Answer:
Wingate Company
1. Contribution Format Income Statement (segmented by divisions):
East Central West Total
Sales $ 355,000 $ 660,000 $ 520,000 $ 1,535,000
Variable Expenses 188,150 151,800 213,200 553,150
Contribution 166,850 508,200 306,800 981,850
Traceable Fixed Exp. 296,000 331,000 202,000 829,000
Non-Traceable Fixed Expenses 251,000
Net operating income/
(Loss) (129,150) 177,200 104,800 (98,150)
2a) Increasing the West Division's monthly advertising by $28,000 based on the belief that it would increase that division's sales by 16%:
East Central West Total
Sales $ 355,000 $ 660,000 $ 603,200 $ 1,618,200
Variable Expenses 188,150 151,800 213,200 553,150
Contribution 166,850 508,200 390,000 1,065,050
Traceable Fixed Exp. 296,000 331,000 230,000 857,000
Non-Traceable Fixed Expenses 251,000
Net operating income/
(Loss) (129,150) 177,200 160,000 (42,950)
2b) The net operating income will increase by $55,200, thus reducing the loss from $98,150 to $42,950.
Explanation:
Segmenting the income statement into divisions helps management to trace the loss making division as Division East. The division has a traceable fixed cost that is far above its contribution to profit. The fixed expense must be studied, otherwise the division may be up for closure.
Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Pasadena Candle Inc. Direct Labor Cost Budget For the Month Ending January 31 Hours required for assembly: Candles min. Convert minutes to hours ÷ min. Molding hours hrs. Hourly rate × $ Total direct labor cost
Answer:
Direct labour cost budget= $1,413,000.
Explanation:
The direct labor cost budget is a function of the production product budget. The quantity of the product budgeted to be produced would determine the labor cost budget.
Direct labour budget = Production budget × standard hours × standard labour rate per hour
Standard hour = 6/60 =0.1 (note there are 60 minutes in an hour)
Direct labour budget = 785,000 × 0.1× 18 = $1,413,000.
Direct labour cost budget= $1,413,000.
The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q = 200 - 5P - .1Pc - .5Pd + .2A - I Where P is the price of the game, Pc is the price of a computer, Pd is the price of a diskette, A is the level of advertising, and Q is the level of income. Suppose P = 10, Pc = 100, Pd = 2, A = 5, and I = 50. What is the price elasticity of demand?
Answer:
Income elasticity of demand = - 0.56
Explanation:
Given,
P=10, Pc=100, Pd=2, A=5, and I=50.
So,
Q=200-5(10)-.1(100)-.5(2)+.2(5)-(50).
Q=90 (level of income)
Computation:
Given , I = 50, Q = 90.
ΔQ / ΔI = -1
Income elasticity of demand = (ΔQ / ΔI) x (I / Q)
Income elasticity of demand = - 1 x (50 / 90)
Income elasticity of demand = - 0.56
On May 1, 2021, Bonita Industries declared and issued a 10% common stock dividend. Prior to this dividend, Bonita had 195000 shares of $1 par value common stock issued and outstanding. The fair value of Bonita's common stock was $24 per share on May 1, 2021. As a result of this stock dividend, Bonita's total stockholders' equity:______
a. decreased by $480700.
b. increased by $480700.
c. did not change.
d. decreased by $23000.
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
Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. What is the contribution margin per machine hour for Bales
Answer:
$5/h
Explanation:
The contribution margin for Bales is ...
$55 -20 = $35
The machine hours for Bales is 7.
The contribution margin per machine hour is ...
$35/(7 h) = $5/h
Identify a true statement about the per-unit expenditure method of determining advertising budget. It bases its advertising budgets on those of competitors or other members of the industry. It attempts to determine the retail price by using production costs as a base. It sets the advertising budget as a predetermined share of profits or financial resources. It involves arguing for and presenting the advertising budget on the basis of research findings.
Answer: It attempts to determine the retail price by using production costs as a base.
Explanation:
The Per-unit expenditure approach to advertising sets the retail price based on the production cost. This means that the amount to be set for advertising is based on a fixed amount that is determined by how many units of a good the company expects to sell so that the advertising is based on how much it spent in production.
Operating data for Swifty Corporation are presented below. 2022 2021Sales revenue $830,700 $634,900 Cost of goods sold 529,000 415,000 Selling expenses 124,700 73,600 Administrative expenses 78,800 53,900 Income tax expense 33,500 23,400 Net income 64,700 69,000 Prepare a schedule showing a vertical analysis for 2022 and 2021. (Round percentages to 1 decimal place, e.g. 12.1%.)
Answer and Explanation:
The preparation of the vertical analysis is presented below:
Particulars Amount % Amount %
Sales $830,700 100 $634,900 100
Less:
Cost of goods sold $529,000 63.7 $415,000 65.4
Gross Profit $301,700 36.3 $219,900 34.5
Less:
Selling Expenses $124,700 15.0 $73,600 11.6
administrative expenses $78,800 9.5 $53,900 8.5
Total Operating
expenses $203,500 24.5 $127,500 20.9
Income before
income taxes $98,200 11.8 $92,400 14.5
Less:
Income tax expenses $33,500 4.0 $23,400 3.7
Net Income $64,700 7.8 $69,000 10.8
Working note
The percentage is like
= Items value ÷ sales × 100
Like for cost of goods sold
= $529,000 ÷ $830,700 × 100
= 63.68%
It is same applicable for other items also
Find the nominal annual rate of interest compounded monthly if $1200 accumulates to $1618.62 in five years.
Answer:
Nominal annual rate of interest(r) = 2.5% (Approx)
Explanation:
Given:
Present value (P) = $1,200
Future value (F) = $1,618.62
Number of year = 5 year = 5(12) months = 60 months
Find:
The nominal annual rate of interest(r)
Computation:
[tex]Nominal\ annual\ rate\ of\ interest(r) = \sqrt[n]{\frac{F}{P} }-1 \\\\Nominal\ annual\ rate\ of\ interest(r) = \sqrt[60]{\frac{1,618.62}{1,200} }-1 \\\\Nominal\ annual\ rate\ of\ interest(r) = 0.004949\\\\Nominal\ annual\ rate\ of\ interest(r) = 0.5 %[/tex]
Actual periodic Nominal annual rate of interest(r) = 0.5 (5year)
Nominal annual rate of interest(r) = 2.5% (Approx)
(LaVilla) LaVilla is a village in the Italian Alps. Given its enormous popularity among
Swiss, German, Austrian, and Italian skiers, all of its beds are always booked in the winter
season and there are, on average, 1,200 skiers in the village. On average, skiers stay in
LaVilla for 10 days.
a. How many new skiers are arriving—on average—in LaVilla every day?
b. A study done by the largest hotel in the village has shown that skiers spend on average $50 per person on the first day and $30 per person on each additional day in local
restaurants. The study also forecasts that—due to increased hotel prices—the average
length of stay for the 2003/2004 season will be reduced to five days. What will be the
percentage change in revenues of local restaurants compared to last year (when skiers
still stayed for 10 days)? Assume that hotels continue to be fully booked!
Q2.6 (Highway) While driving home for the holidays, you can’t seem to get Little’s Law out of
Answer:
a) 120 skiers per day
b) 6.25% increase in revenue
Explanation:
a) If the average skier stays 10 days, the average turnover is 1/10 of the skiers per day, or 1200/10 = 120 skiers per day.
__
b) For a stay of n days, the average skier spends ...
50 +(n-1)30 = 20 +30n
and the average spending per day is ...
(20 +30n)/n = (20/n) +30
So, for a 10-day stay, the average skier spends in restaurants ...
20/10 +30 = 32 . . . . per day
And for a 5-day stay, the average skier will spend ...
20/5 +30 = 34 . . . . per day
The change in restaurant revenue is expected to be ...
(34 -32)/32 × 100% = 2/32 × 100% = 6.25%
Restaurant revenues will be 6.25% higher compared to last year.
Suppose that a small company that makes a standardized product is experiencing an increase in sales even though it has a small geographic footprint. Currently, the founder makes all of the strategic decisions but is beginning to feel overwhelmed. She has decided to pursue a cost-leadership strategy going forward. In order for the firm to achieve its goals, which of the following business-level structures should the firm adopt?
a. an ambidextrous functional structure
b. a centralized functional structurea flexible organic structure
c. a centralized multidivisional structure
d. a simple structure with the founder's imprint
Answer: b. a centralized functional structure
Explanation:
Cost Leadership refers to a situation where a company is better at cost management that other companies in the industry. If a company can produce at a lower cost, they can capture more market share and be more profitable.
When a company wants to engage in cost Leadership one of the best structures to adopt is the Centralised functional structure. This is when decisions are usually made at a top management level in a company that is divided by functions such as Information Technology, Sales, Marketing etc.
By making the structure centralised, the company can make Standardised products on a company wide basis which is very effective in cost saving as the company is able to plan better and spend less because they will be buying resources and producing in bulk. That advantage from Economies of Scale will keep their costs low.
At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should: Multiple Choice Close the $2,500 to Cost of Goods Sold. Close the $2,500 to Finished Goods Inventory. Do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year. Carry the $2,500 to the income statement as "Other Expense". Carry the $2,500 to the next period.
Answer:
Close the $2,500 to Cost of Goods Sold
Explanation:
The under applied overhead is added to the Cost of Goods Sold amount.
The same amount would be debited to the cost of goods sold and the manufacturing overhead would be credited with the same amount that is $ 2500.
Under applied overhead means that the overhead actually incurred is more than the overhead planned of to be incurred. So we add back the amount by which it is less.
Suppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values {$14, $13, $12, $11, $10, $9, $8, $7, $6, $5, $4,}. Assume no transaction costs and a competitive market. If there is a market maker in this market. What is the profit maximizing bid-ask spread per unit for a market maker? a. $9 bid; $9 ask b. $6 bid; $12 ask c. $8 bid; $10 ask d. $7 bid; $11 ask
Answer:
Explanation:
From the question given; The objective here is to determine the profit maximizing bid-ask spread per unit for a market maker. In order to achieve that; The demand supply schedule of the number of units bought and sold need to be computed which is shown in the table below.
Price Quantity demanded by buyers Quantity sold by sellers
$14 1 11
$13 2 10
$12 3 9
$11 4 8
$10 5 7
$9 6 6
$8 7 5
$7 8 4
$6 9 3
$5 10 2
$4 11 1
However; As the two transactions are happening simultaneously; There are 11 people participating in buying of a good and selling from one person to the other.
But the maximum even number of people that can be part of this trade is only 10 people.
So; for the individual having an higher value for the good will be able to afford it and which are those that falls into the category of $14,$13,$12,$11,$10,$9 can place bid for the good.
On the other hand, the individual having a lower value for the good will sell it and which are those that falls into the category of $4,$5,$6,$7,$8,$9 and would want to sell it for the ask price of the good.
In this trend, we understand that the individual valuing the good for $9 won't be able to participate due to the fact that He appears on both trends because in the demand side , he have the lowest willingness to pay and at the seller's side he has the the highest value for the good and that the equilibrium price in this market is $ 9 because at this price the quantity demanded equals quantity supplied .
Thus; we can conclude that there are 5 transactions in the maximizing bid-ask spread per unit for a market maker.
The concept of --------, while not mentioned in the U.S. Constitution, is an important part of our legal system.
Answer:
judicial review,
Explanation:
research lol
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
Book Values Fair Values
Current assets $41,500 $41,500
Building 108,000 67,000
Land 17,000 35,200
Trademark 0 31,800
Goodwill 19,000 ?
Liabilities (50,500) (50,500)
Common stock (100,000)
Retained earnings (35,000 )
Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:
1) $166,000
2) $96,000
Answer:
Scenario 1. Cash Exchange of $166,000
Current assets $41,500 (debit)
Building $67,000 (debit)
Land $35,200 (debit)
Trademark $ 31,800 (debit)
Goodwill $41,000 (debit)
Liabilities $50,500 (credit)
Investment in Deluxe Company $166,000 (credit)
Scenario 1. Cash Exchange of $166,000
Current assets $41,500 (debit)
Building $67,000 (debit)
Land $35,200 (debit)
Trademark $ 31,800 (debit)
Liabilities $50,500 (credit)
Investment in Deluxe Company $96,000 (credit)
Gain on Bargain Purchase $29,000 (credit)
Explanation:
All assets and liabilities of Deluxe Company have been acquired by Allerton Company. This is known as a Business Combination in terms of IFRS 3.
During a Business Combination transaction, Assets and Liabilities are Acquired at their Fair Values instead of Book Values.
Any Excess of the Purchase Price (Consideration) over the Net Assets taken over is known as Goodwill otherwise it is known as a Gain on Bargain Purchase.
Here are comparative statement data for Ivanhoe Company and Pharoah Company, two competitors. All balance sheet data are as of December 31, 2017, and December 31, 2016.
2017 2016 2017 2016
(Ivanhoe (Ivanhoe (Pharoah (Pharoah
Company) Company) Company) Company)
Net sales $1,865,000 $595,000
Cost of goods sold 1,064,000 279,000
Operating expenses 252,000 84,000
Interest expense 8,000 1,800
Income tax expense 70,900 35,000
Current assets 583,495 $559,214 149,171 $142,246
Plant assets (net) 942,972 895,000 250,113 225,203
Current liabilities 118,722 135,709 63,273 54,203
Long-term liabilities 204,042 161,100 53,020 44,750
Common stock, $10 par 895,000 895,000 214,800 214,800
Retained earnings 308,703 262,405 68,192 53,696
Required:
Prepare a vertical analysis of the 2017 income statement data for Ivanhoe Company and Pharoah Company.
Answer:
Condensed Income Statement
For the Year Ended December 31, 2017
Ivanhoe Company Pharaoh Company
Net sales $1,865,000 100% $595,000 100%
Cost of goods sold ($1,064,000) 57% ($279,000) 47%
Gross profit $801,000 43% $316,000 53%
Operating expenses ($252,000) 14% ($84,000 ) 14%
EBIT $549,000 29% $232,000 39%
Interest expense ($8,000) 0.4% ($1,800 ) 0.3%
Income tax expense ($70,900) 3.8% ($35,000) 5.9%
Net income after taxes $470,100 25.2% $195,200 32.8%
A vertical analysis of an income statement uses net sales as the reference for all the other accounts. The other accounts are shown as a % of total net sales.
Where does Hewitt’s leadership fall on the Managerial Grid discussed in the chapter? (5 marks) (b) What deficiencies or shortcomings would you identify in Hewitt’s leadership
Answer:
The Hewitt's leadership falls on the the Middle of Road Management, which is carefully assessed, realistic and in turn creates a balance between concerns for people and production.
The shortcomings of this leadership are, Failure to motivate and inspire people, lack of passion and enthusiasm, Inability to keep workers.
Explanation:
Solution:
(a) The leadership of Hewitt fall towards the Middle of Road Management at 5,5 points, as it is well realistic, carefully assessed or adjusted, and satisfies the concerns for the people and production.
(b) The shortcomings or defaults discovered in Hewitt's Leadership is stated as follows:
The failure to motivate and inspire peopleThe Inability to retain employees or workersThe lack of passion and willingness or zealThe lack of appreciation on employee or individualLucy's Music Emporium opened its doors on January 1, 2015, and it was granted permission to use the same depreciation calculations for shareholder reporting and income tax purposes. The company planned to depreciate its fixed assets over 20 years, but in December 2015 management realized that the assets would last for only 15 years. The firm's accountants plan to report the 2015 financial statements based on this new information. How would the new depreciation assumption affect the company's financial statements
Answer: d. The firm's cash position in 2015 and 2016 would increase.
Explanation:
The financila statements had been calculated with the view that fixed assets would be depreciated over a 20 year period. However, it was discovered that the assest should be depreciated over 15 years instead. This reduction in the period would have the effect for increasing the depreciation payment.
For example, say the asset cost $20,000 and was originally to be depreciated over 20 years using Straight Line Depreciation. This means that the depreciation per year would be,
= [tex]\frac{20,000}{20}[/tex]
= $1,000 a year.
If it was however discovered that it was supposed to be 15 years that figure would go to,
= [tex]\frac{20,000}{15}[/tex]
= $1,333.33 a year
Notice how depreciation increased. Lucy's Music emporium will therefore see their depreciation cost rise. Depreciation is subtracted from revenue as it is tax deductible. When Lucy's Emporium deduct this new depreciation, they will have less profit. They will be taxed on this less profit and so pay a lower tax. This will thus increase their cash holdings because Depreciation is a non cash expense and does not actually require a cash payment.
Purpose of Assignment The purpose of this assignment is for students to employ capital budgeting techniques using time value of money concepts to determine the acceptability of large dollar value assets. Assignment Steps Scenario: A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 650,000 for Year 3, $725,000 for Year 4, and 850,000 for Year 5. The projected terminal value at the end of Year 5 is $6,000,000. The firm's Weighted Average cost of Capital (WACC) is 12.5%. Create a Microsoft® Excel® document to determine the Discounted Cash Flow (DCF) value of the firm based on the information provided above. Recommend acceptance of this project using net present value criteria using a Microsoft® Word® document. Include up to what level of initial investment you would accept the project? Why? Give a complete explanation of up to 350 words. Display your calculations. Coursehero
Answer:
Present Value 5,715,331.32
We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital structure of the company
Accepting a project with a higher cost will not generate enought cashflow to sustain the patyment of debt and the return expected from the stockholders therefore, will generate a economic result and investor will leave the company for other which can sustain their desired return.
Explanation:
We are going to discount the yearly cash-flow at the given rate of 12.50%
then, the terminal value which is the present value of the future period will also be discounted at this rate.
The sum of all this will be the present value of the firm.
[tex]\left[\begin{array}{ccc}$Year&$Cash Flow&$Discounted\\1&575000&511111.11\\2&625000&493827.16\\3&650000&456515.77\\4&725000&452613.93\\5&850000&471689.61\\$terminal&6000000&3329573.74\\Present&Value&5715331.32\\\end{array}\right][/tex]
The formula we use the present value of a lump sum:
[tex]\frac{Maturity}{(1 + rate)^{time} } = PV[/tex]
We are going to accept the project only if the initial investment is at 5,715,331 or below in order to achieve the return to support the cost of capital estructure of the company
Consider the following data for two products of Gitano Manufacturing. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and "OH rate and cost per unit" answers to 2 decimal places.)
Product A Product B
Number of units produced 11,500 units 1.700 units
Direct labor cost ($29 per DLH) 0.16 DLH per unit 0.24 DLH per unit
Direct materials cost $2.10 per unit $3.10 per unit
Activity Overhead costs
Machine setup $94,104
Materials handling 53,000
Quality control inspections 73.200
$220,304
Required
a. Using direct labor hours as the basis for assigning overhoad costs, determine the total production cost per unit for each product line.
b. If the market price for Product A is $28.68 and the market price for Product B is $58, determine the profit or loss per unit for each.
c. Consider the following additional information about these two product lines. If ABC is used for assigning overhead costs to what is the cost per unit for Product A and for Product B?
Answer:
a. Product A $257,830 , Product B $57,086
b. Product A $71,990 , Product B $41,514
c. Hie, for this part of the question there is missing information regarding the Activities for the two Products for each Activity Center.
However the Procedure to deal with the required is explained below :
Step 1 : Determine the Overhead Absorption Rate for Each Activity Center
(We have three Activity Centers: Machine setup, Materials handling: Quality control inspections )
Overhead Absorption Rate = Total Overhead (for each) / Total Number of Activity
Step 2: Absorb the Costs in the products using the Rate for each cost center and the number of activity incurred in each cost center for the two Products
Overhead (Activity Center) = Overhead Absorption Rate× Activity Specific to the Product.
Step 3 : Determine the Total Costs
Total Cost for one Product would include the Total Costs for each Activity Center (which are your overheads) plus the Direct Labor and Direct Material Costs as Calculated in Part b.
Explanation:
Part a
Total Production Cost = Direct Costs + Indirect costs (overheads)
First determine the predetermined rate based on direct labor hours.
Total direct labor hours.
Product A (11,500×0.16) = 1,840
Product B (1.700×0.24) = 408
Total = 2,248
Predetermined rate = total overhead cost / total direct labor hours
= $220,304 / 2,248
= $98 per labor hour
Assigning Overhead Cost
Total Overhead Costs
Product A (1,840×$98) = 180,320
Product B (408×$98) = 39,984
Total = 220,304
Total Costs
Product A Product B
Direct labor cost
Product A ( 1,840×$29) 53,360
Product B (408×$29) 11,832
Direct materials cost
Product A ( 11,500×$2.10) 24,150
Product B (1.700×$3.10) 5,270
Overheads
Product A 180,320
Product B 39,984
Total Costs 257,830 57,086
Part b.
Profit = Selling Price - Expenses
Product A Product B
Sales
Product A ( 11,500×$28.68) 329,820
Product B (1.700×$58) 98,600
Manufacturing Costs (257,830) (57,086)
Profit 71,990 41,514
In January 2020, the management of Sheridan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.
Feb. 1 Purchased 500 shares of Muninger common stock for $27,500.
Mar. 1 Purchased 700 shares of Tatman common stock for $17,500.
Apr. 1 Purchased 40 $1,050, 6% Yoakem bonds for $42,000. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.50 per share on the Muninger common stock.
Aug. 1 Sold 167 shares of Muninger common stock at $65 per share.
Sept.1 Received a $1 per share cash dividend on the Tatman common stock.
Oct. 1 Received the semiannual interest on the Yoakem bonds.
Oct. 1 Sold the Yoakem bonds for $41,000.
Required:
At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share. Prepare the adjusting entry at December 31, 2020, to report the investment securities at fair value. All securities are considered to be trading securities.
Answer:
Sheridan Company
Adjusting Entries for reporting fair values of investments:
December 31, 2020:
Debit Investment in Muninger $333
Credit Unrealized Gains on Investment $333
To record the fair value of common stock investment.
Debit Unrealized Loss on Investment $700
Credit Investment in Tatman $700
To record the fair value of common stock investment.
Explanation:
a) Feb. 1, Muniger Common Stock 500 shares at $55 for $27,500
August 1, Sold 167 shares at $65 for $10,855
December 31 Remaining at fair value, 333 shares at $56 for $18,648
Fair Value Gain = $1 x 333 shares = $333
b) Tatman Common Stock 700 shares for $17,500
March 1, Common Stock 700 shares at $25 for $17,500
December 31, Remaining at fair value, 700 shares at $24 for $16,800
Fair Value Loss = $1 x 700 = $700
c) Trading Investments are held for short-term purposes to take advantage of dividends and changes in the market price of the investments. These securities are accounted for at fair value. The requirement is that at the end of the accounting period, the fair value is determined and used to value the investment. Unrealized Gains or Losses are recorded, depending on their fair values. The gains or losses become realized when the investments are sold.
Kingbird Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows.
KingBird Resort Trial Balance August 31, 2020
Debit Credit
Cash $25,900
Prepaid Insurance 10,800
Supplies 8,900
Land 22,000
Buildings 122,000
Equipment 18,000
Accounts Payable $10,800
Unearned Rent Revenue 10,900
Mortgage Payable 62,000
Common Stock 99,300
Retained Earnings 9,000
Dividends 5,000
Rent Revenue 78,200
Salaries and Wages Expense 44,800
Utilities Expenses 9,200
Maintenance and Repairs Expense 3,600
$270,200 $270,200
Other data:
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.
2. An inventory count on August 31 shows $443 of supplies on hand.
3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost.
4. Unearned Rent Revenue of $3,472 was earned prior to August 31.
5. Salaries of $392 were unpaid at August 31.
6. Rentals of $873 were due from tenants at August 31.
7. The mortgage interest rate is 8% per year.
A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
No. Date Account Titles and Explanation Debit Credit
1. Aug. 31
2. Aug. 31
3a. Aug. 31
3b. Aug. 31
4. Aug. 31
5. Aug. 31
6. Aug. 31
7. Aug. 31
B. Prepare an adjusted trial balance on August 31.
Answer:
A. Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
1. The balance in prepaid insurance is a one-year premium paid on June 1, 2020.
prepaid insurance expense per month = $10,800 / 12 = $900 x 3 months = $2,700
Dr Insurance expense 2,700
Cr Prepaid insurance 2,700
2. An inventory count on August 31 shows $443 of supplies on hand.
supplies expense = $8,900 - $443 = $8,457
Dr Supplies expense 8,457
Cr Supplies 8,457
3. Annual depreciation rates are (a) buildings (4%) (b) equipment (10%). Salvage value is estimated to be 10% of cost.
depreciation expense per month:
buildings = ($122,000 x 90%) x 4% x 1/12 = $366 x 3 = $1,098
equipment = ($18,000 x 90%) x 10% x 1/12 = $135 x 3 = $405
Dr Depreciation expense 1,503
Cr Accumulated depreciation building 1,098
Cr Accumulated depreciation equipment 405
4. Unearned Rent Revenue of $3,472 was earned prior to August 31.
Dr Unearned revenue 3,472
Cr Rent revenue 3,472
5. Salaries of $392 were unpaid at August 31.
Dr Wages expense 392
Cr Cash 392
6. Rentals of $873 were due from tenants at August 31.
Dr Accounts receivable 873
Cr Rent revenue 873
7. The mortgage interest rate is 8% per year.
interest expense per month = $62,000 x 8% x 1/12 = $413.33 x 3 = $1,240
Dr Interest expense 1,240
Cr Interest payable 1,240
B. Prepare an adjusted trial balance on August 31.
first we must calculate the quarter's profit:
Rent Revenue $82,545
Salaries and Wages Expense ($45,192)
Utilities Expenses ($9,200 )
Maintenance and Repairs Expense ($3,600)
Insurance expense ($2,700)
Supplies expense ($8,457)
Depreciation expense ($1,503)
Interest expense ($1,240)
net income = $10,653
retained earnings = $9,000 - $5,000 + $10,653 = $14,653
Kingbird Resort
Balance Sheet
For the Year Ended August 31, 202x
Assets:
Cash $25,508
Accounts receivable $873
Prepaid Insurance $8,100
Supplies $443
Land $22,000
Buildings $120,902
Equipment $17,595
Total assets: $195,421
Liabilities and Stockholders' Equity:
Accounts Payable $10,800
Unearned Rent Revenue $7,428
Interest payable $1,240
Mortgage Payable $62,000
Common Stock $99,300
Retained Earnings $14,653
Total liabilities and stockholders' equity: $195,421
Shulman Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversion cycle? Annual sales = $45,000 Annual cost of goods sold = $30,000 Inventory = $4,500 Accounts receivable = $1,800 Accounts payable = $2,500
Answer:
38.93
Explanation:
Firm Cash Conversion Cycle = Inventory Conversion Period + Average Collection Period - Payable Deferral Period
Inventory Conversion Period = 365 * Inventory / Annual cost of goods sold
365 days * 4500 / 30000 = 54.75
Average Collection Period = 365 days * Account receivable / sales
= 365 * 1800 / 45000 = 14.60
Payable Deferral Period = 365 days * Account payable / sales = 365 * 2500 / 30000 = 30.42
Hence, Firm Cash Conversion Cycle = 54.75 + 14.60 - 30.42 = 38.93
The firm Cash Conversion Cycle is 38.93
what do you do if your lender rejects your loan application
Answer:you tie a noose and hope for the best my friend. and if all goes south, you have a backup plan.
Explanation:
How long can foodborne illnesses last
Answer: Symptoms begin 2 to 10 days after becoming infected, and may last 1 to 2 weeks.
Explanation:
Chocolates R' Us, Inc is owned equally by Desi and his wife Lucy, each of whom hold 550 shares in the company. Lucy plans to reduce her ownership in the company, with the company planning to redeem 475 of her shares for $10,000 per share on December 31 of this year. Assume Desi and Lucy are not getting along and have separated due to marital discord, but are not legally separated. Because they no longer talk to each other, they communicate only through their accountant. Lucy wants to argue that she should not be treated as owning any of Desi's stock in Chocolates because of their hostility toward each other. Can family hostility be used as an argument to voice the family attribution rules?
Answer:
Chocolates R' Us, Inc.
Family hostility cannot be used as an argument to void the family attribution rules.
Lucy is still legally married to Desi. What the husband, Desi, therefore, owes, she owes equally despite their separation and her intention to reduce her ownership in their joint company.
Explanation:
Family Attribution Rules: Section 318 of the Internal Revenue Code says an individual shall be considered as owning the stock owned, directly or indirectly, by or for his spouse and his children, grandchildren, and parents, including legally adopted children.
You plan to borrow money from your grandmother to start a new chocolate candy business. You agree to make one payment of $100,000 at the end of 6 years and negotiate an interest rate of 7%. Your grandmother has offered to reduce either the interest rate or the number of years before the $100,000. Assuming your grandmother will lend you the present value of the final payment and that you want to borrow as much as possible today, which option would you prefer?
Answer:
future payment $100,000 in 6 years
agreed interest rate 7%
the present value of the $100,000:
PV = $100,000 / (1 + 7%)⁶ = $66,634
if your grandmother really likes you and offers to either reduce the interest rate or the number of years, you should choose a reduction in the interest rate:
PV at 6% = $100,000 / (1 + 6%)⁶ = $66,634
PV at 5% = $100,000 / (1 + 5%)⁶ = $74,622
PV at 4% = $100,000 / (1 + 4%)⁶ = $79,031
PV at 3% = $100,000 / (1 + 3%)⁶ = $83,748
PV at 2% = $100,000 / (1 + 2%)⁶ = $88,797
PV at 1% = $100,000 / (1 + 1%)⁶ = $94,205
the less the interest rate, the higher the present value of the $100,000
What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.
Answer:
$340,000
Explanation:
Statement of cash flow ( year-end December 31, 2012)
Operating activities Cashflow
Net Income = $5,000,000
Add back: Depreciation = $440,000
Net cashflow = $5,440,000
Investing activities Cashflow
Cash paid for machinery = ($5,400,000)
Net cashflow = ($5,400,000)
Financing activities Cashflow
Cash receipt from issuing long term debt =$1,000,000
Cash paid for dividends =(800,000)
Net cashflow =$200,000
Net increase = ($5,440,000-$5,400,000+$200,000)
Net increase in cash = $240,000
Opening balance as at 1 Jan 2012 =$100,000
Closing balance as at 31 Dec 2012 =($100,000+$240,000) = $340,000
Suppose the U.S. economy is initially at long run equilibrium, when there is an unexpected large increase in the price of steel used by firms in production. How does this impact the U.S. economy? (write out either "inflationary" or "recessionary" In response to this what monetary policy would the Fed employ? (write one of the following: "raise taxes", "lower taxes", "raise money supply", or "lower money supply" What is the most likely way the Fed will accomplish this change in the monetary policy? (write one of the following: "buy securities", "sell securities", "raise discount rate", "lower discount rate", or "legislation" This action by the Fed will cause interest rates to _______. (Write out "increase" or "decrease" The end result of the monetary policy is a shift of which curve in which direction. (Write out one of the following: "AD right", "AD left" "AS left", "AS right"
Answer:
The price hike in the price of steel would cause an inflationary push in the U.S. economy, because steel is a input to the production processes of many firms.
In this scenario, the fed would lower the money supply in order to stop the inflationary push from continuing. To do so, the fed would sell government securities.
Godcare, an insurance firm based in California, had difficulties expanding their operations to Asian markets as most of their target countries had strict regulations on transferring the details of the customers among the different branches of the firm. The company had to obtain an approval from its customers before sharing their personal information with its branches in other countries. Which of the following barriers is most likely to have affected the services of Godcare in the given scenario?a. Protectionismb. Control on transborder data flowsc. Protection of intellectual propertyd. Cultural requirements for adaptatione. Language translation barriers
Answer:
The correct answer is: b. Control on transborder data flows.
Explanation:
Control on transborder data flows was the barrier that probably affected Godcare services in the scenario above.
The insurance company had this barrier of control of transborder data when expanding its business to Asian countries with stricter regulations on the transfer of customer data.
Generally, these government restrictions arise to protect against possible abuses and invasions of privacy, which meant that the company needed the approval of each customer to share their personal information with its branches in other countries.
Alexander and Kristin are executive managers at Safety First Fall Safety Equipment Co. They realize that within the last several quarters, they have been treating the performance metrics from the company's two very distinct divisions the same rather than focusing on the unique aspects of each division. They have inaccurately assessed divisional performance as a result. Alexander and Kristin realize they have fallen prey to a cognitive bias known as:_______
a. common measures bias
b. motivated reasoning
c. surrogation
d. uncommon measures bias
Answer:
The correct answer to the following question will be Option A (Common measures bias).
Explanation:
CMS occurs because once variations throughout order to respond have been triggered either by method rather than with the real propensities of the participants that only the equipment is trying to expose.It suggested a lack of desire on the part of the decision-maker to integrate specific knowledge because this knowledge provides additional cognitive effort. It's streamlined.The remaining three solutions are not relevant to the situation in question. So Choice A is the right one.
How many years would it take for Jughead to save an adequate amount for retirement if he deposits $2,000 per month into an account beginning today that pays 12 percent per year if he wishes to have a total of $1,000,000 at retirement
Answer:
The number of year needed to save the amount = 36.2739
Explanation:
The annual deposit amount (A) = $2000
Annual interest rate (r ) = 12 %
The retirement amount or the expected amount at the time of retirement (FV) = $1000000
Number of years = n
So if the Jughead want the retirement amount $1000000 that has interest rate 12 percent then we need to calculate the number of years.
Below is the calculation of number of years.
[tex]FV = A \frac{(1 + r)^{n}}{r} \\1000000 = 2000 \frac{(1 + 12 \ percent )^{n} - 1}{12 \ percent} \\\frac {1000000}{2000} = \frac{(1 + 12 \ percent )^{n} - 1}{12 \ percent} \\500 = \frac{(1 + 0.12)^{n} - 1}{0.12} \\ n = 36.2739 \ years[/tex]
