Answer:
a. $77
b. $101
c.Income statement for the month using the contribution format and the variable costing method.
Sales ( $122 × 8,200) 1,000,400
Less Cost of Sales
Opening Stock 0
Add Cost of Goods Manufactured (8,300× $77) 639,100
Less Closing stock ( 100 × $77) (7,700) (631,400)
Contribution 369,000
Less Expenses
Fixed manufacturing overhead ($199,200)
Variable selling and administrative ($7×8,200) (57,400)
Fixed selling and administrative ($106,600)
Net Income / (Loss) 5,800
d.Income statement for the month using the absorption costing method.
Sales ( $122 × 8,200) 1,000,400
Less Cost of Sales
Opening Stock 0
Add Cost of Goods Manufactured (8,300× $101) 838,300
Less Closing stock ( 100 × $101) (10,100) (828,200)
Contribution 172,200
Less Expenses
Variable selling and administrative ($7×8,200) (57,400)
Fixed selling and administrative ($106,600)
Net Income / (Loss) 8,200
e.Reconcile the variable costing and absorption costing operating incomes for the month
Absorption Costing Net Profit 8,200
Add Fixed Costs in Opening Stock 0
Less Fixed Costs in Closing Stock (100 × $24) (2,400)
Variable Costing Net Profit 5,800
Explanation:
Product Cost (Variable Costing) = All Variable Manufacturing Costs
= $27 + $46 + $4
= $77
Product Cost (Absorption Costing) = All Variable Manufacturing Costs + All Fixed Manufacturing Costs
= $77 + ($199,200/8,300)
= $77 + $24
= $101
Income Statements
Non Manufacturing Costs are treated as a Periodic Cost in Absorption Costing Income Statement
Whilst Both Fixed Manufacturing Costs and Non Manufacturing Costs are treated as a Periodic Cost in Variable Costing Income Statement.
Reconciliation
The difference in Profit is due to Fixed Cost component absorbed in Absorption Costing.
Why would the Lana Limited Corporation decide to issue stocks?
Rough Stuff makes 2 products: khaki shorts and khaki pants for men. Each product passes through the cutting machine area, which is the chief constraint during production. Khaki shorts take 15 minutes on the cutting machine and have a contribution margin per pair of shorts of $16. Khaki pants take 24 minutes on the cutting machine and have a contribution margin per pair of pants of $32. If it is assumed that Rough Stuff has 4,800 hours available on the cutting machine to service a minimum demand for each product of 3,000 units, how much will profits increase if 100 more hours of machine time can be obtained?
Answer:
$8,000
Explanation:
khaki shorts khaki pants
machine minutes per unit 15 24
contribution margin per unit $16 $32
CM per machine minute $1.067 $1.33
minimum demand 3,000 3,000
machine minutes required 45,000 72,000
total machine minutes available 288,000
total machine minutes remaining 171,000
production 0 7,125
total production 3,000 10,125
total contribution margin $48,000 $324,000
if 100 more machines hours are added, then production time increases by 6,000 minutes which can be used to produce 250 more khaki pants. Contribution margin will increase by 250 x $32 = $8,000
I calculated contribution margin per minute, but you could also calculate contribution margin per hour to determine which product is more profitable. Contribution margin per hour for shorts = $64, and for pants = $80. The answer will not change.
Erosion can best be explained as the:
A. loss of current sales due to a new project being implemented.
B. loss of revenue due to employee theft.
C. additional income generated from the sales of a newly added product.
D. loss of revenue due to customer theft.
Answer:
A. loss of current sales due to a new project being implemented.
Explanation:
In business, erosion takes place when a new product or project competes with another product or project from the came company. This "internal" competition reduces the revenues and benefits from existing products or projects. It is basically a form of business cannibalization, where the left arm takes away from the right arm. E.g. newer smartphone models decrease the sales revenue from existing (older) models.
In calculating the probability of being alive at certain times in the future, the expert would most likely utilize the National Vital Statistics Report detailing the "number of people alive" out of 100,000 people for various demographic characteristics. True/False
Answer: True
Explanation:
The National Vital Statistics System is an inter-governmental system of sharing of data on vital statistics of the United States population. The National Vital Statistics System consist of the
Vital Statistics of the United States and the National Vital Statistics Report.
If an expert wants to calculate the probability of being alive at certain times in the future, such expert would most likely utilize the National Vital Statistics Report which details the "number of people alive" out of 100,000 people for various demographic characteristics. This is because the reports are accurate and can be easily accessible online.
Congress wishes to impose regulations on the insurance industry. What test would the United State Supreme Court use to determine whether such regulations would violate the substantive due process rights of insurance companies that would be subject to the regulations? What is the likely outcome of the case?
Answer:
Three part test.
The outcome: if the three requirements are not met, then there is not point the Government should interfere.
At the end, the law will be held.
Explanation:
In some cases, the courts are allowed to protect individual, company or business organization from Government interrupting with these individuals or business organization "fundamental right" and this is the "substantive due process rights " of insurance companies as mentioned in the question above.
The test that the United State Supreme Court can use to determine whether the regulations they want to enact would violate the substantive due process rights of insurance companies is what is known as the THREE PARR TEST.
THE THREE PART TEST has its root from cases such as that of Pasgraf V Long Island Railroad co. The three part test involves three main subjects and they are;
=> foreseeability: are the policies in which insurance companies work going to affect the consumers in the future?
=> proximity: what kind of relationship do the insurance companies have with there consumers?
=> fairness: are these policies just and fair?
CONCLUSION: if the three requirements are not met, then there is not point the Government should interfere.
The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely.
A. Assuming the current market price of the stock reflects its value, what rate of return do Nogro’s investors require?
B. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?
C. What is the PVGO for this company?
D. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price?
E. What did you notice about the relationship between Nogro’s dividend payout policy and its price?
F. What do you think is the reason for such relationship?
Answer:
Check below for the solution.
Explanation:
A) Earning Per Share, EPS = $2
Dividend Pay out ratio = 50%
Required rate of return = (Expected Dividend next year / Current selling price) + Growth Rate
Expected Dividend per share next year = EPS x Dividends pay-out ratio
Expected Dividend per share next year = $2 x 50% = $2 * 0.5
Expected Dividend per share next year = $1
Return on Equity, ROE = EPS / Current selling price
ROE = $2 / $10 = 0.20 = 20%
Growth Rate = ROE x (1-Dividend pay-out ratio)
Growth Rate = 0.20 x (1-0.50) = 0.10 = 10%
Required Rate of Return = (Expected Dividend next year / Current selling price) + Growth Rate
Required Rate of Return = ($1 / $10) + 0.10 = 0.20 = 20%
B) If all the earnings are paid as dividends, there won’t be any amount left to invest for growth and hence there won’t be any growth in the company. Also, since the required Rate of Return is equal to its ROE, there won’t be any changes.
C) Present Value of Growth Opportunity (PVGO) = 0
This is because with all earnings paid out as dividends, there won’t be any growth and the required rate of return will be equal to the ROE.
D) Since the ROE is equal to required rate of return, there won’t be any impact of cutting down the dividends pay-out. The residual income with lesser pay-out ratio will be invested by the company in available projects that is expected to earn 20% and ROE is also same. Since, there is no changes in the earnings figures, the stock price would remain $10.
E) There is no relationship between Nogro’s dividend payout policy and its price as no impact is experienced in its share prices due to change in its dividend policy.
F) This is because the ROE and the required rate of return are equal.
Timm Inc., a calendar year, accrual basis taxpayer, is being sued by a customer who was injured when she tripped over a loose carpet in Timm's retail store. Timm's auditors required the corporation to accrue a $500,000 contingent liability and current year expense. Which of the following statements is true?
a. Timm can deduct the $500,000 accrued expense.
b. Timm can never deduct the $500,000 expense.
c. Timm can deduct the expense in the year in which the liability becomes fixed and determinable.
d. Timm can deduct the expense in the year of payment.
Answer: d. Timm can deduct the expense in the year of payment.
Explanation:
A Contingent Liability refers to a liability that a company MIGHT incur if a future event happens. It is mostly often used for law suits in case a company has to pay damages. They will thus accrue the expense in readiness to pay it off should the need ever arise.
While Timm will record it in the books, there is no need to deduct it from the income yet. Timm should wait until the year they will have to pay to deduct it. That way the expense will be correctly apportioned to it's corresponding period.
e Department of Traffic Security of a city is considering the purchase of a new drone for aerial surveillance of traffic on its most congested streets. A similar purchase 4 years ago cost $950,000. At an interest rate of 7% per year, what is the equivalent value today of the previous $950,000 expenditure?
Answer:
The equivalent value of the expenditure today is = $1,245,256.21
Explanation:
The equivalent today of the 950,000 would be the future value compounded at 7% per year.
FV = PV × (1+r)^n
FV - ?, PV - value 4 years ago, n- number of years, r- rate of return
PV - 950,000, n- 4, r-7%
FV = 950,000 ×(1.07^4)= 1,245,256.21
The equivalent value of the expenditure today is = $1,245,256.21
Government Spending
Consumer Expectations
Degree of Excess Capacity
Personal Income Tax Rates
Productivity
National Income Abroad
Business Taxes
Domestic Resource Availability
Prices of Imported Products
Profit Expectations on Investments
Answer the question based on the accompanying list of items related to aggregate demand or aggregate supply. A change in which factor is most likely to change both aggregate demand and aggregate supply?
Answer:
Business Taxes.
Explanation:
A change in business taxes is most likely to change both aggregate demand and aggregate supply.
Aggregate demand can be defined as the total amount of goods and services by consumers at a specific period of time and price level in an economy.
Aggregate supply can be defined as the total amount of goods and services an organization is willing to sell or provide to it's consumers at a specific price level.
When business taxes are imposed on businesses, such as manufacturing companies, these in turn affect the demand and supply framework (final goods and services).
Basically, business taxes causes shifts in demand and supply, which in turn affect the price and quantity of goods and services in an economy.
Hence, companies would either be forced to cut-down on the amount of goods and services provided, result to borrowing or downsizing their manpower. As a result of this, they won't be able to meet the demands of their consumers.
As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of Soria Company for the month of October.
SORIA COMPANY
Budget Report
For the Month Ended October 31, 2017
Budget Actual Difference
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Sales in units 7,800 10,000 2,200 Favorable
Variable expenses
Sales commissions $1,872 $2,400 $528 Unfavorable
Advertising expenses 936 900 36 Favorable
Travel expense 3,120 4,000 880 Unfavorable
Free samples given out 1,794 1,300 494 Favorable
Total variable 7,722 8,600 878 Unfavorable
Fixed expenses
Rent 1,700 1,700 -0- Neither Favorable nor Unfavorable
Sales salaries 1,100 1,100 -0- Neither Favorable nor Unfavorable
Office salaries 800 800 -0- Neither Favorable nor Unfavorable
Depreciation-autos (sales staff) 400 400 -0- Neither Favorable nor Unfavorable
Total Fixed 4,000 4,000 -0- Neither Favorable nor Unfavorable
Total expenses $11,722 $12,600 $876 Unfavorable
As a result of this budget report, Joe was called into the president's office and congratulated on his fine sales performance. He was reprimanded, however, for allowing his costs to get out of control. Joe knew something was wrong with the performance report that he had been given. However, he was not sure what to do, and comes to you for advice.
Prepare a budget report based on flexible budget data to help Joe. (List variable costs before fixed costs. Do not leave any answer field blank. Enter 0 for amounts.)
SORIA COMPANY
Selling Expense
Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017
Difference
Favorable /Unfavorable /Neither Favorable nor Unfavorable
Budget Actual
Answer:
The flexible budget report shows that variable costs were $1,300 below budget.
Explanation:
SORIA COMPANY
Selling Expense Flexible Budget Report
Clothing Department
For the Month Ended October 31, 2017
Budget Actual Difference
Fav /Unfav /Neither
Fav nor Unfav
Sales in units 10,000 10,000 -0- Neither Fav nor Unfav
Variable Expenses
Sales in Commission
(0.24) 2400 2400 -0- Neither Fav nor Unfav
Advertising Expenses
936/7800* 10,000 1200 900 300 Fav
Travel Expense
3120/7800 *10,000 4000 4000 -0- Neither Fav nor Unfav
Free Samples Given Out
1794/7800 *10,000 2300 1300 1000 Fav
Total Variable
Expenses (0.99) 9,900 8,600 1300 Fav
Fixed Expenses
Rent 1700 1,700 -0- Neither Fav nor Unfav
Sales salaries 1,100 1,100 -0- Neither Fav nor Unfav
Office salaries 800 800 -0- Neither Fav nor Unfav
Depreciation-autos (sales staff)
400 400 -0- Neither Fav nor Unfav
Total Fixed 4,000 4,000 -0- Neither Fav nor Unfav
Total Expenses 13900 12600 1300 Favorable
From the above flexible budget report, variable costs were $1,300 below budget.
The flexible budget report shows that the variable costs is $1,300 below the budget.
SORIA COMPANY
Selling Expense Flexible Budget Report
For the Month Ended October 31, 2017
Particulars Budget Actual Difference (F/U)
Sales in units 10,000 10,000 -
Variable Expenses
Sales in Commission 2,400 2,400 -
(0.24*10,000)
Advertising Expenses 1,200 900 300 F
(936/7800*10,000)
Travel Expense 4,000 4,000 -
(936/7800*10,000)
Free Samples given out 2,300 1,300 1,000 F
(1794/7800 *10,000)
Total Variable Cost 9,900 8,600 1,300 Fav
Fixed Expenses
Rent 1,700 1,700 -
Sales salaries 1,100 1,100 -
Office salaries 800 800 -
Depreciation - autos 400 400 -
Total Fixed Cost 4,000 4,000 -
Total Expenses 13,900 12,600 1,300 Fav
In conclusion, the flexible budget report shows that the variable costs is $1,300 below the budget.
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On October 10, a company paid $36,000 to a supplier. Of that amount, $6,000 was for supplies received on October 10 and $30,000 was for supplies that were purchased on account during September. The journal entry to record the $36,000 payment would include a debit to:
Answer:
Debit to :
Supplies Inventory $6,000
Trade Payable $30,000
Explanation:
Here the $6,000 payment will increase the Assets of Supplies Inventories and decrease the Assets of Cash. The $30,000 payment will decrease the Liability - Trade Payable and decrease the Assets of Cash.
The Journal is provided as follows :
Supplies Inventory $6,000 (debit)
Trade Payable $30,000 (debit)
Cash $36,000 (credit)
Should the home country be "large" relative to the world, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:_________
a. revenue effect plus redistribution effect.
b. protective effect plus revenue effect.
c. consumption effect plus redistribution effect.
d. production distortion effect plus consumption distortion effect.
e. None of the above.
Answer:
Option e. is correct
Explanation:
The Terms of Trade is equal to the average price of exports / by the average price of imports. The terms-of-trade refers to the relative price of exports in terms of imports.
Protective effect refers to the wasted resources due to production of good at a higher cost. Consumption effect refers to the loss to consumer due to higher price that leads to less consumption.
Should the home country be "large" relative to the world, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the protective effect plus consumption effect
Which of the following reports, which generally are shared only between the organizations that are doing business with one another, are used by auditors to assess the ICFR at one entity that does business with another entity
A. SOC-1
B. SOC-2
C. SOC-3
Answer:
A. SOC-1.
Explanation:
SOC-1 is an acronym for System and Organization Controls Report, which generally are report shared only between the organizations that are doing business with one another. It is also used by auditors to assess, test and report the Internal Control over Financial Reporting (ICFR) at one entity that does business with another entity.
The SOC-1 report is also known as Statement on Standards for Attestation Engagements (SSAE) 18, it helps to create trust and transparency among business entities.
However, it was formerly referred to as the Statement on Auditing Standards 70 (SAS 70) and usually is valid for a period of 1 year (12 months).
During the year, the following selected transactions affecting stockholders' equity occurred for Navajo Corporation: a. Feb. 1 Repurchased 230 shares of the company's own common stock at $27 cash per share. b. Jul. 15 Sold 130 of the shares purchased on February 1 for $28 cash per share. c. Sept. 1 Sold 100 of the shares purchased on February 1 for $26 cash per share. Required: 1. Prepare the journal entry required for each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Answer:
a. Feb. 1
Treasury Shares $6,210 (debit)
Cash $6,210 (credit)
b. Jul. 15
Cash $3,600 (debit)
Common Shares $3,600 (credit)
c. Sept. 1
Cash $2,600 (debit)
Common Shares $2,600 (credit)
Explanation:
The purchase of company own shares is known as Treasury Shares.This decreases the equity element (Treasury Shares) and decreases the Assets of Cash.
Issue of Company own shares increases the Equity element (Common Shares) and decreases the Assets of Cash.
Where does Hewitt’s leadership fall on the Managerial Grid discussed in the chapter? (5 marks) (b) What deficiencies or shortcomings would you identify in Hewitt’s leadership
Answer:
The Hewitt's leadership falls on the the Middle of Road Management, which is carefully assessed, realistic and in turn creates a balance between concerns for people and production.
The shortcomings of this leadership are, Failure to motivate and inspire people, lack of passion and enthusiasm, Inability to keep workers.
Explanation:
Solution:
(a) The leadership of Hewitt fall towards the Middle of Road Management at 5,5 points, as it is well realistic, carefully assessed or adjusted, and satisfies the concerns for the people and production.
(b) The shortcomings or defaults discovered in Hewitt's Leadership is stated as follows:
The failure to motivate and inspire peopleThe Inability to retain employees or workersThe lack of passion and willingness or zealThe lack of appreciation on employee or individualA water utility is planning to construct a grease treatment facility so that local haulers will not have to transport grease to a city 550 km away. The facility will cost $400,000 to build and $160,000 per year to operate. Benefits to the haulers and restaurant owners (through reduced costs) are expected to be $250,000 per year. If the facility will have a 10-year life, the B/C ratio at 6% per year is closest to:
Answer:
The B/C ratio at 6% per year is closest to 1.17
Explanation:
In order to calculate the B/C ratio at 6% per year we would have to make first the following calculations:
Present Worth(PW) of annual operating cost (excel formula) =PV(0.06,10,160000,0) = $1,177,613.93
PW of annual benefit (excel formula) =PV(0.06,10,250000,0) = $1,840,021.76
Present cost (at beginning of project) = $400,000
Therefore, to calculate the B/C ratio at 6% we would use the following formula:
B/C ratio at 6%=PW of benefits-PW of disbenefits/Initial cost+PW of operating and maintenance-PW of salvage value
B/C ratio = ($1,840,021.76 - 0)/($400,000 - $1,177,613.93) = 1.17
A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs rose dramatically. The vendor is experiencing:________.
A. Economies of scope.
B. Diseconomies of scope.
C. Economies of scale.
D. Diseconomies of scale.
The correct answer is B. Diseconomies of scope
Explanation:
In businesses, diseconomies of scope occur when costs increase when two or more products are produced by the same business. This means it is cheaper and more efficient for a business to specialize in a few products rather than focusing on diverse products. This occurs in the case presented because the production of turkey dogs and ham sandwiches increased the costs, which shows it is more efficient for the business to specialize in a few products. Thus, this vendor is experiencing diseconomies of scope.
Sauber's washer-dryer is available in four stylish finishes: stainless steel, pearl white, gunite gray, and obsidian. Although the cycle time is 20% longer than average, the machine runs quietly and offers 10 wash, 5 spin, and 8 dry options. A programmable timer allows users to program a wash up to 23 hours in advance. The manufacturer's suggested retail price is $1499, which is more expensive than U.S. brands' washer-dryer combinations, which average around $1000. Choose the two variables that would be most predictive of purchase intent for the All-in-One washer-dryer.
a. household size: how many people?
b. dwelling type: apartment, condo, or house.
c. religious orientation: beliefs and worship.
Answer:
a and b
Explanation:
Religious orientation has nothing to do with how much money to spend or what machine to use
Multiple-step income statement and balance sheet The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 20Y7:
Cash $92,000
Retained Earnings $381,000
Accounts Receivable 450,000
Dividends 300,000
Inventory 370,000
Sales 8,925,000
Estimated Returns Inventory 5,000
Cost of Goods Sold 5,620,000
Office Supplies 10,000
Sales Salaries Expense 850,000
Prepaid Insurance 12,000
Advertising Expense 420,000
Office Equipment 220,000
Depreciation Expense—Store Equipment 33,000
Accumulated Depreciation—Office Equipment 58,000
Miscellaneous Selling Expense 18,000
Store Equipment 650,000
Office Salaries Expense 540,000
Accumulated Depreciation—Store Equipment 87,500
Rent Expense 48,000
Accounts Payable 38,500
Insurance Expense 24,000
Customers Refunds Payable 10,000
Depreciation Expense—Office Equipment 10,000
Salaries Payable 4,000
Office Supplies Expense 4,000
Note Payable (final payment due 2034) 140,000
Miscellaneous Administrative Exp. 6,000
Common Stock 50,000
Interest Expense 12,000
Required:
a. Prepare a multiple-step income statement.
b. Prepare a retained earnings statement.
Answer:
Net Profit 1345,000
Retained Earnings $ 1426,000
Explanation:
The multi step income statement shows the sections of the income statement separately such as the operating expenses and non operating expenses .
Kanpur Co.
Multi step Income Statement
For year ended June 30, 20Y7:
Sales 8,925,000
Cost of Goods Sold 5,620,000
Estimated Returns Inventory (5,000)
Adjusted Cost OF Goods Sold 5,615,000
Gross Profit $ 3310,000
Less Operating Expenses
Rent Expense 48,000
Selling And Administrative Expenses
Office Supplies Expense 4,000
Sales Salaries Expense 850,000
Miscellaneous Selling Expense 18,000
Depreciation Expense—Store Equipment 33,000
Office Salaries Expense 540,000
Depreciation Expense—Office Equipment 10,000
Advertising Expense 420,000
Miscellaneous Administrative Exp. 6,000
Total Operating Expenses 1881,000
Operating Income 1381,000
Other Expense
Insurance Expense 24,000
Interest Expense 12,000
Total Non Operating Expenses 36,000
Net Profit 1345,000
Kanpur Co.
Statement of Retained Earnings
For year ended June 30, 20Y7:
Retained Earnings $381,000
Add Net Profits 1345,000
Less Dividends 300,000
Retained Earnings For year ended June 30, 20Y7 $ 1426,000
On March 1, Sather Co. sold merchandise to Boone Co. on account, $28,400, terms 2/15, n/30. The cost of the merchandise sold is $19,500. The merchandise was paid for on March 14. Assume all discounts are taken.Required:Journalize the entries for Sather Co. and Boone Co. for the sale, purchase, and payment of amount due. Refer to the appropriate company’s Chart of Accounts for exact wording of account titles.CHART OF ACCOUNTSSummit Co.General LedgerASSETS110 Cash121 Accounts Receivable-Beartooth Co.125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES210 Accounts Payable216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest ExpenseCHART OF ACCOUNTSBeartooth Co.General LedgerASSETS110 Cash120 Accounts Receivable125 Notes Receivable130 Merchandise Inventory131 Estimated Returns Inventory140 Office Supplies141 Store Supplies142 Prepaid Insurance180 Land192 Store Equipment193 Accumulated Depreciation-Store Equipment194 Office Equipment195 Accumulated Depreciation-Office EquipmentLIABILITIES211 Accounts Payable-Summit Co.216 Salaries Payable218 Sales Tax Payable219 Customers Refunds Payable221 Notes PayableEQUITY310 Owner, Capital311 Owner, Drawing312 Income Summary REVENUE410 Sales610 Interest RevenueEXPENSES510 Cost of Merchandise Sold521 Delivery Expense522 Advertising Expense524 Depreciation Expense-Store Equipment525 Depreciation Expense-Office Equipment526 Salaries Expense531 Rent Expense533 Insurance Expense534 Store Supplies Expense535 Office Supplies Expense536 Credit Card Expense539 Miscellaneous Expense710 Interest Expense
Answer and Explanation:
The journal entries are shown below:
On the books of Sather Co.
On Mar 1
Accounts Receivable $28,400
To Sales $28,400
(Being the merchandise sold on credit is recorded)
For recording this we debited the account receivable as it increased the assets and credited the sales as it also increased the sales
Cost of goods sold $19,500
To Merchandise inventory $19,500
(Being the cost of merchandise is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and credited the inventory as it reduced the assets
On Mar 14
Cash $27,830
Sales Discounts ($28,400 × 2%) $568
To Accounts Receivable $28,400
(Being the payment received is recorded)
For recording this we debited the sales and discount as it increased the assets and discount and credited the account receivable as it decreased the assets
On the books of Boone Co.
On Mar 1
Merchandise Inventory $28,400
To Accounts Payable $28,400
(Being the merchandise is purchased on credit)
For recording this we debited the inventory as it increased the assets and credited the account payable as it also increased the liabilities
On Mar 14
Accounts Payable $28,400
To Cash $27,830
To Merchandise inventory ($28,400 × 2%) $568
(Being the cash payment is recorded)
Fo recording this we debited the account payable as it reduced the liabilities and credited the cash and inventory as it also decreased the assets
Sarah's Soothing Diapers, Inc. and Orville's Odorless Diapers, Inc. are duopolists, who have agreed to collude. Orville has decided that he will comply with the collusive agreement as long as Sarah cooperated in the previous period. But if Sarah cheated in the previous period, Orville will punish Sarah by cheating in the current period. Orville's strategy is referred to as a
Answer:
Find the answer in the attached as the system rejected the word
Explanation:
The strategy is a strategy adopted to get back at the other firm that had committed a wrong in the first place.
This is more like reciprocating the actions of the other firm by cheating in the current period in response to the other firm that cheated in the previous period.
The origin of the strategy means that this one that I done now is to repay you for that which you did earlier.
find attached as well.
Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $90.37, while a 2-year zero sells at $77.15. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 9% per year. a. What is the yield to maturity of the 2-year zero?(Do not round intermediate calculations. Round your answers to 3 decimal places.)
Answer:
The yield to maturity on the 2 year-zero coupon bond is 13.85% as computed in the explanation section below
Explanation:
The yield to maturity on the 2-year-zero coupon bond can be computed using the rate formula in excel as shown thus:
=rate(nper,pmt,-pv,fv)
nper is the number of annual coupon payments which is 2
pmt is the amount of annual coupon payment which is zero since it is a zero coupon bond
pv is the current price of the bond which is $77.15
fv is the face value of the bond which is $100
=rate(2,0,-77.15,100)=13.85%
Sean is a baseball player who earns $890,000 per year playing for team X. If he weren't playing baseball for team X, he would be playing baseball for team Y and earning $660,000 per year. If he weren't playing baseball at all, he would be working as an accountant earning $90,000 per year. What is his economic rent as a baseball player?
Answer: The answer is given below
Explanation:
Economic rent is a payment to a factor of production that is in excess of the costs which are needed to bring the factor into production. It is the payment in excess of the opportunity cost.
Economic rent = Present opportunity - opportunity cost.
Sean is a baseball player who earns $890,000 per year playing for team X. If he weren't playing baseball for team X, he would be playing baseball for team Y and earning $660,000 per year. His economic rent in this case will be:
Economic rent = Present opportunity - opportunity cost.
= $890,000 - $660,000
= $230,000
If he weren't playing baseball at all, he would be working as an accountant earning $90,000 per year. His economic rent in this case will be:
Economic rent = Present opportunity - opportunity cost.
= $890,000 - $90,000
= $800,000
Kelly received a $60,000 salary during 2017. Her federal income tax withholding rate was 20%, and the Social Security base amount for 2017 was $118,500.What is the total amount that her employer should have withheld in 2017?
A. $15,390
B. $16,590
C. $15,979
D. $6,849
Answer: B. $16,590
Explanation:
The FICA tax rate which is the combined Social Security and Medicare rate for 2017 was 7.65%.
Assuming a base of $118,500 this means that you are taxed on your first $118,500 in earnings.
Kelly only made $60,000 so the tax rate will apply to her $60,000.
Adding that to the 20% that she is due to pay on Federal Income tax the total amount her employer withheld was,
= (60,000 * 20%) + (60,000 * 7.65%)
= 12,000 + 4,590
= $16,590
Option B is correct.
James would like to deposit enough money in a savings account to have $8,000 at the end of year 3. Assuming the investment will earn 5% compounded annually, what amount should James deposit in the savings account today
Answer:
$6910.70
Explanation:
At the end of each year, the account balance will be 1.05 times the value at the beginning of the year. Thus, at the end of year 3, the value is 1.05^3 times the original value.
$8000 = (deposit)×1.05^3
deposit = $8000/1.05^3 ≈ $6910.70
James should deposit $6910.70 today.
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to:
Answer:
Net operating income is $ 15,400.00
Explanation:
The company's operating income if it sells 5,300 units is calculated thus:
sales (5,300*$319,200/5,700) $296,800.00
variable expenses($188,100/5700*5300) ($174,900.00)
Contribution $ 121,900.00
Fixed expenses ($106,500.00)
Net operating expenses $ 15,400.00
The net operating expenses dropped when 5,300 units were sold because the higher the volume, the more the contribution towards covering fixed expenses
Answer:
Net operating income= $15,400
Explanation:
Giving the following information:
Sales (5,700 units) $319,200
Variable expenses 188,100
Contribution margin 131,100
Fixed expenses 106,500
Net operating income $ 24,600
Sales now= 5,300 units
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= 131,100/5,700= $23
Contribution margin for 5,300:
Total contribution margin= 23*5,300= $121,900
Fixed costs= 106,500
Net operating income= $15,400
17. A global strategy for a company would include a. Products tailored to local tastes and needs, with local sourcing. b. A standardized product available without any local responsiveness. c. Patents and copyrights that are designed to promote maximum innovation. d. All of the above.
Answer: b. A standardized product available without any local responsiveness.
Explanation:
A global strategy refers to when a company aims to expand across the globe. One of the strategies is known as Standardisation.
This is a policy where the company that hopes to expand decides that it wants to make a standard product that is the same the world over. By not making it available without local responsiveness ( differentiating it by adding local features to it), the company signals that they want their product to be the same around the world.
It is very useful to some companies such as Apple which has the iPhone around the world with no local customisation and Dominoes Pizza which aims to have their pizza taste the same the world over.
You have an investment that in today's dollars returns 12% of your investment in year 1, 18% in year 2, 11% in year 3, and the remainder in year 4. Rounded to two places, what is the Duration of this investment
Answer:
The duration of this investment will be 14,005 years
Explanation:
Duration of investment= Sum of ( Percentage* TIme)
=( 1 x 12%) + (2 x 18%) + (3 x 11%) + (4 x 59%)
= 12+36+33+13,924
=14,005 years
Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days.If the company currently averages $60,000 in collections per day, how many dollars will this suggested cash management system free up?If all freed up dollars would be used to pay down debt that has an interest rate of 5%, how much money could be saved each year in interest expense?Do the numbers suggest that this new system should be implemented if its total annual cost is $5200? Explain.
Answer: a. $120,000
b. $6,000
c. Yes
Explanation:
a. It is said that the collection centres would help reduce the collection time by 2 days and that every day $60,000 comes in.
If the proposal will reduce the amount of time taken to collect by 2 days then that means that the amount freed up is the amount that they would have collected in two days had it not been for the system.
That amount would be,
= $60,000 * 2
= $120,000
b. If they used this free up cash to pay off a debt that was accumulating 5% per year then the 5% will be saved.
The amount saved therefore is,
= 120,000 * 5%
= $6,000
By retiring a $120,000 that was accruing $6,000 a year, the proposal has enabled that $6,000 to be saved instead.
c. The cost of implementing this proposal is $5,200 per year and yet the savings it gives in interest is $6,000.
As the savings are higher than the cost, the number definitely suggest that the project should be implemented because it is more beneficial than it costs.
Is it reasonable to expect that managers can measure their social and environmental performance on the same level as they measure their financial performance with a triple bottom line?
Answer:
The correct answer is: No, it is not reasonable to expect that managers can measure their social and environmental performance on the same level as they measure their financial performance.
Explanation:
To begin with, the concept known as triple bottom line refers exactly to the measuring of the the financial, social and environemental performances from part of an organization. However, it is not posible to measure them in the same way, due to the fact that they are very different terms with different factors. Therefore that in order to measure one of them there will be an unique way of doing it that can not be copy in order to measure the other. That is why if the organization want to measure the financial performance it will look into the numbers but with the social or environmental performance it can not do that.
