ 306,000 $ 285,300
Cost of goods sold:
Inventory, January 1 62,000 18,000
Net purchases 139,000 142,000
Goods available for sale 201,000 160,000
Inventory, December 31 61,000 62,000
Cost of goods sold 140,000 98,000
Gross profit $ 166,000 $ 187,300
The average days inventory for ATC (rounded) for 2021 is: (Round your intermediate calculations to two decimal places. Round your final answer to the nearest whole number.)
A. 171 days.
B. 222 days.
C. 231 days
D. Less than 100 days.
Answer:
D. Less than 100 days
Explanation:
Average days inventory = 365 / Inventory turnover rate
But
Inventory turnover rate = Cost of goods sold / Average inventory
Also,
Average inventory = (Beginning inventory + Ending inventory) / 2
= ($62,000 + $18,000) / 2
= $40,000
Inventory turnover rate = $201,000 / $40,000 = 5.025
Average days inventory = 365 / 5.025 = 72.64 days
Amram Inc. can issue a 20-year bond with a 6% annual coupon at par. This bond is not convertible, not callable, and has no sinking fund. Alternatively, Amram could issue a 20-year bond that is convertible into common equity, may be called, and has a sinking fund. What most accurately describes the coupon rate that Amram would have to pay on the second bond, the convertible, callable bond with the sinking fund, to have it sell initially at par?
Answer:
b. It could be less than, equal to, or greater than 6%.
Explanation:
THIS ARE THE OPTIONS FOR THE QUESTION BELOW!
a. Exactly equal to 6%.
b. It could be less than, equal to, or greater than 6%.
c. Greater than 6%.
d. Exactly equal to 8%.
e. Less than 6%.
Convertible bonds can be regarded as one which can be converted to equity shares at a particular time, so in this case, Base on specific terms set the coupon rate can be equal, greater even less than 6%, talking of real world, the feature of the convertible could make the coupon rate to be probably less than 6%.
Convertible bonds are considered as the bonds that can be converted into stock within a certain time frame. The particular bondholders have right convert their bonds into equity by selling their bonds according to corporation's designated timeframe.
The coupon rate could be less than, equal to, or greater than 6%, depending on the specific terms set.
Amram Inc. is issuing two bonds, one of which is non-convertible and the other of which is convertible but not callable. Convertible and callable bonds will nearly always have a lower coupon rate than non-convertible or non-callable bonds, regardless of the coupon rate they intend to set.
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A note payable was executed by Sterling Inc. to Miami Finance Company. Sterling Inc. used $768,000 of its accounts receivable as collateral for the loan. The contract provided that Miami would advance 85% of the gross amount of the receivables. Sterling Inc. continues to collect payments for the receivables and the cash from customers is then remitted to the finance company. The cash remitted is first applied to the finance charges, with the remainder applied to principal.
During the first month, customers owing $524,800 paid cash, less sales returns and allowances of $20,480, originally recorded as a refund liability. The finance charge at the end of the first month was $4,480. During the second month, the remaining receivables were collected in full, except for $5,120 off as uncollectible. Final settlement was effected with the finance company, including payment of an additional finance charge of $1,920.
Required:
a. Record the entry for Sterling to record the secured borrowing.
b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month.
c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami.
Answer:
See all the entries below.
Explanation:
a. Record the entry for Sterling to record the secured borrowing.
The entries will look as follows:
Account Name Debit ($) Credit ($)
Cash (768,000 * 85%) 652,800
Note Payable 652,800
(To record the secured borrowing.)
b. Record the entries for Sterling to record (1) the collections and (2) the payment to Miami for the first month.
The entries will look as follows:
Account Name Debit ($) Credit ($)
Cash 504,320
Refund Liability 20,480
Accounts Receivable 524,800
(To record collection on receivables for first month.)
Interest Expense 4,480
Note Payable 499,840
Cash 504,320
(To record payment to Miami for the first month.)
c. Record the entries for Sterling to record (1) the collections for the second month and (2) the final payment to Miami.
The entries will look as follows:
Account Name Debit ($) Credit ($)
Cash 238,080
Allowance for Doubtful Debt 5,120
Accounts Receivable (w.1) 243,200
(To record collection on receivables for second month Interest.)
Expense 1,920
Note Payable 151,040
Cash (w.2) 152,960
(To record final payment to Miami.)
Workings:
w.1: Accounts Receivable = Amount of accounts receivable as collateral – Cash received from customer = $768,000 - $524,800 = $243,200
w.2: Cash = Loan - First payment for principal = $652,800 - $499,840 = $152,960
During 2020, Carla Vista Company purchased 87000 shares of Kingbird Corporation common stock for $1330000 as an equity investment. The fair value of these shares was $1263000 at December 31, 2020. Carla Vista sold all of the Kingbird stock for $17 per share on December 3, 2021, incurring $63000 in brokerage commissions. Carla Vista Company should report a realized gain on the sale of stock in 2021 of
Answer:
$86,000
Explanation:
Calculation to determine what Carla Vista Company should report a realized gain on the sale of stock in 2021
2021 Realized gain on the sale of stock=87000 shares x $17 per share = $1,479,000
2021 Realized gain on the sale of stock=$1,479,000-$63,000=$1,416,000
2021 Realized gain on the sale of stock=$1,416,000-$1,330,000
2021 Realized gain on the sale of stock=$86,000
Therefore Carla Vista Company should report a realized gain on the sale of stock in 2021 of $86,000
(1 point) The manager of a large apartment complex knows from experience that 110 units will be occupied if the rent is 300 dollars per month. A market survey suggests that, on the average, one additional unit will remain vacant for each 2 dollar increase in rent. Similarly, one additional unit will be occupied for each 2 dollar decrease in rent. What rent should the manager charge to maximize revenue
Answer:
$270
Explanation:
If the rent is $300 then 110 units will be occupied. The manager of the apartment complex should set a price which will maximize the revenue. When the rent is increased by $2 then one additional unit will be left vacant. This will reduce the revenue of the apartment manager. The equation to find the best possible rent which maximizes the total revenue is:
Profit = 110 (p - 300)
P = 110p - 330
P = 270.
The rent for the apartment should be 270 so the total revenue will be maximized.
On January 1, 2019, Tonika Company issued a four-year, $10,700, 7% bond. The interest is payable annually each December 31. The issue price was $10,018 based on an 8% effective interest rate. Tonika uses the effective-interest amortization method. Rounding calculations to the nearest whole dollar, which of the following journal entries correctly records the 2019 interest expense?
A. Interest expense 1,052
Bond discount 205
Cash 847
B. Interest expense 847
Cash 847
C. Interest expense 805
Bond discount 42
Cash 847
Answer:
C. Interest Expense 805
Bond discount 42
Cash 847
Explanation:
The interest expense is calculated based on effective interest rate. The issue price is 10,018 which is the actual price and with effective interest rate interest amount is determined. The interest expense has cash value and bond discount.
10,018 * 8% = 804.45 approximately 805.
The following events took place when Managers A, B, and C were preparing budgets for the upcoming period:
I. Manager A increased property tax expenditures by 2% when she was informed of a recent rate hike by local authorities.
II. Manager B reduced sales revenues by 4% when informed of recent aggressive actions by a new competitor.
III. Manager C, who supervises employees with widely varying skill levels, used the highest wage rate in the department when preparing the labor budget.
Assuming that the percentage amounts given are reasonable, which of the preceding cases is (are) an example of building slack in budgets?
a. Il only.
b. I only.
c. II and III.
d. Ill only
e. I and II.
Answer:
Assuming that the percentage amounts given are reasonable, an example of building slack in budgets is:
d. Ill only
Explanation:
By using the highest wage rate in the department, Manager C deliberately overestimated her departmental expenses. However, her action is dictated by the need to ensure that there are no budget shortages for wages. By this slack, the actual performance of the department will be better than the budgeted performance because the department will likely spend less than its allotted costs.
The cases that represent an example of the building slacks in budgets should be option III.
Usage of highest wage rate:
Here we use the high wage rate with respect to the department. Also, the manager c should be overestimated the department expenses. The action should be dictated via the need for assurance that there should no shortages with respect to the wages. Also, the actual performance should be more than the budgeted performance since the department should lower than it
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Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:
(a) The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 20% of the following month
d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
Required:
1. Discuss some of the major benefits to be gained from budgeting. Support your answer with suitable example?
2. What are the budgeted sales for July?
3. What are the expected cash collections for July?
4. What are the accounts receivable balance at the end of July?
5. According to the production budget, how many units should be produced in July?
Answer:
Morganton Company
1. Budgeting increases effective financial management while ensuring proper allocation of scarce resources. It encourages planning for the future as well as improved business decisions. It helps management to identify problems before they occur and to develop strategies for solving any problems that may arise. With budgeting, the organization is in a better position to monitor its overall performance and ensure the achievement of its goals and objectives. Finally, budgeting increases the motivation to achieve goals for both the management and individual employees.
2. The budgeted sales for July are $10,000.
3. The expected cash collections for July are $9,040.
4. The accounts receivable balance at the end of July are $6,000.
5. According to the production budget, the units produced in July are 1,040 units.
Explanation:
a) Data and Calculations:
Budgeted selling price per unit = $70
June July August September
Budgeted unit sales 8,400 10,000 12,000 13,000
Cash Collections:
40% month of sale 3,360 4,000 4,800 5,200
60% month following 5,040 6,000 7,200
Total cash collections 3,360 9,040 10,800 12,400
Production costs:
June July August September
Ending Inventory 2,000 2,400 2,600
Cost of goods sold 8,400 10,000 12,000 13,000
Goods available 10,400 12,400 14,600
Beginning Inventory 1,680 2,000 2,400 2,600
Production costs 8,720 10,400 12,200
Unit cost of materials $10 $10 $10 ($2 * 5)
Units produced 872 1,040 1,220
Accounts receivable balance at July end:
June credit sales $8,400
June cash collection 3,360
July 1 Beginning bal. 5,040
July credit sales 10,000
Cash collections 9,040
Ending balance 6,000
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year.Beginning Inventory Ending InventoryRaw material* 41,000 51,000Finished goods 81,000 51,000* Three pounds of raw material are needed to produce each unit of finished product.If Paradise Corporation plans to sell 485,000 units during next year, the number of units it would have to manufacture during the year would be:
Answer:
Production= 455,000 units
Explanation:
Giving the following information:
Beginning Inventory= 81,000
Ending Inventory= 51,000
Sales= 485,000
To calculate the production required for the period, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
Production= 485,000 + 51,000 - 81,000
Production= 455,000 units
The following information is available for Keyser Corporation for the current year: Beginning Work in Process Cost of Beginning Work in Process: (75% complete) 14,500 units Material $25,100 Started 75,000 units Conversion 50,000 Ending Work in Process Current Costs: (60% complete) 16,000 units Material $120,000 Abnormal spoilage 2,500 units Conversion 300,000 Normal spoilage (continuous) 5,000 units Transferred out 66,000 units All materials are added at the start of production. Refer to Keyser Corporation. Assume that the cost per EUP for material and conversion are $1.75 and $4.55, respectively. What is the cost assigned to ending Work in Process
Answer:
$71,680
Explanation:
Calculation to determine the cost assigned to ending Work in Process
Equivalent Units * Cost per Equivalent Unit =Total
Work in Process Current Costs 16,000* $1.75 =$28,000
Work in Process Current Costs: (60% complete 9,600*$4.55=$43,680
(16,000*60%=9,600)
Total Cost assigned to ending Work in Process=$28,000+$43,680
Total Cost assigned to ending Work in Process=$71,680
Therefore cost assigned to ending Work in Process is $71,680
For each example presented in the following table, identify the self-efficacy dimension being illustrated.
Example Magnitude Strength Generality
You believe that you will be able to perform in at least the 70th percentile in sales in the next quarter compared to the rest of your company's sales force.
You are not sure that you will be able to earn employee of the month given how well Peggy is doing.
Although you were one of the top students in your high school, now that you are in college you are not sure if you will continue to perform in the top 20% of your class.
Use your knowledge of the different motivation theories to answer the question.
If your manager assumed that you are motivated by money and offered incentive pay so that you would earn more money if you did more work, what approach to motivation is being illustrated?
A. Expectancy theory
B. Maslow's hierarchy of needs
C. Scientific management
D. The human relations approach
Answer:
1) A) MAGNITUDE
B) STRENGTH
C) GENERALITY
2) Option A: Expectancy Theory
Explanation:
A) The correct self-efficacy dimension in this statement is "MAGNITUDE" because you believe that you can complete the task.
B) The correct self-efficacy dimension in this statement is "STRENGTH" because you are reflecting on your previous confidence you had to claim the employee of the month.
C) The correct self-efficacy dimension in this statement is "GENERALITY" because you are estimating the difference in two tasks which are your performance at the top in high school to the performance at top in college now.
2) Answer is expectancy theory because you are motivated to start working hard because of the extra money the manager is offering as incentive to make you work harder.
A company purchased a computer system on January 2, 2018 for $1,600,000. The company used the straight-line depreciation method with an estimated useful life of 6 years and a residual value of $130,000. The company prepares financial statements at December 31 Assume the company decides to sell the computer system on July 1, 2020 for $1,000,000 Which of the following statements about the journal entry (or entries) required on July 1 is not correct?
A) The Equipment asset account must be credited for $1,600,000 to record the sale.
B) The loss on the sale is $12,500.
C) Accumulated Depreciation is debited for $612,500 in the entry to record the sale.
D) The depreciation expense must be recorded for 6 months, January 1 to July 1.
Answer:
B. Loss on sale is $12,500
Explanation:
The equipment purchase on 1st January 2018. The equipment is sold of 1st July 2020. The duration for accumulated depreciation is 2.5 years. Using straight line method the depreciation will be:
[ 1,600,000 - 130,000 ] / 8 years * 2.5 years = 612,500
The book value for the equipment is 1,600,000 - 612,500 = 987,500
The equipment is sold for 1,000,000
There is gain on disposal of 12,500.
Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $46,000 and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 2 percent of your annual salary in an account that will earn 12 percent per year. Your salary will increase at 7 percent per year throughout your career.How much money will you have on the date of your retirement 39 years from today
Answer:
$1,360,173
Explanation:
I prepared an excel spreadsheet
Morales Company sells $320,000 of its receivables to Instant Factors, Inc. Instant Factors assesses a finance charge of 3% of the amount of receivables sold. Prepare the journal entry to record the sale of the receivables on Morales Company's books. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer:
Dr Cash $310,400
Dr Factoring expense$9,600
Cr Account receivable $320,000
Explanation:
Preparation of the journal entry to record the sale of the receivables on Morales Company's books.
Dr Cash $310,400
($320,000-$9,600)
Dr Factoring expense$9,600
($320,000*3%)
Cr Account receivable $320,000
(Being to record the sale of the receivables on Morales Company's books
Point Company uses the standard costing method. The company's product normally takes 0.25 hour to produce. Normal annual capacity is 3,000 direct labor hours, and budgeted fixed overhead costs for the year were $6,750. During the year, the company produced and sold 8,000 units. Actual fixed overhead costs were $4,800. Compute the fixed overhead variance.
Answer:
the fixed overhead variance is $1,660 (favorable)
Explanation:
The fixed overhead variance results from Fixed Overhead Expenditure (Spending) variance and Fixed Overhead Volume variance.
Expenditure Variance = Actual Fixed Overheads - Budgeted Fixed Overheads
= $4,800 - $6,750
= $1,950 (favorable)
Volume Variance = Budgeted overhead at actual activity - Budgeted fixed overhead
= ($6,750 ÷ 3,000/0.25) x 8,000 units - $4,800
= $300 (unfavorable)
Total Variance = Expenditure Variance + Volume Variance
= $1,950 (favorable) + $300 (unfavorable)
= $1,660 (favorable)
Conclusion :
the fixed overhead variance is $1,660 (favorable)
The total fixed overhead variance is $1,660 Favorable.
Here, we will calculate the expenditure and volume variance to enable us derive the total fixed overhead variance.
Expenditure Variance = Actual Fixed Overheads - Budgeted Fixed
Expenditure Variance = $4,800 - $6,750
Expenditure Variance = $1,950 Favorable
Volume Variance = Budgeted overhead at actual activity - Budgeted fixed overhead
Volume Variance = ($6,750 / (3,000/0.25)) * 8,000 units - $4,800
Volume Variance = $4500 Favorable - $4,800 Unfavorable
Volume Variance = $300 Unfavorable
Total Variance = Expenditure Variance + Volume Variance
Total Variance = $1,950 Favorable + $300 Unfavorable
Total Variance = $1,660 Favorable
Therefore, the total fixed overhead variance is $1,660 Favorable.
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The accounting records of Nash Inc. show the following data for 2017 (its first year of operations).
1. Life insurance expense on officers was $13,000.
2. Equipment was acquired in early January for $307,000. Straight-line depreciation over a 5-year life is used, with no salvage value. For tax purposes, Nash used a 30% rate to calculate depreciation.
3. Interest revenue on State of Iowa bonds totaled $4,000.
4. Product warranties were estimated to be $55,000 in 2017. Actual repair and labor costs related to the warranties in 2017 were $10,000. The remainder is estimated to be paid evenly in 2018 and 2019.
5. Pretax financial income was $850,000. The tax rate is 30%.
Prepare a schedule starting with pretax financial income in 2017 and ending with taxable income in 2017 Prepare the journal entry for 2017 to record income taxes payable, income tax expense, and deferred income taxes.
Answer:
Nash Inc.
1. A schedule of taxable income for 2017:
Pretax financial income = $850,000
add:
1. Life Insurance for officers 13,000
2. Interest on Iowa bonds (4,000)
Excess Depreciation (30,700) ($92,100 - $61,405)
Non-tax allowed warranties 45,000 ($55,000 - $10,000)
Adjusted pre-tax income $873,300
Income tax expense (30%) $261,990
2. Journal entry:
Debit Income tax expense $261,990
Credit Income tax payable $261,990
To record income tax payable.
Debit Deferred Tax Asset $13,550
Credit Profit and Loss Account $13,550
To record the deferred tax asset.
Debit Profit and Loss Account $9,210
Credit Deferred Tax Liability $9,210
To record the deferred tax liability.
Explanation:
a) Data and Analysis:
Pretax financial income = $850,000
add:
1. Life Insurance for officers 13,000
2. Interest on Iowa bonds (4,000)
Excess Depreciation (30,700) ($92,100 - $61,405)
Non-tax allowed warranties 45,000 ($55,000 - $10,000)
Adjusted pre-tax income $873,300
Income tax expense (30%) $261,990
Depreciation Excess/Differences:
Equipment cost = $307,000
Depreciation with straight line (5 years)
Annual accounting depreciation expense = $61,400 ($307,000/5)
Annual taxation depreciation expense = $92,100 ($307,000 * 30%)
Deferred tax liability:
Excess Depreciation (30,700) * 30% = $9,210
Deferred tax asset:
Non-tax allowed warranties 45,000 * 30$ = $13,550
