Answer & Explanation:
Assets = Capital + Liabilities
1) Investment Cash (+17...) (+17160)
2) Borrowings Cash (+7...) Loan (+7...)
3) Purchase Cash (-price paid) + Gain
Equip (+final price) (final - price paid)
4) Revenue Cash (+298...) Income (+298...)
5) Expense Cash (-210...) Expense (-210...)
3)* Price paid = 8700 or 8600 , Final price = 8300 or 7940 , Gain (Discount received) = 8700 - 8300 ie 400 (or) 8600 - 7940 = 660
Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company’s products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,100 helmets, using 2,077 kilograms of plastic. The plastic cost the company $13,708. According to the standard cost card, each helmet should require 0.62 kilograms of plastic, at a cost of $7.00 per kilogram.
Required:
1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 3,100 helmets?
2. What is the standard materials cost allowed (SQ × SP) to make 3,100 helmets?
3. What is the materials spending variance?
4. What is the materials price variance and the materials quantity variance? (For requirements 3 and 4, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations.)
Answer:
1. 1,922
2. $13,454
3. $254 Unfavorable
4. 831 Favorable
$1,085 Unfavorable
Explanation:
1. The computation of standard quantity of kilograms of plastic is shown below:-
Standard quantity of kilograms allowed = Helmets manufactured × Required kilograms of plastic
= 3,100 × 0.62
= 1,922
2. The computation of standard materials cost allowed is shown below:-
Standard cost allowed for actual output = Standard quantity of kilograms allowed × Cost per kilogram
= 1,922 × $7
= $13,454
3. The computation of materials spending variance is shown below:-
Materials spending variance = Plastic cost - Standard cost allowed for actual output
= $13,708 - $13,454
= $254 Unfavorable
4. The computation of materials price variance and the materials quantity variance is shown below:-
Materials price variance = Plastic cost - (Plastic in kilograms × Cost per kilograms)
= $13,708 - (2,077 × $7)
= 831 Favorable
Materials quantity variance = Cost per kilograms × (Plastic in kilograms - Standard quantity of kilograms allowed)
= $7 × (2,077 - 1,922)
= $1,085 Unfavorable
So, we have applied the above formulas.
The balance sheet of Hidden Valley Farms reports total assets of $810,000 and $945,000 at the beginning and end of the year, respectively. The return on assets for the year is 15%. What is Hidden Valley's net income for the year
Answer:
$131,625
Explanation:
The computation of the net income for the year is shown below:
As we know that
Return on assets = net income ÷ average assets
0.15 = net income ÷ ($810,000 + $945,000) ÷ 2
0.15 = net income ÷ $877,500
So, the net income is
= $877,500 × 0.15
= $131,625
hence, the net income for the year is $131,625
We simply applied the above formula
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,900 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:
Answer:
Allowance for Doubtful Accounts $2,900
To Accounts Receivable $2,900
(Being the written off amount is recorded)
Explanation:
The journal entry to record the write off of the account using allowance method is shown below:
On May 3
Allowance for Doubtful Accounts $2,900
To Accounts Receivable $2,900
(Being the written off amount is recorded)
For recording this we debited the allowance for doubtful accounts as it reduced the allowance and credited the account receivable as it decreased the assets so that the proper recording of the given transaction could be done
Culver Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $205,100 and the following divisional results. Division I II III IV Sales $250,000 $198,000 $499,000 $446,000 Cost of goods sold 198,000 191,000 298,000 254,000 Selling and administrative expenses 74,900 63,000 63,000 46,000 Income (loss) from operations $ (22,900) $ (56,000) $138,000 $146,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 69 % 90 % 80 % 74 % Selling and administrative expenses 41 62 52 58 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.
Answer:
Income after discontinuing operations from both departments 1 and 2 is greateri.e. $ 207 444 than income after discontinuing operations from department 1 . i.e. $ 172964
Explanation:
Option 1:
If the 1st division is discontinued. 50 % of the fixed costs and expenses will continue and included in irrelevant costs.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $198,000 $499,000 $446,000
Cost of G. Sold 191,000 298,000 254,000
V. COGS 90 % 80 % 74 %
V.COGS 171,900 238,400 187960
FIxed COGs 19,100 59600 66,040 30690
Selling &
Administrative Exps 63,000 63,000 46,000
Var. S& Admin Exps. 62% 52% 58%
Var. S& Admin Exps. 39060 32760 26,680
Fixed S.& Admin Exps 23940 30240 19320 24346
Income (loss) $ (56,000) $138,000 $146,000
Total Income = $ (56,000)+$138,000+$146,000-30690- 24346
Total Income= $ 172964
Option 2:
If both the 1st and 2nd division are discontinued. 50 % of the fixed costs and expenses are added under the section II.
Culver Company
Income Statement
For the 1st Quarter 2017
Division II III IV Irrelevant Costs
Sales $499,000 $446,000
Cost of G. Sold 298,000 254,000
V. COGS 80 % 74 %
V.COGS 238,400 187960
FIxed COGs 9,550 59600 66,040 30690
Selling &
Administrative Exps 63,000 46,000
Var. S& Admin Exps. 52% 58%
Var. S& Admin Exps. 32760 26,680
Fixed S.& Admin Exps 11970 30240 19320 24346
Income (loss) $138,000 $146,000
Total Income = $138,000+$146,000-30690- 24346- 9,550 - 11970
Total Income= $ 207 444
We calculate the fixed and variable costs by multiplying with the given percentages and subtracting it from the total .
Culver Company
Income Statement
For the 1st Quarter 2017
Division I II III IV
Sales $250,000 $198,000 $499,000 $446,000
Cost of G. Sold 198,000 191,000 298,000 254,000
V. COGS 69 % 90 % 80 % 74 %
V.COGS 136,620 171,900 238,400 187960
FIxed COGs 61,380 19,100 59600 66,040
Selling &
Administrative Exps 74,900 63,000 63,000 46,000
Var. S& Admin Exps. 41% 62% 52% 58%
Var. S& Admin Exps. 30,709 39060 32760 26,680
Fixed S.& Admin Exps 48691 23940 30240 19320
Income (loss) $ (22,900) $ (56,000) $138,000 $146,000
The December 31, 2018, balance sheet of Whelan, Inc., showed $154,000 in the common stock account and $2,790,000 in the additional paid-in surplus account. The December 31, 2019, balance sheet showed $164,000 and $3,090,000 in the same two accounts, respectively. The company paid out $159,000 in cash dividends during 2019 14.28 points What was the cash flow to stockholders for the year? (A negative answer should be indicated by a minus sign.
Answer:
Whelan, Inc.
The cash flow to stockholders for the year is $159,000, representing the cash dividends paid during 2019.
Explanation:
Cash flow to stockholders is the amount of cash that a company pays out to its shareholders, usually in the form of cash dividends. Mainly, cash flows to stockholders in two major ways: dividends and stock price increases when shares are sold. Dividends are cash flows to stockholders from the company. These are usually determined by the board of directors. Stock price increases are cash flows to stockholders from the stock exchange market. They are determined by the company's performance and the sentiments of the investors in an open market with reference to the company's financial performance and position.
Granger Company had January 1 inventory of $150,000 when it adopted dollar-value LIFO. During the year, purchases were $900,000 and sales were $1,500,000. December 31 inventory at year-end prices was $189,750, and the price index was 110. What is Granger Company’s gross profit?
Answer:
$624, 750
Explanation:
Purchases = 900,000
Sales = 1500000
Price index = 110%
Inventory= 189750
1,500,000 - [{($150,000 x 110%) + $900,000} - $189,750]
=1,500,000 - [($150,000 x 1.1) + $900,000] - $189,750
= 1,500,000 - (1065000 - 189750)
= 1,500,000 - 875250
=$624,750
Gross profit. = $624750
The materials purchase price variance, in a standard cost system, is obtained by multiplying the: Group of answer choices a. Actual price by the difference between actual quantity purchased and standard quantity used. b. Actual quantity purchased by the difference between actual price and standard price. c. Standard price by the difference between standard quantity purchased and standard quantity used. d. Standard quantity purchased by the difference between actual price and standard price.
Answer:
b. Actual quantity purchased by the difference between actual price and standard price
Explanation:
The formula to compute the material purchase price is shown below:
= Actual Quantity × (Standard Price - Actual Price)
It is derived by taking a difference between the standard price and the actual price and then multiplying it by the actual quantity so that the material price or material purchase price variance could come
Hence, the correct option is b.
b. Actual quantity purchased by the difference between actual price and standard price
When computing materials purchase price variance in standard costing system, we use the formula below ;
= Actual Quantity × (Standard Price - Actual Price)
Material purchase price variance is derived by subtracting standard price from actual price and then multiplying it by the actual quantity so that we would get the value.
Thus, the materials purchase price variance, in a standard cost system, is obtained by multiplying actual quantity purchased by the difference between actual price and standard price.
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2. It has been mentioned that Starbucks encourages its customers to use its mobile app. What type of information might the company gather from the app to help it better plan operations
Answer:
There are several things and strategies that the company can do from gathering different types of information in the app. Some examples are explained below.
Explanation:
To begin with, the company can extract personal information about the clients like the age and area of residence and those factors can help the organization's operations plan in many ways, like for example in knowing better which is the area where the most of the clients live or which is the average age of all the clients so in that case they will know which is their target audience and how to create marketing messages to stimulate them to go to the store or to buy more products, etc.
Another example could be the likes of the customers, by knowing which is the product that they order the most then the company can implement an strategy to try to sale the other products and so on with other variables.
The following information is available for Flounder Corp. for the year ended December 31, 2017: Other revenues and gains Other expenses and losses Cost of goods sold Other comprehensive income $10,000 Sales revenue 14,900 Operating expenses 246,400 Sales returns and allowances 5,500 $641,300 231,800 40,000
Prepare a multiple-step income statement for Flounder Corp and comprehensive income statement. The company has a tax rate of 30%. This rate also applies to the other comprehensive income. Flounder Corp. Income Statement For the Year Ended December 31, 2017 Revenues Sales Revenue 641300 Less . Sales Returns and Allowances 40000 Net Sales $ 601300 Cost of Goods Sold 246400 Gross Profit 354900 Operating Expenses 231800 Income From Operations 123100 Other Revenues and Gains $ 10000 Other Expenses and Losses 14900
Answer:
Flounder Corp. Income Statement For the Year Ended December 31, 2017
Revenues:
Sales Revenue $ 641,300
Less Sales Returns and Allowances 40,000
Net Sales $ 601,300
Cost of Goods Sold 246,400
Gross Profit 354,900
Operating Expenses 231,800
Income From Operations $123,100
Income Tax on operations 36,930
Net Income after Income Tax $86,170
Comprehensive Income Statement:
Revenues:
Sales Revenue $ 641,300
Less Sales Returns and Allowances 40,000
Net Sales $ 601,300
Cost of Goods Sold 246,400
Gross Profit 354,900
Operating Expenses 231,800
Income From Operations $123,100
Other Revenues and Gains $ 10,000
Less other Expenses and Losses 14,900
Income from Operations &
other comprehensive income $118,200
Income Tax $35,460
Net Income after Tax $82,740
Explanation:
a) A multi-step income statement arranges the revenue and expenses sequentially in order to bring out some financial performance measurement elements, like the gross profit, income from operations, etc.
b) A Comprehensive income statement is a financial statement that includes both standard income and expenses and other comprehensive income and expenses.
The Work in Process Inventory account of a manufacturing company has a $7,728 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $2,800 and direct labor cost of $1,600. Therefore, the company's predetermined overhead rate is:
Answer:
The company's predetermined overhead rate is 208%
Explanation:
In order to calculate the company's predetermined overhead rate we would have to calculate first the Overhead applied as follows:
o verhead applied=Work in process balance-Direct Material-Direct Labor
o verhead applied=$7,728-$2,800-$1,600
o verhead applied=$3,328
Therefore, Overhead application rate = $3,328/$1,600= 217%
Overhead application rate =208%
The company's predetermined overhead rate is 208%
Answer:
208%
Explanation:
Work In Progress= Direct materials + Direct labor+ Over Head
$7,728 = $2,800 + $1,600 + OH
$7,728=$4,400
$7,728-$4,400
OH=$3,328
OH rate = $3,328/$1,600
= 208%
Coronado Company's record of transactions concerning part X for the month of April was as follows.
Purchases Sales
April 1 (balance on hand) 420 0 $7.30 April 5 620
4 720 7.45 12 520
11 620 7.74 27 1,440
26 520 8.18
30 520 8.47
Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost. (Round final answers to 0 decimal places, e.g. 6,548.)
Answer:
1.FIFO 5,631.4
2.LIFO 7,685
3.8.8542 per unit
Explanation:
Coronado Company's
1)First-in, first-out (FIFO)
(520×8.47+ 150×8.18)
= 4,404.4+1,227
= 5,631.4
2)Last-in, first-out (LIFO)
(420×7.30+ 620×7.45)
= 3,066+4,619
= 7,685
3.Cost of goods available for sale
Date Transactions Units ×Rate =Total
Apr-01 Beginning inventory 420 ×$7.30 =$3,066
Apr-04 Purchase 720×$7.45 =$5,363
11-Apr Purchase 620 ×$7.74 =$4,798.8
18-Apr Purchase 520×$7.81 =$4,061.2
26-Apr Purchase 920 ×$8.18= $7,525.6
30-Apr Purchase 520 ×$8.47 $4,404.4
Total: 3,300 $29,219
720+620+520+920+520=3,300
$3,066+5,363+4,798.8+4,061.2+7,525.6+4,404.4 =29,219
Average cost per unit =
Total cost of goods available for sale / Units available for sale
Hence:
$29,219 / 3,300
=8.8542 per unit
Global market channels involve a firm producing goods in:______
A. Their home country and exporting them to other countries.
B. Their home country to sell at home.
C. A foreign country to sell at home.
D. A foreign country to sell abroad.
Answer:
A. Their home country and exporting them to other countries.
Explanation:
A global market channel generally explains the production of commodities by a certain or group of firms and goods by a home country and exporting them to other countries. This is seen generally in the production of phones, laptops, tv brands refrigerators and a whole lot of products amongst tier 1 or tier 2 countries and are been shipped to lowest their countries and other tier countries. This is seen to boost the economy and international trade friendship of either countries though the country at the recieving end is loosing per capital but at the end, we need each other to grow and live.
Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $1,800 of direct materials and used $3,300 of direct labor. The job was not finished by the end of the month, but needed an additional $2,300 of direct materials and additional direct labor of $5,100 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at the end of September relative to Job A3B? Multiple Choice $7,400 $11,700 $4,100 $8,400
Answer:
$11,700
Explanation:
The computation of the balance in the work in process at the end of the month is shown below:
= Direct material cost + direct labor cost + manufacturing overhead cost percentage of direct labor cost
= $1,800 + $3,300 + $3,300 × 200%
= $1,800 + $3,300 + $6,600
= $11,700
We simply added the direct material cost, direct labor cost and the manufacturing overhead cost so that the ending balance could arrive
SCC Co. reported the following for the current year:
Net sales $ 59,000
Cost of goods sold $ 48,800
Beginning balance in inventory $ 3,100
Ending balance in inventory $ 9,100
Compute (a) inventory turnover and (b) days’ sales in inventory.
Hint: Recall that inventory turnover uses average inventory, and days’ sales in inventory uses the ending balance in inventory."
Answer:
a. The inventory turnover is 8.00 times
b. The days’ sales in inventory is 68 days
Explanation:
a. In order to calculate the inventory turnover we would have to use the following formula:
inventory turnover=cost of goods sold/average inventory
inventory turnover=$ 48,800/($3,100+$ 9,100)/2
inventory turnover=8.00 times
b. In order to calculate thedays’ sales in inventory we would have to use the following formula:
days’ sales in inventory=(Ending invenory/cost of goods sold)*365
days’ sales in inventory=($9,100/$48,800)*365
days’ sales in inventory=68 days
The University of Puhonicks hires several professors that specialize in accounting, management, and economics and clusters each into one of three departments. The dean has obviously decided to group employees by:________
a) Project.
b) Function.
c) Product.
d) Geography.
Answer:
b) Function
Explanation:
The Dean placed professors in departments based on the subjects they teach or based on their functions in the school. So all professors that function as economics professors are placed in the same department. This is an example of grouping employees by functions.
In geographic grouping, professors would be grouped based on the different regions they teach.
In product grouping, employees are placed in groups based on the product they produce.
I hope my answer helps you
The Nelson Company has $1,750,000 in current assets and $700,000 in current liabilities. Its initial inventory level is $490,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 1.9? Round your answer to the nearest cent. $ What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places.
Answer:
(a) Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
(b) The firm's quick ratio after Nelson has raised the maximum amount of short-term funds is 1.34
Explanation:
Current assets = $1,750,000
Current liabilities = $700,000
Initial inventory level = $490,000
Current ratio = Current assets ÷ Current liabilities
= $1,750,000 ÷ $700,000 = 2.5
1.9 = (Current assets + [tex]\Delta{NP[/tex]) ÷ (Current liabilities + [tex]\Delta{NP[/tex])
1.9 = ($1,750,000 + [tex]\Delta{NP[/tex]) ÷ ($700,000 + [tex]\Delta{NP[/tex])
1.9 × ($700,000 + [tex]\Delta{NP[/tex]) = ($1,750,000 + [tex]\Delta{NP[/tex])
$1,330,000 + [tex]1.9\Delta{NP[/tex] = $1,750,000 + [tex]\Delta{NP[/tex]
[tex]0.9\Delta{NP[/tex] = $1,750,000 - $1,330,000
[tex]\Delta{NP[/tex] = $466,666.67
Short-term debt can increase by a maximum of $466,666.67 without pushing its current ratio below 1.9
Quick ratio = (Current assets - Inventories) ÷ Current liabilities
= $937,500 ÷ $700,000
= 1.34
In union terms, a direct strike occurs:
a. when an organized body of workers withholds its labor to force the employer to comply with its demands.
b. when union members and their supporters refuse to buy products from a company being struck.
c. when workers who have no particular grievance of their own and who may or may not have the same employer decide to strike in support of others.
d. when people refuse to patronize companies that handle products of struck companies.
Answer:
. when an organized body of workers withholds its labor to force the employer to comply with its demands.
Explanation:
Roy was doing repair work in the apartment of Melinda. He saw a deep crack in the floor but did not repair it at the time. Later while doing ceiling work, his ladder got stuck in the crack and he injured himself. Can he recover damages from Melinda?
A. He can impose consequential damages on Melinda.
B. He can recover under the specific performance provision.
C. No, he cannot recover for injuries that could be easily avoided.
D. No, he cannot recover damages till he gets an injunction.
Answer: No, he cannot recover for injuries that could be easily avoided
Explanation:
From the question, Roy was doing repair work in the apartment of Melinda and saw a deep crack in the floor but he did not repair it at the time. Later when he was doing ceiling work, his ladder got stuck in the crack and he got injured.
In this scenario, Roy cannot recover damages from Melinda. He saw the crack in the floor but did not do anything about it. The injury sustained was as a result of his negligence and he could have avoided it. Hence, he cannot recover for injuries that could be easily avoided.
Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $830 million on January 1, 2021. The bonds sold for $767,557,868 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $750 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $756 million.Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2019, balance sheet. Federal determined that one-half of the increase in fair value was due to a decline in general interest rates.
Answer:
discount on bonds payable 18,383,020.48 debit
other comprehensive income 18,383,020.48 credit
--to adjust Bonds at 12/31/2021 market value --
other comprehensive income 4.739.000 debit
discount on bonds payable 4.739.000 credit
--to adjust Bonds at 12/31/2022 market value --
Explanation:
We solve for the book value at year-end using effective rate
First year:
First payment
830,000,000 x 5.5% = 45,650,000
767,557,868 x 6.0% = 46,053,472.08
Amortization 403,472.08
Second Payment
830,000,000 x 5.5% = 45,650,000
(767,557,868 + 403,472.08) x 6.0% = 46,077,680.4
Amortization 427680.4
Carrying value at year-end
767,557,868 + 403,472.08 + 427,680.40 = 768,389,020.48
We need to recognize a deferred gain for the difference between these and the 750,000,000 market value at December 31th
which is $ 18,383,020.48 as these as not been realized it will be part of other comprehensive income
We will increase the discount to adjust the bonds payable account net balance.
Second year:
We repeat the process
First Payment:
830,000,000 x 5.5% = 45,650,000
Interest expense 750,000,000 x 6% = 45,000,000
Amortization 650000
Carrying value 750,000,000 + 650,000 = 750,650,000
Second Payment:
830,000,000 x 5.5% = 45,650,000
750,650,000 x 6% = 45,039,000
Amortization 611000
Carrying Value 750,650,000 + 611,000 = 751,261,000
Wer now compare this with the 756,000,000
as now the debt of the company has increased we are going to decrease the discounttand recognize a deferred loss through other comprehensive income as it wasn't realized
756,000,000 - 751,261,000 = 4.739.000
The following information ($ in millions) comes from a recent annual report of Amazon, Inc.:
Net sales $10,722
Total assets 4,417
End of year balance in cash 1,104
Total stockholders' equity 503
Gross profit (Sales - Cost of Sales). 2,458
Net increase in cash for the year 19
Operating expenses 2,062
Net operating cash flow 772
Other income (expense), net (30)
a. Compute Amazon's balance in cash at the beginning of the year.b. Compute Amazon's total liabilities at the end of the year.c. Compute cost of goods sold for the year.d. Compute the income before income tax for Amazon.
Answer:
(a) Amazon's balance in cash at the beginning of the year is $1,085 million
(b) Amazon's total liabilities at the end of the year is $3,914 million
(c) Cost of goods sold for the year is $8,264 million
(d) Income before income tax for Amazon is $366 million
Explanation:
(a) Beginning cash balance = Ending cash balance - net increase in cash for the year
= $1,104 million - $19 million
= $1,085 million
(b) Total assets = Total liabilities + Total stockholders' equity
$4,417 million = Total liabilities + $503 million
Total liabilities = ($4,417 - $503) million
= $3,914 million
(c) Cost of goods sold = net sales - gross profit
= $10,722 million - $2,458 million
= $8,264 million
(d) Income before income tax = Gross profit - operating expenses - other expenses
= $2,458 million - $2,062 million - $30 million
= $ 366 million
Selected accounts from the ledger of Garrison Company appear below. For each account, indicate the following:
a. In the first column at the right, indicate the nature of each account, using the following abbreviations: Asset - A Revenue - R Liability - L Expense - E None of the above - N
b. In the second column, indicate the increase side of each account by inserting "Dr." for Debit or "Cr." for Credit.
Account Type of Account Increase Side
(1) Supplies
(2) Fees Earned
(3) Retained Earnings
(4) Accounts Payable
(5) Salaries Expense
(6) Common stock
(7) Accounts Receivable
(8) Equipment
(9) Notes Payable
Answer & Explanation:
Account Type of Account Increase side
Supplies Asset Debit
Retained Earnings Capital Credit
Fees Earned Revenue Credit
Accounts Payable Liability Credit
Salary Expense Debit
Common Stock Asset Debit
Account Receivable Asset Debit
Equipment Asset Debit
Notes Payable Liability Credit
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:
Claimjumper Makeover Total
Sales $106,000 $53,000 $159,000
Variable expenses 32,800 6,950 39,750
Contribution margin $73,200 $46,050 119,250
Fixed expenses 82,575
Net operating income $36,675
Requirement:
1: Compute the overall contribution margin (CM) ratio for the company.
2: Compute the overall break-even point for the company in sales dollars.
3: Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.
Answer and Explanation:
1. The computation of overall contribution margin ratio is shown below:-
Overall contribution margin ratio = Total contribution ÷ Total sales
= $119,250 ÷ $159,000
= 75%
2. The computation of overall break-even point for the company in sales is shown below:-
Overall Break even = Fixed costs ÷ Contribution margin
= $82,575 ÷ 75%
= $110,100
3. The overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products is shown below:-
here, Sales at Break even in the ratio will be 2:1
Particulars Claimjumper Makeover Total
Sales $106,000 $53000 $159,000
($106,000 ÷ $159,000 × $110,100) ($53,000 ÷ $159,000 × $110,100)
Break even
sales $73,400 $36,700 $110,100
Particulars Claimjumper Makeover Total
Sales $73,400 $36,700 $110,100
Variable expense $22,712 $4,813 $27,525
Contribution margin $50,688 $31,887 $82,575
Fixed expense $82,575
Net operating income 0
Working Note
Variable expense for Claimjumper = Variable expenses ÷ Sales × Break even sales
= $32,800 ÷ $106,000 × $73,400
= $22,712
Variable expense for Makeover = Variable expenses ÷ Sales × Break even sales
= $6,950 ÷ $53,000 × $36,700
= $4,813
Indigo Company issues 11,300 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value of $565,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if Tokar stays with the company until December 31, 2024. The par value of the stock is $10. At December 31, 2020, the fair value of the stock is $396,000.
Required:
a. Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015
b. On July 25, 2018, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.
Answer:
a. Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015
January 1, 2014, restricted shares are issued (market price $50 per stock)
Dr Unearned compensation 565,000
Cr Common stock 113,000
Cr Additional paid in capital (stock options) 452,000
December 31, 2015, two years of vesting period have passed
Dr Stock based compensation expense 113,000
Cr Unearned compensation 113,000
b. On July 25, 2018, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.
July 25, stock options are forfeited
Dr Unearned compensation 452,000
Cr Stock based compensation expense 452,000
Explanation:
total stock compensation 11,300
vesting period 5 years = 11,300 / 5 = 2,260 stocks
stock based compensation is recorded using the market price on the date of the grant (January 1, 2014) which = $565,000 / 11,300 = $50 per stock
nothing really happens to the company when the stock options are granted, because unearned compensation is a contra equity account that reduces any increase in equity resulting from the stock options.
January 1, 2014, restricted shares are issued (market price $50 per stock)
Dr Unearned compensation 565,000
Cr Common stock 113,000
Cr Additional paid in capital (stock options) 452,000
The company starts recording expenses as the vesting period is accrued.
December 31, 2014, one year of vesting period has passed
Dr Stock based compensation expense 113,000
Cr Unearned compensation 113,000
December 31, 2015, two years of vesting period have passed
Dr Stock based compensation expense 113,000
Cr Unearned compensation 113,000
December 31, 2016, three years of vesting period have passed
Dr Stock based compensation expense 113,000
Cr Unearned compensation 113,000
December 31, 2017, four years of vesting period have passed
Dr Stock based compensation expense 113,000
Cr Unearned compensation 113,000
Exercise 11-6 Net present value LO P3 A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer:
NPV of investment 1: $509,131
NPV of investment 2: $269,513
Explanation:
initial investment -$520,000
6 year useful life, depreciation per year = ($520,000 - $10,000) / 6 = $85,000
free cash flow per year = $150,000 + $85,000 = $235,000
free cash flow last year = $235,00 + $10,000 = $245,000
NPV = -$520,000 + $235,000/1.1 + $235,000/1.1² + $235,000/1.1³ + $235,000/1.1⁴ + $235,000/1.1⁵ + $245,000/1.1⁶ = -$520,000 + $213,636 + $194,215 + $176,559 + $160,508 + $145,917 + $138,296 = $509,131
initial investment -$380,000
8 year useful life, depreciation per year = ($380,000 - $20,000) / 6 = $60,000
free cash flow per year = $60,000 + $60,000 = $120,000
free cash flow last year = $120,00 + $20,000 = $140,000
NPV = -$380,000 + $120,000/1.1 + $120,000/1.1² + $120,000/1.1³ + $120,000/1.1⁴ + $120,000/1.1⁵ + $120,000/1.1⁶ + $120,000/1.1⁷ + $140,000/1.1⁸= -$380,000 + $109,091 + $99,174 + $90,158 + $81,962 + $74,501 + $67,737 + $61,579 + $65,311 = $269,513
What advice would you offer an Advisor, Laggard, or Mechanic in their quest to become an Orchestrator? Are there any other dimensions you would choose to classify CIOs by other than "Leadership Capability" and "Decision-Making Authority"? Why?
Answer: The answer is given below
Explanation:
Here is the complete question:
Preston, Leidner, and Chen in 2008 discuss four CIO leadership profiles: Orchestrator, Advisor, Laggard, and Mechanic. What advice would you offer an Advisor, Laggard, or Mechanic in their quest to become an orchestrator?
Are there any other dimensions you would choose to classify CIOs by other than "Leadership Capability" and "Decision-Making Authority"? Why?
IT Advisor:
This is a high leadership making authority. In every team, there is division of labor and as an Advisor, one may be called upon to lead the time or give opinions on certain issues. Therefore, IT Advisor should learn how to convince people to accept his or her opinion. Gaining more trust will help in increasing the decision making of the person and more people will believe in his judgement.
IT Laggard:
This is a low leadership capability and a high decision making authority. Also, they need to get the much needed trust from their team members and also within the organization. It should be noted that they are capable and professional people. In order to enhance the more practical aspects of the integration, they should discuss more on the specific implementation methods to their teams and also convince the members and gain their trust.
IT Mechanic:
This is a low leadership capability and low decision making authority. I believe the most vital step for IT mechanic is for the person to strengthen their professional ability. When the person has the required professional capacity, then the person can lead the team to achieve its goal and also make better decision. This will make the IT Mechanics respected, increase his expertise and also gain team members trust.
I believe that apart from "leadership capability" and the "decision-making authority," a company can also use professional capabilities to classify CIOs. The possession of professional ability by the CIOs, can help them in making better decisions which will be of immense benefit to the company.
Insect control devices must and be able to retain the electrocuted insects inside the device
Answer:
Be rated for safety by the USDA
Explanation:
Presence of insect pest around areas of food production poses a lot of risk such as contamination of food which might impact negatively on public health. However, in an attempt to control these insect pests, the problem of food contamination as a result of insect infestation that we're trying to solve might still be increased if safety measures are not strictly adhered to when manufacturing and using insect control devices.
Hence, it is necessary and of utmost importance that insect control devices must be rated for safety by USDA to ensure compliance with laid down measures and protocols for safe control of insect without contamination of food.
In October, Pine Company reports 21,000 actual direct labor hours, and it incurs $118,000 of manufacturing overhead costs. Standard hours allowed for the work done is 20,600 hours. The predetermined overhead rate is $6.00 per direct labor hour. Compute the total overhead variance.
Answer: $5,600 Favorable
Explanation:
Total Overhead Variance is a method of measuring if the company is spending more than it is supposed to on overhead. It checks this by computing the difference between the Actual Overhead spent and the Budgeted/ Standard Overhead that it was supposed to spend.
If the Actual Overhead is more than the Standard Overhead the Variance is Negative, if the reverse is true then the Variance is Positive.
The formula for the Variance given the details in the question is,
Total Overhead Variance = Standard total Overhead - Actual Overhead
= (Standard hours * Pre-determined Overhead rate) - Actual Hours
= ( 20,600 * 6) - 118,000
= 123,600 - 118,000
= $5,600
The Standard Total Overhead is more than the Actual Total Overhead so the Variance is Positive as Pine Company spent less than it thought it would.
Pacific Ink had beginning work-in-process inventory of $754,960 on October 1. Of this amount, $309,920 was the cost of direct materials and $445,040 was the cost of conversion.The 53,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs.
During October, 112,000 units were transferred out and 35,000 remained in ending inventory.The units in ending inventory were 75 percent complete with respect to direct materials and 35 percent complete with respect to conversion costs. Costs incurred during the period amounted to $2,687,500 for direct materials and $3,429,900 for conversion.
Required:
(1) Compute the equivalent units for the materials and conversion cost calculations.
(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.
Answer:
a:Weighted Equivalent Units Materials 138,250 Conversion 124,250
b:FIFO Equivalent Cost Per unit Materials $ 21.5 Conversion $ 30.9
Explanation:
Pacific Ink
Weighted Average Equivalent Units
Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Equivalent Units 138,250 124,250
The FIFO method accounts only for the current period costs and units.
Pacific Ink
FIFO Equivalent Units
Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Less
Beg. Inv 53000 25 25 13250 13250
Equivalent Units 125,000 111000
FIFO Costs :
Materials Conversion
Current Costs: $2,687,500 $3,429,900
FIFO Equivalent Units 125,000 111000
Cost per Unit $2,687,500/125000 $3,429,900/111000
Equivalent Cost Per unit $ 21.5 $ 30.9
When the Pacific Ink that is:
The Weighted of the Average Equivalent Units are:Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Equivalent Units 138,250 124,250
When thus, The FIFO method is accounted only for the current period costs and units is: When the Pacific Ink The FIFO Equivalent UnitsParticulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Then Less
Beg. Inv 53000 25 25 13250 13250
Equivalent Units 125,000 111000
When the FIFO Costs is :
Materials Conversion
Current Costs: $2,687,500 $3,429,900
FIFO Equivalent Units 125,000 111000
Cost per Unit $2,687,500/125000 $3,429,900/111000
Equivalent Cost Per unit $ 21.5 $ 30.9
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Problem 15-10 The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 1 4.1 % 2 5.1 3 6.1 Next year at this time, you expect it to be: Maturity (Years) YTM (%) 1 5.1 % 2 6.1 3 7.1 a. What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? (Round your answer to 1 decimal place.) b-1. Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? (Round your answers to 2 decimal places.) b-2. Is the market's expectation of the return on the 3-year bond greater or less than yours? Greater Less rev: 09_14_2018_QC_CS-134332
Answer:
Explanation:
a.) What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Expect the rate of return to be over the coming year on a 3-year zero-coupon bond = 6.1%
b) Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year?(Round your answers to 2 decimal places. Omit the "%" sign in your response
Yields to maturity does the market expect to observe on 1-year at the end of the year = (1+5.1%)^2/(1+4.1%) - 1 = 6.11%
Yields to maturity does the market expect to observe on 1-year at the end of the year = 6.11%
Yields to maturity does the market expect to observe on 2-year at the end of the year = ((1+6.1%)^3/(1+4.1%))^(1/2) - 1
= 7.11%
Yields to maturity does the market expect to observe on 2-year at the end of the year = 7.11%
2b) Is the market's expectation of the return on the 3-year bond greater or less than yours?
Greater
City Foods, is a firm that is experiencing rapid growth. The firm just paid a dividend of $2.00 yesterday. They expect to see their dividend grow at a twenty percent rate for the next two years and then level out at a continuous six percent growth rate. City Food's required rate of return is twelve percent. What is the most you would pay for City Foods' common stock now
Answer:
The maximum that should be paid for the stock today is $45 per share.
Explanation:
To calculate the current share price or the maximum that should be paid for the stock today, we will use the dividend discount model approach.
The dividend discount model (DDM) estimates the value of a share/stock based on the present value of the expected future dividends from the stock. We will use the two stage growth model of DDM here as the growth in dividends of the stock is divided into two stages.
The formula for current price under two stage growth model is,
P0 = D0 * (1+g1) / (1+r) + D0 * (1+g1)^2 / (1+r)^2 + ... + D0 * (1+g1)^n / (1+r)^n +
[( D0 * (1+g1)^n * (1+g2)) / (r - g2)] / (1+r)^n
Where,
g1 is initial growth rate
g2 is the constant growth rate
r is the required rate of return
So, the price of the stock today will be,
P0 = 2 * (1+0.20) / (1+0.12) + 2 * (1+0.20)^2 / (1+0.12)^2 +
[( 2 * (1+0.20)^2 * (1+0.06)) / (0.12 - 0.06)] / (1+0.12)^2
P0 = $45