Answer:
E) Heidee would have the lower net income as shown on the income statement.
Explanation:
Heidee and Leaudy have the same Earning Before Interest and Taxes (EBIT).
They both also have the same interest rate paid on debt.
So if Heidee uses more of their debt than Leaudy it means they will incur more interest payment on debt.
This will result in less income for the company.
On the other hand Leaudy uses less debt so their interest expense is low and income is higher.
Heidee would have the lower net income as shown on the income statement.
You are a bright, hard-working, entry-level manager who fully intends to rise up through the ranks. Your performance evaluation gives you high marks for your technical skills but low marks when it comes to people skills. Do you think peo-ple skills can be learned, or do you need to rethink your career path? If people skills can be learned, how would you go about learning them?
Answer with its Explanation:
People skills are composed of their knowledge and constant commitment to improve it through experience and hard work. The People skills mostly includes the skills that have to be constantly improve while some of the skills are naturally blessed and all of these skills can be learned. The examples includes the communication skills which helps to influence the viewpoint of the peer group, leadership skills, etc.,
The person must work hard to develop these skills and undergo continuous professional development to compete in the market. The investment in the skills improvement always pays more than investment in the stock exchange. The experience of the person and appetite to learn new everyday and asking attitude to understand the mechanism helps in better understanding and resolving the issues in future.
Your Competitive Intelligence team reports that a wave of product liability lawsuits is likely to cause Baldwin to pull the product Bat entirely off the market this year. Assume Baldwin scraps all capacity and inventory this round, completely writing off those assets and escrowing the proceeds to a settlement fund, and assume these lawsuits will have no effect on any other products of Baldwin or other companies. Without Baldwin's product Bat how much can the industry currently produce in the Core segment
Answer:
11550
Explanation:
The computation of industry current produced in the core segment is shown below:
As there are five companies in the core segment i.e Abby, Brat, Bat, Cent , and Clack
First, we have to compute the total production capacity which is
Companies Primary Segment Capacity Next Round
Abby Core 2150
Brat Core 1250
Bat Core 1500
Cent Core 1098
Clack Core 1027
Total Capacity 7025
Now
segment without Brat.
So,
Production Capacity
= 7025 - 1250
= 5775
Moreover, the company work in two shifts
So, the production capacity is
= 5775 × 2
= 11550
Payback period was the earliest -Select- selection criterion. The -Select- is a "break-even" calculation in the sense that if a project's cash flows come in at the expected rate, the project will break even. The equation is:
Answer: 1. Capital Budgeting
2. Payback Period
3. Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
Explanation:
Payback period was the earliest Capital Budgeting selection criterion. The Payback Period is a "break-even" calculation in the sense...
The Payback period is one of the most simple methods in Capital Budgeting and the earliest as well. It simply checked how long it would take to pay back an investment which made it very alluring to investors who wanted to know how long it would be till they started getting a profit.
It therefore essentially checked when the project would Break-Even.
The formula is,
Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
This means that to calculate the Payback Period, for example, say the investment was $500 and the project brought in $120 for 5 years.
That would mean that in year 4 it would have brought it $480. Year 4 is the Number of Years prior to Full recovery.
The $20 left is the Unrecovered cost at the start of the year and the Cashflow for the year is $120. The Payback is therefore,
= 4 + (20/120)
= 4.17
Abe and Bea each have some money to invest in a CD (Certificate of Deposit). Abe has $5,000 and Bea has $20,000. Both are interested in making a 6-month investment at Synchrony Bank. The CD rates for Synchrony Bank (as of July 8, 2015) are as listed below. With 0.41% interest, Abe would get $5,010 in six months. With 0.50% interest, Bea would get $20,050 at the end of six months. If they pool their funds, they will be able to purchase a $25,000 CD, which pays a higher interest rate. The 0.60% interest will return $25,075 at the end of six months. Obviously, Abe gets back his $5,000 principle, and Bea gets back her $20,000 principle. How should the $75 interest be divided between the two of them
Answer:
Abe = $17.5
Bae = $57.5
Explanation:
Abe's principle = $5,000
Bea's principle = $ 20,000
Abe individual investment yield at 0.41% = (5010-5000) = $10
Bae's individual investment yield at ) 0.50%= (20000-20050) $50
Combined investment yield at 6 % = (25,075 - (20,000+5000) = $75
Extra interest yield = (75-(50+10) = $15
The extra interest yield of $15 should be shared equally among Abe and Bae as a result of joint effort
= 15/2 - $7.5
Therefore , the $75 interest is shared as below
Abe = $10 (interest on individual principle)+$7.5 = $17.5
Bae = $50 (interest on individual principle)+$7.5 = $57.5
An investor is deciding whether to build a retail store. If she invests in the store and it is successful, she expects a return of $100,000 in the first year. If the store is not successful, she will suffer a loss of $80,000. She guesses that the probability that the store will be a success is 0.6. To remove some of the uncertainty from this decision, the investor tries to establish more information, but this market research will cost $20,000. If she spends this money, she will have more confidence in her investment. There is a 0.6 probability that this information will be favorable; if it is, the likelihood that the store will be a success increases to 0.9. If the information is not favorable, the likelihood that the store will be a success reduces to only 0.2. Of course, she can elect to do nothing.
A) Draw the associated decision tree.
B) What do you recommend?
C) How much is the information worth?
Replace all the monetary values with the following utilities
Monetary Value Utility
$100,000 1.00
$80,000 0.40
$0 0.20
-$20,000 0.10
-$80,000 0.05
-$100,000 0.00
A) What do you recommend, based on expected utility?
B) Is the investor a risk soeker or a risk avoider?
Answer:
Explanation:
Given that,
expects a return of $100,000 in the first year
loss of $80,000
probability that the store will be a success is 0.6
research will cost $20,000
0.6 probability that this information will be favorable
store will be a success increases to 0.9
store will be a success reduces to only 0.2
a) Decision tree is attachedEMV= (payoff of first outcome) * (probability of first outcome) + (payoff of second outcome) * (probability of second outcome) + (payoff of third outcome) * (probability of third outcome)
EMV(node 1) = EMV(new store)
= ($100,000 * 0.6) + (-80,000 * 0.4)
=$28,000
EMV (node 2) = EMV (no store)
= $0
EMV (node 3) = EMV ( new store and favourable research)
= ($100,000 * 0.9) + (-80,000 * 0.1)
=$82,000
EMV (node 4) = EMV ( no store and favourable research)
= $0
EMV (node 5) = EMV ( new store and unfavourable research)
= ($100,000 * 0.2) + (-80,000 * 0.8)
= -$44,000
EMV (node 6) = EMV ( no new store and unfavourable research)
= $0
B) Here we compare EMV of not conducting the market research ans EMV of conducting the market research and the maximum EMV shall be taken for decision making
Here the EMV of conducting the market research is higher than not conductingHence, the investor can go to market research test. If result is positive, she can invest in the store, if negative she can stop the proposal.
Jose Reyes surrendered an endowment policy and received $50,000 from the ABC Insurance Company. Over time Jose had paid $35,000 in premiums. In addition, over time Jose had collected $5,000 of dividends on the policy. How much gain (loss), if any, must Jose recognize from surrendering the endowment policy
Answer:
$10,000
Explanation:
Calculation for Jose Reyes gain (loss) recognize from surrendering the endowment policy.
Endowment policy $50,000
Premium $35,000
Dividend $ 5,000
Hence:
Endowment policy $50,000 -Premium $35,000
=$15,000
$15,000 - Dividend $ 5,000
=$10,000
Therefore the gain (loss), if any that Jose recognize from surrendering the endowment policy will be $10,000
Interstate Delivery Service is owned and operated by Katie Wyer. The following selected transactions were completed by Interstate Delivery during May:Indicate the effect of each transaction on the following accounting equation elements (Assets, Liabilities, Common Stock, Dividends, Revenue, and Expense). Also indicate the specific item within the accounting equation element that is affected. To illustrate, the answer to (1) follows:(1) Asset (Cash) increases by $18,000; Common Stock increases by $18,000. Element Item Direction1. Received cash in exchange for common stock, $18,000. Asset Cash Increases Common Stock Increases2. Paid advertising expense, $4,850. 3. Purchased supplies on account, $2,100. 4. Billed customers for delivery services on account, $14,700. 5. Received cash from customers on account, $8,200.
Answer and Explanation:
The indication and effect of each transaction are as follows
Particulars Element Item Direction
1. Received cash in exchange
for common stock, $18,000. Asset Cash Increases
Common Stock Increases
It increased both assets and the common stock
2. Paid advertising expense,
$4,850. Expense Advertising Expense Increases
Asset Cash Decreases
It increased the expenses and reduced the assets
3. Purchased supplies on account,
$2,100. Asset Supplies Increases
Liability Accounts Payable Increases
It increased the assets and also increased the liabilities
4. Billed customers for delivery
services on account, $14,700. Asset Accounts Receivable Increases
Revenue Delivery Service Fees Increases
It increased the assets and the revenue is also increased
5. Received cash from
customers on account, $8,200. Asset Cash Increases
Asset Accounts Receivable Decreases
It increased the assets in cash but it reduced the assets i.e account receivable
Answer: I took this class, these are the answers
Explanation:
The indication and effect of each transaction are as follows
Particulars Element Item Direction
1. Received cash in exchange
for common stock, $18,000. Asset Cash Increases
Common Stock Increases
It increased both assets and the common stock
2. Paid advertising expense,
$4,850. Expense Advertising Expense Increases
Asset Cash Decreases
It increased the expenses and reduced the assets
3. Purchased supplies on account,
$2,100. Asset Supplies Increases
Liability Accounts Payable Increases
It increased the assets and also increased the liabilities
4. Billed customers for delivery
services on account, $14,700. Asset Accounts Receivable Increases
Revenue Delivery Service Fees Increases
It increased the assets and the revenue is also increased
5. Received cash from
customers on account, $8,200. Asset Cash Increases
Asset Accounts Receivable Decreases
It increased the assets in cash but it reduced the assets i.e account receivable
Suppose Nike's managers were considering expanding into producing sports beverages. Why might the company decide to do this under the Nike brand name? The cost of producing sports beverages along with its current products under the Nike brand name is less than the cost of producing sports beverages under a new brand name plus the cost of producing Nike's current products under the Nike brand name. The cost of producing sports beverages along with its current products under the Nike brand name is greater than the cost of producing sports beverages separately under a new brand name plus the cost of producing Nike's current products under the Nike brand name.
Answer:
Te correct answer is the first option: The cost of producing sports beverages along with its current products under the Nike brand name is less than the cost of producing sports beverages under a new brand name plus the cost of producing Nike's current products under the Nike brand name
Explanation:
To begin with, the fact that the managers are looking forward to expand the business and to aggregate sports beverages indicates that the company is doing good in the sales and therefore they have margin to invest in a plan like that. Secondly, the fact that they do it under Nike's name will cost them less than doing it otherwise due the fact that they will not have to pay for a new name and all the registrations and patents that the strategy involves. They will only need to register the new product and even more they would have all the marketing campaign focus on the same audience and will find strength in using the brand and name of Nike for that, in terms of publicity.
A company started the year with the following: Assets $121,000; Liabilities $41,500; Common Stock $71,500; Retained Earnings $8,000. During the year, the company earned revenue of $6,400, all of which was received in cash, and incurred expenses of $3,700, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $2,400 to owners. Assume no other activities occurred during the year. The amount of liabilities at the end of the year is
Answer:
$45,200
Explanation:
According to the scenario, the computation of the given data are as follows:
Liabilities = $41,500
Expense incurred during year = $3,700
So, we can calculate the total amount of liabilities by using the following formula:
Liabilities at the end of the year = Liabilities + Expense incurred
Liabilities at the end of the year = $41,500 + $3,700
= $45,200
Preston Woods has 17,500 shares of stock outstanding along with $408,000 of interest bearing debt. The market and book values of the debt are the same. The firm has sales of $697,000 and a profit margin of 6.8 percent. The tax rate is 35 percent, the debt-equity ratio is 40 percent, and the price-earnings ratio is 11.8. The firm has $130,000 of current assets of which $41,200 is cash. What is the enterprise value
Answer:
$ 926,072.80
Explanation:
The company's market capitalization can be computed using the price-earnings ratio of 11.8.
Net income(earnings after tax)=sales* profit margin=$697,000*6.8%=
$ 47,396.00
P/E ratio=market capitalization/net income
11.8=market capitalization/$ 47,396.00
market capitalization=11.8*$47,396.00
market capitalization=$ 559,272.80
Enterprise value=market capitalization+debt-cash
enterprise value=$ 559,272.80+$408,000.00-41,200=$ 926,072.80
Fremont Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $89 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 60% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:
Direct materials $16
Direct labor 20
Factory overhead (25% of direct labor) 5
Total cost per unit $41
If Fremont Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 5% of the direct labor costs.
Required:
a. Prepare a differential analysis dated September 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.
b. Assuming there were no better alternative uses for the spare capacity, it would ______________ to manufacture the carrying cases. Fixed factory overhead is________to this decision.
Answer:
A.Total cost 41 93 (52)
B. It would be much better to manufacture the carrying cases .
While Fixed factory overhead is less important to this decision.
Explanation:
Fremont Computer Company Differential Analysis
Make Alternative 1: Buy Alternative 2:
Differential effect on net income
Alternative 1 : Alternative 2: Differential effect
Purchase Price - 89 (89)
Direct material 16 - 16
Direct labor 20 - 20
Variable 1 - 1
manufacture overhead (20×5%)
Fixed (5-1) 4 4 -
manufacture overhead
Total cost 41 93 (52)
The Company should choose Alternative 1
which is Make carrying case
B. It would be much better to manufacture the carrying cases.
While Fixed factory overhead is less important to this decision.
Therefore in make or buy decision the selling price of the product will be less important because the selling price was not provided which means it does not have effect on the decision of buy or make.
Chow Publications Inc. is a publicly traded media company focused on products for the home chef market. The company publishes a monthly magazine that can be purchased at newsstands and is available for annual subscriptions (either paper copy or digital copy). Chow Publications sells annual subscriptions for S50 (paper copies) or $40 (digital copies). Subscriptions are paid in advance and are non-cancellable. Chow sold for cash 1 15,000 subscriptions on December 1, 2020, of which 30% were digital subscriptions. Single issues can be purchased on newsstands. Chow Publications uses various magazine distributors across Canada to rack it at newsstands, charging the newstands $5 per copy Normally 25,000 copies are sent out each month, with 15% of these being returned unsold. Of the 25,000 magazines sent out in December 2020, all were sold on account, and none of the returned magazines are expected to be resold and, as a result, are sent to recycling. Unsold nagazines are returned by newstands in the following month.
Required
a. Determine how much revenue Chow Publications would be able to recognize in December 2020. Use the five-step model for revenuc recognition in preparing your responsc. Round the per magazine price to three decimal places. ic. S4.965
b. Prepare the required summary journal entries for the contract based on your analysis in part "a."
Answer:
A. $575,415.67
B.
Dr Cash $575,415.67
Cr Revenue from sales $575,415.67
Explanation:
Chow Publications Inc
A.
Revenue recognition it stated that a five step model is been developed to help recognized the revenue from sale of goods and service to customer which is why revenue should be recognized by
1. Identify the contract with customer in which both the seller and buyer are agreed for the contract and must know their rights and obligation in the contracts.
2. Obligation of performance in contract : In above contract the seller know that he has to deliver the content of magazine and the buyer as well know the price for such goods.
The $ 115,000 subscription received are:
$80,500 for paper form and $34500 for digital form and $25,000 copied are been sold out at news stands.
3. Determine the transaction price in which $50 is for the paper copy and $40 is for the digital copy and $ 5 is for copy which is sold at news Stands.
4. Allocation of transaction price to performance obligation will be by calculating the revenue from the transaction and by applying the rate of performance obligation which is why the Total revenue was $ 575,416.67.
5. Recognizing the revenue in the books occured in a situation where the risk and rewards which relate to the ownership of the goods has been passed which led to the customer been satisfied which inturn means that there is no uncertainty regarding the creation of performance obligation on buyer.
Chow Publications Inc
A.
Total Revenue
Online subscription
Paper form $335,415.67
Online form $115,000.00
$450,415.67
Add Copy at News Stand $125,000
Total $575,415.67
B. Journal entry
Dr Cash $575,415.67
Cr Revenue from sales $575,415.67
Monthly share in Annual Revenue
Annual rate Monthly rate
Paper form $50 4.17
Digital rate $40 3.33
Distribution of subscription total received $115,000
Paper rate 70% ×$115,000
= $80,500
Digital rate 30% ×115,000
= $34,500
Hatfield Corporation, which has only one product, has provided the following data concerning its most recent month of operations:Selling price $123Units in beginning inventory 0Units produced 6,400Units sold 6,100Units in ending inventory 300Variable costs per unit: Direct materials $45 Direct labor $30 Variable manufacturing overhead $1 Variable selling and administrative $8Fixed costs: Fixed manufacturing overhead $140,800Fixed selling and administrative $91,500What is the net operating income for the month under variable costing?a) $12,200b) ($17,200)c) $5,600d) $6,600
Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $123
Units sold= 6,100
Variable costs per unit:
Direct materials $45
Direct labor $30
Variable manufacturing overhead $1
Variable selling and administrative $8
Fixed costs:
Fixed manufacturing overhead $140,800
Fixed selling and administrative $91,500
First, we need to calculate the total variable cost per unit:
Variable cost per unit= 45 + 30 + 1 + 8= $84
Income statement:
Sales= 6,100*123= 750,300
Total variable cost= 6,100*84= (512,400)
Contribution margin= 237,900
Fixed manufacturing overhead= (140,800)
Fixed selling and administrative= (91,500)
Net operating income= 5,600
. Suppose Stevie'sStevie's expectation to sell one standard scooter for every three chrome scooters was incorrect and for every four scooters sold two are standard scooters and two are chrome scooters. Will the breakeven point of total scooters increase or decrease? Why? (Calculation not required.)
Answer:
It depends upon the contribution per unit of each product or in other words it depends on composite contribution per unit.
Explanation:
The composition matters a lot because of the fact that every product has its own contribution per unit. So if the product chrome has $1 contribution per unit and standard scooter has $2 contribution per unit. Also suppose that $6 is the total fixed cost. Then the priority to sell must be standard scooter, because it has higher contribution. Secondly if we only sell chrome scooters then total 6 ($6 fixed cost - 6 units * $1 contribution per unit) units must be sold and if we only sell standard scooters then only 3 ($6 fixed cost - 3 units * $2 contribution per unit) units must be sold to breakeven. Suppose, if we reduce standard scooters from 3 scooters to 2 units ($6 fixed cost - 2 units * $2 contribution per unit) then their will be loss of $2 which can be reduced to zero by selling 2 chrome scooters ($2 loss - 2 units * $1 contribution per unit).
So this is how contribution per unit affects the composite breakeven units and most important thing is that if the composite contribution per unit has increased then the breakeven units will decrease and vice versa.
Which of the following reports, which generally are shared only between the organizations that are doing business with one another, are used by auditors to assess the ICFR at one entity that does business with another entity
A. SOC-1
B. SOC-2
C. SOC-3
Answer:
A. SOC-1.
Explanation:
SOC-1 is an acronym for System and Organization Controls Report, which generally are report shared only between the organizations that are doing business with one another. It is also used by auditors to assess, test and report the Internal Control over Financial Reporting (ICFR) at one entity that does business with another entity.
The SOC-1 report is also known as Statement on Standards for Attestation Engagements (SSAE) 18, it helps to create trust and transparency among business entities.
However, it was formerly referred to as the Statement on Auditing Standards 70 (SAS 70) and usually is valid for a period of 1 year (12 months).
On March 31, 2018, Easy Rental Agency Inc.'s trial balance included the following selected unadjusted account balances. The company's year end is December 31 and it adjusts its accounts quarterly
Debit Credit
Prepaid insurance $14,740
Supplies 2,900
Equipment 22,100
Accumulated depreciation-equipment 5,680
Unearned revenue 9,730
Loan payable, due 2020 20,000
Rent revenue 30,900
Salaries expense 14,500
An analysis of the accounts shows the following:
1. The equipment, which was purchased on January 1, 2017, is estimated to have a useful life of four years. The company uses straight-line depreciation.
2. One third of the unearned revenue related to rent is still unearned at the end of the quarter.
3. The loan payable has an interest rate of 6%. Interest is paid on the first day of each following month and was last paid March 1, 2018.
4. Supplies on hand total $940 at March 31.
5. The one-year insurance policy was purchased for $14,740 on January 1.
6. Income tax is estimated to be $2,600 for the quarter.
Prepare the quarterly adjusting entries required at March 31.
Answer:
1)
Dr Depreciation expense 1,226
Cr Accumulated depreciation 1,226
2)
Dr Unearned revenue 6,487
Cr Rent revenue 6,487
3)
Dr Interest expense 600
Cr Accrued interest 600
4)
Dr Supplies expense 1,960
Cr Supplies 1,960
5)
Dr Insurance expense 3,618
Cr Prepaid insurance 3,618
6)
Dr Income tax expense 2,600
Cr Income tax payable 2,600
Explanation:
March 31, 2018
Prepaid insurance $14,740 - 3,618
Supplies 2,900 - 1,960
Equipment 22,100
Accumulated depreciation-equipment 5,680 + 1,226
Unearned revenue 9,730 - 6,487
interest payable 600
Income tax payable 2,600
Loan payable, due 2020 20,000
Rent revenue 30,900 + 6,487
Salaries expense 14,500
depreciation expense 1,226
interest expense 600
Supplies expense 1,960
Insurance expense 3,618
Income tax expense 2,600
1. The equipment, which was purchased on January 1, 2017, is estimated to have a useful life of four years. The company uses straight-line depreciation.
depreciation per year = $22,100 / 4 = $5,525
depreciation expense up to March 31, 2018:
$5,525 x 1.25 = $6,906.25 ≈ $6,906
adjustment entry = $6,906 - $5,680 = $1,226
Dr Depreciation expense 1,226
Cr Accumulated depreciation 1,226
2. One third of the unearned revenue related to rent is still unearned at the end of the quarter.
adjusting entry = 9,730 - (9,730 x 1/3) = $6,486.67 ≈ $6,487
Dr Unearned revenue 6,487
Cr Rent revenue 6,487
3. The loan payable has an interest rate of 6%. Interest is paid on the first day of each following month and was last paid March 1, 2018.
interest per month = $20,000 x 6% x 1/12 = $600
Dr Interest expense 600
Cr Accrued interest 600
4. Supplies on hand total $940 at March 31.
adjusting entry = $2,900 - $940 = $1,960
Dr Supplies expense 1,960
Cr Supplies 1,960
5. The one-year insurance policy was purchased for $14,740 on January 1.
insurance expense per quarter = $14,470 x 3/12 = $3,617.50 ≈ $3,618
Dr Insurance expense 3,618
Cr Prepaid insurance 3,618
6. Income tax is estimated to be $2,600 for the quarter.
Prepare the quarterly adjusting entries required at March 31.
Dr Income tax expense 2,600
Cr Income tax payable 2,600
Selected account balances from the adjusted trial balance for Olinda Corporation as of its calendar year-end December 31 follow. Debit Credit a. Interest revenue $ 14,500 b. Depreciation expense—Equipment $ 34,500 c. Loss on sale of equipment 26,350 d. Accounts payable 44,500 e. Other operating expenses 106,900 f. Accumulated depreciation—Equipment 72,100 g. Gain from settlement of lawsuit 44,500 h. Accumulated depreciation—Buildings 175,500 i. Loss from operating a discontinued segment (pretax) 18,750 j. Gain on insurance recovery of tornado damage 29,620 k. Net sales 1,003,500 l. Depreciation expense—Buildings 52,500 m. Correction of overstatement of prior year’s sales (pretax) 16,500 n. Gain on sale of discontinued segment’s assets (pretax) 36,500 o. Loss from settlement of lawsuit 24,250 p. Income tax expense ? q. Cost of goods sold 487,500 Assume that the company’s income tax rate is 40% for all items. Compute the tax effects and after-tax amounts of the three items labeled pretax. 2a. What is the amount of income from continuing operations before income taxes? 2b. What is the amount of the income tax expense? 2c. What is the amount of income from continuing operations?
Answer:
2a) 330,500
2b) 132,200
2c) 198,300
Explanation:
Loss from operating a discontinued segment (pretax) 18,750
Correction of overstatement of prior year’s sales (pretax) 16,500
Gain on sale of discontinued segment’s assets (pretax) 36,500
Using these data from the comparative balance sheet of Ramirez Company, perform horizontal analysis.
Dec. 31, 2014 Dec. 31, 2013 Amount Percentage
Accounts receivable $535,000 $450,000 _______ _________
Inventory $792,000 $606,000 _______ _______
Total assets $3,138,000 $2,707,000 _______ _______
Answer:
Ramirez Company comparative balance sheet
2014 2013
Particulars Amount Percent Amount Percent
Accounts receivable 535,000 17.05% 450,000 16.62%
Inventory 792,000 25.24% 606,000 22.39%
Other Assets 1,811,000 57.71% 1,651,000 60.99%
Total assets 3,138,000 100% 2,707,000 100%
2014 Workings
Account receivables= 535,000 / 3,138,000 * 100 = 17.05%
Inventory= 792,000 / 3,138,000 * 100 =25.24%
Other Assets= 1,811,000 / 3,138,000 * 100 = 57.71%
2013 Workings
Account receivables= 450,000/2,707,000 * 100= 16.62%
Inventory=606,000/2,707,000 * 100= 22.39%
Other Assets=1,651,000/2,707,000 * 100= 60.99%
Shawn and Harry signed a contract for Shawn to build a house for Harry according to the specifications provided by Harry. The contract stated that Shawn would be paid $125,000. Shawn unintentionally deviated from the specifications in several minor respects. The house was soundly constructed, and Shawn completed the work within the promised time. Harry refused to pay Shawn any of the $125,000, arguing that the house did not conform to the specifications. In this case,
A) Harry will get a decree of specific performance.
B) Shawn has no right to be paid for any of his work because he breached the contract.
C) if the court finds that Shawn has substantially performed, he will be able to recover the contract price less any damages caused by his failure to perform as promised.
D) if the court finds that Shawn has substantially performed, he will be able to recover the contract price less any damages caused to him because of the delay in payment.
Answer:
C) if the court finds that Shawn has substantially performed, he will be able to recover the contract price less any damages caused by his failure to perform as promised.
Explanation:
From the question Harry signed a contract with Shawn to build a house. Harry made some specification to build the house. But Shawn did not follow the specifications now Harry doesn't want to pay him the contract amount.
Under doctrine of specific performance, Harry can pay less money than the contract price. Because Shawn has performed substantially, he is not entitled to receive the contract price as agreed.
Lily wants to build a business. She has very little capital. She does, however, have a partner with which she could run a business. Lily wants to be able to avoid being held personally liable for any problems the business has. Which of the following would lead Lily to choose a sole proprietorship organization for her business?
a. Possession of a partner
b. Little capital
c. Avoidance of personal liability
d. None of the above
Answer:
The correct answer is option (b) Little capital
Explanation:
Solution
With a little capital this will help Lily to choose a sole proprietorship organization for her business. a sole proprietorship can begin with a little capital.
The option (a) is not correct as possession of a partner will not lead her to start a sole proprietorship business.
Also the option (c) is not correct the avoidance of personal liability is not the reason because in sole proprietorship, Lily will be liable for her debts.
Gomez runs a small pottery firm. He hires one helper at $16,500 per year, pays annual rent of $6,000 for his shop, and spends $22,500 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $5,000 per year if alternatively invested. He has been offered $19,500 per year to work as a potter for a competitor. He estimates he could use his talents to earn an additional $5,500 per year in consulting fees if he were working full time as a potter. Total annual revenue from pottery sales is $89,000.Calculate the accounting profit and the economic profit for Gomez's pottery firm.
Accounting profit = ?
Economic profit = ?
Answer:
$44,000
$14,000
Explanation:
Accounting profit is total revenue less total explicit cost.
Accounting profit = Revenue - Explicit cost
Total explicit cost = $16,500 + $6,000 + $22,500 = $45,000
Total revenue = $89,000
Accounting profit = $89,000 - $45,000 = $44,000
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
Opportunity cost = $5,500 + $19,500 + $5,000 = $30,000
Economic profit = $44,000 - $30,000 = $14,000
I hope my answer helps you
Brazil is almost self-sufficient in ethanol. Brazilian ethanol is made from sugar and costs 83cents per gallon whereas U.S. ethanol, made from corn, costs $1.14 per gallon. The United States has set a zero quota on imports of ethanol, so it does not import ethanol. Source: The New York Times, April 12, 2006 Which country has a comparative advantage in producing ethanol? Explain why both the United States and Brazil can gain from specialization and trade.
Answer:
Brazil has comparative advantage in Ethanol.
Both US & Ethanol can gain from trade, if they specialise in their good of comparative advantage & import the other at lower opportunity cost.
Explanation:
Comparative advantage is when an economy can produce a good with lesser opportunity cost than other economy.
Brazil can produce ethanol at lower opportunity cost, as it uses lesser resources to produce Ethanol, compared to US.
So, Brazil has comparative advantage in producing ethanol. Both US & Brazil can gain from specialisation : As, US can get more ethanol at lesser than domestic opportunity cost. And, Brazil can also gain from trade by importing the good in which US has better opportunity cost & comparative advantage, in exchange of exported ethanol. It would imply Brazil would get more of the other good at lesser than domestic opportunity cost.
Peterson Company estimates that overhead costs for the next year will be $3,500,000 for indirect labor and $870,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 92,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)
Answer:
The company's plantwide overhead rate is $47.5
Explanation:
The total planned overhead costs for next year=$3,500,000+$870,000=$ 4,370,000.00
machine hours as overhead allocation base is 92,000 hours
company's plantwide overhead rate =total planned overhead/overhead allocation base(machine hours)
company's plantwide overhead rate=4,370,000.00/92000=$47.5
A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 200 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero.
Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first.
Approximately how many hours per year will the solar panels need to operate to enable this project to break even?
Answer:
It will take 6,534.31 hours per year for the solar panels to operate to enable this project to break even
Explanation:
Discount rate = 30% = 0.3
Looking at one hour of operation in each year = 200 kW x $0.30 Kw/hr
= $60 value of electricity per year
Compound interest factor for a discount rate of 30% = 3.3158
(taken from compound interest factor table or computed using formula ∑1/(1+r)^t , where r = 30%, and t = 1 to 30)
Present value of operating the solar panels for 1 hour per year = 60 × 3.3158 = $ 198.95
For break even it would need to run = 1.3 million ÷ 198.95
= 6,534.31 hours per year
what are the 8 core subject areas that employer expect all employees to know
Answer:
Communication. More than two-thirds of recruiters across all industries say communication is the most important skill they look for. ... Decision-Making. Flexibility. Commitment. Innovation. Integrity. Leadership. Life-long Learning.Explanation:
Have a good day and stay safe!
Listed below are a few events and transactions of Kim Company. Year 1 Jan. 2 Purchased 95,000 shares of Grey Co. common stock for $501,000 cash. Grey has 285,000 shares of common stock outstanding, and its activities will be significantly influenced by Kim. Sept. 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $500,400. Year 2 June 1 Grey declared and paid a cash dividend of $2.00 per share. Dec. 31 Grey announced that net income for the year is $722,900. Dec. 31 Kim sold 10,000 shares of Grey for $126,500 cash. Prepare journal entries to record the above transactions and events of Kim Company. (Do not round intermediate calculations and round your final answers to the nearest dollar amount.)
Answer:
Year 1
Jan. 2
Investment in Grey $501,000 (debit)
Cash $501,000 (credit)
Sept. 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Year 2
June 1
Share of Profit of Associate : Dividend Received $190,000 (debit)
Dividend Declared $190,000 (credit)
Dec. 31
Cash $126,500 (debit)
Investment In Grey $126,500 (credit)
Explanation:
During the first year, Kim Company purchased 33% of stocks in Grey Co. This led to Kim Company having significant influence over Grey Co. Grey Co. is known as Associate Company.
The dividend paid by an Associate is Part of Share of profit from an associate and must be presented as such in the entity books.
During the second year, when Kim Company sells 10,000 shares of Grey Co, they lost part of Investment but still have significant influence (29%) in Grey Co.The Grey Co remains an Associate of Kim Company.
Suppose Sharon earns $575 per week working as a programmer for PC Pros. She uses $9 to get her car washed at Spotless Car Wash. Spotless Car Wash pays Paolo $300 per week to wash cars. Paolo uses $200 to purchase software from PC Pros.
and
1. Paolo spends $200 to purchase software from PC Pros.
- A. Resource Market? B. Product Market market?
2. Paolo earns $300 per week working for Spotless Car Wash
- A. Resource Market? B. Product Market market?
3. Sharon spends $9 to get her car washed.
- A. Resource Market? B. Product Market market?
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs.
1. The $300 per week Paolo earns working for Spotless Car Wash
2. The $200 Paolo spends to purchase software from PC Pros
3. Sharon's labor
Answer:
First Question
1. B
2. A
3. B
Second Question
The $200 Paolo spends to purchase software from PC Pros.
Explanation:
1. Paolo's transaction falls under the product market cash flow because he wittingly spends on a product–the software.
2. Paolo's earnings comes to the resource market, since he is been paid for his human resourcefulness in the organization.
3. Sharon's payment for washing her car is best placed on the Product market flow since she is spending on a personal product–the car.
The $200 Paolo spends to purchase software from PC Pros in this scenario represent a flow from a household to a firm because he (an individual belonging to a household) transfers his money to the firm.
Piper's Pizza sold baking equipment for $25,000. The equipment was originally purchased for $72,000, and depreciation through the date of sale totaled $51,000. What was the gain or loss on the sale of the equipment
Answer:
The gain on disposal is of $4000
Explanation:
To calculate the gain or loss on disposal, we first need to calculate the Carrying value, also known as the Net Book Value, of the asset at the time of sale. The Carrying value is calculated using the following formula,
Carrying Value or NBV = Cost - Accumulated depreciation
Carrying Value or NBV = 72000 - 51000
Carrying Value or NBV = $21000
If the asset is sold for more than its carrying value, there is a gain on disposal. If it is sold for less than its carrying value, there is a loss on disposal.
As the asset was sold for $25000 which is more than its carrying value of $21000, there is a gain on disposal.
Gain on disposal = 25000 - 21000 = $4000 Gain
If a fixed asset, such as a computer, were purchased on January 1st for $1,832.00 with an estimated life of 6 years and a salvage or residual value of $123.00, what is the journal entry for monthly expense under straight-line depreciation?
Answer:
Dr depreciation expense $ 23.74
Cr accumulated depreciation $ 23.74
Explanation:
The depreciation per month would be first thing to determine:
Yearly depreciation =Cost of asset-residual value/useful life
cost of asset is $1,832.00
residual value which is disposal value at the end of useful life is $123.00
Useful life is 6 years
yearly depreciation charge= ($1,832.00-$123.00)/6=$ 284.83
Monthly depreciation expense=yearly depreciation charge/12=$284.83/12=$23.74
The journal entry monthly would be a debit to depreciation expense and a credit to accumulated depreciation
The current sections of Birmingham Inc.’s balance sheets at December 31, 2019 and 2020, are presented here. Birmingham’s net income for 2020 was $193,000. The income statement included depreciation expense, $25,000, amortization expense, $10,000, and a gain on disposal of equipment, $7,000. The equipment was sold for $47,000. Birmingham also issued bonds for $60,000. 2020 2019Current assets Cash $417,000 $ 99,000 Accounts receivable 120,000 93,000Inventory 159,000 176,000Prepaid expenses 29,000 24,000Total current assets $725,000 $392,000 Current liabilities Accrued expenses payable $ 17,000 $ 6,000 Accounts payable 88,000 94,000Total current liabilities $105,000 $100,000 InstructionsPrepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020 using the indirect method.
Answer:
Net Income 193,000
Non-monetary terms:
Depreciation expense 25,000
amortization expense 10,000
gain on disposal (7,000)
Adjusted Income 221,000
Change in Working Capital:
Increase in A/R (27,000)
Decreasein Inv 17,000
Increase in Prepaid (5,000)
Increase Accrued /P 11,000
Decreasein A/P (6,000)
Change In Working Capital (10,000)
From Operating Activities 211,000
Investing
Sale of Equipment 47,000
Financing
Bonds Issued 60,000
Cash Flow 318,000
Beginning Cash 99,000
Cash Flow 318,000
Ending Cash 417,000
Explanation:
We first remove the non.monetary concetps from the net income.
Then we adjust for the change in working capital which are the incrase and decrease in the current assets and liabilities account
Increase in asset and decrease in liabilities represent cash outflow
while the opposite is true when an asset decrease(convert to cash) or a liablity increase (delay of the payment)