Answer:
EBI Solar
a. Weeks of supply = 14.05 weeks
b. Inventory turnover = 20.5x
Weeks of supply = 2.5 weeks
Explanation:
a) Data and Calculations:
Inventory turnover = 3.7 x
Cost of goods sold = $2.8 million
Average inventory = $756,757 ($2,800,000/3.7)
Current value of inventory:
Raw materials = $95,000
Work-in-process 26,000
Finished goods 15,800
Total = $136,800
a. Weeks of supply = 14.05 weeks (52/3.7)
b. Inventory turnover = 20.5x ($2,800,000/$136,800)
Weeks of supply = 2.5 weeks (52/20.5)
Fremont LLC is looking to purchase new water chlorination equipment. A salesman from Industrial Water Services (IWS) offered water chlorination equipment for $2.1 million. IWS also said that Fremont LLC would not have to pay for the equipment now and can pay after 2 years. While the price offered by a competing saleswoman from AG Enterprises is $1.7 million to be paid now. Fremont LLC's real MARR is 12% per year, and the inflation rate is 3.9% per year. Determine which offer is better.
a. AG offer
b. IWS offer
Answer:
Fremont LLC
Purchase of New Water Chlorination Equipment
The better offer is:
b. IWS offer
Explanation:
a) Data and Calculations:
Offer from Industrial Water Services (IWS) = $2.1 million
Payment term = 2 years
MARR = 12%
Inflation rate = 3.9%
Present value of IWS offer = $1,563,336.34 (see below)
Present value of AG Enterprises offer = $1.7 million
N (# of periods) 2
I/Y (Interest per year) 15.9
PMT (Periodic Payment) 0
FV (Future Value) 2100000
Results
PV = $1,563,336.34
Total Interest $536,663.66
Cullumber Corporation has announced that its net income for the year ended June 30, 2017, was $1,353,412. The company had EBITDA of $4,948,000, and its depreciation and amortization expense was equal to $1,128,000. The company's average tax rate is 34 percent. What was its interest expense
Answer:
See below
Explanation:
Net income = $1,353,412
Tax rate is 34% hence the company's EBT amount is calculated as
EBT = $1,353,412 / 0.66 = $2,050,624.24
Add back Depreciation and amortization to the EBT
= $2,050,624.24 + $1,128,000
= $3,178,624.24
The difference between the above and EBITDA amount will be the interest expense for the year
= $4,948,000 - $3,178,624.24
= $1,769,375.76
Therefore, the interest expense is $1,769,375.76
Absorption and Variable Costing; Inventory Valuation Bondware Inc., has a highly automated assembly line that uses very little direct labor. Therefore, direct labor is part of variable overhead. For March, assume that it incurred the following unit costs: Direct materials $520 Variable overhead 460 Fixed overhead 180The 100 units of beginning inventory for March had an absorption costing value of $92,000 and a variable costing value of $78,000. For March, assume that Bondware Inc. produced 500 units and sold 540 units.
Compute Bondware's March Cost of Goods Sold using both the variable and absorption costing methods.
Answer:
Following are the response to the given question:
Explanation:
Cost of Goods Sold
Absorption costing [tex]92000+440\times (520+460+180) \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ = 602400[/tex]
Variable costing [tex]78000+440\times (520+460) \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ =509200[/tex]
Assume the risk-free rate is 4%. You are a financial advisor, and must choose one of the funds below to recommend to each of your clients. Whichever fund you recommend, your clients will then combine it with risk-free borrowing and lending depending on their desired level of risk.
Expected Return Volatility
Fund A 10% 10%
Fund B 15% 22%
Fund C 6% 2%
Required:
a. Which fund would you recommend to a client seeking the highest possible expected return with a maximum volatility of 22%?
b. Which fund would you recommend to a client seeking the highest possible expected return with a maximum volatility of 22%?
c. Which fund would your recommend without knowing your clients risk preference?
Answer:
Following are the solution to the given point.
Explanation:
Calculate each fund's Sharpe ratio. It Fund is the best danger reward with the highest Sharpe ratio.
[tex]\text{Sharpe Ratio} = \frac{\text{(Fund return - \text{risk free return)}}}{Volatility}\\\\\to Fund A= \frac{(10\%-4\%)}{10\%} = 0.6\\\\\to Fund B= \frac{(15\%-4\%)}{22\%} = 0.5\\\\\to Fund C = \frac{(6\%-4\%)}{2\%}=1.0\\\\[/tex]
Fund C consequently offers the best risk-benefit. and without understanding client risk preference, we will advise Fund C for any clients. If a client wants to have a 22 percent minimum volatility, we'll nevertheless propose that Fund C instead of Fund B is available, because an investor can take risk-free rates to the degree that the total portfolio volatility stands at 22 percent and deposit it in Fund C.
Kingston Co. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are $420,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500, determine the amount to be reported for bad debt expense
Answer:
a. Dr Bad Debts Expense $2,700
Cr Allowance for doubtful accounts $2,700
b. $5000
Explanation:
(a) Prepare the adjusting journal entry to record bad debt expense for the year.
Debit Bad Debts Expense [($420,000 x 1%) – $1,500] $2,700
Credit Allowance for doubtful accounts $2,700
(b) If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500, determine the amount to be reported for bad debt expense
Bad debt expense = $4200 + $800 = $5000
For a market to be competitive:______.
a. each buyer and seller is small, relative to the whole market; no single decision maker has any influence over the market price.
b. the price must be a fair price.
c. sellers should have substantial pricing power.
d. all you need are many buyers and many sellers
Answer:
Option A:
Each buyer and seller is small, relative to the whole market; no single decision maker has any influence over the market price.
Explanation:
A competitive market is a market that is characterized by free entry and exit. This means that any party has a right to enter the industry, do business, and leave it freely. In other words, no party or business holds enough stake to become a gatekeeper in that industry.
Furthermore, prices are determined by the forces of demand and supply, and cannot be arbitrarily set by any business.
No single decision maker has any influence over the market price.
This makes option A correct.
______contains journal vouchers of past periods for audit trail
Answer:
Journal voucher history file
While under contract to play professional basketball for the Philadelphia 76ers, Billy Cunningham, an outstanding player, negotiated a three-year contract with the Carolina Cougars, another professional basketball team. The contract with the Cougars was to begin at the expiration of the contract with the 76ers. In addition to a signing bonus of $125,000, Cunningham was to receive under the new contract a salary of $100,000 for the first year, $110,000 for the second, and $120,000 for the third. The contract also stated that Cunningham "had special, exceptional and unique knowledge, skill and ability as a basketball player" and that Cunningham therefore agreed the Cougars could enjoin him from playing basketball for any other team for the term of the contract. In addition, the contract contained a clause prohibiting its assignment to another club without Cunningham’s consent. In 1971, the ownership of the Cougars changed, and Cunningham’s contract was assigned to Munchak Corporation, the new owners, without his consent. When Cunningham refused to play for the Cougars, Munchak Corporation sought to enjoin his playing for any other team. Cunningham asserts that his contract was not assignable. Was the contract assignable? Explain.
Answer:
Billy Cunningham and the Cougars
The contract was not assignable to another club.
But, the contract (assets and liabilities) can be inherited by a successor entity using the same club, the Cougars.
Explanation:
The contract was not assigned to another club, despite the change of ownership of the Cougars. Interestingly, the contract between Cunningham and Carolina Cougars was inheritable with the change of ownership of the Cougar Club from the formers owners, Carolina Cougars, to the new owners, Munchak Corporation. The clause prohibiting the contract's assignment to another club without Cunningham's consent was not violated.
Auto Industries Company reported the following on its income statement:
Income before income taxes $420,000
Income tax expense (120,000)
Net income $300,000
If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?
a. 5 times.
b. 6.25 times.
c. 5.25 times.
d. 8 times.
Answer:
Option c. 5.25 times is the correct answer.
Explanation:
Below is the calculation:
Income before income tax = $420000
Income tax expenses = 120000 dollars
Net income = $300000
Interest expense = $80000
Interest earned ratio = Earning Before Interest and Taxes / Interest Expenses
Interest earned ratio = 420000 / 80000
Interest earned ratio = 5.25 times
Option c. 5.25 times is the correct answer.
Suppose that Canada can produce 15units of timber or 3 units of grain. Suppose that Mexico can produce 6 units of timber or 2 units of grain. Which of the following is CORRECT?
a. Canada has a comparative advantage in grain production.
b. Mexico has a comparative advantage in grain production.
c. The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.
d. Mexico has an absolute advantage in timber production.
Answer: B. Mexico has a comparative advantage in grain production.
Explanation:
Comparative advantage simply means when an economy can produce a good at a lower opportunity cost than another economy.
From the information given, since Canada can produce 15units of timber or 3 units of grain. Therefore, 1 grain = 15/3 = 5 timber
On the other hand, Mexico can produce 6 units of timber or 2 units of grain. Therefore, 1 grain = 6/2 = 3 timber.
Therefore, Mexico haa a comparative advantage in grain based on the above.
During 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000. Due to an adverse legal decision, Thor’s 2005 liability insurance increased by $1,200,000 over 2004. Assuming the volume and other costs are unchanged, what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
a. $120.00
b. $135.00
c. $150.00
d. $240.00
Answer:
d. $240.00
Explanation:
Calculation to determine what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
2004 CM% = 12.5% ($15/$120)
2005 CM = $2,400,000 ($1,000,000 + $200,000)
2005 CM per unit = $2,400,000/80,000 units
2005 CM per unit= $30 CM per unit;
2005 selling price per unit = $30/.125
2005 selling price per unit= $240
Therefore what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes is $240
Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 235,000 Fixed manufacturing overhead cost $ 3,760,000 Variable manufacturing overhead cost per machine-hour $ 2.00
Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job P90 was started, completed, and sold to the customer for $3,900. The following information was available with respect to this job: Direct materials $ 1,794 Direct labor cost $ 1,287 Machine-hours used 86
Compute the total manufacturing cost assigned to Job P90.
Answer:
Results are below.
Explanation:
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (3,760,000 / 235,000) + 2
Predetermined manufacturing overhead rate= $18 per machine hour
Job P90:
Direct materials $ 1,794
Direct labor cost $ 1,287
Machine-hours used 86
We need to allocate overhead costs:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 18*86= $1,548
Total manufacturing costs= 1,548 + 1,794 + 1,287
Total manufacturing costs= $4,629
The purpose of managerial accounting is to provide useful information to management and other internal decision makers. It does this by collecting, managing, and reporting both monetary and nonmonetary information in a manner useful to internal users. Major characteristics of managerial accounting include (1) focus on internal decision makers, (2) emphasis on planning and control, (3) flexibility, (4) timeliness, (5) reliance on forecasts and estimates, (6) focus on segments and projects, and (7) reporting both monetary and nonmonetary information. Ethics are beliefs that distinguish right from wrong. Ethics can be important in reducing fraud in business operations.
The purposes of managerial accounting are to provide useful information to aid in: __________
a. Renewing pest activities,
b. Determining costs of products and services.
c. Determining costs of employee wages and "lanes
d. Comparing actual to planned
Answer:
d. Comparing actual to planned
Explanation:
The purpose of managerial accounting are to provide useful information to aid managers. It is important to remember that managerial accounting is for internal use only whilst financial accounting is for external use (reporting purposes).
Since one of the characteristics of managerial accounting is planning and control, this is made possible by comparing actual to planned.
Suppose that the money supply and the nominal GDP for a hypothetical economy are $96 bilion and $336 bilion, respectively. (In part a round your answer to 1 decimal place. In part c enter your answer as a whole number.)a. What is the velocity of money?b. How will households and businesses react if the central bank reduces the money supply by $20 billion?
i. Households and businesses will increase spendingii. Households and businesses will not react.iii. Households and businesses will reduce spending.c. By how much will nominal GDP have to fall to restore equilibrium, according to the monetarist perspective?
Answer:
V = 3.5 (1 dollar circulates 3.5 times in a year)
In short term – Reduction of aggregate demand and real output
In long term – reduction of wages and increase of real output of firms
Nominal GDP will fall by $20 bilion
Explanation:
Equation of monetisation =
Total money in circulation = Total money demanded/total output
Money Supply * Money Velocity = Price Level * GDP
V = PY/M
Substituting the given values, we get –
V = 336/96
V = 3.5
This indicates 1 dollar circulates 3.5 times in a year
In short term – Reduction of aggregate demand and real output
In long term – reduction of wages and increase of real output of firms
Nominal GDP will fall by $20 bilion
Leslie purchased 100 shares of GT stock on June 7th. Marti purchased 100 shares of GT stock on Monday, July 9th. GT declared a dividend on June 20th to shareholders of record on July 11th that is payable on August 1st. Which one of the following statements concerning the dividend paid on August 1st is correct given this information?A. Both Marti and Leslie are each entitled to one-half of the dividend amount. B. Neither Leslie nor Marti are entitled to the dividend. C. Leslie is entitled to the dividend but Marti is not. D. Marti is entitled to the dividend but Leslie is not. E. Both Marti and Leslie are entitled to the dividend.
Answer:
GT Stock
The correct statement concerning the dividend paid on August 1st is:
E. Both Marti and Leslie are entitled to the dividend.
Explanation:
a) Data:
June 7th, Leslie purchased 100 shares of GT stock
July 9th, Marti purchased 100 shares of GT stock
July 20th Dividend is declared (dividend declaration date)
July 11th = date of record for dividend payment
August 1st = date of dividend payment
b) Analysis: Both Leslie and Marti purchased shares of GT stock prior to the date of record. The date of record is when note is taken of the stockholders who are entitled to dividend. It is one of the three important dates concerning dividend. The other dates are the declaration date and the payment date.
At the end of January, the unadjusted trial balance of Windsor, Inc. included the following accounts: DEBIT CREDIT Sales (80% of this is credit sales) $500,000 Accounts Receivable $340,000 Allowance for Doubtful Accounts $800 Answer the following 2 questions: 1) Windsor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $7,400. What is the amount of uncollectible accounts expense recognized in Windsor's income statement for January
Answer:
$6,600
Explanation:
Calculation to determine What is the amount of uncollectible accounts expense recognized in Windsor's income statement for January
Using this formula
Uncollectible accounts expense=estimated uncollectible portion-Allowance for Doubtful Accounts
Let plug in the formula
Uncollectible accounts expense=$7400-$800
Uncollectible accounts expense=$6,600
Therefore the amount of uncollectible accounts expense recognized in Windsor's income statement for January is $6,600
Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $19.0 million in iTunes gift cards in November, and customers redeem $12.0 million of the gift cards in December.
Required:
a. Record the necessary entries.
b. Record the receipt of cash for gift cards.
Answer and Explanation:
The journal entries are given below:
a. Deferred revenue from gift cards $19,000,000
To sales revenue $19,000,000
(being the sales revenue is recorded)
b.
Cash $12,000,000
To deferred revenue from gift cards $12,000,000
(Being the Receipt of cash from gift cards)
These two entries are to be recorded for the given situation
how goal succession takes place? Explain the condition responsible for goal succession
Answer:Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.
Explanation:
Answer:
Goal succession refers to the situation where the new or modified goals are incorporated or substituted for the existing one in such a manner that they do not change the spirit of the existing goals. The new goals are such that individuals or the organisation are willing to state publicly.
Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20-year loan to construct a new classroom building. Church officers submit a comprehensive financial report that was audited by a reputable CPA firm. In summary form (the actual statement showed details), the church’s statement of revenues and expenditures indicated the following (in millions):
Revenues from dues and contributions .... $1.8
Revenues from other sources ....... 0.2
Total revenues ............. $2.0
Less: total expenditures .......... 2.0
Excess of revenues over expenditures .... $0.0
The church's balance sheet reported assets, mainly cash and investments (at market value), of $0.2 million. In addition, a note to the financial statements indicated that equipment is approximately $3 million. The church has no outstanding debt.
a. Is there any information in the financial statements that would make you reluctant to approve the loan? If so, indicate and explain.
b. Is there any other financial information of the type likely to be reported in a conventional annual report that you would like to review prior to making a loan decision? If so, indicate and explain.
c. Is there any other information, of any type, that you would like to review prior to making a loan decision? If so, indicate and explain.
d. Comment on the inherent limitations of the financial statements of this church, or any comparable not-for-profit organization, as a basis for making loan decisions.
Answer:
Explanation:
a.
There is little information on how funds are used or how much money is spent to manage the church. The financial statements have been prepared incorrectly.
Interpretation:
While drafting the financial accounts, the church committed many errors. The church's revenue is equivalent to its daily operations operating expenditures. They have approximately $3 million in funding assets that they do not owe any money on.
It may be deduced that the church is attempting to preserve asymmetric information, and therefore it will be better to justify its sources of income and use of money in order to determine whether they can or they cannot pay the debt.
b.
The revenue from various channels must be detailed in the yearly report so that the loan officer may make an informed judgment.
Interpretation:
Since payments and contributions account for 90% of revenue and revenue from other sources accounts for 10%, it's surprising how the church earns money in other ways as stated on the income statement. As a result, it's important to understand what other potential revenue streams the church has before approving the loan.
c.
The officer in charge of the loan should check the church's book records to make sure and guarantee that there are no outstanding loans. This situation necessitates a thorough examination and assessment.
Interpretation:
The church has $3 million worth of equipment. The church's expenses, on the other hand, are equivalent to the church's income. As a result, it's unclear how the church acquired the equipment without taking out a loan. As a result, the church must be urged to produce a full breakdown of its expenses, which may be thoroughly and fully studied to see whether there are any financing charges that the church is attempting to hide in its yearly reports.
d.
There is no direct or primary source of income for the church. It solely makes money from charity donations.
Interpretation:
The church's only sources of income are fundraisers and charitable donations. It also doesn't possess any significant revenue streams. Because the church is attempting to conceal numerous possible pieces of information, this may be a case of micro-management by the proprietors, and so these issues should be considered by the officer in charge of the loan before accepting the loan.
As Laura checks items off her meeting agenda and various individuals provide input and insight, she beams at her team. She is so proud of the work they do at her clinic every day. They have always been a very high performing team, and for that, she has always been thankful.
Select the statement that is true about high performing teams.
a) High performing teams are able to come up with more rapid solutions and have increased productivity.
b) High performing teams never face obstacles.
c) High performing teams should only have about 4-6 members.
d) High performing teams are most effective when all members share the same skills and experience.
Answer: a) High performing teams are able to come up with more rapid solutions and have increased productivity.
Explanation:
A high performing team is as the term implies, one that is productive. To be productive one has to be able to come up with solutions to problems as fast as possible and implement those solutions so as to continue or even increase production.
A high performing team is one that would do the above. Laura's team provides inputs and insights which means they come up with solutions and they also show up to work every day to be productive. They are indeed a high performing team.
The purpose of GAAP's flexibility in its reporting standards allows companies to: Select one: a. Smooth reported revenues and earnings over several reporting periods. b. Change accounting estimates to meet target sales or earnings. c. Change accounting principles to improve reported earnings. d. Adopt specific accounting and reporting procedures to represent the firm's activities more accurately.
Answer:
D. Adopt specific accounting and reporting procedures to represent the firm's activities more accurately.
Explanation:
GAAP in accounting means Generally accepted accounting principle. It is a uniform collection of accounting rules and standards for reporting financial accounting for organizations
The main reason or purpose of GAAP is to ensure that there is transparency and consistency in the reporting of financial details from one organization to another. The aim is to also help firms record their financial activities accurately by adopting specific accounting and reporting procedures as stipulated by GAAP.
In order to update a production process, a company can spend money now or four years from now. If the amount now would be $20,000, what equivalent amount could the company spend four years from now at a compound interest rate of 15% per year?(All the alternatives presented below were calculated using compound interest factor tables including all decimal places
Answer: $34,980.13
Explanation:
The amount that the company will spend 4 years from now is simply the future value of the amount that it can spend today.
The amount to be spent today is $20,000 so the amount to be spent 4 years from now is the future value of $20,000:
= Amount * (1 + rate) ^ number of years
= 20,000 * ( 1 + 15%)⁴
= $34,980.13
On July 1, 2020, Sarasota Company purchased for $5,760,000 snow-making equipment having an estimated useful life of 5 years with an estimated salvage value of $240,000. Depreciation is taken for the portion of the year the asset is used. Complete the form below by determining the depreciation expense and year-end book values for 2014 and 2015 using the
1. Sum-of-the-years'-digits method.
2. Double-declining balance method.
a.
Sum-of-the-Years'-Digits Method 2014 2015
Equipment $2,880,000 $2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation Expense for the Year
b.
Double-Declining Balance Method 2014 2015
Equipment $2,880,000 $2,880,000
Less: Accumulated Depreciation
Year-End Book Value
Depreciation Expense for the Year
Assume the company had used straight-line depreciation during 2014 and 2015. During 2016, the company determined that the equipment would be useful to the company for only one more year beyond 2016. Salvage value is estimated at $160,000.
Compute the amount of depreciation expense for the 2016 income statement.
Answer:
1. We have:
Depreciation expense for 2014 = $920,000
Depreciation expense for 2015 = $1,472,000
2. We have:
Depreciation expense for 2014 = $1,152,000
Depreciation expense for 2015 = $1,843,200
3. Depreciation expense for 2016 = $1,972,000
Explanation:
1. Sum-of-the-years'-digits method.
Depreciable amount = Equipment cost – Salvage value = $5,760,000 - $240,000 = $5,520,000
Sum of the year digits = 5 + 4 + 3 + 2 + 1 = 15
Depreciation expense for a year = Depreciable amount * (Remaining years / Sum of the year digits) ………. (1)
Using equation (1), we have:
Depreciation expense for 2014 = $5,520,000 * (5 / 15) * (6 / 12) = $920,000
Depreciation expense for 2015 = $5,520,000 * (4 / 15) = $1,472,000
Accumulated depreciation at the end of 2015 = $920,000 + $1,472,000 = $2,392,000
Therefore, we have:
Sum-of-the-Years'-Digits Method 2014 2015
Equipment $5,760,000 $5,760,000
Less: Accumulated Depreciation (920,000) (2,392,000)
Year-End Book Value 4,600,000 3,128,000
Depreciation Expense for the Year 920,000 1,472,000
2. Double-declining balance method.
Depreciable amount = Equipment cost – Salvage value = $5,760,000 - $240,000 = $5,520,000
Double-declining depreciation rate = Straight line depreciation rate * 2 = (1 / Number of estimated useful life) * 2 = (1 / 5) * 2 = 0.40, or 40%
Depreciation expense for 2014 = Equipment cost * Double-declining depreciation rate = $5,760,000 * 40% * (6 / 12) = $1,152,000
Depreciation expense for 2015 = (Equipment cost - 2014 Depreciation expense) * Double-declining depreciation rate = ($5,760,000 - $1,152,000) * 40% = $1,843,200
Accumulated depreciation at the end of 2015 = $1,152,000 + $1,843,200= $2,995,200
Note that under Double-declining balance method, the salvage value is not considered until the last year of the asset.
Therefore, we have:
Double-Declining Balance Method 2014 2015
Equipment $5,760,000 $5,760,000
Less: Accumulated Depreciation (1,152,000) (2,995,200)
Year-End Book Value 3,456,000 2,073,600
Depreciation Expense for the Year 1,152,000 1,843,200
3. Compute the amount of depreciation expense for the 2016 income statement.
Straight line depreciation rate = 1 / Number of estimated useful life = 1 / 5 = 0.20, or 20%
Depreciable amount = Equipment cost – Salvage value = $5,760,000 - $240,000 = $5,520,000
Depreciation expense for 2014 = Depreciable amount * Straight line depreciation rate * (6 / 12) = $5,520,000 * 20% * (6 / 12) = $552,000
Depreciation expense for 2015 = Depreciable amount * Straight line depreciation rate = $5,520,000 * 20% = $1,104,000
Accumulated depreciation at the end of 2015 = $552,000 + $1,104,000 = $1,656,000
Net book value at end of 2015 = Equipment cost - Accumulated depreciation at the end of 2015 = $5,760,000 - $1,656,000 = $4,104,000
Depreciation expense for 2016 = (Net book value at end of 2015 - New Salvage value) / Remaining useful years = ($4,104,000 - $160,000) / 2 = $1,972,000
quản trị thương mại là gì?
Commercial Services.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales $3,000,000
Net operating income $150,000
Average operating assets $750,000
Required:
Consider each question below independently. Carry out all computations to two decimal places.
1. Compute the company’s return on investment (ROI).
2. The entrepreneur who founded the company is convinced that sales will increase next year by 50% and that net operating income will increase by 200%, with no increase in average operating assets. What would be the company's ROI?
3. The chief financial officer of the company believes a more realistic scenario would be a $1,000,000 increase in sales, requiring a $250.000 increase in average operating assets, with a resulting $200,000 increase in net operating income. What would be the company’s ROI in this scenario?
Answer:
1. ROI = Margin * Turnover
Margin = Net operating income / Sales
= 150,000 / 3,000,000
= 5%
Turnover = Sales / Average operating assets
= 3,000,000 / 750,000
= 4 times
ROI = 5% * 4
= 20%
2. Sales will increase by 50% and NOI will increase by 200%.
Margin = (150,000 * (1 + 200%)) / (3,000,000 * ( 1 + 50%))
= 10%
Turnover = (3,000,000 * ( 1 + 50%)) / 750,000
= 6
ROI = 10% * 6
= 60%
3. Sales will increase by $1,000,000. Average operating assets by $250,000 and NOI will increase by $200,000
Margin = (150,000 + 200,000) / (3,000,000 + 1,000,000)
= 8.75%
Turnover = (3,000,000 + 1,000,000) / (750,000 + 250,000)
= 4
ROI = 8.75% * 4
= 35%
State and explain types of economies?
Answer:
There are three main types of economies: free market, command, and mixed. The chart below compares free-market and command economies; mixed economies are a combination of the two. Individuals and businesses make their own economic decisions.The way scarce resources get distributed within an economy determines the type of economic system. There are four different types of Economic Systems; a traditional economy, a market economy, a command economy, and a mixed economy. Each type of economy has its own strengths and weaknesses.Apr 20, 2020
Transactions for Jayne Company for the month of June are presented below.
June 1 Issues common stock to investors in exchange for $5,000 cash.
2 Buys equipment on account for $1,100.
3 Pays $740 to landlord for June rent.
12 Sends Wil Wheaton a bill for $700 after completing welding work.
Requied:
Record journal entries.
Answer:
below
Explanation:
A company uses return on investment (ROI) to measure the performance of its business units. The company manufactures and distributes consumer goods. Last year, management identified a possible shortage of raw materials. To mitigate this risk, a large amount of raw material was bought in advance and stored in the manufacturing plant inventory. As a result of this decision, ROI will A. Have an unpredictable change. B. Decrease. C. Increase. D. Not change.
Answer: B. Decrease
Explanation:
Return on investment refers to the ratio between the net income and investment. It should be noted that a high return on investment implies that the investment's gains compare favourably to the cost.
In this scenario, since a large amount of raw material was bought in advance and stored in the manufacturing plant inventory, this will lead to an increase in the cost of production which therefore will reduce the return in investment.
Therefore, the correct option is B.
Here are some important figures from the budget of Crenshaw, Inc., for the second quarter of 2019:
April May June
Credit sales $416,000 $365,000 $453,000
Credit purchases 193,000 181,000 214,000
Cash disbursements
Wages, taxes, and expenses 81,100 76,600 105,300
Interest 10,800 10,800 10,800
Equipment purchases 40,000 12,500 161,000
The company predicts that 5 percent of its credit sales will never be collected, 25 percent of its sales will be collected in the month of the sale, and the remaining 70 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2019, credit sales were $343,000. Using this information, write down the cash budget.
Answer:
Beginning cash Balance 123,000 ; 150,200 ; 239,750
Cash receipts :
Cash collection from credit sales 344,100 ; 382,450 ; 368,750
Cash available 467,100 ; 532,650 ; 608,500
Cash disbursement :
Purchases 185,000 ; 193,000 ; 181,000
Wages, taxes and expenses 81,100 ; 76,600 ; 105,300
Interest 10,800 ; 10,800 ; 10,800
Equipment purchases 40,000 ; 12,500 ; 161,000
Total Cash disbursement 316,900 ; 292,900 ; 458,100
Ending Balance 150,200 ; 239,750 ; 150,400
Explanation:
Cash budgets are prepared to identify the movement of cash in business. The cash collections are the receipts and cash disbursement are the expense paid in cash.
Natasha and Link have been married for 2 years. They live in North Carolina and are about to make an offer on their first home. Their goal is to own the property so that if either Natasha or Link were to die, the surviving spouse would own the property outright. They also want to keep things private and avoid probate. How should they title their new home?
A. Link should own the house fee simple and name Natasha as his beneficiary.
B. Tenancy in common is the best way to title the property because it meets all their objectives.
C. They should title the home as JTWROS as a way to accomplish their goals.
D. Because they live in North Carolina, they should title the home as community property.
Answer:
Natasha and LInk
Based on the spouses goal to own the property so that if either Natasha or LInk were to die, the surviving spouse would own the property outright, keeping things private and avoid probate, they should title their new home as:
C. They should title the home as JTWROS as a way to accomplish their goals.
Explanation:
The arrangement that meets their goals is Joint tenancy with rights of survivorship (JTWROS) which affords survivorship rights to either Natasha or Link in the event of the death of either spouse. In other words, JTWROS allows either Natasha or Link to automatically own the property without publicity or probate. This arrangement will meet all their arrangements, unlike tenancy in common. Moreover, there is no community property provision in North Carolina where they live. Lastly, naming Natasha presupposes that Link would die first. This does not meet their expectations.
