Answer:
Not obligated to pay under the frustration of purpose doctrine
Explanation:
In this specific scenario, Harry is likely Not obligated to pay under the frustration of purpose doctrine. This doctrine states that an individual does not need to abide by his/her contractual duties if a later unforeseen event impedes the buyer's initial purpose for entering into the contract, if and only if the seller knew of the buyer's purpose at the time of entering the contract. Therefore since Harry entered into the agreement for the sole reason of watching the New Year's Eve festivities and it was cancelled due to an unforeseen event (terrorist threat) he does not have to pay.
After observing the heavy snow that his town received the previous winter, Ajay Patel, an enterprising student, plans to offer a show-clearing service in his neighborhood this winter. If he invests in a new heavy-duty blower. Ajay forecasts a profit of $700 if snowfall this winter is heavy, a profit of $200 if it is moderate and a loss of $900 if it is light. As per the current weather forecasts, the probabilities of heavy, moderate and light snowfall this winter are 0.4, 0.3 and 0.3 respectively.
Rather than purchase a new blower, Ajay could get his father's blower repaired and just accept smaller jobs. Under this option, Ajay estimates profit of $350 for a heavy snowfall, and a loss of $150 for a light snowfall. Ajay, of course has the option of choosing neither of these options.
The local weather Adams, is Ajay's good friend. For $50, she is willing to run sophisticated computer weather models on her computer and tell Ajay whether she expects this winter to be cold. For the sake of solving this problem, assume that the following information is available. There is a 45% chance that Samantha will predict this winter to be unseasonably cold. If she does say this, the probabilities of heavy, moderate, and light snowfall are revised to 0.7, 0.25, and 0.05, respectively. On the other hand, if she predicts that this winter will not be unseasonably cold, these probabilities aye revised to 0.15, 0.33, and 0.52, respectively.
Draw the decision tree for the situation faced by Ajay. Fold back the tree and determine the strategy you would recommend he follow. What is the efficiency of Samantha's information?
Spin Cycle Architecture uses three activity pools to apply overhead to its projects. Each activity has a cost driver used to allocate the overhead costs to the projects. The activities and related overhead costs are as follows: initial concept formation $52,960; design $420,000; and construction oversight $118,650. The cost drivers and estimated use are as follows.
Activities Cost Drivers Estimated Use of Cost Drivers per Activity
Initial concept formation Number of project changes 16
Design Square feet 140,000
Construction oversight Number of months 105
Required:
a. Compute the predetermined overhead rate for each activity.
b. Classify each of these activities as unit-level, batch-level, product-level, or facility-level.
Answer:
a. predetermined overhead rate for each activity
initial concept formation = $3,310 per Project Change
design = $3 per Square feet
construction oversight = $1,130 per Month
b. Classification
unit-level activities :
design
batch level activities :
initial concept formation
Product level activities :
design
Facility level activities :
initial concept formation
construction oversight
Explanation:
This question requires application of Activity Based Costing (ABC) method of allocating overheads.
For each overhead a rate is determined as follows :
initial concept formation
Predetermined overhead rate = Overhead Cost / Number of Project Changes
= $52,960/ 16
= $3,310 per Project Change
design
Predetermined overhead rate = Overhead Cost / Square feet
= $420,000/ 140,000
= $3 per Square feet
construction oversight
Predetermined overhead rate = Overhead Cost / Number of Months
= $118,650/ 105
= $1,130 per Month
Classification
The way the activity is to be absorbed in costing determine its classification
The continuous falling price level is called inflation.
True or false?
Answer:
True
Explanation:
When it start failling it is still true.
Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065 and it sells for $1,200. What is the bond's nominal yield to maturity
Answer:
10%
Explanation:
This can be calculated using the nominal yield to maturity (YTM) formula as follows:
Yield to maturity = [C + ((F - P) / n)] / [(F + P) / 2] ........ (1)
Where;
F = Face or par value = $1,000
C = Coupon or interest payment = $1,000 * 13% = $130
P = quoted price = $1,200
n = Years to maturity = 10
Substituting the values into equation (1), we have:
Yield to maturity = [130 + ((1,000 - 1,200) / 10)] / [(1,000 + 1,200) / 2] = 0.10, or 10%.
John, a manager with Whole Foods Grocery Company, has just participated in a meeting that looked at future trends in the grocery business, and identified new challenges and opportunities for Whole Foods. John's participation in this meeting is an example of the __________ function of management.
Answer:
Planning
Explanation:
Planning is a management function that involves creation of a detailed plan of action in order to attain a set goals.
Planning is a continous process that management performs to modify mode of operations so that goals are better achieved.
In this scenario John participated in a meeting that looked at future trends in the grocery business, and identified new challenges and opportunities for Whole Foods.
This is an action that involves planning for future growth of the company, while identifying challenges and opportunities that will be faced.
A stock you own earned: $200, $500, $100, and $700 over the last four years. What was the mean annual gain in value over the four years?
Answer:
$375
Explanation:
200+500+100+700= 1,500
1,500/4=375
Answer:
The answer is $375 (B)
Explanation:
First, add all the numbers (200, 500, 100, 700) to get 1,500
Divide by the mean which is 4 (1500/4)
Here's your answer $375 (B)
Hope this helps!
On January 1, a company purchased a five-year insurance policy for $2,200 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
Answer:
Debit Insurance Expense 440
Credit Prepaid Insurace 440
Explanation:
Since on January 1, the company purchased a five year insurance policy for $2,200 that means we have to divide the insurance policy amount of $2,200 by the numbers of year which is 5 years .
Hence:
$2,200/5 years
=440
Therefore the adjusting entry at the end of the first year is:
Debit Insurance Expense 440
Credit Prepaid Insurace 440
Tim, who is subject to a 35 percent marginal gift tax rate, made a gift of a painting to Ben, valuing the property at $7,000. The IRS later valued the gift at $15,000. Compute the applicable undervaluation penalty.
Answer:
The undervaluation penalty is $560
Explanation:
Solution
Under valuation penalty applied when a person valued assets understated to save tax.
The undervaluation reduces the tax and hence comes with accuracy related penalty.
From the example, Tim undervalued the gift of $7,000 which is valued at $15,000 by IRS.
The deduction is undervalued for more than 150% and hence penalty is assessed. this is so because the income tax valuation is lower than 40%, so the penalty rate is 20%
Thus,
The calculation of overvaluation penalty is given below:
Undervaluation = $8000
Tax rate = 35%
Tax amount = $2,800
Penalty rate = 20%
Penalty on undervaluation is =$560
Therefore, the undervaluation penalty is $560
E-Eyes has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a return of 11 percent on this stock, how much should you pay today
Answer:
Price to be paid for the stock = $25.032
Explanation:
A preferred stock pays a constant amount of dividends in perpetuity.
Using the dividend valuation model, the estimate price of such a stock would be the present value (PV) of the perpetuity.
This given below as dollows:
PV= A/r
A-constant dividend,- 20 ,
r- rate of return- 11%
PV of dividend in Year 19
PV = 20/0.11= 181.8181818
PV in year in year 0
PV = 181.8181818 × 1.11^(-19) = 25.032
Price to be paid for the stock = $25.032
Jardine Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fes Earned, Rent Expense, Advertising Expense, Utility Expense, Miscellaneous Expense.Journalize the following selected transactions for March 2016 in a two-column journal. Journal entry explanations may be omitted.Mar.1. Paid rent for the month, $2,500.3. Paid advertising expense, $675.5. Paid cash for supplies, $1,250.6. Purchased office equipment on account, $9,500.10. Received cash form customers on account, $16,550.15. Paid creditor on the account, $3,180.27. Paid cash for repairs to office equipment, $540.30. Paid telephons bill for the month, $375.31. Fees earned and billed to customers for the month, $49,770.31. Paid electricity bill for the month, $830
Answer:
Mar.1
Rent Expense $2,500 (debit)
Cash $2,500 (credit)
Mar.3
Advertising Expense $675 (debit)
Cash $675 (credit)
Mar.5
Supplies $1,250 (debit)
Cash $1,250 (credit)
Mar.6
Office equipment $9,500 (debit)
Accounts Payable $9,500 (credit)
Mar.10
Cash $16,550 (debit)
Accounts Receivable $16,550 (credit)
Mar.15
Accounts Payable $3,180 (debit)
Cash $3,180 (credit)
Mar.27
Miscellaneous Expense $540 (debit)
Cash $540 (credit)
Mar.30
Utility Expense $375 (debit)
Cash $375 (credit)
Mar. 31
Accounts Receivable $49,770 (debit)
Fees Earned $49,770 (credit)
Mar. 31
Utility Expense $830 (debit)
Cash $830 (credit)
Explanation:
Telephone Bill and Electricity Bill are both utilities used for operations hence entered under Utility Expense Account.
Repairs to Office Equipment was entered in the Account Title Miscellaneous Expense because of all the Account Titles for this Company, this is the most appropriate.
Obtain the linear trend equation for the following data on new checking accounts at Fair Savings Bank and use it to predict expected new checking accounts for periods 16 through 19. (Round your intermediate calculations and final answers to 2 decimal places.)
Period New Accounts Period New Accounts Period New Accounts
1 200 6 239 11 281
2 215 7 241 12 275
3 211 8 250 13 282
4 224 9 254 14 288
5 235 10 267 15 308
Y = + t
Y16 =
Y17 =
Y18 =
Y19 =
Use trend-adjusted smoothing with %u03B1 = .2 and %u03B2 = .1 to smooth the new account data in part a. What is the forecast for period 16? (Use the "Trend" values to 3 decimal places and other values to 2 decimal places for intermediate calculations. Round your final answer to 2 decimal places.)
Answer:
Y16 = 7(16) + 195.33 = 307.33
Y17 = 7(17) + 195.33 = 314.33
Y18 = 7(18) + 195.33 = 321.33
Y19 = 7(19) + 195.33 = 328.33
Explanation:
Period (x)
New accounts (Y)
The regression equation:
Y = mx + t
Y is the dependent variable
X is the independent variable
t point where trend line cuts through the x-axis
M is the gradient or slope
Using the regression calculator, the trend line for the data is :
Y = 7X + 195.33
Using the regression equation obtained :
Y16 = 7(16) + 195.33 = 307.33
Y17 = 7(17) + 195.33 = 314.33
Y18 = 7(18) + 195.33 = 321.33
Y19 = 7(19) + 195.33 = 328.33
1. Which of the following is an example of the resource-based view of the firm? a. Philip Morris diversified by purchasing Kraft foods, because they did not want to put money back in the high-risk cigarette business. b. Google hires employees by asking them to fill out a 200-item questionnaire; many of the questions have nothing to do with computers. c. Halliburton takes advantage of the US war budget to bill the government at over $5 per gallon of gasoline. d. Canon manufactures scanners, printers, copiers and cameras, all using its capability in imaging.
Answer:
An example of the resource-based view of the firm is:
d. Canon manufactures scanners, printers, copiers and cameras, all using its capability in imaging.
Explanation:
The resource-based view is a model or framework for examining the potentials an organization possesses to develop a competitive advantage over other competitors. By applying this model, management sees resources as key to superior firm performance. It therefore focuses its attention on internal resources in an effort to identify those assets, capabilities, and competencies with the potential to deliver superior competitive advantages.
The other approaches mentioned do not consider the firm's internal capabilities as a means of competitive advantage.
You have graduated from college and, after working hard for ten years, have scraped enough money together to make a down payment on a forty-acre farm within driving distance to the small city where you work in Colorado. In town at lunch one day, you run into an old friend from high school, Hayley Mills, who tells you that she is saving her money to start a high-end consignment shop in town. You allow her to have a room in your house for a few months until she has enough money to go into business. Over the following weeks, however, you realize that old acquaintances from high school are stopping by almost daily for short visits. When you bring this up to Hayley, she admits that many old friends are now relying on her for marijuana. She is not a licensed caregiver in Colorado and is clearly violating the law. Out of loyalty, you tell her that she has three weeks to move out, but you do not prevent her from continuing sales while she is there. What crime have you committed?
Answer:
A conspiracy crime
Explanation:
Note that the tem consipiracy could also mean knowingly supporting directly or indirectly in a set course of action with another.
Thus, since the homeowner did not prevent the illegal actions of her acquaintance out of loyalty for her, the homeowner became part of an illegal drug sale conspiracy. This is further evident from the fact that the homeowner
gave the acquaintance three weeks to move out; in a sense giving more ample time for the illegal transactions.
A banking system has a reserve ratio equal to 15%. For every $100 deposited into the banking system, the bank is required to keep 2 at least ____________ on reserve and can therefore lend no more than _________ Instructions: Enter a whole number in each box above.
b. For this banking system, the money multiplier is equal to__________meaning that $100 of cash deposited into the banking system 4 points can be turned into ___________ deposits through the money creation process.
Answer:
A banking system has a reserve ratio equal to 15%. For every $100 deposited into the banking system, the bank is required to keep 2 at least ____$15________ on reserve and can therefore lend no more than ___$85______ Instructions: Enter a whole number in each box above.
b. For this banking system, the money multiplier is equal to_____6.67_____meaning that $100 of cash deposited into the banking system 4 points can be turned into ___$667________ deposits through the money creation process.
Explanation:
a) Reserve Ratio: This is the portion of deposit liabilities that commercial banks must keep, rather than lend out or invest as determined by the country's central bank. In the United States, the Federal Reserve determines the Reserve Ratio and uses it to control the money supply in the economy.
b) The Money Multiplier refers to the change that happens when an initial deposit leads to a bigger final increase in the total money supply. For example, a commercial bank has deposit liability of $1 million and this leads to a final money supply of $10 million. The money multiplier is 10. The formula for calculating the money multiplier is 1/RR, where RR is the Reserve Ratio. This means that the money multiplier is a function of the reserve ratio.
Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $6,000. In Beta, real GDP per capita is $9,000. Based on the economic growth model, what would you predict about the growth rates in real GDP per capita across these two countries
Answer:
The growth rate of real GDP per capita will be higher in Alpha than it is in Beta
Explanation:
If we are to based on the economic growth model, what I would predict about the growth rates in real GDP per capita across ALPA and BETA is that when both countries are been compared with one another The growth rate of real GDP per capita will be higher in Alpha than it is in Beta because the Alpha real GDP per capita is said to be $6,000 while Beta real GDP per capita is said to be $9,000 which means growth rate of real GDP per capita will be much more higher in Alpha than it is in Beta.
Entries for Stock Dividends Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (250,000 shares authorized; 6,000 shares issued), $75 par, $450,000; Paid-In Capital in excess of par— common stock, $48,000; and Retained earnings, $4,500,000. The board of directors declared a 2% stock dividend when the market price of the stock was $95 a share. Senior Life Co. reported no income or loss for the current year. If an amount box does not require an entry, leave it_______.A1. Journalize the entry to record the dedaration of the dividend, capitalizing an amount equal to market value. Stock Dividends 10,440 Stock Dividends Distributable 7,500 Paid In Capital in Excess of Par Common Stock 3,120 A2. Journalize the entry to record the issuance of the stock certificates. ) Stock Dividends 7,500 Common Stock 7,500.B. Determine the following amounts before the stock dividend was dedared: (1) total paid-in capital, (2) total and retained earning (3) total stockholders' equity. Total paid-in capital 828,000Total retained earnings 6,000,000 Total stockholders' equity 6,828,000C. Determine the following amounts after the stock dividend was dedlared and closing entries were recorded at the end of the year:Total paid-in capitalTotal retained earningsTotal stockholders' equity
Answer:
common stock = 6,000 at $75 par = $450,000
additional paid in capital = $48,000
retained earnings = $4,500,000
market price per stock $95
since the stock dividend is 2% (= 6,000 x 2% = , then we must use the market price to calculate it:
A1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.
Dr Retained earnings 11,400
Cr Common stock dividend distributable 9,000
Cr Additional paid in capital 2,400
A2. Journalize the entry to record the issuance of the stock certificates.
Dr Common stock dividend distributable 9,000
Cr Common stock 9,000
B. Determine the following amounts before the stock dividend was declared:
(1) total paid-in capital = $48,000
(2) total retained earning = $4,500,000
(3) total stockholders' equity = $4,998,000
C. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year:
(1) total paid-in capital = $50,400
(2) total retained earning = $4,488,600
(3) total stockholders' equity = $4,998,000
Ecominus Eliminator Manufacturing produces a chemical pesticide and uses process costing. There are three processing departmentslong dashMixing, Refining, and Packaging. On January 1, the first departmentlong dashMixinglong dashhad no beginning inventory. During January, 48 comma 000 fl. oz. of chemicals were started in production. Of these, 38 comma 000 fl. oz. were completed, and 10 comma 000 fl. oz. remained in process. In the Mixing Department, all direct materials are added at the beginning of the production process, and conversion costs are applied evenly throughout the process. The weightedminusaverage method is used.
At the end of January, the equivalent unit data for the Mixing Department were as follows:
WHOLE UNITS Equivalent Units Equivalent Units
Units to be accounted for Direct Materials Cost Conversion Costs
Completed and transferred out 38,000 38,000 38,000
Ending work-in-process 10,000 10,000 44,00
48,000 48,000 42,400
Percent complete for conversion costs: 44%
In addition to the above, the costs per equivalent unit were $1.35 for direct m conversion costs. Using this data, calculate the full cost of the ending WIP balance in the Mixing Department. The weighted-average method is used.
A) $36,380
B) $13,500
C) $64,800
D) $42,400
Answer:
A) $36,380
INCOMPLETE INFORMATION
The text from the book states:
$1.35 direct materials equivalent unit cost
$5.20 conversion cost equivalent unit cost
Explanation:
We must look at the ending work-in-process line and multiply the above equivalent cost by the units to be accounted for on each category
10,000 units x $ 1.35 materials cost = $ 13,500 material cost
4,400 units x $5.20 conversion cost = $ 22,880 converion cost
total cost 22,880 + 13,500 = 36,380
The evaluation of a firm's strengths, weaknesses, opportunities, and threats is called a SWOT analysis. A SWOT analysis can be a valuable tool in the development of a marketing plan, but too often the SWOT analysis is not well thought out and proves to be an ineffective waste of time. Perhaps the most common mistake when conducting a SWOT analysis is the failure to separate internal issues from external issues. The strengths and weaknesses aspects of the SWOT analysis focus on internal capabilities. The opportunities and threats aspects focus on the external environment. Select the most appropriate category for the descriptors below.1. Post office closings2. JPM has the superior information technology infrastructure3. Increasing demand for international packages4. JPM has an excellent workforce and human resource department5. Potential global economic recession6. JPM has increasing labor costs7. JPM has less fuel-efficient planes8. Increasing fuel costs due to turmoil in the Middle East
Answer: Please refer to Explanation
Explanation:
SWOT ANALYSIS is indeed a very useful matrix for evaluating a firm's strong points.
The Strengths and Weaknesses portion focus on the internal Environment with the Strengths looking at what the company does better than other companies and has a competitive advantage in while weaknesses look at where the company is lacking.
The Threats and Opportunities focus on the External Environment. The Threats refer to any and every potential source of negative effects on the company while Opportunities are the potential chances that a company can capitalise on to make themselves more profitable.
Classifying the above,
1. Post office closings. OPPORTUNITIES
This is because JPM as a Delivery Service can then take over the customers that can no longer use the closed Post Offices.
2. JPM has the superior information technology infrastructure. STRENGTHS.
This is an area that JPM excels in making it a strength.
3. Increasing demand for international packages. OPPORTUNITIES.
This is a chance for JPM to grow as they can capitalise on this increased demand to increase profitability.
4. JPM has an excellent workforce and human resource department. STRENGTH.
JPM has a strength in this area because this is something that they are good at.
5. Potential global economic recession. THREATS.
This is a Threat to JPM as it could potentially affect their business negatively.
6. JPM has increasing labor costs. WEAKNESSES.
This is an internal problem that is a weakness for JPM. Rising labour costs means lower profits so they should be careful.
7. JPM has less fuel-efficient planes. WEAKNESSES.
Less fuel efficient planes means that they burn more fuel to deliver goods around the world so they have more expenses. This is a weakness that needs to be curtailed.
8. Increasing fuel costs due to turmoil in the Middle East. THREATS.
This is a threat because it is from the External Environment but threatens to increase the costs of deliveries for JPM.
Why do you think the value of the Indian rupee declined against that of the U.S. dollar after the U.S. Fed had announced that it would begin to wind down its economic stimulus program
Answer:
Because the United States interest moved up and Indian Rupees depends mostly on the capital from the United States of America.
Explanation:
So, about the Indian rupees there are things we must note; (1). The inflation on Indian Rupees is high, (2). The problem of deficit account by the Rupee.
The two problems mentioned above are the problems that made Indian Rupees to rest or relent mostly on the United States of America Fed's cash flow. So, when U.S. Fed announced that it would begin to wind down its economic stimulus program the value of Indian Rupees DECREASES.
Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy in China. There are now more than 3,700 restaurants in 650 Chinese cities, and KFC has a 40 percent market share of the entire fast-food industry there. Yum! Brands China owns and directly manages about 90 percent of its Chinese stores, so it appears that the company prefers __________ in this market.
Answer:
Direct Investment
Explanation:
DIRECT INVESTMENT can be defined as an investment in which a company, organisation or business owner decide to venture into business with another country which is know as foreign business enterprise in order to acquire and obtain a controlling interest in the enterprise which is why DIRECT INVESTMENT is a way of controlling the ownership of a business in one country by an another entity which is based in another country.
Most Investors use the DIRECT INVESTMENT way to put money into a business operating in another country.
Therefore based on the information given the company prefers DIRECT INVESTMENT method which is why the parent company of KFC has more than 3,700 restaurants in 650 Chinese cities in which the Brands China owns and directly manages about 90 percent of its Chinese stores.
Hence this method is called the DIRECT INVESTMENT method .
The Atlanta Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Atlanta Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Cost Hours $24,000 5,000 $26,100 6,300 $34,700 7,900 $48,000 11,000 $38,300 9,250 What is the cost function
Answer:
Total cost= 4,000 + 4x
x= hours
Explanation:
Giving the following information:
Cost Hours
$24,000 5,000
$26,100 6,300
$34,700 7,900
$48,000 11,000
$38,300 9,250
First, we need to calculate the unitary variable cost and fixed cost. We will use the following formulas:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (48,000 - 24,000) / (11,000 - 5,000)
Variable cost per unit= $4 per unit
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 48,000 - (4*11,000)
Fixed costs= $4,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 24,000 - (4*5,000)
Fixed costs= $4,000
Now, we can express the cost formula:
Total cost= 4,000 + 4x
x= hours
Karla Tanner opens a web consulting business called Linkworks and recorded the following transactions in its first month of operations.
Apr. 1 Tanner invests $80,000 cash along with office equipment valued at $26,000 in the company in exchange for common stock.
Apr. 2 The company prepaid $9,000 cash for twelve months' rent for office space. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 3 The company made credit purchases for $8,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days.
Apr. 6 The company completed services for a client and immediately received $4,000 cash.
Apr. 9 The company completed a $6,000 project for a client, who must pay within 30 days.
Apr. 13 The company paid $11,600 cash to settle the account payable created on April 3.
Apr. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts.
Apr. 22 The company received $4,400 cash as partial payment for the work completed on April 9.
Apr. 25 The company completed work for another client for $2,890 on credit.
Apr. 28 The company paid $5,500 cash in dividends.
Apr. 29 The company purchased $600 of additional office supplies on credit.
Apr. 30 The company paid $435 cash for this month's utility bill.
Descriptions of items that require adjusting entries on April 30, 2015, follow.
a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1.
c) Office supplies on hand as of April 30 total $1,200.
d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
e) The company has completed work for a client, but has not yet billed the $1,800 fee.
f) Wages due to employees, but not yet paid, as of April 30 total $2,600.
Use the 3-step adjusting entry process to prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred:
Step 1: Determine what the current account balance equals (See General Ledger tab)
Step 2: Determine what the current account balance should equal.
Step 3: Prepare an adjusting entry to get from Step 1 to Step 2.
Generally Accepted Accounting Principles (GAAP):
The GAAP is a blend of recommendations from government bodies and widely accepted accounting principles for reporting information. It promotes openness in the exchange of economic data and makes clear and consistent financial reporting possible across organizations.
Answer:
a) On April 2, the company prepaid $9,000 cash for twelve months' rent for office space.
Step 1:
Prepaid rent $9,000
Step 2:
Prepaid rent $9,000 - $750 = $8,250
Step 3:
Dr Rent expense 750
Cr Prepaid rent 750
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy; the policy's coverage began on April 1.
Step 1:
Prepaid insurance $2,400
Step 2:
Prepaid rent $2,400 - $200 = $2,200
Step 3:
Dr Insurance expense 200
Cr Prepaid expenses 200
c) Office supplies on hand as of April 30 total $1,200.
Step 1:
Office supplies $3,600 + $600 = $4,200
Step 2:
Office supplies $4,200 - $3,000 = $1,200
Step 3:
Dr Office supplies expense 3,000
Cr Office supplies 3,000
d) Straight-line depreciation of office equipment, based on a 5-year life and a $4,000 salvage value, is $500 per month.
Step 1:
Office equipment $26,000 + $8,000 = $34,000
Step 2:
Office supplies $34,000 - $500 = $33,500
Step 3:
Dr Depreciation expense 500
Cr Accumulated depreciation - equipment 500
e) The company has completed work for a client, but has not yet billed the $1,800 fee.
Step 1:
Service revenue $4,000 + $6,000 + $2,890 = $12,890
Step 2:
Service revenue $12,890 + $1,800 = $14,690
Step 3:
Dr Accrued receivable 1,800
Cr Service revenue 1,800
f) Wages due to employees, but not yet paid, as of April 30 total $2,600.
Step 1:
Wages expense $0
Step 2:
Wages expense $0 + $2,600 = $2,600
Step 3:
Dr Wages expense 2,600
Cr Wages payable 2,600
Assume that a parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000. The excess of total fair value of controlling and noncontrolling interests over book value is assigned to; a building (PPE net) that is worth $100,000 more than book value, an unrecorded patent valued at $200,000 and goodwill valued at $300,000. Goodwill is assigned proportionately to the controlling and noncontrolling interests
Submission Requirements:
Using the ACT470_Mod03-Option01.xlsx Excel spreadsheet in the Module 3 folder:
Prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is an [E] or [A] entry.
Use Excel formulas to derive the Consolidated column amounts and totals.
Using the "Home" key in Excel, go to the "Styles" area and highlight the [E] and [A] entry cells in different shades.
Consolidation Entries
Parent Subsidia Dr Cr Consolidated
Cash 920,000 215,000 0
Accounts receivable 782,000 330,000 0
Inventory 1,100,000 425,000 0
Equity investment 1,078,000 0
Property, plant and equipment (PPE), net 5,400,000 800,000
Patent 0
Goodwill 0
Total assets 9,280,000 1,770,000 0
Current liabilities 810,000 330,000 0
Long-term liabilities 4,000,000 500,000
Common stock 920,000 90,000 0
Additional paid-in capital 700,000 120,000 0
Retained earnings 2,850,000 730,000 0
Noncontrolling interest 0
Total liabilities and equity 9,280,000 1,770,000 0
Answer:
Explanation:
The objective here is to prepare the consolidated balance sheet at the date of acquisition by placing the appropriate entries in their respective debit/credit column cells.
To do that; We need to find both Consolidation entries and Consolidation Spreadsheet on the acquisition date from the given data set from the question.
From the question:
A parent company acquires a 70% interest in a subsidiary for a purchase price of $1,078,000.
Consideration paid by the parent company for 70% share $10,78,000
Non Control Interest fair Value (30%) $ 4,62,000
Total fair value of subsidiary on the acquisition date $15,40,000
Less: Book value subsidiary on the acquisition date
Common Stock 90,000
APIC 1,20,000
Retained earnings 7,30,000 $9,40,000
Fair value in excess of book value $6,00,000
Excess fair value allocated to:
undervalued building $1,00,000
unrecorded patent $2,00,000
Goodwill $3,00,000
Balance $0
Consolidation entries and Consolidation Spreadsheet on the acquisition date are being embedded in the word document attached below due to vast columns of table sets that this answering box cannot contain.
Grouper Company issued $612,000 of 10%, 20-year bonds on January 1, 2020, at 102. Interest is payable semiannually on July 1 and January 1. Grouper Company uses the effective-interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%.
Prepare the journal entries to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(a) The issuance of the bonds.
(b) The payment of interest and related amortization on July 1, 2020.
(c) The accrual of interest and the related amortization on December 31, 2020.
Answer:
Bond issue:
Dr cash $624,240.00
Cr bonds payable $612,000
Cr premium on bonds payable($624,240.00-$612,000) $ 12,240
On 30 June:
Dr Interest expense $30,495.68
Dr premium on bonds payable $104.32
Cr cash $30,600
On 31 December :
Dr interest $ 30,490.59
Dr premium on bonds payable($30,600-$30,490.59) $109.41
Cr interest payable $30,600
Explanation:
The cash proceeds from the bond issuance is 102% of the face value of $612,000 i.e $ 624,240.00 (102%*$612,000)
The interest payment on 30 June=$612,000*10%*6/12=$30,600.00
The interest expense on 30 June=$ 624,240.00*9.7705%*6/12=$30,495.68
amortization of premium=$30,600.00-$ 30,495.68=$104.32
Carrying value of bond at 30 June=$ 624,240.00+$30,495.68 -$30,600=$624,135.68
Interest expense on 31 December=$ 624,135.688*9.7705%*6/12=$30,490.59
Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase orders, sales invoices and suppliers’ invoices to prepare journal vouchers for general ledger entries. Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, he reconciles the subsidiary accounts to their control accounts in the general ledger to ensure they balance. Discuss the internal control weaknesses and risks associated with the above process. (10 marks 300 words)
Answer:
Olive Limited
1) Internal Control Weaknesses: Richard Palm is just an accounting clerk and obviously there is a lack of qualification for him to single-handedly complete his work without supervision. He handles the whole processes of identifying source documents, the accounts involved, and their correctness, preparing the journal, posting to the ledgers, and leger accounts reconciliation. This shows that there is no segregation of duties. There is no personnel that authorizes or reviews Richard's accounting processes. He engages in self-review (reconciliation) of his work.
2) The risks associated with Richard's process are:
a) Richard lacks the required professional experience and qualification to handle most of his work alone. Thus, the risk of misstatement of financial statement elements is high.
b) Since Richard works without appropriate supervision, there is an increased risk of fraudulent behaviors. Richard could post fictitious invoices to the accounting records.
c) Without separation of duties, a single individual handles a transaction from the beginning to the end. This does not augur well for internal controls, which can be easily compromised.
d) Designated managers should be required to authorize certain types of transactions to add an extra layer of responsibility to accounting records. This also proves that transactions have been seen, analyzed, and approved by appropriate authorities. The requirement that large payments and expenses be approved by specific managers stop unscrupulous employees from making large fraudulent transactions with company funds, for example.
e) Richard also self-reviews his work. Thus, it may be difficult for him to identify errors of misstatement. An invoice could be posted more than once in the accounting records without being identified.
Explanation:
Internal controls are business processes that provide reasonable assurance so that several key business objectives are met, processes are operating efficiently, the financial reporting is reliable, and that the business is in compliance with applicable regulations and internal procedures.
Weaknesses occur when there is an absence of internal controls or the controls are not being operated as specified or the control objectives are not being achieved. When any of these are prevalent, risks arise. The risks may lead to intentional and unintentional financial statement misstatements or fraudulent practices.
Someone is retiring next year.What would be an appropriate amount of risk to take with their investments?
Goodwill should:________.
a. be written off as soon as possible against retained earnings.
b. absent impairment, not be written off because it has an indefinite life.
c. written off as soon as possible as an expense.
d. amortized over a maximum of forty years.
Answer:
d.amortized over a maximum of forty years
Sammy's Shovels had sales of $ 90,880 in 2010. The cost of goods sold was $ 34,863 , operating expenses (excluding depreciation) were $ 11,490 , interest expenses were $ 1,317 , depreciation expense was $ 7,961 , and dividends paid were $ 3,415 . The firm's tax rate is 27 percent. What did Sammy's Shovels report as net income (or, net profit) in 2010
Answer: $25731.77
Explanation:
The attached picture explains the way to solve the question. It would be noted that the expenses like the operating, depreciation, interest expense and the cost of good sold were all subtracted from the sales revenue.
Then the income before tax was $35249. Then the tax expense of 27% was deducted.
Income Tax expense = 27% of $35249 = $9517.23
Net profit = $35249 - $9517.23 = $25731.77
The net profit for Sammy Shovels is $25731.77.
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?a) Bev's total explicit costs are $25,300.
b) Bev's total implicit costs are $300.
c) Bev's accounting profits exceed her economic profits by $300.
d) Bev's economic profit is $4,700.
Answer:
Bev's total explicit costs are $1000
Bev's total implicit costs are $25,300
Bev's accounting profits exceed her economic profits by $25,300
Bev's economic profit is $3,700.
Explanation:
Accounting profit is total revenue less total explicit cost.
Explicit cost is actual cost incurred.
Accounting profit = Total revenue - Total explicit cost
Total explicit cost = $1,000
Total revenue = $30,000
Accounting profit = $30,000 - 1,000 = $29,000
Economic profit is accounting profit less implicit cost or opportunity cost.
Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
Implicit cost = $300 + $25,000 = $25,300
Economic profit = $29,000 - $25,300 = $3,700
I hope my answer helps you
When a project has a "hard gate," like being ready on time, how does that affect normal success criteria? Is it fair to judge a project with a critical completion date by normal project success standards? Why or why not?
Explanation:
The issue that determines the success of a project is usually attributed to managing the scope of the project. Therefore, in some projects, the deadline for completion is not necessarily the most fundamental criterion that will incur your success.
Every project has a defined deadline for the beginning and the end, so the project management must be planned so that the time is sufficient for the execution of its tasks that will lead to the achievement of the objectives and goals.
Therefore, it is not fair to judge a project with a critical completion date, due to the fact that the project was developed and controlled so that success was related to other more important variables for such a project, not only time, but also its effectiveness , cost-benefit, quality, costs, etc.
