Answer:
Ferrier Chemical Company
Allocation of the joint cost, using weight as the allocation base:
For B7 = $140,000 ($600,000*35,000/150,000)
For K6 = $300,000 ($600,000*75,000/150,000)
ForX9 = $160,000 ($600,000*40,000/150,000)
Allocation of the join cost, using market value:
For B7 = $78,750 ($600,000*$210,000/$1,600,000)
For K6 = $281,250 ($600,000*$750,000/$1,600,000)
For X9 = $240,000 ($600,000*$640,000/$1,600,000)
Explanation:
a) Data and Calculations:
Joint cost of a standard batch = $600,000
B7 K6 X9 Total
Pounds generated 35,000 75,000 40,000 150,000
Sales price per pound $6 $10 $16
Market value $210,000 $750,000 $640,000 $1,600,000
Allocation of the joint cost, using weight as the allocation base:
For B7 = $140,000 ($600,000*35,000/150,000)
For K6 = $300,000 ($600,000*75,000/150,000)
ForX9 = $160,000 ($600,000*40,000/150,000)
Allocation of the join cost, using market value:
For B7 = $78,750 ($600,000*$210,000/$1,600,000)
For K6 = $281,250 ($600,000*$750,000/$1,600,000)
For X9 = $240,000 ($600,000*$640,000/$1,600,000)
b) The market value for each product class is a function of the quantity produced multiplied by the sales price per unit.
Vic, who was experiencing financial difficulties, was able to adjust his debts as follows:
a. Vic is an attorney. Vic owed his uncle $25,000. The uncle told Vic that if he serves as the executor of the uncle's estate, Vic's debt will be canceled in the uncle's will.
The $25,000 debt cancellation is Vic's gross income when the uncle dies.
b. Vic borrowed $80,000 from First Bank. The debt was secured by land that Vic purchased for $100,000. Vic was unable to pay, and the bank foreclosed when the liability was $80,000, which was also the fair market value of the property.
Vic has a $ gain as a result of the foreclosure.
c. The Land Company, which had sold land to Vic for $80,000, reduced the mortgage on the land by $12,000.
The $12,000 reduction in the debt is Vic's gross income because the debt reduction was made by the seller of the property.
Answer:
Explanation:
From what I can tell, you've already answered the question underneath it
Michael's Machine Shop reports the following information for the quarter.
Sales price $70
Fixed costs (for the quarter)
Selling and administrative 47,620
Production 142,860
Variable cost (per unit)
Materials 18
Labor 15
Plant supervision 8
Selling and administrative 9
Number of units (for the quarter) 23,810 units
Required:
Select the answer for each of the following costs.
a) Variable cost per unit.
b) fixed cost amount
c) breakeven point
d) expected sales
Answer:
Results are below.
Explanation:
First, we need to calculate the variable cost per unit:
Variable cost per unit= Materials + Labor + Plant supervision + Selling and administrative
Variable cost per unit= 18 + 15 + 8 + 9
Variable cost per unit= $50
Now, the fixed cost:
Fixed costs= Selling and administrative + Production
Fixed costs= 47,620 + 142,860
Fixed costs= $190,480
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 190,480 / (70 -50)
Break-even point in units= 9,524
Finally, the expected sales:
expected sales= 23,810*70
expected sales= $1,666,700
The difference between a car's original cost and its selling price is called the markup. A. True or B. False
Mrs. Williams finds that she has two options for investing $32,000.02 for fifteen years. The first option is to deposit the $32,000.02 into a fund earning a nominal rate of discount d(4) payable quarterly. The second option is to purchase an annuity-immediate with 15 level annual payments, the annuity payments computed using an annual effective rate of 7%, and then when she gets an annuity payment, to immediately invest it into a fund earning an annual effective rate of 5%. Mrs. Williams calculates that the second option produces an accumulated value that is $1,500 more than the accumulated value yielded by the first option. Calculate d(4).
Answer:
faith
Explanation:
World trade benefits from free and fair trade among nations. Nevertheless, governments of many countries continue to practice protectionism. While protectionism earns profits for domestic producers and tariff revenues for governments, consumers pay higher prices because of protective restrictions. Imposing tariffs increases the price of goods to consumers. Removing tariffs decreases the price of goods to consumers. Imposing quotas limits supply and therefore increases the price of goods to consumers. Removing quotas makes products more available and therefore decreases the price of goods to consumers.
Answer:
Economic effects of imposing a tariff is that it will increase the prices for the goods and consumers will have to pay more for certain good.
Explanation:
Many countries promote trade without tariff so that they can benefit the consumers of their country, but this is only possible if both countries have good relations. Many countries are governed by World trade organizations in order to govern the trade policies. The countries can flourish their trade if they have minimum tariffs and trade policies. Imposition of higher tariff will create burden on consumers of a country.
ABC Incorporated has operating income before interest and taxes in 2020 of $199.2 million. The firm is expected to generate this level of operating income indefinitely. The firm had depreciation expense of 10 million that same year. Capital spending totaled 20 million during 2020. At the end of 2019 and 2020, working capital totaled 70 and 80 million, respectively. The firm's combined marginal state, local, and federal tax rate was 30% and its debt outstanding had a market value of 1.2 billion. The 10 year Treasury bond rate is 2% and the borrowing rate for companies exhibiting levels of creditworthiness similar to ABC is 5%. The historical risk premium for stocks over the risk free rate of return is 5.5%. ABC's beta was estimated to be 1.0. The firm has 2,500,000 common shares outstanding at the end of 2020. ABC's target debt to total capital ratio is 30%.
1. The free cash flow to the firm in 2020 (in million).
2. The WACC is (in percentage).
3. The firm value is million.
Answer and Explanation:
The computation is shown below:
1. Free cash flow
= EBIT × (1 - tax rate) + depreciation expense - capital expenditure - change in net working capital
= $199.2 × (1 - 0.30) + $10 - $20 - ($80 - $70)
= $119.44
2. The WACC is
But before that following calculations need to be done
Cost of equity = (2 + 1 × 5.5)
= 7.50%
The cost of debt is 5%
The debt to total capital ratio is 30%
The equity to total capital ratio is (100 - 0.30) = 0.70
Tax rate is 30%
Now
WACC is
= (7.5 × 0.7 + 5 × 0.3 × (1 - 0.3))
= 6.30%
3. The firm value is
= $119.44 ÷ 0.063
= $1,895.87 million
On January 1, 2020, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood's $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $65 per share on the date of grant. The fair value of the options at the grant date is $150,000. The period of benefit is 2 years. Prepare Barwood's journal entries for January 1, 2020, and December 31, 2020 and 2021
Answer and Explanation:
The journal entries are shown below;
On Jan 1, 2020
No journal entry is required
On Dec 31, 2020
Compensation expense Dr ($150,000 ÷ 2) $75,000
To paid in capital stock option $75,000
(Being compensation expense is recorded)
On Dec 31, 2021
Compensation expense Dr ($150,000 ÷ 2) $75,000
To paid in capital stock option $75,000
(Being compensation expense is recorded)
define nationalization.
Answer:
the process of transforming privately owned assets into public assets by bringing them under the public ownership of a national government or state.
Explanation:
Chamberlain Co. wants to issue new 17-year bonds for some much-needed expansion projects. The company currently has 12.2 percent coupon bonds on the market that sell for $1,434.96, make semiannual payments, and mature in 17 years. What coupon rate should the company set on its new bonds if it wants them to sell at par
Answer:
The company should set the coupon rate on its new bonds at current yield to maturity of 4.81% if it wants them to sell at par.
Explanation:
There is a need to first calculate the yield to maturity (YTM) using the following RATE function in Excel:
YTM = RATE(nper,pmt,-pv,fv) * Number of semiannuals in a year = RATE(nper,pmt,-pv,fv)*2 .............(1)
Where;
YTM = yield to maturity = ?
nper = number of periods = number of years to maturity * number of semiannuals in a year = 17 * 2 = 14
pmt = semiannual coupon payment = face value * (annual coupon rate / number of semiannuals in a year) = 1000 * (12.2% / 2) = 61
pv = present value = current bond price = 1434.96
fv = face value of the bond = 1000
Substituting the values into equation (1), we have:
YTM = RATE(14,61,-1434.96,1000)*2
Inputting =RATE(14,61,-1434.96,1000)*2 into excel (Note: as done in the attached excel file), the YTM is obtained as 4.81%.
Therefore, the company should set the coupon rate on its new bonds at current yield to maturity of 4.81% if it wants them to sell at par.
he following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Cash balance according to the company's records at August 31, $28,800. Cash balance according to the bank statement at August 31, $30,270. Checks outstanding, $5,850. Deposit in transit, not recorded by bank, $4,690. A check for $480 in payment of an account was erroneously recorded in the check register as $840. Bank debit memo for service charges, $50. a. Prepare a bank reconciliation, using the format shown in Exhibit 13.
Answer:
Creative Design Co.
Bank Reconciliation
August 31, 20Y6
Cash balance according to Bank Statement $30,270
Add: Deposit in transit, not recorded by bank $4,690
$34,960
Less: Outstanding checks ($5,850)
Adjusted Balance $29,110
Cash balance according to Company's records $28,800
Add: Error in recording check (840 - 480) $360
$29,160
Less: Bank service costs ($50)
Adjusted balance $29,110
The following selected information is taken from the work sheet for Warton Company at its December 31 year-end.
Balance Sheet and
Income Statement . Statement of Owner's Equity
Dr Cr. Dr. Cr.
74,500
B. Warton, Capital 41,400
B. Warton, withdrawals
Totals 137,000 204,000
Determine the amount for B. Warton, Capital, that should be reported on its current December 31 year-end balance sheet. Note: B. Warton, Capital was $74,500 on December 31 of the prior year. $ 74,500
B. Warton, Capital, (beginning)
Add: Net income
Less: Withdrawals
B. Warton, Capital, (ending)
Answer:
$100,100
Explanation:
Calculation to Determine the amount for B. Warton, Capital, that should be reported on its current December 31 year-end balance sheet
Statement of Owner's equity
B Warton Capital (Beginning) $74,500
Add: Net Income
($204,000 - $137,000) $67,000
Less: Withdrawals/Drawings ($41,400)
B Walter, Capital (ending) $100,100
Therefore the amount for B. Warton, Capital, that should be reported on its current December 31 year-end balance sheet is $100,100
Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose. Rose had a very small house and did not have a separate bedroom and bath for 12-year-old Tommy. She and Tommy decided to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid. The stock transfers are:
Answer:
presumed voidable unless Rose can show no unfair advantage was taken.
Explanation:
In the given scenario Tommy had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid for the addition to the house.
However Tommy is a minor living with his guardian Aunt Rose.
She may have an unfair influence over him that will force him to make the share transfers.
Considering this the transfer of shares can be viewed as voidable until she proves she did not use the unfair advantage of being a guardian to push the transaction through
Explain the positive and negative aspects of entrepreneurship. Draw evidence to support your claim from two other sources.
Answer:
Advantage #1: A flexible schedule – both in terms of when and where you work. ...
Advantage #3: It's exciting and fulfilling. ...
Advantage #4: The salary makes sense. ...
Disadvantage #1: You wear a lot of hats. ...
Disadvantage #2: You are always at work.
Explanation:
The positive (advantages) and negative aspects (disadvantages) of entrepreneurship are enumerated below:
Control: Entrepreneurship offers the entrepreneur a sense of being in charge and being the captain of the ship. With freedom of control comes increased risk of business failure.Responsibility: The entrepreneur is responsible for her income for life sustenance. There is no more reliance on a period paycheck. The entrepreneur can decide to delight her customers or to scare them away.Flexibility: The entrepreneur enjoys flexibility in work schedule. She works at her own pace. The downside is that your customers dictate when you work. The workload may increase more than your capacity to handle. Thus, flexibility does not happen always until you have established the business properly.Profit-making: As the business makes profits, the entrepreneur is entitled to receive all. When it makes losses, the entrepreneur similarly bears all.Thus, there are numerous benefits in being an entrepreneur. But there are also negative aspects of entrepreneurship.
Read more about entrepreneurship at https://brainly.com/question/21012374 and https://brainly.com/question/24497797
Bauer Manufacturing uses departmental cost driver rates to allocate manufacturing overhead costs to proudcts. Mnaufacturing overhead costs are allocated on the the bases of Macine hours in the Machining Department on the bases of direct labor hours. In the Assembly Department. At the beginning of 2018, the following estimates were provided for the coming year:
Machining Assembly
Direct labor - hours 40,000 40,000
Machine - hours 50,000 20,000
Direct labor costs $500,000 $900,000
Manufacturing overhead costs $280,000 $360,000
The accounting records of the company show the following data for Job #316
Machine Assembly
Direct labor - hours 120 65
Machine - hours 50 5
Direct material cost $425 $175
Direct labor cost $275 $300
WHat are the total manufacturing costs for Job #316
Which of the following are correct? (Please show ALL calculations)
A. $2,040
B. $1,960
C. $1,175
D. $1,440
Answer:
See below
Explanation:
Total manufacturing cost = direct material cost + direct labor cost + manufacturing overhead cost
Where
Direct material cost = Machining direct material cost + assembly direct material cost
= $425 + $175
= $600
The direct labor cost = Machining direct labor cost + Assembly direct labor cost
= $275 + $300
= $575
The machining overhead cost = Manufacturing overhead costs / Machine hours
= $280,000 / 50,000
= $5.6
So, cost = $5.6 × 50 = $280
Assembly overhead cost = Manufacturing overhead costs / direct labor hours
= $360,000 / 20,000
= $18
So, the cost = $18 × 65 = $1,170
= $600 + $575 + $280 + $1,170
= $2,625
A trader wishes to know the cost of goods sold during the year.
Which financial statment will provide the answer? *
A Balance sheet
B Profit and loss Account
C Trading Account
D Trial Balance
what do the four functions of managment have in common
Saginaw Inc. completed its first year of operations with a pretax loss of $692,500. The tax return showed a net operating loss of $884,500, which the company will carry forward. The $192,000 book–tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Missing word "Tax rate is 34 percent"
Date Particulars Debit Credit
Deferred tax asset (884,500*34%) $300,730
Deferred tax benefit $300,730
(To record the deferred tax consequences of the current year NOL)
Deferred tax asset (192,000*34%) $65,280
Deferred tax benefit $65,280
(To record the deferred tax consequences of the depreciation)
Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows: Products Unit Selling Price Unit Variable Cost Sales Mix Laptops $1,000 $500 40% Tablets 600 300 60% The estimated fixed costs for the current year are $3,192,000. Required: 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even point for the current year.
Answer:
Break-even point (units)= 8,400
Explanation:
Giving the following information:
Laptops $1,000 $500 40%
Tablets 600 300 60%
Fixed costs= $3,192,000
To calculate the break-even point for the whole company, we need to use the following formula:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Weighted average contribution margin= (weighted average selling price - weighted average unitary variable cost)
Weighted average contribution margin= (0.4*1.000 + 0.6*600) - (0.4*500 + 0.6*300)
Weighted average contribution margin= $380
Break-even point (units)= 3,192,000 / 380
Break-even point (units)= 8,400
Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below: Alternative Q Alternative R Supplies costs $ 74,000 $ 74,000 Power costs $ 34,200 $ 33,400 Inspection costs $ 27,000 $ 33,400 Assembly costs $ 39,000 $ 39,000 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives
Answer:
Explanation:
Relevant costs are the costs which are affected by the decisions made by the management of an organization while irrelevant costs do not change in future as they're not affected by the decisions from the management.
Based on the information given, the relevant cost are:
1. Power cost
2. Inspection cost
The non relevant cost are:
1. Supplies cost
2. Assembly cost
The management of Maltwo Co. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2015, the accounting records show the following data. Inventory, January 1 (10,000 units) $ 37,000 Cost of 110,000 units purchased 479,000 Selling price of 90,000 units sold 720,000 Operating expenses 150,000 Units purchased consisted of 40,000 units at $4.20 on May 10; 50,000 units at $4.40 on August 15; and 20,000 units at $4.55 on November 20. Income taxes are 30%. Instructions: Prepare comparative condensed income statements for 2015 under FIFO and LIFO. (Show computations of ending inventory.) Answer the following questions for management. Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet? Why? Which inventory cost flow method produces the most meaningful net income? Why? How muc
Answer:
Net income for Maltwo Co. is $132,300
Explanation:
FIFO
Sold 90,000 units
Cost of sold units =
opening 10,000 units for $3.7 = $37,000
purchased 40,000 units for $4.20 = $168,000
purchased 40,000 units for $4.4 = $176,000
Total cost of goods sold = $381,000
Sales = $720,000
less: cost of goods sold = $381,000
less: operating expenses = $150,000
Operating income = $189,000
less: Income tax 30% = $56,700
Net Income = $132,300
LIFO
Sold 90,000 units
Cost of sold units =
purchased 20,000 units for $4.55 = $91,000
purchased 50,000 units for $4.40 = $220,000
purchased 20,000 units for $4.20 = $84,000
Total cost of goods sold = $395,000
Sales = $720,000
less: cost of goods sold = $395,000
less: operating expenses = $150,000
Operating income = $175,000
less: Income tax 30% = $52,500
Net Income = $122,500
Most meaningful net income is calculated by FIFO because in most of the businesses goods purchased first are sold first and if not then the goods purchased the earliest cross its expiry date and eventually results in a loss for the company.
So the net income for Maltwo Co. is $132,300
The real payoff of driving forces is to help managers understand: A. the extent to which rivals have more than two competitively valuable competencies or capabilities. B. what strategy changes are needed to prepare for the impacts of those driving forces. C. the overall strength of the five competitive forces model versus a strategic group map. D. whether the industry's strategic group map will be static or dynamic. E. what conditions exist in the economy at large.
Answer:
B. what strategy changes are needed to prepare for the impacts of those driving forces.
Explanation:
Driving force analysis is defined as the process by which managers and businesses identify and account for changes that occurs in the industry.
They influence the structure of the industry and also the competitive behaviour of rival companies.
So driving force analysis will help the manager formulate strategies that will mitigate the effects of these driving forces on the company's performance.
The export business in China is growing. Uncle George, who has just returned from a trade expo in Shanghai, has informed you that the port authority of Ningbo expects the demand to reach the same level as Shanghai. The port authority of Ningbo is now deciding how to change its system to accommodate this surge in demand. They have two options, (a) to retire their existing x-ray machine and buy an x-ray machine similar to the one used by the Shanghai port, or (b) to buy another x-ray machine similar to the one they already own and therefore operate the system with two similar machines. Both the options will cost the port authority of Ningbo the same. Purely from the perspective of reducing lead-time, is (a) or (b) better for you? Please show your detailed analysis.
Answer:
Assuming that the capacity of the new X-ray machine is the same as the capacity of two older machines, the difference results from the number of units waiting in line (queue). You would need two different groups of workers to move the containers into the correct position if you use the two older machines, while you need only one group to move them to the new machine. This decreases lead time since coordinating work also requires time, it might be a short time, but it is more time at the end of the day.
Lyon Manufacturing Company produces products A, B, C, and D through a joint process. The joint costs amount to $100,000. Product Units Produced Sales Value at Split-Off Additional Costs of Processing Sales Value After Processing A 1,500 $10,000 $2,500 $15,000 B 2,500 $30,000 $3,000 $35,000 C 2,000 $20,000 $4,000 $25,000 D 3,000 $40,000 $6,000 $45,000 If B is processed further, profits will: Group of answer choices
Answer:
Increase by $2,000.
Explanation:
Calculation to determine what the profit will be if B is processed further,
First step is to calculate the Inremental Revenue
Inremental Revenue,=
$35,000 - $30,000
Inremental Revenue = $5,000
Now let calculate B profit if processed further
Using this formula
B profit if processed further=Inremental Revenue- Incremental Cost
Let plug in the formula
B profit if processed further=$5,000-$3,000
B profit if processed further= $2,000 Increase
Therefore If B is processed further, profits will Increase by $2,000.
The City of Lora issued $5,000,000 of general government, general obligation, 8%, 20-year bonds at 103 on April 1, 2017 20X7, to finance a major general government capital project. Interest is payable semiannually on each October 1 and April 1 during the term of the bonds. In addition, $250,000 of principal matures each April 1. If Lora's fiscal year-end is December 31, what amount of debt service expenditures should be reported for this DSF for the 20X7 fiscal year
Answer:
$200,000
Explanation:
The value of the government obligation = $5,00,000, 8%, 20 years bonds payable at 103
Interest expenses = $5,000,000 * 8/100 * 6/12 = $200,000.
Thus, $200,000 will be reported as debt service expenses in the fiscal year 20X7.
The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account for $34,000. b. Receive cash of $26,000 from customers in (a) above. c. Purchase bike equipment by signing a note with the bank for $19,000. d. Pay utilities of $3,400 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Decreases to account classifications should be entered as a negative.)
Answer:
See below
Explanation:
Assets =
Liabilities + Stockholder's equity
Accounts receivables $34,000(+)
Revenue $34,000(+)
Cash $26,000(+)
Accounts receivables $26,000(-)
Bike equipment $19,000(+) Notes payable $19,000(+)
Cash $3,400(-)
Retained earnings $3,400(-)
The first transaction increases asset(account receivable) by $34,000 while revenue(stockholder's equity) increased by the same amount
The cash receipt of $26,000 increases assets cash by $26,000 and decreases an asset , account receivable by the same amount
The purchase of an asset by note payable increases asset, bike equipment by $19,000 while liabilities note payable also increases by $19,000
The payment of utilities for $3,400 decreases asset cash by $3,400 while stockholder's equity retained earnings decreases by same amount.
Doe, Inc. purchased a bulldozer at a cost of $300,000. The bulldozer has an estimated residual value of $20,000 and an estimated life of 10 years, or 15,000 hours of operation. The bulldozer was purchased on January 1, 2020 and was used 500 hours in 2020 and 3,000 hours in 2021. What method of depreciation will produce the maximum depreciation expense in 2021
Answer:
48,000
56,000
the unit of production method
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($300,000 - $20,000) / 10 = $28,000
Depreciation expense using the double declining method = Depreciation factor x cost of the asset
Depreciation factor = 2 x (1/useful life)
Depreciation in 2021 = 2/10 x $300,000 = $60,000
Book value in 2022 = $240,000
Depreciation in 2022 = 48,000
Unit of production = number of hours in 2022 / total number of hours) x (cost of asset -- savlage value)
The typical firm in a perfectly competitive market earns zero economic profit in the long run because: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a firms in competitive markets tend to focus on revenue rather than profit. b U.S. law is designed so that taxes on earnings will eliminate profits. c there are no barriers preventing new firms from entering the market in the long run. d it is illegal for firms in a market that is comprised of many firms to continue to earn positive economic profit.
Answer:
c. there are no barriers preventing new firms from entering the market in the long run.
Explanation:
In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.
This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.
In a perfectly competitive market in long-run equilibrium, a long-run equilibrium avails firms the opportunity to adjust all inputs and all fixed costs are maximized. Also, it's characterized by free entry and exit, as such there isn't a fixed number of firms. This simply means that, since the number of firms in a long-run equilibrium can change, a firm must exit the market as a result of losses i.e when the firm is unable to cover its fixed costs in the long-run while new firms are allowed entry into the market when it anticipates potential profits or gains.
However, the firms always strive to maximize profits by increasing their level of output, such that P = MC. Also, the firms wouldn't be willing to leave or enter into the market because they are not making any profit, such that P=AC.
In a nutshell, in the long run equilibrium P=MR=MC and P=AC.
Therefore, a typical firm in a perfectly competitive market earns zero economic in the long run because there are no barriers preventing new firms from entering the market in the long run.
Blue Corporation manufactures drones. On December 31, 2019, it leased to Althaus Company a drone that had cost $156,000 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires five equal annual rentals of $52,800 payable each December 31, beginning December 31, 2019. An interest rate of 6% is implicit in the lease agreement. Collectibility of the rentals is not probable. Prepare any journal entry for Blue on December 31, 2019. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer:
See the journal entries below.
Lease receivable = $235,757.58
Explanation:
Before the journal entries are prepared, the present value of the annual rentals or lease receivable is first calculated using the formula for calculating the present value of an ordinary annuity due since the annual rentals is payable each December 31, beginning December 31, 2019 as follows:
PV = P * ((1 - (1 / (1 + r))^n) / r) * (1 + r) …………………………………. (1)
Where;
PV = Present value annual rentals or lease receivable = ?
P = Annual rentals = $52,800
r = Interest rate = 6%, or 0.06
n = number of years the lease agreement covered = 5
Substitute the values into equation (1), we have:
PV = $52,800 * ((1 - (1 / (1 + 0.06))^5) / 0.06) * (1 + 0.06)
PV = $235,757.58
The journal entries will now look as follows:
Date Account Tittle Debit ($) Credit ($)
31-Dec-19 Lease Receivable 235,757.58
Cost of Goods Sold 156,000.00
Sales Revenue 235,757.58
Inventory 156,000.00
(To record the lease.)
31-Dec-19 Cash 52,800.00
Lease Receivable 52,800.00
(To record the receipt of lease payment.)
Bought equipment for cash, $48,900. Paid $14,700 on the long-term note payable. Issued new shares of stock for $38,050 cash. Dividends of $650 were declared and paid. Other expenses all relate to wages. Accounts payable includes only inventory purchases made on credit. Required: 1. Prepare the statement of cash flows using the direct method for the year ended December 31, current year.
Answer:
Part a
Statement of Cash flows for the year ended December 31
Cash flow from Operating Activities
Net Income 26,800
Add Depreciation 11,700
Adjust for Changes in Working Capital
Increase in Accounts Receivable (6,100)
Increase in Inventory 5,450
Decrease in Accounts Payable (2,500)
Decrease in Wages Payable (700)
Cash flow from Investing Activities
Equipment Purchased (48,900)
Cash flow from Financing Activities
Retired Long term note payable (14,700)
New Stock Issues 38,050
Dividends Paid (650)
Changes in Cash and Cash Equivalent 7,550
Beginning Cash and Cash equivalent 65,700
Ending Cash and Cash equivalent 73,250
Part b
Sources of Cash : Issue of Stock
Uses of Cash : Purchase of Equipment
Explanation:
NOTE : I have attached the full question as image below.
The Indirect method has been required for this question. This means we reconcile the Net Income to Operating Cash flow by adjusting non-cash items in Income and changes in working capital.
What type of planning do you think Gordon Bernard is doing?
Answer:
I think he is planing to do something to help the world
lol I don't when know tbh lol