Leona, whose marginal tax rate on ordinary income is 37 percent, owns 100 percent of the stock of Henley Corporation. This year, Henley generates $1 million of taxable income.
If Henley wants to pay all of its after-tax earnings to Leona as a dividend, calculate the amount of the dividend payment.
Calculate Leona’s tax due on the dividend computed in part a, and her after-tax cash flow from the dividend receipt.
Compute the combined corporate and individual tax burden on Henley’s $1 million of current year income, and the effective combined tax rate on this income.
Answer: See explanation
Explanation:
First and foremost, it should be noted that there's a flat tax rate of 21% on the taxable income, therefore the after tax income will be:
= (1 - 21%) × $1 million
= 79% × $1 million
= $790,000
Therefore, the amount of the dividend payment is $790,000 which is given to Leona.
The after tax cash flow from the dividend receipt will be:
= $790,000 - (20% × $790,000)
= $790,000 - (0.2 × $790,000)
= $790,000 - $158,000
= $632,000
Therefore, the total tax by Henly and Leona will then be:
= $210,000 + $158,000
= $368,000.
This is 36.8% (368000/1 million) of the tax rate.
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:________.
a. Accounts Receivable. A-Hopkins 2000
Allowance for Doubtful Accounts 2000
b. Allowance for Doubtful Accounts 2000
Bad debts expense 2000
c. Accounts Receivable A-hopkins 2000
Bad debts expense 2000
d. Accounts Receivable A Hopkins 2000
Allowance for Doubtful Accounts 2000
e. Allowance for Doubtful Accounts 2000
Accounts receivables A-Hopkins 2000
Answer:
e. Debit Allowance for Doubtful Accounts $2,000
Credit Accounts receivables A-Hopkins $2,000
Explanation:
When a company use the allowance method of accounting for uncollectible accounts, the company would actively review and book bad debt expenses for any debt in doubt of collection. The entry would be; Debit Bad debt expenses, Credit Allowance for doubtful debt
However, where there is sufficient evidence that these debts goes into default, no more expenses would be recorded , instead
Dr. Allowance for doubtful debt $2,000
Cr. Account receivable $2,000
(To record written off receivables)
Buying Paint April is at the hardware store and must decide whether to buy paint in 11 individual quart cans or to buy it in both gallon and quart cans. Here are the facts:
4 quarts
1 gallon
1 quart costs $4.39
1 gallon costs $13.99
What should April do?
1. Find the cost.
2. Find out how many gallons to buy 2 Gallons.
3. Find the cost. of 4 quarts.
Answer:
a) $41.15
b) Two gallons
c) $48.29
Explanation:
Total individual quarts to be purchased = 11
Number of gallons in 11 quarts = 11/4 = 2
Hence there are 2 gallons and 3 quarts in 11 individual quarts
a) Total price
2 * $ 13.99 + 3 * $4.39 = $41.15
b) Two gallons
c) Cost of 4 quarts
11 * $ 4.39 = $48.29
Consider the case of Cranked Coffee Company:
Cranked Coffee Company is a mature firm that has a stable flow of business. The following data was taken from its financial statements last year:
Annual sales $10,200,000
Cost of goods sold $6,630,000
Inventory $3,200,000
Accounts receivable $2,200,000
Accounts payable $2,400,000
Cranked Coffee’s CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.)
Value
Inventory conversion period 46.93; 41.71; 176.71; or 39.11
Average collection period 27.25; 78.73; 24.38; or 22.94
Payables deferral period 32.50; 41.07; 33.24; or 132.13
Cash conversion cycle 39.62; 122.77; 37.54; 45.88
B: Both the inventory conversion period and payables deferral period use the average daily COGS in their denominators, whereas the average collection period uses average daily sales in its denominator. Why do these measures use different inputs?
Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold.
Current assets should be divided by sales, but current liabilities should be divided by the COGS.
C. Is there generally a positive or negative relationship between net working capital and the cash conversion cycle?(In other words, if a firm has a high level of net working capital, is it likely to have a high or low cash conversion cycle?)
There is a positive relationship between net working capital and the cash conversion cycle.
There is a negative relationship between net working capital and the cash conversion cycle.
D. What are the four key factors in a firm’s credit policy?
Credit terms, discounts, credit standards, and collection policy
Credit period, discounts, credit standards, and collection policy
E. If the credit terms as published by a firm were 2/15, net 60, this means the firm will:
allow a 2% discount if payment is received within 15 days of the purchase, and if the discount is not taken the full amount is due in 60 days.
allow a 15% discount if payment is received within 2 days of the purchase, and if the discount is not taken the full amount is due in 60 days.
F. The management at Cranked Coffee Company wants to continue its internal discussions related to its cash management. One of the finance team members presents the following case to his cohorts:
Case in Discussion
Cranked Coffee Company’s management plans to finance its operations with bank loans that will be repaid as soon as cash is available. The company’s management expects that it will take 40 days to manufacture and sell its products and 35 days to receive payment from its customers. Cranked Coffee’s CFO has told the rest of the management team that they should expect the length of the bank loans to be approximately 75 days.
Which of the following responses to the CFO’s statement is most accurate?
The CFO is not taking into account the amount of time the company has to pay its suppliers. Generally, there is a certain length of time between the purchase of materials and labor and the payment of cash for them. The CFO can reduce the estimated length of the bank loan by this amount of time.
The CFO’s approximation of the length of the bank loans should be accurate, because it will take 75 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank.
Setting and implementing a credit policy is important for three main reasons:
It has a minor effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.
It has a major effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.
Answer:
Cranked Coffee Company
A. Cash conversion cycle = 122.77 days.
B. The measures use different inputs because:
Inventory and accounts payable are carried at cost on the balance sheet, whereas accounts receivable are recorded at the price at which goods are sold.
C. There is a negative relationship between net working capital and the cash conversion cycle.
D. Credit period, discounts, credit standards, and collection policy
E. If the credit terms as published by a firm were 2/15, net 60, this means the firm will:
allow a 2% discount if payment is received within 15 days of the purchase, and if the discount is not taken the full amount is due in 60 days.
F. The most accurate response to the CFO's statement is:
The CFO’s approximation of the length of the bank loans should be accurate, because it will take 75 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank.
G. Setting and implementing a credit policy is important for three main reasons:
It has a major effect on sales, it influences the amount of funds tied up in receivables, and it affects bad debt losses.
Explanation:
a) Data and Calculations:
Annual sales $10,200,000
Cost of goods sold $6,630,000
Inventory $3,200,000
Accounts receivable $2,200,000
Accounts payable $2,400,000
Inventory conversion period = Inventory ÷ (Cost of sales ÷ 365)
= $3,200,000/$6,630,000 * 365
= 176.17 days
Average collection period = Accounts receivable/Sales * 365
= $2,200,000/$10,200,000 * 365
= 78.73 days
Payables deferral period = Accounts payable/Cost of goods sold * 365
= $2,400,000/$6,630,000 * 365
= 132.13 days
Cash conversion cycle = Inventory conversion period + Average collection - Payables deferral period
= 176.17 + 78.73 - 132.13
= 122.77
You are planning to make monthly deposits of $90 into a retirement account that pays 10 percent interest compounded monthly. If your first deposit will be made one month from now, how large will your retirement account be in 19 years?
Answer:
$71,644.27
Explanation:
Future value of the deposit in 19 years = Monthly deposit * [(1 + interest rate/12)^12*No. of years - 1] / (interest rate/12
= $90 * [(1 + 10%/12)^12*19 - 1] / (10%/12)
= $90 * [6.63346333924 - 1] / 0.008333
= $90 * 6.63346333924/0.008333
= $90 * 796.0474
= $71644.269835
= $71,644.27
Distribution network is not required for
product.
O Standardised
O Durable
O Unstandardised
O Perishable
Answer:
O Perishable
Explanation:
The distribution network required for the products that are standardised, durable and unstandardised that means for storage purpose
But in the case of the perishable goods, the goods that are not stored for the longer time that means it consumed immediately like milk, bread, eggs, etc
So as per the given option, the last option should be relevant
Beginning inventory, purchases and sales data for tennis rackets are as follows:
Apr. 1 Inventory 12 units at $45
Apr. 11 Purchase 13 units at $47
Apr. 14 Sale 18 units
Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculate merchandise sold and ending inventory using LIFO.
Assume the selling price for the units sold on April 14 was $100.
Answer:
Cost of goods sold = $836
Ending inventory = $315
Explanation:
a) Data and Calculations:
Date Description Units Unit Price Balance
Apr. 1 Inventory 12 $45 $540
Apr. 11 Purchase 13 $47 $1,151 ($540 + 13 * $47)
Apr. 14 Sale (18) $100 $315 ($7 * $45)
Sales revenue = $1,800 ($100 * 18)
Cost of goods sold = $836 ($47 * 13 + $45 * 5)
Ending inventory = $315 ($7 * $45)
b) Under the LIFO (Last in, First out) inventory valuation method, it is assumed that goods that were purchased closest to the selling date were the ones to be sold while those purchased earlier remain in inventory.
Techniques for building employee empowerment include: building communication networks that include employees. developing open, supportive supervisors. moving responsibility from both managers and staff to production employees. building high-morale organizations. All of these are techniques for employee empowerment.
Answer:
All of these are techniques for employee empowerment.
Explanation:
An employee can be defined as an individual who is employed by an employer of labor to perform specific tasks, duties or functions in an organization.
Basically, an employee is saddled with the responsibility of providing specific services to the organization or company where he is currently employed while being paid a certain amount of money hourly, daily, weekly, or monthly depending on the contractual agreement between the two parties (employer and employee).
Generally, it's very important and necessary for employers or business owners to develop incentives for the empowerment of the employees.
Some of the techniques for building employee empowerment include the following:
I. An employer should build a strong communication networks that include employees and takes ideas from them.
II. An employer should groom his or her supervisors into being receptive, open, and supportive to their subordinates.
III. Moving responsibility from both managers and staff to production employees.
IV. High-morale should be stimulated or built around the employees working within organizations.
Gentle Ben's Bar and Restaurant uses 6,700 quart bottles of an imported wine each year. The effervescent wine costs $4 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben figures that it costs $25 each time an order is placed, and holding costs are 15 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 134 bottles (closed two weeks per year) with a standard deviation of 30 bottles. Ben would like to use an inventory system that minimizes inventory cost and will provide a 95 percent service probability.
Required:
a. What is the economic quantity for Ben to order? (Round your answer to the nearest whole number.)
b. At what inventory level should he place an order? (Round your answer to the nearest whole number.)
Answer:
a. The answer is:762 bottlé.
b. The answer is: 487 bottles.
Explanation:
a. The economic order quantity is calculated as: [tex]\sqrt{(2xDxS/H)}[/tex] = [tex]\sqrt{2 x 6968 x 25)/0.6[/tex] = 762 units because: D = annual demand = Weekly demand x week opening per year = 134 x 52 = 6968; S = Cost per order = 25; H = Holding cost per unit = 15% x purchase price = 15% x 4 = 0.6
b. Inventory level to place order:
With the inventory system providing a 95 percent service probability, z level is 1.64 (using the NORM.S.INV function in excel).
So Inventory level to place order = 134 * 3 + 1.64 * 30 * 3^0.5= 487 bottles.
Your boss wants to set safety stock levels correctly to ensure an 87.9% service level. She needs your answer right away. What should the safety stock level be given that you know: * Average replenishment cycle is 10 days * Standard deviation of daily demand is 12 units * Average daily demand is 100 units * Standard deviation of the replenishment cycle is 3 days Group of answer choices
Answer:
the safety stock is 354
Explanation:
The computation of the safety stock is shown below:
= z × SD of demand during lead time
= z × [ ( SD of daily demand)^2 × Lead time + ( Demand × SDLT)^2]^0.5
= z × [ 144 × 10+ ( 100 × 3)^2]^0.5
= z × [ 1440+90000]^0.5
= 1.17 × 302.39
= 353.79
= 354
hence, the safety stock is 354
On December 29, 2019, Patel Products, Inc., sells a delivery van that cost $20,000. After recording the entry to bring the accumulated depreciation up-to-date, the delivery van had accumulated depreciation of $18,000. Patel received $2,000 cash from the purchaser of the delivery van.
Required:
Write the necessary Journal entry to record the sale.
Answer:
Date Account titles and Explanation Debit Credit
Dec 29 Cash $2,000
Accumulated depreciation - Delivery van $18,000
Delivery van $20,000
(To record the sale of delivery van)
The current price of canvas messenger bags is $36 each and sales of the bags equal 400 per week. If the price elasticity of demand is -2.5 and the price changes to $44, how many messenger bags will be sold per week?
Answer:
624
Explanation:
Categorize the scenarios as either a discretionary act or the result of automatic stabilizers.
a. Economic growth increases personal and corporate income, increasing tax payments.
b. A recession increases the number of recipients of unemployment benefits.
c. Legislators increase tbc generosity of unemployment benefits.
d. A law is enacted that increases government spending on health-care programs
1. Discretionary spending
2. Automatic stabilizers
Answer:
a. automatic stabilizers.
b. automatic stabilizers.
Discretionary spending
Discretionary spending
Explanation:
Automatic stabilizers are stabilizers that adjust the economy automatically without the intervention of external agents . examples include progressive tax and transfer payments
In an expansion, progressive tax increases the tax paid and this reduces disposable income
In a contraction, tax paid is reduced and this increases disposable income
Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.
Discretionary fiscal policies can either be expansionary or contractionary
Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.
Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes
London New York Zurich Hong Kong Bid/Ask Quotes for CHF $0.7464-71 $0.7469-76 $0.7471-74 $0.7460-70 In order to take advantage of locational arbitrage, a currency speculator should buy CHF from the______ dealer and sell CHF to the ______ dealer. Group of answer choices Hong Kong; Zurich London; New York Zurich; Hong Kong New York; Hong Kong
Answer:
The correct option is Hong Kong; Zurich.
Explanation:
Giveen:
Currency dealer in London New York Zurich Hong Kong
Bid/Ask Quotes for CHF $0.7464-71 $0.7469-76 $0.7471-74 $0.7460-70
Locational arbitrage can be described as the act of a currency speculator attempting to profit from tiny exchange rate discrepancies across several banks in different locations for a specific currency pair.
Since it is possible for the currency speculator to buy at Ask price from a bank in one location and sell it to another bank at bid price in another location, he will try to identify where he can buy at the lowest price to go and sell in another location with the highest price.
From the table above, Hong Kong has the lowest Bid/Ask Quotes for CHF of $0.7460-70 while Zurich has the highest Zurich of $0.7471-74. Therefore a currency speculator should buy CHF from the Hong Kong dealer and sell CHF to the Zurich dealer.
Therefore, the correct option is Hong Kong; Zurich.
The Pizza Company is considering a new three-year expansion project. The key data are shown below:
The company hired a consulting firm to help evaluate the project and paid the consulting fee of $60,000. The company owns the space. If company did not invest in the project, it can receive after-tax rental fee for $300,000 per year for 3 years. However, if the
company invested in the project, it will use the space for the project.
The fixed cost to produce pizza is required at $150,000 per year.
It is estimated that 50,000 units will be sold in the first year and that 40,000 units and 30,000 units will be sold in the second and third years respectively.
Each pizza is expected to sell for $25 and the production cost will be $15 per unit.
The sales price and variable cost should increase with inflation. Expected inflation rate per year is 5%.
The project requires an initial investment in working capital of $500,000, which will be required in each year at 10% of revenue in the following year.
The purchase of the machinery at the start of the project is $1,000,000. The shipping and installation cost are $200,000. The machinery will be depreciated straight-line to zero. It is estimated that the machinery can be sold at the end of the project for $250,000.
To finance the project, the company would need to take a one-million dollar loan at 8% interest rate p.a. from HSBC over the life of the project. Annual interest expense is $80,000.
The corporate tax rate is 34%.
The Pizza Company is evaluating its cost of capital under alternative financing arrangements. In consultation with the consulting firm, the Pizza Company expects to be able to issue new Debt at Par with a coupon rate of 8% (coupons paid annually) and to issue new preferred stock with a $4 per share dividend at $32 a share. The common stock of the Pizza Company is currently selling for $22 a share while its book value is $6. The Pizza Company expects to pay a total
dividend of $525,000 for its 200,000 common shares outstanding next year. Market analysts foresee a growth in dividends of the company at the rate of 4% per year. The Pizza Company raises capital using 30% bond, 20% preferred stock, and 50% common stock
a. What is the cost of capital (WACC) of the Pizza Company?
b. Calculate the NPV of the project using the cost of capital calculated in part (a).
Should the project be accepted?
Answer:
dividend of $525,000 for its 200,000 common shares outstanding next year. Market analysts foresee a growth in dividends of the company at the rate of 4% per year. The Pizza Company raises capital using 30% bond, 20% preferred stock, and 50% common stock
a. What is the cost of capital (WACC) of the Pizza Company?
b. Calculate
Phillips Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 8 percent thereafter. If the required return is 11 percent and the company just paid a dividend of $1.45, what is the current share price
Answer:
$69.47
Explanation:
D1 = ($1.45*1.20) = $1.7
D2 = ($1.7*1.20) = $2.04
D3 = ($2.04*1.20) = $2.45
Value after year 3 = (D3*Growth Rate) / (Required rate-Growth Rate)
Value after year 3 = ($2.45*1.08) / 0.11-0.08
Value after year 3 = $2.646 / 0.03
Value after year 3 = $88.20
Current share price = Future dividend and value*Present value of discounting factor(rate%,time)
Current share price = $1.7/1.11 + $2.04/(1.11)^2 + $2.45/(1.11)^3 + $88.20/(1.11)^3
Current share price = $1.5315315 + $1.65571 + $1.7914189 + $64.49107
Current share price = $69.4697304
Current share price = $69.47
The number of times interest charges are earned is computed as
a. net income plus interest charges, divided by interest charges.
b. income before income tax plus interest charges, divided by interest charges.
c. net income divided by interest charges.
d. income before income tax divided by interest charges.
Answer:
B)income before income tax plus interest charges, divided by interest charges.
Explanation:
Interest charges can be regarded as
sum of interest that is on one's credit card account, It can be be defined base on transaction type, such as
cash advances , purchases, or balance transfers. If one is making less than full balance payment or making payment after due date, then one would be charged. Another point is that there is is no grace period for cash advances and balance transfers, i.e as the transaction is been made, there would be accrual of interest. Interest rate is a term for amount that is been charged by lender for usage of assets, and it's been expressed in term of percentage of the principal. It should be noted The number of times interest charges are earned is computed as income before income tax plus interest charges, divided by interest charges.
Doug Datner had an eclectic background. He completed his law degree from the University of Virginia, then went to work for a technology start-up in Dubai. After the start-up was purchased by a larger corporation, affording Doug a hefty sum of money, Doug and his spouse returned to the United States. While working with an architect and a designer to build their dream home, they realized that there was not a provider of high-quality custom-made door and window hardware at a reasonable price point in the United States. Even though Doug had no experience in the field, he decided to start a business manufacturing high-quality custom-made door and window hardware. He named the company Hardware House Doug and his wife cleared space in their newly constructed garage, designed several basic prototypes, and hired a metalwork expert to replicate their prototypes. They decided to have a few designs in catalog as one component of their business, but have the capability to alter those designs to provide designers with custom hardware. The first few years were tough. Business was steady enough to hire a second metalwork expert, but cash flow challenges often made Doug worry whether he would be able to pay his metalwork experts on time. Still, the Hardware House had gained a number of consistent clients, and was able to move into an old warehouse space and expand operations. Ten years later, Hardware House has nearly 100 employees. While the majority of the employees work in manufacturing, there are also employees in marketing, design, accounting, and human resources. Doug structured the business to limit his liability in case of lawsuit, but still managed to maintain the business without sharing ownership.
Which of the following is an advantage Doug should expect by sharing ownership with others?
a. Gaining access to all of the distribution of profits.
b. Access to additional knowledge and expertise.
c. Additional freedom from government regulation.
d. Enhanced control to make decisions immediately
e. Greater degree of secrecy
Answer: b. Access to additional knowledge and expertise.
Explanation:
One of the advantages of opening a limited company be it private or public, is the additional knowledge that the other shareholders would bring on board.
In the case of a private company, the new shareholders would be from various backgrounds and would have knowledge on how to grow the business and in the case of a public company, the Board of Directors are usually drawn from various industries and so will put their experience from those industries into the company thereby giving it an edge.
Reliance is an example of a
1 Product Line
2 Product
3 Product Mix
4 Product Variety
Rowan Co. purchases 500 common shares (40%) of JBI Corp. as a long-term investment for $630,000 cash on July 1. JBI Corp. paid $14,750 in total cash dividends on November 1 and reported net income of $295,000 for the year. (1) - (3) Prepare Rowan's entries to record the purchase of JBI shares, the receipt of its share of JBI dividends and the December 31 year-end adjustment for its share of JBI net income.
Answer and Explanation:
The journal entries are shown below;
On Jul 01
Equity method investments $630,000
To Cash $630,000
(Being cash paid is recorded)
On Nov 01
Cash $5,900 (40% of $14,750)
Equity method investments $5,900
(Being cash receipt is recorded)
On Dec 31
Equity method investments $118,000 (40% of $295,000)
To Earnings from equity method investments $118,000
(Being sharing of the net income is recorded)
Scampini Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of 4% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 10%. If Scampini has 55 million shares of stock outstanding, what is the stock's value per share
Answer:
the stock value per share is $53
Explanation:
The computation of the stock value per share is shown below:
Value of operations = Free cash flows ÷ ( Capitalization Rate - growth rate )
= $175 Million ÷ ( (10% - 4%)
= $2,917
Now stock value per share is
= $2,917 ÷ 55 million shares
= $53 per share
Hence, the stock value per share is $53
Before month-end adjustments are made, the February 28 trial balance of Neutral Milk Hotel contains revenue of $7,000 and expenses of $4,400. Adjustments are necessary for the following items: Depreciation for February is $1,800. Revenue recognized but not yet billed is $2,700. Accrued interest expense is $700. Revenue collected in advance that is now recognized is $2,500. Portion of prepaid insurance expired during February is $400.InstructionsCalculate the correct net income for Neutral Milk Hotel’s Income Statement for February.
Answer: $4,900
Explanation:
Net income will be:
= (Revenue + Revenue recognized but not yet billed + Revenue collected in advance that is now recognized) - Expenses - Depreciation - Accrued interest expense - Portion of prepaid insurance for the month
= (7,000 + 2,700 + 2,500) - 4,400 - 1,800 - 700 - 400
= $4,900
The bookkeeper for Concord Corporation asks you to prepare the following accrued adjusting entries at December 31.
1. Interest on notes payable of $400 is accrued.
2. Services performed but not recorded total $2,000.
3. Salaries earned by employees of $670 have not been recorded.
Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, and Salaries and Wages Payable. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit 1. Dec. 31 2. Dec. 31 3. Dec. 31 Click if you would like to Show Work for this question:
Answer:
No Date Account Titles and Explanation Debit Credit
1. Dec. 31 Interest expenses $400
Interest payable $400
(To record interest due on notes)
2. Dec. 31 Account receivable $2,000
Service revenue $2,000
(To record the service revenue earned)
3. Dec. 31 Salaries and wages expenses $670
Salaries and wages payable $670
(To record the alaries and wages expenses)
In some very small countries, ConveyerPape recognizes that the cost of navigating the legal system and establishing a distribution channel is more than the potential profit. Still, ConveyerPape would like to provide conveyer belts to some established customers operating in the country. ConveyerPape should consider utilizing a:________
Answer:
Distribution intermediary
Explanation:
In simple words, Producers can contact different sorts of clients through intermediaries in a distribution chain. Intermediaries function as go-betweens for distinct parts of the supply chain, purchasing from one and delivering to another.
In other words, A delivery route is a series of firms or middlemen throughout which an item or service is purchased by the end buyer.
Disposal of Fixed AssetEquipment acquired on January 6 at a cost of $401,300 has an estimated useful life of 18 years and an estimated residual value of $25,100.a. What was the annual amount of depreciation for Years 1–3 using the straight-line method of depreciation?Year Depreciation ExpenseYear 1 $Year 2 $Year 3 $b. What was the book value of the equipment on January 1 of Year 4?$
c. Assuming that the equipment was sold on January 3 of Year 4 for $329,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Year 4
Jan. 3 Cash
Accumulated Depreciation-Equipment
Loss on Sale of Equipment
Equipment
d. Assuming that the equipment had been sold on January 3 of Year 4 for $342,000 instead of $315,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Cash
Accumulated Depreciation-Equipment
Equipment
Gain on Sale of Equipment
Answer:
a. Cost of Equipment = $401300
Residual value = $25100
Useful life = 18 years
Depreciation expense = (Purchase cost - Residual value) / Useful life
Depreciation expense = ($401,300 - $25,100) / 18 years
Depreciation expense = $20,900
b. Book value of equipment on January 1 of year 4 = Purchase cost -(Depreciation expense * 3 years)
= $401300 - ($20900*3 years)
= $401300 - $62700
= $338,600
c. Accumulated Depreciation = Depreciation expense * 3 years
Accumulated Depreciation = $20,900*3
Accumulated Depreciation = $62,700
Gain/ loss on sale = Cash received for sale of asset - Book value of asset at jan 1 of year 4
Loss on sale = $315000 - $338600
Loss on sale = $23600
Journal Entry
Cash $315000 Dr
Accumulated depreciation-equipment $62700 Dr
Loss on sale of equipment $23600 Dr
Equipment $401300 Cr
London Company hired some students to help count inventory during their semester break. Unfortunately, the students added incorrectly and the 2019 ending inventory was overstated by $5,000. What would be the effect of this error in ending inventory
The effect of this error in ending inventory would be decrease in cost of goods sold and increase in increasing ending inventory.
Overstating inventory decreases COGS or cost of goods sold because the surplus stock in accounting records results in a higher closing stock and lower COGS. Current assets, total assets, and retained earnings are all exaggerated as a result of overstated ending inventories.
What is inventory?All the goods, merchandise, and supplies that a company keeps on hand in anticipation of selling them for a profit are referred to as inventory. A crucial corporate asset is inventory. Businesses conduct inventories to determine how much stock they have at a given time. Work-in-process (items in various stages of completion), finished goods, and supplies needed to create new sales items are all included in inventory.
What is COGS or cost of good sold?Cost of goods sold is a value or cost involved in selling goods during a particular period.
Cost of sales or the cost of goods sold (COGS) quantify the costs incurred by a company when producing a good or service. it includes the costs of labor, raw materials, and administrative expenses related to running a production plant.
Formula for cost of goods sold is :
Starting inventory + purchases − ending inventory = cost of goods sold
Supportive answer
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On a recent shopping trip to a Target store, Kim went from aisle to aisle selecting the products he needed. Interestingly, the only person Kim encountered in the store was the employee at the checkout counter. The employee is an example of a(n):______.
a. Inside salesperson
b. Sales support staff
c. Order getter
d. Key account manager
e. Missionary salesperson
Answer:
A
Explanation:
An Inside salesperson is a salesperson that works inside an office or a store and does not go out to get customer. Kim encountered an employee inside the store. thus the person is an inside sales person
Missionary salesperson influences others to buy a product
trên cơ sở lý thuyết nhóm hãy chọn một công ty hiện kinh doanh tại thị trường việt nam, dòng sản phẩm tiêu dùng, phân tích thực trạng:
- chiến lược điều chỉnh giá của công ty
- chiên lược chủ động thay đổi giá
Answer:
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Hurzdan, Inc., has a 30-day average collection period and wants to maintain a minimum cash balance of $20 million, which is what the company currently has on hand. The company currently has a receivables balance of $196 million and has developed the following sales and cash disbursement budgets (in millions):
Q1 Q2 Q3 Q4
Sales $441 $513 $594 $558
Total cash disbursement 368 465 720 456
Required:
Draw the cash budget table for the company.
Answer:
Hurzdan, Inc.
Cash Budget
Beginning balance $20 -$152 -$176 -$383
Cash collection 196 441 513 594
Cash available $216 $289 $337 $211
Cash disbursement 368 465 720 456
Ending balance -152 -176 -383 -245
Minimum cash balance 20 20 20 20
Cash requirement $172 $196 $403 $265
Explanation:
a) Data and Calculations:
Average collection period = 30 days
Required minimum cash balance = $20 million
Cash, beginning balance = $20 million
Accounts receivable, beginning balance = $196 million
(in millions): Q1 Q2 Q3 Q4
Sales revenue $441 $513 $594 $558
Cash collection $196 $441 $513 $594
Cash disbursement 368 465 720 456
Bella, Inc. manufactures two kinds of bagstotes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are$25,750. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $33 $44Direct labor cost per unit $52 $60Number of units 520 370Calculate the pre-determined overhead allocation rate.
Answer:
See below
Explanation:
Given that estimated overhead costs for the year = $25,750
Bagstotes:
Direct materials cost per unit = $33
Direct labor cost per unit = $52
Number of units = 520
Satchels
Direct materials cost per unit = $44
Direct labor cost per unit = $60
Number of units = 370
Estimated direct labor =
(Direct labor cost per unit × No of units) of totes + (Direct labor cost per unit × No of units) of Satchels
= ($52 × 520) + ($60 × 370)
= $27,040 + $22,200
= $29,240
Predetermine overhead allocation rate:
= Estimated overhead / Estimated direct labor × 100
= $25,750 / $29,240 × 100
= 88.06%
