Answer:
E. Performance Test
Explanation:
Based on the scenario being described in the question it can be said that this is an example of a performance test. These are simply tests in which an individual is observed performing the tasks/actions that are required of them. Their performance is evaluated based on a predefined guideline in order to rate their efficiency. Which is what the interviewer is doing to the candidates in order to find the best individual to hire as a teacher.
Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $12. At the start of January 2015, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $ 1,590,000
Accounts Receivable 245,000
Supplies 17,800
Equipment 922,000
Land 1,250,000
Building 435,000
Accounts Payable 137,000
Unearned Revenue 140,000
Notes Payable (due 2018) 81,000
Common Stock 2,800,000
Retained Earnings 1,301,800
In addition to the above accounts, VGC’s chart of accounts includes the following: Service Revenue, Salaries and Wages Expense, Advertising Expense, and Utilities Expense.
1. Analyze the effect of the January transactions (shown below) on the accounting equation, and indicate the account, amount, and direction of the effect (+ for increase and − for decrease) of each transaction.(Enter any decreases to account balances with a minus sign.)
a. Received $65,250 cash from customers for subscriptions that had already been earned in 2014.
b. Received $215,000 cash from Electronic Arts, Inc. for service revenue earned in January.
c. Purchased 10 new computer servers for $34,600; paid $14,400 cash and signed a three-year note for the remainder owed.
d. Paid $12,600 for an Internet advertisement run on Yahoo! in January.
e. Sold 19,200 monthly subscriptions at $12 each for services provided during January. Half was collected in cash and half was sold on account.
f. Received an electric and gas utility bill for $5,250 for January utility services. The bill will be paid in February.
g. Paid $420,000 in wages to employees for work done in January.
h. Purchased $3,300 of supplies on account.
Paid $3,300 cash to the supplier in (h).
Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Create T-accounts, enter the beginning balances shown above, post the journal entries to the T-accounts, and show the unadjusted ending balances in the T-accounts.
Prepare an unadjusted trial balance as of January 31, 2015.
Prepare an Income Statement for the month ended January 31, 2015, using unadjusted balances from part 4
Calculate net profit margin, expressed as a percent
Answer:
Explanation:
1 Journal Entries:
Date-----Accounts Title and Explanation-----Debit$--------Credit $
a Cash 65250
Service Revenue 65250
b Cash 215000
Accounts Receivable 215000
c Office Equipment (computers) 34600
Cash 14400
Note Payable 20200
d Advertisement expense 12600
Cash 12600
e Cash 115200
Accounts Receivable 115200
Service Revenue 230400
f Utility expenses 5250
Accounts Payable 5250
g Wages 420000
Cash 420000
h Supplies 3300
Accounts Payable 3300
i Accounts Payable 3300
Cash 3300
unadjusted trial balance as of January 31, 2015:
Account Title Debit $ Credit $
Cash 1535150
Accounts Receivable 145200
Supplies 21100
Equipment 956600
Land 1250000
Building 435000
Accounts Payable 142250
Unearned Revenue 140000
Notes Payable 101200
Common Stock 2800000
Retained Earnings 1301800
Service Revenue 295650
Advertisement 12600
Utilities 5250
Wages 420000
Total 4780900 4780900
Income Statement for the month ended January 31, 2015:
Service Revenues $295650
Less: Expenses:
Wages 420000
Advertisement 12600
Utility expense 5250 437850
Net Income (Loss) ($142200)
January Income Statement is showing loss of 48.1%.
Bookmark question for later Zoey is the CEO of a corporation she organized herself, and the corporation has 15 shareholders. The company operates in several states, as well as outside of the U.S. Her business consists mostly of training services for in-home medical care personnel. Her company would be a __________ corporation
Answer:
Professional corporation
Explanation:
A professional corporation is a type of corporation that is established by professional, majorly licensed individuals; they could include doctors, attorneys or architects. They mostly provide services that are related to the profession they practice. For example, architects establish an architectural firm to provide architectural services.
Professional corporations are usually established based on the laws binding the profession or the laws of the state. Most professional entrepreneurs can set up a professional corporation and can be established by one or more professionals.
In most professional corporations, the shareholders are usually only licensed individuals of the service rendered by the professional company.
Therefore, considering the information, Zoey's corporation would be a professional corporation.
(LaVilla) LaVilla is a village in the Italian Alps. Given its enormous popularity among
Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter
season and there are, on average, 1,200 skiers in the village. On average, skiers stay in
LaVilla for 10 days.
a. How many new skiers are arriving—on average—in LaVilla every day?
b. A study done by the largest hotel in the village has shown that skiers spend on average $50 per person on the first day and $30 per person on each additional day in local
restaurants. The study also forecasts that—due to increased hotel prices—the average
length of stay for the 2003/2004 season will be reduced to five days. What will be the
percentage change in revenues of local restaurants compared to last year (when skiers
still stayed for 10 days)? Assume that hotels continue to be fully booked!
Q2.6 (Highway) While driving home for the holidays, you can’t seem to get Little’s Law out of
Answer:
a) 120 skiers per day
b) 6.25% increase in revenue
Explanation:
a) If the average skier stays 10 days, the average turnover is 1/10 of the skiers per day, or 1200/10 = 120 skiers per day.
__
b) For a stay of n days, the average skier spends ...
50 +(n-1)30 = 20 +30n
and the average spending per day is ...
(20 +30n)/n = (20/n) +30
So, for a 10-day stay, the average skier spends in restaurants ...
20/10 +30 = 32 . . . . per day
And for a 5-day stay, the average skier will spend ...
20/5 +30 = 34 . . . . per day
The change in restaurant revenue is expected to be ...
(34 -32)/32 × 100% = 2/32 × 100% = 6.25%
Restaurant revenues will be 6.25% higher compared to last year.
Karen Bartlett was given a generic version of Sulindac, an anti-inflammatory drug. The result was that she developed toxic epidermal necrolysis, a disease that disfigured and blinded her. She brought suit alleging that there were warnings that should have been put on the generic version of the drug because issues with the skin infections were being reported. However, the manufacturer to Sulindac did not have FDA approval to place the warning on the product. The jury awarded Ms. Bartlett $21 million, and the generic manufacturer appealed the decision. Which of the following theories would be the best approach for the generic manufacturer to take in order to have the verdict reversed?
a. the commerce clause
b. substantive due process
c. preemption
d. due process because of the excessive size of the verdict
Answer:
option c: Preemption
Explanation:
preemption can simply be defined as the rule of law that proclaims the federal law and the constitution as the supreme law in all the land so therefore if there is a case whereby there is a conflict between a federal and a state law, the federal law will be in absolute control and this will render the state law to be void.
there are two primary occasion that will warrant preemption they are where clearly, federal law preempts state or local law, and also where preemption is implied. different kind of preemption can also be said to be express preemption, implied preemption, field preemption, conflict preemption and frustration of purpose preemption.
The expected average rate of return for a proposed investment of $800,000 in a fixed asset with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $360,000 for the four years is
Answer:
22.5%
Explanation:
For computation of return on investment first we need to find out the average investment and average income per year which is shown below:-
Average investment = Proposed investment ÷ Average
= $800,000 ÷ 2
= $400,000
Now, the Average income per year = Expected total net income ÷ Number of year
= $360,000 ÷ 4
= $90,000
Return on investment = Average income per year ÷ Average investment
= $90,000 ÷ $400,000
= 0.225
or
= 22.5%
A manufacturing firm is considering two locations for a plant to produce a new product. The two locations have fixed and variable costs as follows: Location FC (annual) VC (per unit) Atlanta $ 80,000 $ 20 Phoenix $ 140,000 $ 16 If the annual demand will be 20,000 units, what would be the cost advantage of the better location? HINT: Compare the total costs Select one: a. 40000 b. 20000 c. 460000 d. 60000
Answer:
Cost Advantage of different locations:
b. $20,000
Phoenix certainly had a cost advantage over Atlanta and based on this factor, it should be chosen for the new plant instead of any other city.
Explanation:
a) Total Costs of different locations:
Atlanta Phoenix
Fixed Cost $80,000 $140,000
Variable cost 400,000 320,000
Total Costs $480,000 $460,000
b) Variable costs
Atlanta Phoenix
Annual Demand 20,000 20,000
Variable cost/unit $20 $16
Total variable cost $400,000 $320,000
c) Cost Advantage is the competitive edge which location (or company) can have over another through reduced production or marketing costs or both so that it can offer cheaper prices or use excess profits to bolster promotion or distribution. In this case, the comparison is on the total cost, which is made of variable and fixed costs.
Sandhill Company reports the following operating results for the month of August: sales $382,500 (units 5,100), variable costs $245,000, and fixed costs $98,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 16% with no change in total variable costs or units sold.
2. Reduce variable costs to 59% of sales.
Compute the net income to be earned under each alternative.
1. Net Income
$enter a dollar amount
2. Net Income
$enter a dollar amount
Which course of action will produce the higher net income? select an option
Answer:
Results are below.
Explanation:
Giving the following information:
Sales $382,500 (units 5,100 $75 per unit)
variable costs $245,000 (48.04 per unit)
fixed costs $98,000.
Option 1:
Increase selling price by 16%.
New selling price= 75*1.16= 87
Sales= 5,100*87= 443,700
variable costs= (245,000)
fixed costs= (98,000)
Net income= 100,700
2. Reduce variable costs to 59% of sales.
Contribution margin= (382,500*0.41)= 156,825
fixed costs= (98,000)
Net income= 58,825
The most profitable option is the first one.
Raising Canes is a restaurant located primarily in the south and the owner is interested in expanding nationwide. Name and describe the various types of research suppliers and discuss which type could meet his need for finding the best locations in new markets.?
Answer:
- syndicate research service
- limited research service
- standardized research
- custom research
Explanation:
Note, Raising canes ones to expand nationwide, which of course is a monumental task.
- The syndicated research supplier using is already established standards for the research in exchange for a fee.
- Standardized research supplier is willing to meet the needs of clients by directing strategies best fitted to find suitable retail locations. It is the best type of research service to meet this client’s needs.
- Limited-service research are suppliers that are limited in their scope of operations such as data warehousing, or data processing.
Homestead Jeans Co. has an annual plant capacity of 67,000 units, and current production is 45,700 units. Monthly fixed costs are $54,400, and variable costs are $30 per unit. The present selling price is $40 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 19,600 units of the product at $33 each. Dawkins Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Homestead Jeans Co.
Required:
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
b. Briefly explain the reason why accepting this additional business will increase operating income.
c. What is the minimum price per unit that would produce a positive contribution margin?
a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
Answer:
Homestead Jeans Co.
a) Differential Analysis dated November 12
Options Reject (Alternative 1) Special Order Accept (Alternative 2)
Units sold 45,700 19,600 65,300
Revenue $1,828,000 $646,800 $2,474,800
Variable Cost -1,371,000 -588,000 -1959,000
Contribution $457,000 $58,800 $515,800
Fixed Costs 652,800 $0 652,800
Net Income/(Loss) -$195,800 $58,800 -$137,000
b) Accepting this order will reduce operating loss from $195,800 to $137,000, making a difference of $58,800. The reason is that the special order will make a contribution towards offsetting the fixed cost with a sum of $58,800.
c) Minimum price per unit to produce positive contribution margin:
The contribution margin per unit = Selling price minus variable cost per unit = $40 - $30 = $10 per unit.
To produce positive contribution margin, selling price must be more than variable cost. Selling price will be at least $31.
Therefore, the minimum price per unit to produce positive contribution is $31.
Explanation:
a) In differential analysis, only relevant costs are considered. Fixed costs are regarded as sunk and therefore irrelevant in making any differential decision.
b) The revenue is a function of selling price and quantity sold. While the variable costs equal units sold multiplied by the unit variable cost.
Compute ending merchandise inventory, cost of goodssold, and gross profit using the (1) FIFO inventory costingmethod, (2) LIFO inventory costing method, and (3) weighted-average inventory costing method. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.
Requirement 1.
FIFO
Plus:
Less:
Cost of goods sold
Requirement 2.
LIFO
Requirement 3.
Weighted-Average
Additional Information:
June.1 Beginning merchandise inventory 17 units at $15each
12 Purchase 5 units at $19each
20 Sale 14 units at $37each
24 Purchase 11 units at $23each
29 Sale 13 units at $37each
Answer:
a) Ending Merchandise Inventory and Cost of Goods Sold under FIFO:
Beginning Inventory, 17 units at $15each $255
Plus Purchases:
June 12 Purchase, 5 units at $19each 95
June 24 Purchase, 11 units at $23each 253
Cost of Goods Available for Sale $603
Less Ending Inventory 138
Cost of Goods Sold $465
b) Ending Merchandise Inventory and Cost of Goods Sold under LIFO:
Beginning Inventory, 17 units at $15each $255
Plus Purchases:
June 12 Purchase, 5 units at $19each 95
June 24 Purchase, 11 units at $23each 253
Cost of Goods Available for Sale $603
Less Ending Inventory 90
Cost of Goods Sold $513
c) Ending Merchandise Inventory and Cost of Goods Sold under Weighted Average:
Beginning Inventory, 17 units at $15each $255
Plus Purchases:
June 12 Purchase, 5 units at $19each 95
June 24 Purchase, 11 units at $23each 253
Cost of Goods Available for Sale $603
Less Ending Inventory 109.62
Cost of Goods Sold $493.38
2. Ending Inventory = 6 units (17 units + 5 - 14 + 11 - 13)
FIFO LIFO Weighted Average
Ending Inventory value = $23 *6 = $138; $15 *6 = $90; $18.27 *6 = $109.62
Weighted Average = Cost of Goods Available for Sale / Quantity Available for Sale = $603/33 = $18.27 per unit
Explanation:
FIFO: First In, First Out: This is a method of costing inventory which assumes that goods remaining in stock are those that were brought in last. This means that goods are sold out according to the time they are bought, with earlier bought goods being sold before later bought goods.
LIFO: Last In, First Out: This costing method assumes that goods that are sold are those that were bought later leaving those bought earlier to remain in stock. The entity using this method exhausts the last quantity bought before selling the earlier quantities.
Weighted Average: This is another technique which weighs the averages of the cost of inventory before determining the value of inventory. The weighted average method divides the cost of the goods available for sale by the number of those units still on the shelf. The result is the weighted average cost per unit, which can be used to assign a cost to both the ending inventory and the cost of goods sold.
Lansing, Inc., provided the following data for its two producing departments: Molding Polishing Total Estimated overhead $400,000 $80,000 $480,000 Direct labor hours (expected and actual): Form A 1,000 5,000 6,000 Form B 4,000 15,000 19,000 Total 5,000 20,000 25,000 Machine hours: Form A 3,500 3,000 6,500 Form B 1,500 2,000 3,500 Total 5,000 5,000 10,000 Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required:
1. Calculate the overhead rates for each department.
2. Using departmental rates, assign overhead to the two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours?
3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?
Answer:
1. Form A$80 per machine hour
Form B $4 per direct labor hour
2.Form A from $3.84 to $10.00
Form B from $7.30 to $3.60
3. Form A Unit overhead cost $ 3.87
Form B Unit overhead cost $ 7.28
Explanation:
Lansing, Inc
1. Overhead rates for each department will be;
Molding
$400,000/5,000
= $80 per machine hour
Polishing
$80,000/20,000
= $4 per direct labor hour
2. The overhead assignment:
Form A
($80 ×3,500) + ($4 ×5,000)
$280,000+$20,000
=$300,000
Form B
($80 ×1,500) + ($4 ×15,000)
$120,000+$20,000
=$180,000
Total applied overhead $300,000 and $180,000
Units of production Form A :
300,000÷30,000
=Unit overhead cost $10.00
Units of production Form B
180,000÷50,000
= Unit overhead cost $3.60
Plantwide rate Will be :
$480,000/25,000
= $19.20 per direct labor hour
Form A overhead cost in units will be:
$19.20 ×6,000/30,000
$19.20×0.2
$3.84
Form B overhead cost in unit will be :
$19.20 ×19,000/50,000
$19.20×0.38
$7.296 approximately $7.30
The plantwide rate for Form A
$3.84 to $10.00
The plantwide rate for Form B
$7.30 to $3.60
3. Overhead assignment:
Form A
($80 ×1,200) + ($4 ×5,000)
=$96,000+$20,000
=$116,000
Form B
($80 ×3,800) + ($4 ×15,000)
=$304,000 +$60,000
=$364,000
Total applied overhead
Form A $116,000
Form B $364,000
Units of production
Form A
$116,000 ÷ 30,000
=Unit overhead cost $ 3.87
Form B
$364,000÷ 50,000
Unit overhead cost $ 7.28
When compared to the plantwide unit overhead costs the cost will be $0.03 more higher for Form A and $0.02 less for Form B.
Which means that departmental rates may not cause a change in the assignments because It will depends on the complexity of each product and the way in which the resource demands are been made in each of the department.
Which of the following is NOT a pitfall an organization should avoid in strategic planning? Involving all managers rather than delegating planning to a "planner" Failing to communicate the plan to employees Failing to create a collaborative climate supportive of change Top managers not actively supporting the strategic-planning process Doing strategic planning only to satisfy accreditation or regulatory requirements
Answer:
Involving all managers rather than delegating planning to a "planner"
Explanation:
Strategic planning is a process of establishing the direction of a business. It assesses where the business is and where it is going. And the action plan needed to get to it's goal.
Delegating planning to a planner rather than involving all managers is an identified pitfall in strategic planning.
This is why Involving all managers rather than delegating planning to a "planner" is the correct answer since we are required to identify a non pitfall by the question.
On January 1, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, the cost of the available-for-sale securities was $252,000, and the fair value was $258,890. Prepare the adjusting entry to record the unrealized gain or loss on available-for-sale investments on December 31. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Dr Valuation Allowance for Available-for-Sale Investments $6890
Cr unrealized gain/(loss) on AFS investments $6890
Explanation:
The unrealized gain or loss on the available-for-sale securities is the difference between its cost of $252,000 and the fair value of $258,890 on 31st December.
Gain/(loss)=$258,890-$252,000=$6890 unrealized gain
The amount would be credited to unrealized gain/(loss) on AFS investments while Valuation Allowance for Available-for-Sale Investments would be debited with the same amount
Granite Construction Company is considering selling excess machinery with a book value of $328,100 (original cost of $449,200 less accumulated depreciation of $121,100) for $222,800, less a 6% brokerage commission. Alternatively, the machinery can be leased for a total of $217,860 for five years, after which it is expected to have no residual value. During the period of the lease, Granite Construction Company’s costs of repairs, insurance, and property tax expenses are expected to be $16,708.
Required:
A. Prepare a differential analysis, dated November 7 to determine whether Granite should lease (Alternative 1) or sell (Alternative 2) the machinery.
B. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain.
Answer:
A)
book value = $328,100
net selling cost = $222,800 - 6% = $209,432
net lease revenue = $217,860 - $16,708 = $201,152
Granite Construction
Differential analysis
November 7
Alternative 1 Alternative 2 Differential
SELL LEASE amount
Revenue from sales $222,800 $0 $222,800
- sales expenses ($3,368) $0 ($3,368)
Revenue from lease $0 $217,860 ($217,860)
- lease expenses $0 ($16,708) $16,708
total $209,432 $201,152 $8,280
B) Granite Construction should sell the equipment since it will earn $8,280 more than leasing it, and that without considering the value of money in time (discount rate on lease revenue).
Suppose that an issuing bank pays on documents that are conforming to the requirements of the letter of credit, but the seller has shipped worthless goods to the buyer. Which of the following statements, if any, are true?
a. As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
d. A and B
Answer:
the answer C
Explanation:
As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
Every year, the U.S. Census Bureau conducts an income survey of about 60,000 American families carefully selected to represent the whole population. The data collected help to measure income inequality in the economy. Which of the following causes the census data to inaccurately measure income inequality?
a) Very few people move from one income quintile to another over the years.
b) Higher-income families tend to have more persons to support.
c) In-kind transfers do not add to people's incomes but are counted as income.
Answer:
c) In-kind transfers do not add to people's incomes but are counted as income.
Explanation:
In the given scenario the aim of the census is to measure income inequality in the population selected.
If however the amount of income earned by individuals is not estimated accurately the results of the study will be inaccurate.
In kind transfers are usually goods and services that a person gets for free of at a reduced rate. They are not considered to be income.
When in kind transfers are counted as income and do not actually add up to income, we cannot get a true picture of income of participants of the income survey.
People who have low income but high in kind transfers will be considered high income earners which is not true.
The following data have been recorded for recently completed Job 323 on its job cost sheet. Direct materials cost was $2,063. A total of 33 direct labor-hours and 234 machine-hours were worked on the job. The direct labor wage rate is $18 per labor-hour. The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $24 per machine-hour. The total cost for the job on its job cost sheet would be:
Answer:
$8,723
Explanation:
Calculation for total cost for the job on its job cost sheet
Direct materials 2,063
Direct labor (33 hours × $18 per hour) 594
Manufacturing overhead (234 hours × $24 per hour) 5,616
Total manufacturing cost for job 8,273
Callas Corporation paid $380,000 to acquire 40 percent ownership of Thinbill Company on January 1, 20X9. The amount paid was equal to Thinbill’s underlying book value. During 20X9, Thinbill reported operating income of $45,000 and income of $20,000 from gains on derivative contracts that were designated as cash flow hedges, so these gains were reported in Other Comprehensive Income (OCI). Thinbill paid dividends of $9,000 on December 10, 20X9.
Required:
a. Give all journal entries that Callas Corporation recorded in 20X9, associated with its investment in Thinbill Company.
b. Give all closing entries at December 31, 20X9, associated with its investment in Thinbill Company.
Answer: Please refer to Explanation
Explanation:
A.
January 1 20X9
DR Investment in Thinbill Company $380,000
CR Cash $380,000
(To record Investment in Thinbill Company)
DR Investment in Thinbill Company $18,000
CR Income from Thinbill Company $18,000
(To record income from Thinbill company)
DR Investment in Thinbill Company $8,000
CR Unrealised gain on Investment $8,000
(To record share of OCI reported by Thinbill Company)
DR Cash $3,600
CR Dividend $3,600
(To record dividend received from Thinbill Company)
Workings
Income from Thinbill Comapny
Callas owns 40% of Thinbill company and so is entitled to 40% of income which is,
= 40% x 45,000
= $18,000
Dividends
= 9,000 x 40%
= $3,600
Unrealised Gain on Income
= 20,000 x 40%
= $8,000
b. The closing entries are as follows,
DR Income from Thinbill Company $18,000
CR Retained Earnings $18,000
(To recognise income from Thinbill Company)
DR Unrealised Gain on Investment $8,000
CR Accumulated OCI Income from Investee (Thinbill Company) $8,000
(To record accumulated OCI income)
Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of the net assets purchased equals $1,800,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at year-end? 3. Robinson believes that its employees provide superior customer service, and through their efforts, Robinson believes it has created $900,000 of goodwill. Should Robinson Company record this goodwill?
Answer:
Explanation:
Goodwill is defined as the excess in amount of the purchase price of a company over the fair value at acquisition.It is intangible in nature , meaning it can not be physically separated from the other assets. Example are patent , brand name , good employee relation.
1.
Goodwill calculation
Purchase price - $2,500,000
Fair value - $1,800,000
Goodwill - $700,000
2.
No
Under the IAS 36, impairment of assets , goodwill is not amortized but annually tested for impairment as amortization is applicable to intangible assets with a definite useful life while intangible assets with indefinite useful life are annually tested for impairment to evaluate a loss in value experienced.
3
No
Under IAS 38 , Internally generated goodwill are not recognized as no related cost is incurred towards achieving a future benefit
Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,900 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:
Answer:
Allowance for Doubtful Accounts $2,900
To Accounts Receivable $2,900
(Being the written off amount is recorded)
Explanation:
The journal entry to record the write off of the account using allowance method is shown below:
On May 3
Allowance for Doubtful Accounts $2,900
To Accounts Receivable $2,900
(Being the written off amount is recorded)
For recording this we debited the allowance for doubtful accounts as it reduced the allowance and credited the account receivable as it decreased the assets so that the proper recording of the given transaction could be done
What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
Answer:
$340,000
Explanation:
Statement of cash flow ( year-end December 31, 2012)
Operating activities Cashflow
Net Income = $5,000,000
Add back: Depreciation = $440,000
Net cashflow = $5,440,000
Investing activities Cashflow
Cash paid for machinery = ($5,400,000)
Net cashflow = ($5,400,000)
Financing activities Cashflow
Cash receipt from issuing long term debt =$1,000,000
Cash paid for dividends =(800,000)
Net cashflow =$200,000
Net increase = ($5,440,000-$5,400,000+$200,000)
Net increase in cash = $240,000
Opening balance as at 1 Jan 2012 =$100,000
Closing balance as at 31 Dec 2012 =($100,000+$240,000) = $340,000
If 4 million kegs of beer are sold, , which means that: It would be fairer for society to devote fewer resources to the production of beer. It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient quantity of resources to the production of beer. It would be more efficient for society to devote more resources to the production of beer. If 12 million kegs of beer are sold, , which means that: It would be fairer for society to devote more resources to the production of beer. Society is currently devoting the efficient amount of resources to the production of beer. It would be fairer for society to devote fewer resources to the production of beer. It would be more efficient for society to devote fewer resources to the production of beer. The efficient allocation of resources would result in the production of kegs of beer.
Answer:
1. It would be more efficient for society to devote more resources to the production of beer.
2. Society is currently devoting the efficient amount of resources to the production of beer.
Explanation:
1. If 4 million kegs of beer are sold, the marginal benefit exceeds marginal cost which means that: the society values this quantity of kegs of beer and would be more beneficial and efficient if the society devote more resources to beer production.
2. If 12 million kegs of beer are sold, where marginal cost equal marginal benefit, it means that this is a good point in which shows an efficient allocation of resources to beer production because the marginal cost of the resources is equal to the marginal benefit of each keg of beer.
If 4 million kegs of beers are sold, marginal benefit exceeds the marginal cost, which means that :
It would be more efficient for society to devote more resources to the production of beers.
Reason :
the advantage of an additional unit of producing a good is more than the cost of producing it.hence it is good to produce more where marginal benefit equals marginal cost.If 12 million kegs of beers are sold, marginal cost exceeds the marginal benefit, which means that :
It would be more efficient for society to devote fewer resources to the production of beers.
Reason :
the advantage of an additional unit of producing a good is less than the cost of producing it.hence it is good to produce less where marginal benefit equals marginal cost.Learn More :
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Kat Outfitting currently has $22,500 in cash. The company owes $49,500 to suppliers for merchandise and $52,500 to the bank for a long-term loan. Customers owe the company $41,000 for their purchases. The inventory has a book value of $76,800 and an estimated market value of $72,000. If the store compiled a balance sheet as of today, what would be the book value of the current assets?
Answer:
The book value of the current assets is $140,300
Explanation:
Cash = $22,500
Amount owed by company = $49,500
Amount Owed by Customers = $41,000
Book Value of Inventory = $76,800
Estimated market value = $72,000
Book Value of Current Assets = Cash + Amount Owed by Customers + Book Value of Inventory
Book Value of Current Assets = $22,500 + $41,000 + $76,800
Book Value of Current Assets = $140,300
Ebbers Corporation overstated its ending inventory balance by $7,000 in the current year. What impact will this error have on cost of goods sold and gross profit in the current year and following year?
Answer:
ZOOM
Explanation:
Adjustment for Unearned Revenue
On June 1, 20Y2, Herbal Co. received $41,250 for the rent of land for 12 months.
Journalize the adjusting entry required for unearned rent on December 31, 20Y2.
Set up an Unearned Fees T-account. Recall that the unearned revenue account is decreased (debited) for the amount of the revenue that has been earned, and the related revenue account is increased (credited). The balance before adjustment will be the normal balance for the unearned liability account. The number given for the end of the year is to be the new balance after adjusting out the revenue earned. What amount is this difference between the pre-adjustment balance and the post-adjustment balance?
Answer:
oshe mush have been out of her head
Explanation:
0she lost her dog in the microwave
Fine Stationery makes personalized stationery of the highest quality. The company maintains a stock of blank note cards, calling cards, stationery, and envelopes. Customers order online, indicating the product type, personalization (monogram, name), font style, and color. The following schedule is typical of an order of 100 calling cards:
Activity Minutes
Process order ............... 3
Wait for production to begin......... 55
Pull calling cards from inventory........ 15
Set up machine for font style and color.... 2
Process calling cards............ 40
Inspect cards.............. 5
Wait for packaging ............ 16
Package cards for shipping......... 2
Wait for pickup by FedEx......... 120
Required:
Calculate the manufacturing cycle efficiency.
Answer:
The manufacturing cycle efficiency is 0.219
Explanation:
In order to calculate the manufacturing cycle efficiency we would have to calculate the following formula:
manufacturing cycle efficiency=value added time/throughput time
value added time= 40 min
throughput time=Process time+Inspection time+movie time+Queue time
throughput time=40+5+15+2+120
throughput time=182 min
Therefore, manufacturing cycle efficiency=40/182
manufacturing cycle efficiency=0.219
The manufacturing cycle efficiency is 0.219
Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance.
Accounts Payable $ 26,800
Accounts Receivable 17,200
Accumulated Depreciation—
Equipment 68,000
Cash 8,000
Common Stock 35,000
Cost of Goods Sold 614,300
Freight-Out 6,200
Equipment 157,000
Depreciation Expense 13,500
Dividends 12,000
Gain on Disposal of Plant Assets 2,000
Income Tax Expense 10,000
Insurance Expense 9,000
Interest Expense 5,000
Inventory 26,200
Notes Payable 43,500
Prepaid Insurance 6,000
Advertising Expense 33,500
Rent Expense 34,000
Retained Earnings 14,200
Salaries and Wages Expense 117,000
Sales Revenue 904,000
Salaries and Wages Payable 6,000
Sales Returns and Allowances 20,000
Utilities Expense 10,600
Answer:
Wolford Department Store
Income Statement
For the Year Ended November 30,2017
Sales Revenue $904,000
Sales Returns and Allowances ($20,000 )
Net Sales $884,000
Cost of Goods Sold ($614,300)
Gross profit $269,700
Operating expenses:
Wages Expense $117,000 Advertising Expense $33,500 Rent Expense $34,000 Depreciation Expense $13,500 Insurance Expense $9,000 Utilities Expense $10,600Freight-Out $6,200Total operating expenses ($223,800)
Income from operations $45,900
Other revenues:
Gain on Disposal of Plant Assets $2,000
Other expenses:
Interest Expense ($5,000 )
Income before income taxes $42,900
Income Tax Expense ($10,000)
Net income after taxes $32,900
Wolford Department Store
Balance Sheet
For the Year Ended November 30,2017
Assets:
Cash $8,000
Accounts Receivable $17,200
Prepaid Insurance $6,000
Inventory $26,200
Equipment $157,000
Accumulated Depreciation - Equipment (68,000)
Total Assets: $146,400
Liabilities and Stockholders' Equity:
Accounts Payable $26,800
Wages Payable $6,000
Notes Payable $43,500
Common Stock $35,000
Retained Earnings $35,100
Total Liabilities and Stockholders' Equity: $146,400
Wolford Department Store
Statement of Retained Earnings
For the Year Ended November 30,2017
Retained earnings at the beginning of the period: $14,200
Net income after taxes: $32,900
Dividends ($12,000)
Retained earnings at he end of the period: $35,100
a. The Wolford Department Store's Multi-level Income Statement, Balance Sheet, and Statement of Retained Earnings as of November 30, 2017 are as follows:
Wolford Department Store
Income Statement
For the Year Ended November 30,2017
Sales Revenue $904,000
Sales Returns and Allowances ($20,000)
Net Sales $884,000
Cost of Goods Sold ($614,300)
Gross profit $269,700
Operating expenses:
Wages Expense $117,000
Advertising Expense 33,500
Rent Expense 34,000
Depreciation Expense 13,500
Insurance Expense 9,000
Utilities Expense 10,600
Freight-out 6,200
Total operating expenses ($223,800)
Income from operations $45,900
Other revenues:
Gain from Disposal of Plant Assets $2,000
Other expenses:
Interest Expense ($5,000)
Income before Income Taxes $42,900
Income Tax Expense ($10,000)
Net Income After Taxes $32,900
Wolford Department Store
Balance Sheet
As of November 30,2017
Assets:
Current Assets:
Cash $8,000
Accounts Receivable 17,200
Prepaid Insurance 6,000
Inventory 26,200
Current assets $57,400
Long-term assets:
Equipment $157,000
Accumulated Depreciation (68,000) $89,000
Total Assets $146,400
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $26,800
Wages Payable 6,000
Current liabilities $32,800
Long-term liabilities
Notes Payable $43,500
Total liabilities $76,300
Equity:
Common Stock $35,000
Retained Earnings 35,100
Total Equity $70,100
Total Liabilities & Stockholders' Equity $146,400
Wolford Department Store
Statement of Retained Earnings
As of November 30,2017
Retained earnings 1 Dec. 2016 $14,200
Net income after taxes 32,900
Dividends ($12,000)
Retained earnings, Nov. 30, 2017 $35,100
b) The profitability ratios are computed as follows:
1. Profit Margin = (Net Income/Net Sales x 100)
= $32,900/$884,000 x 100
= 3.72%
2. Gross Profit rate = Gross Profit/Net Sales x 100)
= $269,700/$884,000 x 100
= 30.51%
c. If the net sales increases by 15%, the Net sales = $1,016,600 ($884,000 x 1.15)
If Gross profit increases by $40,443, the Gross profit = $310,143 ($269,700 + $40,443)
If Expenses increase by $58,600, the total operating Expenses = $282,400 ($223,800 + $58,600)
Revised Net Income:
Gross Profit $310,143
Total operating expenses (282,400)
Income from operations $27,743
Other revenues:
Gain from Disposal of Plant Assets $2,000
Other expenses:
Interest Expense ($5,000)
Income before Income Taxes $24,743
Income Tax Expense ($10,000)
Net Income After Taxes $14,743
b) The profitability ratios are computed as follows:
1. Profit Margin = (Net Income/Net Sales x 100)
= $14,743/$1,016,600 x 100
= 1.45%
2. Gross Profit rate = Gross Profit/Net Sales x 100)
= $310,143/$1,016,600 x 100
= 30.51%
d. With the proposed changes, the gross profit rate remains the same (without any impact) because the net sales increased by the same rate (15%) as the cost of goods sold and the gross profit.
However, the net income reduced drastically, especially with the income tax remaining the same amount.
Thus, without the income tax effect, there is no merit in this proposal as it reduced the net income margin from 3.72% to 1.45%.
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Investment Management Inc. (IMI) uses the capital market line to make asset allocation recommendations. IMI derives the
following forecasts:
• Expected return on the market portfolio: 12%.
• Standard deviation on the market portfolio: 20%.
• Risk-free rate: 5%.
Samuel Johnson seeks 'Ml's advice for a portfolio asset allocation. Johnson informs IMI that he wants the standard deviation of the portfolio to equal half of the standard deviation for the market portfolio. Using the capital market line, what expected return can IMI provide subject to Johnson's risk constraint?
Answer:
The expected return that IMI can provide subject to Johnson's risk constraint is 8.5%
Explanation:
Capital Market Line (CML)
Expected return on the market portfolio, E([tex]r_m[/tex]) = 12 %
Standard deviation on the market portfolio, σ[tex]_p[/tex] = 20%
Risk-free rate, [tex]r_f[/tex] = 5%
E([tex]r_c[/tex]) = [tex]r_f[/tex] + [ E([tex]r_p[/tex]) - [tex]r_f[/tex] ] × ( σ[tex]_c[/tex] ÷ σ[tex]_p[/tex])
= 0.05 + [ 0.12 - 0.05] × (0.10 ÷ 0.20)
= 8.5%
The owner of a small firm has just purchased a personal computer, which she expects will serve her for the next two years. The owner has been told that she "must" buy a surge suppressor to provide protection for her new hardware against possible surges or variations in the electrical current, which have the capacity to damage the computer. The amount of damage to the computer depends on the strength of the surge. It has been estimated that there is a 3% chance of incurring 350 dollar damage, 5% chance of incurring 250 dollar damage, and 12% chance of incurring 100 dollar damage from a surge within the next two years. An inexpensive suppressor, which would provide protection for only one surge, can be purchased. How much should the owner be willing to pay if she makes decisions on the basis of expected value
Answer:
$35
Explanation:
The computation of the expected value is shown below;
As we know that
= Estimated chance of damage percentage × dollar damage + Estimated chance of damage percentage × dollar damage + Estimated chance of damage percentage × dollar damage
= 3% × $350 + 5% × $250 + 12% × $100
= $10.5 + $12.5 + $12
= $35
We simply multiplied the estimated chance of damage percentage with the dollar damage and then added the other two so that the expected value could arrive
Hi-Tech, Inc., reports net income of $65.0 million. Included in that number are depreciation expense of $5.5 million and a loss on the sale of equipment of $1.5 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.5 million, $3.5 million, and $4.5 million, respectively. What are Hi-Tech's net cash flows from operating activities?
Answer:
Net Cash Flows from operating activities is $68.5 million.
Explanation:
The indirect Method would be used here because all we will find the cash expenses and revenues that were converted into within the year and are reported in the income statement by calculating the increase and decrease in the current assets and current liabilities. Here we will also eliminate the non cash expense effects by adding them back.
The net cash flows from operating activities can be calculated using the following method:
Millions
1. Net Income 65
Add Non Cash Deductions
2. Depreciation 5.5
3. Loss on sale of Equipment 1.5
Add / (Less) the increase or
decrease in current Assets or
liabilities
4. Increase in Trade Receivables (2.5)
5. Increase in Trade Payables 3.5
6. Increase in inventory (4.5)
Net Cash Flows from operating activities $68.5
