Answer:
August ending Inventory 160 units
Explanation:
It wishes a level output AKAK same production over the rest of the year
total demand:
we add up the demand of the moths and our desired ending inventory
then we subtract the beginning and divide over the eight months
800 + 650 + 720 + 690 + 530 + 610 + 630 + 610 + 500 desired ending - 300 beginning = 5,440
We divide by 8 = 680 per month
Now we can do the budget up to August to solve for the ending inventory
[tex]\left[\begin{array}{ccccc}&Beg&Demand&Production&Ending\\May&300&800&680&180\\June&180&650&680&210\\July&210&720&680&170\\August&170&690&680&160\\\end{array}\right][/tex]
Ending = Beginning + Production - Demand (consumed)
Diogo has a utility function,U(q1, q2) = q1 0.8 q2 0.2,where q1 is chocolate candy and q2 is slices of pie. If the price of slices of pie, p2, is $1.00, the price of chocolate candy, p1, is $0.50, and income, Y, is $100, what is Diogo's optimal bundle?The optimal value3 of good q1 isq = units. (Enter your response rounded to two decimal places.)1 The optimal value of good q2 isq2 = units. (Enter your response rounded to two decimal places.)
Answer:
[tex](0.5 \times 8q_2)+q_2=100\\\\5q_2=100\\\\q_2=20[/tex]
since [tex]q_2 = 20[/tex]
[tex]q_1 = 8*20\\\\q_1=160[/tex]
Explanation:
U(q₁ q₂)
[tex]q_1^{0.8}q_2^{0.2}\\\\P_1= \$0.5 \ P_2=\$1 \ Y=100[/tex]
Budget law can be given by
[tex]P_1q_1+P_2q_2=Y\\\\0.5q_1+q_2=100[/tex]
Lagrangian function can be given by
[tex]L=q_1^{0.8}q_2^{0.2}+ \lambda (100-0.5q_1-q_2)[/tex]
First order condition csn be given by
[tex]\frac{dL}{dq} =0.8q_1^{-0.2}q_2^{0.2}-0.5 \lambda=0\\\\0.5 \lambda=0.8q_1^{-0.2}q_2^{0.2}---(i)[/tex]
[tex]\frac{dL}{dq} =0.2q_1^{0.8}q_2^{-0.8}- \lambda=0\\\\ \lambda=0.2q_1^{0.8}q_2^{-0.8}---(ii)[/tex]
[tex]\frac{dL}{d \lambda} =100-0.5q_1-q_2=0\\\\0.5q_1+q_2=100---(iii)[/tex]
From eqn (i) and eqn (ii) we have
[tex]\frac{0.5 \lambda}{\lambda} =\frac{0.8q_1^{-0.2}q_2^{0.2}}{0.2q_1^{0.8}q_2^{-0.8}} \\\\0.5=\frac{4q_2}{q_1}\\\\q_1=8q_2}[/tex]
Putting [tex]q_1=8q_2[/tex] in euqtion (iii) we have
[tex](0.5 \times 8q_2)+q_2=100\\\\5q_2=100\\\\q_2=20[/tex]
since [tex]q_2 = 20[/tex]
[tex]q_1 = 8*20\\\\q_1=160[/tex]
A shoe manufacturer is producing at a point where its marginal costs are $5 and its fixed costs are $5000. At the current price of $10 it is producing 500 pairs. If the demand goes down, such that they can now only charge $8 per pair, should they continue production in the short run?
Answer:
In a short time, as long as the product line can be sold with a positive contribution margin, the company should continue selling it.
Explanation:
Giving the following information:
UNitary variable cost= $5
Fixed costs are $5000.
Sales= 500 units
Selling price= $8
First, we need to calculate the current income:
Income= 500*(8-5) - 5000= -$3,500
In a short time, as long as the product line can be sold with a positive contribution margin, the company should continue selling it. Demand can increase and income could become positive.
Quantum Logistics. Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the Alabama-Georgia border. There are three cities being considered. After site visits and a budget analysis, the expected income and costs associated with locating in each of the cities have been determined. The life of the warehouse is expected to be 12 years and MARR is 15 percent/year. What is the future worth of each site based on future worth ranking? Which city should be recommended?
Answer:
Anniston City should be recommended as it has higher future value.
Explanation:
Using the formula:
Future value of annuity = C * { [(1+r)^n - 1] / r } C where C= initial cost, r= interest rate (MARR=15%), n= 12)
- Langrange City
= $1,260,000 * { [(1+0.15)^12 - 1] / 0.15 } = $6,741,308.466
- Auburn City
$1,000,000 * { [(1+0.15)^12 - 1] / 0.15 } = $5,350,243.439
- Anniston City
$1,620,000 * { [(1+0.15)^12 - 1] / 0.15 } = $8,667,398.504
Companies Heidee and Leaudy are virtually identical in that they are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company Heidee has the higher debt ratio. Which of the following statements is CORRECT?
a. Company Heidee has a lower operating income (EBIT) than Company LD
b. Company Heidee has a lower total assets turnover than Company Leaudy.
c. Company Heidee has a lower equity multiplier than Company Leaudy.
d. Company Heidee has a higher fixed assets turnover than Company Leaudy.
e. Company Heidee has a higher ROE than Company Leaudy.
Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on equity measures how well the management of a business uses owner's equity to get returns. It is calculated by dividing net income by owner's equity.
That is
ROE= Net Income ÷ Owner's equity
Considering the accounting equation
Asset= Liability + Owner equity
Owner equity= Asset - Liability
From the equation when a company that take on more debt owner's equity will reduce.
The effect of reduction in owner's equity on Return on Equity is that it will increase the ratio, since owner's equity is the denominator.
In this scenario both companies have the same profit margin so if company Heidee has higher debt ratio it follows that it also has a higher ROE than Company Leaudy
g Closser Corporation produces and sells two products. In the most recent month, Product M50S had sales of $43,000 and variable expenses of $11,980. Product H50G had sales of $56,000 and variable expenses of $14,750. The fixed expenses of the entire company were $46,180. The break-even point for the entire company is closest to:
Answer:
$63,260
Explanation:
Break-even point is the level of Activity where a firm neither makes a profit nor a loss.
Break even point (Dollars) = Fixed Costs / Contribution Margin Ratio
Contribution Margin Ratio
Is calculated as := Contribution / Sales
= (Sales less Variable Costs) / Sales
= ($43,000+$56,000-$11,980-$14,750) / $99,000
= $72,270/$99,000
= 0.73
Break even point (Dollars) = $46,180 / 0.73
= $63,260
Kenrick Corporation uses activity-based costing to compute product margins. In the first stage, the activity-based costing system allocates two overhead accounts equipment expense and indirect labor to three activity cost pools Processing, Supervising and Other based on resource consumption. Data to perform these allocations appear below.
Overhead costs
Equipment expense $18,000
Indirect labor $2,000
Distribution of Resource Consumption Across activity cost pools
Activity Cost Pools
Processing Supervising Other
Equipment expense 0.10 0.30 0.60
Indirect labor 0.30 0.40 0.30
In the second stage. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products as follows.
Activity
MHs (Processing) Batches (Supervising)
Product U4 5,500 600
Product C7 4,500 1,400
Total 10,000 2,000
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
Sales and Direct Cost Data:
Product U4 Product C7
Sales (total) $58,400 $31,800
Direct materials (total) $26,900 $13,900
Direct labor (total) $25,000 $11,200
What is the product margin for Product U4 under activity-based costing?
a. $3,500
b. $6,500
c. $5,180
d. $3,320
Answer:
D.) $3320
Explanation:
Product margin = (Sales - direct labor - direct materials - overhead)
$(58400 - 26900 - 25000 - 3180) = $3,320
Check attached picture for detailed explanation
The curvilinear relationship of corporate performance and diversification indicates that: a. the less related the businesses acquired, the higher performing the organization. b. dominant-business corporate strategies tend to be higher performing than related constrained or unrelated business strategies. c. none of the strategies consistently outperforms the others. d. the highest performing business strategy is related constrained diversification.
Answer: d. the highest performing business strategy is related constrained diversification.
Explanation:
Multiple studies by strategic management experts have shown that business performance tends to relate in a curvelinear fashion with diversification and have shown that the companies who take advantage of this the most are companies using a related constrained diversification strategy.
This strategy involves expanding by acquiring companies or Businesses which have a similar business to the original company and then sharing resources, assets and knowledge amongst them.
In doing this they are applying the knowledge and resources as well as core competencies that made the original company successful to the acquired businesses so that they too can grow as the original company did.
The Titan retires a $24.6 million bond issue when the carrying value of the bonds is $22.2 million, but the market value of the bonds is $28.3 million. The entry to record the retirement will include: Multiple Choice A credit to cash for $22.2 million. A credit of $6.1 million to a gain account. A debit of $6.1 million to a loss account. No gain or loss on retirement.
Answer:
A debit of $6.1 million to a loss account
Explanation:
The answer is A debit of $6.1 million to a loss account.
To calculate this:
the carrying value of the bonds $22.2 million is subtracted from the market value of the bonds $28.3 million.
Carrying value, $22.2 million, less cash paid to retire the bonds of $28.3 million
= $28.3 - $22.2
= $6.1 million to a loss account.
Suppose initially, vertical portion of the supply curve intersects the demand curve on its downward portion. Graphically show the case where an increase in the interest rate paid on reserves does NOT lead to a change in the equilibrium fed funds rate.
Answer:
Kindly Check Explanation section
Explanation:
NB: Since, we are to show graphically and there is need to draw, kindly check the attached file for the graph that shows the case where an increase in the interest rate paid on reserves does NOT lead to a change in the equilibrium fed funds rate.
The concept of RESERVE is very important in accounting. The amount of money that is saved up from the normal profit of a business organization or company or a country which is being used for further efficient Production In the long run is known as RESERVE.
For a country, it is the central bank in such country that pays the interest with regards to reserves that are in excess.
It must be noted that as the rate of supply increases , the rate of at which the value of price is also reduces. Hence, when there is an increase in the interest rate paid on reserves the whole demand does not shoot up.
NB: The initial equilibrium is at E( the point at which D(A) and P(A) meets and an increase causes it to meet at the point D(B) and P(B).
An asset was acquired on September 30, 2021, for $104,000 with an estimated five-year life and $25,000 residual value. The company uses double-declining-balance depreciation. Calculate the gain or loss if the asset was sold on December 31, 2022, for $54,000. Partial-year depreciation is to be calculated.
Answer:
There is a loss on disposal of $80
Explanation:
The double declining rate method of depreciation is an accelerated form of charging depreciation on an asset. It charges higher depreciation in the earlier years and lower depreciation in the later years of the useful life of the asset. the formula for double declining balance depreciation per year is,
Depreciation expense = 2 * [ (Cost - Accumulated depreciation) / estimated useful life of the asset ]
The depreciation expense per year on this asset is,
Depreciation expense = 2 * [(104000 - 0) / 5]
Depreciation expense for the 1 year(2021) = $41600
As the asset was purchased in September, we will charge a depreciation expense of 4 months.
Depreciation expense for 2021 = 31600 * 4/12 = $13866.67
Accumulated depreciation at the end of 2021 = $13866.67
Depreciation expense for 2nd year (2022) = 2 * [(104000 - 13866.67) / 5]
Depreciation expense for 2nd year (2022) = $36053.33
Accumulated depreciation at the end of 2022 = 13866.67 + 36053.33
Accumulated depreciation at the end of 2022 = $49920
To calculate the gain or loss on disposal, we need to determine the Net Book value of the asset at the end of 2022 and compare it with the cash received from the sale. If the cash received is more than the Net Book Value, there is a gain on disposal and if the cash received is less than the Net Book Value, there is a loss on disposal.
Net Book value at the end of 2022 = 104000 - 49920 = $54080
Loss on disposal = 54000 - 54080 = - $80 (loss on disposal)
The loss on the sale of the asset is $2,160.
There would be a loss on the sale of the asset is the book value of the asset is greater than the selling price of the asset.
Depreciation is a method used to reduce the carrying value of an asset.
Double declining depreciation = (2/ useful life) x cost of the asset
Depreciation expense in 2021 = (2/5) x $104,000 = $41,600
3/12 x $41,600 = $10,400
Book value in 2021 = $104,000 - $10,400 = $93,600
Depreciation expense in 2022 = (2/5) x $93,600 = $37,440
Book value in 2022 = $93,600 - $37,440 = $56,160
Loss = $56,160 - $54,000.= $2,160
To learn more about depreciation, please check: https://brainly.com/question/25887124
g The transactions of Spade Company appear below. Kacy Spade, owner, invested $100,750 cash in the company in exchange for common stock. The company purchased office supplies for $1,250 cash. The company purchased $10,050 of office equipment on credit. The company received $15,500 cash as fees for services provided to a customer. The company paid $10,050 cash to settle the payable for the office equipment purchased in transaction c. The company billed a customer $2,700 as fees for services provided. The company paid $1,225 cash for the monthly rent. The company collected $1,125 cash as partial payment for the account receivable created in transaction f. The company paid a $10,000 cash dividend to the owner (sole shareholder). Required: 1. Prepare general journal entries to record the transactions above for Spade Company by using the following accounts: Cash; Accounts Receivable; Office Supplies; Office Equipment; Accounts Payable; Common Stock; Dividends; Fees Earned; and Rent Expense. 2. Post the above journal entries to T-accounts, which serve as the general ledger for this assignment.
Answer:
1)
Dr Cash 100,750
Cr Common stock 100,750
Dr Office supplies 1,250
Cr Cash 1,250
Dr Equipment 10,050
Cr Accounts payable 10,050
Dr Cash 15,500
Cr Fees earned 15,500
Dr Accounts payable 10,050
Cr Cash 10,050
Dr Accounts receivable 2,700
Cr Fees earned 2,700
Dr Rent expense 1,225
Cr Cash 1,225
Dr Cash 1,125
Cr Accounts receivable 1,125
Dr Dividends 10,000
Cr Cash 10,000
2)
Cash Accounts receivables
Debit Credit Debit Credit
100,750 1,250 2,700 1,125
15,500 10,050 1,575
1,125 1,225
10,000
94,850
Office Supplies Equipment
Debit Credit Debit Credit
1,250 10,050
1,250 10,050
Accounts payable Common Stock
Debit Credit Debit Credit
10,050 10,050 100,750
0 0 100,750
Fees earned Rent Expense
Debit Credit Debit Credit
15,500 1,225
2,700 1,225
18,200
Dividends
Debit Credit
10,000
10,000
Gasoline is considered a final good if it is sold by a a. gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. b. pipeline operator to a gasoline station in San Francisco. c. gasoline station to a motorist in Los Angeles. d. All of the above are correct.
Answer:
c. gasoline station to a motorist in Los Angeles.
Explanation:
A final good is a good that is used by the consumer to satisfy current wants and it is not used to produce another good.
Gasoline would be used by the fuel station in San Francisco to generate cash by selling it. So it is not a final good.
The bus company uses the fuel as an input needed to generate cash. It is not a final good to the bus company.
I hope my answer helps you
This year, Napa Corporation received the following dividends: KLP Inc (a taxable Delaware corporation in which Napa holds an 8% stock interest) - $55,000 Gamma Inc (a taxable Florida corporation in which Napa holds a 90% stock interest) - $120,000 Napa and Gamma do not file a consolidated tax return. Compute Napa's dividends-received deduction. Please show complete calculation.
Answer:
$147,500
Explanation:
Computation of Napa's dividends-received deduction
Napa is said to holds less than 20% stock interest in KLP Inc which means that the dividends received deduction in the case of dividends received from KLP would be 50%.
And in case of dividends received from Gamma, the dividends received deduction would be 100% reason been that KLP holds more than 80% of the stock interest in Gamma.
Hence:
Napa’s dividends-received deduction will be:
= ($55,000 x 50%) + $120,000
=$27,500 +$120,000
= $147,500
Therefore Napa's dividends-received deduction will be $147,500
When landlords wrongfully withhold security deposits, they can often be sued for three times the amount of the security deposit. Is this reasonable? Should a landlord have to pay $3000 for a $1000 debt? What if you fail to pay a rent on time? Should you have to pay three times the amount of your normal rent? If your answers to these two questions are different, why is that?
Answer:
yes it is reasonable
Explanation:
subsection 12 of chapter 4 of the articles of lease-rental agreement states that if a landlord wrongfully withhold security deposits the landlord must pay 3x the amount due to all legal actions and no we don't have to pay 3x rent if we miss a payment we only have to pay the late fee and any other listed fees listed on your lease
Sarah has a toothache. She believes it may be due to her not having regular dental checkups in the past. She now wants to find a dentist, but does not have one that she has used in the past. Because dentistry has __________ properties, Sarah plans to ask her friends for a recommendation for a dentist they like to be sure that she finds a good one.
Answer:
Credence properties
Explanation:
Dentistry has a Credence property because it is a Service provided by medical specialized professionals. medical diagnoses and legal services have credence properties, or characteristics. A consumer may find a service with Credence property impossible to evaluate even after purchase and consumption. To reduce this uncertainty, service consumer like Sarah turns to personal sources of information like her friends during the purchase decision process
The price of a European call option on a stock with a strike price of $50 is $6. The stock price is $51, the continuously compounded risk-free rate (all maturities) is 6% and the time to maturity is one year. A dividend of $1 is expected in six months. What is the price of a one-year European put option on the stock with a strike price of $50?
Answer:
$3.06
Explanation:
The put call parity shows the relationship between the price of European put options and European call options of the same strike price and expiry date.
Given that:
Strike price (K) = $50
Price (C) = $6
rate (r) = 6% = 0.06
Stock price (SO) = $51
Time (T) = 1 year
Dividend (D) = $1
The period of dividend (t) = 6 months = 0.5 years
The put call parity (P) is given by the equation:
[tex]P+SO=C+Ke^{-rT}\\P=C+Ke^{-rT}-SO[/tex]
The dividend present value = [tex]De^{-rt}=1e^{-0.06*0.5}=\$0.97[/tex]
[tex]P=C+Ke^{-rT}-SO\\P=6+50e^{-0.06*1}-(51-0.97)\\P=6+47.088-50.03\\P=\$3.06[/tex]
Botswana Electronics Company (BEC), is contemplating a research and development program encompassing eight major projects. The company is constrained from embarking on all of the projects by the number of available scientists (40) and the budget available for the projects ($300,000). What are the resource requirements and the estimated profit for each project?
Explanation:
Note that we are told that Botswana Electronics Company (BEC) is constrained because of the number of available scientists (40) and the budget available for the projects ($300,000). Since this is an Electronics production company much of the needed resources includes metals, cables, power, as well as specialised workforce.
Using conservative estimates for the eight project, the profit for each project should be $37,500 b($300,000/8)
"All else held constant" is a major problem facing all methods of estimating the demand for business products. Compare and contrast how the marketing and economic approaches deal with this problem. Please use examples.
Answer:
In Economics, the phrase "All esle held constant" is also sometimes written in Latin "Ceteris Paribus". In Economics, this assumption is fundamental to the whole academic discipline since Economics is based on economic models that make a series of assumptions in order to reach partial conditions.
So in Economics, the reasoning is always in the manner of "all else held constant".
In Marketing, what is always done is to estimate demand for a product, and then, apply a marketing strategy in order to try to not only meet demand, but sell even more. This is because the main goal of Marketing is to satisfy customers beyond their expectations.
The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely.
A. Assuming the current market price of the stock reflects its value, what rate of return do Nogro’s investors require?
B. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?
C. What is the PVGO for this company?
D. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price?
E. What did you notice about the relationship between Nogro’s dividend payout policy and its price?
F. What do you think is the reason for such relationship?
Answer:
Check below for the solution.
Explanation:
A) Earning Per Share, EPS = $2
Dividend Pay out ratio = 50%
Required rate of return = (Expected Dividend next year / Current selling price) + Growth Rate
Expected Dividend per share next year = EPS x Dividends pay-out ratio
Expected Dividend per share next year = $2 x 50% = $2 * 0.5
Expected Dividend per share next year = $1
Return on Equity, ROE = EPS / Current selling price
ROE = $2 / $10 = 0.20 = 20%
Growth Rate = ROE x (1-Dividend pay-out ratio)
Growth Rate = 0.20 x (1-0.50) = 0.10 = 10%
Required Rate of Return = (Expected Dividend next year / Current selling price) + Growth Rate
Required Rate of Return = ($1 / $10) + 0.10 = 0.20 = 20%
B) If all the earnings are paid as dividends, there won’t be any amount left to invest for growth and hence there won’t be any growth in the company. Also, since the required Rate of Return is equal to its ROE, there won’t be any changes.
C) Present Value of Growth Opportunity (PVGO) = 0
This is because with all earnings paid out as dividends, there won’t be any growth and the required rate of return will be equal to the ROE.
D) Since the ROE is equal to required rate of return, there won’t be any impact of cutting down the dividends pay-out. The residual income with lesser pay-out ratio will be invested by the company in available projects that is expected to earn 20% and ROE is also same. Since, there is no changes in the earnings figures, the stock price would remain $10.
E) There is no relationship between Nogro’s dividend payout policy and its price as no impact is experienced in its share prices due to change in its dividend policy.
F) This is because the ROE and the required rate of return are equal.
New Age Makeup produces face cream. Each bottle of face cream costs $10 to produce and can be sold for $13. The bottles can be sold as is, or processed further into sunscreen at a cost of $14 each. New Age Makeup could sell the sunscreen bottles for $23 each.
A) Face cream must be processed further because its profit is $9 each.
B) Face cream must not be processed further because costs increase more than revenue.
C) Face cream must not be processed further because it decreases profit by $1 each.
D) Face cream must be processed further because it increases profit by $3 each.
Answer:
Face cream must not be processed further because costs increase more than revenue.
Explanation:
Profit = Total revenue - Total cost
If sold as face cream, total profit = $13 - $10 = $3
If processed into sunscreen , total cost = $10 + $14 = $24
Profit = $24 - $23 = $1
The profit from selling the product as a face cream is greater than the profit of developing it to a face cream. So the product shouldn't be developed further.
I hope my answer helps you
Tanesha sells homemade candles over the Internet. Her annual revenue is $64,000 per year, the explicit costs of her business are $17,000, and the opportunity costs of her business are $22,000. What is her accounting profit
Answer:
The answer is $47,000
Explanation:
Accounting profit profit doesn't consider opportunity cost. So the value for opportunity cost will be left out. It is Economic profit that considers opportunity cost.
Accounting profit = revenue - cost(explicit cost which is all cost involved in directly running the business e.g cost of sales, electricity cost, wage etc.)
Revenue = $64,000
Explicit cost = $17,000
Therefore, Accounting profit is
$64,000 - $17,000
=$47,000
Sweet, Inc. issued a $140,000, 4-year, 12% note at face value to Flint Hills Bank on January 1, 2017, and received $140,000 cash. The note requires annual interest payments each December 31.
Required:
Prepare Coldwell's journal entry record:
a. the issuance of the note
b. the December 31 interest payment.
Answer:
The double entry is given below alongwith its explanation
Explanation:
On January 1, 2017, the receipt of money by the issuance of the 12% note would be recorded as increase in liability which would be credited and increase in cash receipt is increase in asset which must be debited. The entry to record the issuance of note is as under:
Dr Cash $140,000
Cr Loan Note $140,000
On December 31, 2017, the Payment of interest of 12% on note would be recorded as increase in expense which must be debited and decrease in cash due to payment is decrease in asset and it must be credited. The entry to record the payment of interest is as under:
Dr Interest Expense $16,800
Cr Cash Account $16,800
The Accounts Receivable balance for Bach Consulting is $4,400,000 as of May 31, 2020. Before calculating and recording the month’s bad debt expense, there is a credit balance in the Allowance for Doubtful Accounts of $80,000. The May 2020 net sales were $30,000,000. In the past several years, 1% of net sales have proven uncollectible. An aging of accounts receivable results in a $360,000 estimate for the Allowance for Doubtful Accounts as of May 31, 2020.
PART A: PERCENT OF SALES METHOD
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
PART B: ANALYSIS OF RECEIVABLES METHOD
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $___________
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $___________
Problem 3
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020
February 3, 2019
Accounts Receivable (gross)
Allowance for Doubtful Accounts
Accounts Receivable, net
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Answer:
Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 300,000 (= $30,000,000 x 1%)
Cr Allowance for doubtful accounts 300,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,100,000 (= $4,400,000 - $300,000)
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $300,000
Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.
What adjusting entry does Bach make to record May 2020 Bad Debt Expense?
Dr Bad debt expense 280,000 (= $360,000 - $80,000)
Cr Allowance for doubtful accounts 280,000
What is "Accounts Receivable, net" on Bach’s May 31, 2018 Balance Sheet? $4,120,000
What is "Bad Debt Expense" on Bach’s May 2020 Income Statement? $280,000
Use PVH Corp.’s financial statement information to answer the following questions.
Provide the following account balances for PVH:
February 2, 2020 February 3, 2019
Accounts Receivable (gross) $762,000,000 $800,000,000
Allowance for Doubtful Accounts $21,000,000 $22,000,000
Accounts Receivable, net $741,000,000 $778,000,000
Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)?
$741,000,000
Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020?
$21,000,000
Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020?
$762,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019.
Dr Bad debt expense 22,000,000
Cr Allowance for doubtful accounts 22,000,000
Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019.
Dr Allowance for doubtful accounts 22,000,000
Cr Accounts receivable 22,000,000
Explanation:
Accounts receivable = $4,400,000
beginning balance Allowance for doubtful accounts = $80,000
May's net sales = $30,000,000
1% of net sales are uncollectible
aging of accounts receivable results in a $360,000 estimate for the Allowance for doubtful accounts as of May 31, 2020
Which of the following statements is CORRECT? a. The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes. b. The price/earnings (P/E) ratio tells us how much investors are willing to pay for a dollar of current earnings. In general, investors regard companies with higher P/E ratios as being more risky and/or less likely to enjoy higher future growth. c. Other things held constant, the less debt a firm uses, the lower its return on total assets will be. d. Suppose you are analyzing two firms in the same industry. Firm A has a profit margin of 10% versus a margin of 8% for Firm B. Firm A's total debt to total capital ratio is 70% versus 20% for Firm B. Based only on these two facts, you cannot reach a conclusion as to which firm is better managed, because the difference in debt, not better management, could be the cause of Firm A's higher profit margin.
Answer: The advantage of the basic earning power ratio (BEP) over the return on total assets for judging a company's operating efficiency is that the BEP does not reflect the effects of debt and taxes
Explanation:
a. This is correct.
The advantage of basic earning power ratio over the return on the total assets for judging a firm's operating efficiency is that the basic earning power does not reflect effects of debt and taxes.
b. This is incorrect.
Only the price/earnings ratio of the company will tell us nothing about a company. When we compare the price/earnings of a company with the peers, we would know whether such company is under valued, or over valued or maybe fairly valued.
c. This is incorrect.
The total assets is made up of total liabilities plus the shareholders equity, when other things are held constant, less debt simply means less liabilities. To balance both sides, the total assets should reduce as the shareholder's equity is constant. When total assets decreases, the return on the assets will increase.
d. This is incorrect.
We can reach a conclusion on which firm is better managed based on the facts given. The debt ratio is the total liabilities divided by total assets, and a lower ratio is known to be good in comparison to a higher ratio. Similarly, the profit margin is the profit divided by the sales, and low profit margin shows high expenses and also a need for the management to decrease the expense.
Screening Model. Assume that the following criteria relevant to the process of screening various project opportunities are weighted in importance as follows:
• Quality (5)
• Cost (3)
• Speed to Market (7)
• Visibility (5)
• Reliability (1)
Our company has four project alternatives that satisfy these key feature as follows:
Alpha Bete Gamma Delta
Quality 1 3 3 5
Cost 7 7 5 3
Speed 5 5 3 5
Visibility 3 1 5 1
Reliability 5 5 7 7
Construct a project screening matrix to identify among these four projects the most likely candidates to be implemented.
Answer:
Project Alpha 81
Project Beta 81
Project Gamma 83
Project Delta 81
Among the four projects the most likely candidates to be implemented will
be Project Gamma .
Explanation:
Screening Model
1.Calculation for Project Alpha
Important Weight×Weight Score = Weighted Score
Quality 5 × 1 =5
Cost 3 ×7 =21
Speed 7 ×5 =35
Visibility 5 ×3= 15
Reliability 1× 5 =5
Total Score =81
2.Important Weight ×Weight Score = Weighted Score
Calculation for Project Beta
Quality 5 × 3 =15
Cost 3 ×7 =21
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×5 =5
Total Score =81
3.Important Weight ×Weight Score = Weighted Score
Calculation for Project Gamma
Quality 5 ×3 =15
Cost 3 ×5 =15
Speed 7× 3= 21
Visibility 5×5 =25
Reliability 1×7 =7
Total Score=83
4.Important Weight ×Weight Score = Weighted Score
Calculation for project Delta
Quality 5 ×5 =25
Cost 3 ×3 =9
Speed 7× 5 =35
Visibility 5×1 =5
Reliability 1 ×7 =7
Total Score =81
Therefore among the four projects the most likely candidates to be implemented will
be Project Gamma because it has the highest
score with a score of 83.
Determine whether each of the following goods is a private good, a public good, a common resource, or a club good.
1. A free weight station in a fitness room that is open to the public
2. A large, beautiful fountain in a town square
3. A new drum set for you to play in your friend's band
Answer:
1. A free weight station in a fitness room that is open to the public (common resource)
2. A large, beautiful fountain in a town square (public goods)
3. A new drum set for you to play in your friend's band (private good)
Explanation:
Before we look into the different types of goods, let us define the terms associated with goods:
Rival: A good is said to be rival, if its consumption by one consumer prevents simultaneous consumption by another consumer.
Excludable: An excludable good is one for which access is not provided by the owner or seller, to a consumer who has not paid for it or who has not met certain requirements for its use.
Now let us define the different types of goods:
a. Private goods: these goods are excludable and rival. This means that the owners can prevent certain individuals from using them and their use prevents simultaneous use by other consumers. These goods are usually limited in quantity. in our example, A new drum set for you to play in your friend's band meets these requirements. other examples include food, clothes et.
b. public good: these goods are non-excludable and non-rival. These goods can be used simultaneously by many individuals and restrictions to use are virtually absent on them. A large, beautiful fountain in a town square meets these criteria. other examples include air, street lights etc.
c. common resource: These products are non-excludable (restriction to use is absent) and rival (use by an individual can prevent simultaneous use by others). if an individual is using A free weight station in a fitness room that is open to the public, other individuals will have to wait for their turn, even if they do not pay for it.
d. club good: these goods or services are excludable (paid for before use) but non rival (multiple consumers can use them simultaneously). Examples include cable television, internet services, cinemas etc.
Assume that you are a human resource manager of a 5-star international resort chain operating in
a South Pacific country. Your resort CEO recently assigns you to hire one hundred housekeepers
and waiters for your chain of hotels. Besides personality tests, discuss three other selection
measures you could use to select your targeted employees. Justify your choices with relevant
examples
Answer:
1. Language Skills
2. Specialization
3. Customer relationship skills
Explanation:
It is very important to note that South Pacific countries are home to many tourist, therefore the employees selected if able to speak various languages would be an added competitive advantage for the Hotel.
Also, employees with vast experience in their area of specialization is another factor that should be considered because it is serves as key to getting repeat service purchases in the hospitality industry.
Furthermore, the ability of employees to remain calm even to an irate customer shows a high level of good customer relationship. However, lack of this skill would result in potential loses for the hotel as a result of bad customer rating.
CarsonWentz Company uses a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor-hours. Last year, manufacturing overhead and direct labor-hours were estimated at $88,000 and 16,000 hours respectively, for the year. In June, job #315 was completed. Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour. At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead cos
Answer:
Instructions are below.
Explanation:
Giving the following information:
Estimated manufacturing overhead= $88,000
Estimated direct labor-hours= 16,000
Job 315:
Materials costs on the job totaled $1,590 and labor costs totaled $2,340 at $6.50 per hour.
At the end of the year, it was determined that the company worked 15,300 direct labor-hours for the year, and incurred $86,750 in actual manufacturing overhead costs.
With the information provided, we can calculate the total cost of Job 315 and the amount of under/over allocated overhead.
First, we need to determine the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 88,000/16,000= $5.5 per direct labor hour
Job 315:
Direct labor hours= 2,340/6.5= 360 hours
Total cost= 1,590 + 2,340 + 5.5*360= $5,910
Now, to calculate the over/under allocation, first, we need to allocate overhead for the whole company.
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 5.5*15,300= $84,150
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 86,750 - 84,150= $2,600 underallocated
Use the In the News to answer three questions
IN THE NEWS Treasury Prices Fall with Improved Expectations Expectations of accelerated economic growth continue to boost yields on Treasury securities. The price of the Treasury's 2.0 percent 10-year bond fell $17.43 yesterday, from $843.88 to $826.45. The decline in the price of the treasury pushed the yield up from 2.37 percent to 2.42 percent. The 30-year bond also declined, increasing the yield from 2.96 to 3.00. Source: Market reports of January 6, 2017, What would the yield be on the 2.0 percent, $1,000, 10-year Treasury bond if the market price of the bonds were Instructions: Round your responses to two decimal places.
a. $1,000?
b. $800?
c. $1,200?
Answer:
2%
2.5%
1.67%
Explanation:
The yield can be computed using the yield formula which coupon payment divided by price.
The coupon payment=face value*coupon rate
face value is $1000
coupon rate is 2%
coupon payment=2%*$1000=$20
when price is $1000:
yield =$20/$1000=2%
when price is $800
yield=$20/$800=2.5%
when price is $1,200
yield =$20/$1,200=1.67%
In essence ,the lower the price the higher the yield as lower amount is invested in order to receive the same amount of annual coupon of $20
Price serves as a a. rationing device. b. transmitter of information. c. means of determining who gets what of the available limited resources and goods. d. a and b e. all of the above
Answer:
e. all of the above
Explanation:
Price are an mechanism that serve to coordinate economic activity. They help coordinate economic decisions such as rationing, they transmit information, and they also help economic agents make decisions about what to sell, what to buy, what to exchange, and so on.