Answer:
Quarterly income = $ 36,643.03
Explanation:
The quarterly income ca be determined using the present value of the annuity technique.
The Present Value of the annuity technique
PV = A × ((1- (1+r)^(-n)/r
A- quarterly payment, n- number of quarters, quarterly rate, PV - Present of investment
A- ? n -3× 12= 36, r-12%/4= 3%
800,000 = A× (1- (1.03)^(-36)
800,000 = A× (1- (1.03)^(-36)
800,000 = A × 21.8322525
A = 800,000/21.8322525
A= 36,643.03
Quarterly income = $ 36,643.03
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
Byer, a plastics processor, is considering the purchase of a high-speed extruder as one option. The new extruder would cost $50,000 and would have a residual value of $3000 at the end of its 6-year life. The annual operating expenses of the new extruder would be $5000. The other option that Byer has is to rebuild its existing extruder. The rebuilding would require an investment of $30,000 and would extend the life of the existing extruder by 6 years. The existing extruder has annual operating costs of $13,000 per year and does not have a residual value. Byer's discount rate is 12%. Using net present value analysis, which option is the better option and by how much? Present Value of $1 Periods 12% 14% 16% 6 0.507 0.456 0.410 8 0.404 0.351 0.305 10 0.322 0.270 0.227 12 0.257 0.208 0.168Present Value of Annuity of $1 Periods 12% 14% 16% 6 4.111 3.889 3.685 8 4.968 4.639 4.344 10 5.650 5.216 4.833 12 6.194 5.660 5.197
Answer:
Option of the new extruder is better by $14,411.16
Explanation:
The present value of each option needs to be determined in order that the cheaper option in present value terms can be recommended.
Present value of new extruder=$50,000/(1+12%)^0+$5000/(1+12%)^1+$5000/(1+12%)^2+$5000/(1+12%)^3+$5000/(1+12%)^4+$5000/(1+12%)^5+$5000/(1+12%)^6-$3000/(1+12%)^6=$ 69,037.14
The discount factor each year=1/(1+r)^n where is 12% discount rate and n is the year
resent value of old extruder=$30,000/(1+12%)^0+$13,000/(1+12%)^1+$13000/(1+12%)^2+$13000/(1+12%)^3+$13000/(1+12%)^4+$13000/(1+12%)^5+$13000/(1+12%)^6=$ 83,448.30
The first option is better since it has a lower preset value of costs of $ 69,037.14
Difference in PVs= 83,448.30-69,037.14=$14,411.16
Isabella files her income tax return 35 days after the due date of the return without obtaining an extension from the IRS. Along with the return, she remits a check for $40,000, which is the balance of the tax she owes.Note: Assume 30 days in a month.Disregarding the interest element, enter Isabella's failure to file penalty and and failure to pay penalty.
Answer:
a. Failure to pay penalty = 400
b. Failure to file penalty = $4,000
Explanation:
The monthly rate for failure to pay penalty is 0.5% while the failure to file penalty.
Since it is assumed that there are 30 days in a month, the 35 days after the due date of the return without obtaining an extension from the IRS is will be counted as 2 months regardless of the fact that the second month is just 5 files when she filed.
Therefore, we have:
a. Failure to pay penalty = $40,000 * 0.5% * 2 = 400
b. Failure to file penalty = ($40,000 * 5% * 2) = $4,000
c. Total penalties = (Failure to file penalty - failure to pay penalty for the same period) + Failure to pay penalty = ($4,000 - $400) + $400 = $4,000.
Therefore, the total penalty Isabella will pay is $4,000.
The standard deviation from investing in the asset is: (Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.))
Here is the complete question.
State of the Economy Probability of Percentage Returns
the States
Economic recession 25% 5%
Moderate economic growth 55% 10%
Strong economic growth 20% 13%
The standard deviation from investing in the asset is: (Round to the nearest hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.))
Answer:
standard deviation from investing in the asset is: 2.76
Explanation:
From the information given above; the main task to do is to calculate for the standard deviation from investing in the asset ,but in order to do that; we must first determine the expected return value and the variance.
The expected return can either be the profit or loss the investor predict to get after investing on an instrument. It can be determined by multiplying the potential outcomes by the chances of them occurring and then totaling these results.
Here;
the potential outcome = Probability of the States
chances of them occurring = Percentage Returns
∴
Expected return = (0.25 × 5%) + (0.55 × 10%) + (0.20 × 13%)
Expected return = (1.25 + 5.5 + 2.6)%
Expected return = 9.35%
Variance = 0.25 × (5% - 9.35%)² + 0.55 × (10% - 9.35%)² + 0.20 × (13% - 9.35%)²
Variance = 0.25 ( -4.35%)² + 0.55 (0.3575%)² + 0.20 (3.65%)²
Variance = 0.0473 + 0.0023 + 0.0266
Variance = 0.0763
Finally; the standard deviation = [tex]\sqrt{variance}[/tex]
standard deviation = [tex]\sqrt {0.0763[/tex]
standard deviation = 0.276
To the nearest hundredth percent and by answering in the percent format without including the % sign ; we have
standard deviation = 2.76
Larkspur, Inc. purchased a delivery truck with a $44000 list price. The company was given a $4200 cash discount by the dealer and paid $2200 sales tax. Annual insurance on the truck is $1000. As a result of the purchase, by how much will Larkspur, Inc. increase its truck account
Answer:
Larkspur Inc. will increase its truck account by: $43,000.
Explanation:
Step I
To arrive at the above, we need to make the necessary additions and deductions:
Purchase Price = $44,000
Less cash discount of $4,200. Therefore, the final offer is
$44,000-$4,200 = $39,800.
Step II - Calculate the final value truck by applying Sales Tax
Final sales value amount plus sales tax
$39,800 + $2,200 = $ 42 000
Step III - Calculate Total cost to company by adding cost of insurance of the vehicle.
$ 42 000 + $1,000 = $ 43,000
Therefore the total cost of the truck the company is $43,000.
Cheers!
You are upgrading to better production equipment for your firm's only product. The new equipment will allow you to make more of your product in the same amount of time. Thus, you forecast that total sales will increase next year by 16 % over the current amount of 102 comma 000 units. If your sales price is $ 19 per unit, what are the incremental revenues next year from the upgrade?
Answer:
$310,080
Explanation:
Incremental revenue refers to the additional revenue generated by a certain project or activity. In this case, your sales should increase by 16% from 102,000 units to 118,320 units. Total revenue will increase from $1,938,000 (= 102,000 x $19) to $2,248,080 (= 118,320 x $19).
The incremental revenue = $2,248,080 - $1,938,000 = $310,080
The Foundational 15 [LO10-1, LO10-2, LO10-3]
[The following information applies to the questions displayed below.]
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows:
Direct materials: 5 pounds at $9 per pound $ 45
Direct labor: 3 hours at $14 per hour 42
Variable overhead: 3 hours at $9 per hour 27
Total standard cost per unit $ 114
The planning budget for March was based on producing and selling 20,000 units. However, during March the company actually produced and sold 24,800 units and incurred the following costs:
Purchased 155,000 pounds of raw materials at a cost of $7.20 per pound. All of this material was used in production.
Direct laborers worked 65,000 hours at a rate of $15 per hour.
Total variable manufacturing overhead for the month was $612,300.
rev: 11_20_2017_QC_CS-109672
Foundational 10-12
What variable manufacturing overhead cost would be included in the company’s planning budget for March?
Answer:
$540,000
Explanation:
The amount on of variable manufacturing overhead cost to be included in the company's planning budget for March is budgeted production units of 20,000 units multiplied by standard direct labor hours of 3 hours per unit multiplied by cost of direct labor hour used for variable overhead which is $9.
budgeted variable overhead cost for March=20,000*3*$9=$540,000.00
However, the actual cost of variable manufacturing overhead for the month is $612,300,hence an adverse variance of $72,300 is recorded ($612,300-$540,000)
On June 1, Kareem sends Fatima an e-mail offering to build her a new garage for $20,000. In his e-mail, Kareem wrote, "acceptance by certified mail is advisable." On June 2 at 8 a.m., Kareem sends Fatima a certified letter attempting to revoke the offer. At 2 p.m. the same day, Fatima mails Kareem a letter via certified mail attempting to accept his offer. Under these circumstances, _____.
Answer:
B. Fatima's acceptance is effective upon dispatch
Explanation:
The option B is correct as it is mentioned in the question that acceptance by certified mail is advisable that implies if the parties have mail each other than the contract should be accepted
Therefore in the given case, the certified mail is accepted when it is dispatched that results into an acceptance of Fatima i.e tp be effective
Hence, the second option is correct
Journalize the following five transactions for Nexium & Associates, Inc. Omit explanations.
March 1 - Bills are sent to clients for services provided in February in the amount of $800.
March 9 - Corner Office, Inc. delivers office furniture ($1,060) and office supplies ($160) to Nexium leaving an invoice for $1,220.
March 15 - Payment is made to Corner Office, Inc. for the furniture and office supplies delivered on March 9.
March 23 - A bill for $430 for electricity for the month of March is received and will be paid on its due date in April.
March 31 – Salaries of $850 are paid to employees.
For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".
Answer:
Nexium & Associates Journal entries
March 1
Dr Accounts Receivable800
Cr Service Revenue 800
March 9
Dr Office Furniture1,060
Cr Office Supplies 160
Cr Accounts Payable1,220
March 15
Dr Accounts Payable1,220
Cr Cash1,220
March 23
Dr Electricity Expense430
Cr Accounts Payable430
March 31
Dr Salaries Expense850
Cr Cash850
Explanation:
The details given about Nexium & Associates are straight forward and required no further
adjustment.
Answer:
Explanation:
Journal to record the five transactions for Nexium and Associates, Inc.
Account Particulars Debit Credit
March 1
Accounts Receivable $800
Services Revenue $ 800
March 9
Office Furniture $1,060
Office Supplies 160
Accounts Payable 1,220
March 15.
Accounts Payable 1,220
Cash 1,220
March 23.
Electricity Expense $430
Accounts Payable $430
March 31
Salaries Expense $850
Cash $850
The price of coffe beans use to make coffee has decreased. At the same time, the price of cream (a compliment good) has increased. Given these two effects, what will happen to the current equilibrium quantity and price of coffee?
A. Equilibrium quantity will increase, equilibrium price will increase.
B. Equilibrium price will increase; the effect on quantity is ambiguous.
C. Equilibrium quantity will decrease; the effect on price is ambiguous.
D. Equilibrium price will decrease; the effect on quantity is ambiguous.
Answer:
The correct answer is:
Equilibrium price will decrease; the effect on quantity is ambiguous. (D)
Explanation:
First, note that if the price of coffee beans, used in the manufacture of coffee decreases, the price of coffee sold to consumers will decrease, because it takes a lesser amount in manufacturing than it used to, therefore this reduction in manufacturing costs is reflected in the selling price.
Next, it is hard to tell whether this reduction in equilibrium price will affect quantity demanded, because, at the same time, the price of cream ( a complementary good) increases, and since both goods are complementary, they are bought together, and the effect of the reduction in the price of coffee might not necessarily caused an increase in the quantity demanded because this effect is cancelled out by the increase in the price of cream, hence the effect on quantity is ambiguous.
Acquisition of Land and Building
On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are:
Demolition of old building $8,000
Architect’s fees 25,000
Legal fees for title investigation and purchase contract 4,000
Construction costs 650,000
Edwards sold salvaged materials resulting from the demolition for $2,000.
Required:
At what amount should Edwards record the cost of the land and the new building, respectively?
If an input box should be blank, enter a zero.
Land Building
Purchase price of land $ $
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total
Answer: The total cost of land will be $110,00 while the total cost of building will be $675,000.
Explanation:
The total cost of land will be $110,00 while the total cost of building will be $675,000. Total cost of land is gotten by ($100,000 + $8,000 + $4,000 - $2,000) = $110,000
Total cost of building is gotten by adding $25,000 + $650,000 = $675,000.
Further explanation has been attached
On January 2, 2015, Vaughn Corporation issued $1,650,000 of 10% bonds at 96 due December 31, 2024. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable "interest method".) The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2017, Vaughn called $1,140,000 face amount of the bonds and redeemed them. Ignoring income taxes.
Required:
Compute the amount of loss, if any, to be recognized by Vaughn as a result of retiring the $1,140,000 of bonds in 2017
Answer:
$59,280
Explanation:
This can be calculated as follows:
Bond issue price = $1,650,000 * 0.96 = $1,584,000
Discount on bonds payable = $1,650,000 - $1,584,000 = $66,000
Annual amortization of discount on bonds payable = $66,000 / 10 = 6,600
Bond carrying value on January 2, 2017 = Bond issue price + (Annual discount on bonds payable * Number of years) = $1,584,000 + ($6,600 * 2) = $1,597,200
Value of $1,140,000 of bonds = ($1,597,200 / $1,650,000) * $1,140,000 = $1,103,520
Loss on recognized on redemption = ($1,140,000 * 102%) - $1,103,520 = $59,280
The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project Z Amount of investment $55,000 $50,000 Useful life 12 years 15 years Estimated residual value $5,000 $6,000 Estimated total income over the useful life $57,600 $63,000 Determine the expected average rate of return for each project.
Answer:
Project Average rate of return
A 16%
Z 15%
Explanation:
The average rate of return (ARR) is the proportion of the average investment that is earned as profit.
Average rate of return(ARR) = average operating income/ Average investment
Project A=
Average income = 57,600/12 = 4800
Average investment = (55,000 + 5,000)/2 = 30000
ARR = 4,800/30,000 × 100 = 16%
Projecr Z
Average income = 63,000/15= 4200
Aveage investment = (50,000 + 6,000)/2= 28,000
ARR = 4,200/28,000× 100 = 15%
A university spent $1.3 million to install solar panels atop a parking garage. These panels will have a capacity of 200 kilowatts (kW) and have a life expectancy of 20 years. Suppose that the discount rate is 30%, that electricity can be purchased at $0.30 per kilowatt-hour (kWh), and that the marginal cost of electricity production using the solar panels is zero.
Hint: It may be easier to think of the present value of operating the solar panels for 1 hour per year first.
Approximately how many hours per year will the solar panels need to operate to enable this project to break even?
Answer:
It will take 6,534.31 hours per year for the solar panels to operate to enable this project to break even
Explanation:
Discount rate = 30% = 0.3
Looking at one hour of operation in each year = 200 kW x $0.30 Kw/hr
= $60 value of electricity per year
Compound interest factor for a discount rate of 30% = 3.3158
(taken from compound interest factor table or computed using formula ∑1/(1+r)^t , where r = 30%, and t = 1 to 30)
Present value of operating the solar panels for 1 hour per year = 60 × 3.3158 = $ 198.95
For break even it would need to run = 1.3 million ÷ 198.95
= 6,534.31 hours per year
A perfectly elastic demand function A. shows that a consumer is willing to pay any amount for the product. B. has a marginal revenue that is always decreasing. C. is characteristic of an individual firm operating in a perfectly competitive market. D. shows that the individual firm can increase sales by lowering the price of output.
Answer:
C. is characteristic of an individual firm operating in a perfectly competitive market.
Explanation:
Demand is perfectly elastic if the coefficient of elasticity is infinite. It means thay consumers would only buy at one price. Once that price changes, demand falls to zero.
A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply.
If a seller decides to increase the price of his good in a perfect competition, demand falls to zero and reducing price woild lead to losses.
I hope my answer helps you
How is each of the following likely to be affected by a recession:
a. the natural unemployment rate.
b. the cyclical unemployment rate.
c. the inflation rate.
d. the poll ratings of the president
Each of the following likely to be affected by a recession is the cyclical unemployment rate. The correct option is b.
What is a recession?The term "recession" is used in economics to describe the economic downturn brought on by a reduction in supply or demand. The production, employment, and income of domestic economies generally diminish, which in turn results in additional drops in demand and investment, lengthening the recessive process.
Because of this, when demand or production falls, the recession tends to last longer, deepen, and speed up, signaling that the affected nation's domestic economy will be in decline.
A recession is a time in the economy when growth is generally slow, yet inflation is also high. It is crucial that market forces operate independently, without interference from the government, in order to prevent a recession.
Therefore, the correct option is b. the cyclical unemployment rate.
To learn more about the recession, refer to the link:
https://brainly.com/question/17001440
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SCC Co. reported the following for the current year:
Net sales $ 59,000
Cost of goods sold $ 48,800
Beginning balance in inventory $ 3,100
Ending balance in inventory $ 9,100
Compute (a) inventory turnover and (b) days’ sales in inventory.
Hint: Recall that inventory turnover uses average inventory, and days’ sales in inventory uses the ending balance in inventory."
Answer:
a. The inventory turnover is 8.00 times
b. The days’ sales in inventory is 68 days
Explanation:
a. In order to calculate the inventory turnover we would have to use the following formula:
inventory turnover=cost of goods sold/average inventory
inventory turnover=$ 48,800/($3,100+$ 9,100)/2
inventory turnover=8.00 times
b. In order to calculate thedays’ sales in inventory we would have to use the following formula:
days’ sales in inventory=(Ending invenory/cost of goods sold)*365
days’ sales in inventory=($9,100/$48,800)*365
days’ sales in inventory=68 days
Suppose that an issuing bank pays on documents that are conforming to the requirements of the letter of credit, but the seller has shipped worthless goods to the buyer. Which of the following statements, if any, are true?
a. As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
d. A and B
Answer:
the answer C
Explanation:
As long as the documents strickly comply with the letter of credit requirements, the bank will not have to reimburse the buyer
b. If there is fraud in the transaction, the bank will have to reinburse the buyer and seek its remedies against the seller
c. The strick compliance insulates the bank from liability, since it assures the bank that the underlying contract between the buyer and seller is entirely independent from the letter of credit contract
On January 1, 2020, Milwaukee Corporation issued $3,000,000 of its 20-year, 8% bonds payable at 96. Interest is payable annually on January 1. The entry to accrue interest on December 31, 2020 would include a
Answer:
It will include credit to discount on bonds payable for $6,000
Explanation:
Solution
Given that
Issue price of bond = $3,000,000 * 96%
Issue of bond =$ 2,880,000
Thus,
The discount of bond payable = $3,000,000 - $ 2,880,000
=$120,000
Amortization of discount of bond payable = $120,000/20
=$6,000
Now,
We prepare an entry to accrue interest which is given below:
Entry to accrue interest
Date Account Titles and Explanation Debit Credit
31-12-2020 Interest expense $246,000
discount of bond payable $6,000
Interest payable $240,000
(To record the interest accrued)
An end-of-aisle price promotion changes the price elasticity of a good from −2 to −3. Suppose the normal price is $34, which equates marginal revenue with marginal cost at the initial elasticity of –2. What should the promotional price be when the elasticity changes to –3? (Hint: In other words, what price will equate marginal revenue and marginal cost?)
Answer:
MC = $17
P = $25.5
Explanation:
We proceed as follows;
Firstly calculate MC when e = -2, where MR = MC
(P-MC) / P = 1 / IeI
Here P = $34 and e = -2
(34 - MC) / 34= 1/ I-2I
(34 - MC) / 34= 1 / 2
78-2MC = 34
2MC = 34
MC = 34/2
MC = 17
Now, as we have MC, we will calculate the new price when e = -3
(P-MC) / P = 1 / IeI
(P - 17) / P = 1 / I-3I
(P - 17) / P = 1 / 3
3P -51 = P
2P = 51
P = 51/2
P = 25.5
Ajax Computer Company is an accrual-method calendar-year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $3 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $2,500,000 for a one-time advertising blitz during a professional golf tournament in April of next year. What amount of these payments, if any, can Ajax deduct this year
Answer: No deduction can be claimed this year.
Explanation:
The options to the question are:
a. No deduction can be claimed this year.
b. $5.50 million
c. $2,500,000
d. $5.50 million only if the professional golf tournament is played before April 15.
Answer:
Since Ajax Computer company is an accrual method calender-year tax payer, the computer company would recognize the expenses only when such expenses are incurred and not at the time that cash is being paid for the the expenses
Ajax computer company already paid in advance for both advertisements the following year even though the advertisement eanst taking place that year. Therefore, the payments will not be considered to be an expense until advertisements has actually taken place. Because of this, Ajax cannot deduct the amounts paid for the advertisements next year and hence, no deduction will be claimed this year.
On December 31, the following data were accumulated for preparing the adjusting entries for Bellingham Realty: • The supplies account balance on December 31 is $5,635. The supplies on hand on December 31 are $1,495. • The unearned rent account balance on December 31 is $4,600 representing the receipt of an advance payment on December 1 of four months’ rent from tenants. • Wages accrued but not paid at December 31 are $2,035. • Fees earned but unbilled at December 31 are $15,450. • Depreciation of office equipment is $4,420. Required: 1. Journalize the adjusting entries required at December 31. Refer to the Chart of Accounts for exact wording of account titles. 2. What is the difference between adjusting entries and correcting entries?
Answer and Explanation:
Date Adjusting entries Debit Credit Asset Liabilities Equity
Dec 31 Supplies Expense $4,140 Decrease
To Supplies $4,140 Decrease
(Being the supplies expense is recorded)
It is computed below:
= Account balance - still on hand
= $5,635 - $1,495
= $4,140
Dec 31 Unearned Rent revenue $1,150 Decresae
To Rent revenue $1,150 Increase
(Being the unearned rent revenue is recorded)
It is computed below:
= $4,600 ÷ 4 months
= $1,150
Dec 31 Wages Expense $2,035 Decrease
To Wages payable $2,035 Increase
(Being the wages expense is recorded)
Dec 31 Accounts Receivable $15,450 Increase
To Fees earned $15,450 Increase
(Being the fees earned is recorded)
Dec 31 Depreciation expense $4,420 Decrease
To Accumulate depreciation
- Office Equipment $4,420 Decresae
(Being the depreciation expense is recorded)
2 Adjusting entries are the entries that are to be adjusted at the end of the accounting period but it is planed but the correcting entries are not planned it is required when we want to just correct the errors
Sarah signed an agreement to rent an apartment from a landlord who also signed the agreement. During the lease negotiations, the landlord agreed to provide Sarah with extra storage space in the basement of the apartment building but this promise was not included in the agreement. The landlord now tells Sarah that he will not provide the extra space. If the landlord admits making the promise, under the parol evidence rule (select one):
Answer:
He is legally expected to provide the space under the overconfidence trap
Explanation:
The landlord was overconfident about his judgment abilities and was quick to make the promise to provide the extra space without thinking of a wider range of possibilities. Thereby exposing himself to a greater risk than he imagined. The parole evidence is an evidence of oral speech. Since he admitted making the promise to Sarah, he is legally expected to provide the space.
A new equipment has been proposed by engineers to increase the productivity of a welding operation of a local fabrication plant. The investment cost is $25,000, and the equipment will have a market value of $5,000 at the end of a study period of five years. Increased productivity attributable to the equipment will amount to $10,000 per year after operating costs have been subtracted from the revenue generated by the additional production. If MARR is 12%, is investing in this equipment feasible
Answer:
NPV =$13,884.89
Investing the the equipment id feasible because it has a positive NPV, thus implies that it will increase the wealth of the company by $13,884.8963
Explanation:
The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
Initial cost = 25,000
Present value of the cash inflow
PV of annuity= 1 -(1+r)^(-n)/r × Annual cash flow
A-10,000, r- 12%, n- 5
PV of annual cash inflow = 10,0000× (1- (1.12^(-5)/0.12=36,047.762
Present Value of Scrap value
PV = S×× (1+r)^(-n)
S- scrap value , n- 5, r 12%
PV of scrap Value = 5,000 × (1.12)^(-5)= 2,837.13
NPV= 36047.76202+ 2837.134279 - 25,000= 13,884.89
NPV =$13,884.89
Investing the the equipment id feasible because it has a positive NPV, thus implies that it will increase the wealth of the company by $13,884.8963
Drivers of the growth of international acquisitions include all of the following except:_________.
1. the need to grow the business to compete with other global firms.
2. to acquire assets and resources needed to compete.
3. a faster way to develop a presence in the local market.
4. the desire to develop all of the required resources internally.
Answer:
the desire to develop all of the required resources internally.
Explanation:
Assume the Macro Islands can produce 25 fishing boats or 150 jars of guava jelly in one hour. The Micro Islands can produce 30 fishing boats or 300 jars of guava jelly in the same time period. This data tells an economist that:________. a. the Macro Islands have an absolute advantage in producing fishing boats and the Micro Islands have an absolute advantage in producing guava jelly. b. the Micro Islands have an absolute advantage in producing fishing boats and the Macro Islands have an absolute advantage in producing guava jelly. c. the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly. d. the Micro Islands have a comparative in producing fishing boats and the Macro Islands have a comparative advantage in producing guava jelly. the Micro Islands have a comparative and absolute advantage in producing fishing boats.
Answer:
The correct answer is the option C: the Macro Islands have a comparative advantage in producing fishing boats and the Micro Islands have a comparative advantage in producing guava jelly.
Explanation:
To begin with the term of ''comparative advantage'' is refer to the quality of one country in comparison with another to produce in a better way, a more eficient way, a good. Therefore that when a country has a comparative advantage over another country it means that the first country can produce more of a good with less resources that the second country.
That is why, that the Macro Islands have a comparative advantage in producing fishing boats over the Micro islands due to the fact that there is a very little difference with the other country meanwhile the Micro Islands have a comparative advatange in the production of guava jelly due to the amount of goods that it can produce in the same amount of time with the great amount difference in comparison with the Macro Islands. Therefore that one country chooses to produce the good in which it is better in comparison with the other.
Unfortunately, Tori doesn't have enough money in her account right now. She needs to make additional contributions at the end of each of the next three years to be able to pay for the repairs. Her account currently has $5,000, which, along with her additional contributions, is expected to continue earning 9% annual interest. If she makes equal contributions each year, how large must each contribution be for Tori to have $9,000 after three years
Answer:
Annual deposit= $770.22
Explanation:
Giving the following information:
PV= 5,000
FV= 9,000
i= 0.09
n= 3
First, we need to calculate the final value of the first $5,000. We will use the following formula:
FV= PV*(1+i)^n
FV= 5,000*1.09^3
FV= 6,475.15
Now, we calculate the annual deposits for the difference:
Investment difference= 9,000 - 6,475.15= 2,524.85
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (2,524.85*0.09) / [(1.09^3)-1]
A= $770.22
The annual premium for a $ 15 comma 000 15,000 insurance policy against the theft of a painting is $ 300 300. If the (empirical) probability that the painting will be stolen during the year is 0 . 03 .03, what is your expected return from the insurance company if you take out this insurance?
Answer:
P(x)=0.97
E(x)=$150
Explanation:
The expected return from the insurance company if the I nsurance is taken out will be:
A.Let assume x is the random variable for the amount received from the Insurance company.
Therefore:
x =$300-$0
=$300-$15,000
P(x)=1-0.03=0.97
P(x)=0.03
B.
E(x)=0.97×$300-$14,700×0.03
=$291-$441
=$150
For the item below, determine whether the amount would be disclosed in the cash flow statement under: Operating (CFO), Investing (CFI), or Financing (CFF), as well as if would be a net increase (+) or decrease (-) in cash or cash equivalents:
A. Principal payments on long-term borrowings
B. Decrease in accounts receivable
C. Proceeds from long-term borrowings
D. Increase in deferred income tax net liability
E. Net earnings
F. Increase in prepaid expenses
G. Increase in merchandise inventories
H. Cash dividends paid
I. Proceeds from issuance of common stock
J. Increase in accrued salaries, wages, and related benefits
K. Payments for repurchase of common stock
L. Capital Expenditures
M. Increase in accounts payable
N. Depreciation and amortization expenses
Answer:
Explanation:
Operating Cashflows have to do with the transactions dealing with the day to day activities of the business including calculations of net income and revenue and expenses.
Investing Cashflow has to do with the transactions involving fixed assets such as Property, Land and Equipment since these are Capital Expenditure. Also included are stock ownership and bond holding of other entities.
Financing Cashflows refer to transactions relating to the provision of capital for the business through loans or Equity.
A. Principal payments on long-term borrowings.
FINANCING - decrease (-)
This is a financing transaction that deals with long term loans. It will decrease the cash or cash equivalents held.
B. Decrease in accounts receivable.
OPERATING - Increase +
This is an operating cashflow and it is an increase because Receivables reduce when they pay the business so cash increases.
C. Proceeds from long-term borrowings.
FINANCING - Increase +
This is a financing activity and the increase is due to money from Issuing Bonds or borrowing money coming into the business.
D. Increase in deferred income tax net liability.
OPERATING - Increase +
By reducing the amount that we pay in tax that means that less cash has been paid which also means that more cash is kept in the business which increases the Cash balance.
E. Net earnings.
OPERATING - Increase +
So long as the Net Earnings are positive, they go to the Operating Section and increase the amount of cash and cash equivalents.
F. Increase in prepaid expenses.
OPERATING - Decrease -
By increasing the amount of prepaid expenses, this means that the company used money to pay for expenses it hasn't incurred yet which reduces the cash in hand.
G. Increase in merchandise inventories.
OPERATING - Decrease -
By buying more Inventory, more cash was spent and this therefore reduces the cash and cash equivalents balance.
H. Cash dividends paid.
FINANCING - Decrease -
Dividends relate to equity and Equity is a Financing Cashflow Transaction. Paying Dividends means giving out cash so it reduces the cash and cash equivalents balance.
I. Proceeds from issuance of common stock.
FINANCING - Increase
Similar to proceeds from long term borrowings, Equity is a Financing activity as it finds the business, the proceeds received from here increase the cash and cash equivalents balance.
J. Increase in accrued salaries, wages, and related benefits.
OPERATING - Increase +
These are Operating Cashflow transactions and by withholding them, the business does not spend cash on them. That cash that was not paid is an increase to the cash and cash equivalents balance.
K. Payments for repurchase of common stock.
FINANCING - Decrease -
By repurchasing stock which is an Equity transaction, this goes to the Financing Section. The cash spent to repurchase the stock reduces the amount of cash and cash equivalents on hand.
L. Capital Expenditures.
INVESTING - Decrease -
By buying capital items or spending on Capital Investments, the company makes an investment and as such this goes to the Investment Section. The expenses are a reduction on cash.
M. Increase in accounts payable.
OPERATING - Increase +
Accounts Payable are an Operating Activity and when they are increased that means that the company paid less cash and bought more things on credit. That cash that wasn't paid is an increase in the cash balance.
N. Depreciation and amortization expenses.
OPERATING - Increase +
By including depreciation and amortization in the operating cashflow, these increase the Cashflow because they are non cash items. Even though they are recorded, no physical cash actually flows to them. This cash that was supposed to flow to them is in increase.
Software Distributors reports net income of $48,000. Included in that number is depreciation expense of $6,500 and a loss on the sale of land of $4,300. A comparison of this year's and last year's balance sheets reveals a decrease in accounts receivable of $18,000, a decrease in inventory of $11,500, and an increase in accounts payable of $38,000.
Required:Prepare the operating activities section of the statement of cash flows using the indirect method.
Answer:
Net cash from operating activities is $126,300.
Explanation:
Statement of cash flows
(Operating activities section only)
Details $
Net income 48,000
Adjustment to reconcile net income:
Depreciation expense 6,500
Loss on the sale of land 4,300
(Increase) decrease in current assets:
Decrease in accounts receivable 18,000
Decrease in inventory 11,500
Increase (decrease) in current liabilities:
Increase in accounts payable 38,000
Net cash from operating activities 126,300
