Answer:
Results are below.
Explanation:
First, we must deduct the depreciation expense from each month. Depreciation is not a cash disbursement, and insurance and taxes are paid once a year.
March= 132,700 - 28,000= 104,700
April= 124,700 - 28,000= 96,700
May= 113,500 - 28,000= 85,500
Now, the cash disbursements for each month:
March:
Selling and administrative costs from March= 104,700*0.73= 76,431
Total cash disbursement= 76,431
April:
Selling and administrative costs from March= 104,700*0.27= 28,269
Selling and administrative costs from April= 96,700*0.73= 70,591
Total cash disbursement= $98,860
May:
Selling and administrative costs from May= 85,500*0.73= 62,415
Selling and administrative costs from April= 96,700*0.27= 26,109
Total cash disbursement= $88,524
Five-A-Day, a company that produces and distributes organic vegetables for grocery stores, wants to market its vegetables in such a way that children will want to buy them. To accomplish this, the company creates an advertising campaign that features children dressed up in vegetable costumes attending a Halloween party and eating vegetables and dips as a snack. The company also packages cut up vegetables in grab-and-go containers in fun shapes and colorful designs to attract children's attention in the grocery store. Which marketing function does this scenario most closely described
Answer:
Selling
Explanation:
The marketing function that best describes this scenario is defined selling.
This is a strategy that the company uses when it wants to sell its product or service to a specific audience, in the case of the issue the audience is children. To this end, the company develops communication strategies that reach its target audience, such as developing advertising campaigns, using symbols and messages aligned with the tastes, desires and needs of its potential audience, to influence the choices, identification and process of purchase.
The American Girl catalog began as a concept to introduce today's girls to girls who lived in the past. Each historically accurate doll is carefully crafted and dressed and has books to describe her life. For example, Kristen is an 1854 pioneer girl who is growing up in Minnesota. Her story begins with her long sea voyage from Sweden. The basic doll dressed in a calico dress and striped apron plus the hardcover story of how she got to Minnesota costs $90. Six more hardback books of Kristen's life are available for $74.95. Kristen's nightgown costs $20, and a matching one for the doll owner is an additional $38. Buy both together and the price is only $50. A hand-painted wooden bed and trunk for Kristen are available for $213. Shipping costs vary with the price of the merchandise ordered. Refer to the American Girl Doll. What is the revenue to American Girl if it sells 20 basic Kristen doll and books
Use the following information:
Windswept, Inc. 2017
Income Statement
($ in millions)
Net sales $10,200
Cost of goods sold 7,800
Depreciation 355
Earnings before interest and taxes $2,045
Interest paid 94 Taxable income $1,951
Taxes 585
Net income $ 1,366
Windswept, Inc. 2016 and 2017
Balance Sheets ($ in millions)
2016 2017 2016 2017
Cash $340 $360 Accounts payable $1,820 $1,680
Accounts rec. 1,050 950 Long-term debt 1,040 1,500
Inventory 1,820 1,740 Common stock 3,300 3,110
Total $3,210 $3,050 Retained earnings 620 870
Net fixed assets3,570 4,110
Total assets $6,780 $7,160 Total liab & equity $6,780 $7,160
What amount should be included in the financing section of the 2010 statement of cash flows for dividends paid?
Answer:
Windswept, Inc.
The amount that should be included in the financing section of the 2010 statement of cash flows for dividends paid is:
= $1,116
Explanation:
a) Data and Calculations:
Income Statement
($ in millions)
Net sales $10,200
Cost of goods sold 7,800
Gross profit $2,400
Depreciation 355
Earnings before interest and taxes $2,045
Interest paid 94
Taxable income $1,951
Taxes 585
Net income $ 1,366
Windswept, Inc.
Balance Sheets ($ in millions)
2016 2017 2016 2017
Cash $340 $360 Accounts payable $1,820 $1,680
Accounts receivable 1,050 950 Long-term debt 1,040 1,500
Inventory 1,820 1,740 Common stock 3,300 3,110
Total $3,210 $3,050 Retained earnings 620 870
Net fixed assets 3,570 4,110
Total assets $6,780 $7,160 Total liab & equity $6,780 $7,160
Dividends paid:
Retained earnings, 2016 $620
Net income for 2017 1,366
Total $1,986
Retained earnings, 2017 (870)
Dividends paid = $1,116
Based on your understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher? The outlook for the economy and the markets is for a downturn. The outlook for the economy and the markets is for an improvement.
Answer:
The outlook for the economy and the markets is for an improvement.
Explanation:
p/e ratio = price / earning
the higher the equity, the lower the ratio
If the p/e ratio is expected to be higher, it means that the equity would have to be lower this year than next year .
this implies that earnings would be higher next year and p/e ratio would be lower. this means there is a positive economic outlook
From the choices presented, choose the appropriate term for completing each of the following sentences: a. Advertising expenses are usually viewed as costs. b. An example of factory overhead is . c. Direct materials costs and direct labor costs are called costs. d. Implementing automatic factory robotics equipment normally the factory overhead component of product costs. e. Materials that are an integral part of the manufactured product are classified as . f. An oil refinery would normally use a cost accounting system. g. The balance sheet of a manufacturer would include an account for . h. The wages of an assembly worker are normally considered a cost.
Answer:
a. Advertising expenses are usually viewed as period costs.
b. An example of factory overhead is plant depreciation.
c. Direct materials costs and direct labor costs are called conversion costs.
d. Implementing automatic factory robotics equipment normally decreases the factory overhead component of product costs.
e. Materials that are an integral part of the manufactured product are classified as direct materials.
f. An oil refinery would normally use a process cost accounting system.
g. The balance sheet of a manufacturer would include an account for work in process inventory.
h. The wages of an assembly worker are normally considered a product cost.
The Kleins currently use part time, contract employees hired through the vocational rehabilitation program. Before hiring any permanent, full-time employees, they want to better understand the role small businesses play when it comes to job creation. Which of the following explanations should you provide?
a. Working for a small business necessarily means forgoing top pay.
b. Small companies typically employ the owner or founder, but do not hire other employees.
c. Almost one out of four workers in the United States works for a company that has fewer than 20 employees.
d. Less than 1% of U.S. companies have 500 or more employees.
Answer:
D. Less than 1% of U.S. companies have 500 or more employees.
Explanation:
From statistics, about 99.9% of the businesses in the united states of America are small businesses. This is to say that these small businesses are major employers of labour. The small business is an independent business that has less than 500 people in it's labor force. So they play a very crucial role in job creation. Especially since only about 1% of the big companies up to 500 or more employees. The small business creates job opportunities for a greater percentage of the population.
Suppose that the global crude oil price has risen due to refinery breakdowns caused by middle-east politics and warfare. Crude oil is an input in the gasoline production. At the same time, the demand for driving and, therefore, the demand for gasoline has also risen in the United States. You can accurately predict that the domestic price of gasoline is:_______
Answer:
"Definitely increase" is the correct approach.
Explanation:
As fuel demand rises, consumption exceeds the amount, as manufacturers are unable to cope with either the surge in demand whenever the profit margin is still rising.We could perhaps state precisely that consumption overtakes the output of petrol or the curve of availability to that same right as well as would therefore be at that same greater degree.Thus the above is the correct answer.
A retired auto mechanic hopes to open a customizing shop for installing heated or ventilated seats. Two locations are being considered, one in the center of the city and one on the outskirts. The central city location would involve fixed monthly costs of $6,500 and labor, materials, and transportation costs of $20 per car. The outside location would have fixed monthly costs of $3,900 and labor, materials, and transportation costs of $30 per car. Dealer price at either location will be $80 per car. a. Which location will yield the greatest profit if monthly demand is (1) 150 cars
Answer:
Outskrits
Explanation:
The Cost of labor and materials is quite a bit less than if in the middle of town, in the big picture that 10 dollar difference in transportation is nothing in the long run. The only problem is as your not a big pass-by kinda place you might not get as many customers from it as you might like. Saving money is a key but a good product is the door to fortune.
Thomas Company has a sales budget for next month of $1,000,000. Cost of goods sold is expected to be 25 percent of sales. All goods are paid for in the month following purchase. The beginning inventory of merchandise is $50,000, and an ending inventory of $64,000 is desired. Beginning accounts payable is $160,000. For Thomas Company, the ending accounts payable should be:
Answer:
the ending account payable is $264,000
Explanation:
The computation of the ending account payable is shown below;
= Required material + ending inventory - beginning inventory
= ($1,000,000 × 25%) + $64,000 - $50,000
= $264,000
Hence, the ending account payable is $264,000
Basically applied the above formula to calculate the ending account payable
MM Proposition II with taxes: Group of answer choices explains how a firm's WACC increases with the use of financial leverage. reveals how utilizing the tax shield on debt causes an increase in the value of a firm. supports the argument that business risk is determined by the capital structure employed by a firm. supports the argument that the cost of equity decreases as the debt-equity ratio increases. reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm.
Answer:
explains how a firm's WACC increases with the use of financial leverage.
Explanation:
According to the MM Proposition II with taxes, the cost of equity rises with the increases use of debt in the capital structure of a firm.
[tex]r_{e}[/tex] = [tex]r_{o} +( r_{o} - r_{d} )[/tex] × [tex]\frac{D}{E}[/tex]
As cost of equity increases, the firm's WACC increases also
The MM Proposition I with taxes reveals how utilizing the tax shield on debt causes an increase in the value of a firm
XYZ company's prime costs total OMR 3,000,000 and its conversion costs
total OMR 7,000,000. If direct materials are OMR 2,000,000 and factory
overhead is OMR 6,000,000, then direct laboris
OMR 2,000,000 a
OMR 1,000,000 b
X
OMR 4,000,000
.c
OMR 3,000,000 d
OMR 3,500,000 e
Answer:
ok
Explanation:
Assume you are a hiring manager selecting between two finalist candidates, Candidate A and Candidate B. The successful candidate will earn an annual salary of $250,000. Candidate A will generate $500,000 in revenue with 85% probability and $300,000 in revenue with 15% probability. Candidate B will generate $500,000 in revenue with 50% probability and $250,000 inrevenue with 50% probability.a.What is the expected net revenue of Candidate A
Signal mistakenly produced 1,075 defective cell phones. The phones cost $70 each to produce. A salvage company will buy the defective phones as they are for $39 each. It would cost Signal $82 per phone to rework the phones. If the phones are reworked, Signal could sell them for $146 each. Signal has excess capacity. Should Signal scrap or rework the phones
Answer: Rework the phones
Explanation:
The phones have already been produced so the cost price of $70 does not matter as it is a sunk cost.
The decision the company makes between scrap and reworking will depend on which option bring in more money.
Scrap = $39
Reworking:
= Price after reworking - Cost to rework
= 146 - 82
= $64
Incremental income of reworking over scrap:
= 1,075 * (64 - 39)
= $26,875
Signal makes an incremental income of $26,875 if they rework the phones so they should do that.
Paid $42,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $210 cash per truck for the cost of their annual tune-ups. Paid $168 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $236,250 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record the four transactions from part 1.
Answer:
Part 1
Replacement of motor on equipment - Capital Expenditure
Cost of Initial tune -ups - Capital Expenditure
Replacement filters on an air-conditioning system - Revenue Expenditure
Addition to a Building - Capital Expenditure
Part 2
Item 1
Debit : Equipment $42,000
Credit : Cash $42,000
Item 2
Debit : Truck $210
Credit : Cash $210
Item 3
Debit : Replacement expense $168
Credit : Cash $168
Item 4
Debit : Buildings $236,250
Credit : Cash $236,250
Explanation:
Capital Expenditure is any expenditure incurred to enhance the economic value of an asset. This include improvements or costs directly incurred to place the asset in the location and condition intended for use by the management.
Revenue Expenditure is any expenditure incurred to maintain daily operations of the company. This includes repairs and maintenance expenses.
Cincinnati t-shirts prints custom t-shirts. The cost to produce one shirt is: direct materials, $10; direct labor, $1.20; and manufacturing overhead $4.50. Cincinnati Children’s Hospital asked Cincinnati t-shirt to sell them custom t-shirts for $12 each for a local charity event. Direct material and direct labor are required for each t-shirt. Of the manufacturing overhead, $1.50 is variable and would be incurred on each additional unit. The remaining $3 in overhead is allocated fixed overhead that would not be increased or decreased by this order. What would be the effect on net income if they accept this special order and sell 200 shirts to Cincinnati Children’s Hospital for $12 each?
Answer:
Effect on income= $140 decrease
Explanation:
Giving the following formula:
Production costs:
Direct material= 10
Direct labor= 1.2
Variable overhead= $1.5
Selling price= $12
Number of units= 200
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
Effect on income= Units sold*unitary contribution margin
Effect on income= 200*(12 - 10 - 1.2 - 1.5)
Effect on income= $140 decrease
At a movie theater box office, all tickets are sequentially prenumbered. At the end of each day, the beginning ticket number is subtracted from the ending number to calculate the number of tickets sold. Then, ticket stubs collected at the theater entrance are counted and compared with the number of tickets sold. Which of the following situations does this control detect?
a. Some customers presented tickets purchased on a previous day when there wasn't a ticket taker at the theater entrance (so the tickets didn't get torn.)
b. A group of kids snuck into the theater through a back door when customers left after a show.
c. The box office cashier accidentally gives too much change to a customer.
d. The ticket taker admits his friends without tickets.
For each of the following situations, state whether total revenue received by the seller increases, decreases, or does not change.
a. If price elasticity of demand is -1.00 and price increases, total revenue.
b. If price elasticity of demand is -0.02 and price increases, total revenue
c. If price elasticity of demand is 5.00 and price increases, total revenue
d. If price elasticity of demand is-0.131 and price decreases, total revenue
e. If price elasticity of demand is -3.33 and price decreases, total revenue
Answer:
doesn't change
increases
decreases
decreases
increase
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
a. Demand is unit elastic and if price increases, quantity demanded would change by the same amount and total revenue would remain the same
b. Demand is inelastic. If prices increases, there would be little or no change in quantity demanded and revenue would increase
c. Demand is elastic. Increase in price would lead to a reduction in quantity demanded and total revenue would fall
Demand is inelastic, if prices are decreased, there would be little or no change in quantity demanded and revenue would fall
Demand is elastic. A decrease in price would increase the quantity demanded and total revenue would rise
Allocating Liquidation Between Common Stockholders and Preferred Stockholders The Arcadia Company is liquidating. After paying off all of its creditors, the company has $2 million to distribute between its preferred stockholders and its common stockholders. The aggregate par value of the preferred stock is $1.8 million and the aggregate par value of its common stock is $4 million. How much of the remaining $2 million assets should be distributed to the preferred stockholders and how much should be distributed to the common stockholders
Answer and Explanation:
The computation is shown below:
The amount that should be distributed to the preferred stockholder would be equivalent to the aggregate par value of the preferred stock i.e. $1.8 million and the remaining value would be distributed to the common stockholders i.e.
= $2 million - $1.8 million
= $0.2 million
Hence, the same would be considered
Essence of Skunk Fragrances Calculate the average collection period. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the receivables turnover? (Use 365 days a year. Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) What is the amount of the company’s average receivables? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
1. Average collection period 41.25 days
2. Receivable Turnover 8.84848485
3. Average Receivable $521,558.22
Explanation:
1. Calculation for Average collection period
First step is to calculate the Percentage of customers not receiving discounts
Percentage of customers not receiving discounts = 100% - 65%
Percentage of customers not receiving discounts= 35%
Now let calculate Average collection period
Average collection period = (65% * 15) + (35% *90)
Average collection period = 9.75 + 31.5
Average collection period= 41.25 days
Therefore the Average collection period is 41.25 days
2. Calculation to determine the Receivable Turnover using this formula
Receivable Turnover = 365 / Average collection period
Let plug in the formula
Receivable Turnover = 365/41.25
Receivable Turnover = 8.84848485
Therefore the Receivable Turnover is 8.84848485
3. Calculation to determine the amount of the company’s average receivables
First step is to calculate the Total Credit Sales
Total Credit Sales = $6,500 * $710
Total Credit Sales= $4,615,000
Now let calculate the Average Receivable using this formula
Average Receivable =Credit sales / Receivable turnover
Let plug in the formula
Average Receivable= $4,615,000 /8.84848485
Average Receivable= $521,558.22
Therefore Average Receivable is $521,558.22
Chavez S.A., a Venezuelan company, wishes to borrow $8,000,000 for eight weeks (maturity). A rate of 6.250% per year is quoted by potential lenders in Great Britain, and Switzerland. British, and the Swiss-Euro bond definitions of interest (day count conventions) are 56 days and 60 days, respectively. Numbers of days in a financial year are 360. From which source should Chavez borrow?
Answer:
Chavez should borrow from the British market.
Explanation:
We need to compare the interest payment of both markets to make the decision
First, calculate the Interest payment in case, if borrowed from the British market
Interest Payment ( British ) = Principal Value x Interest rate x Time fraction
Interest Payment ( British ) = $8,000,000 x 6.250% x 56/360
Interest Payment ( British ) = $77,777.78
First, calculate the Interest payment in case if borrowed from Swiss market
Interest Payment ( Swiss ) = Principal Value x Interest rate x Time fraction
Interest Payment ( Swiss ) = $8,000,000 x 6.250% x 60/360
Interest Payment ( Swiss ) = $83,333.33
As the British market offers a lower rate, Chavez should borrow from the British market.
A cement manufacturer has supplied the following data: Tons of cement produced and sold 263,000 Sales revenue $ 1,104,600 Variable manufacturing expense $ 432,000 Fixed manufacturing expense $ 229,000 Variable selling and administrative expense $ 94,000 Fixed selling and administrative expense $ 219,000 Net operating income $ 130,600 What is the company's unit contribution margin?
Answer:
$2.2 per unit
Explanation:
With regards to the above and to compute the company's unit contribution margin, we need to first calculate the total contribution margin
Total contribution margin
= Sales revenue - Variable manufacturing expenses - Variable selling and administrative expenses
= $1,104,600 - $432,000 - $94,000
= $578,600
Therefore, the company's unit contribution margin
= Total contribution margin ÷ Number of units produced and sold
= $578,000 ÷ 263,000
= $2.2 per unit
Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 25 billion cases of cola were sold every year at a price of $5 per case. After the tax, 18 billion cases of cola are sold every year; consumers pay $6 per case (including the tax), and producers receive $3 per case.
The amount of the tax on a case of cola is ___________ $ per case. Of this amount, the burden that falls on consumers is __________$ per case, and the burden that falls on producers is ____________$ per case.
The effect of the tax on the quantity sold would have been larger if the tax had been levied on consumers.
a. True
b. False
Answer:
$1
$2
false
Explanation:
A tax is a compulsory sum levied on goods and services by the government. Taxes increases the price of goods
Tax = amount consumers pay - amount producers receive
$6 - $3 = $3
Tax paid by consumers = Price after tax - tax before tax
$6 - $5 = $1
Amount received by producers = tax - tax paid by consumers
$3 - $1 = $2
Myriad Solutions, Inc. issued 12% bonds, dated January 1, with a face amount of $350 million on January 1, 2021, for $312,921,210. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity the market yield is 14%. Interest is paid semiannually on June 30 and December 31. 1. What would be the net amount of the liability Myriad would report in its balance sheet at December 31, 2021
Answer:
Myriad Solutions, Inc.
The net amount of the liability that Myriad would report in its balance sheet at December 31, 2021 is:
= $314,793,494
Explanation:
a) Data and Calculations:
Face value of bonds = $350 million
Discounted value (Cash receipt) = $312,921,210
Total amount of discount = $37,078,790
Bond's interest rate = 12%
Market yield = 14%
June 30, 2021:
Cash payment for interest = $21 million ($350 m * 6%)
Bonds' Interest expense = $21,904,485 ($312,921,210 * 7%)
Amortization of bond discount = $904,485 ($21,904,485 - $21 million)
Bond book value = $313,825,695 ($312,921,210 + $904,485)
Dec. 31, 2021:
Cash payment for interest = $21 million ($350 m * 6%)
Bonds' Interest expense = $21,967,799 ($313,825,695 * 7%)
Amortization of bond discount = $967,799 ( $21,967,799 - $21 million)
Bond book value = $314,793,494 ($313,825,695 + $967,799)
Large Stock Dividend and Forward Stock Split Low Corporation has 50,000 shares of $40 par value common stock outstanding and retained earnings of $1,500,000. The company declares a 100 percent stock dividend. The market price at the declaration date is $40 per share. a. Prepare the journal entries for (1) the declaration of the dividend and (2) the issuance of the dividend.
Answer:
Part 1
Debit : Dividends $50,000
Credit : Shareholders for dividends $50,000
Part 2
Debit : Shareholders for dividends $50,000
Credit : Cash $50,000
Explanation:
When dividends are declared and not paid, raise a Liability - Shareholders for Dividends to depict the Company`s Present obligation to its shareholders.
When dividends are issued, derecognize the liability - Shareholders for Dividends and recognize a Cash outflow to depict the outflow of cash resources as a result of the distribution.
Dividends Calculation :
Dividends = 50,000 shares x 100% = $50,000
On January 1, Year 1, Canseco Plumbing Fixtures purchased equipment for $52,000. Residual value at the end of an estimated four-year service life is expected to be $4,000. The company uses the straight-line method. For how much would each item below be reported at the end of Year 2?
Answer:
Reported for Year 2 will be :
Depreciation Expense = $12,000
Accumulated Depreciation = $24,000
Book Value = $28,000
Explanation:
Straight line method charges a fixed amount of depreciation for the period that the asset is in use in the business.
Depreciation Charge = (Cost - Salvage Value) ÷ Estimated Useful Life
therefore,
Depreciation Charge = ($52,000 - $4,000) ÷ 4
= $12,000
we know that,
Accumulated depreciation = Sum of all depreciation to date
and
Book Value is the Costs less Accumulated depreciation
thus,
Balances for the Next 2 years will be as follows
Year 1
Depreciation Expense = $12,000
Accumulated Depreciation = $12,000
Book Value = $40,000
Year 2
Depreciation Expense = $12,000
Accumulated Depreciation = $24,000
Book Value = $28,000
M Company uses the percentage of sales method to account for its uncollectible accounts. On December 31, 2018, M has $1,800,000 in sales and 60% of these sales were in cash. M has a $2,000 credit balance in its allowance for doubtful account. Past experience suggested that 0.5% of credit sales are uncollectible. Requirements [You must show your work/steps of how you arrive at your answers] Question 1: What is the amount that M should report as its estimated bad debt expenses for year 2018
Answer:
See below
Explanation:
Estimated uncollectible based on past experience
= [($1,800,000 × 60%) × 0.5%]
= $1,080,000 × 0.5%
= $5,400
Credit balance in allowance for doubtful account = $2,000
Therefore, the total amount M should report as its estimated bad debts expense for the year 2018
= $5,400 - $2,000
= $3,400
On January 1, 2021, Bramble Corp., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share. Stockholders' equity before the stock dividend was declared consisted of:
Common stock, $10 par value, authorized 200,000 shares;
issued and outstanding 115000 shares $1150000
Additional paid-in capital on common stock 150000
Retained earnings 700,000
Total stockholders equity $2,050,000
What was the effect on Dodd's retained earnings as a result of the above transaction?
a. $180,000 decrease.
b. $360,000 decrease.
c. $600,000 decrease.
d. $300,000 decrease.
Answer: See explanation
Explanation:
The effect on Dodd's retained earnings as a result of the above transaction will be calculated as:
Common stock = 115000
Percent of stock dividend = 10%
Stock dividend = 10% × 115000 = 11500
Price per share = $30
Stock dividend = $30 × 11500 = $345000
Therefore, there'll be a $345000 decrease on Dodd's retained earnings. The options given are incorrect.
Assuming, the common stock was 120,000, then the answer will have been (120,000 × $3) = $360,000 decrease.
Mountain High Ice Cream Company transferred $79,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $6,900) less a 3% fee (3% of the total factored amount).
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Answer:
Debit Cash for $68,730; Debit Receivable from factor for $6,900; Debit Loss on sale of receivables for $3,370; and Credit Accounts receivable $79,000.
Explanation:
Factored amount = $79,000
Cash = Factored amount * (100% - Percentage of he factored amount retained - Rate of fee = $79,000 * (100% - 10% - 3%) = $68,730
Receivable from factor = $6,900
Loss on sale of receivables = Factored amount - Cash - Receivable from factor = $79,000 - $68,730 - $6,900 = $3,370
The journal entry will therefore look as follows:
Details Debit ($) Credit ($)
Cash 68,730
Receivable from factor 6,900
Loss on sale of receivables 3,370
Accounts receivable 79,000
(To record factoring of accounts receivable.)
Assuming you are 22 and out of college, how many years do you anticipate working before you retire
Vaughn, Inc. had net sales in 2020 of $1,410,300. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $348,200 debit, and Allowance for Doubtful Accounts $2,940 credit. If Vaughn estimates that 10% of its receivables will prove to be uncollectible. Prepare the December 31, 2020, journal entry to record bad debt expense.
Answer:
Date Account Title Debit Credit
Dec. 31 2020 Bad Debt expense $31,880
Allowance for Doubtful Accounts $31,880
Explanation:
Bad debt expense for the period:
= (Estimate of uncollectible receivables) - Allowance for Doubtful accounts credit balance
= (348,200 * 10%) - 2,940
= $31,880