Answer:
A commercial bank is a type of bankthat provides services such as accepting deposits, making business loans, and offering basic investment products that is operated as a business for profit.
Cherokee Inc. is a merchandiser that provided the following information: Amount Number of units sold 13,000 Selling price per unit $ 16 Variable selling expense per unit $ 2 Variable administrative expense per unit $ 3 Total fixed selling expense $ 21,000 Total fixed administrative expense $ 15,000 Beginning merchandise inventory $ 11,000 Ending merchandise inventory $ 25,000 Merchandise purchases $ 88,000 Required: 1. Prepare a traditional income statement. 2. Prepare a contribution format income statement.
Answer:
1. Gross margin is $134,00; and Net profit is $33,000.
2. Contribution margin is $69,000; and Net profit is $33,000.
Explanation:
To prepare the statements, the following calculations are done first:
Sales revenue = Number of units sold * Selling price per unit = 13,000 * $16 = $208,000
Variable selling expenses = Number of units sold * Variable selling expense per unit = 13,000 * $2 = $26,000
Total selling expenses = Variable selling expenses + Total fixed selling expense = $26,000 + $21,000 = $47,000
Variable administrative expense = Number of units sold * Variable administrative expense per unit = 13,000 * $3 = $39,000
Total administrative expense = Variable administrative expense + Total fixed administrative expense = $39,000 + $15,000 = $54,000
Cost of goods sold = Beginning merchandise inventory + Merchandise purchases - Ending merchandise inventory = $11,000 + $88,000 - $25,000 = $74,000
The statements are now prepared as follows:
1. Prepare a traditional income statement.
The purpose of the traditional income statement is to obtain the gross margin and the net profit. These can be obtained as follows:
Cherokee Inc.
Traditional income statement
Details $
Sales 208,000
Cost of goods sold (74,000)
Gross margin 134,000
Selling and Admin. Expenses:
Selling expenses (47,000)
Administrative expense (54,000)
Net profit 33,000
2. Prepare a contribution format income statement
The purpose of the contribution format income statement is to obtain the contribution margin and the net profit. These can be obtained as follows:
Cherokee Inc.
Contribution format income statement
Details $
Sales 208,000
Variable expenses:
Cost of goods sold (74,000)
Selling expenses (26,000)
Administrative expense (39,000)
Contribution margin 69,000
Fixed expenses:
Selling expenses (21,000)
Administrative expense (15,000)
Net profit 33,000
Note:
Note that under both methods, the net profit is the same. This always holds no matter the method used.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Amount Number of units sold 13,000
Selling price per unit $16
Variable selling expense per unit $2
Variable administrative expense per unit $3
Total fixed selling expense $21,000
Total fixed administrative expense $15,000
Beginning merchandise inventory $11,000
Ending merchandise inventory $25,000
Merchandise purchases $88,000
First, we need to calculate the cost of goods sold:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 11,000 + 88,000 - 25,000= 74,000
1) Traditional income statement:
Sales= 13,000*16= 208,000
COGS= (74,000)
Gross profit= 134,000
Total selling expense= (2*13,000) + 21,000= (47,000)
Total administrative expense= (3*13,000) + 15,000= (54,000)
Net operating income= 33,000
2) Contribution format income statement:
Total variable cost= (3 + 2)*13,000 + 74,000= $139,000
Sales= 208,000
Total variable cost= (139,000)
Contribution margin= 69,000
Total fixed selling expense= (21,000)
Total fixed administrative expense= (15,000)
Net operating income= 33,000
Martha, the chief designer of StyleSmartz, is considered a role model by her design team members for her role as an effective leader. Martha is considered an effective leader by the team due to her tendency to _____a. motivate employees by satisfying their basic necessities or low-level needsb. adopt a zero-tolerance stand on erring and unproductive employeesc. discourage employees from letting their emotions affect their workd. engage in management openness by encouraging members to voice their opinion
Answer:
engage in management openness by encouraging members to voice their opinion.
Explanation:
An important characteristic of management is approachability and openness of the manager to ideas of employees. This gives the manager an idea of the actual state of the workplace facilitating effective resolution of issues as they arise.
When employees know they can freely express themselves without being reprimanded, they better express themselves about challenges encountered.
Also opportunities and methods of doing things better is communicated to the manager
Homeowners enjoy many benefits, including a federal tax deduction for state and local property taxes paid. Fishers, Indiana, was voted one of the top 100 best places to live in 2017 by Money magazine. With population of 86,357, a median home price of $236,167, and estimated property taxes at 10.6 mills, how much does the average homeowner pay in property taxes?
Answer:
The average homeowner pay $2,503.37 in property taxes
Explanation:
Population = 86,357
Median home price = $236,167
Estimated property taxes = 10.6 mills
Property Tax 1 Mills equals to 1/1000 Units . That Means Property tax Need to pay $1 For $1000 Assets able value .
Average homeowner pay in property taxes = Home Price × (Mills ÷ 1000)
= $236,167 × (10.6 ÷ 1000)
= $236,167 × 0.0106
=$2,503.37
The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of $49,700, net fixed assets of $248,300, current liabilities of $28,400, and long-term debt of $101,600.
A. Calculate Caraway's stockholders' equity.B. What is the firm's net working capital?
Answer:
A.
$168,000
B.
$21,300
Explanation:
A.
As per accounting equation
Assets = Liabilities + Equity
Equity = Assets - Liabilities
Placing values in the equation
Equity = ( Current assets + Net Fixed Assets ) - ( Current Liabilities + Long term debt )
Equity = ( $49,700 + 248,300 ) - ( 28,400 + 101,600)
Equity = $168,000
B.
Net Working capital is the net of current assets and current liabilities of the company.
Use following formula of net working capital
Net working capital = Current assets - current liabilities
Net working capital = $49,700 - 28,400
Net working capital = $21,300
Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 490 $ 2.49 Apr. 20 Purchase 410 2.72 Dunbar sold 600 units of inventory during the month. Ending inventory assuming FIFO would be
Answer:
$816
Explanation:
Calculation for Dunbar Incorporated Ending inventory
Formula for Ending inventory units using FIFO method:
Ending inventory units = Beginning balance + Purchase -sales
Leg plug in the formula
490+410 - 600
= 300units
Calculation for Ending inventory
Ending inventory = 300*2.72
= $816
Therefore the Ending inventory assuming FIFO method is use would be $816
Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one machine. The cartridge holder (which you hold when you use the pen)is manufactured on another machine. Monthly capacities and production levels are as follows:
Machine 1 (Cartridge) Machine 2 (Holders)
Monthly capacity 1,000,000 800,000
Monthly production 800,000 800,000
The company could sell 1,000,000 pens per month. The units (cartridge inside of holder) sell for $10.40 each and have a variable cost of $4.10 each. Fixed costs are $4,200,000 per month.
Required:
a. Is there a bottleneck at Playful Pens on Machine 1 or Machine 2?
A. Machine 1
B. Machine 2
b. Playful Pens's production supervisors state they could increase machine 2's capacity by 200,000 per month by producing holders on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $1.10 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $820,000 per month.
b-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential Revenues
Differntial costs:
Variable
Fixed
b-2. Should Playful Pens produce holders on the weekend?
Yes
No
c. Independent of the situation in requirement (b), Playful Pens could expand the capability of machine 2 by adding additional workers to perform ongoing maintenance. This would increase its capacity by 100,000 holders per month. This would not affect sales price or fixed costs, but would increase variable cost to $4.62 per unit for all units produced.
c-1. Calculate the differential operating profit (loss). (Losses and amounts to be deducted should be indicated with a minus sign.)
Differential revenues
Differential costs:
Variable cost increase on current production:
Variable cost on new production:
c-2. Should Playful Pens expand Machine 2's capability by adding these additional workers?
Yes
No
Answer:
a) B. Machine 2
b) $220,000
b-2) Yes , positive differential profit.
c-1) $162,000
c-2) Yes , positive differential profit.
Explanation:
B) Differential revenues = $10.40 x 200,000 = $2,080,000
Differential costs:
Variable cost on new production = $5.20 x 200,000 = $1,040,000
Fixed costs = $820,000
differential profit = $2,080,000 - $1,040,000 - $820,000 = $220,000
c) Differential revenues = $10.40 x 100,000 = $1,040,000
Differential costs:
Variable cost increase on current production = ($4.62 - $4.10) x 800,000 = $416,000
Variable cost on new production = $4.62 x 100,000 = $462,000
differential profit = $1,040,000 - $878,000 = $162,000
Flynn Industries has three activity cost pools and two products. It estimates production 3,000 units of Product BC113 and 1,500 of Product AD908. Having identified its activity cost pools and the cost drivers for each pool, Flynn accumulated the following data relative to those activity cost pools and cost drivers.
Annual Overhead Data Estimated Use of Cost Drivers per Product
Activity Cost Pools Cost Drivers Estimated Overhead Estimated Use of Cost Drivers per Activity Product BC113 Product AD908
Machine setup Setups $16,000 40 25 15
Machining Machine hours 110,000 5,000 1,000 4,000
Packing Orders 30,000 500 150 350
Required:
Prepare a schedule showing the computations Of the activity-based Overhead rates per cost driver.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Machine setup Setups $16,000 40 25 15
Machining Machine hours $110,000 5,000 1,000 4,000
Packing Orders $30,000 500 150 350
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
Machine setup= 16,000/(40+25+15)= $200 per setup
Machining= 110,000/ (5,000 + 1,000 + 4,000= $11 per machine hour
Packing= 30,000/ (500 + 150 + 350)= $30 per order
"Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $100,000. The equipment will have an initial cost of $400,000 and have a 5-year life. If the salvage value of the equipment is estimated to be $75,000, what is the payback period
Answer:
4 years
Explanation:
Payback period calculates the amount of the time it takes for the amount invested in a project to be recovered from the cumulative cash flow.
Payback period = amount invested / annual cash flows
= $400,000 / $100,000 = 4 years
I hope my answer helps you
Marigold Corp. budgeted costs for 70000 linear feet of block are: Fixed manufacturing costs$24000 per month Variable manufacturing costs$16 per linear foot Marigold installed 40000 linear feet of block during March. How much is budgeted total manufacturing costs in March
Answer:
$664,000
Explanation:
The computation of the total budgeted manufacturing cost is shown below:
Total manufacturing costs = Variable manufacturing cost + Fixed manufacturing cost
= ($16 × 40,000 units ) + $24,000
= $664,000
We simply added the variable manufacturing cost and the Fixed manufacturing cost so that the total budgeted manufacturing cost could come and the same is to be considered
Vanishing Games Corporation (VGC) operates a massively multiplayer online game, charging players a monthly subscription of $10. At the start of January 2015, VGC’s income statement accounts had zero balances and its balance sheet account balances were as follows:
Cash $2,360,000
Accounts Receivable 152,000
Supplies 19,100
Equipment 948,000
Land 1,920,000
Building 506,000
Accounts Payable 109,000
Unearned Revenue 152,000
Notes Payable (due 2018) 80,000
Common Stock 2,200,000
Retained Earnings 3,364,100
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.
Required:
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 $52,250 cash from customers for subscriptions that had already been earned in 2014.
b. Received $235,000 cash from Electronic Arts, Inc. for service revenue earned in January.
c. Purchased 10 new computer servers for $41,900; paid $12,000 cash and signed a three-year note for the remainder owed.
d. Paid $15,600 for an Internet advertisement run on Yahoo! in January.
e. Sold 10,100 monthly subscriptions at $10 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 $5,900 for January utility services. The bill will be paid in February.
g. Paid $310,000 in wages to employees for work done in January.
h. Purchased $5,100 of supplies on account.
i. Paid $5,100 cash to the supplier in (h).
2. Prepare journal entries for the January transactions listed in part 1, using the letter of each transaction as a reference.
3. 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.
4. Prepare an unadjusted trial balance as of January 31, 2015.
Answer:
Vanishing Games Corporation (VGC)
1. Analysis of the effect of transactions on the accounting equation:
Assets = Liabilities + Equity
Assets (Cash) increases +$52,500 and Assets (Accounts Receivable) decreases -$52,500 = Liabilities + Equity.
b. Assets (Cash) increases +$235,000 = Liabilities + Equity (Retained Earnings) increase + $235,000.
c. Assets (Equipment) increases +41,900; Cash decreases -$12,000 = Liabilities (Notes Payable) increase +$29,900 + Equity.
d. Assets (Cash) decreases -$15,600 = Liabilities + Equity (Retained Earnings) decrease - $15,600.
e. Assets (Cash) increases + $50,500 and (Accounts Receivable) increases + $50,500 = Liabilities + Equity (Retained Earnings) increase + $101,000.
f. Assets = Liabilities (Accounts Payable) increase +$5,900 + Equity (Retained Earnings) decrease -$5,900.
g. Assets (Cash) decreases - $310,000 = Liabilities + Equity (Retained Earnings) decreases - $310,000.
h. Assets (Supplies) increase + $5,100 = Liabilities (Accounts Payable) increase +$5,100 + Equity.
i. Assets (Cash) decreases - $5,100 = Liabilities (Accounts Payable) decrease - $5,100 + Equity.
2. Journal Entries:
a. Debit Cash Account $52,500
Credit Accounts Receivable $52,500
To record cash from customers.
b. Debit Cash Account $235,000
Credit Service Revenue $235,000
To record cash for service revenue.
c. Debit Equipment $41,900
Credit Cash Account $12,000
Credit Notes Payable $29,900
To record purchase of 10 new computer services
d. Debit Advertising Expense $15,600
Credit Cash Account $15,600
To record payment for advertising.
e. Debit Cash Account $50,500
Debit Accounts Receivable $50,500
Credit Service Revenue $101,000
To record subscriptions for services sold.
f. Debit Utilities Expense $5,900
Credit Utilities Payable $5,900
To record utilities expense.
g. Debit Wages & Salaries Expense $310,000
Credit Cash Account $310,000
To record wages paid.
h. Debit Supplies Account $5,100
Credit Accounts Payable $5,100
To record purchase of supplies on account.
i. Debit Accounts Payable $5,100
Credit Cash Account $5,100
To record payment on account.
3. T-Accounts:
Cash Account
Beginning Balance $2,360,000 c. Equipment 12,000
a. Accounts Receivable 52,250 d. Advertising Expense 15,600
b. Electronic Arts, Inc. 235,000 g. Wages & Salaries 310,000
e. Service Revenue 50,500 i. Accounts Payable 5,100
Balance c/d 2,355,050
2,697,750 2,697,750
Balance b/d 2,355,050
Accounts Receivable
Beginning Balance 152,000 a. Cash 52,250
e. Service Revenue 50,500 Balance c/d 150,250
202,500 202,500
Balance b/d 150,250
Supplies
Beginning Balance 19,100 Balance c/d 24,200
Accounts Payable 5,100
24,200 24,200
Balance b/d 24,200
Equipment
Beginning Balance 948,000 Balance c/d 989,900
c. Cash 12,000
c. Notes Payable 29,900
989,900 989,900
Balance b/d 989,900
Land
Beginning Balance 1,920,000
Building
Beginning Balance 506,000
Accounts Payable
i. Cash 5,100 Beginning Balance 109,000
Balance c/d 109,000 h. Supplies 5,100
114,100 114,100
Balance b/d 109,000
Unearned Revenue
Beginning Balance 152,000
Advertising Expense
d. Cash 15,600
Utilities Expense
f. Utilities Payable 5,900
Utilities Payable
f. Utilities Expense 5,900
Wages & Salaries Expense
g. Cash 310,000
Service Revenue
b. Cash 235,000
Balance c/d 336,000 e. Cash 50,500
e. Accounts Receivable 50,500
336,000 336,000
Balance b/d 336,000
Notes Payable (due 2018)
Balance c/d 109,900 Beginning Balance 80,000
c. Equipment 29,900
109,900 109,900
Balance b/d 101,000
Common Stock
Beginning Balance 2,200,000
Retained Earnings
Beginning Balance 3,364,100
4. Trial Balance as at January 31:
Debit Credit
Cash $2,355,050
Accounts Receivable 150,250
Supplies 24,200
Equipment 989,900
Land 1,920,000
Building 506,000
Advertising expense 15,600
Utilities Expense 5,900
Utilities Payable $5,900
Wages & Salaries 310,000
Service Revenue 336,000
Notes Payable 109,900
Accounts Payable 109,000
Unearned Revenue 152,000
Common Stock 2,200,000
Retained Earnings 3,364,100
Total $6,276,900 $6,276,900
Explanation:
a) Note: the adjustment of the Utilities could have been eliminated to produce the same result, with totals reduced by $5,900.
Answer 1:
Analysis of the effect of transactions on the accounting equation:
Assets = Liabilities + Equitya. Assets (Cash) increases +$52,500 and Assets (Accounts Receivable) decreases -$52,500 = Liabilities + Equity.
b. Assets (Cash) increases +$235,000 = Liabilities + Equity (Retained Earnings) increase + $235,000.
c. Assets (Equipment) increases +41,900; Cash decreases -$12,000 = Liabilities (Notes Payable) increase +$29,900 + Equity.
d. Assets (Cash) decreases -$15,600 = Liabilities + Equity (Retained Earnings) decrease - $15,600.
e. Assets (Cash) increases + $50,500 and (Accounts Receivable) increases + $50,500 = Liabilities + Equity (Retained Earnings) increase + $101,000.
f. Assets = Liabilities (Accounts Payable) increase +$5,900 + Equity (Retained Earnings) decrease -$5,900.
g. Assets (Cash) decreases - $310,000 = Liabilities + Equity (Retained Earnings) decreases - $310,000.
h. Assets (Supplies) increase + $5,100 = Liabilities (Accounts Payable) increase +$5,100 + Equity.
i. Assets (Cash) decreases - $5,100 = Liabilities (Accounts Payable) decrease - $5,100 + Equity.
Answer 2:
Journal Entriesa. Debit Cash Account $52,500
Credit Accounts Receivable $52,500
(To record cash from customers)
b. Debit Cash Account $235,000
Credit Service Revenue $235,000
(To record cash for service revenue)
c. Debit Equipment $41,900
Credit Cash Account $12,000
Credit Notes Payable $29,900
(To record purchase of 10 new computer services)
d. Debit Advertising Expense $15,600
Credit Cash Account $15,600
(To record payment for advertising.)
e. Debit Cash Account $50,500
Debit Accounts Receivable $50,500
Credit Service Revenue $101,000
(To record subscriptions for services sold)
f. Debit Utilities Expense $5,900
Credit Utilities Payable $5,900
(To record utilities expense)
g. Debit Wages & Salaries Expense $310,000
Credit Cash Account $310,000
(To record wages paid)
h. Debit Supplies Account $5,100
Credit Accounts Payable $5,100
(To record purchase of supplies on account)
i. Debit Accounts Payable $5,100
Credit Cash Account $5,100
(To record payment on account)
Answer 3:
T-AccountsCash Account
Beginning Balance $2,360,000 c. Equipment 12,000
a. Accounts Receivable 52,250 d. Advertising Expense 15,600
b. Electronic Arts, Inc. 235,000 g. Wages & Salaries 310,000
e. Service Revenue 50,500 i. Accounts Payable 5,100
Balance c/d 2,355,050
Total 2,697,750 2,697,750
Balance b/d 2,355,050
Accounts Receivable
Beginning Balance 152,000 a. Cash 52,250
e. Service Revenue 50,500 Balance c/d 150,250
Total 202,500 202,500
Balance b/d 150,250
Supplies
Beginning Balance 19,100 Balance c/d 24,200
Accounts Payable 5,100
Total 24,200 24,200
Balance b/d 24,200
Equipment
Beginning Balance 948,000 Balance c/d 989,900
c. Cash 12,000
c. Notes Payable 29,900
Total 989,900 989,900
Balance b/d 989,900
Land
Beginning Balance 1,920,000
Building
Beginning Balance 506,000
Accounts Payable
i. Cash 5,100 Beginning Balance 109,000
Balance c/d 109,000 h. Supplies 5,100
Total 114,100 114,100
Balance b/d 109,000
Unearned Revenue
Beginning Balance 152,000
Advertising Expense
d. Cash 15,600
Utilities Expense
f. Utilities Payable 5,900
Utilities Payable
f. Utilities Expense 5,900
Wages & Salaries Expense
g. Cash 310,000
Service Revenue
b. Cash 235,000
Balance c/d 336,000 e. Cash 50,500
e. Accounts Receivable 50,500
Total 336,000 336,000
Balance b/d 336,000
Notes Payable (due 2018)
Balance c/d 109,900 Beginning Balance 80,000
c. Equipment 29,900
Total 109,900 109,900
Balance b/d 101,000
Common Stock
Beginning Balance 2,200,000
Retained Earnings
Beginning Balance 3,364,100
Answer 4:Trial Balance as at January 31:
Debit Credit
Cash $2,355,050
Accounts Receivable 150,250
Supplies 24,200
Equipment 989,900
Land 1,920,000
Building 506,000
Advertising expense 15,600
Utilities Expense 5,900
Utilities Payable $5,900
Wages & Salaries 310,000
Service Revenue 336,000
Notes Payable 109,900
Accounts Payable 109,000
Unearned Revenue 152,000
Common Stock 2,200,000
Retained Earnings 3,364,100
Total $6,276,900 $6,276,900
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Journalize the following transactions that occurred in March2018for DubleCompany. Assume Dubleuses the periodic inventory system. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Mar. 3 Purchased merchandise inventory on account from Silton Wholesalers, $3,000. Tems 3'1, niEOM, FOB shipping point. 4 Paid freight bill of S70 on March 3 purchase. 5 Purchase merchandise inventory for cash of $2,000. 6 Retumed S700 of inventory from March 3 purchase. 8 Sold merchandise inventory to Herrick Company, $3,400, on account. Terms 2/15, n/35 9 Purchased merchandise inventory on account from Teaton Wholesalers, $5,500. Terms 1/10, n/30, FOB destination. 10 Made payment to Silton Wholesalers for goods purchased on March 3, less return and discount. 12 Received payment from Herrick Company, less discount. 13 After negotiations, received a $300 allowance from Teaton Wholesalers. 15 Sold merchandise inventory to Jeter Company, $2,300, on account. Terms 2/10, nEOM. 22 Made payment, less allowance, to Teaton Wholesalers for goods purchased on March 9 9 10 12 13 15 23 Jeter Company retumed $600 of the merchandise sold on March 15. 25 Sold merchandise inventory to Smede for $1,400 on account. Terms of 2/10, n/30 were offered, FOB shipping point. 26 After negotiations, granted a $300 allowance to Smede for merchandise purchased on March 25. 29 Received payment from Smede, less allowance and discount. 30 Received payment from Jeter Company, less return. 26 29 30
Answer:
Mar. 3 Purchased merchandise inventory on account from Silton Wholesalers, $3,000. Tems 3'1, niEOM, FOB shipping point.
Dr Purchases 3,000
Cr Accounts payable - Silton Wholesalers 3,000
4 Paid freight bill of S70 on March 3 purchase.
Dr Freight in expenses 70
Cr Cash 70
5 Purchase merchandise inventory for cash of $2,000.
Dr Purchases 2,000
Cr Cash 2,000
6 Returned S700 of inventory from March 3 purchase.
Dr Accounts payable - Silton Wholesalers 700
Cr Purchases returns and allowances 700
8 Sold merchandise inventory to Herrick Company, $3,400, on account. Terms 2/15, n/35
Dr Accounts receivable - Herrick Company 3,400
Cr Sales 3,400
9 Purchased merchandise inventory on account from Teaton Wholesalers, $5,500. Terms 1/10, n/30, FOB destination.
Dr Purchases 5,500
Cr Accounts payable - Teaton Wholesalers 5,500
10 Made payment to Silton Wholesalers for goods purchased on March 3, less return and discount.
Dr Accounts payable - Silton Wholesalers
Cr Cash 2,231
Cr Purchase discounts 69
12 Received payment from Herrick Company, less discount.
Dr Cash 3,332
Dr Sales discounts 68
Cr Accounts receivable - Herrick Company 3,400
13 After negotiations, received a $300 allowance from Teaton Wholesalers.
Dr Accounts payable - Teaton Wholesalers 300
Cr Purchases returns and allowances 300
15 Sold merchandise inventory to Jeter Company, $2,300, on account. Terms 2/10, nEOM.
Dr Accounts receivable - Jeter Company 2,300
Cr Sales 2,300
22 Made payment, less allowance, to Teaton Wholesalers for goods purchased on March 9
Dr Accounts payable - Teaton Wholesalers 5,200
Cr Cash 5,200
23 Jeter Company returned $600 of the merchandise sold on March 15.
Dr Sales returns and allowances 600
Cr Accounts receivable - Jeter Company 600
25 Sold merchandise inventory to Smede for $1,400 on account. Terms of 2/10, n/30 were offered, FOB shipping point.
Dr Accounts receivable - Smede 1,400
Cr sales 1,400
26 After negotiations, granted a $300 allowance to Smede for merchandise purchased on March 25.
Dr Sales returns and allowances 300
Cr Accounts receivable - Smede 300
29 Received payment from Smede, less allowance and discount.
Dr Cash 1,078
Dr Sales discounts 22
Cr Accounts receivable - Smede 1,100
30 Received payment from Jeter Company, less return.
Dr Cash 1,700
Cr Accounts receivable - Jeter Company 1,700
Federal Semiconductors issued 11% bonds, dated January 1, with a face amount of $800 million on January 1, 2021. The bonds sold for $739,814,813 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 12%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $730 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $736 million.
Required:
1. Prepare the journal entry to record their issuance by Federal on January 1, 2021.
2. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).
3. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).
4. At what amount will Federal report the bonds among its liabilities in the December 31, 2021, balance sheet?
Answer:
1. Prepare the journal entry to record their issuance by Federal on January 1, 2021.
Date Account title Debit ($) Credit ($)
Jan 1, 2021 Cash 739,814,813
Discount on bonds payable 60,185,187
Bonds payable 800,000,000
(To record issue of bonds)
2. Prepare the journal entry to record interest on June 30, 2021 (at the effective rate).
Date Account title Debit ($) Credit ($)
June 30, 2021 Interest expense 44,388,889
Discount on bonds payable 388,889
Cash 44,000,000
(To record payment of semi-annual interest)
3. Prepare the journal entry to record interest on December 31, 2021 (at the effective rate).
Date Account title Debit ($) Credit ($)
Dec 31, 2021 Interest expense 44,412,222
Discount on bonds payable 412,222
Cash 44,000,000
(To record payment of semi-annual interest)
4. The amount that Federal will report for the bonds among its liabilities in the December 31, 2021, balance sheet is $740,615,924
Explanation:
1. Discount on bonds payable = $800 million - $739,814,813 = $60,185,187
2. Cash paid = Face value × stated interest × interest time period
= $800,000,000 × 11% × 0.5
= $44,000,000
Interest expense = price of bonds × market interest rate × interest time period
= $739,814,813 × 12% × 0.5
= $44,388,889
Discount on bonds payable = $44,388,889 - $44,000,000 = $388,889
3. Cash paid = Face value × stated interest × interest time period
= $800,000,000 × 11% × 0.5
= $44,000,000
Interest expense = price of bonds × market interest rate × interest time period
= ($739,814,813 + $388,889) × 12% × 0.5
= $ 44,412,222
Discount on bonds payable = $44,412,222 - $44,000,000 = $412,222
4. Long term liabilities = Bonds payable + Discount on bonds payable June 30 + Discount on bonds payable December 31
= $739,814,813 + $388,889 + $412,222
= $740,615,924
Elaborate on any three internal factors of Jessops’ Group Limited that can influence its functioning
Answer:
The internal factors are factors that are under the control of the company and these can be tangible or intangible in nature.
Explanation:
Examples of three internal factors of Jessops’ Group Limited that can influence its functioning are:
1. Assets of the company: the company has over 200 stores around the UK, and also has an online shop and call center. This will make the company to serve a wide base of customers which can increase the revenue of the UK’s premier photographic retailer.
2. Photo and imaging business: This is a business line which is a key part of the company's product portfolio. The decision of the company to focus its attention on making its imaging business the market leader is because of the stability in its margins during the 2008–09 economic recession in the UK.
3. Participation and investment in social responsibility: The response of the company to the Waste Electrical and Electronic Equipment (WEEE) regulations on the disposal of electronic goods at the end of their life by contributing towards a national fund to assist local councils to develop collection facilities for electronic goods is an example of social responsibility. The creation of a convenient battery recycling points in its stores and effort to increase awareness of the WEEE regulations are part of social responsibility functions that will be seen more favorably by consumers. This can therefore increase the sales of the company.
g Suppose that more British decide to vacation in the U.S. and that the British purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases, a. the first action by itself raises U.S. net exports, the second action by itself raises U.S. net capital outflow. b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow. c. the first action by itself lowers U.S. net exports, the second action by itself raises U.S. net capital outflow. d. the first action by itself lowers U.S. net exports, the second action by itself lowers U.S. net capital outflow.
Answer:
b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow.
Explanation:
Net exports are equal to the difference between the value of a nation's total export of goods, services and the value of all the goods and services it imports.
U.S. net export raises as more British decide to vacation in the U.S. and U.S. net capital outflow reduces as the British purchase more U.S. Treasury bonds.
So, option b is correct.
BJT Corporation is owned 40 percent by Bill, 30 percent by Jack, and 30 percent by the Trumpet Partnership. Bill and Jack are father and son. Jack has a 10 percent interest in Trumpet Partnership. What is Jack’s total direct and constructive ownership of BJT Corporation under Section 267?
Answer:
33%
Explanation:
By virtue of been having 10% interest in Trumpet Partnership, Jack has a 10% share out of 30 percent owned by Trumpet Partnership (0.10 * 30=3%).
Additionally, his own 30 percent is still pay of his direct and constructive ownership of BJT Corporation, thus making his total direct stand at 33%.
Identifying Cost Drivers in an ABC system
Patterson makes electronic components for handheld games and has identified several activities as components of manufacturing overhead: factory rent, factory utilities, quality inspections, materials handling, machine setup, employee training, machine maintenance, inventory security costs, and supervisor salaries. For each activity that Patterson has identified, choose a cost driver to allocate that cost. Explain your reasoning.
Answer:
Factory Rent : No of days worked
Factory Utilities: Units of utility consumed
Quality Inspection : Hours of inspection on production run
Material Handling : No of orders received
Machine Setup : Machine hours
Employee Training : Hours worked
Machine Maintenance : Machine hours used
Inventory Security Costs : Finished goods units
Supervisor Salary : No of workers
Explanation:
A cost driver is unit of activity on which cost is allocated. Cost driver is considered as a direct cause of the cost. In ABC costing cost are allocated to the goods based on the cost drivers.
Consider a hypothetical closed economy in which households spend $0.60 of each additional dollar they earn and save the remaining $0.40. The marginal propensity to consume (MPC) for this economy is0.6 , and the spending multiplier for this economy is . Suppose the government in this economy decides to increase government purchases by $400 billion. The increase in government purchases will lead to an increase in income, generating an initial change in consumption equal to . This increases income yet again, causing a second change in consumption equal to . The total change in demand resulting from the initial change in government spending is .
Answer:
The total change in demand resulting from the initial change in government spending is $1,000 billion
Explanation:
Marginal propensity to consume (MPC) = As with every additional increase in income, consumption increases by 0.60.
MPC = change in Consumption / Change in Income = [tex]\Delta C/\Delta Y[/tex]
[tex]\Delta C/\Delta Y[/tex] = 0.60 / 1
MPC = 0.60.
Spending or Expenditure Multiplier = 1 ÷ (1 - MPC)
Spending Multiplier = 1 ÷ (1 - 0.6) = 1 ÷ 0.4 = 2.5.
The consumption will increase by MPC, with 1 dollar increased, consumption increased by 0.60
Therefore, with $400 billion increase, Consumption will increase by 0.60 × 400 billion = $240 billion.
This increases income, causing a change in consumption at second times equal $240 billion × 0.6 = $144 billion.
The total change in income by this increment in government spending equals as:
Change in Demand = Multiplier × change in G
Change in Demand= $400 billion × 2.5 = $1,000 billion.
The total change in demand resulting from the initial change in government spending is $1,000 billion
Marginal propensity to consume = change in Consumption / Change in Income
Marginal propensity to consume = 0.60 / 1
Marginal propensity to consume = 0.60
Spending Multiplier = 1 / (1 - MPC)
Spending Multiplier = 1 / (1 - 0.6)
Spending Multiplier = 1 / 0.4
Spending Multiplier = 2.5.
Consumption will increase = 0.60 × 400 billion
Consumption will increase = $240 billion.
Consumption will increase second time = $240 billion × 0.6
Consumption will increase second time = $144 billion.
Change in Demand = Multiplier × Spending Multiplier
Change in Demand = $400 billion × 2.5
Change in Demand = $1,000 billion
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Because transit tends to be congested in this country, many people prefer to shop in their local neighborhoods. They tend to go to stores several times a week to get what they need rather than making one big trip less frequently. Since the culture of this company is very network oriented, shoppers expect a trip to the store to involve significant interaction with store employees. Shoppers are also used to good deals and haggling for better prices. A U.S. store opens in this country and exhibits the following characteristics. Which of these characteristics will be problematic for the success of the store?
A) A few large flagship stores located in big cities
B) Product experts on the floor to answer customers' questions
C) Store locations easy to access via public transit
D) High-end pricing
E) Products available individually rather than in bulk
Answer: A few large flagship stores located in big cities; High-end pricing( Option A and D)
Explanation:
Because the people in this country usually shop close to their home, it would not be wise for a business to opt for few large flagship stores rather than a larger number of the smaller stores.
It would also be unwise for such business to sell mainly high-end products because the shoppers are used to good deals and haggling. Such company would be smart, to sell the products individually, because bulk purchases would make little sense for people that make frequent trips to the store.
Also, in a country with a congested transportation, an easy-to-access store locations will be important and having product experts on the floor who answers the questions of customers’ would appeal to network-oriented local culture.
You are an owner of a bakery, and you meet with other neighborhood bakery owners. In an attempt to increase sales, you collectively decide to lower prices by 10%. Which of the following are consequences of this price change?
A. The supply of fresh baked goods will decrease.
B. The quantity supplied of fresh baked goods will decrease.
C. Demand for processed baked goods will decrease.
D. The supply of fresh baked goods will increase.
E. The demand for fresh baked goods will not change.
F. The demand for fresh baked goods will increase.
Answer:
The quantity supplied of fresh baked goods will decrease ( B )
Demand for processed baked goods will decrease. ( C )
The demand for fresh baked goods will not change ( E )
Explanation:
When the neighbourhood bakery owners agree to lower prices of goods by 10% it will not have any effect on the demand for fresh baked goods hence the demand for fresh baked goods will not change because the demand for fresh baked goods have an in-elastic curve
Also since there is s drop in price the quantity supplied by the suppliers will decrease. while The demand for processed baked goods will decrease because of the substitute it has in fresh baked goods that just got its price slashed by 10%
A semi-variable cost:
A. Increases and decreases directly and proportionately with changes in volume.
B. Changes in response to a change in volume, but not proportionately.
C. Increases if volume increases, but remains constant if volume decreases.
D. Changes inversely in response to a change in volume.
Answer:
B. Changes in response to a change in volume, but not proportionately.
Explanation:
A semi variable cost (or mixed cost) is a cost or expense that is partially fixed (does not change according to production output) and is also partially variable (changes according to production output). An example of semi variable costs are utilities which have a fixed minimum level per month and they increase as production output increases. Another example is the cost of a car, where insurance and lease payments are fixed but gas and maintenance expenses vary according to the number of miles driven.
Two countries are trying to decide which product should have an increased production Both Canada and Costa Rica produce cottee and corn, but is easier for Canada to raise com than grow Coffee Costa Rica easily grows coffee, but has a more difficult time growing com. In comparison with Costa Rica, Canada has:_________.
a the camale to create richer lasting coffee than Costa Rica
b the opportunity to increase their coffee production to better compete with Costa Rka
c. a comparative advantage with com.
A Moving to another question will save this response
Answer:
. a comparative advantage with com.
Explanation:
A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.
If it is easier for Canada to produce Com, it means they have a comparative advantage in the production of com. Costa Rica has a comparative advantage in the production of coffee.
I hope my answer helps you
Mills Corporation acquired as a long-term investment $240 million of 5% bonds, dated July 1, on July 1, 2021. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 3% for bonds of similar risk and maturity. Mills paid $280.0 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $270.0 million.
Required:
a. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
b. At what amount will Mills report its investment in the December 31, 2021, balance sheet?
c. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $290 million. Prepare the journal entry to record the sale.
Answer:
a. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
July 1, 2021
Dr Investment in bonds 240,000,000
Dr Premium on investment in bonds 40,000,000
Cr Cash 280,000,000
December 31, 2021
Dr Cash 12,000,000
Cr Interest revenue 8,400,000
Cr Premium on investment in bonds 3,600,000
b. At what amount will Mills report its investment in the December 31, 2021, balance sheet?
Investment in bonds $240,000,000
Premium on investment in bonds $36,400,000
c. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $290 million. Prepare the journal entry to record the sale.
January 2, 2022
Dr Cash 290,000,000
Cr Investment in bonds 240,000,000
Cr Premium on investment in bonds 36,400,000
Cr Gain on sale of investments 13,600,000
Explanation:
effective interest rate on first coupon received = ($240,000,000 x 5%) - ($280,000,000 x 3%) = $12,000,000 - $8,400,000 = $3,600,000
Premium on investment in bonds = $40,000,000 - $3,600,000 = $36,400,000
Earnings per Share and Price-Earnings Ratio A company reports the following: Net income $1,306,000 Preferred dividends $74,000 Shares of common stock outstanding 80,000 Market price per share of common stock $97.02 a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. $ b. Determine the company's price-earnings ratio. Round to one decimal place.
Answer:
(a) The company's earnings per share on common stock is $ 15.40
(b) The company's price-earnings ratio is 6.3
Explanation:
Net income = $1,306,000
Preferred dividends = $74,000
Shares of common stock outstanding = 80,000 shares
Market price per share of common stock = $97.02
(a) Earnings per share = (Net income−Preference dividend ) ÷ Shares outstanding
= ($1,306,000−$74,000 ) ÷ 80,000 shares
= $1,232,000 ÷ 80,000 shares
= $ 15.4
(b) Price-Earnings ratio = Market price per share ÷ Earnings per share
= $97.02 ÷ $15.40 per share
= 6.3
An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time?
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
D. This prepayment of the policy will initially be treated as an expense and over time, the expired portion will be treated as an asset.
Answer:
The question requires the answering party to pick all that apply as found in the attached.
A. The initial payment will be recorded as an increase to a Prepaid Insurance account.
B. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
C. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account.
Explanation:
The initial payment will be recorded as increase to an asset account,prepaid insurance is a correct statement,pending when the insurance cost is cost,
Subsequently,the expired the portion of the prepayment would be removed from the account,hence point B is also correct.
Finally,when the expired portion is removed from prepaid insurance account,it is transferred to insurance expense account,point C is also on point.
against the foregoing background obtain any road road traffic policy and demonstrate your understanding of that particular policy in relation to its level. in your discussion indicate your role as traffic a prospective traffic law enforcement personnel
Answer:
road traffic policy is the application if safety measures to keep both vehicle owners and pedestrians safety or ensures safety in the road.
Explanation:
hope it helps .
Payback period was the earliest -Select- selection criterion. The -Select- is a "break-even" calculation in the sense that if a project's cash flows come in at the expected rate, the project will break even. The equation is:
Answer: 1. Capital Budgeting
2. Payback Period
3. Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
Explanation:
Payback period was the earliest Capital Budgeting selection criterion. The Payback Period is a "break-even" calculation in the sense...
The Payback period is one of the most simple methods in Capital Budgeting and the earliest as well. It simply checked how long it would take to pay back an investment which made it very alluring to investors who wanted to know how long it would be till they started getting a profit.
It therefore essentially checked when the project would Break-Even.
The formula is,
Number of Years Prior to Full Recovery + (Unrecovered Cost at Start of Year / Cash flow during the year)
This means that to calculate the Payback Period, for example, say the investment was $500 and the project brought in $120 for 5 years.
That would mean that in year 4 it would have brought it $480. Year 4 is the Number of Years prior to Full recovery.
The $20 left is the Unrecovered cost at the start of the year and the Cashflow for the year is $120. The Payback is therefore,
= 4 + (20/120)
= 4.17
In preparing its bank reconciliation for the month of April 2020, Henke, Inc. has the following information available. Balance per bank statement, 4/30/20 $102,420 NSF check returned with 4/30/20 bank statement 1,350 Deposits in transit, 4/30/20 15,000 Outstanding checks, 4/30/20 15,600 Bank service charges for April 60 What should be the correct balance of cash at April 30, 2020
Answer:
$101,820
Explanation:
Bank reconciliation is a practice of reconciling the balance on the company;s cash book to the amount on the bank statement to discover any differences that might occur due to ant reason.
Henke Inc bank reconciliation statement for the month ended April 30 , 2020
Balance as per Bank statement 102,420
Add deposit in transit 15,000
117,420
Deduct outstanding check (15,600)
Adjusted cash balance 101,820
Hochberg Corporation uses an activity-based costing system with the following threeactivity cost pools:Activity Cost Pool Total ActivityFabrication ............................ 30,000 machine-hoursOrder processing ................... 300 ordersOther ..................................... Not applicableThe Other activity cost pool is used to accumulate costs of idle capacity andorganization-sustaining costs.The company has provided the following data concerning its costs:Wages and salaries ................. $340,000Depreciation ........................... 160,000Occupancy .............................. 220,000Total ........................................ $720,000The distribution of resource consumption across activity cost pools is given below:Activity Cost PoolsFabricationOrderProcessing Other TotalWages and salaries .................. 30% 60% 10% 100%Depreciation ............................ 15% 50% 35% 100%Occupancy ............................... 15% 55% 30% 100%The activity rate for the Fabrication activity cost pool is closest to:__________A) $5.30 per machine-hourB) $3.60 per machine-hourC) $7.20 per machine-hourD) $4.80 per machine-hour
Answer:
The answer is option A
Explanation:
Amount($) Activity cost pools Allocated amount($)
Wages and salaries 340,000 30% 102,000
Depreciation 160,000 15 % 24,000
Occupancy 220,000 15 % 33,000
Total 720,000 159,000
Cost driver (hours) 30,000 machine hours
Rate per machine hr 159,000 ÷ 30,000
=$ 5.30
Capitan Inc. made an entry to record the return of inventory that the company previously purchased on account. If the company uses a perpetual inventory system, the entry to record the returned inventory includes a:____________
Answer:
Dr Accounts payable
Cr Merchandise inventory
Explanation:
The original purchase entry using the perpetual should be:
Dr Merchandise inventory XX
Cr Accounts payable XX
If the company returns some or all the merchandise purchased, then the journal entry should be:
Dr Accounts payable YY
Cr Merchandise inventory YY
If the company used the periodic inventory system, then the accounts would be different. Perpetual inventory directly debits or credits merchandise inventory account, it doesn't use the purchases account.
The original purchase entry using the periodic system should be:
Dr Purchases XX
Cr Accounts payable XX
If the company returns some or all the merchandise purchased, then the journal entry should be:
Dr Accounts payable YY
Cr Purchases returns and allowances YY
Billy-Bob owns a condo in Seattle, and a farm in Yakima. His older brother, Bobby-Lee, has some severe health problems and is unable to work anymore, and just has Social Security Disability income of about $800/month. Billy-Bob records a deed giving a "life estate" to Bobby-Lee as long as he lives, with the "remainder" to go to Billy-Bob’s sister, Judy. A. Bobby-Lee now owns the "fee simple" title to the property, as long as he lives. B. Once Bobby-Lee dies, Judy will own the "fee simple" title to the property. C. No one will own the "fee simple" title to the property.
Answer: B. Once Bobby-Lee dies, Judy will own the "fee simple" title to the property.
Explanation:
In the Life Estate arrangement, a person is granted use and ownership of a property for as long as they are alive. When they die however, if a Remainder also known as Remainder- man is named, then the property rights transfer to the Remainder- man.
The Remainder-man then gets access to the property and owns in to the highest extent of the law which in common law countries such as the United States, is the Fee Simple title ownership. This gives them the right to basically do what they want with the property.
Bobby-Lee therefore gets the rights to the property but once he dies, his sister Judy will own a fee simple title to the property.
