Answer:A
Explanation:The Taylor Rule specifies that the federal funds rate target should be equal to O equilibrium federal funds rate + inflation rate +1 interest rate - expected inflation rate. 1.5 (inflation rate) + 0.5 (GDP gap) + 1. 0.5 (inflation rate) +1.5 (GDP gap) + 1
XYZ has contribution margin of 30% with fixed costs of $550,000. Next year, sales are projected to be $3,100,000. An advertising with additional $120,000 is being evaluated. How much would sales have to increase to justify the additional ad expense
Answer:
$400,000
Explanation:
Calculation to determine How much would sales have to increase to justify the additional ad expense
Using this formula
Required sales=Additional advertising value/Fontribution margin
Let plug in the formula
Required sales = $120,000 / 0.3
Required sales = $400,000
Therefore How much would sales have to increase to justify the additional ad expense is $400,000
The prepaid insurance account had a beginning balance of $7,560 and was debited for $810 for premiums paid during the year.
Required:
Journalize the adjusting entry required at the end of the year.
Answer: See explanation
Explanation:
Debit Insurance Expenses = $8370
Credit Prepaid insurance = $8370
(To record insurance expense for the current year)
Note that:
Opening prepaid Insurance = $7560
Add: Insurance premium = $810
Insurance expense = $8370
The demand for personal computers has been estimated to be Q = 500,000 – 700P +200I - 500S. Assume that per capita income I is $13,000 and the average price ofsoftware S is $400.When the price of personal computers is P = $3,000, the priceelasticity of demand is:________.a. –2.625b. –7.0c. –1.0d. –21.0e. –4.25
Answer:
The price elasticity of demand is: -2.625
Explanation:
Given
[tex]Q = 500000 - 700P +200I - 500S[/tex] --- the demand
[tex]I =\$13000[/tex] --- per capita income
[tex]S = \$400[/tex] --- average price of software
[tex]P = \$3000[/tex] --- price of computer
Required
The price elasticity of demand
Substitute values for I and S in: [tex]Q = 500000 - 700P +200I - 500S[/tex]
[tex]Q = 500000 - 700P +200*13000 - 500*400[/tex]
Collect like terms
[tex]Q = 500000 +200*13000 - 500*400- 700P[/tex]
[tex]Q = 2900000- 700P[/tex]
The price elasticity (n) is then calculated using:
[tex]n =\frac{P}{Q} * \frac{dQ}{dP}[/tex]
[tex]Q = 2900000- 700P[/tex]
Differentiate
[tex]\frac{dQ}{dP} = -700[/tex]
Calculate Q when [tex]P = \$3000[/tex]
[tex]Q = 2900000- 700*3000[/tex]
[tex]Q = 800000[/tex]
So, we have:
[tex]n =\frac{3000}{800000} * -700[/tex]
[tex]n =-\frac{3000* 700}{800000}[/tex]
[tex]n =-\frac{2100000}{800000}[/tex]
[tex]n =-\frac{21}{8}[/tex]
[tex]n =-2.625[/tex]
The price elasticity of demand is going to be –2.625.
The equation has
Q = 500,000 – 700P +200I - 500S.
p = $3,000
I = $13,000
S = $400
We have to put in these values in the equation that we have here:
Q = 500,000 – 700*3000 +200*13000 - 500*400
= 800000
We have to find dQ/dP= 500,000+200*13000 - 500*400 – 700P
= 2900000-700p
= -700p
The price elasticity =
-700*3000/800000
= -2.625
The price elasticity = -2.625
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Which strategies is suggested to help build strong interpersonal business relationships?
Answer and Explanation:
Gain trust: Business relationship is sealed with trust. If you are able to make a business partner trust you, you are sure to keep doing business with them. Do not try to take advantage of them and be sure they ate not thinking in that direction.
Show interest in people: keeping up with people and always showing that you actually care, and want to assist in any way you can is a sure way to seal a client for life. Be family.
Work hard: you can not build business relationships if you are not a person that delivers. It doesn't matter if you are a nice person that always cares, if you cannot bring results and be trusted to deliver you cannot have any useful business relationship. This is the most important strategy.
Networking: networking is a popular form of building business relationships. Formal occasions, conferences, informal hangout spots, the gym are all places where you can meet new people and start a business relationship.
Fraternity is protected under the ..
-Federal law
-Provincial law
-none of them
-Charter of rights and freedoms.
Fraternity is protected under the federal law.
As a social association, a Fraternity is protected with first amendment rights. The first amendment has a right to freedom of association while the fourteenth amendment offers equal protection rights.
A fraternity by definition are a group of people that have common interests. These interests could be religious or secular.
The first amendment offers protection to associations formed for speech, assembly, religion or to take care of grievances.
Therefore a fraternity is protected by Federal law.
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Collins Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. The following information applies to the Collins Corporation for the current year: Direct Labor-Hours: Estimated for the Year 24,000 Actual Hours Worked 19,500 Direct Labor Cost Estimated for the Year 300,000 Actual Cost Incurred 210,000 Manufacturing Overhead Estimated for the Year 240,000 Actual Cost Incurred 185,000 Beginning Balance Ending Balance Raw Materials 14,000 22,000 Work in Process 27,000 9,000 Finished Goods 62,000 77,000 The manufacturing overhead cost for the current year will be: a. $17,000 overallocated. b. $17,000 underallocated. c. $55,000 overallocated. d. $55,000 underallocated.
Answer:
b. $17,000 underallocated
Explanation:
Given the information above, the computation of manufacturing overhead cost for the current year is seen below;
First, we will compute the predetermined overhead cost
= Estimated manufacturing overhead / Estimated direct labor hour
The estimated factory overhead cost for a Co. is $1750000 for the year. Direct labor hours are estimated to be 500000. Determine: SHOW ALL WORK a. Predetermined factory overhead rate. $ b. Determine the factory overhead applied assume the actual direct labor hours for Job 50 was. 20000 and for J0b 51 was 24000 . c. Determine the balance in the factory overhead account assuming that the actual cost incurred was $153000. d. Over or under-applied
Answer:
Results are below.
Explanation:
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 1,750,000 / 500,000
Predetermined manufacturing overhead rate= $3.5 per direct labor hour
Now, we can allocate overhead to Job 50 and 51:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Job 50:
Allocated MOH= 3.5*20,000
Allocated MOH= $70,000
Job 51:
Allocated MOH= 3.5*24,000
Allocated MOH= $84,000
Finally, the under/over applied overhead:
(We weren't provided with enough information)
Under/over applied overhead= real overhead - allocated overhead
Consider the following argument from analogy. According our rules for appraising analogical reasoning, if a subsequent consideration strengthens the argument, answer a. Answer b if a consideration weakens the argument. Answer c if a consideration does not affect the argument.
Bill has taken three history courses and found them very stimulating and valuable. So he signs up for another one, confidently expecting that it too will be worthwhile.
25. Suppose that his previous history courses were in ancient history, modern European history, and American history.
26. Suppose that his previous history courses had all been taught by the same professor that is scheduled to teach the present one.
27. Suppose that his previous history courses all had been taught by Professor Smith, and the present one is taught by professor Jones.
28. Suppose that Bill had found his three previous history courses to be the most exciting intellectual experiences of his life.
29. Suppose that his previous history courses had all met at 9:00am, and the present one is scheduled to meet at 9:00am also.
30. Suppose that, in addition to the three history courses previously taken, Bill also had taken and enjoyed courses in anthropology, economics, political science, and sociology.
Answer:
Bill has taken three history courses and found them very stimulating and valuable. So he signs up for another one, confidently expecting that it too will be worthwhile.
25. Suppose that his previous history courses were in ancient history, modern European history, and American history.
Answer A
26. Suppose that his previous history courses had all been taught by the same professor that is scheduled to teach the present one.
Answer A
27. Suppose that his previous history courses all had been taught by Professor Smith, and the present one is taught by professor Jones.
Answer B
28. Suppose that Bill had found his three previous history courses to be the most exciting intellectual experiences of his life.
Answer A
29. Suppose that his previous history courses had all met at 9:00am, and the present one is scheduled to meet at 9:00am also.
Answer C
30. Suppose that, in addition to the three history courses previously taken, Bill also had taken and enjoyed courses in anthropology, economics, political science, and sociology.
Answer B
Explanation:
Slapshot Company makes ice hockey sticks. Last week, direct materials (wood, paint, Kevlar, and resin) costing $26,000 were put into production. Direct labor of $20,000 (10 workers x 100 hours x $20 per hour) was incurred. Manufacturing overhead equaled $52,000. By the end of the week, the company had manufactured 2,000 hockey stick. Explain how?
Answer:
Slapshot Company
The total production is $98,000 with a unit cost of $49 per hockey stick.
The selling price per unit should be above $49 when marked-up.
Explanation:
a) Data and Calculations:
Direct materials (wood, paint, Kevlar, and resin) $26,000
Direct labor (10 workers x 100 hours x $20 per hour) 20,000
Manufacturing overhead equaled 52,000
Total production costs = $98,000
Production of hockey stick = 2,000 units
Unit cost of hockey stick = $49 ($98,000/2,000)
Assume a pro rata reinsurance agreement with a 35% retention. Further assume a primary insurance contract with limits of $2,500,000, premiums of $20,000 and deductible $10,000. a)How much premium will the primary insurance company retain
Answer: $7000
Explanation:
Since there is a pro rata reinsurance agreement with a 35% retention, primary insurance contract with limits of $2,500,000, premiums of $20,000 and deductible $10,000, then the amount of premium that the primary insurance company will retain will be:
= Retention rate × Premium
= 35% × $20000
= 0.35 × $20000
= $7000
Which of the following does NOT describe the front-end business practices of firms that respect the strategic roles of purchasing?
a. Product development is regarded as a front-end business practice.
b. Creativity does not require discipline.
c. Marketing in general is regarded as a front-end business practice.
d. High level of uncertainty is about the fact that people have to make important decisions and although they do not have all the relevant information they need.
e. Front-end business practices are discovery-driven in that they explore and create from what they do not know about.
Answer:
b. Creativity does not require discipline.
Explanation:
Front end business practice is the strategy to develop and progress business activities from customer perspective. It focusses on customer demand and then products are customized according to customer needs. Marketing efforts are placed to inform customers about the different features of the product.
Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to
Answer:
C. decrease
Explanation:
In the case when the money demand and the money supply model is used so the open market purchase would result the interest rate of equilibrium to decrease as if there is an open market purchase so it rise the money supply due to which the supply curve of the money move shiftward
Therefore the rate of interest should be decreased
Unobserved effects versus idiosyncratic errors
Suppose you have two years' worth of panel data on wages and work experience of adults; however, the data set has no further information on the characteristics of the individuals in the data set. Specifically, you have cross-sectional wage and work experience data on individuals in 2006, and cross-sectional data on those same individuals in 2012. You plan to use the following fixed effects model to analyze the effects of work experience on wages:
log (wage it ) = βo + 80 yr10, + B1 experit + ai + uit
where
wage it = yearly wage of individual i at time t, in dollars
yrl0, =1 in the year 2010 (t = 2), and =0 otherwise (t = 1)
exper = years of work experience of individual i, at time t
ai = unobserved (time-invariant) effect
uit = idiosyncratic error
Two other factors that can influence wage, which you have not controlled for in your model, are height and industry of employment.
Use the following table to indicate which term in the fixed effects model captures the effect of height, which term captures the effect of industry of employment, and which term captures the effect of work experience.
ai uit β1
Work experience
Height
Industry of employment
Answer:
The terms that capture the effect of industry of employment and work experience are:
Industry of employment = uit
Work experience = β1
Height = ai
Explanation:
a) Data:
ai uit β1
Work experience
Height
Industry of employment
b) Explanation
The "idiosyncratic error" (uit) describes the unobserved factors that impact the dependent variable. For example, industry of employment, and this factor vary from one-time period to the next.
The unobserved (time-invariant) effect (ai) refers to the height of the industry of employment, which does not vary over time.
Finally, work experience is depicted by β1, which is a factor that changes with time.
Fran’s Fries has budgeted sales for May, June and July at $500,000, $680,000 and $720,000, respectively. Sales are 80% cash and 20% on account. Assume sales on account are collected in the month following the sale. Compute cash receipts for June and July. Show your work here.
Answer:
Results are below
Explanation:
Giving the following information:
Sales are 80% cash and 20% on account.
Sales:
May= $500,000
June= $680,000
July= $720,000
Cash collection June:
Cash collection from May= (500,000*0.2)= 100,000
Cash collection June= (680,000*0.8)= 544,000
Cash collection June= $644,000
Cash collection July:
Cash collection from June= (680,000*0.2)= 136,000
Cash collection July= (720,000*0.8)= 576,000
Cash collection July= $712,000
Read the following paragraph and respond to the questions below.
(1) Frequently, department managers and supervisors recruit applicants without working through our corporate human-resources office. (2) Our human-resources departments at all of our locations across the country have experienced this problem. (3) Recently, the manager of our tool-design department met with a recent industrial design graduate to discuss an opening for a tool designer. (4) The graduate was sent to the human-resources department, where she was told that no such position existed. (5) When the tool-design manager asked the director of human resources about the matter, the manager learned that the company president had ordered a hiring freeze for two months. (6) I’m sure that our general employment situation will get better. (7) As a result of the manager’s failure to work through proper channels, the applicant was not only disappointed but bitter.
a. Which number sentence is the topic sentence?
b. Which number sentence does not contribute to paragraph unity?
c. What is the writer providing in sentences 3 through 7 to help the reader understand his/her point?
d. Why is that helpful, or why is the message better by adding sentences 3 through 7?
Answer:
a. The number sentence that is the topic sentence is sentence (1).
b. Sentence (6) does not contribute to the paragraph's unity. It can be eliminated, without changing the meaning that can be obtained from the paragraph. It does not support the topic.
c. The writer, in sentences 3 through 7, provides an example and further details to help the reader to understand her point.
d. The example in a sentence makes the idea clearer to the reader. Without the example, which provides further details, the reader may not clearly appreciate the topic under discussion.
Explanation:
The purpose of the topic sentence is to introduce the theme of the paragraph or the point of view of the writer. It captures the essence of the story. As it bears the central idea, it focuses the paragraph to achieve unity.
What is one of the key phases of procurement processes that employ competitive bidding mechanisms?
In a closed economy, public saving is the amount of a. income that households have left after paying for taxes and consumption. b. spending that the government undertakes in excess of the taxes it collects. c. income that businesses have left after paying for the factors of production. d. tax revenue that the government has left after paying for its spending.
Answer:
In a closed economy, public saving is the amount of
d. tax revenue that the government has left after paying for its spending.
Explanation:
Public saving or budget surplus in a closed economy describes the excess of government revenue (obtained through taxation of individuals and businesses in the economy) and government expenditures on goods and services. In an open economy, transfers are deducted before arriving at the public saving. In all economies, the addition of private (individual and business) and public savings result to national investments.
While the evidence suggests that over long periods of time that stocks will outperform bonds, individuals with a long-term investment horizon may still choose to invest in bonds. Is this rational behavior? Why or why not?
Answer:
Stocks and Bonds
Yes. It is a rational behavior for individuals with a long-term investment horizon to choose to invest in bonds rather than investing in stocks despite the overwhelming "evidence that suggests that over long periods of time stocks still outperform bonds."
Rational behavior involves making rational choices that provide optimal levels of benefit or utility for the individual. People who make rational choices would rather choose bonds with lower risks and returns than stocks with higher risks and returns.
Explanation:
Every rational investor would prefer to reduce her risk exposure instead of increasing it. Every investor is also aware that investments with higher risks attract higher returns. However, determining the certainty of the returns is difficult.
Galaxy Corp. is considering opening a new division to make iToys that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of producing each iToy to be $6,700 in the first year; however, it expects the selling price and cost per iToy to increase by 3.00% each year.
Based on the preceding information and rounding dollar amounts to the nearest whole dollars, the company expects the selling price in the fourth year of the project to be_______ , and it expects the cost per unit in the fourth year of the project to be _______.
Which of the following statements about inflation’s effect on net present value (NPV) is correct?
A. When the selling price and cost per unit are expected to increase at the same rate, forgetting to take inflation into account in a capital budgeting analysis will typically cause the estimated NPV to be lower than the true NPV.
B. When the selling price and cost per unit are expected to increase at the same rate, you do not need to take inflation into account when performing a capital budgeting analysis.
Answer and Explanation:
The computation is shown below:
1
The calculation of the Expected selling price in the fourth year is
Expected Selling Price in year 1 $15,250
Expected Annual Growth rate is 3%
So,
Expected Selling Price in year 4 = 15250 × (1+3%)^3
= $16,664
2
The Calculation of Expected Cost per unit in the fourth year is
Expected Selling Price in year 1 = $6,700
Expected Annual Growth rate = 3%
So,
Expected Selling Price in year 4 = 6700 × (1+3%)^3
= $7,321
3
Inflation’s effect on net present value (NPV):
In the case when the selling price and the cost per unit rises at the similar rate so it is forgot to considered the inflation this will result in NPV that should be lower than the true NPV
Data concerning Lemelin Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 230 100 % Variable expenses 115 50 % Contribution margin $ 115 50 % The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $20 per unit. In exchange, the sales staff would accept a decrease in their salaries of $113,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change
Answer:
Lemelin Corporation
The overall effect on the company's monthly net operating income of this change is an increase of $1,500.
Explanation:
a) Data and Calculations:
Sales units per month = 7,000
Fixed expenses per month = $581,000
Per Unit Percent of Sales
Selling price $ 230 100 %
Variable expenses 115 50 %
Contribution margin $ 115 50 %
Income Statements
Before Change After Change Difference
Sales unit 7,000 7,300 300
Sales revenue $1,610,000 $1,679,000 $69,000
Variable cost of sales 805,000 839,500 -34,500
Sales commission 0 146,000 -146,000
Contribution margin $805,000 $693,500 ($111,500)
Fixed expenses 581,000 468,000 113,000
Net operating income $224,000 $225,500 $1,500
When using email to request action, the subject line should be as vague as possible.
Question 7 options:
True
False
Answer:
False
Explanation:
When using an email to request an action the subject line should be brief but specific. Leaving a vague subject line can often confuse another, however, making the subject line too lengthy and specific defeats the purpose. The best subject lines are brief but give a general idea of what the email contains.
Answer:
False
Explanation:
To email someone to request action, you can't be vague or you might not get what you exactly want from that person.
TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product. Standard Standard Standard Quantity Price Cost Direct Materials 8 pounds $ 1.80 per pound $ 14.40 Direct Labor 0.25 hour $ 8.00 per hour 2.00 $ 16.40 During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours. What is the direct labor rate variance for November
Answer:
The direct labor rate variance for November is $34,200
Explanation:
To find out the direct labor rate variance, we have to multiply the actual standard rate of direct labor into actual hours of direct labor used
Standard hourly rate of direct labor hour = $14.40
Actual direct labor hours = 5,000
Standard direct labor cost
= 5,000 × $14.40
= $72,000
Total factory wages are $42,000 in which direct labor is 90%
= $42,000 × 90%
= $37,800
Actual direct labor cost = $37,800
Therefore,
Direct labor rate variance = Standard direct labor cost - Actual direct labor cost
Direct labor rate variance
= $72,000 - $37,800
= $34,200
When coins were jfirst used, they only had an image on one side. Why did coins start to have images on two sides?
Answer:
The coins have images on both sides because the coin issuers, or seigniors, wanted to see their faces on the coins.
Coins start to have images on two sides because the coin issuers, or seigniors, wanted to see their faces on the coins.
When and why were coins used as money?People traded products and services before money was created. The Mesopotamian people did not invent the shekel, which is regarded as the first known form of money, until roughly 5,000 years ago. Printed coins were used to pay troops, it was approximately 650–600 B.C. when gold and silver coins first appeared. The first real coins were struck in the prehistoric kingdoms of Lydia and Ionia and were made of electrum, a mineral composed primarily of gold and at least 20 percent silver.
The Lydians started minting gold coins in the period between 560 and 546 BC after learning how to separate the gold from the silver in electrum. Coins are significant historical primary sources. They communicate king names together with their titles, images, locations, dates, dynasties, accomplishments, and logos.
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If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?
Answer:
unfavorable variance
Explanation:
In such situation, a debit balance in Direct Materials Price Variance represents
unfavorable variance. This is an accounting term that explains situations when the actual cost of the project is higher than the standard or projected cost.
It means that the actual price at which the materials are bought is higher than the standard price / budgeted price / estimated price and therefore, more amount has to be paid than expected.
Imagine you are reviewing a business plan. In which section of the business plan would you expect to find the answers to the following questions?
Question Financial Statements Marketing & Sales Management Service or Product Line
How much money will the owners invest in the business start-up?
How will the salespeople for this business be compensated?
What are the unique features of this business’s merchandise?
Answer:
Hence,
The money which the owners invest in the business start-up is by Financial statements.
The salespeople for this business be compensated is by Marketing & sales management.
The unique features of this business’s merchandise are by Service or product line.
Explanation:
Financial statements show how much money will the owners invest in the business start-up.
Marketing & sales management shows how will the salespeople for this business be compensated.
Service or product line shows What are the unique features of this business’s merchandise
What would cause an economy to be producing at a point inside its production possibilities curve?
Answer:
The correct answer is: the lack of effectivization in the use of their resources inside the economy to obtain the best outcomes possibles.
Explanation:
To begin with, in the economic theory the term known as production possibilities curve refers to a strategic tool, a graphic that can be used by the professionals of the area in order to understand how the economy is working with its resources, if the economy is producing well enough then the economy should be getting great development results and the point inside the graphic should be in the limit of the curve, but if the point is in the inside of the curve then that means that the resources inside that particulary economy are not being fully use to their best in order to obtain the best outcome so that will explain that there is still possibility to expand the production according to the theory of the tool itself.
Mark owns a driving range in New York City. He has taken notice of the three competitors who are located very close to his business. Mark decides to look at his competitors' pricing and then determine his best pricing strategy based on all of the information. In this scenario, Mark is utilizing ________.
Answer:
competitor-based pricing
Explanation:
Since in the given situation, it is mentioned that mark look to the competitor pricing and them measures it pricing startegy
So here Mark is utilizing competitor based pricing as the mark has decided the price that depend upon his competiton. It is mainly applied for those products who are almost same with the competitor products.
Therefore the above should be the answer for the given scenario.
In order to produce a new product, a firm must lease equipment at a cost of $100,000 per year. The managers feel that they can sell 50,000 units per year at a price of $75. What is the highest variable cost that will allow the firm to at least break even on this project
Answer:
$73 = unitary variable cost
Explanation:
To calculate the unitary variable cost that will yield the break-even point, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
50,000= 100,000 / (75 - unitary variable cost)
3,750,000 - 50,000unitary variable cost= 100,000
3,650,000 = 50,000unitary variable cost
$73 = unitary variable cost
Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on the financial statements.
Jun. 1 Jenna Aracel, the owner, invested $100,000 cash, office equipment with a value of $5,000, and $60,000 of drafting equipment to launch the company in exchange for common stock.
Jun. 2 The company purchased land worth $49,000 for an office by paying $6,300 cash and signing a long-term note payable for $42,700.
Jun. 3 The company purchased a portable building with $55,000 cash and moved it onto the land acquired on June 2.
Jun. 4 The company paid $3,000 cash for the premium on an 18-month insurance policy.
Jun. 5 The company completed and delivered a set of plans for a client and collected $6,200 cash.
Jun. 6 The company purchased $20,000 of additional drafting equipment by paying $9,500 cash and signing a long-term note payable for $10,500.
Jun. 7 The company completed $14,000 of engineering services for a client. This amount is to be received in 30 days.
Jun. 8 The company purchased $1,150 of additional office equipment on credit.
Jun. 9 The company completed engineering services for $22,000 on credit.
Jun. 10 The company received a bill for rent of equipment that was used on a recently completed job. The $1,333 rent cost must be paid within 30 days.
Jun. 12 The company collected $7,000 cash in partial payment from the client billed on June 9.
Jun. 14 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 17 The company paid $1,150 cash to settle the account payable created in on June 8.
Jun. 20 The company paid $925 cash for minor maintenance of its drafting equipment.
Jun. 23 The company paid $9,480 cash in dividends.
Jun. 28 The company paid $1,200 cash for wages to a drafting assistant.
Jun. 29 The company paid $2,500 cash for advertisements on the web during June.
Required:
Journalize the above entires.
Answer:
1 - Cash (Dr.) $100,000
Office equipment (Dr.) $5,000
Drafting equipment (Dr.) $60,000
Capital (Cr.) $165,000
2- Land (Dr.) $49,000
Cash (Cr.) $6,300
Long term notes payable (Cr.) $42,700
3- Portable building (Dr.) $55,000
Cash (Cr.) $55,000
4- Insurance premium (Dr.) $3,000
Cash (Cr.) $3,000
5- Cash (Dr.) $6,200
Service Revenue (Cr.) $6,200
Explanation:
6- Drafting equipment (Dr.) $20,000
Cash (Cr.) $9,500
Long term notes payable (Cr.) $10,500
7- Accounts Receivable (Dr.) $14,000
Service revenue (Cr.) $14,000
8- Office equipment (Dr.) $1,150
Accounts Payable (Cr.) $1,150
9- Accounts Receivable (Dr.) $22,000
Engineering Service (Cr.) $22,000
10- Cash (Dr.) $9,000
Accounts Receivable (Cr.) $9,000
11- Wages expense (Dr.) $1,200
Cash (Cr.) $1,200
12- Accounts Payable (Dr.) $1,150
Cash (Cr.) $1,150
13- Maintenance expense (Dr.) $925
Cash (Cr.) $925
14- Dividends (Dr.) $9,480
Cash (Cr.) $9,480
15- Wages expense (Dr.) $1,200
Cash (Cr.) $1,200
16- Advertising expense (Dr.) $2,500
Cash (Cr.) $2,500
A car dealer leases a small computer with software for $5,000 per year. As an alterative he could buy the computer for $7,500 and lease the software for $3,500 per year. Any time he would decide to switch to some other computer he could cancel software lease and sell the computer for $500.
If he buys the computer nad leases the software, what is the payback period?
a. 3 years
b. 4 years
c. 5 years
d. 6 years
If he kept the computer and software for 8 years, what would be the benefit-cost ratio, based on a 5% interest rate.
a. 1.5
b. 1.4
c. 1.3
d. 1.2
Answer:
1. The payback period is:
= 3 years
2. The benefit-cost ratio is:
= 1.1
Explanation:
a) Data and Calculations:
Leasing Computer Buying Computer &
with Software Leasing Software
Annual lease payment $5,000 $3,500
Cost of computer $7,500
Salvage value of computer $500
Usage period 8 years 8 years
Interest rate 5% 5%
Present value annuity factor 6.463 6.463
Present value factor for salvage 0.677
Present value of annuity $32,315 $29,782 ($22,621 + $7,500 - 339)
$22,782 = ($3,500 * 6.463 + $7,500 - ($500 * 0.677))
Benefit-cost ratio = $32,315/$29,782 = 1.1
