Answer:
Mohave Corp.
1. Cost Differences:
Relevant costs:
Make Buy Difference
Direct materials $3
Direct labor 2
Variable manufacturing overhead 1
Fixed manufacturing overhead 0.80
Total cost per unit $6.80 $7.50 $0.70
Annual Units 8,000 8,000 8,000
Total costs $54,400 $60,000 $5,600
2. Based strictly on the incremental analysis, Mohave should continue to make the tote bags.
3. The recommendation is changed. Mohave should buy the tote bags from outside. Buying from outside increases operating income by $4,400.
Explanation:
a) Data and Calculations:
Price per unit from outside supplier = $7.50
Direct materials $3
Direct labor 2
Variable manufacturing overhead 1
Fixed manufacturing overhead 2
Total cost per unit $8
Relevant costs:
Make Buy Difference
Direct materials $3
Direct labor 2
Variable manufacturing overhead 1
Fixed manufacturing overhead 0.80
Total cost per unit $6.80 $7.50 $0.70
Annual Units 8,000 8,000 8,000
Total costs $54,400 $60,000 $5,600
Relevant costs:
Make Buy Difference
Direct materials $3
Direct labor 2
Variable manufacturing overhead 1
Fixed manufacturing overhead 0.80
Total cost per unit $6.80 $7.50 $0.70
Annual Units 8,000 8,000 8,000
Total costs $54,400 $60,000 $5,600
Annual profits from new product 0 (10,000) $10,000
Total net costs $54,400 $50,000 $4,400
Under the temporal method, income statement items that relate to newly recognized assets and liabilities generally are remeasured using the:
Answer: historical exchange rate
Explanation:
The temporal method is also referred to as the historical method. Under this method, the currency of a foreign subsidiary is being converted into the currency of the parent company.
It should be noted that under the temporal method, the income statement items which relate to newly recognized assets and liabilities generally are remeasured using the historical exchange rate.
Diminishing returns are a reason that fixed costs remain constant. the marginal cost curve is upward sloping. the average fixed cost curve is downward sloping. the marginal cost curve is downward sloping.
Answer:
the marginal cost curve is upward sloping.
Explanation:
Utility can be defined as any satisfaction or benefits a customer derives from the use of a product or service.
This ultimately implies that, any satisfaction or benefits a customer derives from the use of a product or service is generally referred to as a utility.
Basically, the marginal utility of goods and services is the additional satisfaction that a consumer derives from consuming or buying an additional unit of a good or service.
For example, buying a candy stick and eating it may satisfy your cravings but eating another one (an additional or extra unit) wouldn't give you as much satisfaction as the first due to diminishing marginal utility.
In Economics, the law of diminishing marginal utility states that as the unit of a good or service consumed by an individual increases, the additional satisfaction he or she derives from consuming additional units would start decreasing or diminishing as the units of good or service consumed increases.
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity. A marginal cost curve is upward sloping because of the law of diminishing returns.
An excellent website design delights its audience and is the product of innovation built on a foundation of
Answer:
careful site planning
Explanation:
The careful site planning permits you to create the website that contains the delightful design due to which it helps in attracting the audience also it is the foundation for building the production for an innovation purpose. In this we ca n plan about the site theme, its layout, color, design etc
The standard amount of materials required to make one unit of Product Q is 4 pounds. Tusa's static budget showed a planned production of 6,200 units. During the period, the company actually produced 6,300 units of product. The actual amount of materials used averaged 3.9 pounds per unit. The standard price of material is $2 per pound. Based on this information, the materials usage variance was:\
Answer: $1,260 Favorable
Explanation:
Material usage variance = (Standard quantity of materials actually produced - Actual quantity of materials actually produced) * Standard price of material
= [ ( 4 * 6,300 ) - (3.9 * 6,300) ] * 2
= [ 25,200 - 24,570 ] * 2
= 630 * 2
= $1,260 Favorable
Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Activity Driver Activity Capacity Setting up equipment $548,080 Number of setups 680 Ordering costs 313,200 Number of orders 17,400 Machine costs 939,400 Machine hours 42,700 Receiving 343,000 Receiving hours 9,800 Deoro produces two models of dishwashers with the following expected prime costs and activity demands:
Model A Model B
Direct materials $600,000 $800,000
Direct labor $480,000 $480,000
Units completed 16,000 8,000
Direct labor hours 6,000 2,000
Number of setups 400 200
Number of orders 6,000 12,000
Machine hours 24,000 18,000
Receiving hours 3,000 7,000
The company's normal activity is 8,000 direct labor hours.
Required:
1. Determine the unit cost for each model using direct labor hours to apply overhead.
Unit Cost
Model A $
Model B $
2. Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.
Unit Cost
Model A $
Model B $
3. Which method produces the more accurate cost assignment?
Answer:
Deoro Company
1. Unit cost using direct labor hours to apply overhead:
Unit Cost
Model A $167.985
Model B $226.99
2. Unit cost using the four activity drivers:
Unit Cost
Model A $133.97
Model B $287.28
3. Activity-based costing method always produces the more accurate cost assignment.
Explanation:
a) Data and Calculations:
Activity Expected Cost Activity Driver Activity Capacity
Setting up equipment $548,080 Number of setups 680
Ordering costs 313,200 Number of orders 17,400
Machine costs 939,400 Machine hours 42,700
Receiving 343,000 Receiving hours 9,800
Total overhead costs $2,142,680
Activity Rates:
Setting up equipment $806 per setup ($548,080/680)
Ordering costs $18 per order ($313,200/17,400)
Machine costs $22 per machine hour ($939,400/42,700)
Receiving $35 per receiving hour ($343,000/9,800)
Model A Model B
Direct materials $600,000 $800,000
Direct labor $480,000 $480,000
Overhead applied $1,063,500 $1,018,200
Total costs $2,143,500 $2,298,200
Units completed 16,000 8,000
Cost per unit $133.97 $287.275
Direct labor hours 6,000 2,000
Number of setups 400 200
Number of orders 6,000 12,000
Machine hours 24,000 18,000
Receiving hours 3,000 7,000
The company's normal activity is 8,000 direct labor hours.
Assignment of overhead costs:
Model A Model B
Number of setups $322,500 (400 * $806) $161,200 (200 * $806)
Number of orders 108,000 (6,000 * $18) 216,000 (12,000 * $18)
Machine hours 528,000 (24,000 * $22) 396,000 (18,000 * $22)
Receiving hours 105,000 (3,000 * $35) 245,000 (7,000 * $35)
Total overhead applied $1,063,500 $1,018,200
Overhead based on direct labor hours:
Total overhead costs = $2,143,680
Total direct labor hours = 8,000 (6,000 + 2,000)
Overhead rate per DLH = $267.96
Allocation of overhead:
Model A Model B
Direct labor hours 6,000 2,000
Overhead (DLH) $1,607,760 ($267.96 *6,000) $535,920 ($267.96 * 2,000)
Model A Model B
Direct materials $600,000 $800,000
Direct labor $480,000 $480,000
Overhead applied $1,607,760 $535,920
Total costs $2,687,760 $1,815,920
Units completed 16,000 8,000
Cost per unit $167.985 $226.99
The following information is available regarding the total manufacturing overhead of Molsen Company for a recent four-month period. Molsen's projected August operations will require approximately 110,000 machine hours. Using the high-low method, compute total manufacturing overhead estimated for August. Group of answer choices $177,500. $187,500. $197,500. $198,000.
Answer:
$198,000
Explanation:
Calculation to determine what the total manufacturing overhead estimated for August is
First step is to calculate the Variable element
Variable element=($198,000 - $153,000)/(110,000 - 80,000)
Variable element=$45,000/30,000
Variable element= $1.50
Second step is to calculate the Fixed element
Fixed element=$198,000 - ($1.50 x 110,000)
Fixed element=$198,000-$165,000
Fixed element = $33,000
Now let compute total manufacturing overhead
Total manufacturing overhead=$33,000 + ($1.50 x 110,000)
Total manufacturing overhead=$33,000+$165,000
Total manufacturing overhead= $198,000
Therefore Using the high-low method, compute total manufacturing overhead estimated for August is $198,000
Consider using income approach to compute US GDP. Suppose there is a Mexican citizen working at a US firrm located in US, and earned wages of $500. There is also a US citizen that earns wages of $800 in a Mexican firm located in Mexico. If US GNP is $3000, what is US GDP?
Answer:
According to the information in the text, the US GDP would be $500, because GDP only accounts for all the goods and services produced within the country, or under the income approach, for all the forms of income (rent, dividends, wages) earned by nationals or foreigners in domestic soil.
In this case, the Mexican citizen working in the US and earning $500 adds the same amount to US GDP of that year regardless of his nationality.
A government bond issued in France has a coupon rate of 5% (paid annually) and a face value of 100 euros, and it matures in 5 years. Calculate the price of the bond (in euros) if the yield to maturity is 3.5%.
Answer:
Bond Price= 106.77
Explanation:
Giving the following information:
Face value= 100
Coupon= 100*0.05= 5
Yield To Maturity= 0.035
Years to maturity= 5 years
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 5*{[1 - (1.035^-5)] / 0.035} + [100/(1.035^5)]
Bond Price= 22.57 + 84.2
Bond Price= 106.77
If the government intervenes and corrects the externality in the situation described, we would expect Group of answer choices the demand for the output from the hydroelectric power plants to decrease. the demand for the output from the hydroelectric power plants to increase the supply of the output from the hydroelectric power plants to decrease the supply of the output from the hydroelectric power plants to increase.
Answer: the supply of the output from the hydroelectric power plants to increase.
Explanation:
The hydroelectric power operators are incurring the cost of cleaning the river before they can use it. This cost is money that they could be investing in the business in order to produce more power.
If the government corrects the externality and limits the amount of waste being thrown into the river, the hydroelectric company would be able to invest the expenses it was incurring in clean up into generating more power which would lead to a higher supply of output from the power station.
Quasik Corporation will be receiving 300,000 Canadian dollars (C$) in 90 days. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. Quasik plans to purchase options to hedge its receivable position. Assuming that the spot rate in 90 days is $.71, what is the net amount received from the currency option hedge
Answer:
216000
Explanation:
($.73 - $.01) x 300,000
The net amount received from the currency option hedge is $216,000.
What is a call option?A call option is a contract that grants the option buyer the right to purchase an underlying asset at a particular price and time period.
A call option grants you the right, but not the obligation, to buy a stock at a specified price known as the strike price by a specific date at the expiration of the option.
According to the given question, Quasik intends to hedge its receivable position by purchasing options. Because Quasi will get CAD in the future, it should purchase a put option, or the right to sell.
Put option purchase cost = 0.01 * 300,000
= 3,000
Because the spot rate is $0.71 per CAD after 90 days, Quasik will exercise its option at the rate of $0.73 per USD.
Received amount = 0.73 * 300,000
= 219,000
After deducting the cost of purchasing the option, the net amount received is,
= 219,000 - 3,000
= 216,000.
The is $216,000 is the net gain from the currency option hedge.
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Jayco has the following expected cash flows from a project. Calculate the payback period of the project. Year 0 (685,000) Year 1 255,000 Year 2 355,000 Year 3 455,000 Year 4 555,000
Answer:
2.16 years
Explanation:
What is the present value of an investment that will pay $2,000 at the end of the year when interest is compounded annually at 5.10%
Answer:
the present value of an investment is $1,902.94
Explanation:
The computation of the present value of an investment is given below:
present value
= Future value ÷ (1 + rate of interest)^time period
=$2,000 ÷ (1+.051)^1
= $2,000 ÷ 1.051
= $1902.94
Hence, the present value of an investment is $1,902.94
A company developed the following per unit standards for its products: 2.30 pounds of direct materials at $5.7 per pound. Last month, 2500 lbs of direct materials were purchased for $5900. The direct materials price variance for last month was
Answer: $5,010 Favorable
Explanation:
Direct materials price variance is calculated by the formula:
= (Standard Price - Actual Price) * Quantity Purchased
Actual price = Amount pounds were purchased for / Pounds purchased
= 5,900 / 2,500
= $2.36
Direct materials price variance = (5.7 - 2.36) * 2,500
= $5,010 Favorable
14.With earned value management (EVM), the Government can determine if a program is currently experiencing a/n
Answer: cost or schedule variance
Explanation:
Earned value management, refers to the project management technique that's used for the measurement of project progress and performance.
Earned value management integrates the cost, schedule, and scope in the measurement of project performance and this can be used by the government to determine if a program is currently experiencing a cost or schedule variance.
The Hi-Stakes Company has a number of importing and exporting transactions. Importing activities result in payables and exporting activities result in receivables. (LCU represents the local currency unit of the foreign entity.)
Required:
If the direct exchange rate increases, does the dollar weaken or strengthen relative to the other currency? If the indirect exchange rate increases, does the dollar weaken or strengthen relative to the other currency?
Answer:
The Hi-Stakes Company
a. If the direct exchange rate increases, the dollar strengthens relative to the other currency.
b. If the indirect exchange rate increases, the dollar also strengthens relative to the other currency.
Explanation:
When the exchange rate increases, it means that more of the other currency is required in order to embark on importing and exporting transactions. However, the increases will weaken the ability of the importing currency to afford the dollar-based goods, which have then being made more expensive.
Using the following year-end information for WorkFit calculate the acid-test ratio:
Cash 58110
Short-term investments 14000
Accounts receivable 58000
Inventory 270000
Supplies 5600
Accounts payable 108000
Wages payable 31,900
a. 0.77
b. 0.42
Answer:
0.97
Explanation:
The computation of the acid-test ratio is given below:
= Quick assets ÷ current liabilities
= (cash + short term investment + account receivable + supplies) ÷ (accounts payable + wages payable)
= ($58,110 + $14,000 + $58,000 + $5,600) ÷ ($108,000 + $31,900)
= $135,710 ÷ $139,900
= 0.97
Hammond Lumber has just changed from prefabricating 8 gazebos to 10 gazebos (units). Their total costs changed from $9,500 to $11,000. What is the marginal cost for Hammond Lumber?
Answer:
MC = 750
Explanation:
Below is the given values:
Initial quantity = 8
Final quantity = 10
Initial total cost = $9500
Final total cost = $11000
Marginal cost = Change in total cost / Change in quantity
Change in total cost = 11000 - 9500 = 1500
Change in quantity = 10 - 8 = 2
Marginal cost = Change in total cost / Change in quantity
MC = 1500 / 2
MC = 750
What is the Investment in Mopsy Co. balance as of December 31, 2020, if the equity method has been applied
Answer:
$1,609,000
Explanation:
Calculation to determine the Investment in Mopsy Co. balance as of December 31, 2020, if the equity method has been applied
First step is to calculate the Unrecorded Patents Amortization
Unrecorded Patents Amortization
=$1,400,000-[($6,400,000 - $3,000,000)×30%] /10 years
Unrecorded Patents Amortization
=$1,400,000- ($3,400,000 × 30%)/10 years
Unrecorded Patents Amortization
=$1,400,000 - $1,020,000/10 years
Unrecorded Patents Amortization = $380,000 / 10 years
Unrecorded Patents Amortization= $38,000
Now let determine the Investment
Investment=$1,400,000 + $180,000 + $225,000 - $60,000 - $60,000 - $38,000 - $38,000
Investment= $1,609,000
Therefore the Investment in Mopsy Co. balance as of December 31, 2020, if the equity method has been applied is $1,609,000
g A person with a diminishing marginal utility of income: Group of answer choices will be risk neutral will be risk averse will be risk loving
Answer: Risk averse
Explanation:
A person with a diminishing marginal utility of income will derive less utility from income as income increases. A risk averse person is one who would rather avoid risk but still prefers a high income.
Such a person will have a diminishing marginal utility in income because income increases more when there is more risk. A risk averse person does not want that risk and so will go for a lower income which means that they don't want more income as it is riskier to them.
Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 9,900 units of the part that are needed every year. Per Unit Direct materials $ 6.30 Direct labor $ 3.50 Variable overhead $ 6.90 Supervisor's salary $ 2.60 Depreciation of special equipment $ 2.20 Allocated general overhead $ 1.20 An outside supplier has offered to make the part and sell it to the company for $22.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,000 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of one of the company's other products, generating an additional segment margin of $16,200 per year for that product.
Required:
a. Prepare a report that shows the financial impact of buying part Q89 from the supplier rather than continuing to make it inside the company.
b. Which alternative should the company choose
Blart Corp. recently paid a dividend of $5.00 per share. Analysts forecast future dividends will increase by 2% forever. The required rate of return that investors demand to hold Blart Corp.'s stock is 8% What is its estimated price per share today
Answer: $85.0
Explanation:
The formula to calculate the estimated price per share today will be:
Po = Do (1 + g) / (r - g)
Where,
Po = Current price
Do = Current dividend = 5.00
g = Dividend growth = 2% = 0.02
r = Required rate of return = 8% = 0.08
Therefore, the estimated price per share today will be:
= 5.00(1 + 0.02) / (0.08 - 0.02)
= 5.00(1.02) / 0.06
= 5.10 / 0.06
= 85.00
Therefore, the answer is $85
U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of Group of answer choices
Answer: consumer needs, political and legal structures, and social norms vary by country.
Explanation:
It should be noted that different countries have different customer needs, values and social norms with regards to how business is done.
Therefore, it's vital for any company that's moving into the international market to always have this in mind and therefore should be sensitive to these needs in order to achieve its goals.
If two firms are identical in all respects except that one has more of the fixed input capital than another, the marginal product curve for the firm with more capital: Group of answer choices will lie above the marginal product curve for the firm with less capital. must equal the marginal product curve for the firm with less capital. will lie below the total marginal curve for the firm with less capital. will show no diminishing marginal returns.
Answer: will lie above the marginal product curve for the firm with less capital.
Explanation:
Capital is needed to produce goods and services and ideally speaking, when more capital is invested, more goods and services will be able to be produced because more should bring in more.
It is the same case here, if the companies are similar in everything except capital invested, the company with more capital will be able to produce more goods and services which will lead to their marginal product curve lying above the marginal product curve of the company with less capital.
Harwood Company uses a job-order costing system that applies overhead cost to jobs on the basis of machine-hours. The company's predetermined overhead rate of $2.50 per machine-hour was based on a cost formula that estimates $217,500 of total manufacturing overhead for an estimated activity level of 87,000 machine-hours. Required: 1. Assume that during the year the company works only 82,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts: Compute the amount of overhead cost that would be applied to Work in Process for the year and make the entry in your T-accounts. 2A. Compute the amount of underapplied or overapplied overhead for the year and show the balance in your Manufacturing Overhead T-account.
Question Completion:
Manufacturing Overhead Account
Maintenance $24,000
Indirect materials 8,300
Indirect labor 82,000
Utilities 36,000
Insurance 7,300
Depreciation 65,000
Total costs $222,600
Work in Process
Direct materials $740,000
Direct labor 83,000
Answer:
Harwood Company
1. The amount of overhead cost that would be applied to Work in Process for the year is:
= $205,000.
2. T- Accounts:
Work in Process
Direct materials $740,000
Direct labor 83,000
Applied overhead 205,000
Manufacturing overhead
Maintenance $24,000
Indirect materials 8,300
Indirect labor 82,000
Utilities 36,000
Insurance 7,300
Depreciation 65,000
Applied overhead: WIP $205,000
Underapplied overhead 17,600
Total costs $222,600 $222,600
2A. The amount of underapplied overhead for the year is:
= $17,600
2B. Manufacturing overhead
Maintenance $24,000
Indirect materials 8,300
Indirect labor 82,000
Utilities 36,000
Insurance 7,300
Depreciation 65,000
Applied overhead: WIP $205,000
Underapplied overhead 17,600
Total costs $222,600 $222,600
Explanation:
a) Data and Calculations:
Predetermined overhead rate per machine-hour = $2.50
Estimated total manufacturing overhead = $217,500
Estimated activity level = 87,000
Actual results from production during the year:
Machine-hours worked = 82,000
Applied overhead costs = $205,000 (82,000 * $2.50)
Total manufacturing costs incurred = $222,600
Underapplied overhead = $17,600
On May 31, the Cash account of Teasel had a normal balance of $5,400. During May, the account was debited for a total of $12,600 and credited for a total of $11,900. What was the balance in the Cash account at the beginning of May?
a. A $0 balance.
b. A $6,100 debit balance.
c. A $6,100 credit balance.
d. A $4,700 debit balance.
e. A $4,700 credit balance.
Answer:
d. A $4,700 debit balance.
Explanation:
Note that the cash account is an asset account that a debit increases and a credit reduce it, hence, the balance at the beginning of May would be increased by debit entry and decreased as a result of the credit entry as shown thus:
closing balance=beginning balance+debit-credit
closing balance=$5,400
beginning balance=unknown
debit=$12,600
credit=$11,900
$5400=X+$12,600-$11,900
X=$5,400-$12,600+$11,900
X=$4,700(debit)
If the coupon rate on a bond is higher than the yield to maturity, Multiple Choice the bond sells at a discount. the coupon rate on the bond has decreased. interest rates have probably increased since the bond was issued. the current yield on the bond is lower now than when the bond was originally issued.
Answer:
the current yield on the bond is lower now than when the bond was originally issued.
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
A yield to maturity can be defined as the bond's total rate of return required by the secondary market while the coupon rate is defined as the annual interest of a bond divided by its face value.
Hence, if the coupon rate on a bond is higher than the yield to maturity, the current yield on the bond is lower now than when the bond was originally issued.
The first of two significant fiscal policy initiatives enacted by the government during the Great Recession, signed in February 2008 by President George W. Bush, was the:__________
a. American Recovery and Reinvestment Act of 2008.
b. Economic Stimulus Act of 2008.
c. Economic Tax Rebate Act of 2008.
d. Economic Recovery and Reinvestment Act of 2008.
e. American Stimulus Act of 2008.
Answer:
b. Economic Stimulus Act of 2008
Explanation:
The Economic Stimulus Act of 2008 was enacted during the term of George.W Bush. It was done to help encourage business investments during the recession by granting tax rebates to every taxpayers and consequently increasing disposable income. The Economic Stimulus Act of 2008 granted tax rebates of the lesser of net income tax liability or $600 to every taxpayer and $1200 to tax paying couples who filed their taxes jointly.
MC Qu. 157 West Company estimates that overhead costs... West Company estimates that overhead costs for the next year will be $3,600,000 for indirect labor and $880,000 for factory utilities. The company uses machine hours as its overhead allocation base. Of 125,000 machine hours are planned for this next year, what is the company's plantwide overhead rate
Answer:
$35,84 per machine hour
Explanation:
Plantwide overhead rate = Budgeted overheads ÷ Budgeted Activity
where,
Budgeted overheads = $3,600,000 + $880,000 = $4,480,000
Budgeted Activity = 125,000 machine hours
therefore,
Plantwide overhead rate = $4,480,000 ÷ 125,000
= $35,84 per machine hour
E6-9 Littleton Books has the following transactions during May May 2 Purchases books on account from Readers Wholesale for $3,300, terms 1/10, n/30. May 3 Pays cash for freight costs of $200 on books purchased from Readers. May 5 Returns books with a cost of $400 to Readers because part of the order is incorrect. May 10 Pays the full amount due to Readers. May 30 Sells all books purchased on May 2 (less those returned on May 5) for $4,000 on account. Required 1. Record the transactions of Littleton Books, assuming the company uses a perpetual inventory system. 2. Assume that payment to Readers is made on May 24 instead of May 10. Record this payment.
Answer:
Littleton Books
Journal Entries:
May 2 Debit Inventory $3,300
Credit Accounts Payable (Readers Wholesale) $3,300
To record the purchase of books on account, terms 1/10, n/30.
May 3 Debit Freight-in $200
Credit Cash $200
To record the freight paid for the books of May 2.
May 5 Debit Accounts Payable (Readers Wholesale) $400
Credit Inventory $400
To record the return of some books.
May 10 Debit Accounts Payable (Readers Wholesale) $2,900
Credit Cash $2,871
Credit Cash Discounts $29
To record the full settlement on account, including discounts.
May 30 Debit Accounts Receivable $4,000
Credit Sales Revenue $4,000
To record the sale of books on account.
Debit Cost of goods sold $2,900
Credit Inventory $2,900
To record the cost of books sold.
May 24 Debit Accounts Payable (Readers Wholesale) $2,900
Credit Cash $2,900
To record the full settlement on account.
Explanation:
a) Data and Analysis:
May 2 Inventory $3,300 Accounts Payable (Readers Wholesale) $3,300
terms 1/10, n/30.
May 3 Freight-in $200 Cash $200
May 5 Accounts Payable (Readers Wholesale) $400 Inventory $400
May 10 Accounts Payable (Readers Wholesale) $2,900 Cash $2,871 Cash Discounts $29
May 30 Accounts Receivable $4,000 Sales Revenue $4,000
Cost of goods sold $2,900 Inventory $2,900
May 24 Accounts Payable (Readers Wholesale) $2,900 Cash $2,900
Sassy, Inc. needs $115 million to build a new distribution center. If it issues common stock to raise the funds, the issuance costs will be 8 percent of the total amount issued. If Sassy can issue stock at $40 per share, how many shares of common stock must be issued so that it has $115 million after flotation costs to use to fund the construction of the distribution center
Answer: 3,125,000 shares.
Explanation:
The number of shares of common stock that must be issued will be calculated as follows:
Let the amount to be raised be represented by x. Therefore,
x - (8% × x) = $115 million
x - (0.08 × x) = $115 million
x - 0.08x = $115 million
0.92x = $115 million
x = $115 million/0.92
x = $125 million
Then the number of shares that'll be issued will be:
= Amount raised / Issue price of stock.
= $125 million / 40
= 3,125,000 shares.
