Answer:
Ending Cash Balance as are follows:
January = $40,000
February = $67,535
March = $40,000
Also, Loan Balance End of Month as follows:
January = $26,500
February = $0
March = $38,465
Explanation:
Note: See the attached excel file for the cash budget.
In the attached excel file, the following calculations are made:
January loan repayment = January Preliminary cash - January Interest expense - Minimum required cash balance = $94,300 - $800 - $40,000 = $53,500
February Loan repayment = January Loan Balance End of the Month = $26,500
March Additional Loan = Minimum required cash balance - March Preliminary cash balance = $40,000 - $1,535 = $38,465
From the attached excel file, we have Ending Cash Balance as follows:
January = $40,000
February = $67,535
March = $40,000
And also, Loan Balance End of Month as follows:
January = $26,500
February = $0
March = $38,465
Cynthia, a sole proprietor, was engaged in a service business and reported her income on the cash basis. On February 1, 2013, she incorporates her business as Dove Corporation and transfers the assets of the business to the corporation in return for all of the stock in addition to the corporation’s assumption of her proprietorship’s liabilities. All of the receivables and the unpaid trade payables are transferred to the newly formed corporation. The balance sheet of the corporation immediately after its formation is as follows:
Dove Corporation
Balance Sheet
February 1, 2013
Assets
Basis to Dove Fair Market Value
Cash $ 80,000 $ 80,000
Accounts receivable 0 240,000
Equipment (cost $180,000; 120,000 320,000
depreciation previously claimed $60,000)
Building (straight-line depreciation) 160,000 400,000
Land 40,000 160,000
Total $400,000 $1,200,000
Liabilities and Stockholder’s Equity
Liabilities:
Accounts payable—trade $ 120,000
Notes payable—bank 360,000
Stockholder’s equity:
Common stock 720,000
Total $1,200,000
Discuss the tax consequences of the incorporation of the business to Cynthia and to Dove Corporation.
Answer:
Cynthia and Dove CorporationAny profits generated by Dove Corporation will be taxed to the corporation and also taxed to Cynthia as a shareholder whenever Dove distributes the profits as dividends. Taxing Dove and Cynthia creates a double taxation burden for both Dove and Cynthia. Dove Corporation does not get a tax deduction when it distributes dividends to Cynthia. Furthermore, Cynthia cannot deduct any corporation loss when incurred. These are unlike when the business was only a sole proprietorship.
Explanation:
a) Data and Calculations:
Dove Corporation
Balance Sheet
February 1, 2013
Assets
Basis to Dove Fair Market Value
Cash $ 80,000 $ 80,000
Accounts receivable 0 240,000
Equipment (cost $180,000; 120,000 320,000
depreciation previously claimed $60,000)
Building (straight-line depreciation) 160,000 400,000
Land 40,000 160,000
Total $400,000 $1,200,000
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable—trade $ 120,000
Notes payable—bank 360,000
Stockholders' equity:
Common stock 720,000
Total $1,200,000
Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges cost $1 each, and each person can buy at most 5,000 oranges. The government has devised the following tax plans:
Plan A Plan B
Consumption up to 1,000 oranges is taxed at 20%. Consumption up to 2,000 oranges is taxed at 30%.
Consumption higher than 1,000 oranges is taxed at 80%. Consumption higher than 2,000 oranges is taxed at 10%.
Required:
Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 oranges.
Explanation:
We are to find marginal tax and average tax rate at a consumption level of 500 oranges for plan A and plan B
Plan A
Consumption level = 500 oranges
Tax = 20%
Tax payable on this = 500 x 20% = 500 x 0.2 = 100
Marginal tax rate = 20 %
Average tax return = 100/500 = 0.2x100 = 20%
Plan B
At tax rate = 30%
Same consumption level
Tax payable = 500 x 30% = 500 x 0.3 = 150
Marginal tax rate = 30%
Average tax rate = 150/500 = 0.3 x 100 = 30%
Dmitri doesn't like Val, one of his coworkers. Dmitri started to send an e-mail to his workgroup, falsely accusing Val of stealing company supplies. Before clicking "Send," Dmitri reread his message. He decided to delete the message instead of sending it, fearing that his work team members might consider his e-mail to be inappropriate. Which ethical consideration did Dmitri use in his decision to behave in a principled manner?
A) Publicity Test
B) Common Good approach
C) Professional Ethic
D) Utilitarian approach
Answer:
C. Professional Ethics.
Explanation:
Ethics are moral qualities which governs a persons behavior. A person is sometimes in an ethical dilemma scenario where he has to take decision which might impact his ethical values. Professional ethics is a situation where a person thinks how his decision will be viewed by an independent jury or audience.
Eva received $68,000 in compensation payments from JAZZ Corp. during 2018. Eva incurred $13,500 in business expenses relating to her work for JAZZ Corp. JAZZ did not reimburse Eva for any of these expenses. Eva is single and she deducts a standard deduction of $12,000. Based on these facts answer the following questions: Use Tax Rate Schedule for reference.
a. Assume that Eva is considered to be an employee. What amount of FICA taxes is she required to pay for the year?
b. Assume that Eva is considered to be an employee. What is her regular income tax liability for the year?
c. Assume that Eva is considered to be a self-employed contractor. What is her self-employment tax liability and additional Medicare tax liability for the year?
I got answer b but you may wanna double check
Answer:
its b
Explanation:
i got it right on mine
The following note transactions occurred during the year for Towell Company: Nov. 10 Towell issued a 90-day, 9% note payable for $8,000 to Hyatt Company for merchandise. Dec. 1 Towell signed a 120-day, 10% note at the bank for $12,000. Dec. 20 Towell gave Barr, Inc., a 60-day, 10%, $12,000 note for payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.
Answer: See explanation
Explanation:
The general journal entries necessary to adjust the interest accounts at December 31 will be:
1. December 31:
Debit: Interest Expenses = $8,000 × 9% × 51/ 360 = $102
Credit: Interest payable = $102
(To accrue interest expenses for the note issued on November 10).
2. December 31:
Debit: Interest Expenses = $12,000 × 10% ×30/360 = $120
Credit: Interest payable = $120
(To accrue interest expenses for the note issued on December 1)
3. December 31:
Debit: Interest Expenses = $12,000 × 10% × 11/360 = $36.67
Credit: Interest payable = $36.67
(To accrue interest expenses for the note issued on December 20).
Two-Stage ABC for Manufacturing: Reassigning Costs to Cost Objectives National Technology, LTD. has developed the following activity cost information for its manufacturing activities:
Activity Activity Cost
Machine setup $75.00 per batch
Movement 22.00 per batch
0.10 per pound
Drilling 3.00 per hole
Welding 6.00 per inch
Shaping 32.00 per hour
Assembly 18.00 per hour
Inspection 2.00 per unit
Filling an order for a batch of 50 fireplace inserts that weighed 150 pounds each required the following:
Three batch moves .
Two sets of inspections .
Drilling five holes in each unit
Completing 80 inches of welds on each unit .
Thirty minutes of shaping for each unit .
One hour of assembly per unit
Determine the activity cost of converting the raw materials into 50 fireplace inserts
Fireplace Inserts
Activity Cost
Set-up $
Movement
Batch 60V
Weight
Inspection
Drilling
Welding
Shaping
Assembly
Total
Answer:
$27,541
Explanation:
Calculation to Determine the activity cost
Activity Cost
Set-up $75.00
Movement:
Batch 60V $66
(Three batch moves *22.00 per batch)
Weight $750
(150 pounds*0.10 per pound*50)
Inspection $200
(Two sets of inspections*50*2.00 per unit)
Drilling $750
(3.00 per hole*five holes in each unit*50)
Welding $24,000
(6.00 per inch*80*50)
Shaping $800
(32.00 per hour*(30 minutes/60)*50)
Assembly $900
(18.00 per hour*1*50)
Total $27,541
Therefore the activity cost is $27,541
A company pays its employees $3,850 each Friday, which amounts to $770 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
Answer:
$3080
Explanation:
Calculation to determine what the amount of salaries earned but unpaid at the end of the accounting period is:
Salaries earned but unpaid at the end of the accounting period =3850-$770
Salaries earned but unpaid at the end of the accounting period =$3080
Anthony Thomas Candies (ATC) reported the following financial data for 2021 and 2020:
2021 2020
Sales $ 314,000 $ 290,000
Sales returns and allowances 8,000 4,700
Net sales $ 306,000 $ 285,300
Cost of goods sold:
Inventory, January 1 62,000 18,000
Net purchases 139,000 142,000
Goods available for sale 201,000 160,000
Inventory, December 31 61,000 62,000
Cost of goods sold 140,000 98,000
Gross profit $ 166,000 $ 187,300
The average days inventory for ATC (rounded) for 2021 is: (Round your intermediate calculations to two decimal places. Round your final answer to the nearest whole number.)
A. 171 days.
B. 222 days.
C. 231 days
D. Less than 100 days.
Answer:
D. Less than 100 days
Explanation:
Average days inventory = 365 / Inventory turnover rate
But
Inventory turnover rate = Cost of goods sold / Average inventory
Also,
Average inventory = (Beginning inventory + Ending inventory) / 2
= ($62,000 + $18,000) / 2
= $40,000
Inventory turnover rate = $201,000 / $40,000 = 5.025
Average days inventory = 365 / 5.025 = 72.64 days
The following data relate to Department no. 3 of Winslett Corporation: Segment contribution margin$540,000 Profit margin controllable by the segment manager 310,000 Segment profit margin 150,000 On the basis of this information, Department no. 3's variable operating expenses are: Multiple Choice Not determinable. $160,000. $80,000. $390,000. $230,000.
Answer:
$230,000
Explanation:
The Profit margin controllable by the segment manager contains only items directly controllable by the manager and this consists of variable costs. So deduct the profit margin controllable by the segment manager from segment contribution margin to arrive at Variable operating expenses.
Calculation of Variable operating expenses
Segment contribution margin $540,000
Less Profit margin controllable by the segment manager ($310,000)
Variable operating expenses $230,000
The sensitivity of a system for disciplining and possibly terminating employees is important, and it is critical that the system be seen as fair. Employees form conclusions about the system's fairness based on the system's outcomes and procedures and the way managers treat employees when carrying out those procedures. Three principles of justice are outcome fairness, procedural justice, and interactional justice.
Outcome fairness involves the ends of a discipline process or action, while procedural and interactional justice focus on the means to those ends. Not only is behavior ethical that is in accord with these principles, but research has also linked the last two categories of justice with employee satisfaction and productivity
Place each of the following labels in one of the columns.
Listen closely
College buddies
Project work
Family friendly
Explanations
Family relations
Accommodations
Gender benefits
Team raises
Promotion
Respect
Qualifications
Outcome fairness Procedural justice International justice
Answer:
You and a friend apply for a job and you believe that you are more qualified - Outcome Fairness
You find out that your friend's uncle is hiring a manager for the company- Procedural justice
Explanation:
Outcome Fairness is the situation where we perceive that the results for a certain situation will be based on fair judgement.
Procedural Justice is a situation where a man believes that there will be pure justice in resource allocation and decision making will be based on judgement.
You just won the $114 million ultimate lotto jackpot. Your winnings will be paid as $3,800,000 per year for the next 30 years. If the appropriate interest rate is 7.1% what is the value of your windfall?
Answer:
$46,684,511.77
Explanation:
To determine the value of the windfall, we would first determine the future value of the windfall and then determine the present value
Future value = annuity x annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
FV = P (1 + r) n
FV = Future value
P = Present value
R = interest rate
N = number of years
Annuity factor = [(1.071)^30 - 1] / 0.071 = 96.177470
FV = $3,800,000 x 96.177470 = 365,474,386
Present value = FV x ( 1 +r)^-n
365,474,386 x (1.071)^-30 = $46,684,511.77
Ingersoll Company has a bond currently outstanding. The bond has a face value of $1,000 and matures in 10 years. The bond makes no coupon payments for the first three years, then pays $45 every six months over the subsequent four years, and finally pays $100 every six months over the last three years. If the required return on these bonds is 5.8% percent compounded semiannually, what is the current price of the bond
Answer:
$1,196.01
Explanation:
What is the current price of the bond
Face value of Bond = $1000
Term (maturity time) = 10 years
periods = 10 *2 = 20 ( semiannual compound of interest )
Yield = 5.8%. semiannual yield = 5.8% / 2 = 2.9% = 0.029
Next : calculate the value of bond using the relationship below
Discounting factor = 1/(1 + r)^n
n = number of payments
note : payments are made semiannually
attached below is a Table showing the discounting factor and present value starting from the 4th year ( Biannually )i.e. when payment commenced
payments discounting factor present value
45 0.818638898 36.83875
45 0.795567442 35.800535
45 0.773146203 34.791579
45 0.751356854 33.811058
45 0.730181588 32.858171
45 0.709603098 31.932139
45 0.689604566 31.032205
45 0.670169646 30.157634
100 0.651282455 65.128245
100 0.632927556 63.292756
100 0.615089947 61.508995
100 0.597755051 59.775505
100 0.580908698 58.09087
100 0.564537122 56.453712
1000 0.564537122 564.53712
Total of present value = 1196.0093
Match the following empires:
1. Established relatively peaceful trading relationship with Native Peoples and never established large permanent population throughout the colony.
2. After attempting several times to find a Northwest Passage to the Pacific, they established a comparably small presence in North America. However, through their alliance with the Huron and other Native peoples, they were able to maintain a vast claim stretching between the St. Lawrence River, the Ohio River, and the Mississippi River to Louisiana.
3. Originally in search of timber and gold, established a presence in North America for the purpose of colonizing. In order to do this, they depended on the depopulation of Native Peoples throughout the colonies.
4. Given a special decree from the Pope which granted them the ability to conquer all of the lands in the Western Hemisphere in which no Christians resided. After conquering the Aztecs and the Incas, they established new colonial centers as extensions of the empire.
A. Spanish.
B. English.
C. Dutch.
D. French.
Answer:
1 ----> Matches with ----->C
2 ----> Matches with ----->D
3 ----> Matches with ----->B
4 ----> Matches with ----->A
Explanation:
This question is very easy and interesting. In this question, we just need to match the specific empires with the description given in the question. So, Let's Start.
1. The first description matches with the Dutch Empire. (C)
2. The second description matches with obviously the French Empire (D)
3. The third description matches with the English Empire. (B)
Lastly,
4. The forth description clearly matches with the Spanish Empire. (A)
So, Correct Combination will be:
1 ----> Matches with ----->C
2 ----> Matches with ----->D
3 ----> Matches with ----->B
4 ----> Matches with ----->A
A firm will maximize the present value of future profits by maximizing current profits when: the growth rate in profits is constant. the growth rate in profits is larger than the interest rate. Correct! the interest rate is larger than the growth rate in profits and both are constant. the growth rate and interest rate are constant and equal.
Answer:
the interest rate is larger than the growth rate in profits and both are constant.
Explanation:
In the case when the firm wants to maximize the present value of the profits that arise in near future so here the current profits would be maximize at the time when the rate of interest would be more than the growth rate and both would remain constant
Hence, the option c is correct
Contribution Margin and Contribution Margin Ratio
For a recent year, McDonald's company-owned restaurants had the following sales and expenses (in millions):
Sales $18,169.3
Food and packaging $ 6,129.7
Payroll 4,756.0
Occupancy (rent, depreciation, etc.) 4,402.6
General, selling, and administrative expenses 2,487.9
$17,776.2
Income from operations $ 393.1
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place).
b. What is McDonald's contribution margin ratio? Round to one decimal place.
c. How much would income from operations increase if same-store sales increased by $500 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million (one decimal place).
Answer:
See below
Explanation:
Variable food and packaging = $6,129.7
Variable payroll = $4,756.0
Variable general, selling and administrative expenses = 40% × $2,487.9 = $995.16
Fixed general, selling and administrative expenses = 60% × $2,487.9 = $1,492.74
Fixed occupancy = $4,402.6
Total fixed cost = $1,492.84 + $4,402.6 = $5,895.34
Total variable cost = Variable food and packaging + Variable payroll + Variable general, selling and administrative expenses
= $6,129.7 + $4,756 + $995.16
= $11,880.86
a. McDonald's contribution margin
= Sales - Variable cost
= $18,169.3 - $11,880.86
= $6,288.44
b. McDonald's contribution margin
= Contribution margin / Sales
= $6,288.44 / $18,169.3
= 34.61%
c. Increase in operating income
= $500 million × 34.71
= $173,050,000
Wesson Company uses the allowance method to record its expected credit losses. It estimates its losses at one percent of credit sales, which were $750,000 during the year. The Accounts Receivable balance was $220,000 and the Allowance for Doubtful Accounts has a credit balance of $1,000 at year-end. What amount is the debit to the Bad Debts Expense
Answer: $7,500
Explanation:
The Bad Debt expense is the amount that might not be paid by the account receivables of a company.
It is calculated by the formula:
= Credit sales * Estimated losses
= 750,000 * 1%
= $7,500
You and your friends want to buy a condo at the beach to time share. Each of you has single peaked preferences with a most preferred value that you are willing to spend. These values are: Mabel, $10,000; Gertrude, $20,000; Myron, $30,000; Wilber, $40,000; and you, $50,000. The condo costs $150,000. Explain how to implement a uniform rule mechanism to allocate costs and shares.
Answer:
Individual Cost Shares to be enjoyed
Mabel $10,000 10000 / 150000 = 6.67%
Gertrude $20000 20000 / 150000 = 13.3%
Myron $30000 30000 / 150000 = 20%
Wilber $40000 40000 / 150000 = 26.6%
You $50000 50000 / 150000 = 33.3%
Explanation:
peaked preferences
Most preferred value to spend :
Mabel = $10,000
Gertrude = $20,000
Myron = $30,000
Wilber = $40,000
you = $50,000
cost of Condo = $150,000
Implementing a Uniform rule mechanism to allocate costs and shares
The uniform rule ; ∑ j∈I Uj (p) = Ω.
where Ω = fixed amount of resource
hence the summation of all allotment should = Ω ( $150,000 )
Number of friends = 5
cost of condo = $150,000
If divide equally each person will have to pay ; $150,000 / 5 = $30,000
Total money to be spent by friends = 10,000 + 20,000 + 30,000 + 40,000 + 50,000 = $150,000
Individual Cost shares to be enjoyed
Mabel $10,000 10000 / 150000 = 6.67∑%
Gertrude $20000 20000 / 150000 = 13.3%
Myron $30000 30000 / 150000 = 20%
Wilber $40000 40000 / 150000 = 26.6%
You $50000 50000 / 150000 = 33.3%
∑shares ≈ 100% ( 150,000 )
Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits.
Cooking Canning
Beginning work in process $0 $4,710
Materials 22,030 10,200
Labor 8,740 8,020
Overhead 32,760 28,340
Costs transferred in 55,850
ournalize the April transactions.
Answer and Explanation:
The journal entries are shown below:
On April 30
WIP-cooking Dr $22,030
WIP- Canning $10,200
To Raw material inventory $32,230
(Being material used is recorded)
WIP-cooking Dr $8,740
WIP- Canning $8,020
To Factory labor $16,760
(Being assigned of factory labor to production is recorded)
WIP-cooking Dr $32,760
WIP- Canning $28,340
To Manufacturing overhead $61,100
(Being assigned of overhead to production is recorded)
WIP Canning $55,850
To WIP cooking $55,850
(being cost transferred in recorded)
eating small amounts of sweet desserts can satisfy one's urge or craving for healthier food. true or false?
Answer:
I think eating healthier food would be better. Eating sweet desserts would be healthier than eating a lot, but you should still cut down and eat healthier foods. False
Explanation:
A truck was acquired on July 1, 2018, at a cost of $311,850. The truck had a six-year useful life and an estimated salvage value of $34,650. The straight-line method of depreciation was used. On January 1, 2021, the truck was overhauled at a cost of $28,875, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $34,650). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.
Answer:
Details Amount($)
Cost $311,850
Less: Salvage value ($34,650)
Depreciation base July 1, 2018 $277,200
Less: Depreciation to date ($277,200/6)*2.5 ($115,500)
Depreciation base Jan 1, 2021 (unadjusted) $161,700
Overhaul $28,875
Depreciation base Jan 1, 2021 (adjusted) $190,575
Date Particulars Debit($) Credit($)
2021, Jan 1 Depreciation accumulated A/c Dr $34,650
To cash A/c $34,650
2021, Dec 31 Expense for depreciation A/c Dr $19,922
($109,575/5.5)
To Depreciation accumulated A/c $19,922
Determine the amount to be paid in full settlement of each of two invoices, (a) and (b), assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period. If required, round the answers to the nearest dollar. Merchandise (Invoice Amount) Freight Paid by Seller Freight Terms Returns and Allowances (Invoice Amount) a. $5,300 $400 FOB destination, 2/10, n/30 $1,250 b. 2,700 200 FOB shipping point, 1/10, n/30 800 a. $fill in the blank 1 b. $fill in the blank 2
Answer:
a. Amount to be paid = $4,369
b. Amount to be paid = $1,881
Explanation:
Note: Thee data in this question are merged together. They are therefore sorted before answering the question. See the attached pdf file for the complete question with the sorted data.
a. Invoice (a)
Amount to be paid = (Invoice amount - Returns and Allowances) - ((Invoice amount - Returns and Allowances) * 2%) + Freight Paid by Seller = ($5,300 - $1,250) - (($5,300 - $1,250) * 2%) + $400 = $4,369
b. Invoice (b)
Amount to be paid = (Invoice amount - Returns and Allowances) - ((Invoice amount - Returns and Allowances) * 1%) = ($2,700 - $800) - (($2,700 - $800) * 1%) = $1,881
The purpose of charging different prices to different groups of customers is to multiple choice decrease costs and in turn increase profits. Student discounts are an example of this type of pricing. increase revenue, but not profits. Higher holiday airfares are an example of this type of pricing. increase revenue and in turn costs. Senior citizen discounts are an example of this type of pricing. increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
Answer:
increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
Explanation:
Price discrimination is defined as the situation where the same product is being sold to different customers at different prices.
This is mostly based in the ability of the customers to pay at the varying amounts.
In the given instance when afternoon movie tickets are sold at lower prices, that rational is that there is lower demand for movies in the afternoon.
As such the price will need to be lowered to encourage people to buy tickets.
However at night people are less busy and demand for movies will be high. Tickets can now be sold at higher prices with the assurance that people will buy
Student discounts are an example of this type of pricing of increase revenue and in turn profits. Lower afternoon movie prices are an example of this type of pricing.
The following information should be considered;
Price discrimination is defined as the situation where the same product is being sold to different customers at different prices. This is mostly based in the ability of the customers to pay at the varying amounts.Learn more: brainly.com/question/16911495
Elizabeth reports the following items for the current year: Nonbusiness capital gains $ 5,000 Nonbusiness capital losses (3,000) Interest income 3,000 Itemized deductions (including a $20,000 casualty loss in a Federal disaster area) (27,000) In calculating Elizabeth's net operating loss and with respect to these amounts only, what amount must be added back to taxable income (loss)
Answer: $2000
Explanation:
In calculating Elizabeth's net operating loss and with respect to these amounts only, the amount that must be added back to taxable income (loss) will be the difference between the nonbusiness capital gains and the nonbusiness capital losses. This will be:
= $5000 - $3000
= $2000
On January 1, 2019, Tonika Company issued a four-year, $10,700, 7% bond. The interest is payable annually each December 31. The issue price was $10,018 based on an 8% effective interest rate. Tonika uses the effective-interest amortization method. Rounding calculations to the nearest whole dollar, which of the following journal entries correctly records the 2019 interest expense?
A. Interest expense 1,052
Bond discount 205
Cash 847
B. Interest expense 847
Cash 847
C. Interest expense 805
Bond discount 42
Cash 847
Answer:
C. Interest Expense 805
Bond discount 42
Cash 847
Explanation:
The interest expense is calculated based on effective interest rate. The issue price is 10,018 which is the actual price and with effective interest rate interest amount is determined. The interest expense has cash value and bond discount.
10,018 * 8% = 804.45 approximately 805.
Morganton Company makes one product and it provided the following information to help prepare the master budget for its four months of operations:
(a) The budgeted selling price per unit is $70. Budgeted unit sales for June, July, August, and September are 8,400, 10,000, 12,000, and 13,000 units, respectively. All sales are on credit.
(b) Forty-percent of credit sales are collected in the month of the sale and 60% in the following month.
(c) The ending finished goods inventory equals 20% of the following month
d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
Required:
1. Discuss some of the major benefits to be gained from budgeting. Support your answer with suitable example?
2. What are the budgeted sales for July?
3. What are the expected cash collections for July?
4. What are the accounts receivable balance at the end of July?
5. According to the production budget, how many units should be produced in July?
Answer:
Morganton Company
1. Budgeting increases effective financial management while ensuring proper allocation of scarce resources. It encourages planning for the future as well as improved business decisions. It helps management to identify problems before they occur and to develop strategies for solving any problems that may arise. With budgeting, the organization is in a better position to monitor its overall performance and ensure the achievement of its goals and objectives. Finally, budgeting increases the motivation to achieve goals for both the management and individual employees.
2. The budgeted sales for July are $10,000.
3. The expected cash collections for July are $9,040.
4. The accounts receivable balance at the end of July are $6,000.
5. According to the production budget, the units produced in July are 1,040 units.
Explanation:
a) Data and Calculations:
Budgeted selling price per unit = $70
June July August September
Budgeted unit sales 8,400 10,000 12,000 13,000
Cash Collections:
40% month of sale 3,360 4,000 4,800 5,200
60% month following 5,040 6,000 7,200
Total cash collections 3,360 9,040 10,800 12,400
Production costs:
June July August September
Ending Inventory 2,000 2,400 2,600
Cost of goods sold 8,400 10,000 12,000 13,000
Goods available 10,400 12,400 14,600
Beginning Inventory 1,680 2,000 2,400 2,600
Production costs 8,720 10,400 12,200
Unit cost of materials $10 $10 $10 ($2 * 5)
Units produced 872 1,040 1,220
Accounts receivable balance at July end:
June credit sales $8,400
June cash collection 3,360
July 1 Beginning bal. 5,040
July credit sales 10,000
Cash collections 9,040
Ending balance 6,000
Bob lives in Philadelphia and runs a business that sells guitars. In an average year, he receives $704,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $404,000; he also pays wages and utility bills totaling $286,000. He owns his showroom; if he chooses to rent it out, he will receive $3,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Bob does not operate this guitar business, he can work as an accountant, receive an annual salary of $20,000 with no additional monetary costs, and rent out his showroom at the $3,000 per year rate. No other costs are incurred in running this guitar business.
Identify each of Charles's costs in the following table as either an implicit cost or an explicit cost of selling guitars
Implicit Cost Explicit Cost
1. The wholesale cost for the guitars that Charles pays the manufacturer
2. The wages and utility bills that Charles pays
3. The salary Charles could earn if he worked as an accountant
4. The rental income Charles could receive if he chose to rent out his showroom
Complete the following table by determining Charles's accounting and economic profit of his guitar business.
Profit (Dollars)
Accounting Profit
Economic Profit
Answer:
Explicit Cost
1. The wholesale cost for the guitars that Charles pays the manufacturer
2. The wages and utility bills that Charles pays
Implicit cost
3. The salary Charles could earn if he worked as an accountant
4. The rental income Charles could receive if he chose to rent out his showroom
$14,000
Economic profit = $-9000
Explanation:
Accounting profit= total revenue - explicit cost
Total revenue =price x quantity sold
Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Accounting profit = $704,000 - ( $404,000 + $286,000) = $14,000
Economic profit = $14,000 - ($3000 + $20,000) =$-9000
What is double-entry accounting?
Answer:
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Double-entry bookkeeping, in, is a system of where every entry to an account requires a corresponding and opposite entry to a different account. The double-entry system has two equal and corresponding sides known as. The left-hand side is debit and the right-hand side is credit. Wikipedia
Inventor
Prescott gave land to his aunt, Janice. Prescott's basis in the land was $45,000, and its fair market value at the date of the gift was $62,000. Janice borrowed $40,000 from a bank; she used the funds to improve the property. She sold the property to Marshall for $220,000. Marshall paid Janice $80,000 in cash, assumed her $30,000 mortgage, and agreed to pay $110,000 in two years. Janice's selling expenses were $2,000. Marshall is going to pay adequate interest.
a. Janice's basis in the land at the time of the sale is __________.
b. When computing her realized gain, what amount does Janice use as the selling price and as the contract price?
Contract price:__________.
c. Janice's total realized gain on the sale is $fill in the blank 4, but her recognized gain in the year of the sale is ________.
Answer:
A. 220k
B. 45k
C. 2k
Explanation:
An investment project has annual cash inflows of $4,300, $4,000, $5,200, and $4,400, for the next four years, respectively. The discount rate is 13 percent. a. What is the discounted payback period for these cash flows if the initial cost is $5,800? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period for these cash flows if the initial cost is $7,900? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period for these cash flows if the initial cost is $10,900? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
1.64 years
2.27 years
3.13 years
Explanation:
Discounted payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative discounted cash flows
Present value of cash flow in year 1 = 4300 / 1.13 = 3805.31
Amount recovered in year 1 = -5800 + 3805.31 = -1994.69
Present value of cash flow in year 2 = 4000 / (1.13^2) = 3132.59
Amount recovered in year 2 =-1994.69 + 3132.59 = 1137.90
Payback period = 1 + 1994.69/3132.59 = 1.64 years
B
Present value of cash flow in year 1 = 4300 / 1.13 = 3805.31
Amount recovered in year 1 = -7900 + 3805.31 = -4094.69
Present value of cash flow in year 2 = 4000 / (1.13^2) = 3132.59
Amount recovered in year 2 = -4094.69 + 3132.59 = -962.10
Present value of cash flow in year 3 = 5200 / (1.13^3) = 3603.86
Amount recovered in year 3 = -962.10 + 3603.86 = 2641.76
Payback period = 2 years + -962.10 / 3603.86 = 2.27 years
C
Present value of cash flow in year 1 = 4300 / 1.13 = 3805.31
Amount recovered in year 1 = -10900 + 3805.31 = -7094.69
Present value of cash flow in year 2 = 4000 / (1.13^2) = 3132.59
Amount recovered in year 2 = -7094.69 + 3132.59 = -3962.10
Present value of cash flow in year 3 = 5200 / (1.13^3) = 3603.86
Amount recovered in year 3 = -3962.10 + 3603.86 = -358.24
Present value in year 4 = 4400 / (1.13^4) = 2698.60
Amount recovered in year 4 = -358.24 + 2698.60 = 2340.36
Payback period = 3 years + 358.24 + 2698.60 = 3.13 years
Assume that the entry closing total revenues of $284,900 and total expenses of $212,600 has been made for the year ending December 31. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $330,000 and Teresa Schafer, Drawing has a balance of $27,600.
A. Journalize the entry required to close the Teresa Schafer, Drawing account.
B. Determine the amount of Teresa Schafer, Capital at the end of period.
Answer and Explanation:
a. The journal entry to record the closing of drawing account is given below:
Teresa Schafer, Capital $27,600
Teresa Schafer, Drawing $27,600
(Being closing of drawing account is recorded)
b. The ending capital is
= Credit balance of capital - drawings
= $330,000 - $27,600
= $302,400
