Answer:
b. $245.000
Explanation:
The computation of the liabilities is shown below:
As we know that
The accounting equation comprise of
total assets = total liabilities + total equity
where,
total assets = $365,000
Total equity = $120,000
So, the total liabilities is
= total assets - total equity
= $365,000 - $120,000
= $245,000
Hence, the total liabilities is b. $245.000
Accounts receivable $ 35,000 debit Allowance for uncollectible accounts 500 credit Net Sales 180,000 credit All sales are made on credit. Based on past experience, the company estimates that 0.6% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared? Multiple Choice $2,500 $1,080 $1,775 $1,275 $1,500
Answer:
$1,080
Explanation:
Calculation for the amount that should be debited to Bad Debts Expense
Using this formula
Bad Debts Expense=Net Sales× Percentage of net credit sales uncollectible.
Let plug in the formula
Bad Debts Expense=180,000 credit×0.6%
Bad Debts Expense=$1,080
Therefore the amount that should be debited to Bad Debts Expense when the year-end adjusting entry is prepared will be $1,080
Grey Wolf, Inc., has current assets of $2,090, net fixed assets of $9,830, current liabilities of $1,710, and long-term debt of $4,520. a. What is the value of the shareholders’ equity account for this firm? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. How much is net working capital? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Answer and Explanation:
The computation is shown below:
1. Before computing the stockholder equity first we have to determine the total assets and the total liabilities which is shown below:
As we know that
Total Assets = Current Assets + Net Fixed Assets
= $2,090 + $9,830
= $11,920
Now
Total Liabilities = Current Liabilities + Long-term Debt
= $1,710 + $4,520
= $6,230
So,
Stockholders’ Equity = Total Assets - Total Liabilities
= $11,920 - $6,230
= $5,690
2. The net working capital is
Net Working Capital = Current Assets - Current Liabilities
= $2,090 - $1,710
= $380
Taylor's stock has plummeted in value and is currently priced at $5 a share. The firm prefers the price exceed $10 a share and thus has decided to do a reverse stock split. However, when it does this, the firm wants the stock price increased to at least twice its preferred minimum as it is concerned the price will fall further. Which one of the following stock split ratios is most appropriate for this situation?
A. 1-for-3
B. 1-for-4
C. 2-for-7
D. 4-for-1
E. 7-for-2
Answer:
D
Explanation:
a reverse stock split is the opposite of a stock split. A reverse stock split reduces the number of shares outstanding.
It is usually done when it is perceived that the stock of a company is undervalued.
In a 4-for-1 split, for every four shares owned by a shareholder, it becomes one. So if a shareholder has 1000 shares at a price of $5, it becomes 1000/ 4 = 250 the shareholder owns. Prices becomes $5 x 4 = $20. this is at least twice its preferred minimum of $10.
A. 1-for-3
B. 1-for-4
C. 2-for-7
are examples of stock splits and not a reverse stock split.
In a 7-for-2, f a shareholder has 1000 shares at a price of $5, price becomes $5 x (7/2) = $17.50
This is not at least twice its preferred minimum of $10.
A high marginal propensity to expend will cause the multiplier to be smaller.
A. True
B. False
Answer:
False
Explanation:
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Ending Inventory Raw material* 56,000 66,000 Finished goods 96,000 66,000Three pounds of raw material are needed to produce each unit of finished product.If Paradise Corporation plans to sell 560,000 units during next year, the number of units it would have to manufacture during the year would be:a) 504,000 unitsb) 560,000 unitsc) 590,000 unitsd) 530,000 units
Answer:
Production= 530,000 units
Explanation:
Giving the following information:
Beginning Inventory= 96,000
Ending Inventory= 66,000
Sales= 560,000 units
To calculate the production required, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
Production= 560,000 + 66,000 - 96,000
Production= 530,000 units
August, Inc. had the following transactions in 2018, its first year of operations: Issued shares of common stock. The stock has par value of per share and was issued at per share. Issued shares of par value preferred stock at par. Earned net income of . Paid no dividends. At the end of 2018, what is total stockholders' equity
Answer:
A. $601,000
Explanation:
The numbers are missing, so I looked for a similar question:
August, Inc. had the following transactions in 2018, its first year of operations: Issued 21,000 shares of common stock. The stock has par value of $3.00 per share and was issued at $18.00 per share. Issued 1,100 shares of $170.00 par value preferred stock at par. Earned net income of $36,000. Paid no dividends. At the end of 2018, what is total stockholders' equity? A. $601,000 B. $250,000 C. $315,000 D. $565,000
Dr Cash 378,000
Cr Common stock 63,000
Cr Additional paid in capital 315,000
Dr Cash 187,000
Cr Preferred stocks 187,000
Dr Income summary 36,000
Cr retained earnings 36,000
Total stockholders' equity = $63,000 + $315,000 + $187,000 + $36,000 = $601,000
A business tenant pays 2% of his total gross sales volume as rent, with a minimum base rental of $1,000 per month. In the past year, his sales totaled $435,000. How much rent did he pay?
Answer:
$12,000
Explanation:
Calculation for the amount of rent he paid.
First step is to calculate his sales amount for the year using this formula
Sales = Percentage of total gross sales volume× Sales amount
Let plug in the formula
Sales =2%×$435,000
Sales=$8,700
Second step is to calculate his minimum base rental using this formula
Minimum base rental = Numbers of month × Monthly payment
Let plug in the formula
Minimum base rental= 12 months ×$1,000 per month
Minimum base rental=$12,000
Based on the calculation his minimum annual base rent will be $12,000 which is higher than tha amount of $8,700 which means that the tenants paid the amount of $12,000.
Therefore the amount he paid for his rent will be $12,000.
On November 1, Barnes Corporation has 9,200 units of Product A on hand. During the month, the company plans to sell 44,200 units of Product A, and plans to have 10,950 units on hand at end of the month. How many units of Product A must be produced during the month
Answer:
45,950 units
Explanation:
To get the number of units of product A to be produced during the month, we'll make use of the formula below
Units produced = Ending inventory + Units - Beginning inventory
= 10,950 + 44,200 - 9,200
= 45,950
Therefore, the units of product A that must be produced during the month is 45,950 units
Managerial accounting reporting by a public firm is required to follow the rules of GAAP.
a. True
b. False
Answer:
b. False
Explanation:
Only external reports which are used by various stakeholders (Investors, customers, tax authorities, banks, suppliers etc.) are required to follow reporting framework laid out in GAAP.
However, for Managerial reporting , no strict requirements are set for the preparation of reports as the management use various reporting styles to manage business performance. An example is the use of Variable Costing Income Statements that show the relationship between outputs and costs resulting from different activity levels.
21. Perry Inc.'s bonds currently sell for $1,150. They have a 6-year maturity, an annual coupon of $85, and a par value of $1,000. What is their current yield
Answer:
7.39%
Explanation:
The Current Yield = Annual Coupon / Current Price *100
= $85 / $1150 * 100
= 7.391304348%
= 7.39%
Hence, the correct answer is 7.39%
Clara is setting up a retirement fund, and she plans on depositing $4,900 per year in an investment that will pay 8% annual interest. How long will it take her to reach her retirement goal of $61,189
Answer:
9 years
Explanation:
assuming that Clara will make her deposits at year end (ordinary annuity), we can use the future value of an annuity formula:
FV = annual payment x annuity factor
FV = $61,189annual payment = $4,900annuity factor = ?annuity factor = $61,189 / $4,900 = 12.48755
using a future value annuity table and looking at the 8% interest column, the factor for 9 periods is 12.488.
Oakleaf Manufacturing incurs costs of $75 ($67 variable and $8 fixed) to make a product that normally sells for $120. A customer offers to buy 4,200 units for $70 each. Assuming Oakleaf has adequate manufacturing capacity, it should
Answer:
Accept the offer because it will generate incremental net income of $12,600
Explanation:
If Oak accepts the offer, its incremental revenue would be;
4,200 × $70 = $294,000
Its incremental cost would be ;
4,200 × $67 = $281,400
Incremental net net income for the order would be ;
$294,000 - $281,400 = $12,600. Accept the offer.
Which of the following actions on the part of the Federal Reserve will result in a decrease in the money supply?
A. Buying government securities in the open market.
B. Increasing the reserve requirements on banks and depository institutions.
C. Decreasing the discount rate.
D. Increasing the amount of loans made to commercial banks.
Answer:
The answer would be D. Increasing the amount of loans made to commercial banks. Hope this helps. If it does, please give brainliest.
Variability is found in every production operation, but most variability is cause by tolerating waste or by poor management. Group of answer choices
Answer: True
Explanation:
Variability simply occurs when there is a deviation from the process which has already been put in place to ensure the perfect and timely delivery of product.
Variability simply means problems ane.the.lesser the problem, the lesser the waste in the system. It should be noted that most variability is cause by tolerating waste or by poor management.
Why and how are customers a critical piece of the supply chain with regards to sustainability?
Answer:
To achieve a sustainable supply chain, a company has to address environmental, social, economic and legal concerns across its entire supply chain. By taking a holistic approach, this reduces waste and environmental footprint, while also improving labour conditions and health and safety — stopping worker exploitation.
Houston, Inc., planned and actually manufactured 200,000 units of its single product in 2017, its first year of operation. The variable manufacturing cost was $24 per unit produced. The variable operating (nonmanufacturing) cost was $9 per unit sold. Planned and actual fixed manufacturing costs were $600,000.Planned and actual fixed operating (nonmanufacturing) costs totaled $370,000. Houston sold 100,000 units of a product at $45 per unit.
Houston?s 2017 operating income using absorption costing is
(a) $530,000
(b) $230,000
(c) $600,000
(d) $900,000
(e) none of these
Answer:
(a) $530,000
Explanation:
Sales = 100,000 units for $45 per unit = $4,500,000
Less: Cost of Goods Sold
Cost of manufacturing = 100,000 units for $27 per unit = $2,700,000
Variable cost at $24 per unit
Fixed [tex]\frac{600,000}{200,000} = 3[/tex] per unit
Gross income = $1,800,000
Less: Non Manufacturing Expense
Variable = 100,000 units at $9 per unit = $900,000
Fixed = $370,000
Total Non manufacturing expense = $1,270,000
Operating Income as per absorption costing = $1,800,000 - $1,270,000 = $530,000
Under absorption costing method everything expect the non manufacturing fixed expense are consumed on per unit basis, but fixed non manufacturing fixed expense are completely absorbed as are not incurred for manufacturing thus, not charged to finished goods but only to goods sold.
Which of the following is NOT a good way to build a relationship during an interview?
a. Stay close to the script so you don't waste the respondent's time with small talk.
b. Smile, even during phone interviews.
c. Share a common interest to help break the ice.
d. Quietly accept opinions that you don't share with your interviewee.
Answer:A
Explanation: maybe
If a person sticks to the script, he will not waste the participant's time, which is a good way to create a correlation throughout an interview.
What is the relevance of interview?When conducted in good order, an interview lets the leader determine whether an applicant's accomplishments, education, and personality match the job's requirements.
If a person loco motes the script, he will not utilize the time of the associates, which is a great mode to create a connection throughout an interview.
Therefore, option A is correct.
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Analytical tools and decision-making framework models are essential in the business leader toolbox to move an organization forward in refreshing the vision and associated strategies to achieve that vision. In order to sustain the change initiative, what are some actions necessary to prevent initiative decay
Answer:
The correct answer to the question in the attached image below is;
Option A and B.
Explanation:
In the image attached, it shows that the change has to be sustainable. The change initiative should be such that it works on its own and becomes part of the routine operations. Also, ability to develop capacity for easier improvement is another action necessary to prevent initiative decay.
When the Fed raises the required reserve ratio, the excess reserves available in the banking system: Group of answer choices
Answer:
are decreased
Explanation:
the reserve ratio is the reserve requirement on commercial banks to deposit a percentage of their deposit liabilities to the Central Bank so as not to lend or invest all of them. Therefore when reserve ratio is increased, excess reserves available to banks decrease as they are required to keep more funds with the Central Bank. In the US, the Federal Reserve is in charge of setting the reserve ratio which is specified in Regulation D
The elapsed time between an order's receipt, delivery, and payment is called the:_______.
• product-to-payment cycle
• order cycle
• order-to-payment cycle
• inventory-to-sale cycle
• variable-costs-to-payment cycle
Answer:
Option C (order-to-payment cycle) seems to be the correct approach.
Explanation:
A journal article directing the monetary compensation, formulated between one individual or financial institution on some other commercial invoice.Draught reasonable opportunity of being heard-an an estimated standard and sometimes agreement to overdraft a sum of money-a draught exceeding the outstanding balances.The other options in question are not connected to the given instance. So that the option however is the right choice.
Crowder Company acquired a tract of land containing an extractable natural resource. Coronado is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2560000 tons, and that the land will have a value of $1080000 after restoration. Relevant cost information follows:
Land $9,000,000
Estimated restoration costs 1,500,000
If Crowder maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?extracted material?
A. $1.90
B. $2.10
C. $1.60
D. $1.80
Answer:
Depletion expense per ton = $3.68
Explanation:
Calculation of Total Cost
Total cost = Land + Estimated restoration costs
Total cost = $9,000,000 + 1,500,000
Total cost = $10,500,000
The depletion expenses of Crowder Company is as calculated below:
Depletion expense per ton = (Asset cost - Residual value) / No of unit depletion
Depletion expense per ton = $10,500,000 - $1,080,000 / 2,560,000 tons
Depletion expense per ton = $9,420,000 / 2,560,000 tons
Depletion expense per ton = $3.68
Corn Doggy, Inc. produces and sells corn dogs. The corn dogs are dipped by hand. Austin Beagle, production manager, is considering purchasing a machine that will make the corn dogs. Austin has shopped for machines and found that the machine he wants will cost $215,000. In addition, Austin estimates that the new machine will increase the company's annual net cash inflows by $33,000. The machine will have a 12-year useful life and no salvage value.
A. Calculate the cash payback period.
B. Calculate the machine's internal rate of return.
C. Calculate the machine's net present value using a discount rate of 10%.
D. Assuming Corn Doggy, Inc.'s cost of capital is 10%, is the investment acceptable?
Answer:
1. 6.52 years
IRR = 10.93%
NPV = $9,851.30
4. yes
Explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
$215,000 / $33,000 = 6.52 years
Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested
Net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV and IRR can be calculated using a financial calculator
Cash flow in year 0 = $-215,000
Cash flow each year from year 1 to 12 = $33,000
I = 10%
NPV = $9,851.30
IRR = 10.93%
The project is acceptable because the IRR is greater than the cost of capital
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
To find the IRR using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
and the NPV is positive
Purchases in May were $65,000, while expected purchases for June and July are $75,000 and $93,000, respectively. All purchases are paid % in the month of purchase and % in the following month. At what amount are June payments for purchases budgeted?
Answer:
$61,000
Explanation:
The computation of June payments for purchases budgeted is shown below:-
June payments for purchases budgeted = Purchase of June × Purchase percentage + May purchase × Percentage of the following month
= $75,000 × 25% + $65,000 × 65%
= $18,750 + $42,250
= $61,000
Therefore for computing the June payments for purchases budgeted we simply applied the above formula.
A firm operates in manufacture of lysine for industrial use. Lysine sells in a perfectly competitive industry for $35.00 per ton produced. The costs of raw materials such as sugars, water, gas and electricity and labor average to $29.00 per ton. These costs can be avoided by shutting down. The cost of the lease on machinery, the building, and the shipping vehicles average an additional $8.50 per ton; costs that would take a longer time to terminate based on the long-term contracts involved. Based on this information, what is the best course of action for the firm?
Answer:
Continue the production of Lysine until the cost of leasing machinery, the building, and the shipping vehicles becomes avoidable.
Explanation:
We will use relevant costing here to assess whether we must close the production of Lysine or not.
According to relevant costing principles if the cost is relevant then it must satisfy following conditions:
Must be cash flow in nature.Must be Future related (no past commitments).Differential or must be incrementalClearly cash would be used here and the cost or income arising must not be linked to the past bindings, it must be future related. The third condition is very interesting here, the concept of differential.
A differential cost will arise if we take the decision (closing down production of Lysine), and it will not arise if we don't take the decision (closing down production of Lysine).
All the variable costs will be relevant which means that variable cost of $29 per ton is relevant. Variable costs are also known as avoidable cost which means unavoidable costs will not be relevant here.
Here, unavoidable costs are $8.5 per ton and are unavoidable.
Hence
Contribution per unit generated = $35 per ton - $29 per ton = $6 per ton
This means if we close the production of Lysine then we will suffer a loss of $6 per ton
Hence the company must continue producing Lysine until it is able to avoid cost of $8.5 per ton. In which case, the cost will become relevant and the decision will be altered to stop production.
Mathematically, (If $8.5 per ton becomes avoidable in future)
Contribution = $35 per ton - $29 per ton - $8.5 per ton = Loss of $2.5 per ton
Best Course of Action:Continue the production of Lysine until the cost of leasing machinery, the building, and the shipping vehicles becomes avoidable.
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The following information pertains to United Ways, a private voluntary health and welfare organization, for the year ended December 31, 20X3. Balances in net assets at January 1, 20X3: without Donor Restrictions $ 3,013.888 With Donor Restrictions 11, 19.688 The following transactions occurred during the year ended December 31, 20X3:
1. Received cash donations of $519,000 from donors who did not place any time or purpose restrictions on them.
2. Received $1,003,000 of pledges from donors to be recelved in 20X4; It was estimated that 6 percent of the pledges would not be collected. Donors did not place any restrictions on the use of their pledges.
3. Earned Investment Income of $206.000 on endowment Investments that donors permanently restricted for research activities.
4. Designated $230,000 of the $515,000 of cash donations received In 20X3 for computer acquisitions.
5. Spent $152.000 of the $206,000 of Investment Income earned on endowment Investments on research during the year ended December 31, 20X3. (This amount is included in the $250.800 for research expenses shown in the following table.)
6. Acquired $119,000 of equipment from donations made in 20x2 that donors had restricted for that purchase. The governing board of United Ways reports acquisitions of capital assets as unrestricted
7. Received donated audit services from the organization's accounting firm that would have cost $16,300.
8. Learned that the fair value of endowment Investments was $604,000 higher at the end of 20X3 than at the beginning. United Ways did not acquire or sell any endowment Investments during 20x3 and treats gains and losses on endowment Investments as permanently restricted.
9. Incurred program and supporting services expenses during 20x3 as follows (depreciation expense for 20x3 has been properly allocated to the functional expenses):
Research Public health education Community services Management and general (does not include the audit that was donated) Fund-Raising $250.888 191.888 150, 100 125,900 114,300 Required: Prepare a statement of activities in good form for United Ways for the year ended December 31, 20X3. (Negative values should be entered with a minus sign.)
Answer:
United Ways
Statement of Activities for the year ended December 31, 20X3:
Without Donor Restrictions
January 1, 20X3 balance $ 3,013.888
Cash from donations 519,000
Computer acquisition (230,000)
Transfer from restricted 119,000
Equipment acquisition (119,000)
Program and supporting services expenses:
Fund-Raising ($250,888)
Public health education (150,100)
Community services (125,900)
Management and general (114,300)
December 31, 20X3 balance $2,661,700 2,661,700
With Donor Restrictions
January 1, 20X3 balance $1,119,688
Earned Investment Income 206,000
Research (152,000)
Transfer to unrestricted (119,000)
Other Research Expenses (39,888)
December 31, 20X3 balance $1,014,800 1,014,800
Donated audit services 16,300
Audit Cost (16,300) 0
Total Change in net assets $3,676,500
Explanation:
a) Data and Calculations:
Balances in net assets at January 1, 20X3:
Without Donor Restrictions
January 1, 20X3 balance $ 3,013.888
Cash from donations 519,000
Computer acquisition (230,000)
Transfer from restricted 119,000
Equipment acquisition (119,000)
Program and supporting services expenses:
Fund-Raising ($250,888)
Public health education (150,100)
Community services (125,900)
Management and general (114,300)
December 31, 20X3 balance $2,661,700
Donated audit services 16,300
With Donor Restrictions
January 1, 20X3 balance $1,119,688
Earned Investment Income 206,000
Research (152,000)
Transfer to unrestricted (119,000)
Other Research Expenses (39,888)
December 31, 20X3 balance $1,014,800
b) United Ways is not a profit-making organization. It is guided by its missions. Therefore, the terms “statement of activities” and “change in net assets” are used instead of “income statement” and “net income.”
What is Ezy MultiStores?
Answer:
This is a cloud based platform that allows you to create profit generating "Authority E commerce Affiliate stores"by letting you add products from major E commerce networks without any other approval hassles
What would be the best answer
Answer:
D. Logical fallacies are unethical because they use logic to emphasize falsehood.
Explanation:
A logical fallacy is reasoning or error of argument which is logically incorrect and renders the validity of an argument invalid.
There are types of logical fallacies such as Ad Hominem, Straw man, etc.
Logical fallacies are easily identified because they usually lack evidence to support their claim.
When something is said to be unethical, it means that it is morally wrong.
Therefore, the false statement from the list is that logical fallacies are unethical because they use logic to emphasize falsehood.
On January 1, 2017, when the market interest rate was 14%, Luba Corporation issued bonds
in the face amount of $500,000 with interest at 12% payable semiannually. The bonds mature
on December 31, 2026.
Required:
Calculate the bond discount at issuance. How much of the discount should be amortized by the
effective interest method on July 1, 2017?
I am confused about how Discount is calculated? What table if any do I have to refer to.....
Face value is $500,000
Discount (52,970)
Selling Price of bond $447,030
Answer:
the bond discount = face value - market value
market value = PV of face value + PV of coupon payments
PV of face value = $500,000 / (1 + 7%)²⁰ = $129,209.50
PV of coupon payments = $30,000 x 10.594 (PV annuity factor, 7%, 20 periods) = $317,820
market value = $447,029.50
January 1, 2017, bonds are issued at a discount
Dr Cash 447,029.50
Dr Discount on bonds payable 52,970.50
Cr Bonds payable 500,000
the discount amortization for first coupon payment = ($447,029.50 x 7%) - $30,000 = $31,292 - $30,000 = $1,292
July 1, 2017, first coupon payment
Dr Interest expense 31,292
Cr Cash 30,000
Cr Discount on bonds payable 1,292
If expected dividends grow at 7% and the appropriate discount rate is 9%, what is the value of a stock with an expected dividend one year from now of $1.00?
Answer:
P0 = $49.0825 rounded off to $49.08
Explanation:
The value of a stock whose dividends are expected to grow at a constant percentage is calculated using the constant growth model of DDM or dividend discount model. The DDM values the stock based on the present value of the expected future dividends from the stock. The formula for price of the stock today under this model is,
P0 = D1 / (r - g)
Where,
D1 is the dividend expected for the next periodr is the required rate of return or discount rateg is the growth rate in dividendsTo calculate the price today or P0, we use D1. Thus, as the constant growth rate will apply from Year 2, we will first calculate the price of the stock at Year 1 or P1 using the D2. Then we will discount this P1 back to P0 by dividing it by (1+r).
P1 = 1 * (1+0.07) / (0.09 - 0.07)
P1 = $53.5
Price of the stock today is,
P0 = P1 / (1+r)
P0 = 53.5 / (1+0.09)
P0 = $49.0825 rounded off to $49.08
The value of the stock should be $50.
The calculation is as follows;The value of the stock is
= Expected dividend ÷ (required rate of return - growth rate)
= $1 ÷ (9% - 7%)
= $50
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The City of Waterman established a capital projects fund for the construction of an access ramp from the parking garage to the city’s office building to be used by individuals with disabilities. The estimated cost of the ramp is $213,000. On January 1, 20X2, a 10 percent, $154,000 bond issue was sold at 103 with the premium transferred to the debt service fund. At that date, the county board provided a $59,000 grant. After a period of negotiation, the city council awarded a construction contract for $186,000 on April 5, 20X2. The ramp was completed on August 8, 20X2; its actual cost was $193,000. The city council approved payment of the total actual cost of $193,000. In addition to the $193,000, the ramp was carpeted with all-weather material at a cost of $6,780. On November 3, 20X2, the city council gave the final approval to pay for the ramp and the carpeting. After all bills were paid, the remaining fund balance was transferred to the debt service fund.The City of Waterman established a debt service fund to account for the financial resources used to service the bonds issued to finance the ramp is $213,000. The 10 percent, $154,000 bond issue was sold at 103 on January 1, 20X2. It is a 10-year serial bond issue. The resources to pay the interest and annual principal will be from a property tax levy.Additional Information:1. The operating budget for 20X2 included estimated revenue of $37,100. Budgeted appropriations included $15,400 for principal, $15,400 for interest, and $4,300 for other items. The budget also included an estimated transfer in of $6,300 from the capital projects fund.2. The property tax levy was for $42,200 and an allowance for uncollectibles of $4,500 was established. Collections totaled $36,100. The remaining taxes were reclassified as delinquent and the allowance was reduced to $1,600. The bond premium was received from the capital projects fund.3. The current portion of the serial bonds and the interest due this year were recorded and paid. Other expenses charged to the debt service fund totaled $1,880, of which $1,400 was paid.4. The nominal accounts were closed.Required:a. Prepare entries for the debt service fund for 20X2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)b. Prepare a balance sheet for the debt service fund as of December 31, 20X2.c. Prepare a statement of revenues, expenditures, and changes in fund balance for the debt service fund for 20X2.
Answer:
The City of Waterman
Debt Service Fund:
1. Journal Entries:
Jan. 1, 20X2:
Debit Capital Projects Fund $154,000
Credit 10% Bonds Payable $154,000
To record the issue of a 10 percent, $154,000 bond sold at 103.
Debit Debt Service Fund $4,620
Credit Bonds Premium $4,620
To record the premium on the bond issue.
Debit Capital Projects Fund $59,000
Credit Grant from Country Board $59,000
To record the receipt of a grant.
April 5:
Debit Ramp Construction $186,000
Credit Contracts Payable $186,000
To record the award of construction contract.
August 8:
Debit Ramp Construction $7,000
Credit Contracts Payable $7,000
To record the additional cost of construction.
Debit Ramp Carpeting $6,780
Credit Contracts Payable $6,780
To record the award for carpeting the ramp.
November 3:
Debit Contracts Payable $193,000
Credit Capital Projects Fund $193,000
To record payment for ramp construction contract.
Debit Contracts Payable $6,780
Credit Capital Projects $6,780
To record payment for the ramp carpeting.
Debit Debt Service Fund $13,220
Credit Capital Projects Fund$13,220
To record the transfer of the balance to the debt service fund.
2. The City of Waterman Balance Sheet for the debt service fund as of December 31, 20X2:
Debt Service Fund:
Bonds Premium $4,620
Capital Projects Fund $13,220
3. The City of Waterman Statement of revenues, expenditures, and changes in fund balance for the debt service fund for 20X2:
Revenue from 10% Bonds Payable $154,000
Grant from Country Board 59,000
Cost of Ramp construction (193,000)
Cost of Ramp carpeting (6,780)
Fund Balance 13,220
Explanation:
The City of Waterman's general journal records the transactions that occur about the capital projects fund established by the City of Waterman in order to construct the access ramp from the parking garage to the city’s office building to be used by individuals with disabilities. In the same way, the balance sheet and the statement of revenues, expenditures, and changes in fund balance state the debt service fund balance and the revenues and expenditures during the period.