Answer and Explanation:
The computation is shown below:
1. At the time when the partner failed to share the incom and loss so it is assume that the net income i.e. $160,000 should be shared equally so for both it is $80,000 each
2. When the income is shared as per their initial investment
Particulars Kramer Knox Total
Investment $58,000 $65,000 $123,000
Investment ratio 47.15% 52.85%
$160,000 income share $75,440 $84,560 $160,000
3. Sharing of the income as per the defined rule
Particulars Kramer Knox Total
Salary allocated $56,500 $46,500 $103,000
Interest at 12% $6,960 $7,800 $14,760
Remaining balance $21,120 $21,120 $42,240
Total $84,580 $75,420 $160,000
When schools and businesses allocate admissions or jobs on the basis of race, gender, disability, or other criteria unrelated to ability, they are aiming at
Answer:
equality of outcome
Explanation:
Equality of outcome may be defined as to ensuring people with disadvantaged for making any personal profit or gains. It eliminates the personal responsibility of the people.
In the context, when the schools or the businesses allocate jobs or admissions based on the people's disability, race or gender or some other criteria which is unrelated to ability, they are mostly trying o to aim at equality of outcome.
An important difference between a perfectly competitive firm and a monopolist is
Answer:
I don't know because I am in class 6
Pope’s Garage had the following accounts and amounts in its financial statements on December 31, 2019. Assume that all balance sheet items reflect account balances at December 31, 2019, and that all income statement items reflect activities that occurred during the year then ended.
Accounts receivable $33,000
Depreciation expense 12,000
Land 27,000
Cost of goods sold 90,000
Retained earnings 59,000
Cash 9,000
Equipment 71,000
Supplies 6,000
Accounts payable 23,000
Service revenue 20,000
Interest expense 4,000
Common stock 10,000
Income tax expense 12,000
Accumulated depreciation 45,000
Long-term debt 40,000
Supplies expense 14,000
Merchandise inventory 31,000
Sales revenue 140,000
Required:
a. Calculate the total current assets at December 31, 2019.
b. Calculate the total liabilities and owners’ equity at December 31, 2019.
c. Calculate the earnings from operations (operating income) for the year ended December 31, 2019.
d. Calculate the net income (or loss) for the year ended December 31, 2019.
e. What was the average income tax rate for Pope’s Garage for 2019?
f. If $16,000 of dividends had been declared and paid during the year, what was the January 1, 2019, balance of retained earnings?
Answer and Explanation:
a. The computation of the total current asset is shown below
= Account receivable + cash + supplies + merchandise inventory
= $33,000 + $9,000 + $6,000 + $31,000
= $79,000
b The total liabilities and owners equity is
= Account payable + long term debt + common stock + retained earnings
= $23,000 + $40,000 + $10,000 + $59,000
= $132,000
c. The earnings from operations is
Sales revenue $140,000
Less cost of goods sold $90,000
Gross profit $50,000
add: service revenue $20,000
Less depreciation expense $12,000
Less supplies expense $14,000
Operating income $44,000
d. The net income is
= operating income - interest expense - income tax expense
= $44,000 - $4,000 - $12,000
= $28,000
e. The average income tax rate is
= $12,000 ÷ $40,000 × 100
= 30%
f. The beginning retained earnings is
= $59,000 + $16,000 - $28,000
= $47,000
As you move from job shop towards continuous process: A. Your capital intensity decreases B. Your volume decreases C. Your customization ability decreases D. Your throughput decreases E. None of the above
Answer: C. Your customization ability decreases.
Explanation:
Job Shops are able to customize products and services because they manufacture products on a small scale and usually for individual job orders whereas continuous processing is more large scale and the products are more homogeneous.
As one move from a job shop to a continuous process, they will find that they would be unable to customize products as much as they could before because they would be producing a higher volume of goods and so would not have the time to be customizing the products as much.
Characteristics of entertaining media messages according to Bosshart and Marconi include psychological relaxation, stimulation, fun, challenges, dialogue, and joy.
a. True
b. False
Answer:
FALSE
Explanation:
At a specific point on the demand curve for backpacks, the elasticity of demand is calculated to be -1.6.
a. At that point, we would describe demand as ________.
b. If the price of backpacks fell by 10%, the quantity demanded would rise by ________and revenue for the backpack industry would ______ .
c. If the price of backpacks rose by 20% the quantity demanded would fall by _______ and revenue for the backpack industry would ________.
Answer:
elastic
16%
32%
decrease
Explanation:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.
Price elasticity of demand = percentage change in quantity demanded / percentage change in price
If the absolute value of price elasticity is greater than one, it means demand is elastic. Elastic demand means that quantity demanded is sensitive to price changes.
Demand is inelastic if a small change in price has little or no effect on quantity demanded. The absolute value of elasticity would be less than one
Demand is unit elastic if a small change in price has an equal and proportionate effect on quantity demanded.
Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases
Perfectly inelastic demand is demand where there is no change in the quantity demanded regardless of changes in price.
Ice Cream Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:
Beginning work in process inventory:
Units in beginning work in process inventory 900
Materials costs $13,000
Conversion costs $5,100
Percent complete with respect to materials 75%
Percent complete with respect to conversion 20%
Units started into production during the month 9,600
Units completed and transferred to the next department during the month 8,500
Materials costs added during the month $172,100
Conversion costs added during the month $242,100
Ending work in process inventory:
Units in ending work in process inventory 2,000
Percent complete with respect to materials 90%
Percent complete with respect to conversion 30%
The cost per equivalent unit for materials for the month in the first processing department is closest to: __________
Answer:
Ice Cream Corporation
The cost per equivalent unit for materials for the month in the first processing department is closest to: __________
= $17.97.
Explanation:
a) Data and Calculations:
Units Materials Conversion
Beginning work in process inventory 900 $13,000 $5,100
Degree of completion 75% 20%
Units started into production 9,600
Total units in production 10,500
Units completed and transferred 8,500 100% 100%
Ending work in process inventory 2,000 90% 30%
Units Materials Conversion
Beginning work in process inventory 900 $13,000 $5,100
Costs added during the month $172,100 $242,100
Total production costs for the month $185,100 $247,200
Equivalent units of production:
Units Materials Conversion
Units completed and transferred 8,500 8,500 (100%) 8,500 (100%)
Ending work in process inventory 2,000 1,800 (90%) 600 (30%)
Total equivalent units 10,300 9,100
Cost per equivalent unit:
Materials Conversion
Total production costs $185,100 $247,200
Total equivalent units 10,300 9,100
Cost per equivalent unit $17.97 $27.16
Zhang Industries sells a product for $700. Unit sales for May were 400 and each month's sales are expected to exceed the prior month's results by 3%. Zhang pays a sales manager a monthly salary of $3,000 and a commission of 2% of sales. Compute the projected selling expense to be reported on the selling expense budget for the manager for month ended June 30.
a) $8,600.
b) $11,652.
c) $8,652.
d) $5,768.
e) $8,768.
Answer:
Total selling expense= $8,768
Explanation:
Giving the following information:
Selling price= $700
Sales for June in units= 400*1.03= 412
Fixed selling expense= $3,000
Sales commission= 2%
We need to calculate the total commission sales:
Total sales revenue= 700*412= $288,400
Total commission= 0.02*288,400
Total commission= 5,768
Now, the total selling expense:
Total selling expense= 5,768 + 3,000
Total selling expense= $8,768
Emily and Betsey are economists. Emily thinks that the wealthiest 10 percent of the U.S. population should be taxed a rate higher than the rest of society because they can better afford it. Betsey thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Emily and Betsey:______
Answer: b. have different normative views about tax policy.
Explanation:
Economists follow different theories and principles on how the world should be so most times they will disagree with each other on key issues such as taxation and government intervention in markets.
Emily and Betsy both believe in different taxation policies which means that they have different views on how people should be taxed in an economy with one of them believing in a proportional tax regime (Betsey) and the other believing in a progressive tax regime (Emily).
Key Company acquires 60, 10%, 5 year, $1,000 Community bonds on January 1, 2012 for $61,250. This includes a brokerage commission of $1,250. The journal entry to record this investment includes a debit to Group of answer choices Debt Investments for $60,000. Debt Investments for $61,250. Cash for $61,250. Stock Investments for $60,000.
Answer:
Debt Investments for $61,250
Explanation:
When the investment is recorded so here the debt investment should be debited and cash should be credited for $61,250. The investment would be recorded at cost basis also the brokerage represent the investment part
So the journal entry is
Debt investment Dr $61,250
To Cash $61,250
(Being cash paid)
Jantee, a Senior Manager at LionShare Inc., is responsible for the strategic planning process in his organization. He is currently implementing a strategy. Which of the following stages of the strategic planning process is Jantee most likely to have completed immediately before the implementation stage?
A) Stating the organizational mission
B) Conducting a SWOT analysis
C) Establishing goals and objectives
D) Formulating supporting functional strategies
Answer:
D) Formulating supporting functional strategies
Explanation:
Since in the given situation, Jantee who is the senior manager responsible for the strategic planning process so here he should have to complete the strategies related to the functional and that should be supported prior to coming to the implementation stage
So as per the given situation, the option d is correct
At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,800. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $600,000, and $5,600 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. What is the ending normal balance of t
Answer:
$8,200
Explanation:
Missing word "What is the ending normal balance of the Allowance account at year-end?"
Particulars Amount
Opening balance $1,800
Add: Monthly provision $12,000 (2%*$600,000)
Less: Bad debt $5,600
Ending balance of allowance $8,200
LinkedIn Prospecting?
Answer:
Sales prospecting is what it sounds like: Sifting through a mountain of businesses and individuals to uncover the prospects who are most likely to convert into paying customers with a little effort, like a miner panning for gold. Like prospecting for gold, it takes a lot of time.
#CarryOnLearning
Answer:
For most B2B marketers, social selling on LinkedIn is a way of life. When it comes to generating leads, LinkedIn tops the B2B marketer’s best friends list for social prospecting and running outreach campaigns. This is what LinkedIn automation tools have been designed for – to perform all these actions automatically and ramp up your lead generation efforts.
What is the sales prospecting?
Prospecting on LinkedIn is simply equivalent to cold outreach practices. Most commonly, LinkedIn sales prospecting includes:
Using advanced filters to find a targeted audience Powerful social selling campaigns Sending highly-personalized connect requests Sending personalized messages and InMail Joining relevant LinkedIn groups Using LinkedIn automation tools for outreach LinkedIn prospecting can be extremely powerful to generate new business opportunities for you if done right.
LinkedIn Automation Tools For Prospecting
When it comes down to effective prospecting to generate leads, most of the B2B marketers and other professionals use prefer to use automation tools. Advanced automation tools come with powerful features that perform all the functions mentioned above.
1. 48% of B2B marketers acknowledged that automation tools are effective for prospecting
2. More than 80% of the startups and small companies are using automation tools for prospecting
3. Business that use advanced automation told for prospecting has seen significant growth of 12% in the sales pipeline.
Best Tips for LinkedIn Sales Prospecting
Find the right prospects to connect withUse personalizationTry using sales navigatorKeep Your pending requests list clearUse only the right LinkedIn automation toolsIf a well-diversified portfolio of stocks has an expected return of 15% when the expected return on the market portfolio is 10%, then:__________a) Treasury bills are offering a 7% yield.b) The portfolio beta is greater than 1.0.c) The portfolio beta equals 1.67.d) The investor's portfolio contains many defensive stocks.
Answer:
B. The portfolio beta is greater than 1.0
Explanation:
the answer to this question is option b. The portfolio beta is greater than 1.0. the reason is simple. we have the portfolio of expected return, which is 15% to be greater than the market portfolio of return which is 10 percent, then this is to tell us that the portfolio beta is going to be greater than 1.
15% is greater than 10%.
Based on this income statement for Company XYZ for the year ending December 31, 2014, what adjustment would need to be made to Net Income to account for Gain or Loss in calculating cash flow from Operating Activities using the indirect method
Answer:
a) Adjustment of (16,000) in the operating section.
Explanation:
While preparing the operating activities section of the cash flow statement, the net income, depreciation expense, amortization expense, loss on sale of an asset should be added and the profit on sale should be deducted
So there is the loss of $30,000 that should be added and the gain on sale should be deducted i.e. $46,000
So there is an adjustment of -$16,000 in the operating activities section
Hope it helps you!
-miraculousfanx-
Green Penguin Pencil Company has a total asset turnover ratio of 3.50x, net annual sales of $40 million, and operating expenses of $18 million (including depreciation and amortization). On its balance sheet and income statement, respectively, it reported total debt of $2.50 million on which it pays a 11% interest rate.
To analyze a company's financial leverage situation, you need to measure the firm's debt management ratios. Based on the preceding information, what are the values for Green Penguin Pencil's debt management ratios? The U.S. tax structure influences a firm's willingness to finance with debt. The tax structure debt.
Solution :
a). Asset turnover ratio = total sales / total asset = 3.50
Total asset = 40 million / 3.5 = 1142857
Total debt = 2.50 million
Therefore, the debt ratio = [tex]$\frac{\text{debt}}{\text{total asset}}$[/tex]
[tex]$=\frac{2500000}{1142857}$[/tex]
= 2.18
b). Time interest earned ratio = EBIT/Interest
EBIT = net sales - operating expense
= 40,000,000 - 18,000,000
= $ 22,000,000
Interest expense = 10 % x 2,500,000
= $ 250,000
Times interest earned ratio = EBIT/ interest expense
= [tex]$\frac{\$ 22,000,000}{\$250,000}$[/tex]
= 88 times
c). Total equity = total asset - total debt
= 400,000,000 - 2,500,000
= 397,500,000
Money raised from the creditor for each dollar of equity
= 2,500,000/397,500,000
= 6%
Austen, the night shift manager of a 24-hour convenience store, would regularly drive his car to the back door, unlock it, and load in a couple of cases of beer, every night. These cases of beer were marked down for no apparent reason, and Austen paid the reduced price. Is Austen setting a good example for his employees
Answer:
bro
Explanation:
According to real business cycle theorists, ______________ consumption resulting from the major production innovations incentivizes businesses to borrow ______________ from banks, causing the money supply to ______________.
Answer:
increase in, more, increase
Explanation:
Real business cycle theory states that the [tex]\text{macroeconomic fluctuations}[/tex] in any economy can be explained by the technological shocks and the changes in the productivity. All these changes in the technological growth affects the decisions of the firms on investment as well as workers or the labor supply.
Edward C. Prescott and Finn E. Kydland first gave the concept of real business cycle theory.
In the theory of real business cycle, the increase in consumption results from the major [tex]\text{production innovations incentivizes businesses}[/tex] to borrow more from the banks, and it causes the supply of money to increase.
Fong Corporation sold $2,000,000, 7%, 5-year bonds on January 1, 2017. The bonds were dated January 1, 2017 and pay interest on January 1. The company uses straight-line amortization on bond premiums or discounts.
Required:
Prepare all necessary journal entries to record the issuance of the bonds and bond interest expense for 2017.
Answer:
Jan 1
Dr Cash 2,040,000
Cr Bonds payable 2,000,000
Cr Premium on bonds payable 40,000
Dec 31
Dr Interest expense 100,000
Dr premium on bonds payable 40,000
Cr Interest payable 140,000
Explanation:
Preparation of the journal entries to record the issuance of the bonds and bond interest expense for 2017.
Jan 1
Dr Cash 2,040,000
Cr Bonds payable2,000,000
Cr Premium on bonds payable40,000
Dec 31
Dr Interest expense100,000
Dr premium on bonds payable40,000
Cr Interest payable140,000
(7%*$2,000,000)
Acme Fastener and Tool is having major problems with demand management. The VP of Sales is very focused on increasing productivity according to forecasts, but the operations manager routinely presents obstacles to increasing production above current levels. Of the following, which problem is the firm experiencing?
a. Functional silos.
b. Lack of attention on operational planning.
c. Overemphasis on forecasting.
d. Focus on tactics.
Answer:
Functional silos
Explanation:
Functional silo occurs when different teams with their responsibilities and functions have different views about a process.
The managers who have accumulated resources and influence are conflicted over the functional aspects of a process rather than looking out for the wider benefit of the business.
In the given scenario VP of Sales is very focused on increasing productivity according to forecasts, but the operations manager routinely presents obstacles to increasing production above current levels.
They are both pursuing conflicting agendas instead of working together.
This is called functional silo.
A company has 1000000 shares outstanding trading at $15 a piece. Managers believe that the discount rate appropriate for the risk borne is 15% and total cash flows, expected to be $1 million next year, will rise by 5% per year indefinitely. Discuss a strategy that is beneficial to the current shareholders.
Answer:
Explanation:
Knowing the value of the equity and establishing the intrinsic worth of the share may help you develop a perfect strategy that will benefit the current shareholders.
Value of the equity = Cashflow÷(discount rate - growth rate)
= $1,000,000 ÷ (15%-5%)
= $1,000,000 ÷ (10%)
= $10,000,000
Intrinsic value per share = Value of the equity ÷ Shares outstanding
= $10,000,000 ÷ 1,000,000
= $10
For the share, The intrinsic value = $10
However, since the current trading share price is $15, then we can posit that the share price is over-valued.
As a result, the perfect strategy that will be beneficial to the shareholders is for the current shareholders to sell the shares (short selling at a high price and purchasing at a low price).
Francisco leased equipment from Julio on December 31, 2021. The lease is a 10-year lease with annual payments of $159,000 due on December 31 of each year beginning December 31, 2021. The present value of the lease payments is $1,006,192. Francisco's incremental borrowing rate is 14% for this type of lease. The implicit rate of 12% is known by the lessee. What should be the balance in Francisco lease liability at December 31, 2022
Answer: $789855
Explanation:
Initial liability = $1,006,192
Less: Payment = $159,000
Liability = $847192
× Implicit rate 12%
Interest = 12% × $847192 = $101663
Then, reduced balance will be:
= Payment - Interest
= $159,000 - $101663
= $57337
Therefore, Francisco lease liability at December 31, 2022 will be:
= $847192 - $57337
= $789855
Economists look at any situation in terms of its component parts: the people making decisions, the environment in which they're making those decisions, and the goods or services being exchanged. For example, think about doing your laundry. Which of the following laundry-related items are nondurable goods?
a. A washing machine
b. Having a pair of pants dry-cleaned
c. A T-shirt
d. A clothes dryer
Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,600. Budgeted cash receipts total $186,000 and budgeted cash disbursements total $189,200. The desired ending cash balance is $30,600. To attain its desired ending cash balance for January, the company should borrow:
Answer:
Company should borrow = $15200
Explanation:
Below is the calculation for the borrowing amount:
Cash balance at the beginning = $18600
Add - Cash receipts = 186000
Less- Cash disbursements = (189200)
Budgeted cash balance = 18600 + 186000 - 189200 = 15400
Borrowing will be = Ending cash - 15400
Borrowing will be = 30600 - 15400
Borrowing will be = $15200
Company should borrow = $15200
Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Suppose that Schell has conducted further research into its overhead and potential cost drivers. As a result, the company has compiled the following detailed information, breaking total overhead into three cost pools:
Activity Cost Pools Cost Driver Cost Assigned to Pool Quantity/Amount Consumed by Standard Floor Mat Line Quantity/Amount Consumed by
Deluxe Floor Mat Line
Material handling
Number of moves
$
2,300.00
50 moves
50 moves
Quality control
Number of inspections
$
8,763.00
570 inspections
700 inspections
Machine maintenance
Number of machine hours
$
14,360.00
3,090 machine hours
4,090 machine hours
Required :
1. Calculate the activity rates for each cost pool assuming Schell uses an ABC system. (Round your answers to 2 decimal places.)
Activity Rate
Material Handing
Per Material Move
Quality Control
Per Inspection
Maintenance
Per Machine Hourm
2. Calculate the amount of overhead that Schell will assign to the Standard floor mat line. (Round your intermediate calculations to 2 decimal places.
Total Overhead Assigned
3. Determine the amount of overhead Schell will assign to the Deluxe product line. (Round your intermediate calculations to 2 decimal places.)
Total Overhead Assigned
Answer and Explanation:
The computation is shown below:
1. The activity rate for each cost pool is
Material handling ($2,300) ÷ (50 + 50) = $23.00
Quality Control ($8,763) ÷ ($570 + 700) = $6.90
Machine Maintenance ($14,360) ÷ (3,090 + 4,090) = $2.00
2
Total overhead assigned to the standard floor mat line is
= $23 × 40 + $6.9 × 570 + $2 × 3,090
= $1,150 + $3,933 + $6,180
= $11,263.00
3
Total overhead assigned to deluxe product line
= $23 × 50 + $6.9 × 700 + $2 × 4,090
= $1,150 + $4,830 + $8,180
= $14,160.00
At December 31, 2017, Riverbed Corporation reported the following plant assets.
Land $5,613,000
Buildings $26,640,000
Less: Accumulated depreciationâbuildings 22,311,675 4,328,325
Equipment 74,840,000
Less: Accumulated depreciationâequipment 9,355,000 65,485,000
Total plant assets $75,426,325
During 2018, the following selected cash transactions occurred.
Apr. 1 Purchased land for $4,116,200.
May 1 Sold equipment that cost $1,122,600 when purchased on January 1, 2011. The equipment was sold for $318,070.
June 1 Sold land for $2,993,600. The land cost $1,871,000.
July 1 Purchased equipment for $2,058,100.
Dec. 31 Retired equipment that cost $1,309,700 when purchased on December 31, 2008. No salvage value was received.
Required:
Journalize the transactions.
Solution :
1. Journal voucher
Journal Entries
Date Accounts title Debit Credit
June 1 Cash $ 2,993,600
Gain on sale of land $ 1,122,600
Land $ 1,871,000
(Being land sold)
2. Partial Balance sheet
Riverbed Corporation
Partial Balance sheet
December 31, 2008
Plant Assets
Land $ 7,858,200
Building $ 26,640,000
(-) Accumulated Depreciation-building $ 74,465,800 $ 3,662,625
Equipment $ 74,465,800
(-) Accumulated Depreciation-equipment $ (14,734,125) $ 59,731,675
Total Plant Assets $ 71,252,200
U.S. businesspeople are often accused of ethnocentricity. This means that
Answer:
brainllest if right
This means that they are very superior or in a higher rank than others.
Explanation:
Lewis Corporation has two service departments: Data Processing and Administration/Personnel. The company also has three divisions: X, Y, and Z. Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number of employees. Department Direct Costs Employees Hours of use Administration/ Personnel $400,000 10 3,300 Data Processing 850,000 5 1,100 X 450,000 30 1,800 Y 300,000 15 2,200 Z 550,000 25 4,500 Assume that Data Processing provides more service than Administration/Personnel. Refer to Lewis Corporation. Assume that Data Processing costs have been allocated and the balance in Administration is $600,000. Using the step method, what amount is allocated to Y
Answer:
Lewis Corporation
Using the step method, the amount allocated to Y is:
Y = $128,571
Explanation:
a) Data and Calculations:
Department Direct Costs Employees Hours of use
Administration/
Personnel $400,000 10 3,300
Data Processing 850,000 5 1,100
X 450,000 30 1,800
Y 300,000 15 2,200
Z 550,000 25 4,500
Allocation of Administration/
Personnel cost of $600,000:
X = $257,143 (600,000 * 30/70)
Y = $128,571 (600,000 * 15/70)
Z = $214,286 (600,000 * 25/70)
Pina Colada Corp. has the following transactions during August of the current year.
Aug. 1 Issues shares of common stock to investors in exchange for $10,880.
4 Pays insurance in advance for 3 months, $1,500.
16 Receives $880 from clients for services rendered.
27 Pays the secretary $680 salary.
Required:
Indicate the basic analysis and the debit-credit analysis.
Answer and Explanation:
The indication of the basic analysis and the debit credit analysis is as follows;
Date Basic Analysis Debit - Credit Analysis
Aug. 1 The asset Cash is increased; Debits increase assets;
the stockholders' equity account Debit Cash
Common stock is increased. $10,880
Credits increase stockholders' equity
Credit Common stock
$10,880
Aug. 4 The asset Prepaid Insurance Debits increase assets;
is increased; Debit Prepaid Insurance
the asset Cash is decreased. $ 1,500
Credits decrease assets;
Credit Cash
$ 1,500
Aug. 16 The asset Cash is increased; Debits increase assets;
the revenue Service revenue Debit Cash
is increased. $880
Credits increase revenues:
Credit Service revenue
$880
Aug. 27 The expense Salaries expense Debits increase expenses:
is increased; Debit Salaries expense
the asset Cash is decreased. $680.
Credits decrease assets:
Credit Cash
$680
Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO method was $201,000. Inventory data are as follows:
Year Ending Inventory at Year-End Costs Ending Inventory at Base Year Costs
2019 $260,400 $248,000
2020 347,300 302,000
2021 350,400 292,000
Required:
Compute the inventory at December 31, 2019, 2020, and 2021, using the dollar-value LIFO method.
Answer:
Explanation:
The cost index can be calculated as follows:
In 2019:
= 260400/248000
= 1.05
In 2020:
= 347300/302000
= 1.15
In 2021:
= 350400/292000
= 1.2
Inventory Layers converted to the base cost
Date [tex]\text{(Inventory at } \ \ \ \ \ \ \ \ \text{(year-end } \\ \\ \text{ year end cost) } \div \ \ \ \text{cost index) } = \ \ \ \ \ \ \ \text{ Inventory layers(base year cost) }[/tex]
12/31/20 201000 ÷ 1 = 201000
12/31/20 260400 ÷ 1.05 = 248000
12/31/20 347300 ÷ 1.15 = 302000
12/31/20 350400 ÷ 1.2 = 292000
Inventory Layers converted to cost Ending Inventory DVL cost
[tex]\text{(Inventory layers } \ \ \text{("year-end } \\ \\ \text{ base year cost) } \times \text{ cost index") } = \ \ \text{ Inventory layers(cost) }[/tex]
Base
201000 × 1 = 201000
201000 × 1 = 201000
Dec 31, 2019
47000 × 1.05 = 49350
ADD 250350
Base
201000 × 1 = 201000
Dec 31, 2019
47000 × 1.05 = 49350
Dec 31, 2020
(302000 - 248000)
= 54000 × 1.15 = 62100
ADD 312450
Base
201000 × 1 = 201000
Dec 31, 2019
47000 × 1.05 = 49350
Dec 31, 2021
(292000 - 248000)
= 44000 × 1.15 = 50600
ADD 300950