Answer: c. $18,000 increase
Explanation:
Department margin was $100,000 in September.
October Margin = Sales - Variable Costs - Traceable Fixed Costs
= (2,000 *( 210 - 25 - 80 - 15) ) - 62,000
= (2,000 * 90) - 62,000
= $118,000
= October Margin - September Margin
= 118,000 - 100,000
= $18,000 increase
TB MC Qu. 9-251 Turrubiates Corporation makes a product that ... Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity 6.7 liters per unit Standard price $ 1.20 per liter Standard cost $ 8.04 per unit The company budgeted for production of 2,500 units in April, but actual production was 2,600 units. The company used 18,000 liters of direct material to produce this output. The company purchased 18,800 liters of the direct material at $1.30 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is:
Answer:
Direct material quantity variance= $696 unfavorable
Explanation:
Giving the following information:
Standard quantity 6.7 liters per unit
Standard price $ 1.20 per liter
Actual production was 2,600 units.
The company used 18,000 liters of direct material to produce this output.
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 6.7*2,600= 17,420
Direct material quantity variance= (17,420 - 18,000)*1.2
Direct material quantity variance= $696 unfavorable
Selected data concerning operations of Cascade Manufacturing Company for the past fiscal year follow:
Raw materials used ..... $300,000
Total manufacturing costs charged to production during the year (includes raw materials, direct labor, and manufacturing overhead applied at a rate of 60 percent of direct labor costs) ..... 681,000
Cost of goods available for sale ...... 826,000
Selling and general expenses ...... 30,000
Beginning Inventories
Raw materials ...... $70,000
Work-in-process...... 85,000
Finished goods ...... 90,000
Ending Inventories
Raw materials ...... $80,000
Work-in-process ...... 30,000
Finished goods ....... 110,000
Determine each of the following:
a. Cost of raw materials purchased
b. Direct labor costs charged to production
c. Cost of goods manufactured
d. Cost of goods sold
Answer:
a. Purchases $310,000
b. Direct labor $ 238,125
c. Cost of goods manufactured $ 736,000
d. Cost of goods sold $ 716,000
Explanation:
Cascade Manufacturing Company
Raw materials used ..... $300,000
Add Raw materials Ending ...... $80,000
Less Raw materials Beginning...... $70,000
a. Purchases $310,000
Add Raw materials Ending to Raw materials used and subtract Raw materials Beginning to get Raw materials Purchases.
Total manufacturing costs $ 681,000
Less Raw materials used ..... $300,000
Conversion Costs $ 381,000
Conversion Costs = Direct Labor + Factory Overhead
$ 381,000= x + 0.6 x
$ 381,000= 1.6x
b. x= Direct labor = $ 381,000/1.6= $ 238,125
Factory Overhead= 0.6 *$ 238,125= $ 142875
Find Conversion Costs and then apply the ratio to get the direct labor costs.
c.
Cascade Manufacturing Company
Cost of goods manufactured
Raw materials Beginning...... $70,000
Add Purchases $310,000
Less Raw materials Ending ...... $80,000
Raw materials used ..... $300,000
Add Direct labor $ 238,125
Factory Overhead $ 142875
Total manufacturing costs $ 681,000
Add Work-in-process Beginning...... 85,000
Cost of goods available for manufacture $ 766,000
Less Work-in-process Ending...... 30,000
Cost of goods manufactured $ 736,000
Add and subtract as above to get the Cost of goods manufactured.
d. Cascade Manufacturing Company
Cost of goods sold
Raw materials Beginning...... $70,000
Add Purchases $310,000
Less Raw materials Ending ...... $80,000
Raw materials used ..... $300,000
Add Direct labor $ 238,125
Factory Overhead $ 142875
Total manufacturing costs $ 681,000
Add Work-in-process Beginning...... 85,000
Cost of goods available for manufacture $ 766,000
Less Work-in-process Ending...... 30,000
Cost of goods manufactured $ 736,000
Add Finished goods Beginning...... 90,000
Cost of goods available for sale $ 826,000
Less Finished goods Ending....... 110,000
Cost of goods sold $ 716,000
Add and subtract as above to get the Cost of goods sold.
A divisional manager receives a bonus based on 10% of the residual income from the division. During the current year, the division reported revenues of $1,000,000 and expenses of $500,000. The division had $2,000,000 in average operating assets. The minimum required rate of return for the division was 15%. What was the amount of the manager's bonus
Answer:
The amount of the manager's bonus is $20,000
Explanation:
Residual income = Net income - ( average operating assets * minimum rate of return)
Net income= Revenues - Expenses = $1,000,000 - $500,000
Net income = $500,000
Residual income = 500,000 - (2,000,000 * 15%)
= 500,000 - $300,000
= $200,000
Managers bonus = $200,000 * 10%
Managers bonus = $20,000
True or false: A flexible budget reporting sales volumes at three different levels will have the same fixed costs.
Answer:
True
Explanation:
A flexible budget is a budget in which you modify the activity levels to reflect changes in sales to help the company adjusts to different circumstances that may occcur. Also, in this budget the fixed costs remain constant and the variable costs change with the activity levels. According to this, the answer is that the statement that says that a flexible budget reporting sales volumes at three different levels will have the same fixed costs is true.
It is true that a flexible budget presenting sales volumes at three levels would have the same fixed expenses.
Flexible budget:A flexible budget is one in which activity levels are adjusted to reflect sales performance, allowing the organization to respond to unforeseen events.
Furthermore, in this budget, fixed expenditures stay constant while variable costs vary according to activity levels. The assumption that a flexible budget reporting sales volumes at three distinct levels will have the same fixed expenses.
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Harry and Sally formed the Evergreen partnership by contributing the following assets in exchange for a 50 percent capital and profits interest in the partnership.
Basis Fair Market Value Harry:
Cash $30,000 $30,000
Land $100,000 $120,000
Totals $130,000 $150,000
Sally:
Equipment used in business $200,000 $150,000
Totals $200,000 $150,000
a. How much gain or loss will Harry recognize on the contribution?
b. How much gain or loss will Sally recognize on the contribution?
c. Should Sally consider selling the property to the partnership rather than contributing it?
A. Yes
B. No
Answer:
a) $0
Generally, partners recognize gain on property contributed to a partnership only when the cash they are deemed to receive from debt relief exceeds their basis in the partnership prior to the deemed distribution. Harry did not have any debt relief.
b) $0.
Partners may never recognize loss when property is contributed to a partnership even when they are relieved of debt.
c) Sally should consider selling the property to the partnership rather than contributing it. By selling the property, she could recognize the $50,000 built-in loss on the equipment.
The firm is an all-equity firm with assets worth $350 million and 100 million shares outstanding. It plans to borrow $100 million and use these funds to repurchase shares. The firm’s marginal corporate tax is 21%, and it plans to keep its outstanding debt equal to $100 million permanently. If the firm manages to repurchase shares at $4 per share, what is the per share value of equity for the leveraged firm? A) $2.71 per share B) $3.5 per share C) $3.61 per share D) $3.71 per share E) $4 per share
Answer:
B) $3.5 per share
Explanation:
Assets = Existing assets + Tax shield
= $350 million + 21% * $100 million
= $371 million
Equity = Asset - Debt
= $371 million - $100 million
= $271 million
The Shares are repurchase at $4
At this price, the firm would have 100 - 100/4 = 75 million shares outstanding .
Worth of shares outstanding = Equity / Outstanding shares
Worth of shares outstanding = ($271 million / 75 million shares)
Worth of shares outstanding = $3.61 per shares
How is one product determined to specialize in between the two
Answer:
Specialization is a method of production whereby an entity focuses on the production of a limited scope of goods to gain a greater degree of efficiency. Many countries, for example, specialize in producing the goods and services that are native to their part of the world, and they trade them for other goods and services.
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In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome
Answer: risk
Explanation:
In the decision making under risk, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.
Unlike in uncertainties whereby the decision maker won't know the probability of the occurrence of the outcomes, in risk, one is aware.
Eakins Inc.'s common stock currently sells for $15.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings
Answer:
1.12%
Explanation:
By how much would the cost of new stock exceed the cost of retained earnings = Cost of new equity - Cost of retained earnings
Cost of retained earnings = ((2.75 * 70%) / 15) + 6.00%
Cost of retained earnings = ((2.75 * 0.7) / 15) + 0.06
Cost of retained earnings = 0.1283 + 0.06
Cost of retained earnings =0.1883
Cost of retained earnings = 18.83%
Cost of new equity= ((2.75 * 70%) / (15 * (1 - 8%) ) + 6.00%
Cost of new equity= 19.95%
Hence, Cost of new equity - Cost of retained earnings
= 19.95% - 18.83%
= 1.12%
Steady Company's stock has a beta of . If the risk-free rate is and the market risk premium is , what is an estimate of Steady Company's cost of equity?
The question is incomplete as it misses the figures. The following is the complete question.
Steady Company's stock has a beta of 0.21. If the risk-free rate is 6.2% and the market risk premium is 6.9%, what is an estimate of Steady Company's cost of equity?
Answer:
The cost of equity is 0.07649 or 7.649%
Explanation:
The required rate of return or cost of equity capital is the rate required by the investors to invest in a stock based on the systematic risk of the stock as measure by the beta. The required rate of return or cost of equity can be calculated using the CAPM equation. The CAPM equation is,
r = rRF + Beta * rpM
Where,
rRf is the risk free raterpM is the risk premium on marketr = 0.062 + 0.21 * 0.069
r = 0.07649 or 7.649%
A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value at which the bond will trade if the current YTM is 6.1%?
a $411.40
b. $553.15
c $663.78
d. $885.05
e. $774.42
Answer:
The bond will trade at a. $411.40.
Explanation:
Use the following data to find the price, PV of the bond.
n = 15
pmt = $0
p/yr = 1
fv = $1,000
ytm = 6.10 %
pv = ?
Using a financial calculator, the bond price (PV) is $411,4047 or $411,40
Conclusion :
The bond will trade at $411.40 if the current YTM is 6.1%.
It will cost $3,000 to acquire a small ice cream cart. Cart sales are expected to be $1,400 a year for three years. After the three years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the payback period of the ice cream cart?
Answer:
2.14 years
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flows = $3,000 / $1,400 = 2.14 years
Which clause in a mortgage allows a lender to increase the interest rate? A.) Defeasance B.) Escalation C.) Acceleration D.) Exculpatory
Answer:
A
Explanation:
An increase in taxes when the economy is above full employment ______ aggregate demand and real GDP, and the price level ______.
Question options :
A. increases; falls
B. decreases; falls
C. does not change; does not change
D. increases; rises
Answer:
B. decreases; falls
Explanation:
let us understand this by looking at the logic behind it. First when the economy is at full employment, there is high demand since there will be increase in money supply through increased circulation from salaries and wages. If government increases taxes, this will reduce purchasing power as money supply will be reduced and therefore demand will be reduced. Also price will fall since according to the Law of demand and supply, if demand is more than supply, price will increase
The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
Answer:
Operating Activity
Explanation:
The Indirect method, reconciles the Operating Profit to the Operating Cash Flow by adjusting the following items (1) Non Cash flow items previously added or deducted from Operating Profit and (2) Changes in Working Capital items.
Amortization of bond premium is an item of non-cash flow that was previously deducted from Operating Profit and needs to be added back.
1. A research project began with the selection of women who had recently had abdominal surgery. The project matched those women with controls and continued with measurements of abdominal muscle strength for both groups every three months for a year. This project was: A. Prospective study B. Retrospective study C. Experimental study D. Cross sectional study
Answer:
Abdominal rectus diastasis is a condition where the abdominal muscles are separated by an abnormal distance due to widening of the linea alba causing the abdominal content to bulge. It is commonly acquired in pregnancies and with larger weight gains. Even though many patients suffer from the condition, treatment options are poorly investigated including the effect of physiotherapy and surgical treatment. The symptoms include pain and discomfort in the abdomen, musculoskeletal and urogynecological problems in addition to negative body image and impaired quality of life. The purpose of this review was to give an overview of treatment options for abdominal rectus diastasis.
Results: The first treatment step is physiotherapy. However, evidence is lacking on which regimen to use and success rates are not stated. The next step is surgery, either open or laparoscopic, and both surgical approaches have high success rates. The surgical approach includes different plication techniques. The recurrence and complication rates are low, complications are minor, and repair improves low back pain, urinary incontinence, and quality of life. Robotic assisted surgery might become a possibility in the near future, but data are still lacking.
Conclusions: Evidence on what conservatory treatment to use is sparse, and more research needs to be done. Both open and laparoscopic surgery have shown positive results. Innovative treatment by robotic assisted laparoscopic surgery has potential, however, more research needs to be done in this area as well. An international guideline for the treatment of rectus diastasis could be beneficial for patients and clinicians.
Keywords: rectus diastasis, treatment options, physiotherapy, surgery, abdominoplasty, laparoscopy, robot assisted surgery
who are the customers for textbooks? What do these customers want in terms of goods and services related to textbooks? From the publishers point of view, who are the key customer?
Answer:
the customers for textbooks are students and schools
Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $millions)
2006 2005
Total sales 610.1 578.8
Cost of sales (500.2) (355.3)
Gross profit 109.9 223.5
Selling, general, and
administrative expenses (40.5) (38.7)
Research and development (24.6) (21.8)
Depreciation and amortization (3.6) (3.9)
Operating income 41.2 159.1
Other income −− −−
Earnings before interest and taxes (EBIT) 41.2 159.1
Interest income (expense) (25.1) (15.3)
Pretax income 16.1 143.8
Taxes (5.5) (50.33)
Net income 10.6 93.47
Price per share $16 $15
Sharing outstanding (millions) 10.2 8.0
Stock options outstanding (millions) 0.3 0.2
Stockholders' Equity 126.6 63.6
Total Liabilities and Stockholders' Equity 533.1 386.7
Refer to the income statement above. Luther's operating margin for the year ending December 31, 2005 is closest to:_________.
A. 13.7413.74%
B. 21.9921.99%
C. 27.4927.49%
D. 32.9932.99%
Answer:
27.48%
Explanation:
Calculation for Luther's operating margin for the year ending December 31, 2005
Using this formula
Operating margin = Operating income / Sales
Let plug in the formula
Operating margin= 159.1/578.8
Operating margin=0.2748*100
Operating margin=27.48%
Therefore Luther's operating margin for the year ending December 31, 2005 is 27.48%
Which of these conditions helped establish the foundation for a market revolution in the United States
Question Completion:
Choices: Rapid improvements in transportation and communication; the production of goods for a cash market; and the use of inventions and innovations to produce goods for a mass market.
Answer:
The condition that helped to establish the foundation for a market revolution in the United States is:
Rapid improvements in transportation and communication
Explanation:
Rapid improvements in transportation and communication spurred innovations. With innovations, capitalism was born. Innovations needed factories for mass production. In turn, according to American History, "factories and mass production increasingly displaced individual artisans and farmers," who survived at subsistent levels. Large farms grew and produced crops for distant markets, no longer only for family and local markets. Most of the crops were further processed, packaged, preserved, and shipped through cheap transportation systems like the Erie Canal, using steamboats. And the rest, they say, is history.
Sloan Transmissions inc.,has the following estimates for its new gear assembly project: price=$2,200 per unit., variable cost= $440 per unit., fixed costs = $1.6 million., quantity = 90,000 units. suppose the company believes all of its estimates are accurate only to
Answer:
Best case
Price 2,640
Variable cost per unit 352
Fixed cost 1.28 million
Quantity 108,000 units
Worst case
Price 1,760
Variable cost per unit 528
Fixed cost 1.92 million
Quantity 72,000 units
Explanation:
Based on the information given in the best case expenses would be 20% lower while the incomes will be 20% higher.
Calculation for the price
Price = 2,200 ×(1+0.20)
Price=2,200×1.2
Price = 2,640
Calculation for Variable cost per unit
Variable cost per unit = 440× (1-0.20)
Variable cost per unit=440×0.80
Variable cost per unit= 352
Calculation for fixed cost
Fixed cost = 1.60 million ×(1-0.20)
Fixed cost=1.60 million× 0.80
Fixed cost= 1.28 million
Calculation for the Quantity
Quantity = 90,000 × (1+0.20)
Quantity =90,000×1.2
Quantity=108,000units
Therefore, Best case will be:
Price 2,640
Variable cost per unit 352
Fixed cost 1.28 million
Quantity 108,000units
Based on the information given in the worst case expenses would be 20% higher while incomes would be 20% lower.
Calculation for the price
Price = 2,200 × (1-0.20) = 1080
Price=2,200 ×0.8
Price=1,760
Calculation for the Variable cost per unit
Variable cost per unit = 440 × (1+0.20)
Variable cost per unit=440× 1.2
Variable cost per unit= 528
Calculation for Fixed cost
Fixed cost = 1.60 million × (1+0.20)
Fixed cost=1.60 million×1.2
Fixed cost= 1.92 million
Calculation for the Quatity
Quantity = 90,000 ×(1-0.20)
Quantity=90,000×0.8
Quantity= 72,000 units
Therefore Worst case will be:
Price 1,760
Variable cost per unit 528
Fixed cost 1.92 million
Quantity 72,000 units
All of the following statements regarding convertible bonds are true except:_________.
A. Holders of convertible bonds can generally decide whether to convert to stock.
B. Holders of convertible bonds have the potential to profit from increases in stock price.
C. Holders of convertible bonds can choose when to convert to stock.
D. Holders of convertible bonds have the option to not convert and continue receiving bond interest payments and par value at maturity.
E. Holders of convertible bonds can choose how many shares of stock to receive at conversion.
Answer: Holders of convertible bonds can choose how many shares of stock to receive at conversion
Explanation:
A convertible bond is a debt security that yields the payment of interest, but can also be converted into equity shares or common stock that are predetermined.
The option that holders of convertible bonds can choose how many shares of stock to receive at conversion is wrong. This is because the number I shares that will be eventually converted will already have been fixed.
Given the following data for Vinyard Corporation:
D=1000
V=4000
E=3000
V=4000
Calculate the proportions of debt (D/V) and equity (E/V) for the firm that you would use for
estimating the weighted average cost of capital (WACC):
A. 40% debt and 60% equity
B. 50% debt and 50% equity
C. 25% debt and 75% equity
D. none of the given values
Answer:
C
Explanation:
D / V = 1000 / 4000
Dividing 1000 by 4000 gives 0.25 = 25%
E / V = 3000 / 4000
Dividing 3000 by 4000 gives 0.75 = 75%
Harwell Company manufactures automobile tires. On July 15, 2018, the company sold 1,300 tires to the Nixon Car Company for $50 each. The terms of the sale were 3/10, n/30. Harwell uses the gross method of accounting for cash discounts. Required: 1. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on July 23, 2018. 2. Prepare the journal entries to record the sale on July 15 (ignore cost of goods) and collection on August 15, 2018
Answer and Explanation:
The Journal entry is shown below:-
1. a. Accounts Receivable Dr, $65,000 (1,300 × $50)
To Sales revenue $65,000
(Being sales revenue is recorded)
b. Cash Dr, $63,050
Sales discount Dr, $1,950 ($65,000 × 3%)
To Accounts Receivable $65,000
(Being collection is recorded)
2. a. Accounts Receivable Dr, $65,000
To Sales revenue $65,000
(Being sales revenue is recorded)
Cash Dr, $65,000
To Accounts Receivable $65,000
(Being collection is recorded)
Carlos and Deborah are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and corn on the rest.
Rye Corn
(Bushels per acre) (Bushels per acre)
Carlos 18 6
Deborah 28 7
___________ has an absolute advantage in the production of rye, and _________ has an absolute advantage in the production of corn. Carlos's opportunity cost of producing 1 bushel of corn is___________ bushels of rye, whereas Deborah's opportunity cost of producing 1 bushel of corn is ___________ bushels of rye. Because Carlos has a ___________ opportunity cost of producing corn than Deborah,____________ has a comparative advantage in the production of corn, and____________ has a comparative advantage in the production of rye.
Answer:
Deborah
Deborah
3
4
lower
Carlos
Deborah
Explanation:
a person has comparative advantage in production if he / she produces at a lower opportunity cost when compared to other people
for carlos
the opportunity cost of producing rye = 6 / 18 = 0.33
the opportunity cost of producing corn = 18 / 6 = 3
for Deborah,
the opportunity cost of producing rye = 7 / 28 = 0.25
the opportunity cost of producing corn = 28 /7 =4
Carlos has a comparative advantage in the production of corn because he produces at a lower opportunity cost when compared with Deborah
Deborah has a comparative advantage in the production of rye because he produces at a lower opportunity cost when compared with Carlos
A person has absolute advantage in production if he produces more quantity of the product when compared to other people.
Deborah has absolute advantage in the production of both rye and corn
The correct statements will be that
1. Carlos has an absolute advantage in the production of Rye
2. Deborah has an absolute advantage over the production of Corn.
3. Carlos' opportunity cost of producing 1 bushel of rye is 3 bushels of rye
4. Deborah's opportunity cost of producing 1 bushel of corn is 4 bushels of rye.
5. Carlos has a lower opportunity cost of producing corn than Deborah.
6. Deborah has a competitive advantage in the production of Corn.
7. Carlos has a competitive advantage in the production of Rye.
The production outputs of Carlos and Deborah suggests that Deborah is a more efficient farmer.
Production outputThe production output refers to the total outcome derived from the use of resources available at a given period of time, such that the two different outputs are comparable. Here, as the production output of Deborah is more in both the cases of production of rye and corn, it can be said that the production output of Deborah is more than Carlos.Hence, the correct statements regrading the production outputs of Carlos and Deborah are as aforementioned.
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A practice, favored by unions, which contractually binds employers to hire only workers who are already members of the union is called a(n):
Answer:
The correct answer is: Closed Shop.
Explanation:
To begin with, the name of "Closed Shop" refers to a type of practice well known as "pre-entry closed shop" too that unions favored with the only purpose to obligate the companies to contract workers who are already members of the union itself so in that situation both the company and the union tend to have an agreement of maintaining certain salary price for the workers so they are not in a continous fight. Moreover, this practice allow the workers to be employed by the company only if they are members of the union and as long as they are members of it.
An annuity provides for 30 annual payments. The first payment of 100 is made immediately and the remaining payments increase by 8 percent per annum. Interest is calculated at 13.4 percent per annum. Calculate the present value of this annuity.
Answer:
$1423.38
Explanation:
number of payments ( number of years )(n) = 30
first payment = $100
interest calculated at : 13.4 % = 0.134
increment rate : 8 percent = 0.08
we can calculate the present value using this Equation
= (p / (r-g)) * [1 - [(1+g)/(1+r)]^n ]
where :
p / (r-g) = 100 / (0.134 - 0.08 ) = $1852
[1 - ((1+g)/(1+r)]^n ) = (1 - ((1.08/1.134)^30 ) = 0.7686
hence the present value of this annuity = $1852 * 0.7686 = $1423.38
Note :
p ( first principal payment ) = $100
r ( calculated interest ) = 13.4% = 0.134
g ( increment interest ) = 8 % = 0.08
Following are the accounts and balances from the adjusted trial balance of stark company
Notes payable $11,000 Accumulated depreciation building $15,000
Prepaid insurance 2,500 Accounts receivable 4,000
Interest expense 500 Utilities expense 1,300
Accounts payable 1,500 Interest payable 100
Wages payable 400 Unearned revenue 800
Cash 10,000 Supplies expense 200
Wages expense 7,500 Buildings 40,000
Insurance expense 1,800 Dividends 3,000
Common stock 10,000 Depreciation expense—Buildings 2,000
Retained earnings 14,800 Supplies 800
Services revenue 20,000
Prepare the (1) income statement and (2) statement of retained earnings for the year ended December 31 and (3) balance sheet at December 31. The Retained Earnings account balance was $35,600 on December 31 of the prior year.
Answer:
STARK COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31
PARTICULARS AMOUNT $
Service Revenue 20,000
Expenses
Supplies expense 200
Interest expense 500
Insurance expense 1,800
Utilities expense 1,300
Depreciation expense 2,000
Wages expense 7,500
Total expenses 13,300
Net profit 6,700
STARK COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31
Amount $
Retained earnings December 31 prior year end 14,800
Add- Net income 6,700
Less- Dividends 3,000 3,700
Retained earnings, December 31 Current year end 18,500
3. STARK COMPANY
BALANCE SHEET FOR THE YEAR ENDED DECEMBER 31
Current Assets
Cash 10,000
Accounts receivable 4,000
Office supplies 800
Prepaid insurance 2,500
Total current asset 17,300
Non Current Assets
Buildings 40,000
Less- Accumulated dep. 15,000
Total Non Current Assets 25,000
Total Assets 42,300
Liabilities
Current liabilities
Accounts payable 1,500
Interest payable 100
Notes payable 11,000
Unearned revenue 800
Wages payable 400
Total Current liabilities 13,800
Long term liabilities
Common stock 10,000
Retained earnings 18,500 28,500
Total liabilities and capital 42,300
Financial statements are statements that keep a record of the various transactions of the firm. It keeps the records of the inflow and outflow of cash in the company and also maintains the sound wealth in the firm.
The income statement, balance sheet, and calculations have been attached below.
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The monetary value of a homemaker's time CANNOT be estimated by
A. comparing the value of the services to the spouse's wage rate.
B. measuring the marginal value of the services by the homemaker's wage rate received in a part-time job.
C. measuring the services in terms of current market prices.
D. measuring the value of the services by looking at the homemaker's opportunity costs.
Answer: measuring the services in terms of current market prices
Explanation:
Based on the information that has been provided in the question, it should be noted that the monetary value of a homemaker's time can be estimated by
comparing the value of the services to the spouse's wage rate, measuring the marginal value of the services by the homemaker's wage rate received in a part-time job and also measuring the value of the services by looking at the homemaker's opportunity costs.
Therefore, the option that measuring the services in terms of current market prices is not estimated.
Question 7 of 10 How much should you save each year for maintenance on your home? $500 Whatever your home inspector recommends 7% of your gross income At least 1% of the purchase price
Answer: At least 1% of the purchase price
Explanation:
The 1% rule is a popular practice that estimates that 1% of a house´s purchase price should be expected to be required for maintenance every year. This is the case for a house that is less than five years old. Houses between 5 and 25 years old could range between a 1 and 4% annual maintenance budget, depending also on its location, the market, its size, and the impact of the weather.
Delta Distributors has accounts receivable of $2,750,000 and average daily credit sales of $118,280. The firm offers credit terms of 2/10, net 30. On average, what is the firm's accounts receivable period?
Answer:
The firm's accounts receivable period is 23.25 days
Explanation:
Accounts receivable period = 365 / Account receivable turnover ratio
When Account receivable turnover ratio = Net sales / Account receivables
Account receivable turnover ratio = 118,280 * 365 days/ 2,750,000
Account receivable turnover ratio = 15.698
Hence, Account receivable period = 365 / 15.698
Account receivable period = 23.25 days
