Answer:
Allocated MOH= $768
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (555,000/74,000) + 2.1
Predetermined manufacturing overhead rate= $9.6 per machine hour
Now, we can allocate overhead to Job A496:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 9.6*80
Allocated MOH= $768
Find the present values of the following cash flow streams. The appropriate interest rate is 10%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course.
Year    Cash Stream A Cash Stream B
1 $100 $300
2 400 400
3 400 400
4 400 400
5 300 100
   Â
Required:
What is the value of each cash flow stream at a 0 percent interest rate?
Answer:
a. The present value of Cash flow stream A at 10% interest rate is $1,181.50; while the present value of Cash flow streams B at 10% interest rate is $1,239.13.
b. Present value of Cash flow streams A and B at 0% interest rate are both equal to $1,600.
Explanation:
a. Calculations of the present values of Cash Flow Stream A and B at 10% interest rate
The present value (PV) for a particular year can be calculated using the following formula:
PV = FV / (1 + r)^n
Where:
PV = present value of a particular year
FV = Future value or cash stream of a particular year
r = interest rate = 10%
n = The particular year in focus
The present value of cash flow streams at a particular interest rate is the sum of the present values of Cash Stream for all years, and this can be calculated as follows:
Present value of Cash flow stream A at 10% interest rate = (100 / (1 + 10%)^1) + (400 / (1 + 10%)^2) + (400 / (1 + 10%)^3) + (400 / (1 + 10%)^4) + (300 / (1 + 10%)^5) = $1,181.50
Present value of Cash flow streams B at 10% interest rate = (300 / (1 + 10%)^1) + (400 / (1 + 10%)^2) + (400 / (1 + 10%)^3) + (400 / (1 + 10%)^4) + (100 / (1 + 10%)^5) = $1,239.13
b. Calculations of the present values of Cash Flow Stream A and B at 0% interest rate
The present value of cash flow streams at a 0% is simply the sum of Cash Flow Stream for all years, and this can be calculated as follows:
Present value of Cash flow stream A at 0% interest rate = $100 + $400 + $400 + $400 + $300 = $1,600
Present value of Cash flow streams B at 0% interest rate = $300 + $400 + $400 + $400 + $100 = $1,600
Elliot, Inc., uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs were:
Answer:
$90,000
Explanation:
At the activity level of 20,000 machine hours:
total maintenance costs=20,000* $10.50=$210,000
At the activity level of 24,000 machine hours:
total maintenance costs=24,000*$9.75=$234,000
variable maintenance cost per hour=(total maintenance costs at higher activity level-total maintenance costs at lower activity level)/(higher activity level-lower activity level)
variable maintenance cost per hour=($234,000-$210,000)/(24000-20000)
variable maintenance cost per unit=$6
Using the higher activity level data:
total cost=fixed cost+(variable maintenance cost per unit*number of hours)
$234,000=fixed cost+($6*24000)
234,000=fixed cost+$144,000
fixed cost=$234,000-$144,000
fixed cost=$90,000
Pension data for Goldman Company included the following for the current calendar year: Service cost $ 140,000 PBO, January 1 650,000 Plan assets, January 1 700,000 Amortization of prior service cost 5,000 Amortization of net loss 1,000 Discount rate, 6% Expected return on plan assets, 8% Actual return on plan assets, 10% Required: Determine pension expense for the year. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
$129,000
Explanation:
Calculation for pension expense
Service Cost $140,000
Add: Interest Cost $39,000
($650,000 × 6%)
Add: Amortization of prior service cost $5,000
Add: Amortization of net loss $1,000
Less Expected return on plan assets $56,000 ($700,000 × 8%)
Pension Expense $129,000
Therefore Pension Expense is $129,000
Xercise Cycles Company has provided its year ended accounts receivables that were uncollected. The Controller has asked you to help prepare the Aging of Accounts Receivable Schedule and the corresponding journal entries. Use the information included in the Excel Simulation and the Excel functions described below to complete the task.
1) Calculate the number of days unpaid, USING THE EXCEL DAYS FUNCTION (fx).
2) Use the information above to complete the Aging of Accounts Recievable Schedule Below.
Create a formula for each age category, using the Excel IF and AND FUNCTION (fx) to determine where each customer amount belongs.
3) Prepare the adjusting journal entry for recording bad debt expense if the allowance for doubtful accounts had the following unadjusted balance:
4) Prepare the adjusting journal entry for recording bad debt expense if the Allowance for Doubtful Accounts had the following unadjusted balance:
Answer:
In the number of days unpaid column (E8), input the formula; "=DAYS(D8, C8)" then copy it down to the last item on the table.
Explanation:
Answering just the first question, the DAYS function is used to calculate the difference between day timelines. The function accepts two parameters, the first date which is the current date we are subtracting from, and the second date which is the previous date.
Sweet Shop Co. is a chain of candy stores that has been in operation for the past ten years. For each of the following transactions give the accounting effects of the adjustments required. (Enter any decreases to account balances with a minus sign.)
a. Ordered and received $12,300 worth of cotton candy machines from Candy Makers Inc., which Sweet Shop Co. will pay for in 45 days.
b. Sent a check for $6,300 to Candy Makers Inc. for the cotton candy machines from (a).
c. Received $700 from customers who bought candy on account in previous months.
d. To help raise funds for store upgrades estimated to cost $36,500, Sweet Shop Co. issued 1,300 common shares for $25 each to existing stockholders.
e. Sweet Shop Co. bought ice cream trucks for $66,000 total, paying $13,000 cash and signing a long-term note for $53,000.
Answer:
Sweet Shop Co.
Accounting Effects of Transactions:
a. Ordered and received $12,300 worth of cotton candy machines from Candy Makers Inc., which Sweet Shop Co. will pay for in 45 days.
Assets (Equipment +$12,300) = Liabilities (Accounts Payable +$12,300) + Equity
b. Sent a check for $6,300 to Candy Makers Inc. for the cotton candy machines from (a).
Assets (Cash -$6,300) = Liabilities (Accounts payable -$6,300) + Equity
c. Received $700 from customers who bought candy on account in previous months.
Assets (Cash +$700) = Liabilities + Equity (Retained Earnings +$700)
d. To help raise funds for store upgrades estimated to cost $36,500, Sweet Shop Co. issued 1,300 common shares for $25 each to existing stockholders.
Assets (Cash +$32,500) = Liabilities + Equity (Common stock +$32,500)
e. Sweet Shop Co. bought ice cream trucks for $66,000 total, paying $13,000 cash and signing a long-term note for $53,000.
Assets (Trucks +$66,000; Cash -$13,000) = Liabilities (Long-term note payable +$53,000) + Equity
Explanation:
The accounting effects of transactions show how the accounting equation will always remain in balance given each transaction's double-entry effects.
Healthy competition among businesses is good for consumers.
True or False
I say true because it seems like most likely answer.
ExxonMobil reports total assets of $188 billion and total liabilities of $87 billion. Citigroup reports total liabilities of $1,300 billion and stockholders' equity of $90 billion. Amazon reports total assets of $2.7 billion and total stockholders' equity of $0.10 billion. Nike reports an increase in assets of $1.00 billion and an increase in liabilities of $0.5 billion. Kellogg's reports a decrease in liabilities of $0.44 billion and an increase in stockholders' equity of $0.04 billion. (Enter your answers in billions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.) Required: What is the amount of stockholders' equity of ExxonMobil
Answer:
$101 billion
Explanation:
The computation of the amount of stockholders' equity of ExxonMobil is shown below:
As we know that
Total assets = Total liabilities + stockholder equity
where,
total assets is $188 billion
And, the total liabilities is $87 billion
So, the stockholder equity is
= $188 billion - $87 billion
= $101 billion
The total cost accumulated in the sales department using the reciprocal method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar): $150,050. $142,471. $102,222. $122,402. $127,778.
Answer:
$127,778
Explanation:
Calculation for total cost accumulated in the sales department using the reciprocal method
Direct operating cost$70,000
Acturial Cost allocated 24,000
Premium Ratings allocated cost 24,000
Acturial Cost allocated 6400
Premium Ratings allocated cost 2400
Acturial Cost allocated 640
Premium Ratings allocated cost 240
Acturial Cost allocated 64
Premium Ratings allocated cost 24
Acturial Cost allocated 6
Premium Ratings allocated cost 2
Acturial Cost allocated 1
Premium Ratings allocated cost 0
Total cost accumulated $127,778
Therefore total cost accumulated in the sales department using the reciprocal method is $127,778
Suppose you consider buying a bond promising to pay you $25 one year from now and then the same amount every year through the fifth year (that is, you should receive a total of five coupon payments). At the time you receive your fifth payment, you will also receive the bond's face value of $5,000. Suppose the interest rate for a riskless bond is 7%. The most you would be willing to pay for this bond is $ . Give your answer to two decimals.
Answer:
$3,667.44
Explanation:
The amount you would be willing to pay today can be determined by finding the present value of the cash flows
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow each year from year 1 to 4 = $25
Cash flow in year 5 = $25 + $5000
I = 7%
Present value = $3,667.44
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Dawg Town produces dog tags and bowls with the name of your dog permanently etched into a stainless steel label. Indirect etching costs are allocated to tags and bowls based on the amount of time spent on the laser etching machine. The company has budgeted etching costs of $4,224 per month and expects to spend 4,800 hours on the etching labels each month. Each dog tag uses 24 minutes and each bowl uses 6 minutes of laser etching time. How much of the etching costs will be allocated to each dog tag
Answer:
the amount of etching cost that should be allocated to each dog tag is $0.35
Explanation:
The computation of the amount of etching cost that should be allocated to each dog tag is as followS:
= (Budgeted etching cost ÷ (spending hours × 60)) × number of minutes used
= ($4,224 ÷ (4,800 hours × 60)) × 24 minutes
= $0.35
Hence, the amount of etching cost that should be allocated to each dog tag is $0.35
how can you ensure that your personal brand remains credible
Reynolds Manufacturers Inc. has estimated total factory overhead costs of $134,200 and expected direct labor hours of 12,200 for the current fiscal year. If Job 117 incurs 1,030 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for a.$1,030 b.$134,200 c.$11,330 d.$67,100
Answer:
c. 11,330
Explanation:
With regards to the above, we need to compute first, predetermined overhead rate allocation
= Estimated aggregate overhead / Estimated number of labor hours
= $134,200 / 12,200
= $11 per hour
The overhead cost to be allocated to job no 117 will be;
= Number of direct labor hours × predetermined rate of overhead
= 1,030 × $11
= $11,330
Suppose two projects have the same expected business value. Project A has a very high estimated business value along with a high probability of failure. Project B has a much lower estimated business value along with a low probability of failure. If you could do only one of the projects, which one would you choose and under what conditions
Answer:
Project B has a much lower estimated business value along with a low probability of failure.
Explanation:
In order to do only one type of project that has the same business values. I would choose a project that has a low probability of failure. Though it has a low value but in the long run will lead to economic profit and shareholders value. For selection, we need to find out the benefits gained by the project.If a person could choose only one project he must select Project B as it has a much lower estimated business value along with a low probability of failure.
What are the selection criteria for the project?Project B would be a better option to choose as it is giving less risk to business as compared to Project B in terms of failure. However, the value of Project B is less but it has the potential to generate economic profits in the long run.
Therefore, by evaluating the cost and benefit from two projects shareholder's interest would be intact more through Project B.
Learn more about project managemnet here:
https://brainly.com/question/26266895
When you are able to feel and touch product, it is called
Answer:
In a Proctor & Gamble study published in 2009, spanning 21 years total, found that customers who were able to feel merchandise were willing to pay more than those who hadn't. This phenomenon is called “The Endowment Effect." Basically, we make an emotional connection with what we touch.
Explanation:
Hope this helps
From,
1kvibing
The feel and touch of the products are called the endowment effect.
What is an endowment effect?An endowment effect is an effect that is associated with behavioral economics and the effect is that people find more likely to retain an object they own rather than acquire the object that they don't own.
The company named P and G published that clients were able to feel merchandised were willing to pay more than those who had not.
Find out more information about the product.
brainly.com/question/10873737
As CEO of ​, knows it is important to control costs and to respond quickly to changes in the highly competitive​ boat-building industry. When Consulting proposes that invest in an ERP​ system, she forms a team to evaluate the​ proposal: the plant​ engineer, the plant​ foreman, the systems​ specialist, the human resources​ director, the marketing​ director, and the management accountant. A month​ later, management accountant reports that the team and estimate that if implements the ERP​ system, it will incur the following​ costs:
a. $435,000 in software costs
b. $95,000 to customize the ERP software and load Aqua Marine's data into the new ERP system
c. $105,000 for employee training
The team estimates that the ERP system should provide several benefits:
a. More efficient order processing should lead to savings of $105,000.
b. Streamlining the manufacturing process so that it maps into the ERP system will create savings of $125,000.
c. Integrating purchasing, production, marketing, and distribution into a single system will allow Aqua Marine to reduce inventories, saving $225,000.
d. Higher customer satisfaction should increase sales, which, in turn, should increase profits by $155,000.
Requirements
a. If the ERP installation succeeds, what is the dollar amount of the benefits?
b. Should Aqua Marine install the ERP system? Why or why not? Show your calculations.
c. Why did Easton create a team to evaluate Rose's proposal? Consider each piece of cost-benefit information that management accountant Cole reported. Which person on the team is most likely to have contributed each item? (Hint: Which team member is likely to have the most information about each cost or benefit?)
Answer:
a.) Total benefit if the ERP installation succeeds = $610,000
b.) They should not install the ERP system.
c.) For Estimating software costs - Systems specialist
For Estimating cost of loading data into the new ERP system - Management accountant , Systems specialist
For Customize the ERP software - Management accountant , Systems specialist
For Estimating customization costs - All team members
For Estimating training costs - Human resource director
For Savings from more efficient order processing - Systems specialist , Management accountant
For Savings from streamlining the manufacturing process - Plant engineer , Plant foreman
For Evaluating the effects of integrating purchasing, production, marketing, and distribution into a single system - Plant foreman
For Estimating increase in sales from higher customer satisfaction - Marketing director
For Estimating benefits and costs - All team members
For Evaluating the effects of integrating purchasing, production, marketing, and distribution into a single system - Plant foreman
For Estimating increase in sales from higher customer satisfaction - Marketing director
For Estimate benefits and costs - All team members
Explanation:
a.)
If the ERP installation succeeds , the dollar amount of the benefit is as follows :
From more efficient order processing savings = $105,000
From streamlining the manufacturing process savings = $125,000
From reduce inventories savings = $225,000
From increased sales profit = $155,000
⇒Total benefit = $ 105,000 + 125,000 + 225,000 + 155,000
= $610,000
⇒Total benefit if the ERP installation succeeds = $610,000
b.)
Firstly check the Costs for installation of ERP:
Software cost = $435,000
Customizing ERP and loading data cost = $95,000
Employee training cost = $105,000
⇒Total cost = $ 435,000 + 95,000 + 105,000
= $635,000
⇒Total cost = $635,000
Now,
As we have
Total Benefit in installation of ERP = $610,000
Total cost in installation of ERP = $635,000
⇒Net benefit = $610,000 - $635,000 = -$ (25,000)
∴ we get
If Aqua Marine install the ERP system , them they face loss.
So, They should not install the ERP system.
c.)
For Estimating software costs - Systems specialist
For Estimating cost of loading data into the new ERP system - Management accountant , Systems specialist
For Customize the ERP software - Management accountant , Systems specialist
For Estimating customization costs - All team members
For Estimating training costs - Human resource director
For Savings from more efficient order processing - Systems specialist , Management accountant
For Savings from streamlining the manufacturing process - Plant engineer , Plant foreman
For Evaluating the effects of integrating purchasing, production, marketing, and distribution into a single system - Plant foreman
For Estimating increase in sales from higher customer satisfaction - Marketing director
For Estimating benefits and costs - All team members
For Evaluating the effects of integrating purchasing, production, marketing, and distribution into a single system - Plant foreman
For Estimating increase in sales from higher customer satisfaction - Marketing director
For Estimate benefits and costs - All team members
In the text, we supposed a college education raised a person's wage by $30,000 per year, from $40,000 to $70,000. Assume the relevant interest rate is 3%, there is no growth in wages, and you are expected to retire at 65 years old after you graduate high-school. (a): Suppose you are a 18 year old graduating high school senior deciding whether or not to go to college. What is the present discounted value of your labor earnings if you chose not to attend college
Answer:
$1,010,668
Explanation:
if you choose not to attend college, you should be working for 65 - 18 = 47 years
your expected annual salary is $40,000
the present value of your future earnings = $40,000 x PV annuity factor
PV annuity factor = = [1 - 1/(1 + i)ⁿ] / i = [1 - 1/(1 + 0.03)⁴⁸] / 0.03 = 25.2667
present value of future earnings = $40,000 x 25.2667 = $1,010,668
A company issues $25300000, 7.8%, 20-year bonds to yield 8.0% on January 1, Year 17. Interest is paid on June 30 and December 31. The proceeds from the bonds are $24799240. Using effective-interest amortization, what will the carrying value of the bonds be on the December 31, Year 17 balance sheet?" "$24,804,508.00 " "$24,809,990.00 " "$24,825,593.00 " "$25,300,000.00 "
Answer:
$1,960,623
($24,505,180 × .04) + ($24,510,387 × .04) = $1,960,623.
Explanation:
GoodStuff, Inc. is considering investing in Project Awesome. The Project costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. GoodStuff, Inc.'s required rate of return for the project is 10%. The internal rate of return for the Project is
Answer:
35.27%
Explanation:
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
IRR can be calculated with a financial calculator
Cash flow in year 0 = -$120,000
Cash flow in year 1 = $64,000
Cash flow in year 2 = $67,000
Cash flow in year 3 = $56,000
Cash flow in year 4 = $45,000
IRR = 35.27%
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
This type of insurance pays to fix damages that you cause, but does not cover your own car
A professor who teaches at a university is part of which type of career?
A. Education
B. Office administration
C. Management
D. Transportation
Answer:
A
Explanation:
Education
Answer:
a
Explanation:
Novak Corp. bought equipment on January 1, 2022. The equipment cost $390000 and had an expected salvage value of $35000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be
Answer:
$177,000
Explanation:
In order to find the book value of the equipment we need to find the amount of depreciation per year. To do this we need to subtract the salvage value from the initial cost and then simply divide by 5 which is the life span of the equipment...
(390,000 - 35,000) / 5 = x
355,000 / 5 = x
71,000 = x
Now we see that the equipment will depreciate by $71,000 per year. In three years the depreciation would be
71,000 * 3 = 213,000
Now we simply subtract this value from the initial cost to get the book value in the third year
390,000 - 213,000 = 177,000
EVO, Inc. is evaluating a project that will have a life of four years. The operating cash flow each year is expected to be $51,500. There is a need to invest in net working capital at the start of the project in the amount of $4,250. EVO, Inc. will recover this investment in net working capital at the end of the project. EVO also needed to spend $22,400 on equipment in order to get the project started. The book value for this equipment when the project is finished, is estimated to be $4,660. This equipment will be sold at the end of the project for an estimated sales price of $5,670. EVO has a tax rate relevant to this analysis of 34 percent. Calculate the amount of cash flow in year 4 of this project
Answer:
$61,763.40
Explanation:
The computation of the amount of cash flow in year 4 is shown below:
Terminal Cash flow in year 4 is
= operating cash flow + net working capital invested + sale price of equipment - tax on profit from sale
= operating cash flow + net working capital invested + sale price of equipment - tax rate × (Sale price - book value)
= $51,500 + $4,250 + $5,670 - 34% × ($5,670 - $4,660)
= $61,763.40
Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.
Cost of Goods Sold $ 65,000
Work-in-Process Inventory, Beginning 10,500
Work-in-Process Inventory, Ending 9,000
Selling and Administrative Expense 15,000
Finished Goods Inventory, Ending 15,000
Finished Goods Inventory, Beginning?
Direct Materials Used ?
Factory Overhead Applied 12,000
Operating Income 14,000
Direct Materials Inventory, Beginning 11,000
Direct Materials Inventory, Ending 6,000
Cost of Goods Manufactured 60,000
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Fisher, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount of direct materials used?
Answer:
See below
Explanation:
Direct materials used = Cost of goods manufactured - work in process inventory, beginning - factory overhead applied - direct labor + work in process inventory, ending
= $60,000 - $10,500 - $12,000 - (1.5 × $12,000) + $9,000
=
Adriana and Belen are partners who share income in the ratio of 3:2 and have capital balances of $50,000 and $90,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $90,000. How much cash should be distributed to Adriana
Answer:
$54,000
Explanation:
First, we add the ratios together to determine the total parts:
3+2= 5
Next, we divide the cash balance of $90,000 by the total parts:
$90,000/5 = $18,000
To find the amount of cash distributed to Adriana we multiply by her ratio:
5*18,000 = $54,000.
As a graduating senior, Chun Kumora of Manhattan, Kansas, is eager to enter the job market at an anticipated annual salary of $54,000. c. To beat inflation, (note that inflation is usually about 3%), what is the minimum raise (in dollars) that Chun would need to receive next year
Answer: See explanation
Explanation:
Inflation is when the price level of goods and services increase in an economy.
Since Kansas, is eager to enter the job market at an anticipated annual salary of $54,000 while inflation is 3%, the minimum raise that Chun would need to receive next year would be:
= 3% × $54000
= 3/100 × $54000
= 0.03 × $54000
= $1620
The minimum raise will be $1620, therefore he'll be expecting a salary of $54000 + $1620 = $55620
During its first five years of operations, a company reports net income and pays dividends as follows. Required: Calculate the balance of retained earnings at the end of each year. Note that retained earnings will always equal $0 at the beginning of year 1.
Answers:
Years:
$700$1,900$3,000$5,200$8,600Explanation:
Retained earnings for the year is:
= Beginning retained earnings + Net income - Dividends
Year 1
= 0 + 1,200 - 500
= $700
Year 2
= 700 + 1,700 - 500
= $1,900
Year 3
= 1,900 + 2,100 - 1,000
= $3,000
Year 4
= 3,000 + 3,200 - 1,000
= $5,200
Year 5
= 5,200 + 4,400 - 1,000
= $8,600
Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.
Year 1 Year 2
Amounts billed to clients for services rendered $ 170,000 $ 220,000
Cash collected from clients 160,000 190,000
Cash disbursements
Salaries paid to employees for services rendered during the year 90,000 100,000
Utilities 30,000 40,000
Purchase of insurance policy 60,000 0
In addition, you learn that the firm incurred utility costs of $35,000 in year 1, that there were no liabilities at the end of year 2, no anticipated bad debts on receivables, and that the insurance policy covers a three-year period.
Required:
1. & 3. Calculate the net operating cash flow for years 1 and 2 and determine the amount of receivables from clients that the firm would show in its year 1 and year 2 balance sheets prepared according to the accrual accounting model.
2. Prepare an income statement for each year according to the accrual accounting model.
Revenues not attempted not attempted
Expenses:
Salaries 90,000selected answer correct 100,000selected answer correct
Utilities 30,000selected answer incorrect 40,000selected answer incorrect
Insurance 60,000selected answer incorrect 0selected answer incorrect
Net income (loss)
Answer:
Pete, Pete, and Roy
1. Net operating cash flow for years 1 and 2
Year 1 Year 2
Cash collected from clients $160,000 190,000
Cash disbursements
Salaries paid to employees 90,000 100,000
Utilities 30,000 40,000
Purchase of insurance policy 60,000 0
Total disbursements $180,000 $140,000
Net operating cash flow ($20,000) $50,000
3. Amount of receivables in year 1 and 2:
Year 1 Year 2
Beginning balance $10,000
Amounts billed to clients for
services rendered $ 170,000 $ 220,000
Cash collected from clients 160,000 190,000
Balance $10,000 $40,000
2. Pete, Pete, and Roy
Income Statements for years 1 and 2:
Year 1 Year 2
Service Revenue $ 170,000 $ 220,000
Expenses:
Salaries expense 90,000 100,000
Utilities expense 35,000 35,000
Insurance expense 20,000 20,000
Total expenses $145,000 $155,000
Net income $25,000 $65,000
Explanation:
a) Data and Calculations:
Year 1 Year 2
Amounts billed to clients for
services rendered $ 170,000 $ 220,000
Cash collected from clients 160,000 190,000
Cash disbursements
Salaries paid to employees 90,000 100,000
Utilities 30,000 40,000
Purchase of insurance policy 60,000 0
Utility costs incurred in year 1 = $35,000
Net operating cash flow for years 1 and 2
Year 1 Year 2
Cash collected from clients $160,000 190,000
Cash disbursements
Salaries paid to employees 90,000 100,000
Utilities 30,000 40,000
Purchase of insurance policy 60,000 0
Total disbursements $180,000 $140,000
Net operating cash flow ($20,000) $50,000
Insurance expense per year = $60,000/3 = $20,000
Utilities for year 1 = $35,000
Utilities for year 2 = $35,000
Two independent companies, Denver and Bristol, each own a warehouse, and they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:
Denver Bristol
Cost $80,000 $31,500
Accumulated depreciation 60,000 25,000
Fair value 17,000 17,000
Required:
1. Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
2. Assuming the exchange does not have commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
Answer and Explanation:
The journal entries are shown below
1.
On Denver books
Equipment Dr $17,000
Accumulated depreciation $60,000
Loss on sale of equipment $3,000
To Equipment $80,000
(Being equipment recorded)
On Bristol books
Equipment Dr $17,000
Accumulated depreciation $25,000
To Gain on sale of equipment $10,500
To Equipment $31,500
(Being equipment recorded)
2.
On Denver books
Equipment Dr $20,000
Accumulated depreciation $60,000
To Equipment $80,000
(Being equipment recorded)
On Bristol books
Equipment Dr $6,500
Accumulated depreciation $25,000
To Equipment $31,500
(Being equipment recorded)
9. Galloway, Inc. has an odd dividend policy. The company has just paid a dividend of $7 per share and has announced that it will increase the dividend by $2 per share for each of the next 5 years, and then never pay another dividend. How much are you willing to pay per share today to buy this stock if you require a 15 percent return
Answer:
P0 = $41.7196815 rounded off to $41.72
Explanation:
To calculate the price of the stock today, we will use the discounted cashflow model. The formula for price under this model will be the present value of the expected future cash flows. The formula is as follows,
P0 = D1 / (1+r) + D2 / (1+r)^2 + ... + Dn / (1+r)^n
Where,
D1, D2,...,Dn are the dividends in year 1, years 2 and so on to year nr is the required rate of returnP0 = (7+2) / (1+0.15) + (7+2+2) / (1+0.15)^2 + (7+2+2+2) / (1+0.15)^3 +
(7+2+2+2+2) / (1+0.15)^4 + (7+2+2+2+2+2) / (1+0.15)^5
P0 = $41.7196815 rounded off to $41.72
The capital balance for Messalina is $210,000 and for Romulus is $140,000. These two partners share profits and losses 60 percent (Messalina) and 40 percent (Romulus). Claudius invests $100,000 in cash in the partnership for a 20 percent ownership. The bonus method will be used. What are the capital balances for Messalina, Romulus, and Claudius after this investment is recorded
Answer: $216,000 , $144,000 , $90,000
Explanation:
The capital balances for Messalina, Romulus, and Claudius after this investment is recorded will be calculated thus:
Messalina:
Capital balance: $210,000
Bonus share: 60% × $10000 = $6,000
New capital balance: $216,000
Romulus:
Capital balance: $140,000
Bonus share: 40% × $10000 = $4,000
New capital balance: $144,000
Claudius:
Capital balance: $100,000
Bonus share: 10% × $10000 = ($10,000)
New capital balance: $90,000
The answer is $216,000 , $144,000 , $90,000
