Answer:
a. $948,888
b. $773,550
c. $1,237,680
d. $412,560
Explanation:
The Ending Inventory is calculated using the missing figure approach or the Gross Margin technique.
that is,
Ending Inventory = Cost of Goods Available for Sale - Cost of Sales
thus,
This can be clearly done by writing up a Trading Account as shown below for each scenario.
also remember,
Cost + Profit = Sales
so for those based on cost use this formula.
for example : gross profit is 60% of cost
will be : 100 % + 60 % = 160 %
Part a
Pharoah Corporation
Trading Account for the Year
Sales $2,062,800
Less Cost of Sales
Beginning Inventory $ 590,300
Add Purchases $1,472,500
Goods Available for Sale $2,062,800
Less Ending Inventory (Balancing amount) ($948,888) ($1,113,912)
Gross Profit $948,888
Part b
Pharoah Corporation
Trading Account for the Year
Sales $2,062,800
Less Cost of Sales
Beginning Inventory $ 590,300
Add Purchases $1,472,500
Goods Available for Sale $2,062,800
Less Ending Inventory (Balancing amount) ($773,550) ($1,289,250)
Gross Profit $773,550
Part c
Pharoah Corporation
Trading Account for the Year
Sales $2,062,800
Less Cost of Sales
Beginning Inventory $ 590,300
Add Purchases $1,472,500
Goods Available for Sale $2,062,800
Less Ending Inventory (Balancing amount) ($1,237,680) ($825,120)
Gross Profit $1,237,680
Part d
Pharoah Corporation
Trading Account for the Year
Sales $2,062,800
Less Cost of Sales
Beginning Inventory $ 590,300
Add Purchases $1,472,500
Goods Available for Sale $2,062,800
Less Ending Inventory (Balancing amount) ($948,888) ($1,113,912)
Gross Profit $948,888
Part a
Pharoah Corporation
Trading Account for the Year
Sales $2,062,800
Less Cost of Sales
Beginning Inventory $ 590,300
Add Purchases $1,472,500
Goods Available for Sale $2,062,800
Less Ending Inventory (Balancing amount) ($412,560) ($1,650,240)
Gross Profit $412,560
Explain the theory behind the free cash flow valuation approach. Why are the free cash flows value relevant to common equity shareholders when they are not cash flows to those shareholders, but rather are cash flows into the firm?
Answer:
See explanation
Explanation:
The free cash flows value relevant to common equity shareholders because they consists of cash that can be distributed to shareholders as dividends. In other words this is Distributable Cash.
The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002 the Argentine peso was floated. On January 29, 2003 it was trading at Ps3.20/$. During that one year period Argentina's inflation rate was 20% on an annualized basis. Inflation in the United States during that same period was 2.2% annualized.
Required:
a. What should have been the exchange rate in January 2003 if PPP held?
b. By what percentage was the Argentine peso undervalued on an annualized basis?
c. What were the probable causes of undervaluation?
Answer:
1. 1.17416 peso/$
2. -63.30%
Explanation:
1. The exchange rate in January if PPP is held
1.00 = exchange rate
20 % = inflation in Argentina
0.22% = us inflation
1.00(1+0.20)/(1+0.022)
= 1.00x1.20/1.022
= 1.17416 pesos/$
B. Percentage by which pesos was devalued
(PPP/actual exchange rate)-1
= 1.17416/3.20 -1
= 0.366925-1
= -0.6330
= -63.30%
C. At 20 % we can see that inflation is really high in Argentina which is probably the reason for the undervaluation. But the truth is inflation alone cannot be held responsible. Severe crisis in Argentinas balance of payment is partly responsible
a. Edison is opening a clothing shop in the Old Town Boutique District in Alexandria, Virginia, near several other small fashion stores; this is an example of_____________.
b. The television program, Flip or Flop, features Tarek and Christina El Moussa, a couple who started their own business buying dilapidated houses, repairing them, and then selling them for a profit. This process is known as ___________ flipping.
c. The El Moussas are_____________because they were actively involved in developing the new business.
Answer: a. Entrepreneurship
b. House flipping
c. Entrepreneurs
Explanation:
a. Entrepreneurship
The scenario involved is an example of entrepreneurship. This is when a business is set up with the owner taking financial risks so as to meet the needs of the people and make profit as well.
b. House flipping
House flipping involves purchasing buying dilapidated houses, or old buildings , renovating and repairing them, and then sell them for a profit. This is what Tarek and Christina El Moussa does.
c. Entrepreneurs
The El Moussas are regarded as entrepreneurs because they were actively involved in developing the new business. They're the owners and control every other resources, take risks and make decisions.
Suppose 5 years have gone by and the company has to make a decision on how to move forward. It can either pay out all earnings as dividends without considering any growth opportunities or choose a growth strategy where the company will expand into new lines of business in global markets. If the management chooses this strategy, the payout ratio will be reduced down to 20% from 35%, and the company will be able to maintain a growth rate of 7% forever. Which strategy should the management choose to maximize shareholder value
Answer:
The management should choose the growth strategy. It is always more rewarding and maximizes the shareholder value better than embarking on a payout strategy.
Explanation:
Choosing a payout strategy, which does not ensure growth, is not sustainable and does not maximize shareholder value. Business expansion through market penetration, product development, market expansion, and diversification ensures business growth and maximizes shareholder wealth, enabling the company to pay out more in dividends stretched over longer streams.
Marigold Batteries is a division of Enterprise Corporation. The division manufactures and sells a long-life battery used in a wide variety of applications. During the coming year, it expects to sell 60,000 units for $32 per unit. Nyota Uthura is the division manager. She is considering producing either 60,000 or 90,000 units during the period. Other information is presented in the schedule.
Division Information for 2017
Beginning inventory 0
Expected sales in units 60,000
Selling price per unit $33
Variable manufacturing costs per unit $13
Fixed manufacturing overhead costs (total) $540,000
Fixed manufacturing overhead costs per unit:
Based on 60,000 units $9 per unit ($540,000 + 60,000)
Based on 90,000 units $6 per unit ($540,00090,000)
Manufacturing cost per unit:
Based on 60,000 units $22 per unit ($13 variable + $9 fixed)
Based on 90,000 units $19 per unit ($13 variable + $6 fixed)
Variable selling and administrative expenses $5
Fixed selling and administrative
expenses (total) $50,000
(1) Prepare an absorption costing income statement, with one column showing the results if 60,000 units are produced and one column showing the results if 90,000 units are produced.
(2) Prepare a variable costing income statement, with one column showing the results if 60,000 units are produced and one column showing the results if 90,000 units are produced.
Answer:
Marigold Batteries
A Division of Enterprise Corporation
1) Income Statement, absorption costing:
60,000 Units 90,000 Units
Sales revenue $1,980,000 $2,970,000
Manufacturing costs:
Variable manufacturing costs 780,000 1,170,000
Fixed manufacturing costs 540,000 540,000
Total manufacturing costs $1,320,000 $1,710,000
Gross profit $660,000 $1,260,000
Expenses:
Variable selling and admin 300,000 450,000
Fixed selling and admin 50,000 50,000
Total expenses $350,000 $500,000
Net income $310,000 $760,000
2) Income Statement, variable costing:
60,000 Units 90,000 Units
Sales revenue $1,980,000 $2,970,000
Variable costs:
Variable manufacturing costs 780,000 1,170,000
Variable selling and admin 300,000 450,000
Total variable costs $1,080,000 $1,620,000
Contribution margin $900,000 $1,350,000
Fixed costs:
Fixed manufacturing costs 540,000 540,000
Fixed selling and admin 50,000 50,000
Total fixed costs $590,000 $590,000
Net income $310,000 $760,000
Explanation:
a) Data and Calculations:
Selling price per unit = $32
Expected unit sales 60,000 90,000
Production units 60,000 90,000
Beginning inventory = 0
Selling price per unit = $33
Variable manufacturing costs = $13 per unit
Fixed manufacturing costs = $540,000
Variable selling and administrative expenses = $5
Fixed selling and administrative expenses = $50,000
b) The key difference lies with the treatment of fixed and variable costs. With absorption costing, the fixed manufacturing costs are included in the costs of products. With variable costing, they are treated as period costs or expenses. Also, with variable costing, variable selling and administrative costs are included in the variable costs of the products. The variable costing method calculates the contribution margin before deducting the fixed expenses to arrive at the net income. On the other hand, the absorption costing method calculates the gross profit instead of the contribution margin.
Impact of Treasury Financing on Bond Prices The Treasury periodically issues new bonds to finance the deficit. Review recent issues of the Wall Street Journal or check related online news to find a recent article on such financing. Does the article suggest that financial markets are expecting upward pressure on interest rates as a result of the Treasury financing
Answer:
When the treasury bonds are restricted to purchase it creates pressure on other securities and interest rates tend to move upwards.
Explanation:
When interest rates more upwards then cost of borrowing is increased. This increase in cost of borrowing creates pressure on the profits of private sector. The public sector benefits from this increase in interest rates. When government is in trouble and financing is limited then these measures are used to run the economy.
Select the correct answer. How does insurance protect a policyholder against financial loss? A. by allowing the policyholder to make premium payments B. by allowing the policyholder to make a claim for reimbursement C. by allowing the policyholder to avoid maintenance costs for the insured items D. by allowing the policyholder to pay for all the losses
Answer:
by allowing the policyholder to make premium payments
Explanation:
Answer:
B. by allowing the policyholder to make a claim for reimbursement
Explanation:
Took the test on plato 100% right
The law of comparative advantage suggests thata.both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine.b.Qatar would not gain from trade because it has an absolute advantage in producing both goods.c.neither country would gain from trade, even if the costs for transporting the products were zero.d.both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat.
Answer:
A)both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine.
Explanation:
The law of comparative advantage can be regarded as one set up by David Ricardo in the year 1817, which gives reason that is behind international trade that exist between different countries , even the business, workers as well as factories of a country have efficiency at production of every single good compare to other country.
Comparative advantage shows the ability of an economy have in production of a particular good/ service having lower opportunity cost compare to its trading partners.
Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when the cash is collected. In 2020, Superior sold lots for $40 million for which no cash was collected at the time of the sale. This cash will be collected equally over 2021 and 2022. The enacted tax rate was 40% at the time of the sale. In 2021, a new tax law was enacted, revising the tax rate from 40% to 25% beginning in 2022. Calculate the total amount by which Superior should change its deferred tax liability in 2021. (Enter your answer in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
Answer:
$11 million
Explanation:
Calculation for the total amount by which Superior should change its deferred tax liability in 2021
Deferred tax liability 12/31/2020 $16.0
($40 future taxable amt. × 40%)
Less Deferred tax liability 12/31/2021 (5.0)
($40/2 equally future taxable amt. × 25%)
Reduction needed to achieve desired balance $11
($16.00-$5.00)
Therefore the total amount by which Superior should change its deferred tax liability in 2021 is by reducing it to $11 million:
McConnell Corporation has bonds on the market with 12 years to maturity, a YTM of 10.0 percent, a par value of $1,000, and a current price of $1,226.50. The bonds make semiannual payments. What must the coupon rate be on these bonds
Answer:
13.28%
Explanation:
The computation of the coupon rate is shown below
But before that determine the PMT
Given that
NPER = 12 × 2 = 24
RATE = 10% ÷ 2 = 5%
PV = $1,226.50
FV = $1,000;
The formula is shown below
= PMT(RATE;NPER;-PV;FV;TYPE)
After applying the above formula, the monthly payment is
= $66.41 × 2
= $132.82
Now the coupon rate is
= $132.82 ÷ $1,000
= 13.28%
One year ago, Jack and Jill set up a vinegar-bottling firm (called JJVB). Use the question facts to calculate JJVB's opportunity cost of production during its first year of operation. JJVB's opportunity cost of production during its first year of operation is $ __________. (do not include any commas in your answer) Prof. Taylor's note: assume the 6% interest rate stated in fact 8 applies to all money in the bank
Answer: $111,000
Explanation:
The opportunity costs incurred by Jack and Jill include:
Wages of $15,000 paid to employeeCost of equipment and goods and services Interest sacrificed on capital put into businessSalary that Jack gave upHours of leisure given up by JillDepreciation of equipmentOpportunity costs were therefore:
= 15,000 + 30,000 + 10,000 + (30,000 * 5%) + 40,000 + (25 * 10 * 50 weeks) + (30,000 - 28,000)
= $111,000
The point where total expenses equals total income
Answer:
Break Point
Explanation:
EDGE 2021 :D !
Predetermined Factory Overhead Rate Novus Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts $1,257,500 Shop direct labor 550,000 Shop and repair equipment depreciation 91,000 Shop supervisor salaries 250,000 Shop property taxs 40,000 Shop supplies 15,000 Advertising expense 75,000 Administrative office salaries 175,000 Administrative office depreciation expense 12,500 Total costs and expenses $2,466,000 The average shop direct labor rate is $25 per hour. Determine the predetermined shop overhead rate per direct labor hour. $fill in the blank 1 per direct labor hour
Answer:
Predetermined manufacturing overhead rate= $18 per direct labor hour
Explanation:
First, we need to calculate the estimated overhead cost for the period:
Estimated overhead cost= Shop and repair equipment depreciation + Shop supervisor salaries + Shop property taxes + Shop supplies
Estimated overhead cost= 91,000 + 250,000 + 40,000 + 15,000
Estimated overhead cost= $396,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 396,000 / (550,000/25)
Predetermined manufacturing overhead rate= 396,000 / 22,000
Predetermined manufacturing overhead rate= $18 per direct labor hour
Paola and Isidora are married; file a joint tax return; report modified AGI of $148,000; and have one dependent child, Dante. The couple paid $12,000 of tuition and $10,000 for room and board for Dante (a freshman). Dante is a full-time student and claimed as a dependent by Paola and Isidora. Determine the amount of the American Opportunity credit for 2020.
Answer:
$2,500
Explanation:
The computation of the amount is shown below;
In the case when the modified AGI upto $180,000 so it would be credit by $2,500 per eligible student
As we can see that in the given situation there is modified AGI that reported $148,000 so here the amount of the American Opportunity credit for 2020 is $2,500 also we assume that the eligibility condition would be satisfied
Type the correct answer in the box. Spell all words correctly.
Being debt-free within the next 15 years is an example of which goal?
Being debt-free within 15 years is an example of a
goal.
Reset
Next
Answer:
Being debt-free within 15 years is an example of a long-term goal.
Explanation:
One main characteristic of a long-term goal is that it involves a planning horizon that is more than 5 years during which some thoughts are paid to the goal, and the means of achieving it are marshalled out, and rigorously pursued. Long-terms goals are best broken into manageable, short-term, and medium-term goals to enable the decision-maker to accomplish her goal. The future is always uncertain, to achieve a long-term goal you must remain motivated.
Using the following categories, indicate the effects of the following transactions. Indicate the accounts affected and the amounts. (Enter any decreases to account balances with a minus sign.)
a. During the period, customer balances are written off in the amount of $11,600.
b. At the end of the period, bad debt expense is estimated to be $9,600.
Answer:
Note: See the attached excel for the Indication of the effects of the two transactions.
Explanation:
From the attached excel file, we have:
a. During the period, customer balances are written off in the amount of $11,600.
Assets increase as the Allowance for doubtful accounts increases by $11,600; but Assets also decreases at the same as Accounts receivable decreases by $11,600.
b. At the end of the period, bad debt expense is estimated to be $9,600.
Assets decrease as the Allowance for doubtful accounts decreases by $9,600; and Stockholders' Equity also decreases as Bad debt expense increases by $9,600.
Your losses from a stolen ATM card are unlimited if you fail to report unauthorized use within 30 days after your statement is mailed to you.
a. True
b. False
Which of these is an example of a vision statement?
A. Educate our customers on our processes to help build customer
loyalty
B. Strive for profits without compromising our values.
C. To experience the emotion of competition, winning, and crushing
competitors.
D. We love making our jeans and we know people love wearing them.
Answer:
A
Explanation:
if the business explains why the public should buy there product the public would be more inclined to buy there product.
Answer: Its c
Explanation: Because I got it right you donut ^^ LOL
You are evaluating two investment alternatives. One is a passive market portfolio with an expected return of 10% and a standard deviation of 16%. The other is a fund that is actively managed by your broker. This fund has an expected return of 16% and a standard deviation of 20%. The risk-free rate is currently 7%. Answer the questions below based on this information. a. What is the slope of the Capital Market Line
Answer:
the slope of the capital market line is 0.1875
Explanation:
The computation of the slope of the capital market line is shown below:
= (Expected return - risk free rate of return) ÷ (standard deviation)
= (10% - 7%) ÷ 16%
= 3% ÷ 16%
= 0.1875
hence, the slope of the capital market line is 0.1875
We simply used the above formula to measured the slope of the capital market line
Earley Corporation issued perpetual preferred stock with an 8% annual dividend. The stock currently yields 6%, and its par value is $100. Round your answers to the nearest cent. What is the stock's value
Answer:
Value of stock = $133.33
Explanation:
The value of a preferred stock is the present value of the constant dividend payable for the foreseeable future discounted at the required rate of return
Price = Constant dividend/ required return
The constant dividend = Dividend rate × par value= 8%*100= 8
Requited return - 6%
So the price of the stock would be
Price = 8/0.06=133.33
Value of stock = $133.33
Answer the question on the basis of the following cost data.
Output Average Fixed Cost Average Variable Cost
1 $50.00 $100.00
2 25.00 80.00
3 16.67 66.67
4 12.50 65.00
5 10.00 68.00
6 8.37 73.33
7 7.14 80.00
8 6.25 87.50
The marginal cost curve would intersect the average variable cost curve at about: ____________
a. 2 units of output.
b. 4 units of output.
c. 6 units of output.
d. 7 units of output.
Answer:
b. 4 units of output
Explanation:
MC and AVC have the following relationship:
a. MC is above AVC when AVC is rising
b. MC is below AVC when AVC is falling
c. MC = AVC when AVC is at its minimum
Thus, MC would intersect the AVC curve at its minimum point. Since AVC is minimum at 4 units of output equal to 65. It means MC intersects AVC at 4 units of output.
Alpha Company owns 80 percent of the voting stock of Beta Company. Alpha and Beta reported the following account information from their year-end separate financial records: Alpha Beta Inventory $95,000 $88,000 Sales Revenue 800,000 300,000 Cost of Goods Sold 600,000 180,000 During the current year, Alpha sold inventory to Beta for $100,000. As of year end, Beta had resold only 60 percent of these intra-entity purchases. Alpha sells inventory to Beta at the same markup it uses for all of its customers. What is the total for consolidated inventory
Answer:
$173,000
Explanation:
The computation of the total consolidated inventory is shown below:
But before that following calculations need to be done
Percentage profits that Alpha charge to other customers is
= ($800,000 - $600,000) ÷ $800,000
= 25% of sales
Stock held at year end is
= $100,000 × 40%
= $40,000
Profit involved in stock is
= $40,000 × 25%
= $10,000
Now the stock of beta is
= $88,000 - $10,000
= $78,000
And finally, the Total for consolidated inventory is
= $95,000 + $78,000
= $173,000
Levelor Company's flexible budget shows $10,630 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.10 per direct labor hour based on a budgeted operating level of 6,040 direct labor hours (90% of capacity). If overhead actually incurred was $11,095 during May, the controllable variance for the month was:
Answer:
$1,589 favorable
Explanation:
Calculation to determine what the controllable variance for the month was:
Using this formula
Overhead Controllable Variance =(Budgeted overhead per unit x standard number of units) - Actual overhead expense
Let plug in the formula
Controllable variance=(6,040*$2.10)-$11,095
Controllable variance=$12,684-$11,095
Controllable variance=$1,589 favorable
Therefore the controllable variance for the month was:$1,589 favorable
A purely domestic firm that sources and sells only domestically, Multiple Choice should never hedge since this could actually increase its currency exposure. faces no exchange rate risk and should never hedge since this could actually increase its currency exposure. faces no exchange rate risk. faces exchange rate risk to the extent that it has international competitors in the domestic market.
Answer:
faces exchange rate risk to the extent that it has international competitors in the domestic market.
Explanation:
Exchange rate risk is defined as the risk that exists when a company engaged in transactions that are denominated in a foreign currency rather than the domestic currency.
So if a purely domestic firm that sources and sells only domestically has international competitors in its local market, and the exchange rate is favouring the competitors there will be a risk for them.
For example if international competitors can source raw materials cheaper because of the exchange rate of a foreign country, it will be a disadvantage to local firms that cannot reduce their prices.
Consider the following premerger information about Firm X and Firm Y:
Firm X Firm Y
Total earnings $96,000 $22,500
Shares outstanding 53,000 18,000
Per-share values:
Market $53 $18
Book $14 $8
Assume that Firm X acquires Firm Y by issuing long-term debt to purchases all the shares outstanding at a merger premium of $5 per share. Construct the post-merger balance sheet for Firm X assuming the use of the purchase accounting method.
Answer:
Firm X and Firm Y
Post-merger Balance Sheet for Firm X
Net assets $886,000
Goodwill 90,000
Total assets $976,000
Common stock $742,000
Long-term debt 234,000
Total liabilities and
equity $976,000
Explanation:
a) Data and Calculations:
Firm X Firm Y
Total earnings $96,000 $22,500
Shares outstanding 53,000 18,000
Per-share values:
Market $53 $18
Book $14 $8
Net assets $742,000 $144,000
= (53,000*$14) (18,000*$8)
Net assets = Common Stock for each company
Merger premium on Firm Y $5
Goodwill on acquisition = $90,000 (18,000 * $5)
Investment in Firm Y = $234,000 (18,000 * ($8 + $5)
Long-term debt issued = $234,000
Net assets
Firm X net assets before acquisition = $742,000
Firm Y net assets before acquisition = 144,000
Net value of combined assets = $886,000
Laurel Enterprises expects earnings next year of $ per share and has a retention rate, which it plans to keep constant. Its equity cost of capital is , which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be?
Answer: $49.26
Explanation:
Using the Gordon Growth model, the price of stock should be:
= Next divided / (Cost of equity - growth rate)
Next dividend = Earnings per share * (1 - Retention rate)
= 4.44 * ( 1 - 40%)
= $2.66
Price of stock:
= 2.66 / (9% - 3.6%)
= $49.26
you have just purchased a new car! you made a down payment of $5,000 and financed the balance. According to the purchasing agreement, you must pay $600/month for four years, beginning one month from today. the credit agreement is based on an annual interest rate of 12%. what was the cost of the car
Answer:
Cost of car=$27,784
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The monthly equal installment is calculated as follows:
Monthly equal installment= Loan amount/Monthly annuity factor
Loan amount =Balance payment= ?
Monthly annuity factor =
=( 1-(1+r)^(-n))/r
r- Monthly interest rate (r)
= 12/12= 1%
n- Number of months ( n) = 12× 4 = 48
Annuity factor
= ( 1- (1.01)^(-48)/0.01= 37.97
Total payments= 600 × 37.973
= $22,784.37
Cost of car = Down payment and the present value of balance
= 5,000+ 22,784.3=$27,784
Spa Inc. gathered the following information related to its gift card sales for 2020, its first year of selling gift cards: Sales of nonrefundable gift cards, 2020$25,500 Gift card redemptions, 2020$18,360 Spa Inc. estimates that 95% of the value of gift cards sold in 2020 will be redeemed while 5% will remain unclaimed. Under the proportional method, what would Spa Inc. recognize for gift card breakage revenue in 2020
Answer: $969
Explanation:
Since 5% of the value of the gift card sold will be unclaimed, the amount claimed will be:
= $25500 - (5% × $25500)
= $25500 -(0.05 × $25500)
= $25500 - $1275
= $24225
We then find the percentage of the cards that have been redeemed already and this will be:
= $18360 / $24225
= 0.7579
= 76%
Therefore, breakage in revenue to be recognized will be:
= ($25500 × 5%) × 76%
= $1275 × 76%
= $1275 × 0.76
= $969
Motorcycle Manufacturers, Inc. projected sales of 51,100 machines for the year. The estimated January 1 inventory is 6,460 units, and the desired December 31 inventory is 7,130 units. What is the budgeted production (in units) for the year
Answer:
51,770 units
Explanation:
With regards to the above, the budgeted production (in unit) for the year is computed as;
= Sales - Beginning inventory + Ending inventory
Given that ;
Sales = 51,100
Beginning inventory = 6,460
Ending inventory = 7,130
Budgeted production in units for the year = 51,100 - 6,460 + 7,130 = 51,770 units
On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $76,000 and $4,000, respectively. During Year 2, Kincaid reported $215,000 of credit sales, wrote off $2,100 of receivables as uncollectible, and collected cash from receivables amounting to $271,100. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. What effect will the entry to recognize the uncollectible accounts expense for Year 2 have on the elements of the financial statements
Answer:
The effect the entry to recognize the uncollectible accounts expense for Year 2 will have on the elements of the financial statements are that it will reduce Accounts Receivable to $15,560 and the Allowance for Doubtful Accounts to $1,900 at the end of Year 2.
Explanation:
Credit sales estimated to be uncollectable = Credit sales * Estimated percentage uncollectable = $215,000 * 1% = $2,150
Ending account receivable = Beginning accounts receivable + Credit sales - Cash collected - Receivales written off as uncollectable - Credit sales estimated to be uncollectable = $76,000 + $215,000 - $271,100 - $2,100 - $2,150 = $15,560
Ending Allowance for Doubtful Accounts = Beginning Allowance for Doubtful Accounts - Allowance for Doubtful Accounts - Receivales written off as uncollectable = $4,000 - $2,100 = $1,900
Therefore, the effect the entry to recognize the uncollectible accounts expense for Year 2 will have on the elements of the financial statements are that it will reduce Accounts Receivable to $15,560 and the Allowance for Doubtful Accounts to $1,900 at the end of Year 2.