Answer:
No Answer in Option but the Equity decreases by $468,000
Explanation:
From the question,
Common Stock that Bonita industries had at par $1 = $195,000
They issued a common stock dividend= 10%
The Value of Stock dividend = 10/100 * 195,000 = $19,500
The fair value of Bonita's common stock was $24 per share on May 1, 2021. Hence, the stock dividend will be 19,500 * 24 = $468,000
We must understand that Stock dividend are issued from Retained Earning, hence as a result of this stock dividend, Bonita's total stockholder equity decreased by $468,000
When a central bank increases bank reserves by $1, the money supply rises by more than $1. The amount of extra money created when the central bank increases bank reserves by $1 is called the money multiplier.
a. The money multiplier is generally greater than 1 because:
1. in a fractional-reserve banking system, each dollar bill is spent more than once (velocity is larger than 1), thereby increasing the money supply by more than $1.
2. in a fractional-reserve banking system, each dollar of reserves can support more than one dollar of deposits, thereby increasing the money supply by more than $1.
3. in a 100 percent reserve banking system, each dollar of reserves supports exactly one hundred dollars of deposits, thereby increasing the money supply by $100.
4. when a central bank increases bank reserves by $1, deposits are automatically increased by $1 as well, thereby increasing the money supply by $2.
The money multiplier is equal to 1 when:
1. reserves < deposits.
2. reserves > deposits.
3. reserves = deposits.
b. The initial money supply is $1,500, of which $700 is currency held by the public. The desired reserve-deposit ratio is 0.1. Calculate the increase in the money supply associated with increases in bank reserves of $10. What is the money multiplier in this economy? Assume that individuals do not change their currency holdings.
c. A general rule for calculating the money multiplier is:
1. 1/(deposit ratio-desired reserve).
2. 1/deposit ratio.
3. 1/desired reserve.
4. 1/(desired reserve-deposit ratio).
d. Suppose the Fed wanted to reduce the money multiplier, perhaps because it believes that change would give it more precise control over the money supply. In order to achieve its goal, the Fed would:
1. decrease the ratio of reserves to deposits.
2. increase reserve requirements.
3. increase the money supply.
4. decrease reserve requirements.
Answer: a. 2. in a fractional-reserve banking system, each dollar of reserves can support more than one dollar of deposits, thereby increasing the money supply by more than $1.
3. reserves = deposits.
b. $900.
Multiplier is 10
c. 4. 1/(desired reserve-deposit ratio).
d. 2. increase reserve requirements.
Explanation:
a. In fractional-reserve banking system, $1 of deposits can be used to create more than $1 in money supply as the money is continuously deposited into other bank accounts. This enables the money to keep increasing until it theoretically reaches a certain amount determined by the money Multiplier.
If the money Multiplier is equal to 1 which is a very rare occasion, this means that the amount required in reserves is equal to the deposits. $1 of deposits will yield a $1 in money supply increase.
b. The desired reserve-deposit ratio is 0.1. For every $1, 0.1 goes to reserves.
If bank reserves have increased by $10 then that means that deposits are,
0.1x = 10
x = $100
Deposits not in reserve are,
= 0.9 * 100
= $90
The money Multiplier can be calculated with the formula,
= 1/(desired reserve-deposit ratio)
= 1/0.1
= 10
Increase in money supply is therefore,
= $90 * 10
= $900
c. As earlier mentioned, option D is the general rule for calculating the money Multiplier.
= 1/(desired reserve-deposit ratio)
d. If the Fed increases the reserve requirement, the effect would be a reduction in the money supply because the denominator is now higher.
For instance, reserve requirement of 0.1 vs 0.2.
At 0.1, the money supply would be,
= 1/0.1
= 10
At 0.2, the money supply would be,
= 1/0.2
= 5
The higher the reserve requirement, the lower the Multiplier.
Tim, who is subject to a 35 percent marginal gift tax rate, made a gift of a painting to Ben, valuing the property at $7,000. The IRS later valued the gift at $15,000. Compute the applicable undervaluation penalty.
Answer:
The undervaluation penalty is $560
Explanation:
Solution
Under valuation penalty applied when a person valued assets understated to save tax.
The undervaluation reduces the tax and hence comes with accuracy related penalty.
From the example, Tim undervalued the gift of $7,000 which is valued at $15,000 by IRS.
The deduction is undervalued for more than 150% and hence penalty is assessed. this is so because the income tax valuation is lower than 40%, so the penalty rate is 20%
Thus,
The calculation of overvaluation penalty is given below:
Undervaluation = $8000
Tax rate = 35%
Tax amount = $2,800
Penalty rate = 20%
Penalty on undervaluation is =$560
Therefore, the undervaluation penalty is $560
Account balances at the beginning of the year were: accounts receivable, $180,000; and inventory, $270,000. All sales were on account. Assume that Castile Products, Inc., paid dividends of $2.55 per share during the year. Also assume that the company’s common stock had a market price of $70 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.
Additional information:
The financial statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $23,000
Accounts receivable, net $250,000
Merchandise inventory $340,000
Prepaid expenses $8,000
Total current assets $621,000
Property and equipment, net $840,000
Total assets $1,461,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $290,000
Bonds payable, 11% $300,000
Total liabilities $590,000
Stockholders’ equity:
Common stock, $10 par value $130,000
Retained earnings $741,000
Total stockholders’ equity $871,000
Total liabilities and equity $1,461,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $2,140,000
Cost of goods sold $1,230,000
Gross margin $910,000
Selling and administrative expenses $600,000
Net operating income $310,000
Interest expense $33,000
Net income before taxes $277,000
Income taxes (30%) $83,100
Net income $193,900
Required:
Compute financial ratios as follows: 1. Earnings per share. (Round your answer to 2 decimal places.) 2. Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).) 3. Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).) 4. Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.) 5. Book value per share. (Round your answer to 2 decimal places.)
Answer:
$14.9217.1%3.6%4.7$67Explanation:
1. Earnings per share = net income / average shares outstanding = $193,900 / 13,000 stocks = $14.92
2. Dividend payout ratio = total dividends / net income = ($2.55 x 13,000) / $193,900 = $33,150 / $193,900 = 17.1%
3. Dividend yield ratio = dividend per share / market price per share = $2.55 / $70 = 3.6%
4. Price-earnings ratio = price per share / earnings per share = $70 / $14.92 = 4.7
5. Book value per share = (stockholders' equity - preferred stocks) / total number of stocks outstanding = $871,000 / 13,000 = $67
On January 1, 20X1, Draper Inc. signed a five-year noncancelable lease with Thornhill Company for custom-made equipment. The lease calls for five payments of $161,364.70 to be made at the beginning of each year. The leased asset has a fair value of $900,000 on January 1, 20X1. There is no bargain purchase option, and ownership of the leased asset reverts to Thornhill at the lease end. The leased asset has an expected useful life of six years, and Draper uses straight-line depreciation for financial reporting purposes. Its incremental borrowing rate is 8%. Draper uses a calendar year for financial reporting purposes.
Required:
1. Under U.S GAAP would Draper classify this lease as a capital lease or as an operating lease? Explain.
2. Under IFRS would Draper classify this lease as a capital lease or as an operating lease? Explain.
Answer:
1. Under U.S GAAP the lease will be capital lease
2. Under IFRS it is leased under capital lease method.
Explanation:
1. In order to determine Under U.S GAAP if Draper classify this lease as a capital lease or as an operating lease we would to calculate the lease payable as follows:
lease payable=(Annual Payment*present value after interest and tax)/Fair value
lease payable=($161,364.70*800)/$900,000
lease payable=77.3%
Under U.S GAAP the lease will be capital lease because the lease term is for 5 years was more than 75% of economic life
2. Under IFRS the assets are mostly considered by its economic value, so it is leased under capital lease method.
Waterway Industries has equipment with a carrying amount of $2510000. The expected future net cash flows from the equipment are $2545000, and its fair value is $2043000. The equipment is expected to be used in operations in the future. What amount (if any) should Waterway report as an impairment to its equipment
Answer:
No impairment
Explanation:
Since the future net cash flows are still recoverable and they are higher than carrying amount, none needs to be reported
Use the following information to answer the question: There are three firms in an economy: X, Y, and Z. Firm X buys $400 worth of goods from Firm Y, and $200 worth of goods from Firm Z to produce 250 units of output at $3 per unit. Firm Y buys $250 worth of goods from Firm X and $250 worth of goods from Firm Z to produce 250 units of output at $4 per unit. Firm Z buys $100 worth of goods from Firm X and $500 worth of goods from Firm Y to produce 500 units at $2 per unit. Given this information, using the Value Added approach to eliminating intermediate goods and services (in order to avoid double-counting), what is the economy's GDP
Answer:
$1,050
Explanation:
Value Added Approach to calculating the GDP avoids double counting by adding only the value addition of all firms in an economy to obtain the GDP. Value addition for each firm can be calculated by deducting the intermediate purchase of each firm from its intermediate sales as follows:
Firm X value addition = ($250 * 3) - $400 - $200 = $750 - $600 = $150
Firm Y value addition = ($250 * 4) - $250 - $250 = $1,000 - $500 = $500
Firm Z value addition = (500 * 2) - $100 - $500 = $1,000 - $600 = $400
Therefore, we have:
The economy's GDP = $150 + $500 + $400 = $1,050
Item15 0.3 points eBookPrintReferences Check my work Check My Work button is now enabledItem 15Item 15 0.3 points Corporation Q, a calendar year taxpayer, has incurred the following Section 1231 net gains and losses since its formation in 2015. 2015 2016 2017 Section 1231 gains $ 14,800 $ 5,700 0 Section 1231 losses (13,000 ) (9,000 ) $ (3,100 ) Net gain or (loss) $ 1,800 $ (3,300 ) $ (3,100 ) In 2018, Corporation Q sold only one asset and recognized a $4,000 Section 1231 gain. How much of this gain is treated as capital gain, and how much is ordinary
Answer:
$4,000 is treated as a capital gain and then reduced by the un-offset net losses in 2016 ($300) and 2017 ($100) to arrive at net capital gain of $3,600 ($4,000 - 300 - 100). $0 of the amount is treated as an ordinary income.
Explanation:
Section 1231 gain arises when an asset (real property or depreciable business property) is sold for more than its current tax basis. The gain is regarded as a capital gain and taxed at the lower capital gain rates and not as ordinary income.
Section 1231 property are assets used in trade or business and held by the Taxpayer for more than one year. A gain on the sale of Section 1231 business property is treated as a long-term capital gain.
Every organization needs some degree of flexibility and standardization. True False Being overly committed to following rules can harm an organization and keep it from growing. True False Every organization needs either a degree of ________ to adapt to new situations or some degree of ________ to make routine tasks and decisions as efficient and effective as possible. standardization; flexibility culture; vision flexibility; standardization structure; design
Answer:
1. True: Every organization needs some degree of flexibility and standardization.
2. True: Being overly committed to following rules can harm an organization and keep it from growing.
3. flexibility; standardization.
Explanation:
It is really important and necessary that all organization have some degree of flexibility and standardization. Every organization is expected to be flexible, in order to be able to effectively manage potential changes or challenges that arises in business. They should also be standardized, by having proper policies, strategies and structure for the purpose of running the business smoothly and efficiently.
However, if an organization is overly committed to following rules, this can cause harm to it's business operations and thereby hindering its growth and development.
Hence, some degree of flexibility is needed in every organization in order to adapt to new situations or some degree of standardization to make routine tasks and decisions as efficient and effective as possible.
How can economies of scale benefit you as a customer and society as a whole? Can the taxicab industry, in large cities, be subject to significant economies of scale? Are ride-sharing services, such as Uber and Lyft, able to take advantage of economies of scale? How or why not?
Answer:
The answer to this question can be described as follows:
Explanation:
The economy scale with cost activity and total volumes of sales, which lowers the overall product prices as a result, and grows all economies of scale, because consumers purchase the stuff like those, who pay even less than the amount they expect to receive.
It is the transition, the same saved money it's spent on other commodities and the overall deficit as well as the actual boosting of financial social assistance that generates income as a whole. It also increases outlays and creates more jobs, and benefits people with higher median income levels and a decent standard of living, For example
Uber often encourages ride-sharing, in which the car is capable of serving 3-4 people simultaneously. This gives a win-win situation to all sides and generates economies of scale. Throughout the market like India, Uber already is introducing it and being extremely successful.
g You want to save sufficient funds to generate an annual cash flow of $50,000 a year for 20 years as retirement income. You currently have no retirement savings but plan to save an equal amount each year for the next 30 years until your retirement. How much do you need to save each year if you can earn 8 percent on the savings? (10 Points)
Answer:
You need to save $4,012.45 each year
Explanation:
Pertiuty in 20 years is $50,000.
So the amount must be in account after 30 years saving to enough for above pertiuty is calculated as below:
= $50000/(1+8%)+ $50000/(1+8%)^2+......+$50000/(1+8%)^20
= $50,000 * Annuity Factor ( 1-20 years) of 8%
=$50000*9.818
= $490,907
To have $490,907 (FV) in account after 30 years (tenor), now you have save an amount each year (PMT) calculated as below:
$490,907 = PMT*(1+8%)^30+....PMT*(1+8%)^2 + PMT*(1+8%)
= PMT * Discount Factor ( 1-30 years) of 8%
$490,907 = PMT * 122.346
-> PMT = $490,907/ 122.346
= $4,012.45
Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 35,000 shares authorized, 18,000 shares issued, and 14,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:
Answer:
Journal Entry
Dr. Dividend $7,000
Cr. Dividend Payable $7,000
Explanation:
Dividend are only paid to the outstanding share. Outstanding shares re those share is in held by the stockholders of the company at a specific time period.
Authorised share are those shares which a company can issue in the market legally.
Issued shares are those share which have been issued by the company.
Dividend Declared = Outstanding shares x dividend per share.
Dividend Declared = 14,000 shares x $0.5 = $7,000
If Katerina were delivering an expository speech about strip mining, she would be presenting _______________________. a. an informative process speech b. an exposition of a theory, principle, or law c. an exposition of political, economic, social, religious, or ethical issues d. an exposition of historical events and forces
Answer:
a. an informative process speech
Explanation:
An expository speech is one that explains the processes involved in doing an activity. It is meant to inform the audience on processes involved in executing a task.
In this scenario strip mining is the process of removing the top layer of soil in order to gain access to a mineral. This process is opposed to digging of deep holes to access minerals. The method is commonly used in coal reserves.
An expository speech by Katerina on strip mining will be an informative process speech on this process of mining minerals
Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:
Fixed Element Variable Element Actual Total
per Month per Customer Served for May
Revenue $5,000 $160,000
Employee salaries and wages $50,000 $1,100 $88,000
Travel expenses $600 $19,000
Other expenses $36,000 $34,500
When preparing its planning budget, the company estimated that it would serve 30 customers per month; however, during May the company actually served 35 customers.
Required:
1. What amount of revenue would be included in Adger's flexible budget for May?
2. What amount of employee salaries and wages would be included in Adger's flexible budget for May?
3. What amount of travel expenses would be included in Adger's flexible budget for May?
4. What amount of other expenses would be included in Adger's flexible budget for May?
5. What net operating income would appear in Adger's flexible budget for May?
Answer:
1. Total Revenue in May $ 175,000
2. Total Salaries & wages For May $ 88500
3. Total Travel Expenses for May $21,000
4. Other Expense $ 36,000
5. Operating Income $ 65,500
Explanation:
Given
Adger Corporation
Fixed Element Variable Element Actual Total
per Month per Customer Served for May
Revenue $5,000 $160,000
Employee Salaries
& wages $50,000 $1,100 $88,000
Travel expenses $600 $19,000
Other expenses $36,000 $34,500
There were 35 customers.
Revenue = $5000 per customer
We can easily calculate as we have been given the number of customers and the variable element of expense per customer.
1. Total Revenue in May = 5000 * 35= $ 175,000
Variable Salaries & wages = $ 1100 per customer
Total Variable Salaries & wages = $ 1100 *35= $ 38500
2. Total Salaries & wages For May = Variable + Fixed
= $ 38500 + $50,000= $ 88500
Travel expenses = $600per customer
3. Total Travel Expenses for May = $ 600 *35= $21,000
4. Other Expense = Fixed Expenses = $ 36,000 ( there are no variable expenses)
5. Operating Income= Revenue - Employee Salaries - Travel Expenses
= $ 175,000- $ 88500 - $ 21,000= $ 65,500
Other expenses are included in the net income statement not operating income statement.
Consider two countries, Alpha and Beta. In Alpha, real GDP per capita is $6,000. In Beta, real GDP per capita is $9,000. Based on the economic growth model, what would you predict about the growth rates in real GDP per capita across these two countries
Answer:
The growth rate of real GDP per capita will be higher in Alpha than it is in Beta
Explanation:
If we are to based on the economic growth model, what I would predict about the growth rates in real GDP per capita across ALPA and BETA is that when both countries are been compared with one another The growth rate of real GDP per capita will be higher in Alpha than it is in Beta because the Alpha real GDP per capita is said to be $6,000 while Beta real GDP per capita is said to be $9,000 which means growth rate of real GDP per capita will be much more higher in Alpha than it is in Beta.
Suppose that there is a French shipbuilder that imports American made aluminum for parts in its ships. The French shipbuilder needs to purchase aluminum from the American producer for $100,000. Question: At the equilibrium exchange rate, how much does it cost to purchase $100,000 worth of aluminum from the American producer
Answer:
€67,000
Explanation:
The computation o the cost is shown below:
But before that first we have to determine the exchange rate at which the quantity demanded equal to quantity supplies
As we can see that from the table $1.5 per euro exchange rate, the quantity demanded equal to quantity supplied
That means € 1 = $ 1.5
So,
$1 = € 1 ÷ 1.5
So,
Euro exchange rate = €0.67 per dollar
Now
Worth of exchange is
= $100,000 × € 0.67 per dollar
= €67,000
Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?
Answer:
$3.00
Explanation:
Calaculation of the approximate overhead cost per unit of Product A under activity-based costing:
The first step is to calculate for the Activity 1 allocated to Product A line which is :
$87,000 × 3,000/5,800
=$261,000,000/5,800
=$45,000
The second step is to calaculate for Activity 2 allocated to Product A line which is :
$62,000 × 4,500/10,000
$279,000,000/10,000
=$27,900
The third step is to calculate for Activity 3 allocated to Product A line which is :
$93,000 × 2,500/7,750
=$232,500,000/7,750
=$30,000
The total overhead allocated to Product A
$45,000+$30,000+$27,900
= $102,900
Overhead per unit of Product A: $102,900/Annual production of 34,300 units
= $3.00
Therefore the approximate overhead cost per unit of Product A under activity-based costing will be $3.00
(c)
Your answer is partially correct. Try again.
Prepare a CVP income statement for current operations and after Mary's changes are introduced.
v
MARIGOLD SHOE STORE
CVP Income Statement
Current
New
Sales
$800,000
$912,000
जी
Variable Expenses
$480,000
$576,00
Contribution Margin
$320,000
$336,000
Fixed Expenses
$270,000
$294,000
Net Income/(Loss)
$50,000
$42,000
$
Would you make the changes suggested?
No
Answer:
The changes suggested increase income by 16,000 therefore is a good idea to made the changes
Explanation:
Your Mistake is that fixed expenses should remain constant with a sales increase
Current New
Sales $800,000 $ 912,000
Variable $ 480,000 $ 576,000
Contribution $ 320,000 $ 336,000
Fixed $ 270,000 $ 270,000
Net Income $ 50,000 $ 66,000
Orange Corporation acquired new office furniture on August 15, 2018, for $130,000. Orange does not elect immediate expensing under § 179. Orange claims any available additional first-year depreciation. If required, round your answer to the nearest dollar.
a. Determine Orange's cost recovery for 2018
The office furniture is classified as a seven-year class of property for MACRS. If bonus depreciation is elected, Orange's deduction is
b. Determine Orange's cost recovery for 2018 if Orange decided to only use $52,000 of bonus depreciation and normal MACRS on the balance of the acquisition cost.
Answer:
Explanation:
a) The asset is purchased in 2018.
In 2018, bonus depreciation % has been increased from 50% to 100%. If bonus depreciation is elected Orange Corporation can deduct 100% of Purchase cost of $130,000.
The office furniture is classified as seven year class of property for MACRs. If bonus depreciation is elected Orange's deduction is $130,000
= $130,000
b) if Orange decides to use only $52,000 of bonus depreciation, it can claim depreciation (MACRS) on balance amount of acquisition cost.
Cost Recovery for 2018:
Bonus depreciation = $52,000
MACRS Depreciation [($130,000 - $52,000) * 14.29%]= $11,146.20
Hence, Cost Recovery for 2018 = Bonus depreciation + MACRS Depreciation
= $52,000 + $11,146.20
= $63,146 (rounded off to nearest dollar)
A company purchased a computer system at a cost of $25,000. The estimated useful life is 6 years, and the estimated residual value is $8,000. Assuming the company uses the double-declining-balance method, what is the depreciation expense for the second year
Answer:
$5,102
Explanation:
Double declining Method
Cost $ 25,000
B Residual Value $2,000
C = A - B Depreciable base $23,000
D Life [in years] 7
E = C/D Annual SLM depreciation $3,286
F = E/C SLM Rate 14.29%
G = F x 2 DDB Rate 28.57%
.
Depreciation schedule-Double declining
Year Beginning Book Value Depreciation rate Depreciation expense Accumulated Depreciation Ending Book Value
1 $25,000 , 28.57%, $7,143 , $7,143 $17,857
2 $17,857, 28.57%, $ 5,102 , $ 12,245, $12,755
Find the mean, median and mode for the above set of data
Answer:
a. Mean = 35.2 ≈ 35
b. Median = 35.6 ≈ 36
c. Mode = 36.6 ≈ 37
Step-by-step Explanation:
==>Given:
Class of ages in yrs
No. of cases of each class = f
Midpoint of each class = x
Product of midpoint and no. of cases of each class = fx
==>Required:
a. Mean
b. Median
c. Mode
==>SOLUTION:
a. Mean = (Σfx)/Σf
Σf = sum of no. of cases = 5+10+20+22+13+5 = 75
Σfx = 47.5+195+590+869+643.5+297.5 = 2,642.5
Mean = 2,642.5/75 = 35.2 ≈ 35
b. Median = Lm + [((Σf/2) - Cfb)/fm]Cw
Our median is between the 37th and the 38th term, which can be found in the class interval 35-44. This is our median class.
Lm = Lower class boundary of the median class = lower limit of the Medina class + upper limit of the class before the median class ÷ 2 = (35+34)/2 = 34.5
Σf/2 = 75/2 = 37.5
Cfb = Cumulative frequency of class before the median class = 5+10+20 = 35
fm = frequency of the Medina class = 22
Cw = Class width = upper class boundary - lower class boundary = 44.5-34.5 = 10
Median = 34.5 + [(37.5-35)/22] × 10
= 34.5 + [2.5/22] × 10
= 34.5 + [25/22]
= 34.5 + 1.1
= 35.6 ≈ 36
c. Mode = Lm + [∆¹/(∆¹+∆²)]Cw
Modal class = (35-44) [i.e. the class with the highest frequency, which is where our mode falls in]
Lm = lower class boundary of the modal class = lower limit of the modal class + upper limit of the class before the modal class ÷ 2 = (35+34)/2 = 34.5
∆¹ = difference between the frequency of the modal class & the frequency of the class before the modal class = 22 - 20 = 2
∆² = difference between the frequency of the modal class & the frequency of the class after the modal class = 22 - 13 = 9
Cw == Upper class boundary - Lower class boundary = 44.5 - 34.5 = 10
Mode = 34.5 + [2/(2+9)] × 10
= 34.5 + [2/11] × 10
= 34.5 + [20/11]
= 34.5 + 1.8
Mode = 36.6 ≈ 37
As a toy company produces more toys the average total cost of each toy produced decreases. This is because: total fixed costs are decreasing as more toys are produced. average variable cost is decreasing as more toys are produced. total variable cost is decreasing as more toys are produced. None of the above.
Answer:
total fixed costs are decreasing as more toys are produced.
Explanation:
Costs are classified as variable or fixed based on their relationship with the level of activity.
At any given level of activity, variable unit costs are constant. However, the unit fixed costs decrease as more units are produced.
Common stocks typically have which of the following that bonds do NOT have?
I. Voting rights
II. Fixed cash flows
III. Set maturity date
IV. Tax deductibility of cash flows to investors
a) i only
b) i,ii and iv only
c) ii,iii and iv only
d) iv only
e) i, ii,iii and iv
Answer:
The correct option is A, i only
Explanation:
The voting right attached to common stock means that common stockholders being the original owners of the company have the right to attend the company annual general meetings and vote on issues concerning the efficient running of the company as well as election of board of directors.
Fixed cash flows of annual or semiannual coupon interest, set maturity date including the tax deductibility of cash flows to investors are all features of bonds.
Pablo Management has seven employees, each of whom earns $210 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the seven employees worked Monday, December 31, and Wednesday through Friday, of the same week. The next week, the seven employees worked only four days because New Year's Day was an unpaid Holiday.
Required:
a. Prepare the adjusting entry that would be recorded Monday, December 31, 2013.
b. Prepare the journal entry that would be made to record payment of the employees' wages on Friday, Janyary 4, 2014.
Answer:
a) $1,470 Debit –Wage Expense; $1,470 Credit –Wage Payable.
b) $4,410 Debit –Wage Expense; $1,470 Debit –Wage Payable
Explanation:
Remember, we are told each of the worker earns $210 per day. Therefore
a.To record accrued and current wages.Wages expense = 7 workers × 3 days × $210 = $4,410.
b. To record accrued wages four days Cash = 7 workers × 4 days × $210 = $5,880. For one day (7 workers × $210) = $1,470.
Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $103 for the skirt:
Determining opportunity cost Juanita is decidin
Store Travel Time Each Way Price of a Skirt
(Minutes) (Dollars per skirt)
Local Department Store 15 103
Across Town 30 89
Neighboring City 60 63
Juanita makes $16 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $16 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling.
Complete the following table by computing the opportunity cost of Juanita's time and the total cost of shopping at each location.
Store Opportunity Cost of Time Price of a Skirt Total Cost
(Dollars) (Dollars per skirt) (Dollars)
Local Department Store 103
Across Town 89
Neighboring City 63
Assume that Juanita takes opportunity costs and the price of the skirt into consideration when she shops. Juanita will minimize the cost of the skirt if she buys it from the:_________.
Answer:
Juanita should purchase the skirt at the store across town because the total economic cost will be lowest.
Explanation:
three options:
local store 15 minutes away and a price of $103across town 30 minutes away and a price of $89neighboring city 1 hour away and a price of $63Juanita makes $16 per hour at her work, and her purchase decision includes the opportunity cost of lost wages:
total economic cost:
local store = $103 + [1/4 hours x 2 (round trip) x $16] = $111across town = $89 + [1/2 hours x 2 (round trip) x $16] = $105neighboring city = $63 + [1 hour x 2 (round trip) x $16] = $95Juanita should purchase the skirt at the store across town because the total economic cost will be lowest ($105)
Opportunity costs are the benefits lost or extra costs incurred for choosing one activity or investment over another alternative. Economic costs include both accounting costs and opportunity costs.
General Discussion Questions What should business leaders take away from this scandal? What could Wells Fargo have done differently to avert this cultural meltdown? Practice of Ethical Leadership Questions Modeling Character and Values: What values did Stumpf model to Wells Fargo employees? What impact might that have on the culture of Wells Fargo? Encouraging Ethical Conduct: What behaviors can leaders model in order to encourage ethical behavior in their organization? Designing Ethical Systems: Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behavior, but it didn’t work. Why do you think that is? What steps can leaders take to design systems that encourage ethical behavior rather than unethical behavior?
Answer:
From this scandal, business leaders should learn to:
(a) not encourage unethical practices directly or indirectly among employees.
(b) not set unrealistic targets for employees to achieve within an unrealistic time-frame.
(c) Institute measures to prevent unethical practices.
(d) Encourage honest employees to grow in the company.
(e) Honor adherence to regulatory framework as applicable to the company.
Wells Fargo could have done differently in these manner:
(a) When the first incident of aggressive sales practice was reported in year 2004 with identified incidents from year 2002, they could have instituted measures to prevent recurrence of such incidents. Some of the practical and workable measures are enumerated in succeeding paragraphs.
(b) Convene a meeting of senior managers to provide them with appropriate guidelines so as not to repeat such incidents.
(c) Instruct senior managers to advise their juniors to refrain from any such aggressive sales practices.
(d) Investigate to determine the extent of impact of aggressive sales practices as on 2004 and take remedial actions against those who are engaged in such activities.
(e) Promote the whistle-blower method of instantaneous reporting of an incident by anyone who has witnessed such an incident.
(f) Reward employees having honesty, integrity and moral values.
Practice of Ethical Leadership Questions
CEO John Stumpf’s model was to aggressively cross-sell products by any means. While leading the bank in doing so, he had compromised on the minimum value system that any financial institution or any company must adhere to. The cultural impact that had on Wells Fargo is listed below:
(a) Employees were pressurized for resorting to unethical practices.
(b) Employees reporting matters on unethical practices were punished.
(c) The performance management/ measurement system, in effect, encouraged dishonesty in employees.
(d) The compensation system was skewed in favor of bonus.
(e) Since, the supervisors pressurized employees, the structural dishonesty within the organization was evident.
Leaders can encourage ethical behavior in their organization in the following manner:
(a) Demonstrate personal ethics in their words and actions.
(b) Instruct senior managers to strictly adhere to the ethical norms to be followed.
(c) Instruct senior managers to communicate company’s ethical agenda to the supervisors/ other junior employees within their departments/ sections.(d) Monitor adherence to / violation of ethical practices on a regular basis.(e) Institute immediate remedial measures to prevent recurrence of any unethical practice.
(f) Encourage employees to report incidents of unethical practices.
(g) Reward honest and hardworking employees.
Well Fargo’s system of ensuring Ethical System within the bank, such as ethics hotline to report unethical behavior did not work because, the top management, led by the CEO did not pay any importance to prevention of unethical practices. Rather, they steered in an organized and structured manner to promote unethical practices.
Leaders can take the following steps to design systems that encourage ethical behavior:
(a) The top leaders must “think ethics”, “speak ethics” and “act ethics”. This is the top most fundamental step in the direction of designing systems to encourage ethical behavior.
(b) Matters on “what is ethical and what is not ethical” must be circulated across the organization.
(c) Periodic briefing must take place from the top management to the junior most employees in a structured and organized manner.
(d) Encouragement on reporting (whistle-blowing) incidents of unethical practices must be given.
(e) System of rewarding honest and hardworking employees must be put in place.
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.
Date Activiies Units Acquired at Cost Units Sold at Recall
Mar. 1 Beginning inventory 60 units $50.20 per unit
Mar. 5 Purchase 205 units $55.20 per unit
Mar. 9 Sales 220 units $85.20 per unit
Mar. 18 Purchase 65 units $60.20 per unit
Mar. 25 Purchase 110 units $62.20 per unit
Mar. 29 Sales 90 units $95.20 units
Total 440 units 310 units
Required:
1. Compute cost of goods available for sale and the number of units available for sale.
2. Compute the number of units in ending inventory.
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 300 from the February 10 purchase, 200 from the March 13 purchase, 50 from the August 21 purchase, and 250 from the September 5 purchase.
4. Compute gross profit earned by the company for each of the four costing methods.
Answer:
Warnerwoods Company
Perpetual Inventory System:
1. Cost of Goods Available for Sale and Units Available for Sale:
Mar. 1 Beginning inventory 60 units $50.20 per unit $3,012
Mar. 5 Purchase 205 units $55.20 per unit 11,316
Mar. 18 Purchase 65 units $60.20 per unit 3,913
Mar. 25 Purchase 110 units $62.20 per unit 6,842
Available for Sale 440 units Cost = $25,083
2. The number of units in ending inventory:
Units Available for Sale 440
Subtract units sold 310
Ending Inventory 130 units
3. The Cost assigned to ending inventory using:
a) FIFO: Ending Inventory
20 units at $60.20 per unit = $1,204
110 units at $62.20 per unit = 6,842
Ending Inventory $8,046
b) LIFO: Ending Inventory
Mar. 1 Beginning Inventory 45 units $50.20 per unit = $2,259
Mar. 18 Purchase 65 units $60.20 per unit = 3,913
Mar. 25 Purchase 20 units $62.20 per unit = 1,244
Ending Inventory 130 units Cost = $7,416
c) Weighted Average: Ending Inventory
Cost of Goods Available for Sale divided by units available for sale
= $25,083/440 = $57 per unit
Ending Inventory = $57 x 130 = $7,410
d) Specific Identification: Ending Inventory
This cannot be answered from the information provided in the question:
4. Gross Profit for each costing method:
FIFO LIFO WEIGHTED SPECIFIC
AVERAGE IDENTIFICATION
Sales $27,312 $27,312 $27,312 $27,312
Cost of Sales 17,037 17,667 17,670
Gross Profit $10,275 $9,645 $9,642
Explanation:
a) Sales:
Mar. 9 Sales 220 units $85.20 per unit = $18,744
Mar. 29 Sales 90 units $95.20 units = 8,568
Total = $27,312
b) Cost of Sales:
i) FIFO
Mar 1. Beginning inventory 60 units $50.20 per unit = $3,012
Mar. 5 Purchase 205 units $55.20 per unit = 11,316
Mar. 18 Purchase 45 units $60.20 = 2,709
Cost of Sales = $17,037
ii) LIFO:
Mar. 1 Beginning inventory 15 units $50.20 per unit = $753
Mar. 5 Purchase 205 units $55.20 per unit = $11,316
Mar. 25 Purchase 90 units $62.20 per unit = $5,598
Cost of Sales = $17,667
iii) Weighted Average:
Cost of Sales = $57 x 310 = $17,670
c) Calculations under the specific identification cannot be made because of the figures given under this method.
Cost of goods available for sale = 440 units and $25,071
Number of units in ending inventory is 130 units.
1. The calculation of compute cost of goods available for sale and the number of units available for sale is;
Beginning inventory cost = 60 units x $50.20 = $3,012Purchase on March 5 cost = 205 units x $55.20 = $11,304Purchase on March 18 cost = 65 units x $60.20 = $3,913Purchase on March 25 cost = 110 units x $62.20 = $6,842Cost of goods available for sale = 440 units and $25,071
2. Number of units in ending inventory:
Units sold = 220 + 90 Units sold = 310 unitsUnits in ending inventory = total available for sale - units sold Units in ending inventory = 440 - 310 = 130 unitsNumber of units in ending inventory is 130 units.
3. Compute the cost assigned to ending inventory
4. Compute gross profit earned by the company for each of the four costing methods.
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Palisade Creek Co. is a merchandising business that uses the perpetual inventory system. The account balances for Palisade Creek Co. as of May 1, 2016 (unless otherwise indicated), are as follows:
110 Cash $ 83,600
112 Accounts Receivable 233,900
115 Merchandise Inventory 624,400
116 Estimated Returns Inventory 28,000
117 Prepaid Insurance 16,800
118 Store Supplies 11,400
123 Store Equipment 569,500
124 Accumulated Depreciation-Store Equipment 56,700
210 Accounts Payable 96,600
211 Salaries Payable ---
212 Customers Refunds Payable 50,000
310 Common Stock 100,000
311 Retained Earnings 585,300
312 Dividends 135,000
313 Income Summary ----
410 Sales 5,069,000
510 Cost of Merchandise Sold 2,823,000
520 Sales Salaries Expense 664,800
521 Advertising Expense 281,000
522 Depreciation Expense ---
523 Store Supplies Expense ---
529 Miscellaneous Selling Expense 12,600
530 Office Salaries Expense 382,100
531 Rent Expense 83,700
532 Insurance Expense ---
539 Miscellaneous Administrative Expense 7,800
During May, the last month of the fiscal year, the following transactions were completed:
May
1 Paid rent for May, $5,000.
3 Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
4 Paid freight on purchase of May 3, $600.
6 Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.
7 Received $22,300 cash from Halstad Co. on account.
10 Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
13 Paid for merchandise purchased on May 3.
15 Paid advertising expense for last half of May, $11,000.
16 Received cash from sale of May 6.
19 Purchased merchandise for cash, $18,700.
19 Paid $33,450 to Buttons Co. on account.
20 Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500 and the cost of the returned merchandise was $8,000.
20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,0000. The cost of the merchandise sold was $70,000.
21 For the convenience of Cresecent Co., paid freight on sale of May 20, $2,300.
21 Received $42,900 cash from Gee Co. on account.
21 Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
24 Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
28 Paid sales salaries of $56,000 and office salaries of $29,000.
29 Purchased store supplies for cash, $2,400.
30 Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000.
30 Received cash from sale of May 20 plus freight paid on May 21.
31 Paid for purchase of May 21, less return of May 24.
Required:
Enter the May 1 balances of each of the accounts in the appropriate balance column of a four-column account.
Enter May 1 in the date column. Write Balance in the item section, and place a check mark (?) in the Posting Reference column.
Answer:
1 Paid rent for May, $5,000.
Dr Rent expense 5,000
Cr Cash 5,000
3 Purchased merchandise on account from Martin Co., terms 2/10, n/30, FOB shipping point, $36,000.
Dr Merchandise inventory 36,000
Cr Accounts payable 36,000
4 Paid freight on purchase of May 3, $600.
Dr Merchandise inventory 600
Cr Cash 600
6 Sold merchandise on account to Korman Co., terms 2/10, n/30, FOB shipping point, $68,500. The cost of the merchandise sold was $41,000.
Dr Accounts receivable 68,500
Cr Sales revenue 68,500
Dr Cost of Merchandise Sold 41,000
Cr Merchandise inventory 41,000
7 Received $22,300 cash from Halstad Co. on account.
Dr Cash 22,300
Cr Accounts receivable 22,300
10 Sold merchandise for cash, $54,000. The cost of the merchandise sold was $32,000.
Dr Cash 54,000
Cr Sales revenue 54,000
Dr Cost of Merchandise Sold 32,000
Cr Merchandise inventory 32,000
13 Paid for merchandise purchased on May 3.
Dr Accounts payable 36,000
Cr Cash 36,000
15 Paid advertising expense for last half of May, $11,000.
Dr Advertising expense 11,000
Cr Cash 11,000
16 Received cash from sale of May 6.
Dr Cash 67,130
Dr Sales discounts 1,370
Cr Accounts receivable 68,500
19 Purchased merchandise for cash, $18,700.
Dr Merchandise inventory 18,700
Cr Cash 18,700
19 Paid $33,450 to Buttons Co. on account.
Dr Accounts payable 33,450
Cr Cash 33,450
20 Paid Korman Co. a cash refund of $13,230 for returned merchandise from sale of May 6. The invoice amount of the returned merchandise was $13,500 and the cost of the returned merchandise was $8,000.
Dr Sales revenue 13,230
Cr Cash 13,230
Dr Merchandise inventory 8,000
Cr Cost of Merchandise Sold 8,000
20 Sold merchandise on account to Crescent Co., terms 1/10, n/30, FOB shipping point, $110,0000. The cost of the merchandise sold was $70,000.
Dr Accounts receivbale 110,000
Cr Sales revenue 110,000
Dr Cost of Merchandise Sold 70,000
Cr Merchandise inventory 70,000
21 For the convenience of Cresecent Co., paid freight on sale of May 20, $2,300.
Dr Accounts receivable 2,300
Cr Cash 2,300
21 Received $42,900 cash from Gee Co. on account.
Dr Cash 42,900
Cr Accounts receivable 42,900
21 Purchased merchandise on account from Osterman Co., terms 1/10, n/30, FOB destination, $88,000.
Dr Merchandise inventory 88,000
Cr Accounts payable 88,000
24 Returned damaged merchandise purchased on May 21, receiving a credit memo from the seller for $5,000.
Dr Accounts payable 5,000
Cr Merchandise inventory 5,000
26 Refunded cash on sales made for cash, $7,500. The cost of the merchandise returned was $4,800.
Dr Sales revenue 7,500
Cr Cash 7,500
Dr Merchandise inventory 4,800
Cr Cost of Merchandise Sold 4,800
28 Paid sales salaries of $56,000 and office salaries of $29,000.
Dr Wages expense 85,000
Cr Cash 85,000
29 Purchased store supplies for cash, $2,400.
Dr Supplies 2,400
Cr Cash 2,400
30 Sold merchandise on account to Turner Co., terms 2/10, n/30, FOB shipping point, $78,750. The cost of the merchandise sold was $47,000.
Dr Accounts receivable 78,750
Cr Sales revenue 78,750
Dr Cost of Merchandise Sold 47,000
Cr Merchandise inventory 47,000
30 Received cash from sale of May 20 plus freight paid on May 21.
Dr Cash 110,100
Dr Sales discounts 2,200
Cr Accounts receivable 112,300
31 Paid for purchase of May 21, less return of May 24.
Dr Accounts payable 83,000
Cr Cash 82,170
Cr Purchase discounts 830
I prepared a general ledger for May in an excel spreadsheet that I attached.
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.
Required:
a. Prepare the entry to record the merchandise returns and the year-end adjusting entry for estimated returns.
b. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Answer:
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.
Explanation:
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $330,000. During 2021, Halifax sold merchandise on account for $11,800,000. Halifax's merchandise costs is 70% of merchandise selling price. Also during the year, customers returned $345,000 in sales for credit, with $191,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 3% of sales, are recorded as an adjusting entry at the end of the year.
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise:
a. A suitable location in a large shopping mall can be rented for $4,500 per month.
b. Remodeling and necessary equipment would cost $378,000. The equipment would have a 10-year life and a $37,800 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation.
c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $480,000 per year. Ingredients would cost 20% of sales.
d. Operating costs would include $88,000 per year for salaries, $5,300 per year for insurance, and $45,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 13.0% of sales.
Required:
1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet
2-a. Compute the simple rate of return promised by the outlet
2-b. If Mr. Swanson requires a simple rate of return of at least 21%, should he acquire the franchise?
3-a. Compute the payback period on the outlet
3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise?
Answer:
1.) check attached picture
2a)Simple rate of return = 25.2%
2b) Yes
3a)2.92 years
3b) Yes
Explanation:
Kindly check attached picture
In game theory, a Nash equilibrium occurs when: Group of answer choices Both players are incented to "cheat" to improve their positions Neither player can improve their position Nether player has a dominate strategy Two or more players collude on pricing
Answer:
Neither player can improve their position
Explanation:
Game theory is the method of modeling the strategic engagement of multiple players in a situation that involves rules and results.
Nash equilibrium is a term of game theory in which the optimum result of a game is one in which no participant has an incentive to diverge from his selective strategy after examining the selection of an opponent
Therefore according to the given situation, the second option is correct
