Answer:
Wyzard Corporation
The revenue variance in the Revenue and Spending Variances column of a performance report comparing actual results to the flexible budget for July would have been closest to: ________
$1,800 F
Explanation:
a) Data and Calculations:
Fixed Element Variable Element Actual Total
per Month per Container for February
Refurbished
Revenue $3,800 $123,400
Employee salaries and wages $40,000 $1,100 $73,800
Refurbishing materials $700 $21,800
Other expenses $29,700 $28,800
Revenue variance
Budgeted revenue (flexible) = $121,600 ($3,800 * 32)
Actual revenue 123,400
Variance $1,800
Banana Company hired some students to help count inventory during their semester break. Unfortunately, the students added incorrectly and the 2020 ending inventory was overstated by $6,000. What would be the effect of this error in ending inventory?
Answer: a. 2020 net income will be overstated
Explanation:
Ending Inventory is used in the calculation of Cost of Goods sold. It is subtracted from the Cost of Goods sold so if it is Overstated then that means that Cost of Goods sold is understated.
Cost of Goods sold is subtracted from Revenue to find income so if Cost of Goods sold is Understated then Net Income will be Overstated in turn.
A country has nominal GDP equal to $204.31 billion in 2018. The GDP deflator in 2018 has a value of 112.64. What was the value of real GDP, in billions of dollars. Round to two decimal places. If your answer is 3.2 billion then just enter 3.2.
Answer:
$181.38 billion
Explanation:
The computation of the value of the real GDP is shown below:
As we know that
Real GDP = (Nominal GDP ÷ GDP Deflator) × 100
= ($204.31 billion ÷ 112.64) × 100
= $181.38 billion
Hence, the value of real GDP is $181.38 billion
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Jackson Company's payment policy is to pay 40 percent of its accounts payable in the quarter urchases are made and 60 percent in the following quarter. Assume Jackson's credit purchases totaled $400,000 in quarter 1, $420,000 in quarter 2, $530,000 in quarter 3 and $580,000 in quarter 4. What will Jackson's cash payments be for quarter 3? A. $482,500 B. $560,000 C. $530,000 D. $464,000 E. None of the above.
Answer: D. $464,000
Explanation:
To calculate Jackson's cash payments be for quarter 3 goes thus:
60% of Quarter 2 will be calculated as:
= 60% × $420,000
= 0.6 × $420,000
= $252,000
40% of Quarter 3 will be calculated as:
= 40% of $530,000
= 0.4 × $530,000
= $212,000
We then add the values gotten together. This will be:
= $252,000 + $212,000
= $464,000
Therefore, the correct option is D.
Applying ExcelData Unit sales 10,000 unitsSelling price per unit $70 per unitVariable expenses per unit $42 per unitFixed expenses $140,000Enter a formula into each of the questions below. If your formulas are correct, you should get the correct answers to the following questions. Show your work and formulas.(a) What is the break-even in dollar sales?Break-even in dollar _____(b) What is the margin of safety percentage?Margin of safety percentage _____(c) What is the degree of operating leverage? (Round your answer to 2 decimal places.)Degree of operating leverage _____3. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%Percentage increase in the operating income _____4. Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like thisData Unit sales 12,000 unitsSelling price per unit $70 per unitVarable expenses per unit $42 per unitFixed expenses $140,000(a) What is the net operating income? (Negative amount should be indicated by a minus sign.)Net operating income (loss) _____(b) By what percentage did the net operating income increase?Percentage increase in net operating income _____%
Answer:
Please see solution below
Explanation:
a. Break even in dollar sales
= [ Fixed cost / Contribution margin ] × Selling price per unit
Fixed cost = $140,000
Selling price per unit = $70
Variable expenses per unit = $42
BEP in dollars = [$140,000 / $70 - $42] × $70
= $350,000
b. Margin of safety percentage
= [ Current sales level - Break even point / Current sales level ] × 100
Current sales level = 10,000 units
Break even point = Fixed cost / Contribution margin
= $140,000 / $70 - $42
= 5,000 units
Margin of safety = [10,000 - 5,0000/10,000 ] × 100
= 50%
C. Degree of operating leverage.
= Contribution margin / Net operating income
Contribution margin = $70 - $42 = $28
Net operating income
Sales ($70 × 10,000)
$700,000
Less Variable cost ($42 × 10,000)
$420,000
Contribution margin
$280,000
Less Fixed cost
$140,000
Net operating income
$140,000
Degree of operating leverage = $280,000 / $140,000
= 20%
D. Percentage in net income
Sales ($70 × 12,000)
$840,000
Less variable cost
$420,000
Contribution margin
$420,000
Less fixed cost
$140,000
Net operating income
$280,000
Percentage change in net income
= [$140,000 / $280,000] × 100
= 50%
Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The average Inventory amount is:______.a) $37,200b) $46,300c) $83,500d) $41,750
Answer:
Average inventory= $41,750
Explanation:
Giving the following information:
Beginning Inventory= $37,200
Ending Inventory= $46,300
To calculate the average inventory, we need to use the following formula:
Average inventory= (beginning inventory + ending inventory) / 2
Average inventory= (37,200 + 46,300) / 2
Average inventory= $41,750
An optimal procedure for organizations to accept projects is to specify a return on investment (ROI) and fund only projects that meet this criterion. A. True B. False
Answer:
False
Explanation:
Capital budgeting is needed in any project work as it entails the process and procedures taken in evaluation and selection of long-term investments that are consistent with the firm's goal of maximizing owner's wealth.
Normally, before a company invest or undergo any project, background work is done to know if the project will yet profit or no, feasibility study is carried out and things are put in place. If it is favourable for the firm and profit is high, firms may choose to invest after weighing the pros and cons (advantage and disadvantage) of the project before investment. So return of investment initial investment is not really considered when taking up a project as all project is done at their own risk.
The person granting another person to act on their behalf using a power of attorney is called a _______________. A) Potentate B) Premier C) Principal D) Agent E) None of the above Mark for follow up
Answer:
Principal
Explanation:
On January 2, 2017, Kellogg Corporation acquired equipment for$800,000. The estimated life of the equipment is 5 years or 80,000 hours. The estimated residual value is $10,000. What is the book value of the asset on December 31, 2018, if Kellogg Corporation uses the straight−line method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar.)
A. $790,000
B. $800,000
C. $484,000
D $642,000
Answer:
Book value of the asset = $484,000
Explanation:
Given:
Equipment cost = $800,000
Residual value = $10,000
Computation:
Depreciation = (Equipment cost - Residual value) / Life
Depreciation = ($800,000 - $ 10,000) / 5
Depreciation = $ 158,000 per year
Depreciation for 2 year =$ 158,000 x 2
Depreciation for 2 year = $316,000
Book value of the asset = Equipment cost - Depreciation for 2 year
Book value of the asset = $800,000 - $316,000
Book value of the asset = $484,000
Your local T-Spirit store is having a sale on the latest i-razpod cell phone. The store is also offering financing to those who
qualify. The new cell phone is on sale for $150.00 with a two year contract. The sales associate informs you that the
closed-end installment loan offered by the store is a 24 month installment plan with monthly payments of $8.44.
Determine the finance charge (interest) of the installment loan.
a $52.00
c. $54.30
b. $52.56
d. $56.10
Answer:
$52.56
Explanation:
first, figure out how much you'll be paying during the 24 months.
8.44 x 24 = 202.56
subtract 150, the original price of the phone, from 202.56, the price you would be paying over 24 months.
202.56 - 150 = 52.56
the finance charge is $52.56.
Answer:
B. 52.56
Explanation:
I meant to choose B and accidentally chose A. Says the answers b
On a website advertising its LSAT preparation classes, The Princeton Review includes this sentence: Since 1998, more than 99% of our surveyed students have said they would recommend Law Preview to entering law students. This persuasive technique relies on ________.
Answer:
relies on statistics
Explanation:
Since 1998, more than 99% of our surveyed students have said they would recommend Law Preview to enter law students. This persuasive technique relies on statistics.
What is law?The term law states that the states of rules are made by the government for the public welfare, there are different laws are being there which help people to make more protective and more effective work in it. By the law the people can work properly under the law and discrimination they have been provided.
As the survey is to be conducted and the basis of the survey the result have been made and by the statics, the result has been concluded to be the students have been recommended the law as compared to the other things. The more served there, the more about the students can be noted down.
Therefore, persuasive techniques play an important role in it. For the survey of the law student.
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Suppose that United States produces 10,000,000 barrels of oil and 1,000 bushels of wheat each week. Suppose that Pakistan produces 9753 barrels of oil and 9753 bushels of wheat each week. 1. In autarky, what is the largest amount of wheat United States can consume every week? Number bushels 2. What does the term autarky refer to? a) The process of negotiating terms of trade between two countries. b) A major argument against globalization. c) countries Government policies meant to reduce international trade. d) A situation where one country does not engage in trade with other
Answer:
1. 1,000 bushels of wheat
2. d) A situation where one country does not engage in trade with other
Explanation:
1 & 2. Autarky refers to a situation where a country does not engage in trade with other countries but rather relies on its own production capacities to feed the consumption in the country.
Autarkies in the current world are not a thing because countries trade with each other. Even North Korea trades with Russia, China and others.
In an Autarky situation therefore, the United States would only be able to consume the wheat that it produces itself which according to the question is 1,000 bushels of wheat.
Answer: 1. 1000 bushels of wheat.
2. A situation where one country does not engage in trade with other.
Explanation:
Autarky simply refers to an economy that's self sufficient and doesn't depend on other economies and doesn't trade with them.
1. The largest amount of wheat that the United States can consume every week will be 1000 bushels of wheat. This is because in autarky, nations won't engage in trading so whatever quantity of whameat that's produced will be consumed.
2. Autarky situation where one country does not engage in trade with other. Therefore, the correct option is D.
What is Jensen's alpha of a portfolio comprised of 45 percent portfolio A and 55 percent of portfolio B?
Portfolio Average Return Standard Deviation Beta
A 18.9 % 21.6 % 1.92
B 13.2 12.8 1.27
The risk-free rate is 3.1 percent and the market risk premium is 6.8 percent.
2.04 percent
0.47 percent
1.08 percent
1.46 percent
−1.25 percent
Answer:
Alpha of the overall portfolio = 2.04%
Explanation:
The alpha or abnormal return is the excess return given by a stock or a portfolio over its required rate of return. To calculate the alpha of a portfolio containing two portfolios, we first need to calculate the alpha of each individual portfolio and then take a weighted average of these alphas to determine the overall portfolio alpha.
First we need to calculate the required rate of return of each portfolio and deduct it from the Average return of portfolios to calculate individual portfolio alpha.
Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * rpM
Where,
rRF is the risk free rate rpM is the market risk premium
r of A = 0.031 + 1.92 * 0.068 = 0.16156 or 16.156%
Alpha of portfolio A = 18.9 - 16.156 = 2.744%
r of B = 0.031 + 1.27 * 0.068 = 0.11736 or 11.736%
Alpha of portfolio B = 13.2 - 11.736 = 1.464%
Alpha of the overall portfolio = 0.45 * 2.744% + 0.55 * 1.464%
Alpha of the overall portfolio = 2.04%
At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $46,000 with a yield to maturity of 5 percent.Given that she will not actually receive any interest payments until the bond matures in 10 years, how much interest income will she report this year assuming semiannual compounding of interest?
Answer:
Semiannual compounding of interest = $2,328.75
Explanation:
Given:
Semi annual rate = 5/2 = 2.5 = 0.025
P = $46,000
Find:
Semiannual compounding of interest
Computation:
Semiannual compounding of interest = 46,000[1 - (1 + 0.025)²]=
Semiannual compounding of interest = $2,328.75
Geralds manufacturing firm sold goods worth $6000 to some customers on credit in the month of January. His customers plan to pay him the entire amount at once in March. Gerald plans to record and recognize this income in the business’s accounts in March. Which accounting method does Geralds business follow?
His business follows the (________) method of accounting.
Answer:
Cash accounting method
Explanation:
The cash accounting method records receipts and expenses during the period in which cash changes hands. In this method, revenue will be recorded when payment from a customer is received. Expenses are not recorded unless money is paid out. In short, revenues and expenses are recognized and recorded only when cash is received or paid.
Cash accounting contrasts with the accrual accounting system, which recognizes revenues and expenses when their respective events occur.
Martinez Corporation purchased machinery on January 1, 2022, at a cost of $268,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $31,800. The company is considering different depreciation methods that could be used for financial reporting purposes.
(SEE PICTURE)
Answer:
see below
Explanation:
1. Depreciation using the straight-line method.
Under the straight-line method, depreciation is a constant figure in every year of an asset's useful life.
The calculation of depreciation expense is by establishing the depreciable amount, which is the asset cost minus salvage value.
Depreciable amount = Asset cost - Salvage value.
In this case
Depreciable amount = $268,000 - $31,800
=$236,200
The depreciation rate = 1/4 x 100 = 25%
Depreciation per year
=25/100 x $236,200
=$59,050
year Depreciable cost rate Amount
2022 $236,200 25% $59,050
2023 $236,200 25% $59,050
2024 $236,200 25% $59,050
2025 $236,200 25% $59,050
2. Depreciation under the double-declining method.
The double-declining method uses twice the rate of the straight-line depreciation method.
The depreciation rate for the straight-line method is 25%, double-declining will use 50%. The salvage value is $31,800. The asset is depreciated until the salvage value is achieved.
year Depreciable cost rate Amount
2022 $268,000 50% $134,000
2023 $134,000 50% $67,000
2024 $67,000 50% $33,500
2024 $33,500 - $1,700
Balance : salvage value of $31,800
b The straight-line method would have the highest income reported in 2022. It reports less depreciation expense.
c. both Methods will report the same amount of income over the 4 year period.
A sentence that contains one independent clause and one or more dependent clauses is a
Answer:
Complex sentence they always have one independent clause + 1 or more dependant clause
Joined by using conjunctions!
Assume that England and Spain can switch between producing cheese and producing bread at a constant Labor Hours Needed to Make 1 Unit of Number of Units Produced in 24 Hours Cheese Bread Cheese BreadEngland 2 3 12 8Spain 3 6 8 4Assume that England and Spain each has 24 labor hours available. If each country divides its time equally between the production of cheese and bread, then total production is:_________. a. 10 units of cheese and 6 units of bread. b. 25 units of cheese and 7.5 units of bread. c. 20 units of cheese and 12 units of bread. d. 12 units of cheese and 8 units of bread.
Answer:
a. 10 units of cheese and 6 units of bread.
Explanation:
Total there are 24 labor hours
So, for each there is 12 hours
Now the distribution is as follows
For england
= 12 ÷ 2 + 12 ÷ 3
= 6 units + 4 units
= 10 units
For Spain
= 12 ÷ 3 + 12 ÷ 6
= 4 units + 2 units
= 6 units
Hence, the correct option is a
And, the same is to be considered
All other options are wrong
An architecture firm earned earned $2320 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:________.A) revenues to be understated B) revenues to be overstated C) liabilities to be understated. D) net income to be overstated.
Answer:
A) revenues to be understated
Explanation:
In this scenario, this would cause revenues to be understated. This is mainly because the financial report of profit would state an amount that is less than the amount that was actually earned by the Architecture Firm. This is due to the profit of $2320 that was already fully earned by the Firm not being included in the financial report, therefore missing a piece of the profits in the report (understated).
Performance appraisals can be improved by: Improving appraisal formats Selecting the right raters Training raters to rate more accurately Understanding how raters process information All of the choices are correct
Answer:
All of the choices are correct
Explanation:
Performance appraisals is one of the tools that helps in the maximizing and enhancing the energies of the employees towards achieving the goals. It is the way through which the performance of the employees are evaluated and analyzed. Some of the methods include providing rewards, promoting or demoting the employees and facilitating transfers. It helps in the flow of better communication of the employees and the employers. The improvement in the productivity of the employees, growth in the company's turnover and good relationship are some of the outputs of the performance appraisals.
Vaughan Company started the year off with an Accounts Receivable balance of $50,000. During the year credit sales were $949,000. Accounts Receivable at the end of year totaled $80,000. What is the average number of days it takes Vaughan Company to collect a receivable? (Do not round your answers in any part of this problem)
Answer:
25 days
Explanation:
To calculate the average number of days, we'll make use of the formula below;
= [(Average receivable / Net credit sales)] × 365
Average receivables = $50,000 + $80,000 / 2 = $65,000
Net credit sales = $949,000
Therefore,
Average collection period
= ($65,000 / $949,000) × 365
= 25 days
It will take Vaughan company 25 days to collect a receivable.
Please Help me, with this question for one of my class discussions.
Think of a product and describe the stages of production the product goes through.
Answer:
Well, it depends on the product. But, I'd say, first, an idea for the product. Creating/designing and refining the product is next. Then, when finally satisfied, begin mass production
Explanation:
Need help with entreprenuer questions ASAP
Consider the estimated equation from your textbook: Test Score = 698.9 - 2.28 times STR, R^2 = 0.051, SER = 18.6 (10.4) (0.52) The t-statistic for the slope is approximately: a) 67.20. b) 4.38. c) 1.76. d) 0.52.
Answer:
b) 4.38
Explanation:.
Calculation for the t-statistic for the slope
Using this formula
Slope = Regression equation / Standard Error
Let plug in the formula
Slope= 2.28 / .52
Slope = 4.38
Therefore the t-statistic for the slope is approximately 4.38
Shares of Corporation have a beta of 0.90. The market risk premium is 7%, and
the risk-free rate is 8%. Corporation paid a dividend of $1.80 per share, and the
dividend is expected to grow at 7% forever. The share currently sells for $25.
Corporation has a debt-equity ratio of 50%. Its cost of debt is 8%, before taxation,
taxation rate is 30%.
What is the weighted average cost of capital of Corporation?
Answer:
The weighted average cost of capital of Corporation is 11.4%
Explanation:
Now use following formula to calculate the weighted average cost of equity
WACC = ( Weight of equity x Cost of equity ) + ( Weight of debt x Cost of debt (after tax ) )
Weight
Equity = 100%
Debt = 50%
Cost
First we need to calculate the cost of equity using CAPM formula
Cost of equity = Risk free rate + Beta x ( Market risk premium )
Placing values in the formula
Cost of equity = 8% + 0.90 x 7%
Cost of equity = 14.3%
Cost of debt = 8%
Cost of debt (after tax ) = 8% x ( 1 - 30% ) = 5.6%
Placing values in the formula of Weighted average cost of capital
WACC = ( ( 100%/150% ) x 14.3% ) + ( ( 50% / 150% ) x 5.6% )
WACC = 9.53% + 1.87%
WACC = 11.4%
Differentiate between manmade and natural attraction
In a SWOT analysis, what are strengths?
Answer:
A SWOT analysis is an evaluation of your company's strengths, weaknesses, opportunities, and threats.
Explanation:
The SWOT approach is a useful tool to support various brainstorming sessions due to its benefits, such as its ability to address a variety of business difficulties.
What is SWOT analysis?Strengths, Weaknesses, Opportunities, and Threats is referred to as SWOT. Your company's internal strengths and weaknesses are factors over which you have some control and which you can make changes. Examples include your team members, your intellectual property and patents, and your location.
A SWOT analysis is a strategic planning tool that assists businesses in gaining a comprehensive understanding of their key difficulties and in choosing actions that will actually support their success.
The acronym stands for the four principles of strengths, weaknesses, opportunities, and threats in English.
An organization or project's strengths, weaknesses, opportunities, and threats are identified using a SWOT analysis, a planning technique.
With this approach, you concentrate your analysis on the three Cs, or strategic triangle, which are the company, the competitors, and the customers.
Finding the key success factor (KSF) and developing a workable marketing strategy can both be accomplished by carefully examining these three components.
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Alpha Company used the periodic inventory system for purchase & sales of merchandise. Discount terms for both purchase & sales are, FOB Destination, 2/10, n30 and the gross method is used.
Alpha Company sold on account merchandise costing $3,000 to Bravo Company on May 2, 2016. Selling price was $4,500. Freight charges related to this transaction of $200 were paid by Alpha Company.
Bravo Company returned, to Alpha Company, merchandise with an original cost to Alpha of $300 on May 3, 2016. Merchandise was sold to Bravo for $450.
Use this information to prepare Alpha Company's General Journal entries (without explanation) for May 2 & May 3 entries.
Answer:
May 2
Trade Receivable $4.700 (debit)
Sales Revenue $4,700 (credit)
May 3
Sales Revenue $450 (debit)
Trade Receivable $450 (credit)
Explanation:
First, it is important to identify in whose books we are required to make the accounting entries. In this case we are required to record in Alpha (supplier) records.
Note also that Alpha Company, Alpha Company uses the periodic inventory system for purchase & sales of merchandise. This means inventory valuation is done at the end of financial year.
May 2
This is is the date of sale, we recognize the Revenue and the asset - Account Receivable. The amount should include the freight charges since this is a FOB destination shippment.
May 3
The date that the merchandise was returned. We derecognize the sale and the asset - Trade Receivable to the extent of the selling price of the goods returned
Leaf's Paper Company is planning to launch a new notebook product that is water resistant. The company wants to sell 30,000,000 of the new notebooks next year and wants to know what trial rate is required to achieve this goal. The market research group forecasts an awareness rate of 78% and an ACV% of 51%. Of those that try the product by purchasing 1 notebook, 21% will repurchase 5 notebooks per year. There are 200,000,000 notebook consumers in the target market. Total fixed costs to Leaf Paper Company to manufacture this new notebook are $11,000,000, with variable costs of $2.56 per notebook. What trial rate is required to achieve the company's goal?
Answer:
7.5%.
Explanation:
This question can be solved by using the formula below;
The trial rate is required to achieve the company's goal = ( number of new notebooks that the company wants to sell the following year) ÷ awareness rate × units per trial × ACV × number in target market.
From the Question above, we have the following information which is going to be slot in to the formula above and use in solving this question;
=> The number of new notebooks that the company wants to sell the following year = 30,000,000.
=> The awareness rate = 78%.
=> ACV% = 51%.
=> The percentage of people that will repurchase 5 notebooks per year = 21%.
=> The total number of notebook consumers in the target market = 200,000,000 .
=>'' The Total fixed costs to Leaf Paper Company to manufacture this new notebook = $11,000,000''
=> The variable costs per Notebook = $2.56.
Thus, slotting in the values respectively, we have;
Trial rate = 30,000,000 ÷ (0.78 × 5 × 0.51 × 200,000,000).
Trial rate = 0.07541478129713423.
Thus, 0.07541478129713423 × 100 = 7.5%.
Trial rate = 7.5%.
Wendy is a single taxpayer with adjusted gross income of $92,300 for tax year 2019. She has rental income of $55,000 and rental expenses of $80,000. What can Wendy report on her tax return given this situation?
a. She can deduct $10,000 because her rental expenses exceeded her rental income
b. She can deduct $15,000 because her rental expenses exceeded her rental income
c. She can deduct $25,000 because her rental expenses exceeded her rental income
Answer: c. She can deduct $25,000 because her rental expenses exceeded her rental income
Explanation:
You are allowed a deduction when your rent expenses exceeds your rent income by the amount that the rent expense exceeds your net income by however, this deduction is limited to a maximum of $25,000.
This only applies however if the tax payer's adjusted gross income for the year is less than $100,000 which it is in this case.
= Rental expense - rent income
= 80,000 - 55,000
= $25,000
She can deduct $25,000.
The correct option is c. She can deduct $25,000 because her rental expenses exceeded her rental income
The calculation is as follows:
= Rental expense - rent income
= 80,000 - 55,000
= $25,000
She can deduct $25,000.
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Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions:
a. During the year, the company purchased office supplies that cost $2,300. At the end of the year, office supplies of $670 remained on hand.
b. On January 1 of the current year, the company purchased a special machine for cash at a cost of $23,500. The machine's cost is estimated to depreciate at $2,350 per year.
c. On July 1, the company paid cash of $840 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year.
Answer:
Gordon Company
Analysis of Transactions at December 31:
a. Office Supplies $670 (DR)
Office Supplies Expense $1,630 (DR)
b. Equipment $23,500 (DR)
Accumulated Depreciation on Equipment $2,350 (CR)
Depreciation Expense - Equipment $2,350 (DR)
c. Prepaid Insurance $630 (DR)
Insurance Expense $210 (DR)
Explanation:
1. The Office Supplies Account will be debited with $2,300 and credited with $1,630 ($2,300 - $670) as Office Supplies Expense (used supplies) for the year. This will leave a debit balance of $670 in the account.
2. The equipment account will be maintained at its cost, while a contra account (accumulated depreciation) is created to accumulate the depreciation expenses over the years. The useful life of the equipment is 10 years ($23,500/$2,350) with an annual depreciation expense of $2,350.
3. The Prepaid Insurance Account will be debited with $840 and credited with $210 ($840/4) representing Insurance that expired during the year for six months. The balance of $630 is carried forward for the remaining one and half years.