Answer:
Net income = $1,353,750
Note: See the income statement below.
Explanation:
Before preparing the income statement, the following calculations are done first:
Income from operations of discontinued component = Income before-tax generated by the division - Before-tax loss on disposal = $630,000 - $405,000 = $225,000
Income from continuing operations = Income before tax - Restructuring costs = $1,650,000 - $70,000 = $1,580,000
The income statement can now be prepared as follows:
Esquire Comic Book Company
Partial Income Statement
For the year ended December 31, 2021
Details $
Income from continuing operations 1,580,000
Discontinued operations gain (loss):
Income from discontinued component 225,000
Total income before tax 1,805,000
Tax expenses (1,805,000.00 * 25%) (451,250)
Net income 1,353,750
Under Tim Cook's leadership, the emphasis at Apple remains on innovation, which is valued in the marketplace. Because of this, it is important that Cook assemble what type of top management team? a. One that is built from the external labor market b. One that is built from the internal labor market c. One that is homogeneous d. One that is heterogeneous
Answer:
D. One that is heterogeneous
Explanation:
It is important that Tim Cook assembles a heterogeneous top management team.
A heterogeneous top management team introduces a variety of perspectives to the company with greater possibility for strong competitive action. It creates more tendencies for people to think outside the box, giving way to more creative decision making, innovation, and strategic actions. It also promotes debate.
Therefore Tim Cook should assemble a heterogeneous top management team since innovation is one of its characteristics.
Venus Creations sells window treatments (shades, blinds, and awnings) to both commercial and residential customers. The following information relates to its budgeted operations for the current year.
Commercial Residential
Revenues $300,000 $480,000
Direct materials costs $30,000 $50,000
Direct labor costs 100,000 300,000
Overhead costs 85,000 215,000 150,000 500,000
Operating income (loss) $85,000 $(20,000)
The controller, Peggy Kingman, is concerned about the residential product line. She cannot understand why this line is not more profitable given that the installations of window coverings are less complex for residential customers. In addition, the residential client base resides in close proximity to the company office, so travel costs are not as expensive on a per client visit for residential customers. As a result, she has decided to take a closer look at the overhead costs assigned to the two product lines to determine whether a more accurate product costing model can be developed. Here are the three activity cost pools and related information she developed:
Activity Cost Pools Estimated Overhead Cost Drivers
Scheduling and travel $85,000 Hours of travel
Setup time 90,000 Number of setups
Supervision 60,000 Direct labor cost
Expected Use of Cost Drivers per Product
Commercial Residential
Scheduling and travel 750 500
Setup time 350 250
What should Peggy Kingman do?
Answer and Explanation:
The explanation is shown below:-
First we need to find out the activity based overhead rates
Activity Estimated overhead Basis Quantity Activity based
cost overhead rates
Travel
and Scheduling $85,000 Hours of 1,250 $68
travel (700 + 500)
Set up time $90,000 Number of 600 $150
setups (350 + 250)
Supervision $60,000 Direct labor $400,000 15%
cost ($100,000 + $300,000)
Now we need to find out the overhead cost assigned to commercial which is shown below:-
Activity Activity based Actual allocation of Overhead
overhead rates cost drivers assigned
Travel and
Scheduling $68 750 $51,000
Set up time $150 350 $52,500
Supervision 15% $100,000 $15,000
Total $118,500
For computing the overhead assigned we simply multiply the activity based overhead rate with actual allocation of cost drivers.
after this we need to find out the overhead cost assigned to residential which is shown below:-
Activity Activity based Actual allocation of Overhead
overhead rates cost drivers
Travel and
Scheduling $68 500 $34,000
Set up time $150 250 $37,500
Supervision 15% $300,000 $45,000
Total $116,500
For computing the overhead we simply multiply the activity based overhead rate with actual allocation of cost drivers.
Finally we need to find out the operating income or loss for the commercial and residual which is shown below:-
Particulars Commercial Residential
Sales revenue $300,000 $480,000
Less: Direct material cost $30,000 $50,000
Less: Direct labor cost $100,000 $300,000
Less: Overhead costs
assigned $118,500 $116,500
Operating income (loss) $51,500 $15,500
The Peggy Kingman should establish the cost to be assigned based on the product lines for overhead cost as the Peggy Kingman is more focused to the overhead cost which were based on the activity cost drivers. Moreover, it shows a profit earned on residential product line
Listed below are a few events and transactions of Kodax Company.
Jan. 2 Purchased 92,000 shares of Grecco Co. common stock for $526,000 cash. Grecco has 276,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax.
Sept. 1 Grecco declared and paid a cash dividend of $1.50 per share.
Dec. 31 Grecco announced that net income for the year is $507,900. Year 2
June 1 Grecco declared and paid a cash dividend of $3.80 per share.
Dec. 31 Grecco announced that net income for the year is $735,400.
Dec. 31 Kodax sold 13,000 shares of Grecco for $96,500 cash.
Required:
Prepare journal to record the above transactions and events of kodax Company.
Answer:
Jan. 2
Investment in Associate $526,000 (debit)
Cash $526,000 (credit)
Sept. 1
Cash $138,000 (debit)
Dividend Received $138,000 (credit)
June 1
Cash $349,600 (debit)
Dividend Received $349,600 (credit)
Dec. 31
Cash $96,500 (debit)
Investment in Associate $96,500 (credit)
Explanation:
When Kodax Company purchased 92,000 shares of Grecco Co she had significant influence (more than 20% of shareholding in Grecco Co). We call this an Investment in an Associate.
The Investment in Associate is a Financial Asset to the Holder (Kodax Company) and an Equity Element to the Investee (Grecco Co) and should be recorded appropriately as above.
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as $):
Division
Queensland New South
Wales
Sales $4,000,000 $7,000,000
Average operating assets $2,000,000 $2,000,000
Net operating income $360,000 $420,000
Property, plant, and equipment (net) $950,000 $800,000
Requirement 1:
Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.
Requirement 2:
Which divisional manager seems to be doing the better job?
Answer:
Queensland Wale -18%
New South Wales-21%
The manager of New South seems to be doing a better job with a higher return on investment of 21%
Explanation:
Return on investment stated in terms of margin and turnover combines the margin formula and the asset the turnover formula as below:
Return on investment=Net operating income/sales*sales/average operating assets:
Queensland Wales:
Net operating income is $360,000
sales is $4,000,000
average operating assets is $2,000,000
return on investment=$360,000/$4000,000*$4000,000/$2000,0=18%
New South :
Net operating income is $420,000
sales is $7,000,000
average operating assets is $2,000,000
return on investment=$420,000/$7000,000*$7000,000/$2000,000=21%
The VP of operations requests that ending inventory of 1-gallon containers on December 31, 2018, be 300 comma 000 units. If the production budget calls for Saphire to produce 1 comma 200 comma 000 1-gallon containers during 2018, what is the beginning inventory of 1-gallon containers on January 1, 2018?
Answer:
Hi, the information you have provided is missing information regarding the Budgeted Sales of 1-gallon containers During the year.
However, the following points are provided to help solve the problem.
The Beginning inventory of 1-gallon containers on January 1, 2018 can be determined using the missing figure approach.
Production Budget for the year end December 31, 2018
1-gallon containers
Budgeted Production 1,200,000
Less Budgeted Sales (amount missing) XXX
Less Budgeted Closing Stock (300,000)
Budgeted opening Stock XXX
Foster Manufacturing uses a job order cost accounting system. On April 1, the company has Work in Process Inventory of $7,600 and two jobs in process: Job No. 221, $3,600, and Job No. 222, $4,000. During April, a summary of source documents reveals the following:
For Materials Requisition Slips Labor Time Tickets
Job No. 221 $1,200 $1,600
222 1,700 2,200
223 2,400 2,900
224 2,600 2,800
General use 600 400
Totals $8,500 $9,900
Foster applies manufacturing overhead to jobs at an overhead rate of 70% of direct labor cost. Job No. 221 is completed during the month.
Required:
Prepare summary journal entries to record the raw materials requisitioned, factory labor used, the assignment of manufacturing overhead to jobs, and the completion of Job No. 221.
Answer:
Foster Manufacturing
Journal Entries
Sr. No Particulars Debit Credit
1 Work in Process Job No. 221 1200
Work in Process Job No. 222 1700
Work in Process Job No. 223 2400
Work in Process Job No. 224 2600
Factory Overhead Indirect Materials 600
Materials Inventory 8500
Materials Requisitioned to specific jobs work in process inventory.
2. Direct Labor Work in Process Job No. 221 1600
Direct Labor Work in Process Job No. 222 2200
Direct Labor Work in Process Job No. 223 2900
Direct Labor Work in Process Job No. 224 2800
Indirect Labor 400
Payroll 9500
Factory OverheadControl 400
Direct Labor used for specific jobs.
3. Work in Process Job No. 221 1120
Work in Process Job No. 222 1540
Work in Process Job No. 223 2030
Work in Process Job No. 224 1960
Manufacturing Overheads 6930
Manufacturing Overheads applied to specific jobs at the rate of 70%.
4. Finished Goods Inventory $ 7940
Opening Work in Process Job No. 221 3600
Work in Process Job No. 221 Materials 1200
Work in Process Job No. 221 Direct Labor 1600
Work in Process Job No. 221 MOH 1540
Job 221 completed and transferred to finished goods.
The following transactions occurred during the month of June 2018 for the Stridewell Corporation. The company owns and operates a retail shoe store
1. Issued 115,000 shares of common stock in exchange for $575,000 cash.
2. Purchased furniture and fixtures at a cost of $95,000. $38,000 was paid in cash and a note payable was signed for the balance owed
3. Purchased inventory on account at a cost of $230,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $391,000. The cost of the goods sold was $195,500
5. Paid $5,000 in rent on the store building for the month of June
6. Paid $2,640 to an insurance company for fire and liability insurance for a one-year period beginning June 1, 2018
7. Paid $166,175 on account for the merchandise purchased in 3
8. Collected $78,200 from customers on account.
9. Paid shareholders a cash dividend of $5,750
10. Recorded depreciation expense of $1,900 for the month on the furniture and fixtures
11. Recorded the amount of prepaid insurance that expired for the month.
Required
Prepare journal entries to record each of the transactions and events listed above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 01 Cash 575,000 Common stock 575,000
Answer:
See the journal entries below.
Explanation:
Tr. General Journal Dr ($) Cr ($)
1. Cash 575,000
Common stock 575,000
(To record common stock issued for cash.)
2. Furniture and fixtures 95,000
Cash 38,000
Note payable 57,000
(To record purchase of furniture and fixtures.)
3. Merchandise inventory 230,000
Account payable 230,00
(To record inventory purchased on account.)
4a. Account receivable 391,000
Sales 391,00
(To record credit sales).
4b. Cost of goods sold 195,500
Merchandise inventory 195,000
(To record cost of inventory sold.)
5. Rent expenses 5,000
Cash 5,000
(To record interest paid for June.)
6. Prepaid insurance 2,640
Cash 2,640
(To record prepaid insurance.)
7. Account payable 166,175
Cash 166,175
(To record payment for merchandise inventory bought on account.)
8. Cash 78,200
Account receivable 78,200
(To record cash received from customer.)
9. Dividend paid 5,750
Cash 5,750
(To record cash dividend paid.)
10. Depreciation expenses 1,900
Accumulated Dep. - F $ F 1,900
(To record record depreciation expenses for Furniture & F.)
11. Insurance expenses (2,640 / 12) 220
Prepaid insurance 220
(To record insurance expenses for the month.)
The Baldwin company will continue to train their existing workforce at their current level to help reduce turnover and improve productivity next year. Employee training costs $20 per hour. How much would their training costs per employee be to the nearest dollar
Answer: $1,600
Explanation:
The training hours per employee can be calculated by multiplying the Employee Training hours by the cost of training per employee.
From the Attached document, the Baldwin company does 80 hours of training for employees.
The Training costs per Employee is;
= 80 * 20
= $1,600
If the Baldwin Company organizes 80 hours of training for each employer in a given year, and the training cost per hour for an employee is $20, it implies that the training costs per employee would be $1,600 ($20 x 80).
Data and Calculations:
Training costs per employee per hour = $20
Training hours per employee in a year 80 hours
Total training costs per employee in a year = $1,600 ($20 x 80)
Thus, the Baldwin Company spends $1,600 per employee in training them so that employee turnover would be reduced while productivity improves.
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What is the company’s financial position? Please refer to the income statement and balance sheet for the Exceptional Service Grading Company available here. Using the learning resources provided in the Reading Assignment, perform a financial ratio analysis of the company using the following ratios: • Gross profit margin • Current ratio • Debt ratio
Answer:
Gross profit margin requires revenue and gross profit of the company.
Current ratio = 1.386 x
Debt ratio = 0.123 x
Explanation:
Gross profit margin requires revenue and gross profit of the company which is provided in the question but it can be calculated using this formula ; Total revenue / gross profit . where Gross profit = Revenue - cost of goods sold
Current ratio is calculated using the formula ; current assets/ current liabilities lets assume the left column is for the most recent year then current ratio = 4612200/3325950 = 1.386x
Debt ratio is calculated using the formula ; total debts/total assets lets assume once more that the left column is the most recent year. note; total debts = long term + current notes payable = 454800 + 277550
therefore debt ratio = 732350 / 5957800 = 0.123x
attached is the income statement and balance sheet
On December 31, 2018, Interlink Communications issued 6% stated rate bonds with a face amount of $107 million. The bonds mature on December 31, 2048. Interest is payable annually on each December 31, beginning in 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Determine the price of the bonds on December 31, 2018, assuming that the market rate of interest for similar bonds was 7%. (Enter your answers in whole dollars. Round your final answers to nearest whole dollar amount.)
Answer:
$93,725,580.00
Explanation:
The market price of the bond is the present value of annual coupon payment plus the present value of face amount receivable at the end of the bond tenure.
Annual coupon interest=face amount*stated rate=$107,000,000*6%=$6,420,000.00
Face amount=$107,000,000
The discount factor for annual coupon is the present of 30 years annuity(2048-2018) at 7% market rate, which is 12.4090
The discount factor for the face value is 0.1314
Price of the bond=($6,420,000.00*12.4090)+($107,000,000*0.1314)=$93,725,580.00
What are the strengths and weaknesses of the Campbell Soup Company's marketing?
Answer:
For one - their social media presance for a large corporation is really lacking. A company as well known as Campbell should be current in social media, they have not posted to in over a month.
They rely to heavily on the fact that they are the oldest name in the soup business and I feel like they are a little lazy when it comes to their marketing with other compitors on their heels.
An investor wishes to buy a new issue of U.S. Government agency bonds. You recommend that the customer purchase Federal Home Loan Bank bonds with a 20 year maturity. An investor who purchases the new issue of Federal Home Loan Bank bonds can expect to pay:
Answer:
The answer is Par
Explanation:
An investor who purchases the new issue can expect to pay Part.
The agency appoints a selling group that sells new issues of agency securities.This selling group is usually made of large banks and broker-dealers. They sell the issue at par to the public. From what was made from the sale, the agency then pays the selling group a selling concession. In contrast, direct U.S. Government obligations are sold through auction
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
Book Values Fair Values
Current assets $41,500 $41,500
Building 108,000 67,000
Land 17,000 35,200
Trademark 0 31,800
Goodwill 19,000 ?
Liabilities (50,500) (50,500)
Common stock (100,000)
Retained earnings (35,000 )
Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:
1) $166,000
2) $96,000
Answer:
Scenario 1. Cash Exchange of $166,000
Current assets $41,500 (debit)
Building $67,000 (debit)
Land $35,200 (debit)
Trademark $ 31,800 (debit)
Goodwill $41,000 (debit)
Liabilities $50,500 (credit)
Investment in Deluxe Company $166,000 (credit)
Scenario 1. Cash Exchange of $166,000
Current assets $41,500 (debit)
Building $67,000 (debit)
Land $35,200 (debit)
Trademark $ 31,800 (debit)
Liabilities $50,500 (credit)
Investment in Deluxe Company $96,000 (credit)
Gain on Bargain Purchase $29,000 (credit)
Explanation:
All assets and liabilities of Deluxe Company have been acquired by Allerton Company. This is known as a Business Combination in terms of IFRS 3.
During a Business Combination transaction, Assets and Liabilities are Acquired at their Fair Values instead of Book Values.
Any Excess of the Purchase Price (Consideration) over the Net Assets taken over is known as Goodwill otherwise it is known as a Gain on Bargain Purchase.
Markysha needs to know the cost variance of her project to determine if it is under budget or over budget. To do this she decides to use _________ to compare her project's performance to the expected progress.
Answer:
Earned value management
Explanation:
Markysha decided to use Earned value management for this comparison.
Earned Value Management helps project managers to measure project performance.
It is a project management process that is used to find variances in projects by comparing project's performance to the expected progress. It is useful on cost and schedule control and can be very beneficial when it comes to forecasting during projects.
In 2001, President George W. Bush and Federal Reserve Chairman Alan Greenspan were both concerned about a sluggish U.S. economy. They also were concerned about the large U.S. trade balance deficit. To help stimulate the economy, President Bush proposed a tax cut. What are the effects of the proposed policy using the IS-LM model
Answer:
The answer is given below.
Explanation:
The effect of this tax cut would be a resultant shift in the IS curve to the right, resulting in higher interest rates, currency appreciation, and bigger current account deficits. The tax cut would encourage consumers to spend more and, thereby increasing planned expenditure. The tax cut raises both income and the interest rate.
Suppose you win the lottery and have two options: A. Take $1 million now. B. Take $1.2 million to be paid out as 300,000 now and then $300,000 a year for 3 years. Which is the better deal? Assume that the interest rate is 10%. Please show your work. (4 point)
Answer:
A. Take $1 million now.
Explanation:
A. If we take $1 million now the present value of the money is $1 million.
B. If we choose to take $1.2 million paid out over 3 years then present value will at 10% will be;
$300,000 + $300,000 / 1.2 + $300,000/ 1.44 + $300,000 / 1.728
$300,000 + $250,000 + $208,000+ $173,611 = $931,944
The present value of option B is less than present value of option A. We should select option A and take $1 million now.
The Work-in-Process inventory account of a manufacturing firm shows a balance of $3,980 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $660 and $460 for materials, and charges of $560 and $740 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:
Answer:
Predetermine overhead rate as a percentage of direct labor cost is 120%
Explanation:
To calculate the predetermined overhead rate, we first need to determine the total overheads under the balance of $3980 for two jobs.
The total cost of both jobs which are uncompleted equals,
Total cost both jobs = (660 + 560) + (460 + 740)
Total cost both jobs = 1220 + 1200 = $2420
Thus, the overhead cost involved in both jobs is,
Total Overhead cost = 3980 - 2420 = $1560
This total overhead of $1560 has been absorbed on the basis of a predetermine overhead rate based on the direct labor cost. The total direct labor cost involved under both uncompleted jobs is,
Total direct labor cost both jobs = 560 +740 = $1300
So, the predetermined overhead rate is,
Overhead rate = Total overheads / total direct labor cost
Overhead rate = 1560 / 1300
Overhead rate = $1.2 per $1 of direct labor cost
Expressed as a percentage of direct labor cost, it is:
% Overhead rate = 1560 / 1300 * 100 = 120% of direct labor cost
A few years back, Dave and Jana bought a new home. They borrowed $230,415 at a fixed rate of 5.49% (15-year term) with monthly payments of $1,881.46. They just made their twenty-fifth payment and the current balance on the loan is $208,555.87.
Interest rates are at an all-time low and Dave and Jana are thinking of refinancing to a new 15-year fixed loan. Their bank has made the
following offer: 15-year term, 3.0%, plus out-of-pocket costs of $2,937. The out-of-pocket costs must be paid in full at the time of refinancing.
Build a spreadsheet model to evaluate this offer. The Excel function:
=PMT(rate, nper, pv, fv, type)
alculates the payment for a loan based on constant payments and a constant interest rate. The arguments of this function are as follows:
rate = the interest rate for the loan
nper = the total number of payments
pv= present value - - the amount borrowed
fv = future value - - the desired cash balance after the last payment (usually 0)
type = payment type (0 = end of period, 1 = beginning of the period)
For example, for Dave and Jana's original loan there will be 180 payments (12*15 = 180), so we would use =PMT( .0549/12, 180, 230415,0,0) = $1881.46. Note that since payments are made monthly, the annual interest rate must be expressed as a monthly rate. Also, for payment calculations, we assume that the payment is made at the end of the month.
Assume that Dave and Jana have accepted the refinance offer, and that there is no pre-payment penalty, so that anything above the beyond the required payment is applied to the principal. Construct a spreadsheet model in Excel so that you may use Goal Seek to determine the monthly payment that will allow Dave and Jana to pay off the loan in 12 years. Do the same for 10 and 11 years. Which option for prepayment if any, would you choose and why?
(Hint: Break each monthly payment up into interest and principal [the amount that gets deducted from the balance owed] Recall that the monthly interest that is charged is just the monthly loan rate multiplied by the remaining loan balance.)
If required, round your answers to two decimal places.
Pay off loan in years Additional Payment
10 Years $
11 Years $
12 Years $
Which option for prepayment if any, would you choose and why?
Answer:
Explanation:
If required, round your answers to two decimal places.
Pay off loan in years Additional Payment
10 Years $
11 Years $
12 Years $
Which option for prepayment if any, would you choose and why?
New monthly payment
PMT(3%/12, 15*12, 208555.87, 0, 0) = $1,440.25
Now, we need find the additional amount that they need to pay in order to repay their outstanding loan in 10,11 and 12 years. So, using the above formula, we get
10-year installment = PMT(3%/12, 10*12, 208555.87, 0, 0) = $2,013.83
11-year installment = PMT(3%/12, 11*12, 208555.87, 0, 0) = $1,856.93
12-year installment = PMT(3%/12, 12*12, 208555.87, 0, 0) = $1,726.40
Additional Monthly Payment
10-year: $2,013.83 - $1,440.25 = $573.58
11-year: $1,856.93 - $1,440.25 = $416.68
12-year: $1,726.40 - $1,440.25 = $286.15
Refinancing means finance again(object) and, usually with a new loan with a low-interest rate.
What is the term refinancing means?Refinance, or "refi" briefly, refers to the process of reviewing and replacing existing credit agreement terms, usually as they relate to the loan or mortgage.
Calculation of new monthly payment under refinance model:
New monthly payment:
[tex]PMT(3\%/12, 15\times 12, 208555.87, 0, 0) = \$1,440.25[/tex]
The calculation is shown in the attached image.
Now, we need to find the additional amount that they need to pay in order to repay their outstanding loan in 10,11, and 12 years.
Using the above formula, we get
[tex]\rm\,10-year \;installment\; = \;PMT(3\%/12, 10\times 12, 208555.87, 0, 0) = \$2,013.83\\\\11-year installment = PMT(3\%/12, 11 \times 12, 208555.87, 0, 0) = \$1,856.93\\\\12-year installment = PMT(3\%/12, 12 \times 12, 208555.87, 0, 0) = \$1,726.40[/tex]
Additional Monthly Payment
[tex]\rm\,10-year \$2,013.83 - \$1,440.25 = \$573.58\\\\11-year: \$1,856.93 - \$1,440.25 = \$416.68\\\\12-year: \$1,726.40 - \$1,440.25 = \$286.15[/tex]
Hence, We can go for 12-year model, as it is cost-effective for Dave and Jana.
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Bonds payable-record issuance and premium amortization. Kaye Co. issued $1 million face amount of 11% 20-year bonds on April 1,2004. The bonds pay interest on an annual basis on March 31 each year.
Required:
a. Assume that market interest rates were slightly lower than 11% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were $1,080,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
c. Calculate the interest expense that Kaye Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2004, assuming that the premium of $80,000 is amortized on a straight-line basis.
Answer:
Cash proceeds would be higher than face amount.
Bond issuance:
Dr cash $1,080,000
Cr bonds payable $1,000,000
Cr premium on bonds payable($1,080,000-$1,000,000) $80,000
$57,400
Explanation:
If the market interest rate were slightly lower than 11% coupon rate,the cash proceeds from the bonds would be higher than face amount as a lower market rate is used as a discount rate in calculating the present value,in other words,the lower the discount rate,the higher the present value as further shown below.
Assume market rate is 10.5%
cash proceeds=-pv(rate,nper,pmt,fv)
rate is 10.5%
nper is 20 years
pmt =$1,000,000*11%=$110,000
fv is $1000,000
=-pv(10.5%,20,110000,1000000)=$1,041,154.54
amortization(annually)=$80,000/20=$4000
Amortization for six months=$4,000*6/12=$2,000
coupon=$1,080,000*11%*6/12=$ 59,400.00
Interest expense=coupon -premium amortization=$ 59,400.00-$2,000.00=$57,400
1. Crandle Manufacturers Inc. is approached by a potential customer to fulfill a one-time-only special order for a product similar to one offered to domestic customers. The company has excess capacity. The following per unit data apply for sales to regular customers: Variable costs: Direct materials $130 Direct labor 110 Manufacturing support 125 Marketing costs 65 Fixed costs: Manufacturing support 175 Marketing costs 85 Total costs 690 Markup (50%) 345 Targeted selling price $1,035 What is the full cost of the product per unit
Answer:
Full cost per unit = $690
Explanation:
The full cost of a product is the sum of its variable cost per unit and its fixed cost per unit. Costing a product at its full cost ensures that all costs are recovered both variable cost and fixed cost
The full cost for Crandle's product would be:
$
Material 130
Labour 110
Manufacturing 125
Market 65
Variable cost 430
Fixed cost
Manufacturing 175
Marketing 85
Full cost per unit 690
Full cost per unit = $690
Walkers World Company gathered the following information for 2019:
Total sales revenue (65% on credit) $432,000
Cost of goods sold 231,000
Sales returns and allowances (on credit) 44,000
Accounts receivable at end of 2019 ($30,000
increase during 2019) 100,000
Allowance for doubtful accounts:
Beginning of 2019 5,000
End of 2019 7,000
Merchandise inventory at end of 2019 ($10,000
decrease during 2019) 28,000
Assume 365 days in the year.
Calculate each of the following ratios.
A. Receivable turnover ratio.
B. Average age of receivables.
C. Inventory turnover ratio.
D. Average number of days' supply in inventory
Answer:
A. Receivable turnover ratio. = 4.57 times
B. Average age of receivables. 94.07 days
C. Inventory turnover ratio. 7 times
D. Average number of days' supply in inventory = 633 days
Explanation:
Net Sales $ 388,000
Sales revenue (65% on credit) $432,000
Less Sales returns and allowances (on credit) 44,000
Average Accounts Receivable = Accounts Rec (beg) Accounts Rec (end)/2
= 70,000+ 100,000/2= $85,000
A. Receivable turnover ratio.
Receivable turnover ratio= Net Sales / Average Accounts Receivable
= 388,000/ 85,000= 4.5647= 4.565= 4.57 times
A high turnover ratio is favorable because the accounts receivable are quickly collected.
B. Average age of receivables.
Average age of receivables= Accounts receivable *365/ Sales
= 100,000* 365/388,000= 365,000,00/388,000= 94.07 days
Accounts receivable will be collected in 94 days.
C. Inventory turnover ratio.
Inventory turnover ratio= Cost Of Goods Sold/ Average Inventory
= 231,000/38,000+ 28,000/2
= 231,000/33,000= 7 times
A company with a high turnover requires a smaller investment in inventory than one producing the same sales with a lower turn over.
D. Average number of days' supply in inventory
Average number of days' supply in inventory= Cost of Goods Sold/ 365
= 231,000 /365= 632.89
More Inventory will be needed in 633 days
Walkers World Company gathered the following information for 2019:
Total sales revenue (65% on credit) $432,000
Cost of goods sold 231,000
Sales returns and allowances (on credit) 44,000
Accounts receivable at end of 2019 ($30,000
increase during 2019) 100,000
Allowance for doubtful accounts:
Beginning of 2019 5,000
End of 2019 7,000
Merchandise inventory at end of 2019 ($10,000
decrease during 2019) 28,000
Assume 365 days in the year.
Calculate each of the following ratios.
A. Receivable turnover ratio.
B. Average age of receivables.
C. Inventory turnover ratio.
D. Average number of days' supply in inventory
Lang Warehouses borrowed $287,610 from a bank and signed a note requiring 15 annual payments of $27,709 beginning one year from the date of the agreement. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the interest rate implicit in this agreement
Answer:
The interest rate implicit in this agreement is 5%
Explanation:
A fix periodic payment made for a specific of time is known as annuity.
The 15 annual loan payment of $27,709 is an annuity payment and we will use the following formula to calculate the interest rate.
PV of annuity = P x annuity factor
Where
P = annual payments = $27,709
Placing values in the formula
$287,610 = $27,709 x annuity factor
Annuity factor = $287,610 / $27,709
Annuity factor = 10.37966
The annuity factor of 10.37966 for 15 years is for 5% interest rate.
"Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $100,000. The equipment will have an initial cost of $400,000 and have a 5-year life. If the salvage value of the equipment is estimated to be $75,000, what is the payback period
Answer:
4 years
Explanation:
Payback period calculates the amount of the time it takes for the amount invested in a project to be recovered from the cumulative cash flow.
Payback period = amount invested / annual cash flows
= $400,000 / $100,000 = 4 years
I hope my answer helps you
Clipper Corporation is considering an investment of $70,000 in a project that will generate annual net operating income of $12,950. If the division planning to make the investment currently has a return on investment of 20% and its manager is evaluated based on the division's ROI, will the division manager be inclined to request funds to make this investment
Answer and Explanation:
The computation is shown below:
But before reaching any decision, first we have to find out the ROI for new investment which is
ROI of new investment = net operating income ÷ investment
= $12,950 ÷ $70,000
= 18.50%
Now
If investment taken place, then overall ROI is
= Total net operating income ÷ Total average operating assets
= ($380,000 + $12,950) ÷ ($2,000,000 + $70,000)
= 18.98%
As we can see that the overall ROI i.e 18.98% is less than the currently ROI i.e 20% so he should not recommend ROI as it is shows fallen
Using a method of trend projection, the monthly sales for Yazici Batteries, Inc., were as follows: Month Sales Feb 21 Jan 20 Mar 15 Apr 15 May 13 Jun 16 Jul 17 Aug 17Sept 20Oct 22 Nov 23 Dec 23The forecast for the next month (Jan) using the naive method =_____sales. The forecast for the next period Jan using a 3 month moving average approach =_____sales. The forecast for the next period Jan using a 6 month weighted average with weights of 0.10, 0.10, 0.10, 0.20, 0.20 and 0.30, where the heaviest weights are applied to the most recent month =_____sales. Using exponential smoothing with α = 0.35 and a september forecast of 20.00, hte forecast for the next period Jan =_____sales. Using a method of trend projection, the forecast for the next month Jan =_____sales. The method that can be used for making a forecast for the month of March is_____.
Answer:
the answer is C or b im not 100% sure
Skip owns a business. Since demand is on the rise, he decided to purchase an upgraded machine that will produce four times as fast as his previous machine. The cost of the new machine is $400,000 and will be the only depreciable property that Skip places in service during 2019. What is the amount of his Section 179 deduction for 2019
Answer: $400,000
Explanation:
According to Section 179 on deducting Expenses issued by the IRS, a company may deduct the cost of certain assets when they are first put into service.
The Assets include tangible assets such as equipment and machinery so long as they are purchased for business use.
Skip bought the equipment for $400,000 and as such can deduct this entire amount under Section 179.
Suppose that an issuing bank pays on documents that are conforming to the requirements of the letter of credit, but the seller has shipped worthless goods to the buyer. Which of the following statements, if any, are true?
a. As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
d. A and B
Answer:
the answer C
Explanation:
As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
When the government sets an effective price floor suppliers are helped and consumers are helped. suppliers are hurt and consumers are helped. suppliers are helped and consumers are hurt. This is an incorrect answer. Have a nice day! supply increases due to the increase in price.
Answer:
suppliers are helped and consumers are hurt.
Explanation:
A price floor is when the government or an agency of the government sets the least price a good or service can be purchased.
A price floor is usually set above equilibrium price. As a result, the profit earned by sellers increase while the good becomes more expensive for consumers.
I hope my answer helps you
Charles is a stay-at-home parent who lives in New York City and teaches tennis lessons for extra cash. At a wage of $25 per hour, he is willing to teach 6 hours per week. At $35 per hour, he is willing to teach 16 hours per week. Using the midpoint method, the elasticity of Teresa’s labor supply between the wages of $25 and $35 per hour is approximately _________ , which means that Teresa’s supply of labor over this wage range is _________
Answer:
2.75, elastic.
Explanation:
Measure labor supply elasticity of Individual T's as follows :
[tex]\bf Elasticity=\frac{Percent \;change\;in\;labour\;hr}{\frac{Average\;labour\;hour}{\frac{Percent\;change\;in\;wage\;price}{Average\;wage\;price} } }[/tex]
[tex]\bf =\frac{16-6}{\frac{16+6}{\frac{2}{\frac{35-25}{\frac{35+25}{2} } } } }[/tex]
[tex]\bf=\frac{10}{\frac{11}{\frac{10}{30} } }[/tex]
[tex]\bf=\frac{0.91}{0.33}[/tex]
[tex]=2.75[/tex]
Therefore, the elasticity of the labour supply of Individual T's is approx. of earnings per hour. 2.75, meaning that the work supply of Person T's is elastic across this wage range
The Old World Café’s cash register receipts showed total sales of $884. The cash equaled $534, and the credit card slips equaled $237. How much of the sales are not accounted for? What might explain the difference?
Answer:the answer is $307
Explanation: some one didn't pay