Answer:
a. $7,382.40
Explanation:
With regards to the above,
Bettina Amman 's average monthly expenditure calculation is shown below;
= Total monthly expenses / Number of months
= $4,356.01 + $9,011.20 + $8,780 / 3
= $7,382.40
Therefore, Bettina Amman's average monthly expenditure is $7,382.40
In 1963, an investor opened a savings account with $LaTeX: \text{K} K earning simple interest at annual rate of LaTeX: 2.5\% 2.5 % . Four years later, the investor closed the account and invested the accumulated amount in a savings account earning LaTeX: 5\% 5 % compound interest. Determine the number of years (since 1963) necessary for the balance to reach $LaTeX: 3K 3 K .
Answer:
The number of years necessary for the balance to turn from K to 3K (since 1963) in the given situation = 24.5636 years rounded off to 25 years
Explanation:
The simple interest earned is at the rate of 2.5%. The formula for simple interest per year is,
Simple interest per year = Investment * interest rate
Simple interest per year = 1K * 2.5% => $0.025K
Simple interest for 4 years = 0.025 * 4 = $0.1K
So, total investment at the after 4 years = 1K + 0.1K = $1.1K
The formula for future value of a sum of amount will be used to calculate the value of investment at a future date. The formula is as follows,
Future value = Present value * (1+r)^t
Where,
r is the interest rate or rate of returnt is the time periodSo, accumulated earnings ($1.1K) are invested at 5% compound interest. The value of t necessary for 1.1K to turn into 3K can be found as follows,
3 = 1.1 * (1.05)^t
3 / 1.1 = 1.05^t
2.727272727 = 1.05^t
ln(2.727272727) / ln(1.05) = t
t = 20.5636 years rounded off to 21 years
The number of years necessary for the balance to turn from K to 3K in the given situation = 4 + 20.5636 = 24.5636 rounded off to 25 years
What are the five components of internal control briefly explain each component?
Answer: The five components of internal control are control environment, risk assessment, control activities, information and communication, and monitoring.
Explanation:
The five components of internal control are control environment, risk assessment, control activities, information and communication, and monitoring.
Control environment; is also known as internal control environment. These are set of standards and structures that guides the basis of carrying out internal control within an organization. It is the awareness, attitude and action of the management team regarding internal control and it's relevance to the organization
Risk assessment is used to describe the process and method of identifying hazard and risk which have potentials to raise harm in an environment
Control activities are policies, techniques and procedures that are pit in place to manage or reduce risk in an environment. Their actions carried out to minimize or limit risk in an environment
Information and communication is a method of information being passed through systems by means of communication. To place everyone involved in the system enlightened by communicating properly to them.
Monitoring is the act of observing a process to control both success and failure that may tend to arise within the process.
The following accounts are taken from the ledger of Crane Company at December 31, 2017. Notes Payable $19,600 Cash $5,900 Common Stock 24,500 Supplies 4,900 Equipment 74,500 Rent Expense 2,000 Dividends 7,800 Salaries and Wages Payable 2,900 Salaries and Wages Expense 37,200 Accounts Payable 8,800 Service Revenue 84,300 Accounts Receivable 7,800
Prepare a trial balance.
CRANE COMPANY
Trial Balance
For the Month Ended December 31, 2017For the Year Ended December 31, 2017December 31, 2017
Debit Credit
$ $
$ $
Answer:
DEBIT SIDE $140,100
CREDIT SIDE $140,100
Explanation:
Preparation of a trial balance.
CRANE COMPANY Trial Balance For the Month Ended December 31, 2017
DEBIT SIDE
Equipment $74,500
Accounts receivable $7,800
Cash $5,900
Supplies $4,900
Dividends $7,800
Salaries and Wages Expense $37,200
Rent Expense $2,000
TOTAL DEBIT SIDE $140,100
CREDIT SIDE
Common stock $24,500
Notes payable $19,600
Salaries and wages payable $2,900
Accounts payable $8,800
Service Revenue $84,300
TOTAL CREDIT SIDE $140,100
Therefore Prepare a trial balance CRANE COMPANY Trial Balance will have both. DEBIT and CREDIT BALANCE of $140,100
Billed Mercy Co. $2,400 for services performed.
how to journalize this?
When a business transaction requires a journal entry, we must follow these rules:
The entry must have at least 2 accounts with 1 DEBIT amount and at least 1 CREDIT amount.
The DEBITS are listed first and then the CREDITS.
The DEBIT amounts will always equal the CREDIT amounts.
For another example, let’s look at the transaction analysis we did in the previous chapter for Metro Courier (click Transaction analysis):
1. The owner invested $30,000 cash in the corporation. We analyzed this transaction by increasing both cash (an asset) and common stock (an equity) for $30,000. We learned you increase an asset with a DEBIT and increase an equity with a CREDIT. The journal entry would look like this:
2. Purchased $5,500 of equipment with cash. We analyzed this transaction as increasing the asset Equipment and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit. This journal entry would be:
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Answer:
All the journal entries illustrated so far have involved one debit and one credit; these journal entries are called simple journal entries. Many business transactions, however, affect more than two accounts. The journal entry for these transactions involves more than one debit and/or credit. Such journal entries are called compound journal entries.
Explanation:
1. The owner invested $30,000 cash in the corporation. We analyzed this transaction by increasing both cash (an asset) and common stock (an equity) for $30,000. We learned you increase an asset with a DEBIT and increase an equity with a CREDIT
2. Purchased $5,500 of equipment with cash. We analyzed this transaction as increasing the asset Equipment and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit.
3. Purchased a new truck for $8,500 cash. We analyzed this transaction as increasing the asset Truck and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit.
4. Purchased $500 in supplies on account. We analyzed this transaction as increasing the asset Supplies and the liability Accounts Payable. To increase an asset, we debit and to increase a liability, use credit.
5. Paid $300 for supplies previously purchased. Since we previously purchased the supplies and are not buying any new ones, we analyzed this to decrease the liability accounts payable and the asset cash. To decrease a liability, use debit and to decrease and asset, use debit.
6. Paid February and March Rent in advance for $1,800. When we pay for an expense in advance, it is an asset. We want to increase the asset Prepaid Rent and decrease Cash. To increase an asset, we debit and to decrease an asset, use credit.
7. Performed work for customers and received $50,000 cash. We analyzed this transaction to increase the asset cash and increase the revenue Service Revenue. To increase an asset, use debit and to increase a revenue, use credit.
8. Performed work for customers and billed them $10,000. We analyzed this transaction to increase the asset accounts receivable (since we have not gotten paid but will receive it later) and increase revenue. To increase an asset, use debit and to increase a revenue, use credit.
9. Received $5,000 from customers from work previously billed. We analyzed this transaction to increase cash since we are receiving cash and we want to decrease accounts receivable since we are receiving money from customers who we billed previously and not new work we are doing. To increase an asset, we debit and to decrease an asset, use credit.
10 Paid office salaries $900. We analyzed this transaction to increase salaries expense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.
11. Paid utility bill $1,200. We analyzed this transaction to increase utilities expense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.
The GAP is a global clothing retailer for men, women, children, and babies. The following information is taken from The Sap's fiscal 2015 annual report. Selected Balance Sheet Data ($ millions)20152014 Inventories$1,918$1,844 Accounts Payable1,1571,128 a. The Gap purchased inventories totaling $10,438 million during fiscal 2015. Use the financial statement effects template to record cost of goods sold for The Sap's fiscal year ended 2015. (Assume accounts payable is used only for recording purchases of inventories and all inventories are purchased on credit.) b. What amount did the company pay to suppliers during the year
Answer:
The GAP
a. Cost of goods sold = $10,364
b. Cash paid to suppliers = $10,409
Explanation:
a) Data and Calculations:
Selected Balance Sheet Data
($ millions) 2015 2014
Inventories $1,918 $1,844
Accounts Payable 1,157 1,128
Purchases during 2015 = $10,438 million
b) Cost of goods sold:
Beginning inventory $1,844
Purchases 10,438
Goods available $12,282
Ending inventory (1,918)
Cost of goods sold $10,364
c) Accounts Payable:
Beginning balance $1,128
Purchases 10,438
Less ending balance 1,157
Cash paid to suppliers $10,409
The conceptual framework indicates the desired fundamental and enhancing qualitative characteristics of accounting information. Several constraints impede achieving these desired characteristics. Answer each of the following questions related to these characteristics and constraints.
1. Which component would allow a large company to record the purchase of a $120 printer as an expense rather than capitalizing the printer as an asset?
2. Donald Kirk, former chairman of the FASB, once noted that " . . . there must be public confidence that the standard-setting system is credible, that selection of board members is based on merit and not the influence of special interests . . ." Which characteristic is implicit in Mr. Kirk's statement?
3. Allied Appliances, Inc., changed its revenue recognition policies. Which characteristic is jeopardized by this change?
4. National Bancorp, a publicly traded company, files quarterly and annual financial statements with the SEC. Which characteristic is relevant to the timing of these periodic filings?
5. In general, relevant information possesses which qualities?
6. When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?
7. Jeff Brown is evaluating two companies for future investment potential. Jeff's task is made easier because both companies use the same accounting methods when preparing their financial statements. Which characteristic does the information Jeff will be using possess?
8. A company should disclose information only if the perceived benefits of the disclosure exceed the costs of providing the information. Which constraint does this statement describe?
Answer:
1)Materiality
2)Reliability
3)Consistency
4)periodicity
5)Predictive Value, Confirmatory value, and/or Materiality
6)Faithful representation
7)Comparability
8)Cost effectiveness
Explanation:
1)Materiality can be regarded the cost or asset that is been considered having a great influence on the company. It is the relevancy of information as well as work of transaction as regards financial statement of the company.
2)Reliability in Accounting can be regarded as trustworthiness in a financial statements. It helps to know if a financial information is eligible to be utilized by investors as well as creditors ending up with the same results.
3)Consistency can be regarded as when the company follows accounting principles in subsequent years when presenting and presenting financial statements as well as internal working.
4)periodicity explained that financial results of a company can be reported within a designated periods of time. This could be on basis of monthly, quarterly as well as annual.
5)Predictive Value, Confirmatory value, and/or
Materiality
A relevant information are ones that has data from occured event i.e it is CONFIRMATORY. It should also encompass data as regards to the future I.e
PREDICTIVE.Relevant information helps in decision making
6)Faithful representation can be regarded as a concept that explained that financial statements of a company should be able to display the condition of a business accurately
7)Comparability can be regarded as the extent to which financial statements information can be compared in different firms as well as time period
8)Cost effectiveness can be regarded as when greatest benefits are recorded with a comparatively low price
Bridges and Lloyd, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $250,000) has been allocated to services on the basis of billable hours to clients. A recent analysis found that 65% of the firm's billable hours to clients resulted from tax planning services, while 35% resulted from consulting services. The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows: Staff Support $ 180,000 In-house computing charges 50,000 Miscellaneous office costs 20,000 Total $ 250,000 A recent analysis of staff support found a strong correlation between the number of staff personnel and the number of clients served (consulting, 20; tax planning, 60). In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting consumed 30% of the firm's computer hours and had 20% of the total client transactions. If Bridges and Lloyd switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would:
Answer: Decrease by $23,500
Explanation:
The Consulting cost under their current accounting system is:
= 250,000 * 35%
= $87,500
Under Activity based:
Staff support for Consulting:
20 goes to Consulting, 60 to tax planning.
Total = 20 + 60 = 80
Consulting is 20/80 of Staff support amount
= 20/80 * 180,000
= $45,000
In house computing charges for Consulting
Consulting consumed 30% of the firm's computer hours.
= 30% * 50,000
= $15,000
Miscellaneous office costs
Consulting consumed 20% of total client transactions
= 20% * 20,000
= $4,000
Total cost for Consulting under Activity based = 45,000 + 15,000 + 4,000
= $64,000
Difference = 87,500 - 64,000
= $23,500
The large percentage of population involved in agriculture in China indicates that most people consume an inadequate number of calories. most people must produce food for their own survival factory production cannot expand. the country imports most of its food. few people are unemployed
Answer:
The answer is "most people must produce food for their own survival".
Explanation:
Its large percentage of Chinese people involved in agriculture indicates that the majority of people have had to make food to sustain themselves. The processing of dairy products, wool, fruits, veggies, meat, livestock, eggs, and farmed fish is among the first nations in the world. Only with importance attached to opening farming with the outside world, China is becoming more and more closely connected with the other countries.
are capital markets also organisational markets?
Answer:A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold.[6] Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments.[a] Financial regulators like Securities and Exchange Board of India (SEBI), Bank of England (BoE) and the U.S. Securities and Exchange Commission (SEC) oversee capital markets to protect investors against fraud, among other duties.
Modern capital markets are almost invariably hosted on computer-based electronic trading platforms; most can be accessed only by entities within the financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. As an example, in the United States, any American citizen with an internet connection can create an account with TreasuryDirect and use it to buy bonds in the primary market, though sales to individuals form only a tiny fraction of the total volume of bonds sold. Various private companies provide browser-based platforms that allow individuals to buy shares and sometimes even bonds in the secondary markets. There are many thousands of such systems, most serving only small parts of the overall capital markets. Entities hosting the systems include stock exchanges, investment banks, and government departments. Physically, the systems are hosted all over the world, though they tend to be concentrated in financial centres like London, New York, and Hong Kong.
Explanation:
Jack works for Red, Blue and Green CPAs. Each year Red, Blue and Green asks Jack to fill out a form indicating all of his financial interests and those of his family members and close friends. Red, Blue and Green uses these charts to ensure that their auditors comply with the independence standards as described by the AICPA Code of Professional Conduct.
Code of Professional Conduct contains examples of situations that may impair an auditor's independence. Relationships are divided into three categories for purposes of the interpretations: immediate family, close relatives, and other relatives and friends. It is important for an auditor to understand how existing relationships fit into these categories so that the auditor can determine if there is an effect on his or her independence. Understanding of relationships is of primary importance to understanding the auditor's Code of Professional Conduct regarding independence. Place the following relationships into the appropriate category.
1. Immediate Family
2. Close Relative
3. Other Relative or Friend
a. Dependent
b. Child
c. Father
d. Cousin
e. Spouse
f. Sister
g. Golf
h. Partner
i. Spouse
j. Equivalent
k. Brother
l. Niece
m. Dependent
n. Parent
o. Mother
p. Nephew
q. Independent
r. Child
s. College
t. Friend
u. Grand father
Roommate
Answer:
1.Immediate Family:
Dependent Child
Spouse
Spouse equivalent
Dependent Parent
2.Close Relatives:
Father
Mother
Sister
Brother
Grand Father
Independent Child
3. Other relatives and Friends:
Cousin
Golf Partner
College Friend
Roommate
Nephew
Niece
Explanation:
Code of Professional conduct is a list of standards which are required to be followed by the CPA professionals. It provides guidance to the professionals about the decision making in certain situations. There are two broad categories which is rules and standard. Rules are mandatory to be followed regardless of the situation and there can not be any deviation allowed from the listed rule. Standard provide guidance for decision making in business scenarios.
The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $62,500. According to an independent appraisal, the land currently is worth $150,000. Tinsley paid $25,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance
Answer:
$175,000
Explanation:
When an exchange transaction has commercial substance, the accounting standard IAS 16 requires that the cost price of the item acquired be at fair Value of the asset given up.
Fair Value of Asset given up is $150,000.
However Tinsley has also paid a trade -in allowance for the new parcel of land of $25,000.
Therefore, the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance is $175,000 ($150,000 + $25,000)
Consider a firm making production decisions in the short run. Select the statement(s) that must be correct. Choose one or more: A. Average total cost will always exceed average variable cost. B. Average total cost cannot decline as output increases, at any level of output. C. Average fixed cost cannot increase with output, at any level of output. D. Average variable cost is always above the average fixed cost. E. Average variable cost cannot decline with output, at any level of output.
Answer:
A). Average total cost will always exceed average variable cost.
C). Average fixed cost cannot increase with output, at any level of output
Explanation:
In the short term, a company that increases its profits will increase production if the marginal cost is less than the marginal income. Reduction in production if marginal cost exceeds marginal income. Continue production when the average variable cost is less than the unit. so correct answer is A and CLast month, you lent a work colleague $5000 to cover some overdue bills. He agreed to pay you in 1 month with interest at 2% for the month, thus owing you $5100. Today, when the repayment is due, he asked you to extend the loan for another month and he would pay you the $5100 next month. In the meantime, you have had the offer to invest as much as you wish in an oil-well venture that is expected to pay 40% per year and a hot new IT stock that is estimated to return 39% the first year. If you let your colleague have another month, what is the opportunity cost of your decision
Answer:
The opportunity cost of lending the money to the friend is the largest expected return that could be earned with the money loaned to the friend. From the available opportunity, the investor could earn maximum of 40% by investing in oil well venture. Thus, the opportunity cost to the investor is 40%
The opportunity cost in dollar = Investment * Opportunity cost in %
= $5,000 * 40%
= $2,000
Thus, the opportunity cost in dollar is $2,000
a) Calculate the PV of a perpetuity with a cash flow of $111,111 received every year. The first cash flow occurs in year 1. The interest rate is 11% simple annual rate. b) Calculate the PV of a perpetuity with a cash flow of $222,222 received every second year. The first cash flow occurs in year 2. The interest rate is 11% simple annual rate. c) Calculate the PV of a perpetuity with a cash flow of $333,333 received every third year. The first cash flow occurs in year 3. The interest rate is 11% simple annual rate.
Answer:
a) Calculate the PV of a perpetuity with a cash flow of $111,111 received every year. The first cash flow occurs in year 1. The interest rate is 11% simple annual rate.
PV of a perpetuity = annual payment / interest rate = $111,111 / 11% = $1,010,100
b) Calculate the PV of a perpetuity with a cash flow of $222,222 received every second year. The first cash flow occurs in year 2. The interest rate is 11% simple annual rate.
PV of a perpetuity = annual payment / interest rate = $222,222 / (11% x 2) = $1,010,100
c) Calculate the PV of a perpetuity with a cash flow of $333,333 received every third year. The first cash flow occurs in year 3. The interest rate is 11% simple annual rate.
PV of a perpetuity = annual payment / interest rate = $333,333 / (11% x 3) = $1,010,100
Explanation:
Since the interest rate is simple, not compounded, the three perpetuities have the same present value.
XYZ Corporation had 158 million shares outstanding on January 1, 2012. On February 2,2012, it issued an additional 30 million shares to the market at the market priceof $55 per share. What was the effect of this share issue on the price per share
Answer:
There was no effect of this share issue on the price per share
Explanation:
First, we need to determine the pre-issuance value
Numbers of outstanding shares = 158,000,000 shares
Total Value of equity = Numbers of outstanding shares x Market value per share = 158,000,000 shares x $55 per share = $8,690,000,000
Now calculate the issuance values
Numbers of shares issued = 30,000,000 shares
Vaue of issued equity = NUmbers of shares issued x Mrket value per share = 30,000,000 x $55 per share = $1,650,000,000
Now determien the post issuance value
Numbers of outstanding shares = 158,000,000 shares + 30,000,000 shares = 188,000,000 shares
Total Value of equity = $8,690,000,000 + $1,650,000,000 = $10,340,000,000
Now calcuate the Value per share
Value per share = Post Issuance Total value of equity / Post issuance total numbers of shares = $10,340,000,000 / 188,000,000 shares = $55 per share
There is no effect of share issue on the price of the share.
Most of the time it is quite difficult to separate the three functions of money. Money performs its three functions at all times, but sometimes we can stress one in particular. For each of the following situations, identify which function of money is emphasized: _________
a) Brooke accepts money in exchange for performing her daily tasks at her office, since she knowsshe can use that money to buy goods and services: medium of exchange
b) Tim wants to calculate the relative value of oranges and apples, and therefore checks the price per pound of each of these goods quoted in currency units: unit of account
c) Maria is currently pregnant. She expects her expenditures to increase in the future and decides to increase the balance in her savings account: store of value
Answer:
a medium of exchange
a unit of account
a store of value,
Explanation:
Functions of money
1. Medium of exchange : money can be used to exchange for goods and services. For example, money serves as a medium of exchange when you pay $20 for your favourite jeans
2. Unit of account : money can be used to value goods and services, For example, $20 is the value of your favourite jeans
3. Store of value : money can retain its value over the long term, this it can be used as a store of value
What are the costs and sources of inefficiency in a barter B apply.) A. Productivity is increased by specialization. B. Each good has only one price. C. There is increased time and effort spent looking for trading partners. D. There is a lack of standardization. E. There is difficulty in accumulating wealth. OF. Transactions costs are almost always high.
Answer:
C)There is increased time and effort spent looking for trading partners.
D)There is a lack of standardization.
E)There is difficulty in accumulating wealth.
Explanation:
barter in a trade can be regarded as a system of exchange that involves exchange of goods and services for another without using money as a medium of exchange. Barter is been considered as 'inefficient' as a result of the needs for 'double coincidence of wants'. For instance in a situation whereby someone is buying particular amount of another's goods, but the payment he/she has is for just one indivisible unit of another good, and the worth is higher than what he/she want to obtain, in this case there won't be barter transaction.
It should be noted that the costs and sources of inefficiency in a barter are;
✓There is increased time and effort spent looking for trading partners.
✓There is a lack of standardization.
✓There is difficulty in accumulating
In its income statement for the year ended December 31, 2017, Darren Company reported the
following condensed data.
Salaries and wages expense $465,000 Loss on disposal of plant assets $83,500
Cost of goods sold 987,000 Sales revenue 2,210,000
Interest expense 71,000 Income tax expense 25,000
Interest revenue 65,000 Sales discounts 160,000
Depreciation expense 310,000 Utilities expense 110,000
Instructions
(a) Prepare a multi-step income statement.
(b) Calculate the profit margin and gross profit rate.
(c ) In 2016, Darren had a profit margin of 5%. Is the decline in 2017 a cause for concern?
(Ignore income tax effects.)
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a) DARREN COMPANY
Income Statement
For the Year Ended December 31, 2017
Sales
Sales revenue $2,210,000
Less: Sales discounts $160,000
Net Sales $2,050,000
Cost of goods sold $987,000
Gross profit $1,063,000
Operating expenses
Salaries and wages expense $465,000
Depreciation expense $310,000
Utilities expense $110,000
Total operating expenses $885,000
Income from operations $178,000
Other revenues and gains
Interest revenue $65,000
Other expenses and losses
Loss on disposal of plant assets 83,500
Interest expense 71,000 154,500
Income before income taxes 88,500
Income tax expense 25,000 28%
Net income $63,500
(b) Profit margin
Net income $63,500
Net Sales 2,050,000
3.10%
Gross profit rate
Gross profit $1,063,000
Net sales $2,050,000
51.9%
After you have completed E5-8 , consider the following additional question.
1. Assume that cost of goods changed to $1,015,000 and that the income tax rate is 28%.
What impact does this change have on the multi-step income statement and the
profitability ratios?
Answer:
Part a
Darren Company
Multi-step income statement
Sales
Sales revenue $2,210,000
Less: Sales discounts ($160,000)
Net Sales $2,050,000
Cost of goods sold ($987,000)
Gross profit $1,063,000
Operating expenses
Salaries and wages expense $465,000
Depreciation expense $310,000
Utilities expense $110,000
Total operating expenses ($885,000)
Income from operations $178,000
Other revenues and gains
Interest revenue ($65,000)
Other expenses and losses
Loss on disposal of plant assets $83,500
Interest expense $71,000 ($89,500)
Income before income taxes $88,500
Income tax expense 25,000 28% ($25,000)
Net income $63,500
Part b
Darren Company
Profit margin = 3.10 % and gross profit rate = 51.85 %
Part c
Change in profit margin : The Profit Margin has fallen from 5% to 3.10 % in 2017 by 2.10% . The cause of this decline is a concern and must be investigated. The Profit margin rate measure the success with respect of earnings on sales thus more investigations must be done on what caused the earnings to decline in 2017.
Part 1
Cost of Goods Sold has increased by $28,000 ($1,015,000 -$987,000). Income tax rate has not changed.
a. Impact of the change on multi-step income statement
The items of Gross Profit and Income from Operations will decline by $28,000.
b. Impact of the change on profitability ratios
The Profit ratios will decline. Profit margin will be 1.73 %. Gross Profit margin will be 50.49 %
Explanation:
Multiple Step Income Statement shows separately the Operating Income and the Net Income. Operating Income being Income derived from Primary Activities of the Company whilst the Net Income includes the Secondary Activities of the Company such as Income taxes or Sale of assets.
Other Workings :
Profit margin = Net Income / Net Sales x 100
= $63,500 / $2,050,000 x 100
= 3.10 %
Gross Profit rate = Gross Profit / Net Sales x 100
= $1,063,000 / $2,050,000 x 100
=51.85 %
The Total Revenue and Net Earnings are shown individually on the Several Stage Financial Statements. Operating income comes from the company's main activities, whereas net earnings come from the industry's support functions, such as taxable income and divestments.
The income statement has been attached below.
Part. B.
Darren Company
Profit margin = 3.10 % and gross profit rate = 51.85 %
Part. C.
Profitability has dropped by 2.10 percent from 5 percent to 3.10 percent in the year 2017. The basis for this drop is a point of anxiety that needs to be questioned.
Because the gross margin rate evaluates achievement in terms of income on selling, more analysis into what prompted the profitability to drop in 2017 is required.
Part 1
Cost of Goods Sold has boost up by $28,000 ($1,015,000 -$987,000).
The income tax rate has not changed.
a. Impact of the change on the multi-step income statement
The items of Gross Profit and Income from Operations will reduce by $28,000.
b. Impact of the change on profitability ratios
The Profit ratios will decline.
The profit margin will be 1.73 %.
The Gross Profit margin will be 50.49 %
Working Notes:
Profit margin = [tex]\frac{ \text{Net Income}}{ \text{Net Sales}} \times 100[/tex]
= [tex]\frac{ \$63,500}{ \$2,050,000}\times 100[/tex]
= 3.10 %
Gross Profit rate = [tex]\frac{\text{Gross Profit}}{\text{Net Sales}} \times 100[/tex]
= [tex]\frac{ \$1,063,000 }{ \$2,050,000}\times 100[/tex]
=51.85 %
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brainly Stuart Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Stuart immediately purchased office furniture and manufacturing equipment costing $32,000 and $40,000, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of six years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Stuart completed production on 10,000 units of product and sold 8,000 units at a price of $9 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) calculate assets
Answer:
Stuart Manufacturing Company
Assets = $107,200
Explanation:
a) Data and Calculations:
Cash Account
Common stock $89,000
Furniture (32,000)
Equipment (40,000)
Salaries (12,000)
Wages (21,000)
Raw materials (26,000)
Sales 72,000
Cash balance $30,000
Inventory:
Cost = $26,000
Units produced = 10,000 units
Cost per unit = $2.60 ($26,000/10,000)
Cost of goods sold = 8,000 * $2.60 = $20,800
Ending inventory = 2,000 * $2.60 = $5,200
Sales Revenue = 8,000 * $9 = $72,000
Assets:
Cash $30,000
Ending inventory 5,200
Furniture 32,000
Equipment 40,000
Total $107,200
b) An asset is something that brings in future cash flows to the business entity. It is made up of Cash and Cash Equivalents, Inventories, Property, Plant, Equipment, and other business investments. Assets are funded from finance provided by creditors and the equity owners, and they generate economic values.
Time-tested practices for developing successful teams are Multiple Choice showing enthusiasm, making timely decisions, practicing innovation. admitting mistakes, being flexible, having persistence. giving credit to others, keeping people informed, keeping promises. putting others first and self last. all of these.
Answer:
all of these.
Explanation:
Time-tested practices can be regarded as methods , ways that has been usings for long period of time that has produced a successful teams and can be trusted any time. It should be noted that Time-tested practices for developing successful teams are the followings;
✓showing enthusiasm
✓making timely decisions
✓ practicing innovation
✓admitting mistakes
✓ being flexible,
An analysis of the company's insurance policies provided the following facts.
Policy Date of Purchase Months of Coverage Cost
A April 1, 2017 24 $10,824
B April 1, 2018 36 9,576
C August 1, 2019 12 8,424
The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)
Required:
So what would my adjusting journal entry be?
Answer:
Adjusting Journal in the year of payment:
December, 2017: Policy A
Debit Insurance Expense $4,059
Credit Prepaid Insurance $4,059
To record the insurance expense for the year (9 months).
December, 2018: Policy A and B
Policy A:
Debit Insurance Expense $5,412
Credit Prepaid Insurance $5,412
To record insurance expense for the year, 12 months.
Policy B:
Debit Insurance Expense $2,394
Credit Prepaid Insurance $2,394
To record insurance expense for the year, 9 months.
December, 2019:
Policy A:
Debit Insurance Expense $1,353
Credit Prepaid Insurance $1,353
To record insurance expense for the year, 3 months.
Policy B:
Debit Insurance Expense $3,192
Credit Prepaid Insurance $3,192
To record insurance expense for the year, 12 months.
Policy C:
Debit Insurance Expense $3,510
Credit Prepaid Insurance $3,510
To record insurance expense for the year, 5 months.
Explanation:
a) Data and Calculations:
Policy Date of Purchase Months of Cost Monthly
Coverage Cost
A April 1, 2017 24 $10,824 $451 ($10,824/24)
B April 1, 2018 36 9,576 $266 ($9,576/36)
C August 1, 2019 12 8,424 $702 ($8,424/12)
b) The insurance expenses recorded under the three policies have been determined using the monthly rates. In each year, the months covered are taken into consideration when computing the insurance expense for the year. In this way, only the expenses incurred for the period are accounted for, in accordance with the accrual concept of accounting.
Ashley Corporation uses a process-cost accounting system. The company adds direct materials and direct labor at the start of its production process; overhead cost is incurred evenly throughout manufacturing. The firm has no beginning work-in-process inventory; its ending work in process is 40% complete. Which of the following sets of percentages would be used to calculate the correct number of equivalent units in the ending work-in-process inventory?
a. Materials, 100%; labor, 100%; overhead cost, 40%.
b. Materials, 100%; labor, 100%; overhead cost, 100%.
c. Materials, 100%; labor 40%; overhead cost, 40%.
d. Materials, 40%; labor, 40%; overhead cost, 60%.
e. Materials, 40%; labor, 40%; overhead cost, 100%.
Answer:
a. Materials, 100%; labor, 100%; overhead cost, 40%
Explanation:
Since Materials and Labor are added at the start of its production process, they will always be 100 % complete at the the end of the period as this mark is already passed. Overheads will be complete up to the extent of the work done in work in process that is 40%.
Consider the production department of a manufacturer of laptop computers. Classify the cost of the factory maintenance manager's salary.
a. Period
b. Variable
c. Indirect
d. Fixed
e. Direct
f. Product
Answer:
c. Indirect
d. Fixed
f. Product
Explanation:
Cost of the factory maintenance manager's salary is a manufacturing cost. However, this manufacturing cost is an Indirect and fixed cost. Manufacturing costs are Product costs whereas Non-Manufacturing costs are Period Costs
Kevin's boat was wrecked by hurricane Harvey (a federally declared natural disaster). Damage to the boat was estimated at $30,000. The original cost was $25,000. The boat was partially insured, and Kevin received an insurance reimbursement of $15,000. Kevin's adjusted gross income is $50,000, and he had no other losses during the year. What amount can Keith deduct on his tax return for this year
Answer:
A) $4,900
Explanation:
Options are: "A) $4,900 B) $5,000 C) $9,900 D) $14,900"
Particulars Amount
Original cost $25,000
Damage $30,000
Lower of the two is $25,000
Less: Insurance reimbursement $15,000
Actual loss $10,000
Less: Deduction $100
Less: 10% of AGI (10% of 50,000) $5,000
Final Deduction $4,900
Note: Flat $100 is deducted from this amount and also 10% of AGI, i.e 10% of $50,000 is deducted to finally arrive at the deduction.
Better Corp. completed the following transactions during Year 2:
a. Purchased land for $10,500 cash.
b. Acquired $36,000 cash from the issue of common stock.
c. Received $75,000 cash for providing services to customers.
d. Paid cash operating expenses of $40,900.
e. Borrowed $21,000 cash from the bank.
f. Paid a $10,500 cash dividend to the stockholders.
g. Determined that the market value of the land purchased in event 1 is $46,000.
Required:
a. Record the transactions In the approprlate general ledger accounts. Record the amounts of revenue, expense, and dividends In the Retalned Earnings column. Provide the appropriate titles for these accounts In the last column of the table.
b. As of December 31, 2018, determine the total amount of assets, lablities, and stockholders' equity and present this Information In the form of an accounting equation.
c. What is the amount of total assets, liabilities, and stockholders' equity as of January 1, 2019?
Answer:
Better Corp.
a. Journal Entries:
a. Debit Land $10,500
Credit Cash $10,500
To record the purchase of land.
b. Debit Cash $36,000
Credit Common Stock $36,000
To record the issuance of stock for cash.
c. Debit Cash $75,000
Credit Service Revenue $75,000
To record the receipt of cash for services provided.
d. Debit Operating expenses $40,900
Credit Cash $40,900
To record the payment of operating expenses.
e. Debit Cash $21,000
Credit Bank Loan $21,000
To record the borrowing of cash from the bank.
f. Debit Dividends $10,500
Credit Cash $10,500
To record the payment of cash dividend to stockholders.
g. N/A
a2. a. Assets (Land +$10,500 + Cash- $10,500) = Liabilities + Equity
b. Assets (Cash + $36,000) = Liabilities + Equity (Common Stock + $36,000)
c. Assets (Cash $36,000 + 75,000) = Liabilities + Equity (Common Stock $36,000 + Retained Earnings + $75,000) Service Revenue
d. Assets (Cash 111,000 - $40,900) = Liabilities + Equity (Common Stock $36,000 + Retained Earnings $75,000 = $40,900) Operating Expense
e. Assets (Cash $70,100 + $21,000) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $34,100)
f. Assets (Cash $91,100 - $10,500) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $34,100 - $10,500) Dividends
g. Assets (Cash $80,600) = Liabilities (Bank Loan + $21,000) + Equity (Common Stock $36,000 + Retained Earnings $23,600)
b. Total amount of assets, liabilities, and stockholders' equity as of December 31, 2018:
Total assets $80,600 = Liabilities $21,000 + Equity (Common Stock $36,000 + Retained Earnings $23,600)
c. The amount of total assets, liabilities, and stockholders' equity as of January 1, 2019:
Assets = $80,600
Liabilities = $21,000
Equity = $59,600
Explanation:
The accounting equation is Assets = Liabilities + Equity. It is the basis of the double-entry system of accounting. With this equation, every transaction is always recorded twice.
postretirement health care benefit plan. On January 1 of the current calendar year, the following plan-related data were available. Net loss-postretirement benefit plan $ 222,000 Accumulated postretirement benefit obligation $ 2,100,000 Fair value of plan assets $ 440,000 Average remaining service period to retirement 12 years Average remaining service period to full eligibility 10 years The rate of return on plan assets during the year was 12%. The expected return was 10%. The actuary revised assumptions regarding the APBO at the end of the year, resulting in a $32,000 increase in the estimate of the obligation. Required: 1. Calculate any amortization of net loss that should be included as a component of postretirement benefit expense for the current year. 2. Determine the net loss or gain as of December 31 of the current year.
Answer:
1. Amortization of net loss = $1000
2. Ending Net Loss: $244,200
Explanation:
Data Given:
Net Loss Post Retirement Benefit Plan = $222,000
Accumulated Port Retirement Benefit Obligation = $2,100,000
Fair value of Plan Assets = $440,000
Average Remaining Service period to Retirement = 12 years
Average Remaining Service period to full eligibility = 10 years
Rate of Return on Plan Assets during the year = 12%
Expected Return = 10%
Estimate in the obligation = $32,000
Required:
1. Amortization of net loss
Solution:
For Amortization of net loss, we need to have the value of excess at the beginning of the year and average remaining service years.
So,
Net loss = $222,000
And
Accumulated Port Retirement Benefit Obligation = $2,100,000
Expected Return = 10%
So,
Find 10% of the Accumulated Port Retirement Benefit Obligation
$2,100,000 x 10% = $210,000
Now, for excess at the beginning of the year:
$222,000 - $210,000
excess at the beginning of the year = $12,000
And we know that,
Average Remaining Service period to Retirement = 12 years
Amortization of net loss = $12,000/12 years
Amortization of net loss = $1000
2. Net loss or gain at the end of the year.
Solution:
We know the beginning net loss = $222,000
Estimate in the obligation = $32,000
Now, we need to find the excess actual return over expected return:
Amortization of net loss = $1000
Fair value of Plan Assets = $440,000
Rate of Return on Plan Assets during the year = 12%
Expected Return = 10%
excess actual return over expected return: $440,000 x (12% - 10%)
excess actual return over expected return: $440,000 x (2%)
excess actual return over expected return: $8,800
Now,
For the Ending Net Loss:
(beginning net loss + Estimate in the obligation - excess actual return over expected return - Amortization of net loss)
$222,000 + $32,000 -$8,800 - $1000 = $244,200
Ending Net Loss: $244,200
An entrepreneur recently purchased Cocoon's, a local deli, on the beach. To operate the business, she estimates that selling and administrative expenses will be $98,510.00 per year and that depreciation will be $20,000.00 per year. As part of her purchase, she took out a bank loan that will require $76,265.00 per year in interest. She anticipates paying a 32.00% tax rate on income. She estimates that the deli will attract 200.00 customers per day. Each customer will spend $12.00 on average. The cost of goods per customer will be $4.50. She will operate the deli 350.00 days per year. What is the projected net profit margin for the deli
Answer:
27%
Explanation:
The computation of the net profit margin is shown below;
As we know that
net profit margin = Net profit ÷ sales
where
net profit is
Particulars Amount
Sales (200 customers × $12 × 350 days) $840,000
Less: cost of goods sold (200 customers × $4.50 × 350 days) -$315,000
Gross profit $525,000
Less:
Selling and admin expense -$98,510
Depreciation expense - $20,000
Bank loan interest -$76,265
Net income before tax $330,225
Less tax at 32% -$105,672
Net income after tax $224,553
Now the net profit margin is
= $224,553 ÷ $840,000
= 27%
England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour.
If free trade exists between the countries, then each country will benefit if
a. England exports scones, Scotland exports sweaters.
b. England exports sweaters, Scotland exports scones.
c. both countries export scones.
d. given the production possibilities, both countries will not benefit from trade.
Answer:
A
Explanation:
The country with a comparative advantage in the production of a good should export the good
A country has comparative advantage in production if it produces at a lower opportunity cost when compared to other countries.
England
Comparative advantage in the production of scones = 1/50 = 0.02
Comparative advantage in the production of sweater = 50/1 = 50
Scotland
Comparative advantage in the production of scones = 2/40 = 0.05
Comparative advantage in the production of sweater = 40/2 = 20
England has a comparative advantage in the production of scones and should export scones
Scotland has a comparative advantage in the production of sweaters and should export sweaters
Concerned by recent negative trends in economic indicators such as the consumer price index, gross domestic product, and inflation, the marketing manager of Kevin's Kayaks recommends that the company reduce its advertising spending. His recommendation is based on ________ data.
Answer:
Macroeconomics.
Explanation:
Economics can be classified into two (2) main categories, namely;
1. Microeconomics can be defined as the study of the effect of price and quantity levels through interactions between individual buyers and sellers in various markets. Simply stated, it focuses on analyzing or evaluating the decisions of consumers (buyers) and those of firms (sellers) such as methods of production, pricing; and the manner in which government policies affect those decisions.
2. Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Therefore, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.
In this scenario, concerned by recent negative trends in economic indicators such as the consumer price index, gross domestic product, and inflation, the marketing manager of Kevin's Kayaks recommends that the company reduce its advertising spending. Thus, his recommendation is based on macroeconomics data.
This ultimately implies that, macroeconomic is a form of externality that typically affects the levels of inflation, unemployment, consumer price index, or growth in the economy as a whole (GDP).
In the fall of 2014, China and the United States agreed to expand the Information Technology Agreement to drop tariffs on a number of technology products. This is an example of_________ reducing protectionist measures.
Answer:
Free trade policy.
Explanation:
Trade can be defined as a process which typically involves the buying and selling of goods and services between a producer and the customers (consumers) at a specific period of time.
In the fall of 2014, China and the United States agreed to expand the Information Technology Agreement to drop tariffs on a number of technology products. Therefore, this is an example of free trade policy reducing protectionist measures.
Free trade policy includes the adoption and implementation of tariffs and quotas between countries.
Trade policies tariffs and quotas will most likely benefit domestic producers of the protected good and harm domestic consumers of the protected good as they're made to pay for the consumption of imported products. Hence, under free trade there are more societal benefits due to the specialization of domestic goods.
Tariffs can reduce both the volume of exports and imports in a country.
In order to generate revenues, domestic government make use of tariffs while quotas do not generate any revenue for them.
