Answer:
Option A, buy less of X and more of Y is correct.
Explanation:
The amount that Mr. Rational is going to spend = $27
Quantity of good X = 5 units
Price of good X (Px) = $3 per unit
Marginal utility of 5th unit of X (MUx) = 30
Quantity of good Y = 6 units
Price of good Y (Py) = $2 per unit
Marginal utility of 6th unit of Y (MUy) = 18
[tex]Now \ find \ \frac{MUx}{Px} = \frac{30}{3} = 10 \\[/tex]
[tex]Now \ \frac{MUy}{Py} = \frac{18}{2} = 9[/tex]
[tex]Since \ the \ \frac{MUx}{Px} is \ greater \ than \ \frac{MUy}{Py}.[/tex]
So good x will be substituted for y in order to reach the consumer equilibrium.
[tex]\frac{MUx}{Px} = \frac{MUy}{Py}[/tex]
Thus, Option a. buy less of X and more of Y is correct.
David and Daniel formed a partnership. David invested $10,000 in cash; Daniel invested $5,000 in cash and equipment valued at $6,000. The proper entry to record this is which of the following?
Answer:
Debit Cash $15,000, debit Equipment $6,000, credit David's Capital $10,000 and credit Daniel's Capital $11,000
Explanation:
Contribution of capital by partners will result in an increase in cash balance as indicated by a debit to cash account. Similarly, contribution of equipment will again be indicated by a debit to equipment account as it would result in the creation/increase in the value of an asset (equipment account). The capital contributed by both partner's will be reported in their capital accounts respectively as indicated by a credit to David and Daniel Capital accounts. Cash and equipment will be reported on the asset side of the balance sheet and capital accounts will get reported on the liabilities of the balance sheet of the partnership firm.
Seranno Inc. budgeted production of 47,000 personal journals in 20Y6. Paper is required to produce a journal. Assume 115 square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 324,000 square yards. The desired December 31, 20Y6, paper inventory is 243,000 square yards.If paper costs $0.13 per square yard, determine the direct materials purchases budget for 20Y6. If required, round your final answer to the nearest dollar.
Answer:
Purchases (yards)= 5,324,000 square yards
Total cost= $692,120
Explanation:
Giving the following information:
The number of units= 47,000
Quantity required (unitary)= 115 square yards
Beginning inventory= 324,000 square yards.
Desired ending inventory= 243,000 square yards.
Paper costs $0.13 per square yard.
To calculate the purchase required, we need to use the following formula:
Purchases (yards)= production + desired ending inventory - beginning inventory
Purchases (yards)= 47,000*115 + 243,000 - 324,000
Purchases (yards)= 5,324,000 square yards
Now, the total cost:
Total cost= 5,324,000*0.13= $692,120
Cary, Dean, and Madeline are partners in a furniture store. Madeline wants to buy some antiques from an upcoming estate sale. Dean thinks it’s a good idea, but Cary says it is too pricey. Madeline goes ahead and buys the antiques. Which of the following best describes the situation?
A. All three partners must agree on the furniture purchase.B. The estate can hold the partnership liable, but Madeline has breached her duty to the partnership.C. Cary will not be liable to the estate on the antiques contract.D. The partnership and all three partners will be liable on the contract for the antiques.
Answer:
The partnership and all three partners will be liable on the contract for the antiques.
Explanation:
According to the scenario been described in the question, the option that best explain the it is the partnership and all three partners will be liable on the contract for the antiques, this is so because the three are members of the same board and they share whatever comes to their way.
The following excerpt is from "Throwing the Book at Apple" (Wall Street Journal, Review and Outlook, June 12, 2013): At the time, prior to the existence of the tablet device market that Jobs created with the iPad, Apple did not sell eminus−books. Amazon sold nine of every 10. Justice claims Jobs then forced Amazon and every other eminus−book distributor to adopt a new eminus−book pricing model that harmed consumers. Yet the average retail price for "trade" eminus−books has since dropped to $7.34 from $7.97, and Amazon's Kindle is still the industry leader with Apple trailing in third. Over the same period readers bought 447% more eminus−books, and they can choose from dozens of tablets for titles and other media content.
What market structure best describes the e - book market?
A. A monopoly
B. A perfectly competitive market
C. A competitive market with a few dominant firms producing identical goods
D. A competitive market with a few dominant firms producing substitutes
Answer:
D. A competitive market with a few dominant firms producing substitutes
Explanation:
E book market has few dominant firms - Amazon, Apple.
Their e - book selling digital services have uniquely different features from each other. They serve similar nature of good ie e books contests. So, the digital services rendered by firms are substitute of each other.
Providing substitute goods, firms compete with each other.
As per technical economic terminologies : this market structure is analogous to Oligopoly market structure.
Trout farming is a perfectly competitive industry and all trout farms have the same cost curves.
When the market price is $25 a fish, farms maximize profit by producing 200 fish a week. At this output, average total cost is $20 a fish and average variable cost is $15 a fish. Minimum average variable cost is $12 a fish.
Required:
i) If the price falls to $20 a fish, will a trout farm produce 200 fish a week. Explain why or why not?
ii) If the price falls to $12 a fish, what will the trout farmer do?
iii) What are two points on a trout farm's supply curve?
Answer:
(i) The farm can cover its revenue using its total variable cost, therefore the farm will continue producing 200 units
(ii) The farm cannot cover its revenue using its total variable cost, therefore the farm will shut down
(iii) The two relevant points on supply curve will be: (Price = $12 & Quantity = 0) and (Price = $25 & Quantity = 200)
Explanation:
(i)According to given data, When output is 200 but price is $20, this price is equal to ATC, so the farm breaks even. But since this price is higher than AVC of $15, the farm can cover its revenue using its total variable cost, therefore the farm will continue producing 200 units.
(ii) When output is 200 but price is $12, this price is equal to ATC, so the farm makes economic loss. Also, this price is lower than AVC of $15, so the farm cannot cover its revenue using its total variable cost, therefore the farm will shut down.
(iii) The farm's supply curve is the portion of its Marginal cost (MC) curve above the minimum point of AVC. Since price equals MC, the two relevant points on supply curve will be: (Price = $12 & Quantity = 0) and (Price = $25 & Quantity = 200).
A job cost sheet of Sandoval Company is given below.
Job Cost Sheet
JOB NO. 469 Quantity 2,500
ITEM White Lion Cages Date Requested 7/2
FOR Todd Company Date Completed 7/31
Date Direct Materials Direct Labor Manufacturing Overhead
7/10 800
12 900
15 400 500
22 300 375
24 1,600
27 1,575
31 600 750
Cost of completed job:
Direct materials
Direct labor
Manufacturing overhead
Total cost
Unit cost
Required:
1. What are the source documents for direct materials, direct labor, and manufacturing overhead costs assigned to this job?
2. What is the predetermined manufacturing overhead rate? (Round answer to 0 decimal places)
3. What are the total cost and the unit cost of the completed job? (Round unit cost to 2 decimal places)
4. Prepare the entry to record the completion of the job.
Answer and Explanation:
As per the data given in the question, the calculation and journal entry is given below:
1)
Source documents for direct material is Material requisition slip, For direct labor is time tickets and for manufacturing overhead cost is predetermined overhead rate.
2)
Predetermined manufacturing overhead rate = 500 ÷ 400
= 1.25
= 125%
Hence, Predetermined overhead rate is 125% of labor cost.
3)
Total cost :
Direct material $4875 ($800 + $900 + $1600 + $1575)
Direct labor $1,300 ($400 + $300 + $600)
Manufacturing overhead $1,625 ($500 + $375 + $750)
Total cost $7,800 ($4875 + $1300 + $1625)
Now
Unit cost = Total cost ÷ Quantity
=$7,800 ÷ 2,500
= $3.12
4) The journal entry is
Finished goods inventory A/c Dr. $7,800
To Work in process inventory Cr. $7,800
(Being the completion of the job is recorded)
1. The source documents for each of the following is as follows:
direct material: the material requisition slip.direct labor: time tickets.manufacturing overhead costs: the predetermined overhead rate.2. The predetermined manufacturing overhead rate is 125% of the direct labor cost.
Computation:
[tex]\text{Predetermined Overhead rate}=\dfrac{\text{Manufacturing overhead cost}}{\text{Direct labor cost}}\times100\\\\=\dfrac{\$500}{\$400}\times100\\\\=125\%\;\text{of direct labor cost}[/tex]
3. The total cost of the completed job is $7,800, while the unit cost is $3.12.
Computation:
The total cost of the completed job is shown in the image attached below.
The unit cost is computed as follows:
[tex]\text{Unit Cost}=\dfrac{\text{Total Cost}}{\text{Total Quantity}}\\\\=\dfrac{\$7,800}{2,500}\\\\=\$3.12[/tex]
4. The journal entry to record the completion of the job is attached in the image below:
To know more about job costing, refer to the link:
https://brainly.com/question/15864934
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date Cash Interest Amortization Balance January 1, Year 1 $ 58,998 End of Year 1 $ 3,944 $ 3,717 $ 227 58,771 End of Year 2 ? ? ? 58,530 End of Year 3 ? ? 257 ? End of Year 4 ? 3,671 ? 58,000
Answer and Explanation:
The amortization schedule is presented below:
Date Cash Interest expense Amortization Balance
A B C = (A - B)
January 1, Year 1 $58,998
D
End of Year 1 $3,944 $3,717 $227 $58,771
E = D - C
End of Year 2 $3,944 $3,702.573 $241 $58,530
End of Year 3 $3,944 $3,687.39 $257 $58,273
End of Year 4 $3,944 $3,671 $273 $58,000
Working notes:
For computing the missing amount first we have to find out the interest expense rate which is
= $3,717 ÷ $58,998
= 6.30%
For year 2,
The interest expense is
= $58,771 × 6.30%
= $3,702.573
For year 3,
The interest expense is
= $58,530 × 6.30%
= $3,687.39
Joyful Gas Company an independent oil producer in Dallas, Texas. In March, company geologist discovered a pool of oil that tripled the company’s proven reserves. Prior to disclosing the new oil to the public, Joy Gas Company quietly bought most of its stock as treasury stock. After the discovery was announced, the company’s stock price increased from $5 to $28.
Please discuss and answer at least two the following questions:________.
1. What accounting principle is involved?
2. Who are the stakeholder’s?
Answer: 1. Full Disclosure
2. Please refer to Explanation
Explanation:
1. The Full Disclosure Principle in Accounting was enacted to reduce the Information Assymetry between the Management of a company and it's shareholders. Under this Principle, the company should endeavour to disclose any transaction or event that could materially affect the company's financial position by stating it in their financial statements as either an entry or a footnote. Joyful Gas Company should state the discovery of the oil as well as their efforts at repurchasing Treasury stock.
2. The Stakeholders in a company refer to any and all people or entities who have an interest in the company. This includes the Shareholders, the Government, creditors, employees, suppliers, the general public etc.
Jmes Graham Manufacturing is a small manufacturer that uses machine-hours as its
activity base for assigned overhead costs to jobs. The company estimated the
following amounts for 2019 for the company, for Job 62 and Job 63:
Company Job 62 Job 63
Direct materials $60,000 $4,500 $7,100
Direct labor $25,000 $2,500 $4,200
Manufacturing
overhead costs $72,000
Machine hours 90,000 1,350 3,100
During 2019, the actual machine-hours totaled 95,000, and actual overhead costs were $71,000. Job 62 consisting of 1,000 units and Job 63 consisting of 2000 units were completed during the month.
Instructions:
A) Compute the predetermined overhead rate.
B) Compute the total manufacturing costs for Job 62 and Job 63.
C) Compute the unit cost of Jobs 62 and 63.
D) How much overhead is over or underapplied for the year for the company? State amount and whether it is over- or underapplied.
E) If Graham Manufacturing sells Job 62 for $14,000 and $18,000 for Job 63, compute the gross profit.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Company - Job 62 - Job 63
Direct materials: $60,000 - $4,500 - $7,100
Direct labor: $25,000 - $2,500 - $4,200
overhead costs $72,000
Machine hours: 90,000 - 1,350 - 3,100
During 2019, the actual machine-hours totaled 95,000, and actual overhead costs were $71,000. Job 62 consisting of 1,000 units and Job 63 consisting of 2000 units were completed during the month.
A) To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= 72,000/90,000
Estimated manufacturing overhead rate= 0.8 per machine-hour
B) Total manufacturing cost= direct material + direct labor + allocated overhead
Job 62:
Total manufacturing cost= 4,500 + 2,500 + 0.8*1,350
Total manufacturing cost= $8,080
Job 63:
Total manufacturing cost= 7,100 + 4,200 + 0.8*3,100
Total manufacturing cost= $13,780
C) Unitary cost= total cost/ number of units
Job 62:
Unitary cost= 8,080/1,000= $8.08
Job 63:
Unitary cost= 13,780/2,000= $6.89
D) First, we need to apply overhead for the company as a whole:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 0.8*95,000
Allocated MOH= $76,000
Now, we can calculate the over/under applied overhead:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 71,000 - 76,000
Overapplied overhead= $5,000
E) Job 62= 14,000
Job 63= 18,000
Gross profit= sales - cost of goods sold
Job 62:
Gross profit= 14,000 - 8,080= $5,920
Job 63:
Gross profit= 18,000 - 13,780= $4,220
Why do globalization and increasing interdependence pose risks to the global
economy?
O A. Global production cannot be as efficient as national production.
B. Disruptions in one place have effects everywhere.
C. There is no consistent set of international regulations.
D. Worldwide competition leads to market concentration.
SUBMIT
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< PREVIOUS
Answer:
B.Disruptions in one place have effects everywhere is the correct answer.
Explanation:
Globalization and increasing interdependence have increased competition among the local and international business and because of advancement in globalization, the countries are dependent on each other to get resources that created an interdependence.
As the countries to run their business are interdependent on the countries and when there is any disruption in the one place it will have its impact everywhere as they are dependent on each other for the resources due this global economy gets affected.
Globalization and increasing interdependence has also unfavorable effect on the local economies.
Which of the following statements is most correct? a. Because taxes on long-term capital gains are not paid until the gain is realized, investors must pay the top individual tax rate on that gain. b. Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders. c. 70% of the dividends received by corporations is excluded from taxable income. d. 70% of the interest received by corporations is excluded from taxable income. e. The corporate tax system favors equity financing, as dividends paid are deductible from corporate taxes.
Answer:
Option C
Explanation:
In simple words, the dividends that are received by the corporations are considered to be tax deductible to avoid the common issue of double taxation of corporate incomes.
Such investments are considered to be return from investments and some jurisdictions even allow majority share holding in the investing asset also. Through default 70 per cent of distributions earned from companies hold 20 per cent or fewer are exempt. This will otherwise be better.
The deadweight loss associated with output less than the competitive level can be determined by A. subtracting the consumer surplus from the producer surplus associated with less output. B. summing the change in the total consumer and producer surplus from moving from the competitive level of output to less output. C. subtracting the competitive level producer surplus from the producer surplus associated with less output. D. summing the consumer and producer surplus associated with less output.
Answer:
C. subtracting the competitive level producer surplus from the producer surplus associated with less output
Explanation:
A deadweight loss refers to a cost to society created as a result of market inefficiency. Market inefficiency occurs when supply and demand are out of equilibrium. It is also known as excess burden.
Deadweight loss is also created due to taxes as they prevent people from purchasing things that they would otherwise as the final price of the product increases.
The deadweight loss associated with output less than the competitive level can be determined by subtracting the competitive level producer surplus from the producer surplus associated with less output
Use the following to answer question 80: Gross Corporation adopted the dollar-value LIFO method of inventory valuation on December 31, 2011. Its inventory at that date was $440,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows: Inventory at Current Current Prices Price Index December 31, 2012 $513,600 107 December 31, 2013 580,000 125 December 31, 2014 650,000 130 80. What is the cost of the ending inventory at December 31, 2013 under dollar value LIFO
Answer:
$465680
Explanation:
For calculating the ending inventory under the dollar value LIFO method we will follow the 2 steps given as under:
Step1:
Y = Current Price at year end / Price Index at that time
Step2:
Ending Inventory = Opening Inventory value + (Y - Opening Inventory Value) * Index Value
For the Year 2012
Step 1:
Y = 513,600 / 1.07 = $480,000
Step 2:
Ending Inventory = $440,000 + ($480,000 - 440,000) * 1.07 = $482,800
Similarly for the year 2013
Step 1:
Y = 580000 / 1.25 = $464,000
Step 2:
Ending Inventory = $440,000 + ($464,000 - $440,000) * 1.07 = $465,680
The answer is $465680.
Square Block Company is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 350,000 shares of stock outstanding. Under Plan II, there would be 225,000 shares of stock outstanding and $5 million in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes. a. If EBIT is $1,000,000, which plan will result in the higher EPS? b. If EBIT is $1,500,000, which plan will result in the higher EPS? c. What is the break-even EBIT?
Answer:
a. If EBIT is $1,000,000 Plan 1 will give higher EPS
b. If EBIT is $1,500,000 Plan 2 will give higher EPS
c. The break-even EBIT would be $ 1,400,000
Explanation:
a) In Plan 1
According to given data EBIT = $1,000,000
Since there is no debt, so there is no interest. Also there are no taxes
So , earnings avaliable to shareholders = $ 1,000,000
shares of stock outstanding = 350,000
EPS = 1,000,000 / 350,000 = 2.857
Plan 2
EBIT = $1,000,000
Debt = 5000000
Interest = 10% * 5000000 = $ 500000
So , EBIT -interest = $ 500000
Earnings avaliable to shareholders = $ 500000
shares of stock outstanding = 225000
EPS = 500000/ 225000= 2.222
So Plan 1 will give higher EPS
b) Plan 1
EBIT = $1,500,000
Since there is no debt, so there is no interest. Also there are no taxes
So , earnings avaliable to shareholders = $ 1,500,000
shares of stock outstanding = 350,000
EPS = 1,500,000 / 350,000 = 4.286
Plan 2
EBIT = $1,500,000
Debt = 5000000
Interest = 10% * 5000000 = $ 500000
So , EBIT -interest = $ 1000000
Earnings avaliable to shareholders = $ 1000000
shares of stock outstanding = 225000
EPS = 1000000/ 225000= 4.444
So Plan 2 will give higher EPS
c)
Let the breakeven EBIT be 'x'
So,
In breakeven EBIT both EPS for plan 1 and 2 will be same
So,
x / 350000 = ( x - 500000) / 225000
Solving for x , x= 1400000
Breakeven EBIT = $ 1,400,000
The Company is in the process of evaluating a new product using the following information: ∙ A new transformer has three production runs each year, each with $15,000 in setup costs. ∙ The new transformer incurred $45,000 in development costs and is expected to be produced over the next three years. ∙ Direct costs of producing the transformers are $55,000 per run of 5,000 transformers each. ∙ Indirect manufacturing costs charged to each run are $45,000. ∙ Destination charges for each transformer average $2.00. ∙ Customer service expenses average $0.40 per transformer. ∙ The transformers are selling for $20 the first year and will increase by $4 each year thereafter. ∙ Sales units equal production units each year. What is the estimated life-cycle operating income for the first year?
Answer:
total loss for first year = ($96,000)
Explanation:
direct costs per 5,000 transformers = $55,000, or $11 per unit
indirect manufacturing overhead per 5,000 transformers = $45,000 or $9 per unit
destination charges per transformer = $2 each
customer service expenses = $0.40 per transformer
sales price:
year 1 = $20 x 15,000 = $300,000
year 2 = $24 x 15,000 = $360,000
year 3 = $28 x 15,000 = $420,000
total revenue = $1,080,000
total costs:
development costs = $45,000
setup costs = $15,000 x 3 per year x 3 years = $135,000
direct costs = $11 x 45,000 units = $495,000
manufacturing overhead costs = $9 x 45,000 = $405,000
sales and administrative costs = $2.40 x 45,000 = $108,000
total = $1,188,000
total operating life cycle loss = $1,080,000 - $1,188,000 = -$108,000
life cycle operating loss for first year:
total revenue = $300,000
- setup costs = $45,000
- direct costs = $165,000
- manufacturing overhead costs = $135,000
- S&A costs = $36,000
- 1/3 of development costs = $15,000
total loss = -$96,000
Rauch Incorporated leases a piece of equipment to Donahue Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,892 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,000, a book value of $20,000, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Rauch set the lease payments with the intent of earning a 5% return, and Donahue is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.Prepare the lease amortization schedule(s) for Donahue for all 4 years of the lease. (Round answers to 0 decimal places, e.g. 5,275.)
Answer:
Explanation:
DONAHUE CORPORATION Lease Amortization Schedule Annuity-Due Basis Reduction of Interest on Liability Lease Liability Annual Payment Lease Liability 4892 4892 4 892 1/1/22 1 1/1/237 4892
Lease Expense Schedule Interest on Amortization of Lease Liability ROU Asset Lease Expense (Straight-Line) Date Carrying Value of ROU Asset 1/1/20 4892 290 4892 12/31/20 12/31/21 12/31/22 12/31/23 4892 4892
Date Account Titles and Explanation Debit Credit 1/1/20 | Right-of-Use Asset 182141 T 18214 Lease Liability (To record the lease) 1/1/20 Lease Liability 4,892 T 4,892 Cash (To record lease payment) 12/31/20 Lease Expense 4,892 Lease Liability Right-of-Use Asset
[1/1/21 || Lease Liability 4.8921T Cash 4,892 12/31/21 - || Lease Expense 4,8921T 1 PPPTT Lease Liability 22649 Right-of-Use Asset 22649
Date Account Titles and Explanation Debit Credit 1/1/20 Right-of-Use Asset 18214 Lease Liability 22649 Cash 22649 (To record the lease) 11/1/20 1/1/20 | Lease Liability Lease Liability 4,892 4,892 Cash (To record lease payment) [12/31/20 Lease Expense 4892 Lease Liability 22649 T Right-of-Use Asset 22649
The company's adjusted trial balance as follows includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Owner, Capital, $63,500; Owner, Withdrawals, $2,000; Sales, $56,000; Sales Returns and Allowances, $3,000; Sales Discounts, $1,500; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances.Prepare the second closing entry by selecting the account names and entering dollar amounts in the debit and credit columns.
Answer:
Dr. Sales, $56,000
Cr. Income Summary account $56,000
Dr. Income Summary account $52,500
Cr. Sales Returns and Allowances, $3,000
Cr. Sales Discounts, $1,500
Cr. Depreciation Expense, $25,000
Cr. Salaries Expense, $23,000.
Dr. Owner, Capital Account $2,000
Cr. Owner, Withdrawals, $2,000
Explanation:
All the incomes and expenses accounts are closed in Income summary accounts.
Owners withdrawals balance is adjusted in the owners capital account.
The accounts of Assets, Equity and Liabilities are not closed because these are permanent accounts.
All the following accounts are permanent account
Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Owner, Capital, $63,500; ;
Perpetual Inventory Using FIFO The following units of a particular item were available for sale during the calendar year:
Jan. 1 Inventory 4,000 units at $40
Apr. 19 Sale 2,500 units
June 30 Purchase 4,500 units at $44
Sept. 2 Sale 5,000 units
Nov. 15 Purchase 2,000 units at $46
The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column. Schedule of Cost of Goods Sold FIFO Method Purchases Cost of Goods Sold Inventory Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Jan. 1
Apr. 19
June 30
Sept. 2
Nov. 15
Dec. 31
Balances
Answer:
Explanation:
FIFO
Date PURCHASE COST OF MERCHANDISE SOLD INVENTORY
QUANTITY UNIT COST TOTAL COST QUANTITY UNIT COST TOTAL COST QUANTITY UNIT COST TOTAL COST
January 1 4000 40 160000
April 19
2500 40 100,000 1500 40 60000
June 30 4500 44 198,000 1500 40 60000
4500 44 198000
September 2 1500 40 60000 1000 44 44000
3500 44 154,000
November 15 2000 46 92,000 1000 44 44000
2000 46 92000
December 31 Balances 314,000 3000 136000
LIFO
Date PURCHASE COST OF MERCHANDISE SOLD INVENTORY
QUANTITY UNIT COST TOTAL COST QUANTITY UNIT COST TOTAL COST QUANTITY UNIT COST TOTAL COST
January 1 4000 40 160000
April 19 2500 40 100000 1500 40 60000
June 30 4500 44 198,000 1500 40 60000
4500 44 198000
September 2 500 40 20000
4500 44 198000 1000 40 40000
November 15 2000 46 92000 1000 40 40000
2000 46 92000
December 31 Balances 318,000 3000 132000
Keener Incorporated had the following transactions occur involving current assets and current liabilities during February 2017.
Feb. 3 Accounts receivable of $14,000 are collected.
7 Equipment is purchased for $27,800 cash.
11 Paid $2,300 for a 3-year insurance policy.
14 Accounts payable of $12,500 are paid.
18 Cash dividends of $5,700 are declared.
Additional information:
1. As of February 1, 2017, current assets were $130,200, and current liabilities were $49,300.
2. As of February 1, 2017, current assets included $15,900 of inventory and $1,000 of prepaid expenses.
(a) Compute the current ratio as of the beginning of the month and after each transaction.
(b) Compute the acid-test ratio as of the beginning of the month and after each transaction
Round answers to 1 decimal place, e.g. 1.6.)
Current ratio Acid-test ratio
February 1 :1 :1
February 3 :1 :1
February 7 :1 :1
February 11 :1 :1
February 14 :1 :1
February 18 :1 :1
Answer: Please refer to Explanation
Explanation:
The Current Ratio is calculated by dividing the Current Assets by the Current Liabilities.
The Acid-Test Ratio on the other hand is calculated by removing the Inventory from the Current Assets and then dividing that figure by the Current Liabilities.
February 1.
Current Ratio = Current Assets/Current Liabilities
= 130,200/49,300
= 2.65
Acid-Test Ratio = (Current Asset – Inventory) / Current Liability
= (130,200-15,900) / 49,300
= 2.32
February 3
Accounts Receivables collected is Cash moving from The Receivables to the Cash account. Both of them are Current Assets so no change.
Current Ratio = 2.65
Acid -Test Ratio = 2.65
February 7
Cash reduces by $27,800
Current Ratio = (130,200-27,800) / 49,300
= 2.08
Acid-Test Ratio = (130,200-27,800 - 15,900) / 49,300
= 1.75
February 11
Paying for the Insurance in advance is considered a Prepayment. Prepayments are Current Assets so cash simply moved from cash account to Prepayment so no change in Current Assets so both ratios remain the same.
Current Ratio = 2.08
Acid-test Ratio = 1.75
February 14.
Accounts Payable being paid reduces the Current Liabilities. It also reduces the cash account so both Current Liabilities and Current Assets will be reduced.
Current Ratio = (130,200-27,800-12,500) / (49,300-12,500)
= 89,900 / 36,800
= 2.44
Acid-Test Ratio = (130,200 - 27,800 - 15,900 - 12,500) / (49,300-12,500)
= 74,000/36,800
= 2.01
February 18
When Dividends are declared but not paid, there is no effect on the cash account. However, because they have been declared, they become a liability. This therefore increases the current Liability account.
Current Ratio = 89,900 / (36,800 + 5,700)
= 2.12
Acid Test Ratio = 74,000 / (36,800 + 5,700)
= 1.74
Call Systems Company, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period. Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of 1% of sales would have had on the amount of bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts:
Year Sales Uncollectible Accounts Written Off receivable written
1st $ 900,000 $4,500 $4,500
2nd 1,250,000 9,600 3,000 $6,600
3rd 1,500,000 12,800 1,000 3,700 $8,100
4th 2,200,000 16,550 1,500 4,300 $10,750
Required:
1. Assemble the desired data to prepare a schedule of bad debt expense. Enter all amounts as positive numbers.
Answer:
Year Sales Written Off Accounts
Year of Origin
Uncollectible 1 2 3
1st $ 900,000 $4,500 $4,500
2nd 1,250,000 9,600 3,000 $6,600
3rd 1,500,000 12,800 1,000 3,700 $8,100
4th 2,200,000 16,550 1,500 4,300 $10,750
Year Bad Debt Expense
Expense Actually Expense Increase Balance of Allowance
Reported Estimated (Decrease) Account Year End
1) $4500 $ 9000 $4500 $ 4500
2) $ 9600 $12500 1900 $ 6400
3) $12800 15000 2200 $ 8600
4) 16550 22000 5450 14,050
Explanation:
The actual write off accounts originating in the years were
1) ( $ 4500+ $ 3000+ $ 1000+ $ 1500)= $ 9500
2) ( $ 6600+ 3700+ 4300) = $ 14600
3) ($ 8100+ $ 10,750)= $ 18,850.
Only the first year written off accounts are close to expense if it would have been calculated to 1% of sales ( 1% of $ 900,000) = $ 9000
Trevor Smith contributed equipment, inventory, and $48,000 cash to a partnership. The equipment had a book value of $27,000 and a market value of $30,000. The inventory had a book value of $70,000, but only had a market value of $30,000, due to obsolescence. The partnership also assumed a $15,200 note payable owed by Smith that was used originally to purchase the equipment. Provide the journal entry for Smith's contribution to the partnership. If an amount box does not require an entry, leave it blank.
Answer:
Dr Cash.48000
Dr Inventory 30,000
Dr Equipment 30,000
Cr Notes Payable 15,200
Cr Trevor Smith, Capital 92,800
Explanation:
Trevor Smith Journal entry
Dr Cash 48000
Dr Inventory 30,000
Dr Equipment 30,000
Cr Notes Payable 15,200
Cr Trevor Smith, Capital 92,800
(108,000-15,200)
The following information is available for Larkspur Corporation for the year ended December 31, 2022.
Beginning cash balance $40,000
Accounts payable decrease 3,200
Depreciation expense 84,000
Accounts receivable increase 9,400
Inventory increase 12,300
Net income 257,000
Cash received for sale of land at book value 40,000
Sales revenue 745,000
Cash dividends paid 11,900
Income tax payable increase 4,000
Cash used to purchase building 140,500
Cash used to purchase treasury stock 30,100
Cash received from issuing bonds 269,000
Prepare a statement of cash flows using the indirect method.
Answer:
The statement of cash flows using the indirect method would be the following:
Cash flow statement for year ended December 31, 2022:
Description Amount Amount
Operating activities:
Net income $257,000
Adjustments to reconcile net income to net cash from operating activities
Add: Depreciation expense $84,000
Less: Decrease in accounts payable ($3,200)
Less: Increase in accounts receivable ($9,400)
Less: Increase in inventory ($12,300)
Add: Income tax payable increase $4,000
Net cash flows from operating activities $320,100
Investing activities:
Buildings purchased ($140,500)
Cash received from sale of land $40,000
Net cash flows from investing activities ($100,500)
Financing activities:
Dividends paid ($11,900)
Treasury stock purchased ($30,100)
Proceeds from bond issue $269,000
Net cash flows from financing activities $227,000
Net change in cash $446,600
Beginning cash balance $40,000
Ending cash balance $486,600
Explanation:
The statement of cash flows using the indirect method would be the following:
Cash flow statement for year ended December 31, 2022:
Description Amount Amount
Operating activities:
Net income $257,000
Adjustments to reconcile net income to net cash from operating activities
Add: Depreciation expense $84,000
Less: Decrease in accounts payable ($3,200)
Less: Increase in accounts receivable ($9,400)
Less: Increase in inventory ($12,300)
Add: Income tax payable increase $4,000
Net cash flows from operating activities $320,100
Investing activities:
Buildings purchased ($140,500)
Cash received from sale of land $40,000
Net cash flows from investing activities ($100,500)
Financing activities:
Dividends paid ($11,900)
Treasury stock purchased ($30,100)
Proceeds from bond issue $269,000
Net cash flows from financing activities $227,000
Net change in cash $446,600
Beginning cash balance $40,000
Ending cash balance $486,600
The average exchange rate during 2020 was $.96 = §1. The beginning inventory was acquired when the exchange rate was $1.20 = §1. The ending inventory was acquired when the exchange rate was $.90 = §1 and current market value of the inventory is higher than the acquisition cost. The exchange rate at December 31, 2020 was $.84 = §1. Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the U.S. dollar income statement?
Answer:
$11,613,600
Explanation:
Beginning Inventory 240 * rate at that date 1.20 = 288,000
Purchase 12,360, 000 * 0.96 average for the year = 11,865,600
Available for sale =(11,865,600+288,000)
12,153,600
Ending 600,000 * BalanceSheet HR .90 = 540,000
COGS =( 12,153,600-540,000) $11,613,600
Therefore Assuming that the foreign country had a highly inflationary economy, at what amount should the foreign subsidiary's cost of goods sold have been reflected in the U.S. dollar income statement will be $11,613,600
On January 1, 2012, Browning Corporation had 75,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:
Mar. 1 Issued 60,000 shares of common stock for $675,000
June 1 Declared a cash dividend of $2.00 per share to stockholders of record on June 15
June 30 Paid the $2.00 cash dividend
Dec. 1 Purchased 5,000 shares of common stock for the treasury for $18 per share
Dec. 15 Declared a cash dividend on outstanding shares of $2.50 per share to stockholders of record on December 31
Net income for 2012 amounted to $951,000.
Instructions
Prepare journal entries to record the above transactions.
Answer:
The solution are given as under:
Explanation:
Part 1. The entry would record common stock at part and the above par value would be paid in capital.
Dr Cash $675,000
Cr Common Stock $60,000
Cr Paid In Capital $615,000
Part 2. When dividend is declared, dividend payable must be recognized against the Retained Earnings.
Dividends Payable can be calculated by finding out the total shares on 15th of June, which is:
Total shares = Shares issued + Previously Held shares
= 75,000 + 60,000 = 135,000
Now the total dividend that is payable is:
Dividend Declared = Total Number of Shares * Dividend per share
= 135,000 Shares * $2 per share = $270,000
Dr Retained Earnings $270,000
Cr Dividend Payables $270,000
Part 3. The payment of dividends will decrease the dividend payables with $270,000, so the double entry would be:
Dr Dividend Payables $270,000
Cr Cash Account $270,000
Part 4. The purchasing of the treasury stock would be recorded as under:
Dr Treasury Stock $90,000 ..... $15 per share * 5000 shares
Cr Cash Account $90,000
Part 5. The cash dividend declared would be similarly the way we calculated in the part 3 but here we will also account for the treasury stock as under:
Total shares = Shares issued + Previously Held shares - Treasury Stock
= 75,000 + 60,000 - 5,000 = 130,000
Now the total dividend that is payable is:
Dividend Declared = Total Number of Shares * Dividend per share
= 130,000 Shares * $2.5 per share = $325,000
Dr Retained Earnings $325,000
Cr Dividend Payables $325,000
Dapper Corporation had only one job in process on May 1. The job had been charged with $1,010 of direct materials, $3,630 of direct labor, and $5,510 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $15.70 per direct labor-hour. During May, the following activity was recorded:Raw materials (all direct materials): Beginning balance $9,700Purchased during the month $25,000Used in production $31,400Labor: Direct labor-hours worked during the month 2,160Direct labor cost incurred $29,808Actual manufacturing overhead costs incurred $31,800Inventories: Raw materials, May 30 ?Work in process, May 30 $20,100Work in process inventory on May 30 contains $3,450 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.
Required:
1. The balance in the raw materials inventory account on May 30 was ___________.a) $3,180b) $3,820c) $3,300d) $3,420
Answer:
ending inventory= $3,300
Explanation:
Giving the following information:
Raw materials (all direct materials):
Beginning balance $9,700
Purchased during the month $25,000
Used in production $31,400
To calculate the ending balance for Direct materials, we need to use the following formula:
Direct material used= beginning inventory + purchases - ending inventory
31,400= 9,700 + 25,000 - ending inventory
ending inventory= 3,300
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2021, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2024, and expire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. What is the correct entry to record the exercise of 90% the options on April 15, 2024, when the market price of the stock was $8?
Answer:
Debit Cash for $270,000
Debit Paid-in capital-stock options for $54,000
Credit Common stock for $54,000
Credit Paid-in capital—excess of par for $270,000
Explanation:
Cash from he exercise of 90% = 60,000 * 90% * $5 = $270,000
Paid-in-capital for the stock options = $60,000 * 90% = $54,000
Common stock = 60,000 * 90% * $1 = $54,000
The the correct entry to record the exercise of 90% the options on April 15, 2024, when the market price of the stock was $8 will now be as follows:
Details Dr ($) Cr ($)
Cash 270,000
Paid-in capital-stock options 54,000
Common stock 54,000
Paid-in capital—excess of par 270,000
To record the exercise of 90% of the stock options.
iSooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero salvage value. The market value of the spotter truck is currently $32,000. iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck. The new spotter truck will reduce variable manufacturing costs by $25,000 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck (ignoring the time value of money) is:
Answer: $36,000 increase.
Explanation:
Cost of keeping Current Truck.
The cost of keeping the current truck will be the Opportunity Cost of not purchasing the New truck.
The New truck is capable of reducing Manufacturing costs by $25,000 a year for 5 years so,
Cost of Keeping Current Truck = 25,000 * 5
= $125,000
Cost of buying new truck
It is given that if the company trades in the old truck they get a $31,000 reduction.
The Cost Price of the new truck is therefore,
= 120,000 - 31,000
= $89,000
The difference between the costs will be,
= 125,000 - 89,000
= $36,000
If buying a new truck will reduce expenses by $36,000 then that means it will increase income by $36,000.
More Competition: You are in a head-to-head battle with your arch competitor, Evil Enterprises. One of your co-workers approaches you. He has recently joined your company after having worked for a second competitor for several years. He suggested, "I made notes on all of Evil's bids when I could get the data. They use some clear cost standards. Would you like me to bring my notes to the office tomorrow and let you look through them?
Explanation:
In this case, there may be an ethical dilemma, so it is necessary to analyze where the information collected by your co-worker arose.
It would be important to analyze whether he got this information through an open registration and after bids have been opened or the information was compiled illegally.
In case the information is obtained in a legal way, it would be important for the company to study the data of Evil enterprises in order to understand its bidding strategy and outline a strategy so that its company also remains competitive in the market.
Waterway Industries makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $0.60 $ 5500 Shipping 1.20 Advertising 0.30 Executive salaries 42000 Depreciation on office equipment 8300 Other 0.35 30000 Expenses are paid in the month incurred. If the company has budgeted to sell 8000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?
Answer:
$19,600
Explanation:
Waterway Industries
Total budget variable selling and administrative
Sales commissions$0.60
Shipping1.20
Advertising0.30
0thers 0.35
Total 2.25
Hence:
2.45 ×8,000
=$19,600
Therefore the total budgeted variable selling and administrative expenses for October will be 19,600
Consider a medium-sized company that has decided to begin using project management in a wide variety of its operations. As part of their operational shift, they are going to adopt a project management office somewhere within the organization. Make an argument for the type of PMO it should adopt (weather station, control tower, or resource pool). What are some of the key decision criteria that will help it determine which model makes most sense
ANSWER:
The company's PMO should adopt resource pool model, because this model will make the project managers to participate in every aspect of the company's project, as one project manager will be involved in one or more operation. Since the company wants to use project management in a wide varieties of it's operations, and not only to determine it's operational shifts.
EXPLANATION:
Project management office are those central office in an organization, that helps to uphold the organizations standard, practice, culture, and procedures, when executing a project.
If the PMO should adopt weather station model, that means it will only forecast the outcome of any decisions the company makes on the project. And this is not the best approach to the company's need at the moment. The company need to improve on it's performance and not forecasting the outcome of it's operations.
If the PMO should adopt control tower, that means the office will only direct and guild the workers on how best to execute their task in accordance with the company's standard. This model will not allow the project managers to involve in the operations of the company. This will not be a good help to the company because the project managers will only teach and guild the staffs on how best to execute the job, but will not be available to work in hands with them during the job task. These can reduce the efficiency of the project.