Answer:
when costs are recognized as expenses on the income statement.
Explanation:
The expense recognition principle is an accounting principle which is typically used on accrual basis accounts and it states that expenses incurred by an individual or business entity should be recognized and matched in the same period with respect to the revenues they are related to.
The expense recognition principle indicates when costs are recognized as expenses on the income statement.
For instance, company XYZ purchases a property worth $90,000 in June, it was then sold in July for $250,000. Based on the expense recognition principle, the $90,000 cost shouldn't be recognized by company XYZ as an expense until July, when the related revenue would be recognized also. Else, if recognized, its expenses would be overstated by $90,000 in June, and consequently understated to the tune of $250,000 in July.
Additionally, the expense recognition principle helps business owners to calculate their taxes and profits or losses properly.
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.
During its first year of operations, Bramble Corp. had these transactions pertaining to its common stock. Jan. 10 Issued 25,200 shares for cash at $4 per share. July 1 Issued 51,000 shares for cash at $7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $4 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1 per share.
Answer and Explanation:
The journal entries are shown below:
a.
On Jan 10
Cash Dr $100,800 (25200 shares × $4 )
To Common Stock $100,800
(Being the common stock is issued)
To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder so common stock is credited
On July 1
Cash $357,000 (51,000 shares × $7)
To Common stock $204,000 (51,000 shares × $4)
To Additional Paid in capital in excess of par value - Common stock $153,000 (51,000 shares × $3)
(Being the issuance of the common stock is recorded)
To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock
b.
On Jan 10
Cash $100,800 (25,200 shares × $4)
To Common stock $25,200 (25,200 shares × $1)
To Additional Paid in capital in - Common stock $75,600 (25,200 shares × $3)
(Being the issuance of the common stock is recorded)
To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock
On July 1
Cash $357,000 (51,000 shares × $7)
To Common stock $51,000 (51,000 shares × $1)
To Additional Paid in capital in - Common stock $306,000 (51,000 shares × $6)
(Being the issuance of the common stock is recorded)
To record this, we debited the cash as it increased the assets and, at the same time, it also increased the total equity of the stockholder and the common stock is credited with the additional capital paid for common stock
Here, we are preparing the journal entry for the various transaction stated in the question.
a. Date Account titles and Explanation Debit Credit
Jan 10 Cash $100,800
(25,200 shares * $4)
To Common Stock $100,800
(Being the common stock is issued)
July 1 Cash $357,000
(51,000 shares × $7)
To Common stock $204,000
(51,000 shares × $4)
To Additional Paid in capital in excess $153,000
of par value (51,000 shares × $3)
(Being the issuance of the common stock is recorded)
b. Date Account titles and Explanation Debit Credit
Jan 10 Cash $100,800
(25,200 shares × $4)
To Common stock $25,200
(25,200 shares × $1)
To Additional Paid in capital $75,600
(25,200 shares × $3)
(Being the issuance of the common stock is recorded)
July 1 Cash $357,000
(51,000 shares × $7)
To Common stock $51,000
(51,000 shares × $1)
To Additional Paid in capital $306,000
(51,000 shares × $6)
(Being the issuance of the common stock is recorded)
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A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: 0 1 2 3 4 Project X -$1,000 $100 $320 $400 $700 Project Y -$1,000 $1,000 $110 $55 $45 The projects are equally risky, and their WACC is 13%. What is the MIRR of the project that maximizes shareholder value
Answer:
Project X maximizes shareholder value (highest NPV) and has a MIRR of 14.27%.
Explanation:
year cash flow project X cash flow project Y
0 -1,000 -1,000
1 100 1,000
2 320 110
3 400 55
4 700 45
WACC = 13%
Using an excel spreadsheet I calculated the projects' NPV, IRR and MIRR
NPV IRR MIRR
project X $45.65 15% 14.27%
project Y $36.82 16% 14.03%
The modified internal rate of return (MIRR) considers that the project's cash inflows are invested at the company's WACC and the initial investment is financed at a certain debt rate (in this case the same WACC).
The current sections of Birmingham Inc.’s balance sheets at December 31, 2019 and 2020, are presented here. Birmingham’s net income for 2020 was $193,000. The income statement included depreciation expense, $25,000, amortization expense, $10,000, and a gain on disposal of equipment, $7,000. The equipment was sold for $47,000. Birmingham also issued bonds for $60,000. 2020 2019Current assets Cash $417,000 $ 99,000 Accounts receivable 120,000 93,000Inventory 159,000 176,000Prepaid expenses 29,000 24,000Total current assets $725,000 $392,000 Current liabilities Accrued expenses payable $ 17,000 $ 6,000 Accounts payable 88,000 94,000Total current liabilities $105,000 $100,000 InstructionsPrepare the net cash provided by operating activities section of the company’s statement of cash flows for the year ended December 31, 2020 using the indirect method.
Answer:
Net Income 193,000
Non-monetary terms:
Depreciation expense 25,000
amortization expense 10,000
gain on disposal (7,000)
Adjusted Income 221,000
Change in Working Capital:
Increase in A/R (27,000)
Decreasein Inv 17,000
Increase in Prepaid (5,000)
Increase Accrued /P 11,000
Decreasein A/P (6,000)
Change In Working Capital (10,000)
From Operating Activities 211,000
Investing
Sale of Equipment 47,000
Financing
Bonds Issued 60,000
Cash Flow 318,000
Beginning Cash 99,000
Cash Flow 318,000
Ending Cash 417,000
Explanation:
We first remove the non.monetary concetps from the net income.
Then we adjust for the change in working capital which are the incrase and decrease in the current assets and liabilities account
Increase in asset and decrease in liabilities represent cash outflow
while the opposite is true when an asset decrease(convert to cash) or a liablity increase (delay of the payment)
The materials purchase price variance, in a standard cost system, is obtained by multiplying the: Group of answer choices a. Actual price by the difference between actual quantity purchased and standard quantity used. b. Actual quantity purchased by the difference between actual price and standard price. c. Standard price by the difference between standard quantity purchased and standard quantity used. d. Standard quantity purchased by the difference between actual price and standard price.
Answer:
b. Actual quantity purchased by the difference between actual price and standard price
Explanation:
The formula to compute the material purchase price is shown below:
= Actual Quantity × (Standard Price - Actual Price)
It is derived by taking a difference between the standard price and the actual price and then multiplying it by the actual quantity so that the material price or material purchase price variance could come
Hence, the correct option is b.
b. Actual quantity purchased by the difference between actual price and standard price
When computing materials purchase price variance in standard costing system, we use the formula below ;
= Actual Quantity × (Standard Price - Actual Price)
Material purchase price variance is derived by subtracting standard price from actual price and then multiplying it by the actual quantity so that we would get the value.
Thus, the materials purchase price variance, in a standard cost system, is obtained by multiplying actual quantity purchased by the difference between actual price and standard price.
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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.
Revise the following sentences to emphasize the perspective of the audience and the "you" view.
1. To help us process your order with our new database software, we need you to go to our website and fill out the customer information required.
Answer:
You are required to go to our website to fill out the required customer information. This will help us process your order.
Explanation:
The customer or client does not need to be informed of the existence of our new database software. We can simply request the customer to fill out the enclosed form by going to our website. This approach is more business-like and courteous. It emphasizes the customer as the subject and what the customer is required to do. The focus is shifted to the customer and not to the company. The customer learns immediately that his or her actions (going to the website and filling the form) are in their own interest.
Cotrone Beverages makes energy drinks in three flavors: Original, Strawberry, and Orange. Company is currently operating at 75 percent of capacity. Worried about the company's performance, the company president is considering dropping the Strawberry flavor. If Strawberry is dropped, the revenue associated with it would be lost and the related variable costs saved. In addition, the company’s total fixed costs would be reduced by 20 percent.
Segmented income statements appear as follows:
Product Original Strawberry Orange
Sales $65,200 $85,600 $102,400
Variable costs 44,000 77,200 80,200
Contribution margin $21,200 $8,400 $22,200
Fixed costs allocated to each product line 9,400 12,000 14,200
Operating profit (loss) $11,800 $(3,600) $8,000
Required:
a. Prepare a differential cost schedule.
b. Should Cotrone drop the Strawberry product line?
Answer:
Yes Strawberry line should be dropped as it reduces the overall profit by$ 3600 when the fixed costs are not 20 %
Yes Strawberry line should be dropped as it reduces the overall profit by$ 1720 even when the fixed costs are 20 %
Explanation:
Cotrone Beverages
Differential Analysis
Totals Totals Difference / Change
including (less) Without (equals)
Strawberry Strawberry
Sales 253,200 167,600 85600 Decrease
Variable costs 201,400 124,200 77200 Decrease
Fixed costs allocated 35,600 28,480 7120 Decrease
Operating profit (loss) 13,200 14,920 (1720) Increase
Working
Total Fixed Costs Reduced will be = 35,600 *20%= 7120
Here we see the profit is increased by 1720 therefore strawberry line should be dropped.
Cotrone Beverages
Differential Analysis
Totals Totals Difference / Change
including (less) Without (equals)
Strawberry Strawberry
Sales 253,200 167,600 85600 Decrease
Variable costs 201,400 124,200 77200 Decrease
Contribution margin 51,800 43,400 8,400 Decrease
Fixed costs allocated 35,600 23,600 12000 Decrease
Operating profit (loss) 13,200 16,800 (3,600) Increase
Yes Strawberry line should be dropped as it reduces the overall profit by$ 3600
Working
We find the totals with and without the strawberry product line and then subtract to find the differential costs
Cotrone Beverages
Product Original Strawberry Orange Total
Sales $65,200 $85,600 $102,400 253,200
Variable costs 44,000 77,200 80,200 201,400
Contribution margin $21,200 $8,400 $22,200 51,800
Fixed costs allocated 9,400 12,000 14,200 35,600
Operating profit (loss) $11,800 $(3,600) $8,000 13,200
If we drop the strawberry line then the new totals would be
Product Original Orange Total
Sales $65,200 $102,400 167,600
Variable costs 44,000 80,200 124,200
Contribution margin $21,200 $22,200 43,400
Fixed costs allocated 9,400 14,200 23,600
Operating profit (loss) $11,800 $8,000 16,800
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
A limited partnership: Multiple Choice May only have two partners. Has owners called stockholders. Includes a general partner with unlimited liability. Is the same as a corporation. Is subject to double taxation.
Answer:
Is the same as a corporation.
Explanation:
The partnership is a firm in which there are two or more partners comes in a contract to share the profit and losses to their profit and losses sharing ratio
A limited partnership is a partnership firm in which the partners have limited liability to their investment but the general partner has unlimited liability
It is just like a corporation who contains limited partners with the limited liability
Tangarine Company is considering a project with an internal rate of return of 12%. Tangarine requires a minimum rate of return of 10%. The net present value of the project is: a.equal to zero. b.infinite. c.negative. d.positive. e.None of these choices are correct.
Answer:
The correct option is D
Positive NPV
Explanation:
The internal rate of return is the discount rate that equates the present value of cash inflow to the present value of cash inflows.
It is the maximum cost of capital that can be used to discount a project without causing harm to the investors. In other words, it is the cost of capital that produces an NPV of Zero.
It therefore means that any cost of capital that is less than the IRR would produce a positive NPV and vice and versa.
and vice versa
Finally, if the IRR is 12% a cost of capital of 10% would produce a positive NPV
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 was driving his car in a careless way, failing to drive as a reasonably prudent person would under the driving conditions. Ramona was crossing the street in a careless way, failing to cross as a reasonably prudent person would. John struck and injured Ramona with the car John was driving. At trial, it was determined that John was 80 percent at fault and that Ramona was 20 percent at fault. The injuries sustained amounted to $100,000. Explain how much, if any, recovery Ramona would receive in a state that applies the contributory negligence rule. Do the same thing for a state that applies the comparative negligence rule
Answer:
1. If this law of contributory negligence applies to the state, then Ramona will receive no compensation for the damages she sustained.
2. If this law of comparative negligence applies to this state, then Ramona will get 100% - 20% = 80% of the damages incurred in the accident, from John which will be $80,000
Explanation:
In contributory negligence, the defense completely bars plaintiffs from any recovery if they contribute to their own injury through their own negligence.
If this law of contributory negligence applies to the state, then Ramona will receive no compensation for the damages she sustained.
In comparative negligence, the plaintiff's damages is award by the percentage of fault that the fact-finder assigns to the plaintiff for his or her own injury i.e the plaintiff's damage compensation is reduced by percentage of his/her percentage of fault.
If this law of comparative negligence applies to this state, then Ramona will get 100% - 20% = 80% of the damages incurred in the accident, from John
this is 80% of $100,00 which is equal to $80,000
Degregorio Corporation makes a product that uses a material with the following direct material standards:
Standard quantity 3.7 kilos per unit
Standard price $5 per kilo
The company produced 6,300 units in November using 23,780 kilos of the material. During the month, the company purchased 25,950 kilos of the direct material at a total cost of $124,560. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for November is:
A. $2,350 F
B. $2,256 F
C. $2,350 U
D. $2,256 U
Answer:
Materials quantity variance = $2,350 F
Explanation:
Given:
Standard quantity = 3.7 kilos per unit
Standard price = $5 per kilo
Unit produced = 6,300
Total material = 23,780
Computation:
Materials quantity variance = (Actual quantity × Standard price) - (Standard quantity × Standard price)
Materials quantity variance = (23,780 × $) - (6,300 × 3.7 × $5)
Materials quantity variance = $118,900 - $116,550
Materials quantity variance = $2,350 F
Blythe Company has provided the following information: Sales price per unit $40 Variable cost per unit 18 Fixed costs per month 12,800 What is the amount of sales in dollars required for Blythe to break even? (Round any percentages to two decimal places and your final answer to the nearest dollar.)
Answer:
Break-even sales in dollars = $23,273
Explanation:
The break-even point is the selling price at which the selling price, equals the cost of production. no profit is made, but no loss is incurred too.
we will use the formula for calculating required selling price, to calculate the break-even price as follows:
Required selling price = (Fixed costs + Target profit) ÷ (Contribution margin ratio)
Contribution margin ratio = Contribution margin ÷ net sales revenue
Contribution margin = sales price - variable cost
contribution margin = 40 - 18 = $22
Net sales revenue = $40
∴ contribution margin ratio = (Contribution margin ÷ net sales revenue) × 100
= 22 ÷ 40 = 55.00% = 0.55
∴ Required selling price = (Fixed costs + Target profit) ÷ (Contribution margin ratio)
Required selling price = (12,800 + 0) ÷ 55.00%
= 12,800 ÷ 0.55 = 23,272.7 = 23,273 (to the nearest dollars)
Break-even sales in dollars = $23,273
The following account balances are taken from the December 31, 2018, financial statements of ABZ Advertising Company. The company uses accrual basis accounting. Advertising Revenue $ 46,482 Cash 41,516 Accounts Receivable 7,296 Interest Expense 2,299 Accounts Payable 5,000 Operating Expenses 37,460 Deferred Revenue 1,178 Equipment 18,048 Income Tax Expense 2,326 The following activities occurred in 2019: Performed advertising services on account, $55,000. Received cash payments on account, $10,400. Received deposits from customers for advertising services to be performed in 2020, $2,500. Made payments to suppliers on account, $5,000. Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year. Which of the following is the journal entry that will be used to record activity #3? Multiple Choice Debit Cash and credit Accounts Receivable for $2,500. Debit Deferred Revenue and credit Advertising Revenue for $2,500. Debit Deferred Revenue and credit Receivable for $2,500. Debit Cash and credit Deferred Revenue for $2,500.
Answer:
Debit Cash and credit Deferred Revenue for $2,500.
Explanation:
Deferred revenue can be described as an advance payment thta is received a business for services to be performed or goods to be delivered in the future.
This type of revenue will not be reported in the income statement but it will be reported as a liability under the current liabilities in the balance sheet, after debiting the cash account, until when the services are performed or goods are delivered.
For this question, $2,500 deposits received in 2018 from customers for advertising services to be performed in 2020 will not be reported in the 2018 income statement but it will continue to be reported as a liability under the current liabilities in the balance sheet till 2020 when the services are performed.
Thereofe, the correct journal entry that will be used to record activity #3 is Debit Cash and credit Deferred Revenue for $2,500.
Avril Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $54,080 per month, which includes depreciation of $3,840. All other fixed manufacturing overhead costs represent current cash flows. The direct labor budget indicates that 3,200 direct labor-hours will be required in October. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for October should be:
Answer:
Estimated manufacturing overhead rate= $21.5 per direct labor hour
Explanation:
Giving the following information:
The variable overhead rate is $4.60 per direct labor-hour.
Budgeted fixed manufacturing overhead is $54,080 per month
The direct labor budget indicates that 3,200 direct labor-hours will be required in October.
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (54,080/3,200) + 4.6
Estimated manufacturing overhead rate= $21.5 per direct labor hour
Which of the following situations would preclude an accountant from issuing a review report on a company's financial statements in accordance with Statements on Standards for Accounting and Review Services (SSARS)?
a. Finished-goods inventory does not include any overhead amounts.
b. The accountant was engaged to review only the balance sheet.
c. The owner of a company is the accountant's father.
d. Land has been recorded at appraisal value instead of historical cost.
Answer:
c. The owner of a company is the accountant's father.
Explanation:
Standard for Accounting and Review services (SSARS) is used for an entity that is not required to file financial statements with a regulatory body for sale of its securities in the public market.
It is concerned with unaudited financial statements and other unaudited information.
According to the SSARS when the accountant is exposed to bias by being related or having vested interest in the company he is precluded from issuing a review report on the companie's financial statements.
Prince Paper has budgeted the following amounts for its next fiscal year: Total fixed expenses $ 600 comma 000 Selling price per unit $ 70 Variable expenses per unit $ 45 If Price Paper spends an additional $ 12 comma 300 on advertising, sales volume should increase by 3 comma 000 units. What effect will this have on operating income?
Answer:
Operating income will increase by $63,000
Explanation:
Given:
Sales volume increase = 3,000 units
Particular Amount
Increase in Sales $210,000 ($70×3000)
Less: Increase in Variable cost $135,000 ($45×3000)
Less: Increase additional Costs $12,000
Chane in Net operating Income $63,000
Operating income will increase by $63,000
A man turns 40 today and wishes to provide supplemental lifetime retirement income of 3,000 at the beginning of each month starting on his 65th birthday. Starting today, he makes monthly contribution of X to a fund for 25 years. The fund earns a nominal rate of 8% compounded monthly. Every 9.65 of lifetime income paid at the beginning of each month starting at age 65 will cost 1,000 to purchase. Calculate x.
Answer:
324.72
Explanation:
To get an income of $1, the man needs [tex]\frac{1000}{9.65}[/tex], therefore to get an income of $3000, the man needs [tex]\frac{1000*3000}{9.65}=310880.83[/tex].
Interest (i)= 8%/12 = 0.08/12 = 0.00667
Number of periods (N) = 12 months/year × 25 years = 300
Using actuarial notation:
[tex]Xs_{300/0.006667}=310880.83\\Where:\\s_{300/0.006667}=(1+0.006667)\frac{(1+0.006667)^{300}-1}{0.00667} =957.366[/tex]
Therefore:
[tex]957.366X=310880.83\\X=\frac{310880.83}{957.366} =324.72[/tex]
Larson, Inc. is an integrated marketing solutions company. Whenever a client comes to it wondering why a product was not welcomed by its target audience or why customers have stopped buying another product, Impiric always suggests the marketing research process begins with:________.
Answer:
Defining the problem
Explanation:
In this scenario clients come to Larson Inc wondering why a product was not welcomed by its target audience or why customers have stopped buying another product.
According to Impiric a marketing solutions company the first step in marketing research process is defining the problem.
Why are products not being welcomed by their target audience?
This will give insight and help in formulating a solution to tackle the challenge
Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 33,817 $ 40,739 $ 42,420 Accounts receivable, net 100,012 69,175 53,814 Merchandise inventory 128,260 91,410 59,663 Prepaid expenses 11,001 10,482 4,576 Plant assets, net 311,773 292,386 255,527 Total assets $ 584,863 $ 504,192 $ 416,000 Liabilities and Equity Accounts payable $ 141,262 $ 85,208 $ 56,010 Long-term notes payable secured by mortgages on plant assets 108,855 118,283 91,936 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 171,246 137,201 104,554 Total liabilities and equity $ 584,863 $ 504,192 $ 416,000 1. Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.) 2. Assuming annual sales have not changed in the last three years, is the change in accounts receivable as a percentage of total assets favorable or unfavorable? 3. Assuming annual sales have not changed in the last three years, is the change in merchandise inventory as a percentage of total assets favorable or unfavorable?
Answer:
Simon Company's
Balance Sheets at December 31L
Current Yr % 1 Yr Ago % 2 Yrs Ago %
Assets
Cash $ 33,817 6 $ 40,739 8 $ 42,420 10
Accounts receivable, net 100,012 17 69,175 14 53,814 13 Merchandise inventory 128,260 22 91,410 18 59,663 14
Prepaid expenses 11,001 2 10,482 2 4,576 1
Plant assets, net 311,773 53 292,386 57 255,527 61
Total assets $ 584,863 100 $ 504,192 100 $ 416,000 100
Liabilities and Equity
Accounts payable $ 141,262 24 $ 85,208 17 $ 56,010 13
Long-term notes payable 108,855 19 118,283 23 91,936 22 Common stock,
$10 par value 163,500 28 163,500 32 163,500 39 Retained earnings 171,246 29 137,201 27 104,554 25
Total liabilities & equity$ 584,863 100 $ 504,192 100 $ 416,000 100
2. Assuming annual sales have not changed in the last three years, the change in accounts receivable as a percentage of total assets is favorable. It is always better to maintain low accounts receivable, thereby reducing credit risk exposures.
3. Assuming annual sales have not changed in the last three years, the change in merchandise inventory as a percentage of total assets is favorable. Less inventory means that working capital is not being tied down to inventory.
Explanation:
Common-size percentages are used in analyzing the balance sheet. The calculations set each line item as a percent of the total assets.
At the beginning of the month, Arthur's Olde Consulting Corporation had two jobs in process that had the following costs assigned from previous months:
Job Number Direct Labor Applied Overhead
SY-400 $ 23,790 ?
SY-403 15,870 ?
During the month, Jobs SY-400 and SY-403 were completed but not billed to customers. The completion costs for SY-400 required $26,700 in direct labor. For SY-403, $79,500 in labor was used.
During the month, the only new job, SY-404, was started but not finished. Total direct labor costs for all jobs amounted to $150,570 for the month. Overhead in this company refers to the cost of work that is not directly traced to particular jobs, including copying, printing, and travel costs to meet with clients. Overhead is applied at a rate of 70 percent of direct labor costs for this and previous periods. Actual overhead for the month was $107,600.
Required:
(a) What are the costs of Jobs SY-400 and SY-403 at the beginning of the month and when completed?
(b) What is the cost of Job SY-404 at the end of the month?
(c) How much was under- or overapplied service overhead for the month?
Answer:
Cost at the beginning:
Cost of SY-400 $40,443.00
Cost SY-403 $ 26,979.00
Cost at month end:
Cost of SY-400 $85,833.00
Cost of SY-403 $162,129.00
Cost of SY-404 $75429
Overhead was under-applied by $2,201.00
Explanation:
At the beginning of the month costs of jobs SY-400 and SY-403 are the direct labor costs incurred already plus 70% of the direct labor cost as overhead applied:
Cost of SY-400=$23,790+($23,790*70%)=$40,443.00
Cost SY-403=$15,870+($15,870*70%) =$ 26,979.00
Costs at the end of the month would be cost at the beginning plus new direct labor cost incurred as well as the overhead on the new direct labor cost:
Cost of SY-400=$40,443.00+$26,700+($26,700*70%)=$85,833.00
Cost of SY-403=$ 26,979.00+$79500+(70%*$79500)=$162,129.00
Direct labor cost of SY-404=$150,570- $26,700-$79,500=$44370
Cost of SY-404=$44370+(70%*$44370)=$75429
Actual overhead is $107,600
Overhead applied=(70%*$44370)+(70%*$79500)+($26,700*70%)=$105,399.00
Under-applied overhead=$107,600-$105,399=$2,201.00
a) The cost of Jobs SY-400 and SY-403 at the beginning of the month and on completion are:
SY-400 SY=403
Beginning costs $40,443 $26,979
Total costs $85,833 $162,129
b) The cost of Job SY-404 at the end of the month is $75,429.
c) The Service Overhead for the month was underapplied by $2,201.
Data and Calculations:
Job Number Direct Labor Applied Overhead Total Costs
SY-400 $ 23,790 ? = $16,653 ($23,790 x 70%) $40,443
SY-403 15,870 ? = $11,109 ($15,870 x 70%) $26,979
SY-400 SY=403 SY404 Total Costs
Beginning costs $40,443 $26,979 $0 $67,422
Direct labor 26,700 79,500 $44,370 $150,570
Overhead applied 18,690 55,650 31,059 105,399
Total costs $85,833 $162,129 $75,429 $323,391
Overhead applied = $105,399
Actual overhead $107,600
Underapplied o/h = $2,201
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Real-Balances Effect Household Expectations Interest-Rate Effect Personal Income Tax Rates Profit Expectations National Incomes Abroad Government Spending Answer the question based on the accompanying list of factors that are related to the aggregate demand curve. Changes in which two of the factors would most likely cause a shift in aggregate demand due to a change in consumer spending.
Answer: Household Expectations
Personal Income Tax Rates
Explanation:
The Aggregate Demand curve can shift as a result of Consumer Spending, Government Spending, Investment Spending or Net Export spending.
When the AD shifts due to a change in Consumer Spending, the reasons are usually related to individuals in the economy including Households.
One of the reasons there may be a shift is due to changes in Household Expectations.
If a Household expects an Economic variable such as Inflation to change in the future, it might inspire them to act now to take advantage of it. For example, if a Household expects that car prices will rise in future, they may decide to buy a car now instead so as not to pay a higher amount in future thus increasing demand and shifting the AD curve Right.
Another reason could be the Personal Income Tax rate. Taxes reduce the amount that people have after they are paid. A change in personal income tax rates therefore is a change in people's income. If Personal Tax rates were to reduce for instance, that would mean that people would have more money to spend and they might consume this extra money. This would increase Consumption and therefore shift the AD curve Right.
A roofing company collects fees when jobs are complete. The work for one customer, whose job was bid at $3,900, has been completed as of December 31, but the customer has not yet been billed. Assuming adjustments are only made at year-end, what is the adjusting entry the company would need to make on December 31, the calendar year-end?
Answer:
Debit Accounts Receivable, $3,900;
Credit Roofing Fees Revenue, $3,900
Explanation:
Here, no cash transaction was involved. Since the job has been completed but the customer has not been billed yet, this simply means it has to be debited with accounts receivable, which is recognised as current asset and recognised as revenue for the period, hence needs to be credited.
This means that accounts receivable has to be debited with the amount of $3,900 while roofing fees revenue has to be credited with the amount of $3,900
Considering the above, the adjusting entry the company would need to make on December 31, the calendar year-end would be:
Debit Accounts Receivable, $3,900;
Credit Roofing Fees Revenue, $3.900
Suppose the comparative balance sheets of Windsor, Inc. are presented here. WINDSOR, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 Assets Current Assets Property, plant, and equipment (net) Other assets Total assets Liabilities and Stockholders' Equity Current Liabilities Long-term liabilities Stockholders' equity Total liabilities and stockholders' equity $9,520 $8,720 2,010 1,870 1,610 $13,080 $12,200 1,550 3,210 $3,320 1,210 1,290 7,590 $13,080 $12,200 8,660 (a) Prepare a horizontal analysis of the balance sheet data for Windsor, using 2016 as a base. (if amount and percentage are a decrease show the numbers as negative, e.g.-55,000 -20% or (55,000), (20%). Round percentages to 1 decimal place, e.g. 12.1%.) WINDSOR, INC. Condensed Balance Sheet May 31 ($ in millions) 2017 2016 (Decrease) Change from 2016 $9,520 $8,720 2,010 1,870 1,610 Current Assets Property, plant, and equipment (net) Other assets 1,550 Total assets $13,080$12,200 $ Liabilities and Stockholders' Equity $3,210 $3,320 1,210 1,290 7,590 $13,080 $12,200 Current Liabiiies Long-term liabities Stockholders equity Total liabilities and stockholders' equity 8,660
Answer:
since there is not enough room here, I prepared the comparative balance sheets on an excel spreadsheet.
Explanation:
WINDSOR, INC.
May 31 2017 2016
($ in millions)
Assets
Current Assets $9,520 $8,720
Property, plant, and equipment (net) $2,010 $1,870
Other assets $1,550 $1,610
Total assets $13,080 $12,200
Liabilities and Stockholders' Equity
Current Liabilities $3,210 $3,320
Long-term liabilities 1,210 1,290
Stockholders' equity 8,660 7,590
Total liabilities and stockholders' equity $13,080 $12,200
"All else held constant" is a major problem facing all methods of estimating the demand for business products. Compare and contrast how the marketing and economic approaches deal with this problem. Please use examples.
Answer:
In Economics, the phrase "All esle held constant" is also sometimes written in Latin "Ceteris Paribus". In Economics, this assumption is fundamental to the whole academic discipline since Economics is based on economic models that make a series of assumptions in order to reach partial conditions.
So in Economics, the reasoning is always in the manner of "all else held constant".
In Marketing, what is always done is to estimate demand for a product, and then, apply a marketing strategy in order to try to not only meet demand, but sell even more. This is because the main goal of Marketing is to satisfy customers beyond their expectations.
Nordstrom Inc. reports net income of $600 million for its fiscal year ended January 2016. At the beginning of that fiscal year, Nordstrom had $9,245 million in total assets. By fiscal year ended January 2016, total assets had decreased to $7,698 million.
What is Nordstrom's ROA?
Answer:
The answer is 7.1%
Explanation:
ROA means Return on Asset. It is one of the profitability ratios. It tells us how profitable a company is in using its assets. It is the rate of return on assets owned by the business and it is expressed as a percentage. The formula for calculating it is:
Net profit ÷ total assets.
In this the question we have the beginning and the ending total assets, what we need to do is to find the average i.e ($9,245 million + $7,698 million) / 2 =$8,472.5 million
Therefore, Nordstrom's ROA is:
$600 million / $8,472.5 million
= 7.1%
Pacific Ink had beginning work-in-process inventory of $754,960 on October 1. Of this amount, $309,920 was the cost of direct materials and $445,040 was the cost of conversion.The 53,000 units in the beginning inventory were 25 percent complete with respect to both direct materials and conversion costs.
During October, 112,000 units were transferred out and 35,000 remained in ending inventory.The units in ending inventory were 75 percent complete with respect to direct materials and 35 percent complete with respect to conversion costs. Costs incurred during the period amounted to $2,687,500 for direct materials and $3,429,900 for conversion.
Required:
(1) Compute the equivalent units for the materials and conversion cost calculations.
(2) Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method.
Answer:
a:Weighted Equivalent Units Materials 138,250 Conversion 124,250
b:FIFO Equivalent Cost Per unit Materials $ 21.5 Conversion $ 30.9
Explanation:
Pacific Ink
Weighted Average Equivalent Units
Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Equivalent Units 138,250 124,250
The FIFO method accounts only for the current period costs and units.
Pacific Ink
FIFO Equivalent Units
Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Less
Beg. Inv 53000 25 25 13250 13250
Equivalent Units 125,000 111000
FIFO Costs :
Materials Conversion
Current Costs: $2,687,500 $3,429,900
FIFO Equivalent Units 125,000 111000
Cost per Unit $2,687,500/125000 $3,429,900/111000
Equivalent Cost Per unit $ 21.5 $ 30.9
When the Pacific Ink that is:
The Weighted of the Average Equivalent Units are:Particulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Equivalent Units 138,250 124,250
When thus, The FIFO method is accounted only for the current period costs and units is: When the Pacific Ink The FIFO Equivalent UnitsParticulars Units %of Completion Equivalent Units
Mat Conversion Mat. Conversion
Transferred Out 112000 100 100 112000 112000
Add Ending Inv 35000 75 35 26250 12250
Then Less
Beg. Inv 53000 25 25 13250 13250
Equivalent Units 125,000 111000
When the FIFO Costs is :
Materials Conversion
Current Costs: $2,687,500 $3,429,900
FIFO Equivalent Units 125,000 111000
Cost per Unit $2,687,500/125000 $3,429,900/111000
Equivalent Cost Per unit $ 21.5 $ 30.9
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Your bank account pays an interest rate of 9 percent. You are considering buying a share of stock in XYZ Corporation for $90. After 1, 2, and 3 years, it will pay a dividend of $4. You expect to sell the stock after 3 years for $100.Is XYZ a good investment?
Answer: It is NOT a good investment.
Explanation:
Your bank account pays an interest of 9% per annum. This can be used as a discount rate to discount the dividends and the final Sales price to the present to see if the present value of Future benefits is more than what the stock is valued at now.
If the Present Value of the future benefits is higher than the cost now, XYZ is a good investment.
$4 are expected every year for 3 years and then on the third year, the stock will be sold for $100.
Discounting therefore gives us,
= (4 / (1 + 9%) ) + (4 / (1 + 9%)^2) + ( 4 / ( 1 + 9%) ^ 3) + ( 100 / ( 1 + 9%) ^ 3)
= 87.34
= $87.34
The Present Value of the future benefits including the future sales price is $87.34 which is less than the current cost of the stock at $90.
XYZ is NOT a good investment.
