Answer:
You should use the discount coupon to pay for the Chicago-Miami trip. Not considering the personal motivations for the trip, the coupon is worth $500. The cost of flying is $600, so you will only pay $100 yourself. You will be spending $900 + $1000 = $1,000 in total.
The opportunity cost of using the coupon is $350 (the cost of the round trip to Atlanta). Even if you add the $350 to the $1,000 expense, the total is $1,350, less than your $1,400 maximum budget.
Parent Corporation acquired 100% of Sub Corporation on January 1, 2020 for $285,000. The trial balances for the two companies on December 31, 2020, included the following amounts: Other information: 1. Out of the total purchase price, $60,000 is paid for the goodwill. However, the manager assess the reporting division and estimated that 50% of the goodwill has impaired. 2. The rest of the differential is split between the building and equipment (40%) and inventory (60%). By the end of the year, Sub Corp sold 50% of all the inventories acquired. The building and equipment has five years of remaining economic life and the company uses the straight line depreciation. 3. Sub Corp owed Parent Corp $20,000 in the form of accounts of payable as of December 31, 2020. Task 1a: Calculate the amount of differential? Task 1b: What is the amount of excess value (i.e., fair value above the book value)? Task 1c: What is the book value of Sub’s net asset? Task 2: Give all journal entries recorded by Parent with regard to its investment in Sub during 2020.
Answer:
Note: The full question is attached as picture
Task 1
a. Net Assets of Company = Common Stock + Retained Earning = $25,000 + $115,000 = $140,000
Amount of Differential on purchase of Company = Purchase price - Net Assets
Amount of Differential on purchase of Company = $285,000 - $140,000
Amount of Differential on purchase of Company = $145,000
b. Excess Value = $145,000 - $60,000 = $85,000
c . Book Value of Sub's Net Assets = $140,000
Task 2
Journal entries recorded by Parent with regard to its investment in Sub during 2020.
Date Description and Explanation Debit Credit
Investment in Sub Corp $285,000
To Bank $285,000
(Being purchase consideration paid)
Easton Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2019: Date Activity Quantity Unit Price 5/1 Beginning Inventory 100 $10 5/5 Purchase 250 $12 5/15 Purchase 200 $14 5/25 Purchase 250 $16 Sales were 580 units at $20. Using the LIFO method, determine the dollar value of Cost of Goods Sold for the month of May.
Answer:
.$7,280
Explanation:
Date Activity Quantity Unit Price
5/1 Beginning Inventory 100 $10
5/5 Purchase 250 $12
5/15 Purchase 200 $14
5/25 Purchase 250 $16
Sales were 580 units at $20.
Using the FIFO method, cot of goods sold is:
= (100 x $10) + (250 x $12) + (200 x $14) + (30 x $16) = $7,280
when you use the first in, first out (FIFO) method, you calculate cost of good sold using the oldest units in inventory first (not necessarily the oldest physical units but their price).
Researchers at Ohio State and Michigan put leader behavior into two broad categories; __________ and __________.
a. Task , Power
b. People , Task
c. Task , Organizational
Answer:
b. People , Task
Explanation:
Based on the Michigan Leadership Studies that was carried out around 1950s and 1960s which centered on behavioral approaches and identification of leader relationships and group processes. The outcome of the research showed that there are three significant traits of productive leaders which are mainly:
1. Task-oriented behavior
2. Relationship-oriented behavior: this focused on people interaction in and out of the work place.
3. Participative leadership.
Hence, in this case, it can be concluded that "Researchers at Ohio State and Michigan put leader behavior into two broad categories; PEOPLE and TASK.
Suppose you purchase a ten-year bond with annual coupons.You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per face value? b. What is the internal rate of return of your investment?
Answer:
Explanation:
The Full question is "Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond’s yield to maturity was 5% when you purchased and sold the bond, what cash flows will you pay and receive from your investment in the bond per $100 face value?"
Face Value = $100
YTM = 5%
Annual Coupon = 6% * $100 = $6
Purchase Price = $6*PVIFA(5%, 10) + $100*PVIF(5%, 10)
Purchase Price = $6*(1-(1/1.05)^10)/0.05 + 100/1.05^10
Purchase Price = $107.72
Selling Price = $6*PVIFA(5%, 6) + $100*PVIF(5%, 6)
Selling Price = $6*(1-(1/1.05)^6)/0.05 + 100/1.05^6
Selling Price = $105.08
Cash Outflow at Year 0 = $107.72
Cash Inflow at Year 1 = $6
Cash Inflow at Year 2 = $6
Cash Inflow at Year 3 = $6
Cash Inflow at Year 4 = $6 + $105.08 = $111.08
B. The internal rate of return of your investment = 5.001% (Find attach the calculation)
Why would an organization decide to use focal-point reviews instead of the less burdensome anniversary model for performance appraisals? And, in your opinion and based on your HR knowledge, which method is better?
Explanation:
In my opinion, the use of focal point reviews is more advantageous for an organization than the anniversary model for employee performance evaluations, since in the anniversary evaluation there is an annual performance evaluation, carried out on the employee's hiring date or at the end of the year, this model may be more complex due to the difficulty of organizing the evaluation of all employees, since there are different dates for hiring employees, which can mean a problem with the agenda that interferes with the evaluation.
Focal point reviews, on the other hand, are more advantageous because they can be carried out whenever there is an identification of reduced performance of employees, and allow managers to carry out integrated performance evaluations, which gives the advantage of eliminating some type of bias that compromises the fairness of the assessment. In the focal point reviews, there is an employee evaluation based on comparisons between employee performance, which ensures greater efficiency in evaluating and developing actions to improve employee performance.
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 78 Units in beginning inventory 0 Units produced 8,800 Units sold 8,700 Units in ending inventory 100 Variable costs per unit: Direct materials $ 18 Direct labor $ 10 Variable manufacturing overhead $ 4 Variable selling and administrative expense $ 5 Fixed costs: Fixed manufacturing overhead $255,200 Fixed selling and administrative expense $ 87,000 What is the unit product cost for the month under absorption costing
Answer:
$61
Explanation:
The computation of unit product cost for the month under absorption costing is shown below:-
Unit product cost = Direct material + Direct labor + Variable Manufacturing overhead + Fixed manufacturing cost
= $18 + $10 + $4 + ($255,200 ÷ 8,800)
= $61
Therefore for computing the unit product cost for the month under absorption costing we simply applied the above formula.
The Carlton Corporation has $5 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 10. The firm has $5 million in excess cash. a. Compute the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If the $5 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.) c. If the $5 million is used to repurchase shares in the market at a price of $30 per share, how many shares will be acquired? (Do not round intermediate calculations and round your answer to the nearest whole share.) d. What will the new earnings per share be? (Use the rounded number of shares computed in part c but do not round any other intermediate calculations. Round your answer to 2 decimal places.) e-1. If the P/E ratio remains constant, what will the price of the securities be? (Use the rounded answer from part d and round your answer to the nearest whole dollar.) e-2. By how much, in terms of dollars, did the repurchase increase the stock price? (Use the rounded whole dollar answer from part e-1. A negative value should be indicated with a minus sign. Round your answer to the nearest whole dollar.) f. Has the stockholders' total wealth changed as a result of the stock repurchase as opposed to receiving the cash dividend? Yes No
Answer:
a. Compute the current price of the stock.
P/E ratio = 10
EPS = $5,000,000 / 2,000,000 stocks = $2.50 per stock
price = $2.50 x 10 = $25
b. If the $5 million is used to pay dividends, how much will dividends per share be?
$2.50, same as EPS
c. If the $5 million is used to repurchase shares in the market at a price of $30 per share, how many shares will be acquired?
$5,000,000 / $30 = 166,666.7 ≈ 166,667 stocks
d. What will the new earnings per share be?
outstanding stocks = 2,000,000 - 166,667 = 1,833,333
EPS = $5,000,000 / 1,833,333 = $2.73
e-1. If the P/E ratio remains constant, what will the price of the securities be?
price = $2.73 x 10 = $27.30
e-2. By how much, in terms of dollars, did the repurchase increase the stock price?
$27.30 - $25 = $2.30
f. Has the stockholders' total wealth changed as a result of the stock repurchase as opposed to receiving the cash dividend?
No
Which is an example of a businessman making an investment?
he receives financing from an angel investor
he contributes money to a partnership
he applies for a small business loan
he reports investor fraud to the SEC
Answer:
he contributes money to a partnership
The one that can be stated as an example of a businessman who is making an investment is by making a contribution in the form of money to a partnership. Hence, Option B is correct.
What is a businessman?An individual who owns or has shares in a private sector and engages in commercial or industrial activities to generate cash flow, sales, and income by combining human, financial, intellectual, and physical capital with the goal of sustaining is referred to as a businessman or businesswoman.
Although it is a difficult career path, those who choose business reap the rewards of their labour and have access to employment options in almost every industry.
One may find them in almost any company, managing operations, hiring and firing staff, keeping the books balanced, and managing funds. The one that can be used as an illustration of a businessman investing is by giving a financial contribution to a partnership.
Therefore, Option B is correct.
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If Mux/Px < MUy/Py, then A. Spending a dollar less on Y and a dollar more on X increases utility B. Spending a dollar less on X and a dollar more on Y increases utility C. The substitution effect will increase the quantity of the good demanded while the income effect t will decrease the quantity of the good demanded D. The substitution effect will decrease the quantity of the good demanded while the income effect will increase the quantity of the good demanded
Answer:
B. Spending a dollar less on X and a dollar more on Y increases utility
Explanation:
Consumer's utility maximising equilibrium in case of two commodities is when Marginal Utility on per unit currency spent on both goods is equal.
MU X / P X = MU Y / P Y
If MU X / P X < MU Y / P Y : Consumer gets more additional satisfaction per unit currency spent, from good Y than good X
So in this case, spending a dollar less on X & a dollar more on Y increases utility.
Doreen has preferences represented by the utility function U(x, y) = 10x + 5y. She consumes 10 units of good x and 9 units of good y. If her consumption of good x is lowered to 1, how many units of y must she have in order to be exactly as well off as before?
Answer:
she must consume 11 units of good Y
Explanation:
Doreen's current utility = (10 x 10) + (5 x 9) = 145 utils
if she consumes only 9 goods of X, her utility will be:
90 + 5Y
the amount of good Y that makes both equations equal is:
90 + 5Y = 145
5Y = 55
Y = 55 / 5 = 11 units
Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $47,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20,000,000 for the golfing season. About 440,000 golfers are expected each year. Variable costs are about $17 per golfer. Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge $84 per round of golf. What profit will it earn as a percent of assets
Answer:
47.4%
Explanation:
A. Expected golfers
440,000
B Revenue (440,000 × $84)
$36,960,000
C. Variable cost (440,000 × $17)
$7,480,000
D = B - C Contribution margin
$29,480,000
E Fixed cost
$20,000,000
F = D - E Profit
$9,480,000
G Assets
H = F/G × 100 Return on assets
47.4%
On September 15, 2021, Oliver's Mortuary received a $7,200, nine-month note bearing interest at an annual rate of 8% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2021
Answer: PLease see answer below
Explanation:
Date Account title and explanation Debit Credit
Dec 31 Interest receivable $168
2021 Interest revenue $168
Calculation
Interest =Principal x time x rate
= 7,200 x 8% x 3.5 /12(15th september to 31st December)
=$168
How do prevention and resistance technologies stop intruders from accessing and reading sensitive information?A) Content filtering,encryption,and firewallsB) Calculating,locking,and firewallsC) Content prohibiting,and cookiesD) None of the above
Answer: A. Content filtering, encryption and firewalls.
Explanation:
Due to fraud and other security challenges, prevention and resistance technologies are important in order to help computer and internet users to protect their informations.
Ways to achieve this include content filtering, encryption and firewalls. Content filtering is when the access to a particular web content is restricted. Encryption has to do with the translation of data into another form so that it won't be accessible to anyone without the password. Firewall is also done on order to curb unauthorized access.
Roger owns some farmland that he rents to a tenant. The tenant lives in an old farmhouse on the property and raises crops on the land. Roger is concerned about legal liability if the tenant injures someone. Roger requires the tenant to have liability insurance and to add himself to the liability coverage through an endorsement. Under the tenant's liability insurance, Roger is a(n)
Answer:
additional insured
Explanation:
An additional insured endorsement refers to an amendment clause made to an exiting policy which adds someone else, and therefore, extends the coverage of the policy to include this recently added party.
In this case, Roger was included or added to his tenant's liability insurance policy, therefore, he will be covered by it.
On a flight from Boston to Seattle, American reduced its Internet price by $190.00. The sale price was $535.99. What was the original price?
Answer:
the original price is $725.99
Explanation:
Calculation of Original Price
Current Sales Price $535.99
Add Reduction Amount $190.00
Original Price $725.99
Here are comparative statement data for Duke Company and Lord Company, two competitors. All balance sheet data are as of December 31, 2020, and December 31, 2019.
2020 2019 2020 2019
(Duke Company) (Duke Company) (Lord Company) (Lord
Company)
Net sales $1,896,000 $561,000
Cost of goods sold 1,020,048 297,330
Operating expenses 257,856 79,662
Interest expense 7,584 3,927
Income tax expense 54,984 6,171
Current assets 322,500 $310,000 83,500 $78,000
Plant assets (net) 520,800 500,300 139,800 123,000
Current liabilities 64,200 75,600 34,400 29,600
Long-term liabilities 108,400 90,400 28,400 26,000
Common stock, $10 par 498,000 498,000 122,500 122,500
Retained earnings 172,700 146,300 38,000 22,900
Prepare a vertical analysis of the 2017 income statement data for duke company and Lord company.
Answer:
Please attached detailed solution.
Explanation:
• Prepare a vertical analysis of the 2017 income statement data for Luke and Lord company.
Please see as attached detailed solution to the above question.
Given the following data: Selling price per unit $ 2.00 Variable production cost per unit $ 0.30 Fixed production cost $ 3,000 Sales commission per unit $ 0.20 Fixed selling expenses $ 1,500 The break-even point in dollars is:
Answer:
Break-even point (dollars)= $6,000
Explanation:
Giving the following information:
Selling price per unit $ 2.00
Variable production cost per unit $ 0.30
Fixed production cost $ 3,000
Sales commission per unit $ 0.20
Fixed selling expenses $ 1,500
To calculate the break-even point in dollars, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Fixed costs= 3,000 + 1,500= 4,500
Unitary variable cost= 0.3 + 0.2= $0.5
Break-even point (dollars)= 4,500 / [(2 - 0.5) / 2]
Break-even point (dollars)= $6,000
Packer Corporation’s year 8 income statement reported $130,000 in income before provisions for income taxes. To compute the provision for federal income taxes, the following year 8 data are provided: Rent received in advance $ 22,000 Income from exempt municipal bonds $ 17,000 Depreciation deducted for income tax purposes $ 18,000 Depreciation deducted for financial reporting $ 10,000 What amount should Packer report as taxable income?
Answer:
$127,000
Explanation:
Calculation for the amount to be reported as taxable income
Using formula
Taxable income=[Year 8 Income Statement + Rent received in advance -Income from exempt municipal bonds -(Depreciation deducted for income tax purposes-Depreciation deducted for financial reporting)]
Let plug in the formula
Taxable income=[$130,000+$ 22,000 -$ 17,000 -( $ 18,000 -$ 10,000 )]
Taxable income=$130,000+$ 22,000 -$ 17,000 -$8,000
Taxable income=$127,000
Therefore the amount that Packer should report as taxable income will be $127,000
Using the Rule of 70, if Slowland's GDP grows at 2% per year and Speedyland's GDP grows at 5% per year, how much quicker will Speedyland double its GDP compared to Slowland?
a. Speedyland will double its GDP 35 years quicker than Slowland.
b. Speedyland will double its GDP 21 years quicker than Slowland.
c. Speedyland will double its GDP 14 years quicker than Slowland.
d. Speedyland will double its GDP 3 years quicker than Slowland.
Answer:
b. Speedyland will double its GDP 21 years quicker than Slowland.
Explanation:
According to the rule of 70, it tells about the number of years to double
For Slowlands
= 70 ÷ 2
= 35
For speedyland
= 70 ÷ 5
= 14
So if we take the difference than it comes
= 35 - 14
= 21
Hence, the correct option is b and the same is to be considered
And all other options are wrong
What are entrepreneurs?
Answer:
Entrepreneurs are people who organize/operate their own buisness or buisnesses.
Explanation:
hope this helps lad :)
Capital budgeting analysis not only requires the evaluation of cash flows but also requires the understanding of the origin of those cash flows. Based on your understanding of cash flows in a firm, complete and answer the following questions: Which of the following is a reason cash flows may differ from accounting income? The total number of units sold will be different for accounting income and cash flows. Depreciation is a tax-deductible expense but is not a cash outlay.
Answer:
The reason cash flows may differ from accounting income is, for example:
Depreciation is a tax-deductible expense but is not a cash outlay.
Explanation:
Cash flows are transactions that involve the inflow or outflow of cash. For example, with depreciation expense, the cash outlay could have taken place before, when the asset was initially purchased. But, when the asset is put to use, the depreciation cost is deducted from the accounting income. This implies that there will no longer be any cash flowing out of the business during the periods the asset's cost is being written off as an expense.
A reason cash flows may differ from accounting income is depreciation is a tax-deductible expense but is not a cash outlay.
Capital budgeting analysis is the process of determining the profitability of a project using the projected cash flows.
Types of capital budgeting analysis
Internal rate of return Net present value Payback methodCash flow in the sum of depreciation and accounting income. While, accounting income does not include deprecation. For example, if net income is $10,000, deprecation is $2000, cash flow is $12,000.
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Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $529,000 $161,000 $368,000 Variable expenses 305,900 99,820 206,080 Contribution margin 223,100 61,180 161,920 Traceable fixed expenses 122,380 33,320 89,060 Segment margin 100,720 $ 27,860 $ 72,860 Common fixed expenses 36,030 Net operating income $ 64,690 The break-even in sales dollars for Division Q is closest to: Multiple Choice $280,790 $223,375 $446,200 $202,409
Answer:
$202,409
Explanation:
Firstly, we will need to calculate Break even in sales dollar for division Q using the formula;
= Division Q fixed cost / contribution margin ratio
Division Q fixed cost = $89,060
But,
Contribution margin ratio = Contribution margin / Sales
Contribution margin ratio = $161,920 / $368,000
Contribution margin ratio = 44%
Therefore, the Break even in sales dollar for Division Q
= $89,060 / 44%
= $202,409
The Break even in sales dollars for Division Q is closest to $202,409
Task 3: Budget for 25- to 30-year-old Business Professionals
Talk to your mentor, family members, or relatives between the ages of 25-30 and who are
employed to see what their budgets look like. Develop a sample budget for someone aged 25
to 30 years old.
Answer:
Sample Budget
Salary Income $2515
Rent expense -$900
Food and groceries -$250
Entertainment expense -$85
Shopping -$45
Birthday Party gift -$12
Transportation expense -$150
Home maintenance cost -$320
Tuition cost -$121
Net savings = $632
Explanation:
The mid aged person who is age of 25 to 30 will have different expenses. He will have to budget his monthly income and routine expenses to identify the savings. The sample budget will include different types of household expenses that a person incurs to live. He might have to budget one off expenses such as party cost, gifts etc. He will have to keep track of groceries and food expenses.
Answer:
Iteam Sample budget
Rent/ housing bill $800
Utility Bills $400
Transportation $80
Groceries $150
Clothing expense $40
Entertainment $50
Study related costs $ 100
Savings $200
Pet Care $45
Medications $35
Insurance & tax $200
Newton Company currently produces and sells 7,000 units of a product that has a contribution margin of $5 per unit. The company sells the product for a sales price of $23 per unit. Fixed costs are $39,000. The company is considering investing in new technology that would decrease the variable cost per unit to $11 per unit and double total fixed costs. The company expects the new technology to increase production and sales to 12,000 units of product. What sales price would have to be charged to earn a $90,000 desired profit assuming the investment in technology is made
Answer:
selling price= $25
Explanation:
Giving the following information:
Fixed costs= $78,000
Unitary variable cost= $11
Desited profit= $90,000
Break-even point in units= 12,000
To calculate the selling price, we need to use the following formula:
Break-even point in units= (fixed costs + desired profit) / contribution margin per unit
12,000= (78,000 + 90,000) / (selling price - 11)
12,000*selling price - 132,000 = 168,000
12,000selling price = 300,000
selling price= $25
A consumer is likely to have a broad search including more brands during an external information search when:
Answer:
There is a direct relationship between perceived risk and external research. The higher the perceived risk, the more external research a consumer will carry out. Perceived risk is not simply fearing that you will make a bad purchase, but it also refers to the costs and benefits associated with the purchase.
The higher the benefits that a consumer can obtain from a purchase, the higher the risk of not getting enough benefits if they make a bad choice. E.g. if you have a lot of good choices available, then you will want to do some more research to choose the best one.
Generally consumers include more brands in their search when they are physically in stores. As consumers we generally consider a very limited number of brands when we shop online, but when we are in a store, we tend to broaden our search and include al the brands that we find.
First Financial Corporation is a secured party with a security interest in property owned by Retail Sales Company. Perfection of this security interest may not protect First Financial against the claim of:___________.a. a bank.b. a buyer in the ordinary course of business.c. a subsequent lien creditor.d. a trustee in bankruptcy.
Answer:
d. a trustee in bankruptcy.
Explanation:
Generally secured creditors are the first creditors to be paid, but there are some expenses that need to be paid before any creditor actually receives any money. Bankruptcy expenses, e.g. lawyers, accountants, court, and the trustee. After the bankruptcy costs are paid, then the money is distributed among creditors. First Financial Corporation would be included in the list of creditors to be paid first.
___________ is/are associated with collecting, storing, and distributing the product or service to buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling.
a. Services
b. Inbound logistics
c. Outbound logistics
d. Operations
Answer:
Outbound logistics
Explanation:
Logistics is defined as the process by which inventory and other goods are moved from their source to locations of use or consumption.
Outbound logistics for a business is concerned with movement of finished goods from a company to the consumer. It is movement of goods outward.
Various activities involved in this are storing, collection, order processing, warehousing, and distribution.
On the other hand inbound logistics deals with inflow of required raw materials and equipment for production or operations.
eorge and Weezy received $30,200 of Social Security benefits this year ($12,000 for George; $18,200 for Weezy). They also received $5,000 of interest from jointly owned City of Ranburne Bonds and dividend income. What amount of the Social Security benefits must George and Weezy include in their gross income under the following independent situations
Answer:
$0
Explanation:
George and Weezy will not get any amount as social security benefit if they file married joint. The sum of their modified AGI plus the 50% of their social security benefit is [$5,000 + $8,000 + $15,100]. This equals to $28,100 which is below the minimum amount of social security.
At the end of a reporting period, a company determines that its ending inventory has a cost of $300,000 and a net realizable value of $230,000. What would be the effect(s) of the adjustment to write down inventory to net realizable value?
Answer:
1.Cost of Goods Sold Increase by $70,000
2.Gross Profit and Net Profit decrease by $70,000
3.Inventory in balance sheet decrease by $70,000
Explanation:
IAS 2 requires inventory to be measured at the lower of cost or net realizable value.
In our case the inventory will be valued at net realizable value of $230,000 because this is lower.
The effect with this is :
1.Cost of Goods Sold Increase by $70,000
2.Gross Profit and Net Profit decrease by $70,000
3.Inventory in balance sheet decrease by $70,000
On December 31, 2016, Fall Company prepared adjusting entries that included the following items: Depreciation expense: $31,000. Accrued sales revenue: $29,000. Accrued expenses: $12,000. Used insurance: $9,000; the insurance was initially recorded as prepaid. Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue. If Fall Company reported pretax income of $120,000 prior to the adjusting entries, how much is Fall's pretax income after the adjusting entries
Answer: $104,000
Explanation:
Pretax income after the Adjustment = Pretax income before adjustments + Accrued sales revenue + Rent revenue earned - depreciation - accrued expenses - used insurance
= 120,000 + 29,000 + 7,000 - 31,000 - 12,000 - 9,000
= $104,000
The above were all period costs and so needed to be accounted for in the income.
