Answer and Explanation:
The preparation of the operating activities is presented below:
cash flow from operating activities
Net income $397,000
Add: Depreciation expense $49,200
Add: Amortization expense $7,500
Add: Accounts receivable decrease $142,900
Less: Gain on sale of plant asset -$6,600
Add: Inventory decrease $48,500
less: Prepaid expenses increase -$4,800
Less: Accounts payable decrease -$9,400
Add: Salaries payable increase $1,600
net cash flow from operating activities $625,900
Computing Straight-Line and Double-Declining-Balance Depreciation
On January 2, 2016, Dechow Company purchases a machine to help manufacture a part for one of its key products. The machine cost $306,180 and is estimated to have a useful life of six years, with an expected salvage value of $32,760.
Compute each year's depreciation expense for 2016 and 2017 for each of the following depreciation methods.
a. Straight-line.
b. Double-declining balance.
Answer:
a.
2016 = $45,570
2017 = $45,570
b.
2016 = $102,080
2017 = $68,014
Explanation:
Straight line method
Straight line method charges a fixed amount of depreciation
Depreciation Charge = (Cost - Salvage Value) ÷ Estimated useful life
2016
Depreciation Charge = $45,570
2017
Depreciation Charge = $45,570
Double declining method
Double declining method charges a higher amount of depreciation at the early years and less in the later years
Depreciation Charge = 2 x SLDP x BVSLDP
2016
Depreciation Charge = 2 x 16.67 % x $306,180 = $102,080
2017
Depreciation Charge = 2 x 16.67 % x ($306,180 - $102,080) = $68,014
what happens in your retirement if you have a lapse in your years of work history?
Your monthly benefit will be lower
A lapse in your years of work history refers, There are generally the four ways by which we can handle it, various points are as leave it where it is, and the second point refers that, roll it over an ira.
What is employment?In most cases, employment refers to the status of having a paid job—of being employed. Employing someone is paying them to work. Employees are employed by an employer. Employment can also refer to the act of hiring individuals, as in We're trying to hire more women.
The employment lapse refers that, The working period of an employee and, The commencing of the individual's termination from the service date. He can continue to begin the performance services as an employee.
Therefore. As a result, The ends of the benefits, or the privileges are been applicable under a policy.
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Monsanto Company, a large chemical and fibers company, invested $37 million in state-of-the-art systems to improve process control, laboratory automation, and local area network (LAN) communications. The investment was not justified merely on cost savings but was also justified on the basis of qualitative considerations. Monsanto management viewed the investment as a critical element toward achieving its version of the future. What qualitative and quantitative considerations do you believe Monsanto would have considered in its strategic evaluation of these investments
Solution :
The investment which was made by the Monsanto Company had both qualitative as well as quantitative aspects. The quantitative aspect of the investment represents the strategic evaluation which relates to the investment in order to improve the process control and the laboratory automation. While improving the process control helps in controlling the working process of the machines and the human force which reduces the wastage to a large extent, it also increases the efficiency and it reduces the cost per unit.
The laboratory automation increases the efficiency of working and also increases the production. Strengthening the LAN network improves the organizations' communication and also reduces the unnecessary delays in the work saving cost. Improving the local area network provides qualitative improvement and it speeds up the work thus reducing the wastage of time and promotes effective communication.
An amount for which of the following accounts would not appear in the Balance Sheet columns of the end-of-period spreadsheet?
a. Terry James, Drawing and Unearned Revenue
b. Service Revenue
c. Terry James, Drawing
d. Unearned Revenue
Answer:
Service revenue
Explanation:
Service revenue does not appear on a balance sheet. It appears on an income statement.
Speed World Cycles sells high-performance motorcycles and motocross racers. One of Speed World’s most popular models is the Kazomma 900 dirt bike. During the current year, Speed World Cycles purchased eight of these bikes at the following costs.
Purchase Date Units Purchased Unit Cost Total Cost
July 1 2 $ 4,950 $ 9,900
July 22 3 5,000 15,000
Aug. 3 3 5,100 15,300
8 $ 40,200
On July 28, Speed World Cycles sold four Kazomma 900 dirt bikes to the Vince Wilson racing team. The remaining four bikes remained in inventory at September 30, the end of Speed World’s fiscal year.
Assume that Speed World Cycles uses a perpetual inventory system. (See the data provided.)
Required:
a-1. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using Average cost.
a-2. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using FIFO method.
a-3. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of Kazomma 900 dirt bikes at September 30, using LIFO method.
b-1. Which of the three cost flow assumptions will result in Speed World Cycles reporting the highest net income for the current year?
b-2. Which of the three cost flow assumptions minimizes the income taxes owed by Speed World Cycles for the year?
b-3. May Speed World Cycles use the cost flow assumption that results in the highest net income for the current year in its financial statements, but use the cost flow assumption that minimizes taxable income for the current year in its income tax return?
Answer:
Speed World Cycles
a. Average Cost FIFO LIFO
Cost of goods sold $20,100 $19,900 $20,300
Ending inventory $20,100 $20,300 $19,900
b-1. FIFO will result in Speed World Cycles reporting the highest net income for the current year, because of the reduced cost of goods sold.
b-2. LIFO minimizes the income taxes owed by Speed World Cycles for the year, because it reduces the income before taxes.
b-3. Yes. However, the cost flow assumptions self-correct in later years, by which time it is not allowed to be jumping from one cost flow assumption to another.
Explanation:
a) Data and Calculations:
Purchase Date Units Purchased Unit Cost Total Cost
July 1 2 $ 4,950 $ 9,900
July 22 3 5,000 15,000
Aug. 3 3 5,100 15,300
Total 8 $ 40,200
July 28 Sold 4
September 30 4 (8 - 4)
Average cost = $40,200/8 = $5,025
a-1. Cost of goods sold = $20,100 (4 * $5,025)
Ending inventory = $20,100 (4 * $5,025)
a-2. FIFO:
Ending inventory = $20,300 (3 * $5,100 + 1 * $5,000)
Cost of goods sold = Cost of goods available minus cost of ending inventory
= $40,200 - $20,300
= $19,900
a-3 LIFO:
Cost of goods sold = $20,300 (3 * $5,100 + 1 * $5,000)
Ending inventory = Cost of goods available minus cost of goods sold
= = $40,200 - $20,300
= $19,900
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 2.0. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $20 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever
a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic valueS
b-1. If the market price of a share is currently $108, and you expect the market price to be equal to the intrinsic value one year from now, calculate the price of the share after one year from now. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price
b-2. What is your expected one-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Expected one-year holding-period return
Answer:
$109
$118.81
18.26%
Explanation:
Intrinsic value can be determined using the constant growth dividend model
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
dividend, growth rate and cost of equity are not given and they have to be calculated
growth rate = retention rate x ROE
Retention rate = 1 - payout ratio = 1 - 0.5 = 0.5 = 50%
0.5 x 18% = 9%
According to the capital asset price model: cost of equity = risk free + beta x (market rate of return - risk free rate of return)
9% + 2x (14% - 9%) = 19%
dividend = payout ratio x earnings per share
0.5 x $20 = $10
Intrinsic value = [tex]\frac{10( 1 + 0.09)}{0.19 - 0.09}[/tex] = $109
Stock price in a year
[tex]\frac{10(1 + 0.9)^{2} }{0.19 - 0.09}[/tex] = 118.81
(dividend return + price return)
price return is the return on investment as a result of appreciation or depreciation of share price
Dividend return is the return on investment from dividend earned
price return = price at the end of the year - price at the beginning of the year
The following are selected 2017 transactions of Shamrock Corporation.
Sept. 1 Purchased inventory from Encino Company on account for $55,600. Shamrock records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $55,600, 12-month, 8% note to Encino in payment of account.
Oct. 1 Borrowed $55,600 from the Shore Bank by signing a 12-month, zero-interest-bearing $59,960 note.
Required:
Prepare journal entries for the selected transactions above.
Answer and Explanation:
The journal entries are shown below:
a.
On Sep-01
Purchases $55,600
Accounts Payable $55,600
(Being inventory is purchased)
On Oct-01
Accounts Payable $55,600
Notes Payable $55,600
(being note payable is issued)
On Oct-01
Cash $55,600
Discount on Notes Payable $4,360
Notes Payable $59,960
(Being amount is borrowed)
b
On Dec-31
Interest Expense $1,112 ($55,600 × 8% × 3 ÷ 12)
Interest Payable $1,112
(Being interest on the note is recorded)
On Dec-31
Interest Expense $1,090 ($4,360 ÷ 12 × 3)
Discount on Notes Payable $1,090
(Being discount on the note is recorded)
The stockholders’ equity section of Whisper Co. at December 31, 2018 is as follows. Common stock—$15 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $ 675,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 430,000 Total stockholders' equity $ 1,175,000 During 2019, the company has the transactions including the following.
Jan. 2 Purchased 6,000 shares of its own stock at $20 cash per share.
Jan. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 2,250 of its treasury shares at $24 cash per share.
Aug. 22 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Sept 5 Sold 3,750 of its treasury shares at $17 cash per share.
Oct. 28 Paid the dividend declared on September 5.
Dec. 31 Closed the $368,000 debit balance (from net loss) in the Income Summary account to Retained Earnings.
Required:
1. Prepare journal entries to record each of these transactions.
2. Prepare a statement of retained earnings for the year ended December 31, 2019.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2019.
Answer:
Whisper Co.
1. Journal Entries to record transactions:
Jan. 2 Debit Treasury stock $90,000
Debit Paid-in Capital in Excess $30,000
Credit Cash $120,000
To record the purchase of 6,000 shares of its own stock at $20 cash per share.
Jan. 5 Debit Cash Dividend $78,000
Credit Dividend Payable $78,000
To record the declaration of a $2 per share cash dividend payable on 39,000 (45,000 - 6,000) shares
Feb. 28 Debit Dividend Payable $78,000
Credit Cash $78,000
To record the payment of the dividends.
July 6 Debit Cash $54,000
Credit Treasury stock $33,750
Credit Paid-in Capital in Excess $20,250
To record the resale of 2,250 of its treasury shares at $24 cash per share.
Aug. 22 Debit Cash Dividend $90,000
Credit Dividend Payable $90,000
To record the declaration of a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record (45,000 shares).
Sept 5 Debit Cash $63,750
Credit Treasury stock $56,250
Credit Paid-in Capital in Excess $7,500
To record the resale of 3,750 of its treasury shares at $17 cash per share.
Oct. 28 Debit Dividend Payable $90,000
Credit Cash $90,000
To record the payment of the dividends.
Dec. 31 Debit Retained earnings $368,000
Credit Income Summary $368,000
To close the net loss to the retained earnings.
2. Statement of Retained Earnings for the year ended December 31, 2019
Retained earnings, December 31, 2018 $430,000
Net loss -368,000
Dividends paid -168,000
Retained earnings, December 31, 2019 ($106,000)
3. Stockholders' Equity, December 31, 2019:
Common stock—$15 par value, 100,000 shares authorized,
45,000 shares issued and outstanding $ 675,000
Paid-in capital in excess of par value, common stock 67,750
Retained earnings ($106,000)
Total stockholders' equity $ 636,750
Explanation:
a) Data and Calculations:
Stockholders' Equity (December 31, 2018)
Common stock—$15 par value, 100,000 shares authorized,
45,000 shares issued and outstanding $ 675,000
Paid-in capital in excess of par value, common stock 70,000-30,000+20,250+7,500 = 67,750
Retained earnings 430,000
Total stockholders' equity $ 1,175,000
Transaction Analysis:
Jan. 2 Treasury stock $90,000 Paid-in Capital in Excess $30,000 Cash $120,000 purchase of 6,000 shares of its own stock at $20 cash per share.
Jan. 5 Cash Dividend $78,000 Dividend Payable $78,000
a $2 per share cash dividend payable on 39,000 (45,000 - 6,000) shares
Feb. 28 Dividend Payable $78,000 Cash $78,000
July 6 Cash $54,000 Treasury stock $33,750 Paid-in Capital in Excess $20,250 2,250 of its treasury shares at $24 cash per share.
Aug. 22 Cash Dividend $90,000 Dividend Payable $90,000
$2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Sept 5 Cash $63,750 Treasury stock $56,250 Paid-in Capital in Excess $7,500 3,750 of its treasury shares at $17 cash per share.
Oct. 28 Dividend Payable $90,000 Cash $90,000
Dec. 31 Retained earnings $368,000 Income Summary $368,000
Dec. 31 Retained earnings $168,000 Cash Dividend $168,000
The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses.
Time Warner, Inc.
Segment Revenues
(in millions)
Turner (cable networks and digital media) $21,700
Home Box Office (pay television) 22,200
Warner Bros. (films, television, and videos) 80,600
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner 22%
Home Box Office 47%
Warner Bros. 32%
Determine the contribution margin and contribution margin ratio. Enter amounts in millions. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to the nearest whole percent for each segment from the information given. Enter all amounts as positive numbers. 40% 35% 25% Turner Home Box Office Warner Bros. Revenues Variable costs Contribution margin Contribution margin ratio (as a percent) b. Does your answer to (b) mean that the other segments are more profitable businesses?
Answer:
Time Warner, Inc.
a.
Turner Home Box Office Warner Bros. Total
Segment Revenues
(in millions) $21,700 $22,200 $80,600 $124,500
Variable costs 4,774 10,434 25,792 41,000
Contribution margin $16,926 $11,766 $54,808 $83,500
Contribution ratio 78% (100 - 22) 53% (100 -47) 68% (100 -32) 67%
b. Certainly, Turnover and Warner Bros. are more profitable businesses than Home Box Office in terms of total contribution margin (dollars) and contribution margin ratio.
Explanation:
a) Data and Calculations:
Segment Revenues
(in millions)
Turner (cable networks and digital media) $21,700
Home Box Office (pay television) 22,200
Warner Bros. (films, television, and videos) 80,600
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner 22%
Home Box Office 47%
Warner Bros. 32%
b) The contribution margin ratio for the three segments can easily be determined by subtracting the variable costs percentages from 100 for each segment instead of doing more computations (Contribution margin/Sales Revenue * 100). But the results are the same for either method.
Assume that Jordan Enterprises's radio broadcast license is renewable at the end of each 10-year term and management has provided evidence that approval of the renewal is highly probable. In this case, the broadcast license qualifies as anindefinite-life intangible asset and is not subject to amortization. Therefore, the firm carries the broadcast license at its original cost of $786,000.
On December 31, 2015 the company noted substantial declines in radio advertising revenues over the past year due to expanded satellite radiosubscriptions, Internet broadcasts, and the use of iPod players. Based on the required annual review and consideration of the available impairment indicators, management believes that it is more likely than not that the broadcast license may be impaired. Therefore, the company must test the broadcast license for impairment. Similar broadcast licenses have been sold in auctions for $676,000.
Assuming that renewal of the broadcast license is probable for this indefinite-life intangible asset, analyze the accounting for impairment and prepare the journal entries.
1.) Conduct the impairment test indicated forindefinite-life intangible asset at the end of the year and determine the impairment loss, if any. (If you selected "No" that an impairment loss is not indicated, then leave the impairment loss input cell blank. Show a loss with a parentheses or minus sign.)
2.) Next, prepare the journal entry required to record any impairment loss. (Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the tableblank.)
Answer:
Jordan Enterprises
1) The impairment loss = $110,000.
2) Journal Entry to record the impairment loss:
Debit Broadcast License Impairment Loss $110,000
Credit Accumulated Impairment Loss $110,000
Explanation:
a) Data and Calculations:
Broadcast license original cost (book value) = $786,000
Market value of similar broadcast license = 676,000
Impairment loss = $110,000
b) US GAAP defines impairment loss as the decrease in an asset's net carrying value. This means that impairment loss arises when the book or net carrying value is greater than the future estimated cash flows or the market value of the asset.
Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: Activity Cost Driver Amount M XY Production setups Number of setups $82,000 8 12 Material handling Number of parts 48,000 56 24 Packaging costs Number of units 130,000 80,000 50,000 $260,000 What is the total overhead per unit allocated to Product M using activity-based costing (ABC)
Answer:
Unitary cost= $1.83
Explanation:
First, we need to calculate the allocation rates:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Production setups= 82,000/20= $4,100 per setup
Material handling= 48,000/80= $600 per part
Packaging costs= 130,000/130,000= $1 per unit
Now, we allocate cost to Product M:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Production setups= 4,100*8= 32,800
Material handling= 600*56= 33,600
Packaging costs= 1*80,000= 80,000
Total= $146,400
Finally, the unitary cost:
Unitary cost= 146,400 / 80,000
Unitary cost= $1.83
Adamson Corporation is considering four average-risk projects with the following costs and rates of return:
Project Cost Expected Rate of Return
1 $2,000 16.00%
2 3,000 15.00
3 5,000 13.75
4 2,000 12.50
The company estimates that it can issue debt at a rate of rd = 10%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $5 per year at $48 per share. Also, its common stock currently sells for $33 per share; the next expected dividend, D1, is $4.00; and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.
Required:
a. What is the cost of each of the capital components?
b. What is Adamson's WACC?
Answer:
a. Cost of debt = Interest * (1 - Tax rate)
= 10%*(1 - 0.30)
= 7%
Cost of preferred stock = Dividend/ Issue price
= 5/48
= 10.42%
Cost of common stock (Cost of retained earnings) = (D1/P0) + g
= (4/33) + 0.07
= 0.12 + 0.07
= 0.19
= 19%
b. Fund Cost Weight Cost * Weight
Debt 7% 0.15 1.05%
Preferred stock 10.42% 0.10 1.042%
Retained earnings 19% 0.75 14.25%
WACC 16.342%
Clampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, had cash ($54,000), inventory (FMV $74,000, basis $37,000), accounts receivable (FMV $54,000, basis $54,000), and equipment (FMV $74,000, basis $94,000). In 2021, Clampett, Incorporated, sells its entire inventory for $74,000 (basis $37,000). Assume the corporate tax rate is 21 percent. Clampett, Incorporated's taxable income in 2021 would have been $1,000,000 if it had been a C corporation. How much built-in gains tax does Clampett, Incorporated, pay in 2021
Answer:
$3,570
Explanation:
Particulars FMV Basis Differences
Inventory $74,000 $37,000 $37,000
Accounts receivable $54,000 $54,000 $0
Equipment $74,000 $94,000 -$20,000
Taxable gain $17,000
Tax rate = 21%
So, Built-in gains tax = Taxable gain × tax rate
= $17,000 × 21%
= $3,570
A review of the ledger of Wildhorse Co. at December 31, 2022, produces these data pertaining to the preparation of annual adjusting entries.
1. Prepaid Insurance $16,824. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2021, for $10,080. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2022, for $8,424. This policy has a term of 18 months.
2. Unearned Rent Revenue $314,240. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Date Term (in months) Monthly Rent Number of Leases
Nov.1 8 $5,380 5
Dec. 1 7 $8,120 4
3. Notes Payable $46,800. This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1.
4. Salaries and Wages Payable $0. There are 11 salaried employees. Salaries are paid every Friday for the current week.
5 employees receive a salary of $635 each per week, and 6 employees earn $ 765 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
Required:
Prepare the adjusting entries at December 31, 2017.
Answer:
1. Debit Insurance expense for $8,976; and Credit Prepaid insurance for $8,976.
2. Debit Unearned revenue for $86,280; and Credit Rent revenue for $86,280.
3. Debit Interest expense for $819; and Credit Interest payable for $819.
4. Debit Salaries expense for $4,659; Credit for Salaries payable for $4,659.
Explanation:
Note: The correct date in the requirement is 2022 not 2017 as mistakenly stated.
The adjusting journal entries will look as follows:
Date Accounts Title & Explanation Debit ($) Credit ($)
Dec. 31 Insurance expense (w.1) 8,976
Prepaid insurance 8,976
(To record insurance expenses)
Dec. 31 Unearned revenue 86,280
Rent revenue (w.2) 86,280
(To record rent revenue.)
Dec. 31 Interest expense (w.3) 819
Interest payable 819
(To record interest on note payable.)
Dec. 31 Salaries expense (w.4) 4,659
Salaries payable 4,659
(To record salaries accrued.)
Workings:
w.1. Prepaid Insurance $16,824. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2021, for $10,080. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2022, for $8,424. This policy has a term of 18 months.
Expired insurance Policy B4564 adjustment = $10,080 / 3 = $3,360
Expired insurance Policy A2958 adjustment = ($8,424 /18 months) * 12 months = $5,616
Total insurance expense = Expired insurance Policy B4564 adjustment + Expired insurance Policy A2958 adjustment = $3,360 + $5,616 = $8,976
w.2. Unearned Rent Revenue $314,240. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Earned revenue = Monthly rent * Accrued month * Number of lease
Therefore, we have:
Total earned revenue = ($5,380 * 2 * 5) + ($8,120 * 1 * 4) = $86,280
w.3. Notes Payable $46,800. This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1.
Interest expense on note payable = Principal * Rate * Time = $46,800 * 7% * (3 / 12) = $819
w.4. Salaries and Wages Payable $0. There are 11 salaried employees. Salaries are paid every Friday for the current week. 5 employees receive a salary of $635 each per week, and 6 employees earn $ 765 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
Total salaries accrued = (5 employees * $635 each per week * 3/5 days) + (6 employees * $765 each per week * 3/5 days) = $4,659
A firm has the following account balances for this year. Sales for the year are $500,000. Projected sales for next year are $545,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?
a) $10,520
b) $14,720
c) $18,520
d) $20,720
e) $25,620
Answer:
b) $14,720
Explanation:
Note: The missing words are attached below for understanding
Determining the increase in the sales:
Percentage increase in sales = (New sales - Old sales) / Old sales
= ($545,000 - $500,000) / $500,000
= 9%
Determining the new balances of assets and liabilities:
Current assets = $48,000*109% = $52,320
Fixed assets = 158000*109% = $172,220
Total assets = $52,320 + $172,220 = $224,540
Financed by:
The current liabilities = $48000*109% = $52,320
Long-term debt = $83,000 - $5,000 = $78,000
Common stock = $36,000
Retained earnings = $40,000 + $3,500 = $43,500
Total liabilities & the equity = $52,320 + $78,000 + $36,000 + $43,500 = $209,820
External financing needed = Total assets - Total liabilities and equity
External financing needed = $224,540 - $209,820
External financing needed = $14,720
During the current year, the company purchased equipment for $212,000 on October 1. It is estimated the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000. During the current year, the company uses the equipment for 525 hours and the equipment produced 1,000 unites. The company uses December 31 as its fiscal year end.
Part 1: For the current year, compute depreciation expense using the straight-line method.
Part 2: For the current year, compute depreciation expense using the activity method (units of output).
Part 3: For the current year, compute depreciation expense using the activity method (working hours).
Answer:
$6250
$5000
$5250
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($212,000 - $12,000) / 8 = $25,000
The machine was used for only 3 months in the fiscal year. Thus, the depreciation expense = $25,000 x (3/12) = $6250
Activity method based on output = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)
(1000 / 40,000) x ($212,000 - $12,000) = $5000
Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
($212,000 - $12,000) x (525 / 20,0000) = $5250
a. Describe an important decision in your academic or personal life that you will have to make in the near future.
b. Using the five-step decision-making approach , analyze your decision and conclude with your "best" choice.
Explanation:
a. Describe an important decision in your academic or personal life that you will have to make in the near future.
An important decision for all people is to choose which professional career to follow, since there are people with different skills, which can cause some difficulty in choosing which academic course to follow.
It is essential that the student does research on the professions that are most consistent with their profile, it is important to read about the functions of each profession, take vocational tests, talk to other professionals, etc., so that their decision is more effective.
b. Using the five-step decision-making approach , analyze your decision and conclude with your "best" choice.
1- Identify your goals: In choosing a professional career, identifying your life goals is essential to set more achievable goals and stay focused.
2- Gather information: The more you research about the career options you intend to pursue, the easier it will be to understand the aspects that will lead to a successful decision. It is important to gather information from different sources, through internet searches, books, conversations with other workers, etc.
3- Check the consequences: This step is important for the individual to be able to see his decision in a broad sense, from the positive and negative aspects that every profession has, and thus analyze whether he will be able to deal with all of them in the best way.
4- Make the decision: In the penultimate stage the decision is made, so far you have already gathered essential information that will lead you to the decision. In the example of career choice, the decision is extremely important and can impact a person's entire life, so it is common for doubts and uncertainties to arise from the decision.
5- Evaluation of the decision: This is the step that will assist in the realization of a good decision, as in the correction of problems and development of skills that contribute to make your decision the best possible and in line with your objectives.
Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below:
Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 7.90 pounds $2.10 per pound $16.59
Direct labor 0.50 hours $5.00 per hour $2.50
During the most recent month, the following activity was recorded:
a. 14,850.00 pounds of material were purchased at a cost of $2.00 per pound.
b. All of the material purchased was used to produce 1,500 units of Zoom.
c. 600 hours of direct labor time were recorded at a total labor cost of $4,200.
Required:
1. Compute the materials price and quantity variances for the month.
2. Compute the labor rate and efficiency variances for the month.
Answer:
Results are below.
Explanation:
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (2.1 - 2)*14,850
Direct material price variance= $1,485 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (7.9*1,500 - 14,850)*2.1
Direct material quantity variance= $6,300 unfavorable
To calculate the direct labor efficiency and rate variance, we need to use the following formulas:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (1,500*0.5 - 600)*5
Direct labor time (efficiency) variance= $750 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (5 - 7)*600
Direct labor rate variance= $1,200 unfavorable
Actual rate= 4,200/600= $7
Norris Company has the following capital structure: Common stock, $1 par, 100,000 shares issued and outstanding. On October 1, 2020, the company declared a 5% common stock dividend when the market price of the common stock was $15 per share. The stock dividend will be distributed on October 15, 2020, to stockholders on record on October 10, 2020. Upon declaration of the stock dividend, Norris Company would record:
Answer: Debit to retained earnings of $75000
Explanation:
Based on the information given, the stock dividend will be:
= 100,000 shares x 5%
= 100000 × 0.05
= 5,000 shares.
Since the market price is $15 per share, then the retained earnings will be:
= $15 × 5000
= $75000
Stock dividend distributable will be:
= 5,000 x $1
= $5000
Paid in capital in excess of par = $75000 - $5000 = $70000
The journal entry will be:
Debit Retained earnings $75000
Credit Stock dividend distributable $5,000
Credit Paid in capital in excess of par $70000
The comparative balance sheets and income statement for Bingky Barnes Inc. are as follows:
Current Year Prior Year
Balance sheet at December 31
Cash $37,300 $29,400
Accounts receivable 32,700 28,900
Merchandise inventory 42,000 38,300
Property and equipment 121,500 100,800
Less: Accumulated depreciation (30,700) (25,300)
$202,800 $172,100
Accounts payable $36,700 $27,900
Accrued wages expense 1,400 1,800
Note payable, long-term 44,500 50,800
Common stock and additional paid-in capital 89,600 72,900
Retained earnings 30,600 18,700
$202,800 $172,100
Income statement for current year Sales $123,000
Cost of goods sold 73,000
Other expenses 38,100
Net income $11,900
Additional Data:
a. Equipment bought for cash, $20.700.
b. Long-term notes payable was paid off for $4,800.
c. Issued new shares of stock for $16,400 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $5,200, wages, $20,100; taxes, $6,100; other, $6,500 f. Assume that expenses were fully paid in cash, when there are no liabilities account related to them. For example, tax expenses are paid in cash since there is no taxes payable.
Required:
Prepare the statement of cash flows for the year ended December 31, current year, using the Indirect method.
Answer:
Bingky Barnes Inc.
Statement of Cash Flows for the year ended December 31, Current Year
(using the indirect method)
Operating activities:
Net income $11,900
Add non-cash expenses:
Depreciation 5,400
Adjusted operating $17,300
Changes in working capital:
Accounts receivable -3,800
Merchandise inventory -3,700
Accounts payable +8,800
Accrued wages expense -400
Net operating cash flow $18,200
Investing activities:
Property & equipment -$20,700
Financing activities:
Note payable, long-term -6,300
Common stock and
additional paid-in capital +16,700
Net cash from financing $10,400
Net cash flows $7,900
Explanation:
a) Data and Calculations:
Comparative balance sheets and income statement
Current Year Prior Year Change
Balance sheet at December 31
Cash $37,300 $29,400 +7,900
Accounts receivable 32,700 28,900 +3,800
Merchandise inventory 42,000 38,300 +3,700
Property and equipment 121,500 100,800 +20,700
Less: Accumulated depreciation (30,700) (25,300)
Total assets $202,800 $172,100
Accounts payable $36,700 $27,900 +8,800
Accrued wages expense 1,400 1,800 -400
Note payable, long-term 44,500 50,800 -6,300
Common stock and
additional paid-in capital 89,600 72,900 +16,700
Retained earnings 30,600 18,700
Total liabilities and equity $202,800 $172,100
Income statement for current year
Sales $123,000
Cost of goods sold 73,000
Other expenses 38,100
Net income $11,900
Additional Data:
a. Equipment bought for cash, $20,700
b. Long-term notes payable was paid off for $4,800?
c. Issued new shares of stock for $16,400 cash.
d. No dividends were declared or paid.
e. Other expenses:
Depreciation, $5,400
Wages 20,100
Taxes, 6,100
Other, 6,500
f. Assume that expenses were fully paid in cash, when there are no liabilities account related to them. For example, tax expenses are paid in cash since there is no taxes payable.
Wages Payable
Beginning balance $1,800
Wages expense $20,100
Ending balance 1,400
Cash paid 19,700
Snowy Mountain Financial Advisors is a network of branches providing investing and financial advising services. It discloses that it uses a balanced scorecard with the following six performance measures.
Required:
Link the measures to the perspective number(s) of the balanced scorecard.
Perspective
1. Financial
2. Customer
3. Learning and growth
4. Internal business processed
Procedure Measure Prespective number
Market share
Regulatory compliance
New cutomer refresh from existing customer
Order errors
Brach profit
Answer:
Financial : market share and Branch profit Customer : New customer referrals from existing customer Learning and Growth : Not available on the score card Internal business processed : Regulatory compliance, Order errorsExplanation:
Linking the measures to the perspective number(s) of the balanced scorecard
Financial : market share and Branch profit Customer : New customer referrals from existing customer Learning and Growth : Not available on the score card Internal business processed : Regulatory compliance, Order errorsThe Market share is simply a portion of the general market that is been controlled by a product or organization
New customer referrals form existing customers is one way a company can get new and returning customers to patronize them
Regulatory compliance and order errors is been handled by the management of the business
Josiah is training users to navigate Access forms. What is the best way to advance in the form to the next field?
Enter
Shift+Tab
Ctrl+Home
End
Answer: Enter
Explanation:
If one wants to move to the next field but still in the same form on Access, one simply needs to tap the Enter button and it will move on. This is the same thing that happens in Excel when Enter is tapped.
It is probably because the forms created in Access do not allow for paragraphs so the enter key will only move you to another field instead of creating a new paragraph.
Candy or cookies? i want to know
Answer:
Candy
Explanation:
FOLLOW MY ACCOUNT PLS PLS
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2020: Shareholders' Equity ($ in millions) Common stock, 210 million shares at $1 par $ 210 Paid-in capital—excess of par 1,260 Paid-in capital—share repurchase 1 Retained earnings 1,200 Required: 1. During 2021, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock. On February 5, 2021, TNL Systems purchased 9 million shares at $10 per share. On July 9, 2021, the corporation sold 3 million shares at $12 per share. On November 14, 2023, the corporation sold 3 million shares at $7 per share. 2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2023, comparing the two approaches. Assume all net income earned in 2021–2023 was distributed to shareholders as cash dividends.
Answer:
TNL Systems Inc.
Journal Entries:
Retired shares:
February 5, 2021:
Debit Treasury stock $9
Debit Paid-in capital - excess of par $81
Credit Cash $90
To record the repurchase of shares.
Debit Common stock $9
Credit Treasury stock $9
To record the retirement of shares.
b) Viewed as treasury stock:
February 5, 2021:
Debit Treasury Stock $9
Debit Paid-in capital - excess of par $81
Credit Cash $90
To record the repurchase of 9 million shares at $10 each.
July 9, 2021:
Debit Cash $36
Credit Treasury Stock $3
Credit Paid-in capital - excess of par $33
To record the resale of 3 million treasury shares at $12 each.
November 14, 2023:
Debit Cash $21
Credit Treasury Stock $3
Credit Paid-in capital - excess of par $18
To record the resale of 3 million treasury shares at $7 each.
2a. Retired Shares
At December 31, 2020:
Shareholders' Equity ($ in millions)
Common stock, 210 million shares at $1 par $ 201
Paid-in capital—excess of par 1,161
Paid-in capital—share repurchase 1
Retained earnings 1,200
2b. Treasury stock:
At December 31, 2020:
Shareholders' Equity ($ in millions)
Common stock, 210 million shares at $1 par $ 210
Paid-in capital—excess of par 1,230
Paid-in capital—share repurchase 4
Retained earnings 1,200
Explanation:
a) Data and Calculations:
At December 31, 2020:
Shareholders' Equity ($ in millions)
Common stock, 210 million shares at $1 par $ 210
Paid-in capital—excess of par 1,260
Paid-in capital—share repurchase 1
Retained earnings 1,200
Transactions Analysis:
Retired shares:
February 5, 2021:
Common stock $9 Paid-in capital - excess of par $81 Cash $90
Treasury stock:
February 5, 2021:
Treasury Stock $9 Paid-in capital - excess of par $81 Cash $90
July 9, 2021:
Cash $36 Treasury Stock $3 Paid-in capital - excess of par $33
November 14, 2023:
Cash $ 21 Treasury Stock $3 Paid-in capital - excess of par $18
Treasury stock
Beginning balance $1
February 5, 2021 9
July 9, 2021 (3)
November 14, 2023 (3)
Ending balance $4
Paid-in capital - excess of par
Beginning balance $1,260
February 5, 2021 (81)
July 9, 2021 33
November 14, 2023 18
Ending balance $1,230
Akers Company sold bonds on July 1, 20X1, with a face value of $100,000. These bonds are due in 10 years. The stated annual interest rate is 6% per year, payable semiannually on June 30 and December 31. These bonds were sold to yield 8%. By July 1, 20X2, the market yield on these bonds had risen to 10%.
Required:
What was the bonds' market price on July 1 20x2?
Answer:
$76,620.83
Explanation:
According to the scenario, computation of the given data are as follows
Future Value (FV) = $100,000
Rate of interest = 10% yearly
Rate of interest (Rate) = 10%÷ 2 = 5% semiannually
Number of period (Nper) = 9 × 2 = 18
Face value = $100,000
Payment (pmt) = $100,000 × (6%÷2) = $3,000
By putting the value in excel present value formula, we get,
PV = $76,620.83
Attachment is attached below
The Pines Company, which manufactures office equipment, is ready to introduce a new line of portable copiers. The following copier data are available:
Variable manufacturing cost $ 180
Variable selling and administrative cost 90
Applied fixed manufacturing cost 60
Allocated fixed selling and administrative cost 75
What price will the company charge if the firm uses cost-plus pricing based on total manufacturing cost and a markup percentage of 160%?
Answer:
$ 624
Explanation:
Given :
Variable manufacturing cost = $ 180
Applied fixed manufacturing cost = $ 60
Therefore, total manufacturing cost = 180 + 60
= $ 240
Mark up percentage = 160%
Price to be charged = 240 + 160% of 240
= 240 + 384
= $ 624
Replenishing the Petty Cash Fund
illustration: On March 15 Zhu Ltd's petty cash custodian
requests a check for NT$2,610. The fund contains NT$390
cash and petty cash receipts for postage NT$1,320, freight-out
NT$1,140, and miscellaneous expenses NT$150. The journal
entry is:
Answer:
Explanation:
Postage expense. 1320
freight out. 1140
miscellaneous exp. 150
Cash. 2610
to replenish petty cash account
note that pettty cash is only debited or credited when you are increasing Or decreasing the petty cash fund. This entry appears to be only replenishing the petty cash account.
Fultz Company has accumulated the following budget data for the year 2017. 1 Sales: 31,450 units, unit selling price $85. Cost of one unit of finished goods: direct materials 1 pound at $5 per J pound, direct labor 3 hours at $13 per hour, and manufacturing overhead $6 per direct labor hour, j Inventories (raw materials only): beginning, 10,290 pounds; ending, 15,250 pounds. Selling and administrative expenses: $170,000; interest expense: $30,000. Income taxes: 30% of income before income taxes.
Prepare a schedule showing the computation of cost of goods sold for 2017.
Answer:
See below
Explanation:
Computation of Cost of goods sold
Direct materials
Direct labor
Manufacturing overheads
Total cost
Click to watch the Tell Me More Learning Objective 5 video and then answer the questions below. 1. The entry to record the amortization of a patent would include a debit to __________ and a credit to __________. Amortization Expense; Patents Amortization Expense; Accumulated Amortization Patents; Accumulated Amortization Patents Expense; Accumulated Amortization 2. The exclusive right to publish and sell a literary, artistic, or musical composition is granted by a patent. trademark. copyright. franchise.
Answer:
1. Amortization Expense; Patents.
2. Copyright.
Explanation:
Patent can be defined as the exclusive or sole right granted to an inventor by a sovereign authority such as a government, which enables him or her to manufacture, use, or sell an invention for a specific period of time.
Generally, patents are used on innovation for products that are manufactured through the application of various technologies.
Basically, the three (3) main ways to protect an intellectual property is to employ the use of
I. Trademarks.
II. Patents.
III. Copyright.
Copyright law can be defined as a set of formal rules granted by a government to protect an intellectual property by giving the owner an exclusive right to use while preventing any unauthorized access, use or duplication by others.
Filling the missing words or texts in the question, we have;
1. The entry to record the amortization of a patent would include a debit to amortization expense and a credit to patents. Amortization in financial accounting is used to periodically lower the book value of a loan principal or an intangible asset such as intellectual property over a set period of time.
2. Copyright: the exclusive right to publish and sell a literary, artistic, or musical composition is granted by a patent.
oneycutt Co. is comparing two different capital structures. Plan I would result in 39,000 shares of stock and $108,000 in debt. Plan II would result in 33,000 shares of stock and $324,000 in debt. The interest rate on the debt is 7 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $160,000. The all-equity plan would result in 42,000 shares of stock outstanding. What is the EPS for each of these plans
Answer:
All equity plan:
EPS = $160,000 / 42,000 = $3.81
Plan I:
EPS = [$160,000 - ($108,000 x 7%)] / 39,000 = $152,440 / 39,000 = $3.91
Plan II:
EPS = [$160,000 - ($324,000 x 7%)] / 33,000 = $137,320 / 33,000 = $4.16
Plan II is better since the resulting EPS is higher than the other alternatives.
