Answer:
Unit product cost= $84
Explanation:
Giving the following information:
Units produced 8,700
Direct materials $13
Direct labor $55
Variable manufacturing overhead $1
Fixed manufacturing overhead $130,500
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
Unitary fixed overhead= 130,500/8,700= $15
Unit product cost= 13 + 55 + 1 + 15= $84
Demographic studies show that the proportion of teenagers and minorities in the U.S. population is likely to increase in the near future. In your opinion, what implications, if any, will this trend have on the unemployment rate?
Answer:
Demographic Studies and Increased Proportion of Teenagers and Minorities
Implications of the Trend on the Unemployment Rate:
a) Labor Force Participation Rate: If the population of teenagers and minorities increase proportionately in the near future, there will be an increase in the labour force participation rate. This means that more people are vying for the available jobs. This puts pressure on the economy to create more sustainable jobs. However, this holds true if all other things are held constant. Obviously, the increased population of these demographic groups will push industries to create jobs in pursuit of the huge demand placed by the groups for more goods and services.
b) Increased Industrial growth reduces the unemployment rate. The resulting increased demand for goods and services required by these groups will increase industrial growth. This will in its turn reduce the unemployment rate.
c) Another implication of the trend on the unemployment rate is that the increased population of these groups will lead to social mobility. Social mobility happens when people move out of their social class to lower or better social classes. Social mobility affects the unemployment rate in any demography. When educated people accept menial jobs, while it may appear that they are working, they are obviously still within the unemployment bracket because they will be searching for jobs.
Explanation:
a) Unemployment rate is the number of unemployed people as a percentage of the labor force. The labor force comprises those who are unemployed plus those who are in paid or self employment.
b) Demographic studies are the studies conducted about a population based on factors such as age, race, and sex.
Granny Carney Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each depreciable asset. During 2018, Granny Carney Associates completed the following transactions: (Click the icon to view the transactions.) Record the transactions in the journal of Granny Carney Associates. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Jan. 1: Purchased office equipment, $119,000. Paid $84,000 cash and financed the remainder with a note payable. (Record a single compound journal entry.) Date Accounts and Explanation Debit Credit Jan. 1
Jan. 1 Purchased office equipment, $119,000. Paid $84,000 cash and financed the remainder with a note payable. Apr. 1 Acquired land and communication equipment in a lump-sum purchase. Total cost was $320,000 paid in cash. An independent appraisal valued the land at $252,000 and the communication equipment at $84,000. Sep. 1 Sold a building that cost $570,000 (accumulated depreciation of $265,000 through December 31 of the preceding year). Granny Carney Associates received $430,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $45,000. Dec. 31.
Recorded depreciation as follows:
Communication equipment is depreciated by the straight-line method over a five-year life with zero residual value. Office equipment is depreciated using the double-declining-balance method over five years with a $4,000 residual value.
Answer:
Jan 1
Dr Office equipment 119,000
Cr Cash 84,000
Cr Note payable 35,000
April 1
Dr Land 240,000
Dr Communication equipment 80,000
Cr Cash 320,000
Sept 1
Dr Cash 430,000
Dr Accumulated depreciation -Building 265,000
Cr Building 570,000
Cr Gain on sales of building 125,000
Dec 31
Depreciation expenses 12,000
Dr Accumulated Depreciation 12,000
Explanation:
Granny Carney Associates Journal entries
Jan 1
Dr Office equipment 119,000
Cr Cash 84,000
Cr Note payable 35,000
(119,000-84,000)
April 1
Dr Land 240,000
(320,000×252,000/252,000+84,000)
Dr Communication equipment 80,000
(320,000×84,000/252,000+84,000)
Cr Cash 320,000
(80,000+240,000)
Sept 1
Dr Cash 430,000
Dr Accumulated depreciation -Building 265,000
Cr Building 570,000
Cr Gain on sales of building 125,000
Dec 31
Depreciation expenses 12,000
(80,000-0)/5×9months/12months
Dr Accumulated Depreciation 12,000
Imperial Jewelers manufactures and sells a gold bracelet for $408.00. The company’s accounting system says that the unit product cost for this bracelet is $268.00 as shown below:
Direct materials $147
Direct labor 85
Manufacturing overhead 36
Unit product cost $268
The members of a wedding party have approached Imperial Jewelers about buying 30 of these gold bracelets for the discounted price of $368.00 each. The members of the wedding party would like special filigree applied to the bracelets that would require Imperial Jewelers to buy a special tool for $452 and that would increase the direct materials cost per bracelet by $9. The special tool would have no other use once the special order is completed.
To analyze this special order opportunity, Imperial Jewelers has determined that most of its manufacturing overhead is fixed and unaffected by variations in how much jewelry is produced in any given period. However, $15.00 of the overhead is variable with respect to the number of bracelets produced. The company also believes that accepting this order would have no effect on its ability to produce and sell jewelry to other customers. Furthermore, the company could fulfill the wedding party’s order using its existing manufacturing capacity.
Required:
a. What is the financial advantage (disadvantage) of accepting the special order from the wedding party?
b Should the company accept the special order?
Answer:
2352, Yes
Explanation:
a) Incremental Cost = Direct Material cost + Direct labour cost + Filgree + Manufacturing overhead cost
= 147 + 85 + 9 + 15 = 256
Total additional Cost = 256 x 21 = 5376
Incremental Revenue = 368
Total additional Revenue = 368 x 21 = 7728
Incremental net operating income = Total additional revenue - total additional cost
= 7728 - 5376 = 2352
b) As Incremental net operating income is positive, company is earning from the special order. Yes, it should accept it
The relevant costs for a decision to accept the special order are :
1. Incremental Revenue from the special order
2. incremental variable cost
3. The cost of the special tool
Unit variable cost = 147+ 85 + 9 + 15 = $256
The balance of manufacturing overhead would be incurred either way. Therefore, they are not relevant for the decision
Sales revenue from special order $
(21× $368) 7728
The Variable cost of special order $
(21× $256) (5376 )
Financial advantage 2358
The company should accept the special order, as it will increase its profit by $2352
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g (Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project: Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 440,000 Annual cash inflows $ 77,000 Salvage value of equipment $ 0 Life of the investment 20 years Discount rate 13 % The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The internal rate of return on the investment is closest to:
Answer:
16.70%
Explanation:
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator:
Cash flow in year 0 = $-440,000
Cash flow each year from year one to twenty = $77,000
IRR = 16.70%
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
I hope my answer helps you
Describe a "rite of initiation" that you experienced at a place of work. This could be described via a situation in which you began with the company as a new employee, or during a period of time in which your status within the company changed. In your opinion, are rites of initiation in the workplace a good thing?
Answer: Rites of initiation is a good thing at the workplace. The answer is explained further below.
Explanation:
Initiation is the rite of passage marking the entrance or acceptance into an organization, a group or a society. The rite of initiation I experienced at a place of work was when I worked as an intern for a firm and I was told that the rite of initiation was for me to sing my favourite song. I actually sang my favorite song and it was fun and I was welcomed into the organization and introduced myself.
I believe rites of initiation are important at the workplace. It helps to increase engagement, boost employee moral, and also foster a supportive culture. It also enable the organization reach its goals as the workers are united and work as a team.
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Managers involved in negotiation should:__________.
1. Search for the absolute best answer.
2. Exercise premature judgment.
3. Realize that solving the other party's problem is actually the other party's problem.
4. Verify whether there is only a fixed set of alternatives.
Which of the following phenomena would be most likely to occur if the project team did not have clear and commonly understood project goals?
1. The level of trust among team members would increase.
2. The motivation level of team members would increase.
3. The interdependency among team members would increase.
4. Conflict among team members would increase.
Answer:
For question (1): 4. Verify whether there is only a fixed set of alternatives.
For question (2): 4. Conflict among team members would increase.
Explanation:
Managers involved in negotiation should always verify whether there is only a fixed set of alternatives.
It is ideal that when managers are making a negotiation and by extension decision-making, they should ensure there are one or more alternative options. A fixed set of alternatives would only mean they're absolutely liable to the other party, without any reasonable benefits to their organization in the event of a crisis with the deal.
Conflict among team members would increase if the project team did not have clear and commonly understood project goals.
As a rule and standard, it is necessary to ensure that team members share common understanding, aims, ideas and vision in order to achieve their project goals and objectives.
When team members are in sync, they're bound to collaborate and use collective intelligence to attain success.
Hence, to increase the level of trust, motivation level, and interdependency among team members, project managers should ensure they've clear and commonly understood project goals.
In March of 2019, Thomas makes a $5,000 cash contribution to a public university. In that month, he also donates $20,000 to an organization subject to the 30 percent limitation. Thomas has adjusted gross income for 2019 of $30,000. What is the amount of Thomas's 2019 charitable contribution deduction?
Answer:
The amount of Thomas's 2019 charitable contribution deduction is $14,000
Explanation:
In order to calculate the amount of Thomas's 2019 charitable contribution deduction we would have to calculate the following:
amount of Thomas's 2019 charitable contribution deduction =Cash contribution + [30% of adjusted gross income or actual property ,whichever is lower]
amount of Thomas's 2019 charitable contribution deduction = $5,000+ [(30%* $30,000) or $20,000 ,whichever is lower]
amount of Thomas's 2019 charitable contribution deduction =$5,000 [ $9,000 or $20,000]
amount of Thomas's 2019 charitable contribution deduction= $5,000 + $9,000
amount of Thomas's 2019 charitable contribution deduction= $14,000
s) A system has four processes and five types of allocatable resources. The current allocation and maximum needs are as follows: Allocated Maximum Available Process A 2 1 0 2 2 4 2 2 3 3 3 2 x 2 3 Process B 3 1 1 0 2 3 3 6 1 2 Process C 2 1 0 2 1 3 2 3 3 1 Process D 1 1 0 1 0 1 2 3 2 1 What is the smallest value of x for which this is a safe state? Show all steps.
Answer:
The smallest value of x is 5 which leads to a safe state.
Explanation:
Solution
Given that:
Process Available Maximum Request = Max-Available
A [2 ,1 ,0 ,2, 2] [4, 2,2, 3, 3] [2,1,2,1,1]
B [3 ,1, 1, 0 ,2] [3 ,3 ,6 ,1 ,2] [0,2,5,1,0]
C [2 ,1 ,0 ,2 ,1 ] [3 ,2 ,3 ,3 ,1] [1,1,3,1,0]
D [1, 1, 0, 1, 0 ] [1, 2, 3, 2 ,1 ] [0,1,3,1,1]
Available = 3,2,x,2,3 ⇒ x has to be determined.
Now
consider x=1 then Available = 3,2,1,2,3
It can't satisfy A,B,C,D since the minimum value of x among those is 2
Consider x=2 then Available = 3,2,2,2,3
It can't satisfy B,C,D since the minimum value of x among those is 3
Thus
consider x=3 then Available = 3,2,3,2,3
It can't satisfy D since the minimum value of x among those is 5
Then
consider x=5 then Available = 3,2,5,2,3
It can satisfy A,B,C,D
Therefore, the minimum value of x is 5. So, that it leads to a safe state.
A computer's operating system serves as a link between humans and machines. A resource allocator is another title for it.
Solution:-
Given that:-
Process Available Maximum Request = Max-Available
A [2 ,1 ,0 ,2, 2] [4, 2,2, 3, 3] [2,1,2,1,1]
B [3 ,1, 1, 0 ,2] [3 ,3 ,6 ,1 ,2] [0,2,5,1,0]
C [2 ,1 ,0 ,2 ,1 ] [3 ,2 ,3 ,3 ,1] [1,1,3,1,0]
D [1, 1, 0, 1, 0 ] [1, 2, 3, 2 ,1 ] [0,1,3,1,1]
Available = 3,2,x,2,3 ⇒ x has to be determined.
Now , consider x=1 then Available = 3,2,1,2,3
It can't satisfy A,B,C,D since the minimum value of x among those is 2
Consider x=2 then Available = 3,2,2,2,3
It can't satisfy B,C,D since the minimum value of x among those is 3
Thus, consider x=3 then Available = 3,2,3,2,3
It can't satisfy D since the minimum value of x among those is 5
Then ,consider x=5 then Available = 3,2,5,2,3
It can satisfy A,B,C,D
Therefore, the minimum value of x is 5. So, that it leads to a safe state.
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New lithographic equipment, acquired at a cost of $800,000 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, the equipment was sold for $135,000.
Required:
1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods:
a. Straight-line method
Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year
1 $ $ $
2 $ $ $
3 $ $ $
4 $ $ $
5 $ $ $
b. Double-declining-balance method
Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year
1 $ $ $
2 $ $ $
3 $ $ $
4 $ $ $
5 $ $ $
Hide
2. Journalize the entry to record the sale, assuming double-declining balance method is used. If an amount box does not require an entry, leave it blank.
3. Journalize the entry to record the sale, assuming that the equipment was sold for $88,750 instead of $135,000. If an amount box does not require an entry, leave it blank.
Answer:
a. Straight-line Method :
Year Depreciation Accumulated End of Year Book Value
0 Expense Depreciation $800,000
1 $142,000 $142,000 $ 658,000
2 $142,000 $284,000 $ 516,000
3 $142,000 $426,000 $ 374,000
4 $142,000 $568,000 $ 232,000
5 $142,000 $710,000 $90,000
b. Double-Declining-Balance Method:
Year Depreciation Accumulated End of Year Book Value
0 Expense Depreciation $800,000
1 $320,000 $320,000 $ 480,000
2 $192,000 $512,000 $ 288,000
3 $115,200 $627,200 $ 172,800
4 $69,120 $696,320 $ 103,680
5 $13,680 $710,000 $90,000
2. Journal entry to record the sale, assuming double-declining balance method:
Debit Cash $135,000
Credit Sale of Equipment $135,000
To record sale of equipment.
Debit Sale of Equipment $103,680
Debit Accumulated Depreciation $696,320
Credit Equipment $800,000
To record close of accumulated depreciation and equipment accounts.
3. Journal entry to record sale, assuming equipment was sold for $88,750:
Debit Cash $88,750
Credit Sale of Equipment $88,750
To record sale of equipment.
Debit Sale of Equipment $103,680
Debit Accumulated Depreciation $696,320
Credit Equipment $800,000
To record close of accumulated depreciation and equipment accounts.
Explanation:
a) Straight-line method of depreciation applies the same amount of depreciation charge over the life of the asset. It is calculated by subtracting the salvage value from the asset and dividing the resulting figure by the number of useful life in years. It is very simple, but does not take into consideration maintenance costs incurred as assets age. Therefore, it does not spread the costs of the asset evenly over the periods the asset is in use, or according to the productivity value of the asset in each period.
b) Declining balance method of depreciation accelerates depreciation charge initially but the annual expense declines with age of the fixed asset. Under this method, depreciation expense is calculated by applying the depreciation rate to the book value of the asset at the start of the period.
An adjusted trial balance is given below.
Debit Credit
Cash $12,000
Accounts Receivable 3,000
Prepaid Rent 700
Merchandise Inventory 25, 000
Accounts Payable $4,100
Salaries Payable 1,500
Notes Payable 800
Common Stock 8,000
Retained Earnings 3,500
Dividends 1,000
Sales Revenue 89,500
Cost of Goods Sold 21,000
Salaries Expense 20,000
Rent Expense 14,000
Selling Expense 8,300
Delivery Expense 1,900
Supplies Expenseâââââ 500âââââââââââââââ
Totalâ $107,400â$ 107,400
What will be the final balance in theâ corporation's Retained Earnings account after recording the closingâentries?
Answer:
$16,400
Explanation:
The formula for Retained Earnings = Total assets - Total Liabilities except Retained Earnings
Under the Balance sheet in accordance with this question, the asset recognizable are Cash Account Receivables Prepaid Rent and Merchandise inventory. The liability recognizable are Account payable, Salary Payable, Notes Payable and Common stocks
Therefore Retained earnings = (12000+3000+700+25000)-(14000+1500+800+8000)
Retained earnings = 40700 - 24300
Retained earnings = $16,400
The four conditions (mutual exclusion, hold and wait, no preemption and circular wait) are necessary for a resource deadlock to occur. Give an example to show that these conditions are not sufficient for a resource deadlock to occur. When are these conditions sufficient for a resource deadlock to occur
Explanation:
The conditions sufficient for a resource deadlock to occur is when a deadlock will prevail for process A, B, and C when two resources R and S; if only one instance of each resources is allowed.
Solution
Deadlock conditions
A deadlock is a situation where two or more processes request for same critical resource at the same time.
The mutual exclusion applies a restriction to a resource when the resource is used by any process, it should become unavailable for the other resources
The hold and wait allocations explains that any process which is allocate resources must hold them; till all needed resources are nor sure.
In the meantime, if any other processes need a resource which is held by another process, then the latter will release the resource to prevent deadlock.
No pre-emption states that the operating system can grant access to resources to another process while it is in use by another process; depending on the priority , to prevent deadlock.
Circular wait should not be implemented so that resources being requested by process are allocated when they get free.
Now,
Three processes A, B, and C functions on a system, having two distinct resources R and S.
The resource R has one instant active while resource S has two instances available.
The instance of R is allocated to a process A after request. first instance of resource S is allocated to process B, and second instance of resource S is allocated to process C.
When a request is placed by process B for resource R, then the resource is not available for execution. the process A request for resource S which is used by both C and B.
All the four conditions prevail in this situation; yet deadlock does not occur.
The resource S is released by process C and is allocated to process A. when process A finishes, it releases resources and resources R is allocate d to process B.
Hence all three processes end without a deadlock.
However, the deadlock will prevail for process A, B, and C when two resources R and S; if only one instance of each resources is allowed.
Segment Contribution Margin Analysis The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses. Time Warner, Inc. Segment Revenues (in millions) Turner (cable networks and digital media) $75,100 Home Box Office (pay television) 43,200 Warner Bros. (films, television, and videos) 44,500 Assume that the variable costs as a percent of sales for each segment are as follows: Turner 27% Home Box Office 16% Warner Bros. 25% a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given. Turner Home Box Office Warner Bros. Revenues $ $ $ Variable costs Contribution margin $ $ $ Contribution margin ratio (as a percent) % % % b. Does your answer to (a) mean that the other segments are more profitable businesses
Answer:
Time Warner, Inc.
a) Contribution Margin and Contribution Margin Ratio for each segment:
Turner Home Box Office Warner Bros.
Revenues $75,100 $43,200 $44,500
Variable costs 20,277 6,912 11,125 Contribution margin $54,823 $36,288 $33,375
Contribution margin ratio
(as a percent of Revenue) 73% 84% 75%
b) The answer in (a) does not mean that the two other segments are more profitable than Turner. The Contribution Margin Ratio is not enough to decide the profitability of each segment. It only shows the percentage of revenue that is left after deducting the variable costs. To determine profitability, fixed costs will be deducted from the contribution margin. Fixed costs refer to the periodic costs associated with running the different segments.
Explanation:
Segment Contribution Margin Analysis helps management to review the contributions made by each segment to the entity. It shows the difference between segmental revenues and segmental variable costs.
Harry owns a Cadillac and a Porsche. Ryan has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Ryan and Harry tells Ryan, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Ryan calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Ryan is talking about the Cadillac, says, "You've got a deal." On what grounds is the above agreement open for rescission
Answer:
mutual mistake
Explanation:
A mutual mistake happens when all the parties involved in a contract (two or more) are mistaken or do not know the correct information about some specific material fact that is relevant to the contract. In this case, the contract can be rescinded because Harry believes that Ryan wants to buy his Cadillac, while Ryan believes Harry is selling his Porsche.
Since both of them are mistaken and do not know relevant material facts regarding the contract, the contract can be terminated.
Black Sparrow Aviation, Inc. is concerned they are not maintaining adequate liquidity. The accounting department has provided you, the newly hired finance manager, with the following ratios:
1. Current ratio 4.5 Industry norm 4.0
2. Quick ratio 2.0 Industry norm 3.1
3. Inventory turnover 6.0 Industry norm 10.4
4. Average collection period 73 days Industry norm 52 days
5. Average payment period 31 days Industry norm 40 days
Discuss · In your opinion, what do these ratios indicate about Black Sparrow Aviation, Inc.?
A. What recommendations would you make based on these ratios?
B. What results do you think you can achieve if your recommendations are followed?
C. Why might your recommendations not be effective?
Answer:
Black Sparrow Aviation, Inc.
1. Indications from ratios about Black Sparrow Aviation:
The current ratio of 4.5 is higher than the industry's norm of 4.0. This indicates that working capital elements are not being managed properly. This is supported by the the remaining four ratios. Inventory level is not optimal. More inventory is held without being sold to customers. Obviously, from the inventory turnover of 6.0 translating to approximately 61 days that it takes the company to sell its inventory as against the industry average of 35 days, it shows that the marketing and sales forces lack stamina. Debt collection from customers is over-delayed, showing poor credit policy and management. Perhaps, it takes the company many days to issue invoices. More time than necessary is allowed to customers to pay compared to the industry norm. In addition, payments are made to suppliers 11 days earlier than the industry average. Advantage is not being taken of trade credit offered by suppliers. Trade credit is an important source of funding operations, which every company should utilize to the maximum.
2A. Based on the above ratios, I would recommend:
1. Minimum inventory should be maintained.
2. Sales efforts should be intensified, so that more sales are made each year than it is currently the case.
3. Debt collection is an important activity for every company that sells on account. This activity should be taken seriously. Credit extension to customers should not exceed 50 days.
4. Payments to suppliers can be delayed by more 10 days without offending suppliers.
2B. Results from Recommendations:
1. Working capital is not tied in inventory.
2. More debts are recovered from customers and on time. Delay increases credit default.
3. More sales are made to customers, increasing the turnover. The profit is always in the frequency of turnover.
4. Short-term financing is obtained from suppliers, which strengthens liquidity.
Explanation:
Liquidity management is a financial management tool, which describes a company's ability to meet financial obligations through cash flow, funding activities, and capital management in order to minimize the risks associated with illiquidity.
Calculation, analysis, comparison of ratios are some of the ways to make informed decisions on liquidity management. Ratios should be compared over many periods, with best performing competitors, and the industry norm to ascertain the position of the reporting entity.
The Converting Department of Osaka Napkin Company uses the average cost method and had 2,000 units in work in process that were 60% complete at the beginning of the period. During the period, 25,200 units were completed and transferred to the Packing Department. There were 1,100 units in process that were 30% complete at the end of the period.
a. Determine the number of whole units to be accounted for and to be assigned costs for the period.
b. Determine the number of equivalent units of production for the period.
Answer:
Equivalent Units
Material cost = 26,560
Conversion Cost= 25,540
Explanation:
We would assume the company uses weighted average method of valuation.
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.
Equivalent units = Degree of completion (%) × Number of units
Material cost
Item Unit Equivalent unit
Completed 25,200 100% ×25200 = 25,200
Closing WIP 1,360 100%× 1,360 1360
Total equivalent units 26,560
Conversion Cost
Item Unit Equivalent unit
Completed 25,200 100% ×25200 = 25,200
Closing WIP 1,360 25%× 1,360 340
Total equivalent units
The Converting Department of Osaka Napkin Company uses the average cost method and had 2,000 units in work in process that were 60% complete at the beginning of the period.
A. To determine the number of whole units to be accounted for and to be assigned costs for the period, let's calculate the total equivalent units of production.
Whole units at the beginning of the period = 2,000 unit
Units started and completed during the period = 25,200 units
Whole units in process at the end of the period = 1,100 units
Total whole units to be accounted for:
= Whole units at the beginning + Units started and completed during the period + Whole units in process at the end
= 2,000 units + 25,200 units + 1,100 units
= 28,300 units
B. To determine the number of equivalent units of production for the period, we need to consider the percentage of completion for the units in process at the beginning and the units in process at the end.
Equivalent units of production for units in process at the beginning:
= Whole units at the beginning × Percentage of completion at the beginning
= 2,000 units × 60%
= 1,200 equivalent units
Equivalent units of production for units in process at the end:
= Whole units in process at the end × Percentage of completion at the end
= 1,100 units × 30%
= 330 equivalent units
Total equivalent units of production for the period:
= Equivalent units of production for units in process at the beginning + Equivalent units of production for units in process at the end + Units started and completed during the period
= 1,200 equivalent units + 330 equivalent units + 25,200 units
= 26,730 equivalent units
Therefore, the number of equivalent units of production for the period is 26,730 units.
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The company employs a single employee who works all five weekdays and is paid on the following Monday. The employee works the entire week ending on Friday, December 30. The employee earns $800 per day. Complete the necessary December 31 journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.
Answer: The answer is provided below
Explanation:
Adjusting entries are the entries that are passed at the end of the year. They are passed to adjust the account so as to make them follow the matching principle.
In the calculation attached, it should be noted that the salary expenses was calculated as the amount earned per day by the number of days. This is:
= $800 × 5
= $4000.
The necessary journal has been attached
Presented below is information related to Oriole Corp. for the year 2020.
Net sales $1,534,000 Write-off of inventory due to obsolescence $94,400
Cost of goods sold 920,400 Depreciation expense omitted by accident in 2019 64,900
Selling expenses 76,700 Casualty loss 59,000
Administrative expenses 56,640 Cash dividends declared 53,100
Dividend revenue 23,600 Retained earnings at December 31, 2019 1,156,400
Interest revenue 8,260 Effective tax rate of 20% on all items
Prepare a multiple-step income statement for 2020. Assume that 62,370 shares of common stock are outstanding.
Answer:
Oriole Corp.
Income Statement
For the Year Ended December 31, 2020
Total sales $1,534,000
Cost of goods sold ($920,400)
Loss from inventory write off ($94,400)
Gross margin $519,200
Operating expenses:
Administrative expenses $56,640
Selling expenses $76,700
Total operating expenses ($133,340)
Income from operations $385,860
Other revenues and gains
Dividend revenue $23,600
Interest revenue $8,260
Total other revenues and gains $31,860
Other expenses and losses
Depreciation expense 2019 $64,900
Casualty loss $59,000
Total other expenses and losses ($123,900)
Net income before taxes $293,820
Income taxes 20%* ($58,764)
Net income $235,056
*Generally dividend revenue is not taxed or only 30% of it sis taxed. Since we were told to apply 20% income tax to all items, I didn't calculate it separately. But if you calculate it separately, then income taxes would be $1,156 lower (total $57,608) and net profit would be higher (total $236,212).
For every dollar that you deposit into a bank, the bank will tend to:_________.
a) keep a portion of it and lend out the rest.
b) keep every penny as vault cash since it is such a small amount.
c) lend out every penny since almost all transactions are digital.
Answer:
The answer is A.
Explanation:
This system is known as Fractional Reserve Banking.
Fractional Reserve Banking is a banking system which allow banks to hold a fraction their customers' deposit as reserves. The rest not kept as reserves are used to make loans, thereby creating new money.
Central banks announce reserve requirements which banks within the jurisdiction must comply with.
Why would the Lana Limited Corporation decide to issue stocks?
How did industrialization and unionization need to outsourcing
Answer: It is often assumed that manufacturing workers in developing countries, as recipients of outsourced jobs, would achieve economic benefits and organizational power. The author argues that job growth in developing countries through outsourcing to competing firms has often actually resulted in declining unionization and lower wage rates relative to traditional, integrated manufacturing firms. Using time-series data on union membership from 1980-2003 for Honduras and El Salvador as well as 2004 Household Survey Data for El Salvador, he examines the determinants of unionization rates and wages in the manufacturing sectors. He finds that that competitive outsourcing hurts labor at the plant-level in three ways: 1) it reduces labor's strike leverage by geographically dispersing the production process; 2) it increases the threat of plant mobility by decreasing plant-level investments; and 3) it increases labor costs relative to total costs, which creates an incentive for employers to keep wages low and unions out.
You are considering buying common stock in Grow On, Inc. The firm yesterday paid a dividend of $7.80. You have projected that dividends will grow at a rate of 9.0% per year indefinitely. If you want an annual return of 24.0%, what is the most you should pay for the stock now
Answer:
The answer is $56.68
Explanation:
Solution
We recall that:
The firm paid a dividend of =$7.80
The projected growth of dividends is at a rate = 9.0%
The annual return = 24.0%
Now,
V = ($7.80 * (1.09)/(.24 - 0.9)
= (8.502)/(.24-0.9)
= (8.502) * (-0.66)
= $56.68
Therefore, this would be the most we would pay for the stock. If we paid less than that, our return would be above the 24%.
Oriole Corporation reported the following for 2020: net sales $1,235,200, cost of goods sold $721,800, selling and administrative expenses $338,600, and an unrealized holding gain on available-for-sale debt securities $15,700.
Required:
Prepare a statement of comprehensive income, using (a) the one statement format, and (b) the two statement format. (Ignore income taxes and EPS).
Answer:
In both formats, net income is equal to $190,500
Explanation:
(a) the one statement format
The single step statement format is an income statement format that shows only one category of income and only one category of expenses. From the question, this can be prepared as follow:
Income = Net sales + unrealized holding gain on available-for-sale debt securities = $1,235,200 + $15,700 = $1,250,900
Expenses = Cost of goods sold + Selling and administrative expenses = $721,800 + $338,600 = $1,060,400
Oriole Corporation
Statement of comprehensive income
Details Amount ($)
Income 1,250,900
Expenses 1,060,400
Net income 190,500
(b) the two statement format.
The two step statement format is an income statement format that uses two category to separate income accounts based on their function by showing gross profit and other income separately to arrive operating income, and also show selling and administrative expenses on its own. This can be prepared as follows:
Oriole Corporation
Statement of comprehensive income
Details Amount ($)
Net sales 1,235,200
Cost of goods sold (721,800)
Gross profit 513,400
Other income:
Available-for-sale debt securities gain 15,700
Operating income 529,100
Expenses:
Selling and administrative expenses (338,600)
Net income 190,500
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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A firm's average cost increases as it increases its output by expanding its plant and hiring additional workers (its only inputs to production). The firm's owner blames the increase in per-unit costs on the law of diminishing marginal productivity. The owner's reasoning is: A. correct because some inputs are fixed in the long run. B. incorrect because economies of scale are present. C. correct because marginal productivity must decrease in the short run. D. incorrect because all inputs are varied in the example.
Answer: D. incorrect because all inputs are varied in the example.
Explanation: While marginal productivity describes the extra output, or return, or profit gotten per unit by benefits from the production inputs of a company, the law of diminishing marginal productivity is one that recognizes that the quantity of all inputs of production cannot be changed at one time. The owner's reasoning of attributing the increase in per-unit costs on the law of diminishing marginal productivity is incorrect because all inputs are varied in the example. Marginal productivity eventually declines because some inputs are fixed, but however, in the long run where no inputs are fixed, the law does not apply.
Hot and Cold has annual sales of $847,000, annual depreciation of $47,000, and net working capital of $43,000. The tax rate is 21 percent and the profit margin is 7.3 percent. The firm has no interest expense. What is the amount of the operating cash flow
Answer:
The amount of the operating cash flow is $108,831
Explanation:
In this question, we are tasked with calculating the amount of the operating cash flow.
Firstly, we calculate the net income.
Mathematically, net income = Sales × % profit margin
From the question, sales = $847,000
% profit margin = 7.3% = 7.3/100 = 0.073
Net income = $847,000 × 0.073 = $61,831
Finally, Operating cash flow = Net income + Depreciation
From the question, depreciation = $47,000
Plugging this alongside the net income,
Operating cash flow = $61,831 + $47,000 = $108,831
A food truck operator originally produced hamburgers and hotdogs. To serve the tastes of their various customers, the hot dog vendor decides to start producing turkey dogs and ham sandwiches as well. Since the new products were introduced, average costs rose dramatically. The vendor is experiencing:________.
A. Economies of scope.
B. Diseconomies of scope.
C. Economies of scale.
D. Diseconomies of scale.
The correct answer is B. Diseconomies of scope
Explanation:
In businesses, diseconomies of scope occur when costs increase when two or more products are produced by the same business. This means it is cheaper and more efficient for a business to specialize in a few products rather than focusing on diverse products. This occurs in the case presented because the production of turkey dogs and ham sandwiches increased the costs, which shows it is more efficient for the business to specialize in a few products. Thus, this vendor is experiencing diseconomies of scope.
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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Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Claim Jumper Makeover Total Sales $ 104,000 $ 52,000 $ 156,000 Variable expenses 32,200 6,800 39,000 Contribution margin $ 71,800 $ 45,200 117,000 Fixed expenses 86,850 Net operating income $ 30,150 Required: 1. What is the overall contribution margin (CM) ratio for the company
Answer:
Weighted average contribution margin ratio= 0.726
Explanation:
Giving the following information:
Sales:
Claim Jumper= $104,000
Makeover= $52,000
Variable cost:
Clain Jumper= $32,200
Makeover= $6,800
First, we need to calculate the participation of the sales for each product:
Claim Jumper= 104,000/156,000= 0.67
Makeover= 52,000/156,000= 0.33
To calculate the weighted average contribution margin ratio, we need to use the following formula:
Weighted average contribution margin ratio= (weighted average sales - weighted average variable cost)/ weighted average sales
weighted average sales= (0.67*104,000) + (0.33*52,000)
weighted average sales= 86,840
weighted average unitary variable cost= (0.67*32,200) + (0.33*6,800)
weighted average unitary variable cost= 23,818
Weighted average contribution margin ratio= (86,840 - 23,818) / 86,840
Weighted average contribution margin ratio= 0.726
Analyzing Adjusting Journal Entries, Prepaid Asset and Deferred Revenue Voss Inc., an accounting firm, adjusts and closes its accounts each December 31. Below are two situations requiring adjusting entries.
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225. At the current year-end, inventory remaining was $360. Prepare the adjusting entry required for each of the following separate cases.
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case A Supplies 225 0
Supplies Expense 0 225
Case A: Balance of Supplies at year-end: $ 225
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
General Journal
Ref. Account Name Dr. Cr.
Case B Supplies 900 0
Expense Supplies 0 900
Case B: Balance of Supplies at year-end: $ 225
Answer:
a. Case A-the $1,125 was debited to Supplies Expense. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies expense 1,125
Cr Supplies 1,125
Then the ending balance of Supplies would be = -$900
b. Case B the $1,125 was debited to supplies. What is the balance of Supplies at year-end?
The previous balance was Supplies $225
If the following was made:
Dr Supplies 1,125
Cr Supplies expense 1,125
Then the ending balance of Supplies would be = $1,350
Explanation:
During the current year, supplies were purchased for $1,125 cash. The inventory of supplies at the prior year-end was $225.
Adjusting entry to record supplies expense = $1,125 + $225 - $360
Dr Supplies expense 990
Cr Supplies 990
Ending balance of supplies inventory = $360
Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:
Crazy Mountain Outfitters Co. Unadjusted Trial Balance April 30, 20Y5
Debit Balances Credit Balances
Cash 11,400
Accounts Receivable 72,600
Supplies 7,200
Equipment 112,000
Accounts Payable 12,200
Unearned Fees 19,200
Common Stock 20,000
Retained Earnings 117,800
Dividends 10,000
Fees Earned 305,800
Wages Expense 157,800
Rent Expense 55,000
Utilities Expense 42,000
Miscellaneous Expense 7,000
475,000 475,000
For preparing the adjusting entries, the following data were assembled:
a. Supplies on hand on April 30 were $1,380.
b. Fees earned but unbilled on April 30 were $3,900.
c. Depreciation of equipment was estimated to be $3,000 for the year.
d. Unpaid wages accrued on April 30 were $2,475.
e. The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.
Required:
1. Journalize the adjusting entries necessary on April 30. 2016.
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries.
3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters G after the adjusting entries.
4. Determine the effect of the adjusting entries on Retained Earnings.
Answer:
Required 1.
a.
Supplies Inventory $1,380 (debit)
Income Statement $1,380 (credit)
b.
Cash $3,900 (debit)
Un-earned Fees $3,900 (credit)
c.
Depreciation $3,000 (debit)
Accumulated Depreciation $3,000 (credit)
d.
Wages Expenses $2,475 (debit)
Wages Accrued $2,475 (credit)
e.
Unearned Fees $14,140 (debit)
Fees Earned $14,140 (credit)
Required 2.
Fees Earned 305,800
Less Expenses :
Wages Expense (157,800)
Rent Expense (55,000 )
Utilities Expense (42,000 )
Miscellaneous Expense (7,000)
Net Income / (loss) 44,000
Required 3.
Fees Earned (305,800 + 14,140) 319,940
Less Expenses :
Wages Expense (157,800 + 2,475) (160,275)
Rent Expense (55,000 )
Utilities Expense (42,000 )
Miscellaneous Expense (7,000)
Depreciation (3,000)
Net Income / (loss) 52,665
Required 4.
Effect = Increase by $8,665
Explanation:
Required 3.
Make the following Adjustments :
Increase the Fees EarnedIncrease the Wages ExpenseInclude the Depreciation Expense in Net Income calculation.Required 4
Adjust the Retained Earnings with items affecting the Income Statement.
Retained Earnings $117,800
Less Depreciation Expense ($3,000)
Less Wages Accrued ($2,475)
Add Fees Earned $14,140
Adjusted Retained Earnings $126,465
Conclusion :
Effect = Increase
Amount = $126,465 - $117,800 = $8,665
