Match the measurement bases with its definition. Definition Measurement Bases A. Amount of cash (or equivalent) that would be required if the asset were acquired currently. 5. Current market value B. Amount of cash (or equivalent) that would be received by selling the asset in an orderly liquidation. Liabilities may also be measured at current market value. 3. Net realizable value C. Amount of cash (or equivalent) that is paid to acquire the asset. In the case of a liability, this measurement base is the amount of cash (or equivalent) that is received when the obligation was incurred. This measurement base may change over the life of the asset/liability if it is adjusted for depreciation or amortization. 2. Current cost D. Amount of cash (or equivalent) that is expected to be received in exchange for an asset less the direct costs of the disposal. In the case of a liability, it is the amount of cash (or equivalent) expected to be paid to liquidate the obligation, including any direct costs of liquidation. 4. Present value of future cash flows E. Discounted net cash flows expected to be received on exchange of an asset, or paid out in the case of a liability. ▼
Answer and Explanation:
The matching is given below:
1. Historical cost: Historical cost is the cost that should be shown in the balance sheet. It is known as the real cost or original cost
hence, the correct option is C
2. Current cost: The current cost is the cost that should be incurred for the acquisition of an asset
Therefore the correct option is A
3. Net realizable value: The net realizable value is the value that could be determined by deducting any direct cost from the sale value also it would be use for pay off the liabilities
Therefore the correct option is D
4. Present value of future cash flows: The present value would be discounted at the particular rate of the market
Therefore the correct option is E.
5. Current market price: The amount of money that would be received when the asset is sold
Hence, the correct option is B.
A homeowner in a sunny climate has the opportunity to install a solar water heater in his home for a cost of $2,481. After installation the solar water heater will produce a small amount of hot water every day, forever, and will require no maintenance. How much must the homeowner save on water heating costs every year if this is to be a sound investment
Answer:
the question is missing the discount or interest rate that we must use to calculate the answer.
for example, if the interest rate is 5% per year, then this would be a good investment if the homeowner can save $2,481 x 5% = $124.05 per year.
but if the interest rate is 8%, then the homeowner would need to save at least $2,481 x 8% = $198.48 per year.
On January 1, 2021, Doty Co. redeemed its 15-year bonds of $7,000,000 par value for 102. They were originally issued on January 1, 2009 at 92 with a maturity date of January 1, 2024. Doty amortizes discounts and premiums using the straight-line method. What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)
Answer:
$252,000
Explanation:
Calculation for What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)
Bonds redemption=[($7,000,000*1.02)-$7,000,000]+[(100%-92%*$7,000,000)-((100%-92%*$7,000,000)/15 years*12)]
Bonds redemption=[($7,140,000-$7,000,000]+[(8%*$7,000,000)-((8%*$7,000,000)/15 years*12)]
Bonds redemption=[($7,140,000-$7,000,000]+[(8%*$7,000,000)-((8%*$7,000,000)/15 years*12)]
Bonds redemption=$140,000+[(560,000-($560,000/15 years*12)]
Bonds redemption=$140,000+[(560,000-$448,000)]
Bonds redemption=$140,000+$112,000
Bonds redemption=$252,000
Therefore What amount of loss that Doty should recognize on the redemption of these bonds (ignore taxes) is $252,000
. If Carissa Dalton has a $130,000 home insured for $100,000, based on the 80 percent coinsurance provision, how much would the insurance company pay on a $5,000 claim
Answer:
$4,807.69
Explanation:
The first step is to calculate the requirement for coinsurance
= 80/100 × 130,000
= 0.8× 130,000
= 104,000
Therefore the amount in which the insurance person will pay can be calculated as follows
= 100,000/104,000 × 5000
= 0.96153×5000
= $4,807.69
Executives identified _______ as the most important driver in creating an innovative culture.
Index numbers make it possible to compare
Answer:
Different variable in relative forms
Explanation:
Index numbers allow to compare the relative values of different values.
To do so, an index is made by equating a value to a base value, usually a value of 100, and other variables that are to be compared with the index value are expressed in terms of how different or far they are from the base value.
For example, suppose that inflation for year 1 is 4%, and this is indexed to be the base value 100. If inflation for year 2 is 8%, then, the inflation value is 200 in terms of the index, or twice as much as the value of the base year.
Please calculate the Net Present Value for the following scenario:
Today End of Year 1 End of Year 2 End of Year 3 End of Year 4
Outflow (investment) 2000
Inflow (return) 300 350 400 450
Discount rate-14%
Annual compounding at the end of the year (do not use your calculator's annuity due function)
Answer:
-$931.35
Explanation:
The computation of the net present value is given below:
Before that the present value is
Year Amount Discount factor at 14% Present value
1 $300 .877 $263.1
2 $350 .769 $269.15
3 $400 .675 $270
4 $450 .592 $266.4
PV of Cash Inflows = $1,068.65
And, the initial investment is $2,000
So, the net present value is
= The present value of Cash inflows - initial investment
= $1,068.65 - $2,000
= -$931.35
The computation of the net present value is:
-$931.35The computation of the net present value is given below:
Year Amount Discount factor at 14% Present value
1 $300 0.877 $263.1
2 $350 0.769 $269.15
3 $400 0.675 $270
4 $450 0 .592 $266.4
The Net Present Value for the following scenario will be -$931.35.
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When implementing an ethics code, it is important to share it with all
because pressure to act unethically often comes from the outside.
The answer is stakeholders.
Assume the following data for a country: Category Number of People, Millions Total population 500 Population under 16 years of age or institutionalized 120 Not in the labor force 150 Unemployed 23 Part-time workers looking for full-time jobs 10 Instructions: Enter your answers as a whole number. a. What is the size of the labor force
Answer:
230 people
Explanation:
a. What is the size of the labor force
The labor force is the sum of the number of employed and unemployed, unemployed meaning people who lack employment, but who want to work, and are looking for a job.
First we substract the people that is not in the labor force, and those under 16 years of age from the total population: 500 - 120 - 150 = 230.
Of this figure, 150 people are unemployed, 23 are part time workers looking for full time employment (they are employed), and the rest: are 57 employed people.
So the size of the labor force is effectively 230 people.
Given the following, calculate total manufacturing costs: Direct materials: $40,000; Direct labor: $100,000; Manufacturing overhead applied: $120,000; Beginning Work in process inventory: $30,000; Ending Work in process inventory: $12,000 Multiple choice question.
Answer:
cost of goods manufactured= $278,000
Explanation:
Giving the following information:
Direct materials: $40,000
Direct labor: $100,000
Manufacturing overhead applied: $120,000
Beginning Work in process inventory: $30,000
Ending Work in process inventory: $12,000
To calculate the total manufacturing costs, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 30,000 + 40,000 + 100,000 + 120,000 - 12,000
cost of goods manufactured= $278,000
Kostelnik Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $488,400, variable manufacturing overhead of $2.70 per machine-hour, and 74,000 machine-hours. The company has provided the following data concerning Job A496 which was recently completed: Number of units in the job 20 Total machine-hours 80 Direct materials $ 930 Direct labor cost $1,860 The unit product cost for Job A496 is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice
Answer:
Unitary cost= $176.7
Explanation:
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (488,400/74,000) + 2.7
Predetermined manufacturing overhead rate= $9.3
Now, we can determine the total cost for Job A496:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Total cost= 930 + 1,860 + (9.3*80)
Total cost= $3,534
Finally, the unitary cost:
Unitary cost= 3,534/20
Unitary cost= $176.7
g Assume you are given the following relationships for the Haslam Corporation: Sales/total assets1.6 Return on assets (ROA)4% Return on equity (ROE)7% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: %
Answer:
Profit margin % = 2.5%, Liabilities-to-assets ratio % = 42.86%
Explanation:
Profit margin % = Return on assets (ROA)/(Sales/total assets)
Profit margin % = 4% / 1.6
Profit margin % = 0.025
Profit margin % = 2.5%
Liabilities-to-assets ratio % = 1 - ROA/ROE
Liabilities-to-assets ratio % = 1 - 4%/7%
Liabilities-to-assets ratio % = 1 - 0.57143
Liabilities-to-assets ratio % = 0.42857
Liabilities-to-assets ratio % = 42.86%
Larkspur Corporation was organized on January 1, 2020. It is authorized to issue 10,900 shares of 8%, $100 par value preferred stock, and 507,800 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.
Jan. 10 Issued 80,990 shares of common stock for cash at $7 per share.
Mar. 1 Issued 5,280 shares of preferred stock for cash at $110 per share.
Apr. 1 Issued 24,410 shares of common stock for land. The asking price of the land was $90,500; the fair value of the land was $80,990.
May 1 Issued 80,990 shares of common stock for cash at $9 per share.
Aug. 1 Issued 10,900 shares of common stock to attorneys in payment of their bill of $53,200 for services rendered in helping the company organize.
Sept. 1 Issued 10,900 shares of common stock for cash at $11 per share.
Nov. 1 Issued 1,090 shares of preferred stock for cash at $114 per share.
Required:
Prepare the journal entries to record the above transactions.
Answer:
Larkspur Corporation
Journal Entries:
Jan. 10:
Debit Cash Account $566,930
Credit Common Stock $80,990
Credit APIC - Common Stock $485,940
To record the issue of 80,990 common stock shares for cash at $7 per share.
Mar. 1:
Debit Cash Account $580,800
Credit Preferred Stock $528,000
Credit APIC - Preferred Stock $52,800
To record the issue of 5,280 preferred stock shares for cash at $110 per share.
Apr. 1:
Debit Land $80,990
Credit Common Stock $24,410
Credit APIC - Common Stock $56,580
To record the issue of 24,410 common stock shares for land.
May 1:
Debit Cash Account $728,910
Credit Common Stock $80,990
Credit APIC - Common Stock $647,920
To record the issue of 80,990 common stock shares for cash at $9 per share.
Aug. 1:
Debit Attorney Fees $53,200
Credit Common Stock $10,900
Credit APIC - Common Stock $42,300
To record the issue of 10,900 common stock shares for attorney services rendered in helping the company organize.
Sept. 1:
Debit Cash Account $119,900
Credit Common Stock $10,900
Credit APIC - Common Stock $109,000
To record the issue of 10,900 common stock shares for cash at $11 per share.
Nov. 1:
Debit Cash Account $124,260
Credit Preferred Stock $109,000
Credit APIC - Preferred Stock $15,260
To record the issue of 1,090 shares of preferred stock for cash at $114 per share.
Explanation:
a) Data and Calculations:
Authorized share capital:
10,900 shares of 8%, $100 par value preferred stock
507,800 shares of no-par common stock with a stated value of $1 per share
b) In this case, some shares were issued above the their par values. This gives rise to the creation of a capital account called Additional Paid-in Capital (APIC). This account records the difference between the par value of shares and the issue prices.
According to safety protocols, what should be Paula’s next course of action?
She should attempt to fix the mesh screen on the electric stacker.
She should inspect all of the machines in the warehouse.
She should inform her manager of the problem with the equipment.
She should make sure to wear the proper safety gear while using the stacker.
Answer:
c) she should inform her manager of the problem
Explanation:
Answer: c) she should inform her manager of the problem
Explanation: Got a 100
Blue Ridge Hot Tubs manufactures and sells two models of hot tubs: the Aqua-Spa and the HydroLux. Howie Jones, the owner and manager of the company, needs to decide how many of each type of hot tub to produce during his next production cycle. Howie buys prefabricated fiberglass hot tub shells from a local supplier and adds the pump and tubing to the shells to create his hot tubs. (This supplier can deliver as many hot tub shells as Howie needs.) Howie installs the same type of pump for both hot tubs. He will have only 200 pumps available during his next production cycle. From a manufacturing standpoint, the main difference between the two models of hot tubs is the amount of tubing and labor required. Each Aqua-Spa requires 9 hours of labor and 12 feet of tubing. Each Hydro-Lux requires 6 hours of labor and 16 feet of tubing. Howie expects to have 1,566 production labor hours and 2,880 feet of tubing available during the next production cycle. Howie earns a profit of $350 on each Aqua-Spa he sells and $300 on each Hydro-Lux he sells. He is confident that he can sell all the hot tubs he produces. The question is, how many Aqua-Spas and Hydro-Luxes should Howie produce if he wants to maximize his profits during the next production cycle
Answer:
Using Excel solver, the optimal solution is: 122 Aqua-Spa + 78 Hydro-Lux, and the maximum profit = $66,100
Explanation:
you have to maximize the following equation: 350A + 300H
where:
A = number of Aqua-Spa hot tubs sold
H = number of Hydro-Lux hot tubs sold
the constraints are:
A + H ≤ 200 ⇒ number of water pumps available
9A + 6H ≤ 1,566 ⇒ number of labor hours available
12A + 16H ≤ 2,880 ⇒ number of feet of tubing available
A ≥ 0 ⇒ non-negative numbers
B ≥ 0 ⇒ non-negative numbers
both A and B are integers
Using Excel solver, the optimal solution is: 122A + 78B, and the maximum profit = $66,100
The financial statements of Walgreen Co. reported the following information (in millions): Year 2 Year 1 Cost of sales $51,098 $51,291 Inventories, net 6,852 7,036 The average inventory days outstanding in year 2 is: Group of answer choices 55.6 days 33.9 days 21.5 days 49.6 days
Answer:
49.6 days
Explanation:
The average inventory days outstanding is an example of an activity ratio. Activity ratios measures the efficiency with which comapnies carry out their daily tasks
The average inventory days outstanding = number of days in a period / inventory turnover
inventory turnover = cost of goods sold / average inventory
Average inventory = (6,852 + 7,036 ) / 2 = 6944
$51,098/ 6944 = 7.365
365/ 7.365= 49.6 days
State two goals you hope to achieve through applying your coursework this term to your workplace experience
Incomplete question. I answered from a general working perspective.
Answer:
1. communication skill improvement
2. time management skill improvement
Explanation:
1. Note, in virtually every work environment today, effective communication is key to achieve the objectives of the organization. Therefore, it is important to know;
what to say,how to say it,when to say it, andwho to say it to.2. Having time management skills is vital in today's fast pace work environment. Therefore, applying the coursework to gaining this skill-set is surely worth commendation.
Suppose that the current exchange rate is €0.80 = $1.00. The direct quote, from the U.S. perspective is Group of answer choices €0.80 = $1.00. £1.00 = $1.80. None of the answers provided. €1.00 = $1.25.
Answer:
the direct quote from U.S. perspective is 1 Euro is $1.25
Explanation:
The computation of the direct quote from the U.S perspective is
Given that
Euro 0.80 = $1
Now
1 Euro = 1 ÷ 0.80 $
So,
1 Euro = $1.25
Hence, the direct quote from U.S. perspective is 1 Euro is $1.25
Guiding, teaching, and supervising employees are activities associated with: Group of answer choices staffing. leading. organizing. controlling.
Answer:
b. leading
Explanation:
Leading is an activity that requires conceptual skills from an individual to guide, teach and supervise employees.
For a company to succeed and position itself in the market, it is necessary that leadership is based on ethical values that help in creating an organizational culture favorable to the development of each employee, and other essential skills, such as knowing how to communicate, offer assistance, provide feedback, understand each worker profile, in order to guide the work towards the achievement of objectives and goals.
An effective leader is one who, through his own examples as a professional, manages to motivate employees to be more productive and satisfied with their work.
What is the primary goal of the regulations announced in this press release?
A. To reduce the cost of air travel for consumers
B. To strengthen existing consumer protections
C. To limit airlines’ access to the factor market
D. To decrease scarcity in the travel industry
To reduce the cost of air travel for consumers is the primary goal of the regulations announced in this press release.
What are consumers?A consumer is a person or a group that is not directly involved in entrepreneurial or business operations and who intends to order or uses purchased items, products, or services primarily for personal, social, family, or household needs.
The phrase is most frequently used to describe someone who makes purchases for their own use. A consumer in an economy purchases goods or services primarily for personal use rather than for resale or for commercial objectives.
The price that consumers pay for the goods or services is followed by consumption. As a result, consumers are an essential component of any economy and play a crucial role in the economic system of a capitalist society. The consumer is also at one end of the supply chain.
When it comes to consumer protection regulations, the legal definition of the term "consumer" is typically limited to live individuals and excludes commercial users.
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value of all goods made within a county
Answer:
GDP can be measured by adding either consumption and investment, the value of final goods or total income
Explanation:
Explanation:
Gross Domestic Product, or GDP, is the sum total of all the goods and services produced within a country. It's used to compare economic performance between countries. GDP can be measured by adding either consumption and investment, the value of final goods or total income.
Types of Gross Domestic Product (GDP)
Real Gross Domestic Product. Real GDP is the GDP after inflation has been taken into account.
Nominal Gross Domestic Product. Nominal GDP is the GDP at current prices (i.e. with inflation).
Gross National Product (GNP) ...
Net Gross Domestic Product.
GDP DEFINITION. Gross Domestic Product (GDP) measures the total market value of all final goods and services produced within a country in one year.
An entrepreneur has an idea for a new product in the technology industry. The product will require an initial investment to develop, manufacture, market, and distribute the product. While the product has unique applications that are not currently available to consumers, the industry has barriers to entry in terms of consumer brand loyalty, manufacturing, and product distribution. The entrepreneur is trying to decide what type of business organization to create for the production and sale of the product.
For which goal would the entrepreneur be BEST served by choosing to start a corporation rather than a sole proprietorship or partnership?
A
raising capital for manufacturing and distribution
B
maintaining control over product development
C
getting the product to market quickly
D
minimizing the long-term tax burden
Answer:
A raising capital for manufacturing and distribution
Explanation:
the greatest advantage of a corporation is that the entrepreneur can raise funds from a lot of different investors. Anyone that purchases stock form the company is investing money and helping the entrepreneur raise capital. If the project requires a lot of capital, the best way is to form a corporation. A sole-proprietorship or a partnership have limited sources for raising capital, plus the unlimited liability does not help either.
Accounting definition?
Answer:
Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations.
Explanation:
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Session Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 70,000 Total fixed manufacturing overhead cost $511,000 Variable manufacturing overhead per direct labor-hour $ 2.10 Recently, Job K913 was completed with the following characteristics: Total direct labor-hours 150 Direct materials $ 705 Direct labor cost $4,650 The total job cost for Job K913 is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice
Answer:
Total cost= $6,765
Explanation:
Giving the following information:
Total direct labor-hours 70,000
Total fixed manufacturing overhead cost $511,000
Variable manufacturing overhead per direct labor-hour $ 2.10
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (511,000/70,000) + 2.1
Predetermined manufacturing overhead rate= $9.4 per direct labor hour
Job K913:
Total direct labor-hours 150
Direct materials $ 705
Direct labor cost $4,650
Total cost= 705 + 4,650 + (150*9.4)
Total cost= $6,765
The King Corporation has total annual revenue of $800,000; expenses other than depreciation of $350,000; depreciation expense of $200,000 for tax purposes; and depreciation expense of $130,000 for reporting purposes. T he tax rate is 34%. Calculate net income for reporting purposes and for tax purposes. What is the deferred tax liability
Answer:
Results are below.
Explanation:
First, we will determine the net income for tax purposes:
Sales= 800,000
Expenses other than depreciation= (350,000)
Gross profit= 450,000
Depreciation= (200,000)
EBT= 250,000
Tax= (250,000*0.34)= (85,000)
Depreciation= 200,000
Net income= 365,000
Now, for reporting purposes:
Gross profit= 450,000
Depreciation= (130,000)
EBT= 320,000
Tax= (320,000*0.34)= (108,800)
Depreciation= 130,000
Net income= 341,200
Carlton Company uses the percent of sales method to estimate its bad debt expense. Based on past experience, the company estimates 2 percent of credit sales to be uncollectible. At the end of the current year, the company's unadjusted trial balance shows Accounts Receivable of $245,000 and Credit Sales of $900,000.
Required:
Prepare the necessary December 31 adjusting entry.
Answer:
Dr Bad debt expense 18,000
CrAllowance for doubtful accounts 18,000
Explanation:
Preparation of the necessary December 31 adjusting entry.
Based on the information given if the the company estimated 2 percent of credit sales to be uncollectible in which the Credit Sales was the amount of $900,000 which means that the necessary December 31 adjusting entry will be :
Dr Bad debt expense 18,000
CrAllowance for doubtful accounts 18,000
(2%*$900,000)
Which of the following taxpayers may file as a head of household in 2019?Marco provides all o f the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco pays the rent and other expenses for the apartment and properly claims his mother as a dependent.Tammy provides over one-half the support for her 18-year old brother, Dan. He earned $4,200 in 2019 working at a fast-food restaurant and is saving his money to attend college in 2020. Dan lives in Tammy's home.Juan's wife left him late in December of 2018. No legal action was taken and Juan has not heard from her in 2019. Juan supported his 6-year-old son, who lived with him throughout 2019.a. Tammy onlyb. Juan onlyc. Marco and Juan onlyd. Marco, Tammy, and Juan
Answer:
d. Marco, Tammy, and Juan
Explanation:
For someone to be qualified for head-of-household tax filing status, There are some criteria that is usually put into consideration such as;
✓ The person should be considered unmarried.
✓ The person should file a separate
individual tax return.
✓ The person must be paying for more than half of expenses in that household.
✓The person must Considered having a dependent which could be a qualifying child.
1)In the case of the question, we were told that
Marco provides all o f the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco pays the rent and other expenses for the apartment and properly claims his mother as a dependent.
HINTS: Here we can see that His mother is dependent on him, paying more of the expenses needed in the house
2)Tammy provides over one-half the support for her 18-year old brother, Dan. He earned $4,200 in 2019 working at a fast-food restaurant and is saving his money to attend college in 2020. Dan lives in Tammy's home.
Hint:Here we can see that Tammy provides over one-half the support for his dependent brother, he's working , paying over one-half the of house expenses
3)Juan's wife left him late in December of 2018. No legal action was taken and Juan has not heard from her in 2019. Juan supported his 6-year-old son, who lived with him throughout 2019.
HINTS: Juan is not with his wife, he's having a dependent which is his 6-year-old son, and he is responsible for expenses.
Winston Company estimates that the factory overhead for the following year will be $844,800. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 35,200 hours. The total machine hours for the year were 54,600 hours. The actual factory overhead for the year was $1,329,000. Enter the amount as a positive number. a. Determine the total factory overhead amount applied.
Answer:
Missing word "b. Calculate the over or under applied amount for the year. c. Prepare the journal entry to close factory overhead into Cost of Goods Sold."
Predetermined Overhead Rate = $844,800 / 35,200
Predetermined Overhead Rate = $24 per machine hour
a. Total Factory Overhead Applied = $24 * 54,600 hours = $1,310,400
b. Under-applied Overhead = $1,329,000 - $1,310,400 = $18,600
c. Journal Entry
Cost of Goods Sold Dr. $18,600
To Manufacturing Overhead Cr. $18,600
Majid Corporation sells a product for $140 per unit. The product's current sales are 41,200 units and its break-even sales are 32,370 units. What is the margin of safety in dollars
Answer:
the margin of safety in dollars is $1,236,200
Explanation:
The computation of the margin of safety in dollars is shown below:
= Total sales - break even sales
= (41,200 units - 32,370 units) × $140 per unit
= $1,236,200
We simply deduct the break even sales from the total sales so that the margin of safety in dollars come
Hence, the margin of safety in dollars is $1,236,200
On May 3, it was discovered that the following errors took place in journalizing and posting transactions: a. Insurance of $16,000 paid for the current year was recorded as a debit to Insurance Expense and a credit to Prepaid Insurance. b. A withdrawal of $9,600 by Brian Phillips, owner of the business, was recorded as a debit to Wages Expense and a credit to Cash. Journalize the entries on May 3 to correct the errors. Use two entries to correct the error described in a. (That is, record an entry to reverse the incorrect entry and a second entry to record the correct entry.) Refer to the Chart of Accounts for exact wording of account titles. Journalize the entries on May 3 to correct the errors. Use two entries to correct the error described in a. (That is, record an entry to reverse the incorrect entry and a second entry to record the correct entry.) Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Journal Entries on May 3:
a. Debit Prepaid Insurance $16,000
Credit Insurance Expense $16,000
To reverse the error.
Debit Insurance Expense $16,000
Credit Cash Account $16,000
To correct the error.
b. Debit Drawings $9,600
Credit Wages Expense $9,600
To correct the error.
Explanation:
a) Data:
1. Insurance expense credited to Prepaid Insurance, instead of Cash account = $16,000
2. Drawings by Brian Phillips, the owner of the business recorded as Wages Expense.
b) The journal can also be used to correct errors in posting transactions. The process can involve first reversing the error and then correcting it, as done with case (a). This will involve using two entries. It can also involve simply involve correcting the error without reversion, as done with case (b).
