Answer:
Cash Surplus May $83,300 June $ 61,600 July $33,000
Aug $25,500 Sept $ 3650
Explanation:
MONTH AND YEAR PROJECTED SALES FIRST MONTH
COLLECTIONS (80%)
April 20X1 $ 140,000 112,000
May 20X1 130,000 104,000
June 20X1 90,000 72,000
July 20X1 65,000 52,000
August 20X1 84,000 67,200
September 20X1 95,000 76,000
October 20X1 160,000 128,000
November 20X1 200,000 160,000
December 20X1 240,000 192,000
January 20X2 190,000 152,000
First we find the monthly cash collections 80 % in the month of sales , 10% in the second month , 5% in the third and 5 % in the fourth . We have summed them up in the following table.
Sales Collections
MAY JUNE JULY AUGUST SEPT
Particulars
1st Month 104,000 72,000 52,000 67,000 76,000
Collections
2nd Month 14,000 13,000 9000 6500 8400
3rd Month 7000 6500 4500 3250
4th Month 7000 6500 4500
Total
Collections 118,000 92,000 74,500 84,500 92,150
Now we prepare the cash budget deducting payments from collections and maintaining beginning and ending balance.
Cash Budget
MAY JUNE JULY AUGUST SEPT
Particulars
Opening 10,000 10,000 10,000 10,000 10,000
Add Total
Collections 118,000 92,000 74,500 84,500 92,150
Less Closing 10,000 10,000 10,000 10,000 10,000
Less Payments34,700 30,400 41,500 59,000 88,500
Cash Surplus 83,300 61,600 33,000 25,500 3650
A small businessman tries to buy a computer to help with the job. He needs a small computer, but the expected growth of the business might lead to the incompatibility of the small system in the next few years. The alternatives for the businessman were limited to buying a small device or a small device that can be increased in size or a large device, and their purchase prices were 4000, 6000, and 9000, respectively. In a period of 3 years, he can replace the small or medium system with a large system at a cost of 7500 pounds or expand in the expandable device at a cost of 4000 pounds. The probability of his needs for a large computer system within 3 years has been estimated to be 80%. The probability of his needs for a small computer system within 3 years has been estimated to be 20%. o Analyze the problem using a decision tree. o State which decision is the best decision for the businessman
Answer:
The cheapest option would be to purchase the large computer right away at 9,000 pounds. Even though the other options require a lower initial investment, the probability of needing a large computer in the future is very high and the cost of either acquiring a new computer or expanding an existing one is higher.
Explanation:
Since there is not enough room here I attached the decision tree.
An investor owns 5,000 shares of IBM stock, $105 per share. He thinks that there is no large rise and possible drop in price. This investor decides to sell 50 December 110 call option at $4, receiving $20,000. Note: Each call option contract provides for the right to buy 100 shares of stock. December 110 call option means that the strike price of the call is 110 and it matures in December.
Required:
1. If IBM stock price rises from $105 to $112, the profit associated with the passive strategy is __________ and the profit associated with the covered call writing strategy is ____________.
Answer:
If IBM stock price rises from $105 to $112, the profit associated with the passive strategy is $ 35,000 and the profit associated with the covered call writing strategy is $ 45,000 .
Explanation:
Shares = 5000
Price of shares = $105
Sell Price = $112
The profit associated with the passive strategy = $(112 - 105) × 5000
= $ 35,000
Now with covered call also included in the strategy the profit/loss from covered call can be calculated as
Strike Price = $110
Spot Price = $112
Total Shares on which Call options are sold = 50 × 100 = $5000
Total Premium received = 5000 × 4 = $20000
(Spot Price - Strike Price ) × Total Shares
= $(112 - 110) × 5000
= $10,000
Hence Net Profit = Premium received - $10,000 = $20,000 - $10,000
= $ 10000
Hence the profit associated with the covered call writing strategy
= $35,000 + $10,000
= $ 45,000
Because the liquidity-preference framework focuses on the:
a.short run, it assumes the price level adjusts to bring the money market to equilibrium.
b.short run, it assumes the interest rate adjusts to bring the money market to equilibrium.
c.long run, it assumes the price level adjusts to bring the money market to equilibrium.
d.long run, it assumes the interest rate adjusts to bring the money market to equilibrium.
Answer:
B. Short run, it assumes the interest rate adjusts to bring the money market to equilibrium
Explanation:
This theory is explained to be a model that suggests that an investor should demand a higher interest rate or premium on securities with long-term maturities that carry greater risk because, all other factors being equal, investors prefer cash or other highly liquid holdings.
According to this theory, which was developed by John Maynard Keynes in support of his idea that the demand for liquidity holds speculative power, investments that are more liquid are easier to cash in for full value. Cash is commonly accepted as the most liquid asset. According to the liquidity preference theory, interest rates on short-term securities are lower because investors are not sacrificing liquidity for greater time frames than medium or longer-term securities.
During 2018, its first year of operations, Pave Construction provides services on account of $142,000. By the end of 2018, cash collections on these accounts total $101,000. Pave estimates that 25% of the uncollected accounts will be bad debts.
Required:
1. Record the adjustment for uncollectible accounts on December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Journal entry worksheet Record the adjustment entry for Uncollectible Accounts Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018 Bad debt expense 10,250 Allowance for uncollectible accounts 10,250
2. Calculate the net realizable value of accounts receivable.
Answer:
1. Record the adjustment for uncollectible accounts on December 31, 2018.
Dr Bad debt expense 10,250
Cr Allowance for doubtful accounts 10,250
Allowance for doubtful accounts is a contra asset account that reduces the amount of accounts receivable and has a credit balance.
2. Calculate the net realizable value of accounts receivable.
net realizable value of accounts receivable = total accounts receivable - allowance for doubtful accounts = $41,000 - $10,250 = $30,750
Explanation:
total services on account $142,000
cash collected $101,000, remaining accounts receivable $41,000
25% of remaining accounts receivable will be uncollectible = $41,000 x 25% = $10,250 in bad debts
Provide some examples of items that would be adjusted directly against equity, rather than being included as part of profit or loss. and explain it. ( words 650 )
Answer:
1.Common Stocks Issues and Repurchases
2.Preference Stocks Issues and Repurchases
3.Dividends Declared
Explanation:
Common Stocks Issues and Repurchases
Common Stockholders have voting rights. The movement in the Stocks must be presented separately in the Statement of Changes in Equity.
Preference Stocks Issues and Repurchases
Preference Stockholders do not have voting rights. The movement in the Stocks must be presented separately in the Statement of Changes in Equity.
Dividends Declared
Dividends Paid are not included in Profit and Loss but in Statement of Changes in Equity.
Payment of Dividends adjusts the Retained Earnings Amount in Statement of Changes in Equity.
Laura Bryant joined Kellogg's straight after university in 2002. She joined the Field Sales team initially. This involved visiting five to ten supermarkets a day to develop relationships at a local level. After two years her hard work was rewarded and she was promoted to Customer Marketing Manager at Head Office. This helped to raise her profile as she wanted to move into marketing. With support from her manager, Laura made the transition from Sales to Marketing as Assistant Brand Manager on Rice Krispies and Frosties. In 2009 she was promoted again to manage the marketing plan for Special K and she is now Brand Manager for Kellogg's Cornflakes. The company has helped motivate her to climb the hierarchy of needs and achieve her career ambitions.
A. Identify and explain the theory of motivation applied by the manager at Kellog’s company. Identify each level and support your answer from examples from the case.
B. Herzberg's motivational factors and Maslow's esteem and self-actualization needs are similar. Explain how organizations can meet these needs.
Answer:
A. The manager at Kellogg's company applied Herzberg's two factors motivational theory. Kellogg provided Laura the enabling environment by creating organizational policies and procedures, supervision, relationships with co-workers and supervisors, physical work environment, job security, promotions, and rewards which propelled Laura to aspire for great responsibilities and achieve her career ambitions.
By applying the motivational factors, such as recognition of Laura's efforts, giving her appropriate responsibilities at each level of her development in the organization, and raising her profile and advancement with promotions, Laura's manager motivated her with what Herberg described as "intrinsic job elements." And the Kellogg company must have provided the extrinsic job elements which enabled both the manager and Laura to perform their jobs well.
B. Herzberg's motivational factors are the intrinsic job elements like achievement, recognition, nature of work, responsibility, advancement, and growth and Maslow's self-esteem and self-actualization needs are similar. Maslow's self-esteem and self-actualization needs indicate that an individual, after satisfying physiological, security, and sociological needs, will aspire to greater needs. These greater needs stated as self-esteem and self-actualization needs are represented by such factors as respect, valued work contribution in a supportive environment, and a sense of personal responsibility and achievement, among others.
Organizations can meet these self-esteem and self-actualization needs (according to Maslow) by being aware of and promoting Herzberg's two factors motivational model, thus creating the enabling environment for individual achievement, advancement, and growth. In Laura's Kellogg Company, she was given a chance (employment), put in relevant positions, promoted several times, and was motivated "to climb the hierarchy of needs and achieve her career ambitions."
Explanation:
Herzberg's two factors motivational theory states that "two factors affect motivation in the workplace." Herzberg called these factors, "the hygiene factors and motivating factors." Hygiene factors are "extrinsic job factors that will cause an employee to work less if they are not present." But, motivating factors encourage an employee to work harder if present.
Maslow identified human needs in a hierarchical order, starting from physiological needs (food and other basic necessities of life), security needs (job security, financial security, etc.), sociological needs (acceptance and love), self-esteem needs (respect, achievement, recognition, etc.), and finally self-actualization needs (creativity, peak experience of life, objectivity, etc.).
WP Corporation produces products X, Y, and Z from a single raw material input in a joint production process. Budgeted data for the next month is as follows:
Product X Product Y Product Z
Units produced 1,500 2,000 3,000
Per unit sales value at split-off $ 19.00 $ 21.00 $ 24.00
Added processing costs per unit $ 7.00 $ 7.50 $ 7.00
Per unit sales value if processed further $ 29.00 $ 29.00 $ 30.00
The cost of the joint raw material input is $149,000. Which of the products should be processed beyond the split-off point?
Product X Product Y Product Z
A) Yes Yes No
B) No Yes No
C) Yes No Yes
D) No Yes Yes
1. Choice D
2. Choice A
3. Choice B
4. Choice C
Answer:
yes yes NO ( A )
Explanation:
products X,Y,Z
units produced : X = 1500 , Y = 2000, Z = 3000
per unit sales value at split-off : X = $19, Y = $21, Z = $24
Added processing costs per unit : X = $7, Y = $7.50 , Z = $7
per unit sales value if processed further : X = $29, Y = $29, Z = $30
COST OF JOINT MATERIAL INPUT = $149000
To check for products to be processed further we apply
(unit sales value if processed further - per unit sales value at split-off ) - ( added processing cost )
for product X = $29 - $19 - $7 = $3
for product Y = $29 - $21 - $7.5 = $0.50
for product Z = $30 - $24 - $7 = - $1 ( negative value )
products to be processed beyond the split of point would be : X Y
because Z has a negative contribution margin
From the dropdown box beside each numbered balance sheet item, select the letter of its balance sheet classification. If the item should not appear on the balance sheet, choose the letter Z from the selection choices.
a. Current assets
b. Long-term investments
c. Plant assets
d. Intangible assets
e. Current liabilities
f. Long-term liabilities
g. Equity
1. Prepaid rent
2. Taxes payable
3. Account payable
4. Automobiles
Answer:
1. Prepaid rent : a. Current assets
2. Taxes payable : e. Current liabilities
3. Account payable : e. Current liabilities
4. Automobiles : b. Long-term investments
Explanation:
Balance Sheet items include :
Assets - Economic Resources of the Entity that would result in future cash inflowLiabilities - Present obligations of the entity that will result in future cash outflowEquity - Residue After removing Liabilities from the Assets or Shareholders entitled interest.With practical illustration, discuss how managers can leverage on organizational behaviour components to maximize business success.
Answer:
Within every organisation that is made up of humans, people are usually placed in groups and units. Because these units collectively make up the organisation, it is important to understand how people behave when they are placed in them. The study of the above is referred to as Organisational Behaviour.
When discussing Organisational Behavior, one has to look at the following:
1. People: Every organisation needs the right people to survive. It needs strong leadership and competent people who are culture fit with the ability to key into the vision, mission and objectives of the organisation and run with it with minimal supervision.
Practically speaking, let's assume Tendon LLC is a start-up, the culture of the organisation will most likely reflect the values, habits and tendencies of the CEO. If the CEO values partnerships, integrity, quality, he'd lookout for those qualities in the heads of departments who he'd hire to manage units within the organisation. Those, in turn, will do the same. The extent to which such values are implemented will determine the success of the organisation, to a large extent.
Leadership: Companies that can develop leaders the fastest will eventually win in the market place. For the sake of this explanation, let's say Leadership is the ability to influence others towards the attainment of organisational goals which are ethical and profitable and to make them love doing it.
Strong and quality leadership prevents high attrition rates and ensure cohesion within teams. If Tendon LLC, for instance, enters the market with a stronger team that Reflex LLC who has been in the business for 15 years, the probability that Tendon will kick Reflex out of the market is high. One of the attributes of leaders are they groom other leaders quickly, they share information rather than hoard them, as they share what they know, they learn more and have more to share thus there is a free and increasing flow of knowledge.
Other attributes of good leadership are accountability and ownership mentality. Leaders don't own the business but they show up every day like they own it and put in the work like they would if they own it. Contrast the above with Reflex who has staff that only show up to work because they have to and do only the bit they are required to.
2. Structure: This simply refers to the various formal relationships that have been created within the organisation for the effective working of the same. For example, there is the Accounting Unit, Human Resources Unit, Marketing Unit, Customer Care Unit, Board of Directors, Executive Management etc.
The relationship between each of these units/ roles servers to clarify reporting structures thus removing any ambiguity with the contractual, political and power relationships between the organisation.
3. Technology: Technology in some industries has replaced a lot of jobs. The purpose of technology is to make life and work simpler, easier. However, in certain industries, for instance, robots have taken over the jobs of millions of people. This simply means that the future of organisations cannot exist without technology. Looking at it from the entrepreneur’s perspective, it is cheaper in the long run to have robots. Robots don't take sick and maternity leaves, come late to work or feel bad. They simply get the job done. This means more profit in the long run.
4. Social System:
Where ever there is a group of people, organised towards a common goal, a social system is most likely to emerge. The values, attributes, personality and thinking of the leaders in any organisation will always influence its social system/ culture. Just like it is important to form healthy habits as an individual, an organisation must form social systems that are healthy and critical to the attainment of its organisational objectives.
Automattic Inc --an American company-- for instance, has successfully codified its social system such that as employees are coming on board, this is communicated to them and they sign off on it. Thus, it becomes like a social contract which will guide their behavior during their stay there.
5. Environment
Every organisation must take into cognisance its internal and external environments. If the external environment is conducive for business, then there is one less factor to worry about. If however, just like in recent times, workers cannot come physically to work due to a pandemic, the behaviour of the organisation is altered. If they do not quickly adjust their operations to accommodate this new behaviour, it will translate to the loss of man-hours, loss of value to customers, loss of customers and ultimately an erosion of the bottom line of the business. So is the internal environment. The internal environment must be conducive for employees to work. The environment must be such that encourages and elicits creativity, problem-solving, teamwork and cohesion.
Cheers!
The following information is for Redwood Inc. for the year ended December 31, 2016. Redwood had a cash and cash equivalents balance of $5,600 on January 1, 2016.
Cash Received from:
Customers $ 1,940
Interest on investments 220
Sale of land 120
Sale of common stock 640
Issuance of debt securities 2,040
Cash Paid for:
Interest on debt 320
Income tax 84
Debt principal reduction 1,540
Purchase of equipment 4,500
Purchase of inventory 1,000
Dividends on common stock 220
Operating expenses 520
Required:
Prepare a statement of cash flows for the year using the direct method for operating activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer and Explanation:
The preparation of the cash flow statement using the direct method is presented below:
Redwood Inc.
Cash flow statement
For the year ended December 31, 2016
Cash flow from operating activities
Cash Received from Customers $1,940
Interest on investments $220
Less: Interest on debt -$320
Less: Income tax -$84
Less: Purchase of inventory -$1,000
Less: Operating expenses -$520
Net cash provided by operating activities $236
Cash flow from investing activities
Sale of land $120
Less: Purchase of equipment -$4,500
Net cash used by investing activities -$4,380
Cash flow from financing activities
Sale of common stock $640
Issuance of debt securities $2,040
Less: Debt principal reduction -$1,540
Less: Dividends on common stock -$220
Net cash provided by financing activities $920
Decrease in cash -$3,224
Add: Beginning cash balance $5,600
Ending cash balance $2,376
The items which shows in a positive sign indicates the cash inflow and the items which shows in a negative sign indicates the cash outflow and the same is to be considered
Crazy Mountain Outfitters Co., an outfitter store for fishing treks, prepared the following unadjusted trial balance at the end of its first year of operations:
Crazy Mountain Outfitters Co.
Unadjusted Trial Balance
April 30, 2019
Debit Balances Credit Balances
Cash 11,400
Accounts Receivable 72,600
Supplies 7,200
Equipment 112,000
Accounts Payable 12,200
Unearned Fees 19,200
John Bridger, Capital 137,800
John Bridger, Drawing 10,000
Fees Earned 305,800
Wages Expense 157,800
Rent Expense 55,000
Utilities Expense 42,000
Miscellaneous Expense 7,000
475,000 475,000
For preparing the adjusting entries, the following data were assembled:
a. Supplies on hand on April 30 were $1,380.
b. Fees earned but unbilled on April 30 were $3,900.
c. Depreciation of equipment was estimated to be $3,000 for the year.
d. Unpaid wages accrued on April 30 were $2,475.
The balance in unearned fees represented the April 1 receipt in advance for services to be provided. Only $14,140 of the services was provided between April 1 and April 30.
Required:
1. Journalize the adjusting entries necessary on April 30. 2019.
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries.
3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters after the adjusting entries.
4. Determine the effect of the adjusting entries on Retained Earnings.
Answer:
1. Journalize the adjusting entries necessary on April 30. 2019.
Dr Supplies expense 5,820
Cr Supplies 5,820
Dr Accounts receivable 3,900
Cr Earned fees 3,900
Dr Depreciation expense 3,000
Cr Accumulated depreciation 3,000
Dr Wages expense 2,475
Cr Wages payable 2,475
2. Determine the revenues, expenses, and net income of Crazy Mountain Outfitters before the adjusting entries.
unadjusted income statement
Fees Earned $305,800
Wages Expense ($157,800 )
Rent Expense ($55,000 )
Utilities Expense ($42,000 )
Miscellaneous Expense ($7,000)
Net income $44,000
3. Determine the revenues, expense, and net income of Crazy Mountain Outfitters after the adjusting entries.
adjusted income statement
Fees Earned $309,700
Wages Expense ($160,275 )
Rent Expense ($55,000 )
Utilities Expense ($42,000 )
Depreciation expense ($3,000)
Miscellaneous Expense ($12,820)
Net income $36,605
4. Determine the effect of the adjusting entries on Retained Earnings.
Since net income decreases after the adjusting entries, retained earnings will also decrease. Retained earnings are increased by the amount of net income.
Select the correct answer from each drop-down menu.
What caused the adoption of the current Constitution of Virginia?
The current Constitution of Virginia was adopted in 1971. This constitution incorporated the federal (EDUCATION, SPEECH, VOTING) Rights Act and the (CIVIL, CONSUMER, EQUALITY) Rights Act, which were passed to promote racial equality.
Answer: Voting and Civil
Explanation: These rights were in the 1971 constitution to promote racial equality.
A Company processes pine rosin into three products: turpentine, paint thinner, and spot remover. During May, the joint costs of processing were $720,000. Production and sales value information for the month is as follows: Product Units Produced Sales Value at Split-off Point Turpentine 15,000 liters $120,000 Paint thinner 15,000 liters $100,000 Spot remover 7,500 liters $50,000 Determine the amount of joint cost allocated to Paint thinner if the physical-measure method is used.
Answer:
$288,000
Explanation:
As per the given question the solution of the amount of joint cost allocated to Paint thinner is provided below:-
Here, we need to find out the amount of joint cost allocated to Paint thinner so we will find out first total units produced of each product and joint cost allocated to paint thinner which is follow below:-
Total units produced of each product = Turpentine + Paint thinner + Spot remover
= 15,000 liters + 15,000 liters + 7,500 liters
= 37,500
Joint cost allocated to paint thinner = Paint thinner of total units produced ÷ Total units produced of each product
= 15,000 ÷ 37,500
= 40%
Joint cost allocated to Paint thinner = Joint cost of processing × Joint cost allocated to paint thinner
= $720,000 × 40%
= $288,000
To reach the amount of joint cost allocated to Paint thinner we simply multiply the joint cost of processing with joint cost allocated to paint thinner.
What's the total resistance of a circuit that contains three 30 Ω resistors connected in series
Answer:
The total resistance is 90 Ω
Explanation:
When the circuit are connected in the series then we can determined the total resistance of the circuit by the formula that are mention below .
[tex]R=R1+ R2 +R3[/tex] -------Equation 1
Here [tex]R1=R2=R3=30 \ ohm[/tex]
Now putting the value of R1, R2 and R3 in the Equation 1
So
[tex]R=30 + 30 + 30\\[/tex]
Therefore the total resistance of the circuit =90 Ω
The internal and external environment will cause changes for companies in Ghana (Large, Medium, and
small-Scale Enterprises) during this crisis. Explain
Answer:
The External Environment will present Threats or Opportunity based on the Companies` Internal (Strengths and Weakness) this will determine the failures or success of the entities.
Explanation:
The Internal Environment for a company consist of its Strengths and Weakness, whilst the External environment consists of Political, Economic, Social, Technological, Legal and Environmental issues. These can cause changes for Companies in Ghana and the rest of the World.
The External Environment will present Threats or Opportunity based on the Companies` Internal (Strengths and Weakness) this will determine the failures or success of the entities.
If a company applies overhead to production with a predetermined overhead rate, a credit balance in the Factory Overhead account at the end of the period means that: Select one: a. Actual overhead was greater than the overhead amount applied to production. b. The overhead was underapplied for the period. c. The bookkeeper has made an error because the debits don't equal the credits. d. Actual overhead incurred was less than the overhead amount applied to production. e. The balance will be carried forward to the next period as an overhead cost.
Answer:
d) Actual overhead incurred was less than the overhead amount applied to production.
Explanation:
A credit balance in the overhead account implies that overhead is over applied. When overhead is applied the production work in progress,the accounting entries are to debited work in progress and credit the factory overhead the amount of overhead absorbed.
On the other hand, the actual overhead is debited to the factory overhead e account and and credited to their respective indirect material, indirect labour and indirect expenses.
The difference between the amount debited and and credited to the overhead is the over or under applied overhead. A credit and debit balance represent over and under applied overhead respectively
Answer:
Option D. Actual overhead incurred was less than the overhead amount applied to production.
Explanation:
The reason is that during the period, the accountant keeps posting entry of overhead expense at the predetermined rate, which must be adjusted at the end of the period. So if the expense account is been debited, then it means the actual overhead expense was lower than the expense been anticipated. So the right option is D.
Vaughn Service Center just purchased an automobile hoist for $34,000. The hoist has an 8-year life and an estimated salvage value of $3,400. Installation costs and freight charges were $4,200 and $800, respectively. Vaughn uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Vaughn estimates that the new hoist will enable his mechanics to replace 5 extra mufflers per week. Each muffler sells for $77 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $14. (a) Compute the cash payback period for the new hoist. Cash payback period years (b) Compute the annual rate of return for the new hoist. (Round answer to 2 decimal places, e.g. 10.52%.) Annual rate of return %
Answer:
a. Cash payback period years = 6 years
b. Annual rate of return = 9.67%
Explanation:
(a) Compute the cash payback period for the new hoist. Cash payback period years
Total cost of automobile hoist = Purchase cost + Installation costs + freight charges = $34,000 + $4,200 + $800 = $39,000
Weekly profit or cash inflow = (Muffler selling price per unit - Muffler cost per unit - Muffler labor cost per unit) * Number of extra muffler per week = ($77 - $38 - $14) * 5 = $125
Annual cash inflow = $125 * 52 weeks = $6,500
Cash payback period years = Total cost of automobile hoist / Annual cash inflow = $39,000 / $6,500 = 6 years
(b) Compute the annual rate of return for the new hoist
Annual depreciation expenses = (Total cost of automobile hoist - Estimated salvage value) / Useful years = ($39,000 - $3,400) / 8 = $4,450
Expected annual income = Annual cash inflow - Annual depreciation expenses = $6,500 - $4,450 = $2,050
Average investment = (Total cost of automobile hoist + Salvage value) / 2 = ($39,000 + $3,400) / 2 = $21,200
Annual rate of return = Expected annual income / Average investment = $2,050 / $21,200 = 0.0967, or 9.67%
The Can Division of Vaughn Manufacturing manufactures and sells tin cans externally for $1.20 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.10, respectively. The Packaging Division wants to purchase 50,000 cans at $0.34 a can. Selling internally will save $0.03 a can. Assuming the Can Division is already operating at full capacity, what is the minimum transfer price it should accept? $0.86 $0.71 $1.17 $0.27
Answer:
Minimum transfer price = $1.17
Explanation:
The Can Division is operating at full capacity, hence it has no excess capacity .
This implies that it can not produce enough to meet both the internal and external buyers.
Since Division X can not accommodate the demands of the Packaging Division at a price lower than the external price, because it will result to a loss in contribution.
To maximize and optimize the group profit
Minimum transfer price = External selling price - savings in internal transfer cost
= $1.20 - 0.03 = $1.17
Minimum transfer price = $1.17
Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital between borrowers and lenders, financial instruments trade in the financial markets. These financial instruments can be categorized on the basis of their issuers, maturity, risk, and other factors. Identify the financial instruments based on the following descriptions.
a. Backed by the US government, these financial instruments are fixed-rate debt securities with a maturity of more than one year. They are considered default free but are subject to interest rate risk.
b. Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk.
c. These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.
d. These financial instruments are contractual agreements that give one party a long-term agreement to use an asset by providing regular payments.
Which of the following instruments are traded in the capital markets? Check all that apply.
a. Common stocks
b. Corporate bonds
c. Preferred stocks
d. Certificates of deposit
e. Long-term bank loans
Answer:
(1)a. U.S Treasury bills.
b. Commercial paper.
c. Money market mutual funds.
d. Leases.
(2)a. Common stocks.
b. Corporate bonds.
d. Certificates of deposit
Explanation:
a. U.S Treasury bills: Backed by the US government, these financial instruments are fixed-rate debt securities with a maturity of more than one year. They are considered default free but are subject to interest rate risk.
b. Commercial paper: Issued by corporations, these unsecured debt instruments are used to fund corporate short-term financing requirements. If issued by a financially strong company, they have less risk.
c. Money Market Mutual Funds: These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.
d. Leases: These financial instruments are contractual agreements that give one party a long-term agreement to use an asset by providing regular payments.
Capital market instruments are the trade in both stocks and bonds, they're long-term assets.
The following instruments are traded in the capital markets;
• Common stocks.
• Corporate bonds.
• Certificates of deposit.
The following transactions are for Kingbird Company.
1. On December 3, Kingbird Company sold $473,800 of merchandise to Blossom Co., on account, terms 2/10, n/30. The cost of the merchandise sold was $320,000.
2. On December 8, Blossom Co. was granted an allowance of $22,800 for merchandise purchased on December 3.
3. On December 13, Kingbird Company received the balance due from Blossom Co.
Required:
a. Prepare the journal entries to record these transactions on the books of Kingbird Company. Kingbird uses a perpetual inventory system.
Answer:
a. The journal entries to record the transactions woule be the following:
To record the sales
3 dec Debit Credit
Account receivables $473,800
Sales $473,800
To record the cost of goods sold
cost of goods sold $320,000
Merchandise Inventory $320,000
To record the allowance
8 dec Debit Credit
Sales return and allowance $22,800
Accounts receivable $22,800
To record the cash received from the customer
13 dec Debit Credit
Cash $446,490
Sales discount $4,510
Accounts receivable $451,000
Explanation:
a. The journal entries to record the transactions woule be the following:
First we have to prepare the journal entry to record the sales and cost of goods sold according to the given data:
To record the sales
3 dec Debit Credit
Account receivables $473,800
Sales $473,800
To record the cost of goods sold
cost of goods sold $320,000
Merchandise Inventory $320,000
Next we have to Prepare the journal entry to record the allowance as follows:
To record the allowance
8 dec Debit Credit
Sales return and allowance $22,800
Accounts receivable $22,800
Finally we have to Prepare the journal entry to record the cash received from the customer as follows:
To record the cash received from the customer
13 dec Debit Credit
Cash $446,490
Sales discount $4,510
Accounts receivable $451,000
Cash=$451,000-$4,510=$446,490
Sales discount=$451,000*1%=$4,510
Accounts receivable=$473,800- $22,800=$451,000
At its date of incorporation, Sauder, Inc. issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, Sauder acquired 20,000 shares of its common stock at a price of $16 per share and accounted for them by the cost method. Subsequently, these shares were reissued at a price of $12 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts? Explain and show your work.Retained Earnings Additional Paid-in Capitala. Decrease Decreaseb. No effect Decreasec. Decrease No effect
d. No effect No effect
Answer:
Sauder Inc.
The answer is d.
The effect of the reissuance of the stock on:
1)Retained Earnings - No effect
2) Additional Paid-in Capital: No effect
Using the cost method or the par value method, there is no effect on Retained Earnings by the reissuance of stock.
Using the cost method, there is no effect on the Additional Paid-in Capital. Every treasury stock transaction is recorded in the Treasury Stock account without reference to the Additional Paid-in Capital.
Using the par value method, there is an effect on the Additional Paid-in Capital for reissuance of stock at more than the par value.
Workings:
The reissuance would be recorded as follows, using the costing method:
Debit Cash with $240,000
Credit Treasury Stock with $240,000
To record the reissuance of 20,000 shares at $12 per share.
The reissuance would be recorded as follows, using the par value method:
Debit Cash with $240,000
Credit Treasury Stock with $200,000
Credit Additional Paid-in Capital with $40,000
To record the reissuance of 20,000 shares at $12 per share.
Explanation:
Treasury Stock account is a contra account to the Common Stock account. There are two methods for recording treasury stock transactions: the costing method and the par value method.
Under the costing method, every treasury stock transaction is recorded in the Treasury Stock account. Under the par value method, the above or below par value elements of treasury stock transactions are recorded in the Additional Paid-in Capital account.
Beta Industries is considering a project with an initial cost of $6.9 million. The project will produce cash inflows of $1.52 million a year for seven years. The firm uses the subjective approach to assign discount rates to projects. For this project, the subjective adjustment is +2.2 percent. The firm has a pretax cost of debt of 9.1 percent and a cost of equity of 17.7 percent. The debt-equity ratio is 2.67 and the tax rate is 34 percent. What is the net present value of the project? (Round the answer to the nearest $100.)
Answer:
The net present value of the project is $173,200
Explanation:
According to the given data we have the following:
Let Weight of debt = Wd = x
Weight of equity = We = 1-x
Debt / equity = 2.67
x / (1-x) = 2.67
3.67x = 2.67
Weight of Debt = Wd = x = 0.72752
Weight of Equity = We = (1-x) = 1-0.72752 = 0.27248
Cost of debt = rd = 9.1%
Cost of equity = re = 17.7%
Tax rate = t = 34%
Therefore, WACC = [Wd * rd * (1-t)] + [We*re]
= [0.72752 * 9.1%*(1-34%)] + [0.27248 * 17.7%]
= 4.36949% + 4.82290%
= 9.19239%
Hence, Discount rate for the project = 9.19%+2.2% = 11.39%
The net present value of the project is $173,200
An investor is given the two investment alternatives (Assets A and B) with the following characteristics: Asset Expected Return Standard Deviation of Returns A 18.4 percent 16.5 percent B 10.8 percent 6.8 percent What is the standard deviation of a portfolio comprised of 60 percent of an investor's wealth invested in Asset A and 40 percent invested in Asset B if the correlation between the returns of A and Asset B are 0.70?
Answer:
12.00%
Explanation:
As per the given question the solution of standard deviation of a portfolio is provided below:-
Standard deviation of a portfolio = √(Standard deviation of Product 1)^2 × (Weight 1)^2 + Standard deviation of Product 2)^2 × (Weight 2)^2 + 2 × Standard deviation of product 1 × Standard deviation of product 2 × Weight 1 × Weight 2 × Correlation
= √(0.165^2 × 0.6^2) + (0.068^2 × 0.4^2) + (2 × 0.6 × 0.4 × 0.165 × 0.068 × 0.7)
= √0.009801 + 0.0007398 + 0.00376992
= √0.01431076
= 0.119628592
or
= 12.00%
So, we have calculated the standard deviation of a portfolio by using the above formula.
Tamera and Rupert each applied for the same credit card through the same company. Tamera has a positive credit history. Rupert has a negative credit history.
Which compares their credit limits and likely interest rates?
Answer:
Tamera's credit limit is most likely higher than Rupert's, and her interest rate is most likely lower
Explanation:
Credit limit can be defined as the highest or maximum amount of credit that either a financial institution or other lender will tend to extend to a debtor due to a particular line of credit or allow a consumer to spend using a credit card in which the limits are determined by banks, alternative lenders, and credit card companies and are often based on several pieces of information which are related to the borrower.
INTEREST RATE can be defined as the amount that are been charged and said to be expressed as a percentage of the principal, by a lender to a borrower for the use of an assets.
Therefore Tamera's credit limit is most likely higher than Rupert's, and her interest rate is most likely lower because they both
applied for the same credit card through the same company in which Tamera has a positive credit history while Rupert has a negative credit history.
Answer:
The Answer is A in Edge
Explanation:
quiz
The following transactions of Houston Pharmacies occurred during 2017 and 2018:
2017
Jan. 9 Purchased computer equipment at a cost of $ 9,000, signing a six-month, 7%
note payable for that amount.
29 Recorded the week's sales of $ 69,000, three-fourths on credit and one-fourth
for cash. Sales amounts are subject to a 6% state sales tax. Ignore cost of
goods sold.
Feb. 5 Sent the last week's sales tax to the state.
Jul. 9 Paid the six-month, 7% note, plus interest, at maturity.
Aug. 31 Purchased merchandise inventory for $ 3,000, signing a six-month, 11% note
payable. The company uses the perpetual inventory system.
Dec. 31 Accrued warranty expense, which is estimated at 3% of sales of $ 601,000.
31 Accrued interest on all outstanding notes payable.
2018
Feb. 28 Paid the six-month 11% note, plus interest, at maturity.
Journalize the transactions in Houston’s general journal. Explanations are not required.
Answer:
Please see below for all the journal entries required for Houston.
Explanation:
2017
Jan. 9
Debit: Computer Equipment $9,000
Debit: Interest Expense $630
Credit: Interest Payable ($9,000 x 7%) $630
Credit: Notes Payable $9,000
Jan. 29
Debit: Accounts Receivables ($69,000 x 3/4) $51,750
Debit: Cash ($69,000 x 1/4) $17,250
Credit: Sales Tax Payable ($69,000 x 6%) $4,140
Credit: Sales $69,000
Feb. 5
Debit: Sales Tax Payable $4,140
Credit: Cash $4,140
Jul. 9
Debit: Interest Payable ($9,000 x 7%) $630
Debit: Notes Payable $9,000
Credit: Cash $9,630
Aug. 31
Debit: Inventory $3,000
Debit: Interest Expense $330
Credit: Interest Payable ($3,000 x 11%) $330
Credit: Notes Payable $3,000
Dec. 31
Debit: Warranty Expense ($601,000 x 3%) $18,030
Credit: Accrued Warranty $18,030
Dec. 31
Debit: Interest Payable $330
Credit: Accrued Interest $330
2018
Feb. 28
Debit: Accrued Interest $330
Debit: Notes Payable $3,000
Credit: Cash $3,330
International Data Systems' information on revenue and costs is relevant only up to a sales volume of 106,000 units. After 106,000 units, the market becomes saturated and the price per unit falls from $16.00 to $9.80. Also, there are cost overruns at a production volume of over 106,000 units, and variable cost per unit goes up from $8.00 to $8.50. Fixed costs remain the same at $56,000.
a. Compute operating income at 106,000 units.b. Compute operating income at 206,000 units.
Answer:
Option A. $792,000
Option B. $211,800
Explanation:
At the level 106,000 Units, the price per unit and variable cost per unit will remain at $16 and $8 per unit.
Option A.
Sales (106,000 Units * $16) $1,696,000
Variable cost (106,000* $8) $848,000
Fixed costs $56000
Operating Profit $792,000
Option B.
When the production exceeds 106,000 units level, the price per unit and variable cost per unit will remain at $9.8 and $8.5 per unit.
Sales (206,000 * $9.8) $2,018,800
Variable cost (206,000 * $8.5) $1,751,000
Fixed costs $56,000
Operating Profit $211,800
The profit has been decreased substantially due to increase in Marginal cost.
Chang Industries has 2,000 defective units of product that already cost $14 each to produce. A salvage company will purchase the defective units as is for $5 each. Chang's production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. The $14 per unit is a: Multiple Choice Sunk cost. Out-of-pocket cost. Period cost. Incremental cost. Opportunity cost.
Answer:
The correct answer to the following question will be Option A "Sunk cost".
Explanation:
A sunk cost includes money also now invested and therefore not recoverable. In industry, the aphorism that one should "probably waste money to make profits" is expressed in the sunken cost trend.It differs from the potential risks that a company will face, including such inventory purchasing costs as well as drug price choices. 2000 Default units including its drug were already manufactured at $14, this expense was already accrued and seems to be negligibleThe other choices corresponding to the specified situation are not. So the proper answer is Alternative A.
Accounting: Identifying adjusting entries with explanations?
For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.)
A. To record receipt of unearned revenue
B. To record this periods earning of prior unearned revenue
C. To record payment of an accrued expense
D. To record receipt of an accrued revenue
E. To record an accrued expense
F. To record an accrued revenue
G. To record this periods use of a prepaid expense
H. To record payment of a prepaid expense
I. To record this periods depreciation expense
1. Rent Expense Dr: $2,000
Prepaid Rent Cr. $2,000
2. Interest Expense Dr. $1,000
Interest Payable Cr. $1,000
3. Depreciation Expense Dr. $4,000
Accumulated Depreciation Cr. $4,000
4. Unearned Professional Fees Dr. $3,000
Professional Fees Earned Cr. $3,000
5. Insurance Expense Dr. $4,200
Prepaid Insurance Cr. $4,200
6. Salaries Payable Dr. $1,400
Cash Cr. $1,400
7. Prepaid Rent Dr. $4,500
Cash Cr. $4,500
8. Salaries Expense Dr. $6,000
Salaries Payable Cr. $6,000
9. Interest Receivable Dr. $5,000
Interest Revenue Cr. $5,000
10. Cash Dr. $9,000
Accounts Receivable (from consulting) Cr. $9,000
11. Cash Dr. $7,500
Unearned Professional Fees Cr. $7,500
12. Cash Dr. $2,000
Interest Receivable Cr. $2,000
Answer:
1.. Rent Expense Dr: $2,000
Prepaid Rent Cr. $2,000
G
2. Interest Expense Dr. $1,000
Interest Payable Cr. $1,000
E
3. Depreciation Expense Dr. $4,000
Accumulated Depreciation Cr. $4,000
I
4. Unearned Professional Fees Dr. $3,000
Professional Fees Earned Cr. $3,000
B
5. Insurance Expense Dr. $4,200
Prepaid Insurance Cr. $4,200
G
6. Salaries Payable Dr. $1,400
Cash Cr. $1,400
C
7. Prepaid Rent Dr. $4,500
Cash Cr. $4,500
H
8. Salaries Expense Dr. $6,000
Salaries Payable Cr. $6,000
E
9. Interest Receivable Dr. $5,000
Interest Revenue Cr. $5,000
F
10. Cash Dr. $9,000
Accounts Receivable (from consulting) Cr. $9,000
D
11. Cash Dr. $7,500
Unearned Professional Fees Cr. $7,500
A
12. Cash Dr. $2,000
Interest Receivable Cr. $2,000
D
Explanation:
When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are
Debit Cash account and Credit Unearned fees or deferred revenue.
As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.
When revenue is earned but cash is yet to be received,
Debit Accounts receivable
Credit Revenue account
When cash is received,
Debit Cash account
Credit Accounts receivable.
When insurance is paid in advance, the entries required are
Debit Prepaid Insurance
Credit Cash account
As time elapses and the insurance expires,
Debit Insurance expense
To record depreciation of an asset, Debit depreciation expense account , credit Accumulated depreciation expense account.
The following information on selected cash transactions for 2021 has been provided by Coronado Industries: Proceeds from sale of land $319000 Proceeds from long-term borrowings 601000 Purchases of plant assets 219000 Purchases of inventories 1028000 Proceeds from sale of Coronado common stock 370000 What is the cash provided (used) by investing activities for the year ended December 31, 2021, as a result of the above information
Answer:
$100,000
Explanation:
Coronado Industries
CASH FLOW STATEMENT
For the year ended December 31, 2021
Cash Flow from Investing Activities:
Proceeds from sale of land $319,000
Less: Purchases of plant assets ($219,000)
Net Cash used in Investing Activity $100,000
Answer:
$100,000
Explanation:
cash flow from investing activities:
cash proceeds from sale of land $319,000
- purchase of plant assets ($219,000)
net cash flow from investing activities = $100,000
Cash flows from investing activities include only those purchases and sales of assets that are used by the company to generate revenue, e.g. plant and equipment, land, investment in stocks in other companies, etc.
Company A has been experiencing lost sales and high returns recently, so they have decided to undertake a comprehensive quality program. The program would require additional inspection of products prior to shipment at an estimated cost of 45000, and the upgrading of production equipment at an estimated cost of 400000. Company A knows that if it undertakes this program, it will be able to reduce warranty repair costs by 25000. They also know they will be able to avoid lost profits by retaining customers, but they cannot quantify that benefit with any degree of precision.Should company A go ahead with the quality program?
Answer:
Explanation:
Incremental cost
Inspection cost prior to shipment - 45,000
Upgrading of equipment - 400,000
Incremental benefit - 25,000
The incremental cost of improving quality far outweigh the incremental benefit
Even though loss of profit was avoided by retaining existing customers , yet the quality improvement program dies not guarantee additional customers and profit to write off or reduce the incremental cost .
Therefor , it is not advisable fort the company to go on with the quality program.