Pam Erickson Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2015. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows.

Pretax Income from:

Percentage-of-Completion Completed-Contract Difference

2014 $752,200 $586,700 $165,500
2015 683,500 444,700 238,800

(a) Assuming that the tax rate is 30%, what is the amount of net income that would be reported in 2015?

Net income $
(b) What entry(ies) are necessary to adjust the accounting records for the change in accounting principle?

Answers

Answer 1

Answer:

a. $478,450

b.Dr Construction in Process $165,500

Cr  Deferred tax liability  $49,650

Cr   Retained earnings  $115,850

Explanation:

A. Calculation for the amount of net income that would be reported in 2015 for Pam Erickson Construction Company

Using this formula

Net income =(Income before income tax ) Income before income tax-Tax rate

Let plug in the formula

Net income= $683,500 - (683,500 × 30%)

Net income= $683,500 - $205,050

Net income= $478,450

B. Preparation of the Journal entry(ies) that are necessary to adjust the accounting records

For Pam Erickson Construction Company

Dr Construction in Process $165,500

Cr  Deferred tax liability  $49,650

($165,500 × 30%)

Cr   Retained earnings  $115,850

($165,500 × (100%-30%)


Related Questions

Write a detailed note on Manufacturing Process types and Service process types in process design?

Answers

Answer:

Each of the process are used to the crosses organizational borders.

Explanation:

Process structure of manufacturing:

Job process: It is highly adaptable, scaled operation and structured around particular events. Batch process: It most common used in industries. It is small to large batches. Line process: It is the repetitive process and have modular production with large quantity. Continuous flow chart: It is product focused process. It processed only one item at a time.

Process design: There are three major process of design

Professional service designMass service designService shop design

ABC Co. and XYZ Co. are identical firms in all respects except for their capital structures. ABC is all-equity financed with $475,000 in stock. XYZ uses both stock and perpetual debt; its stock is worth $237,500 and the interest rate on its debt is 10 percent. Both firms expect EBIT to be $53,000. Ignore taxes.


Requried:

a. Rico owns $23,750 worth of XYZ’s stock. What rate of return is he expecting?

b. Suppose Rico invests in ABC Co and uses homemade leverage. Calculate his total cash flow and rate of return.

c. What is the cost of equity for ABC and XYZ?

d. What is the WACC for ABC and XYZ?

Answers

Answer:

ABC Co. and XYZ Co.

a. Rico owns $23,750 worth of XYZ’s stock. What rate of return is he expecting?

Expected Rate of Return = 12.32%

b. Suppose Rico invests in ABC Co and uses homemade leverage. Calculate his total cash flow and rate of return.

Cash flow from ABC Co. = 11.16% of $23,750 = $2,650.50

Cash outflow from homemade leverage = 10% of $11,875 = $1,187.50

Total cash flows = $1,463 ($2,650.50 - $1,187.50)

Rate of return = $1,463/$11,875 x 100 = 12.32%

c. What is the cost of equity for ABC and XYZ?

Cost of Equity for ABC Co. = Expected Return on Equity

= $53,000/$475,000 x 100

= 11.16%

Cost of Equity for XYZ Co. = Expected Return on Equity

= $29,250/$237,500 x 100

= 12.32%

d. What is the WACC for ABC and XYZ?

WACC for ABC = Cost of Equity = 11.16%

WACC for XYZ = Weighted Cost of Equity + Weighted Cost of Debt

= 11.16% x 50% + 10% x 50%

= 0.0558 + 0.05

= 0.1058

= 10.58%

Explanation:

ABC:

Equity = $475,000

Expected EBIT = $53,000

Returns on Equity = $53,000/$475,000 x 100 = 11.16%

XYZ:

Equity = $237,500

Debt = $237,500

Interest on Debt = 10% = $23,750

EBIT = $53,000

Return for Equity = $29,250 ($53,000 - 23,750)

Return on Equity = $29,250/$237,500 x 100 = 12.32%

RICO is assumed to leverage debt for his shares in ABC Co. to the tune of 50% just as the debt leverage in XYZ Co.

ABC's and XYZ's costs of equity are equal to the expected returns on the equities expressed percentages of the equities.

ABC's and XYZ's WACC or Weighted Average Costs of Capital are the weighted cost of equity plus the weighted cost of debt respectively.

The Sherman Antitrust Act: Multiple Choice was passed in 1800. All of these statements are true. was actively used by President Roosevelt in the early 20th century. no longer applies to business practices today.

Answers

Answer: Was actively used by President Roosevelt in the early 20th century.

Explanation:

The Sherman Act of 1890 was a law passed by Congress to target monopolies in the United States. At the time, Trusts had been in existence. Trusts were in effect monopolies because they worked by getting the largest stockholders to transfer their stock to a single trust and get profits from all companies in the trust. This Trust would then in effect control the industry as a monopoly.

To combat this, the Sherman Act enabled the Federal Government to go against Trusts and dissolve them. This was good news to President Theodore Roosevelt who ruled from 1901 to 1909. Roosevelt hated the anti-competitive tactics of the rich that ripped off the poor. He believed that this would bring about a revolution and he also hated them as the big corporations thought themselves above the law in his assessment.

Using the Sherman Act, he went against them with so much vigor that he earned the nickname, The Trust Buster. He started with a Trust controlled by J.P. Morgan called Northern Securities Company which was dissolved by the Supreme Court after the Attorney General under Roosevelt brought a suit against them.

A firm has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio

Answers

Answer:

Debt / Equity = 0.72649 : 1 or 72.649%

Explanation:

The ROE or return on equity can be calculated using the Du Pont equation. It breaks the ROE into three components. The formula for ROE under Du Pont is,

ROE = Net Income / Sales * Sales / Total Assets * Total Assets / Shareholder's equity

or

ROE = Net Income / Total equity

Assuming that sales is $100.

Net Income = 100 * 0.051 = 5.1

Total Assets = 100 / 1.84

Total Assets = 54.35

0.162 = 5.1 / Total equity

Total Equity = 5.1 / 0.162

Total Equity = 31.48

We know that Assets = Debt + Equity

So,

54.35 = Debt + 31.48

Debt = 54.35 - 31.48

Debt = 22.87

Debt / Equity = 22.87 / 31.48

Debt / Equity = 0.72649 : 1 or 72.649%

Presence indicators _____.

a. are small digital badges that people can embed in emails and on websites to share their contact information and social affiliations.
b. are visual elements used to change the aesthetic of a web page.
c. are things that others create we feel are worth redistributing to our social networks.
d. are an option to have one's profile reflected back to them from the perspective of others.
e. enable users to project an identity more vividly to others within a community

Answers

Answer: enable users to project an identity more vividly to others within a community.

Explanation:

The small digital badges that people can embed in emails and on websites to share their contact information and social affiliations are referred to as identity cards.

Skin/themes are the visual elements that are used to change the aesthetic of a web page.

Identity reflectors are option to have one's profile reflected back to them from the perspective of others.

Presence indicator allow users to project an identity more vividly to others within a community.

Booker Corporation had the following comparative current assets and current liabilities: Dec. 31, 2019 Dec. 31, 2018 Current assets Cash $60,000 $30,000 Short-term investments 40,000 10,000 Accounts receivable 55,000 95,000 Inventory 110,000 90,000 Prepaid expenses 35,000 20,000 Total current assets $300,000 $245,000 Current liabilities Accounts payable $140,000 $110,000 Salaries payable 40,000 30,000 Income tax payable 20,000 15,000 Total current liabilities $200,000 $155,000 During 2019, credit sales and cost of goods sold were $750,000 and $400,000, respectively. Compute the following liquidity measures for 2019:

Answers

Answer:

1. 1.5 Times

2.$100,000

3.0.775 Times

4.$75,000

5.$100,000

Explanation:

Liquidity ratios can be found by just simply putting the given values in their appropriate formulas. All you have to memorize is the simple formulas

1.Current Ratio  

CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITIES

CURRENT RATIO = $300,000/$200,000

CURRENT RATIO = 1.5 Times

2. Working Capital

WORKING CAPITAL= CURRENT ASSETS- CURRENT LIABILITIES

WORKING CAPITAL= $300,000 - $200,000

WORKING CAPITAL= $100,000

3. Acid ratio

ACID RATIO = CURRENT ASSETS - INVENTORY - PREPAID EXPENSES/CURRENT LIABILITIES

ACID RATIO = ($300,000 - $110,000 - $35,000)/$200,000

ACID RATIO = 0.775 Times

4. Receivable turnover

RECEIVABLE TURNOVER = CREDIT SALES/AVERAGE RECEIVABLE

RECEIVABLE TURNOVER = $750,000/$75,000

RECEIVABLE TURNOVER = 10 Times

Working

AVERAGE RECEIVABLE = (Opening receivables+Closing receivables)/2

AVERAGE RECEIVABLE = ($55,000 + $95,000) / 2 = $75,000

5. Inventory Turnover

INVENTORY TURNOVER = COST OF GOODS SOLD / AVERAGE INVENTORY

INVENTORY TURNOVER = $400,000 / $100,000

INVENTORY TURNOVER = 4 Times

Working

AVERAGE INVENTORY = (Opening inventories+Closing inventories)/2

AVERAGE INVENTORY = (110,000 + 90,000)/2

AVERAGE INVENTORY = $100,000

Nakatomi Corporation produces 10,000 units of Product A at a cost of $20 per unit. A detailed breakdown of the cost is below. Choose the correct answer from the options provided. Per Unit Variable costs $ 12 Allocated manufacturing overhead costs 3 Allocated general administrative costs 5 $ 20 Outside supplier's offer $ 17 What are the total relevant cost of producing the units internally

Answers

Answer:

$120,000

Explanation:

Calculation for the total relevant cost of producing the units internally

Using this formula

Total relevant cost = Variable costs per unit*Units Produce

Let plug in the formula

Total relevant cost=$12 per unit* 10,000 units

Total relevant cost=$120,000

Therefore the total relevant cost of producing the units internally will be $120,000

The best way to characterize public relations at Under Armour is to use the label Multiple Choice fund raising. political public relations. marketing public relations. relationship management. publicity

Answers

Answer:

The correct answer is the option: Marketing Public Relations.

Explanation:

To begin with, the concept known as "Public Relations" in the marketing field refers to the instrument that the managers have and they can use with the purpose to establish better relationships with the public and with the target audience that the company has. The major goal of the public relations strategy is to know how to engage the company in relationships with outside agents that can benefit the company in its image to the customers. Therefore that this type of strategy focuses on the actions that the company can take in order to increase its public image to the society.

What element of the tourism and recreation industry has increased tenfold over the last fifteen years, bringing increased revenue to cities in the Coastal South such as Miami, Fort Lauderdale, and Tampa

Answers

Answer: A. The Cruise Ship Industry

Explanation:

The Cruise Ship Industry has been until recently (due to the Pandemic) one of the fastest growing elements of Tourism and Recreation in the United States having increased tenfold over the last 15 years.

Indeed in 2018, it was estimated that the industry added over $52 billion to the US economy as well as employing over 400,000 people.

This massive growth has benefitted port cities from which these Cruises take off and return to such as Miami, Fort Lauderdale, and Tampa immensely.

In an attempt to bring about a change in the organization, what do you think might happen to The Learning Focus if Nemeroff fired all the existing writers and replaced them with new writers

Answers

Answer:

If all existing writers are replaced with new writers there could be a number of issues as the existing writers had experience and were use to of the type of writing required, they understand the nature of the reader. The new writers might fail to satisfy the old readers as they will be unaware of the taste the readers want and like to read. If learning focus Nemeroff fired all the existing writers the above described issues may appear.

Explanation:

If all existing writers are replaced with new writers there could be a number of issues as the existing writers had experience and were use to of the type of writing required, they understand the nature of the reader. The new writers might fail to satisfy the old readers as they will be unaware of the taste the readers want and like to read. If learning focus Nemeroff fired all the existing writers the above described issues may appear.

You short-sell 200 shares of Rock Creek Fly Fishing Co., now selling for $50 per share. You are required to post a 50% margin on the short sale. If your broker requires a 30% maintenance margin, at what price will you get a margin call? (Ignore interests and dividends)
a. $62.50
b. 57.69
c. 56.25
d. 37.50

Answers

Answer:

b. 57.69

Explanation:

Calculation for what price that you will get a margin call

First step

200 shares *$25 per share=$10,000

Second step

Based on the information given we are required to post a 50% margin on the short sale.

Now let find the 50% margin

50% margin =50%*$10,000

50% margin=$5,000

Hence,

$10,000+$5,000=$15,000

Third step

Based on the information given we were told that the broker requires a 30% maintenance margin.

.30=($10,000-200p)/200p

60p=$15,000-200p

260p= $15,000

Hence

$15,000/260

Price= $57.69

Therefore the price that you will get a margin call will be $57.69

"A customer owns 200 shares of ABC, purchased 2 years ago at $50 per share. The current market value of ABC stock is $60 per share. If the customer gifts the stock to his son, the result is the:"

Answers

Answer: The donor may incur a gift tax liability. Also, the cost basis will be $50 per share to the recipient of the gift.

Explanation:

From the question, we are informed that a customer owns 200 shares of ABC, that were bought 2 years ago at $50 per share and that the current market value of ABC stock is $60 per share.

If the customer gifts the stock to his son, the result is the donor may incur a gift tax liability. Also, the cost basis will be $50 per share to the recipient of the gift.

Which of the following is not a reason why it is important for parties to memorialize their agreements in writing?

a. A party enhances his/her chances of proving that an obligation was undertaken and makes it harder for the other party to deny making the promise.
b. Signing a writing communicates the seriousness of the occasion to the signer.
c. A person's signature on a written contract provides a basis for the contract to be authenticated.
d. Writings are subject to the danger that a person might fabricate terms.

Answers

Answer:

B. singing a writing communicates the seriousness of the occasion to the singer

The reason which is not important for parties to memorialize their agreements in writing is  signing a writing communicates the seriousness of the occasion to the signer. Thus, the correct answer is C.

What is an agreement?

Agreement refers to consent of individual on a particular opinion. When the both parties agree on a concept they will make it in writing. When this agreement enforceable by law it is considered as contract.

The reason it is important top memorialize the agreements in writing are it will act as proof or evidence when formulated in written to be presented in case of obligation.

An agreement will be duly signed by both the parties which shows its authenticity and reliability and avoid any false interpretation of the deal. When the agreement is in writing the violation of terms and conditions is not possible as it clearly mentions the drawbacks of circumstances if any party failed to fulfill the conditions of the agreement.

Therefore, the option C signing a writing communicates seriousness is the appropriate answer.

Learn more about Agreement, here:

https://brainly.com/question/24225827

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Hannah is the owner of a party store. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. If she could earn $53,000 working for another party store nearby, we know that her economic profit was

Answers

Answer:

$433,900

Explanation:

The computation of the capitalized cost of the land is shown below:-

Capitalized cost of the land = Purchase price + Demolition of building + Title insurance + Attorney fee + Property taxes covered during the period - Scrap value from the building

= $420,000 + $12,000 + $900 + ($3,000 - $500) - $1,500

= $420,000 + $12,000 + $900 + $2,500 - $1,500

= $435,400 - $1,500

= $433,900

Tyler Company applies manufacturing overhead to production at the rate of $4.9 per direct labor hour and ended August with $12,900 underapplied overhead. Actual manufacturing overhead incurred for August amounted to $110,410.
How many direct labor hours did Tyler Company incur during August?

Answers

Answer: 19,900 hours

Explanation:

Direct Labor hours = Applied Manufacturing Overhead/ Applied Overhead rate per hour

Applied Manufacturing Overhead

When the overhead is said to be under-applied, the Applied overhead is less than the Actual Overhead.

To find the Applied overhead therefore;

= Actual Overhead - Under-applied amount

= 110,410 - 12,900

= $97,510

Direct Labor hours = Applied Manufacturing Overhead/ Applied Overhead rate per hour

= 97,510/4.9

= 19,900 hours

The FI Corporation’s dividends per share are expected to grow indefinitely by 5% per year. a. If this year’s year-end dividend is $8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? b. If the expected earnings per share are $12, what is the implied value of the ROE on future investment opportunities? c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)?

Answers

Answer:

a)

P₀ = Div₁ / (Re - g)

P₀ = current stock price = ?Div₁ = next dividend = $8Re = equity cost = 10%g = constant growth rate = 5%

P₀ = $8 / (10% - 5%) = $8 / 5% = $160

b)

EPS = $12

Return on equity (ROE) = g / b

b = retention rate = 1 - payout ratio = 1 - ($8/$12) = 0.333

g = 5%

ROE = 5% / 0.333 = 15%

c)

Present value of growth opportunity (PVGO) = P₀ - EPS/Re

P₀ = $160EPS = $12Re = 10%

PVGO = $160 - $12/10% = $160 - $120 = $40 per share

Acme Company’s production budget for August is 17,600 units and includes the following component unit costs: direct materials, $7.70; direct labor, $10.10; variable overhead, $6.20. Budgeted fixed overhead is $33,000. Actual production in August was 18,810 units. Actual unit component costs incurred during August include direct materials, $8.50; direct labor, $9.10; variable overhead, $6.90. Actual fixed overhead was $34,600. The standard direct material cost per unit consists of 11 pounds of raw material at $0.7 per pound. During August, 319,770 pounds of raw material were used that were purchased at $0.50 per pound.

Required:
Calculate the materials price variance and materials usage variance for August.

Answers

Answer:

Instructions are below.

Explanation:

Giving the following information:

Actual production in August was 18,810 units.

During August, 319,770 pounds of raw material were used that were purchased at $0.50 per pound.

The standard direct material cost per unit consists of 11 pounds of raw material at $0.7 per pound.

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (0.7 - 0.5)*319,770

Direct material price variance= $63,954 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Standard quantity= 18,810*11= 206,910

Direct material quantity variance= (206,910 - 319,770)*0.7

Direct material quantity variance= $79,002 unfavorable

Heston and Burton, CPA's, currently work a five-day week. They estimate that net income for the firm would increase by $75,000 annually if they worked an additional day each month. The cost associated with the decision to continue the practice of a five-day work week is an example of a(n)

Answers

Answer:

Opportunity cost.

Explanation:

Opportunity cost is an economics term that is used to describe the value or determinant to best forgone alternative in certain situations. In as much as every business model or dealings can never be measured in monetary terms because merit can also be determined through satisfaction gained and actual time spent on the job.

It is sometimes seen to fall in as individual perspective, this is seen as such because it is always different for every person in as much as our personality and different in likes and lifestyle affects it when it boils down to persons.

Economists also tag opportunity cost to be fundamental costs and are generally used for gaining a better understanding of a project.

A cash equivalent is: Multiple Choice Another name for cash. Close to its maturity date but its market value may still be affected by interest rate changes.

Answers

Complete Question:

A cash equivalent is:

Group of answer choices

a) Generally is within 12 months of its maturity date.

b) Another name for cash.

c) An investment readily convertible to a known amount of cash.

d) Is not considered highly liquid.

e) Close to its maturity date but its market value may still be affected by interest rate

changes

Answer:

c) An investment readily convertible to a known amount of cash.

Explanation:

In Financial accounting, cash equivalents can be defined as any short term and highly liquid investments which can be easily converted or transformed to a known and standard amounts of cash and as such are subjective to little or no risk of changes in value.

This ultimately implies that, a cash equivalent is an investment readily convertible to a known amount of cash.

Under the statements of cash flow, cash equivalents can be classified broadly into three (3) categories and these are;

1. Operating activities.

2. Financing activities.

3. Investing activities.

Answer:

money

Explanation:

The principle that each World Trade Organization member must accord to all other member countries tariff treatment no less favorable than it provides to any other country is known as the __________ principle.

Answers

Answer:

Most favoured nation principle

Explanation:

Most favoured nation (MFN) clause of the World Trade Organisation requires that when a nation trades with others the concessions, immunities, and privileges granted to one nation should be the the same granted to all WTO members.

It discourages discrimination where one nation in international trade is favoured above another.

For example if Ghana reduces tariff on trades with South Africa it is expected that tariffs to other WTO nations will also be reduced to 3%.

Exceptions to this principle are for developing nations, regional free trade areas, and custom unions.

You own a stock portfolio invested 34 percent in Stock Q, 18 percent in Stock R, 36 percent in Stock S, and 12 percent in Stock T. The betas for these four stocks are 1.03, 1.09, 1.49, and 1.94, respectively. What is the portfolio beta

Answers

Answer:

Portfolio beta = 1.3156

Explanation:

The portfolio beta is a function of the weighted average of the individual stocks betas' that form up the portfolio. To calculate the portfolio beta, we use the following formula,

Portfolio beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N

Where,

w represents the weight of each stock in portfolio

Portfolio beta = 0.34 * 1.03  +  0.18 * 1.09  +  0.36 * 1.49  +  0.12 * 1.94

Portfolio beta = 1.3156

Suppose when the price of coffee beans goes from $1 to $1.20 per pound, production increases from 90 million pounds of coffee beans to 110 million pounds per year. Using the mid-point method, the percentage change in quantity supplied is: Multiple Choice 20 percent 18 percent 0.6 6.0

Answers

Answer: 20%

Explanation:

Using the midpoint formula, the denominator is an average of the beginning and ending figures;

= [tex]\frac{Q2 - Q1}{Q2 + Q1 /2 } * 100[/tex]

= [tex]\frac{110 - 90}{(110 + 90)/2} * 100[/tex]

= [tex]\frac{20}{100} * 100[/tex]

= 20%

BioGrow Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, BioGrow Pharma invested $100 million in the project. This investment made by BioGrow Pharma will result in a _____.

Answers

Answer: credible commitment

Explanation:

From the question, we are informed that BioGrow Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine but that the project required huge capital investments, and its research partner was not ready to solely face the risks involved.

Therefore, to gain its partner's confidence and to prove its involvement, BioGrow Pharma invested $100 million in the project. This investment made by BioGrow Pharma will result in a credible commitment.

A company with 99,006 authorized shares of $8 par common stock issued 48,828 shares at $13 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price was $22 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

A. $43,563
B. $21,484
C. $7,812
D. $13,672

Answers

Answer:

$21,484

Explanation:

A company has 99,006 authorized shares of $8 par

The common stock was issued at 48,828 shares at the price of $13 for one share

The company made a 2% dividend declaration

= 2/100

= 0.02

The market price is $22 per share

Therefore, the amount that was transferred from the retained earnings account to the paid-in capital accounts can be calculated as follows

= 48,828 shares × 0.02 × $22

= $21,484

Hence the amount that was moved from the retained earnings account to the paid-in capital accounts as a result of stock dividend is $21,484

Granger Inc. Comparative Balance Sheets December 31

Assets 2017 2016
Cash $80,800 $48,400
Accounts receivable 87,800 38,000
Inventory 112,500 102,850
Prepaid expenses 28,400 26,000
Long-term investments 138,000 109,000
Plant assets 285,000 242,500
Accumulated depreciation (50,000) (52,000)
Total $682,500 $514,750

Liabilities and Stockholders' Equity
Accounts payable $102,000 $67,300
Accrued expenses payable 16,500 21,000
Bonds payable 110,000 146,000
Common stock 220,000 175,000
Retained earnings 234,000 105,450
Total $682,500 $514,750


Granger Inc. Income Statement Data For the Year Ended December 31, 2017

Sales revenue $388,460

Less:
Cost of goods sold $135,460
Operating expenses, excluding depreciation 12,410
Depreciation expense 46,500
Income tax expense 27,280
Interest expense 4,730
Loss on disposal of plant assets 7,500 233,880
Net income $154,580

Additional information:

1. New plant assets costing $90,000 were purchased for cash during the year.
2. Old plant assets having an original cost of $51,750 and accumulated depreciation of $43,650 were sold for $1,350 cash.
3. Bonds payable matured and were paid off at face value for cash.
4. A cash dividend of $23,427 was declared and paid during the year.

Required:
Prepare a statement of cash flows for Granger Inc. using the direct method.

Answers

Answer:

                                       GRANGER INC.

       STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)

                  FOR THE YEAR ENDED DECEMBER 31, 2017

                Particulars                                                    Amount$

Cash flow from operating activities

Net Income                                                                    154,580

Adjustments to reconcile net income to net cash

provided by operating activities  

Adjustment for non cash effects

Depreciation expense                                                   46,500

Loss on sale of plant assets                                           7,500

Change in operating assets & liabilities

Increase in Accounts receivable                                  -49,800

Increase in inventory                                                      -9,650

Increase in prepaid expenses                                        -2,400

Increase in accounts payable                                         34,700

Decrease in accrued expenses payable                       -4,500

Net cash flow from operating activities (a)                 176,930

Cash Flow from Investing activities

Old Plant assets sold                                                       1,350

New plant assets purchased                                         -90,000

Long-term investments purchased                                -29,000

Net cash Flow from Investing activities (b)                -117,650

Cash Flow from Financing activities

Cash dividends paid                                                        -23,427

Common stock issued                                                      45,000

Bonds paid                                                                        -36,000

Net cash Flow from Financing activities (c)                 -14,427

Net Change in cash c=a+b+c                                            44,853

Add: Beginning cash balance                                           48,400

Closing cash balance                                                        93,253

You can spend $150 on either a new Kindle or a new pair of boots. If you choose to buy the new kindle, the economic cost of it is:

Answers

Answer:

$300

Explanation:

The economic cost is the sum of implicit cost and explicit cost.The implicit cost is the cost by implication, which is the cost of alternative forgone.

The explicit cost is the actual cost requiring actual cash flow in settling it.

Economic cost=cost of new kindle+cost of alternative forgone(new pair of boots)

Economic cost=$150+$150

The explicit cost is also the cost incurred from accounting point of view

If I currently sell 10,000 units, and my use of Formula 1 indicates that I will need to sell 500 additional units to justify my suggested change to the marketing mix, what percentage of sales does that represent

Answers

Answer:

It represents a 5% change to the marketing mix.

Explanation:

The change = 500/10,000 x 100 = 5%.

Company A's change in a variable can be compared with another index, by expressing the change (addition) as a percentage of the index.  For instance, the sale of 10,000 units is an index.  The additional 500 units that is needed to be sold represent the change.  In percentage terms, the change can be divided by the index and then multiplied by 100.

Under the allowance method, when writing off an account receivable, the journal entry to record the write-off includes a credit to:

Answers

Answer: credit to Accounts Receivable

Explanation:

Accounts Receivable is the payment that a particular company will get from the customers who have bought the company's product or services on credit.

Under the allowance method, when writing off an account receivable, the journal entry to record the write-off includes a credit to account receivables.

On October 10, the stockholders? equity of Sherman Systems appears as follows:
Common stock?$10 par value, 72,000 $ 720,000
shares authorized, issued, and outstanding
Paid-in capital in excess of par value, common stock 216,000
Retained earnings 864,000
Total stockholders equity $ 1,800,000
Prepare journal entries to record the following transactions for Sherman Systems.
1a. Purchased 5,000 shares of its own common stock at $25 per share on October 11.
1b. Sold 1,000 treasury shares on November 1 for $31 cash per share.
1c. Sold all remaining treasury shares on November 25 for $20 cash per share.
2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.

Answers

Answer: Please find answers in explanation column

Explanation:

Common stock?$10 par value, 72,000

shares authorized, issued, and outstanding                 $ 720,000

Paid-in capital in excess of par value, common stock  $216,000

Retained earnings                                                         $864,000

Total stockholders equity                                             $1,800,000

a)journal entry to record the purchase of shares on Oct 11

Date  Account                                Debit                 Credit

Oct 11 Treasury stock                     $125,000

Cash                                                                $125,000

Calculation

value of the Treasury stock=No.of shares×Value per share

=5,000×$25  =$125,000

b. journal entry to record the sales of treasury shares.

​Date  Account                                Debit                 Credit

Oct 11  Cash                                     $31,000

Treasury stock                                                       $25,000

Paid in capital from the sale of the stock

(31,000 - 25,000)                                                      $6,000

Calculation

Cash =No.of shares×Value per share

=1,000×$31 =$31,000

Treasury stock=No.of shares× purchased value of share

=1,000×$25  =$25,000

1c)journal entry to record the sales of the remaining  treasury shares

​Date  Account                                              Debit                 Credit

Nov 1  Cash                                                $80,000

Paid in capital from the sale of the stock $6,000

Retained earning                                     $14,000

Treasury stock                                                               $100,000

Calculation

Remaining treasury shares = 5000-1000= $4000

Cash =No.of shares×Value per share

=4, 000× 20  =$80 ,000

Treasury stock=No.of shares× purchased value of share

=4,000×$25  =$100,000

recall paid in  capital from sale = $6000

retained earnings = treasury stock - cash- paid in capital= 100,000- 80,000 - 6,000= $14,000

2) Revised equity of the balance sheet to show new  total stockholders’ equity

Account /Particulars                                Amount

Common stock $ 720,000

Paid-in capital   $216,000

Retained earnings         $864,000

less Treasury stock       ($125,000)

Balance                                                    $739,000

Total stockholders equity                      $1,675,000

whatis the general termfor resources used by a business to produce good or services referred to as

Answers

Answer:

Factors of Production

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