Toni Prevosti is opening a new business, Prevosti Farms and Sugarhouse, which is a small company that will harvest, refine, and sell maple syrup products. In subsequent chapters, you will have the opportunity to establish payroll records and complete payroll information for Prevosti Farms and Sugarhouse.
Toni has decided that she needs to hire employees for the business to grow. Complete the application for Prevosti Farms and Sugarhouse’s Employer Identification Number (Form SS-4) with the following information:
Prevosti Farms and Sugarhouse is located at 820 Westminster Road, Bridgewater, Vermont, 05520 (which is also Ms. Prevosti's home address), phone number 802-555-3456. Bridgewater is in Windsor County. Toni, the responsible party for a Limited Liability Corporation with one member, has decided that Prevosit Farms and Sugarhouse will pay its employees on a biweekly basis. Toni’s social security number is 055-22-0443. The beginning date of the business is February 1, 2017. Prevosti Farms and Sugarhouse will use a calendar year as its accounting year. Toni anticipates that she will need to hire six employees initially for the business, three of whom will be agricultural and three who will be office workers. The first date of wage disbursement will be February 13, 2017. Toni has not had a prior EIN.
Prepare Form SS-4 for Prevosti Farms.
Answers
Please find full question and answer attached
Answer and Explanation:
We have attached the form SS-4 and filled the details necessary for Prevosti Farms and Sugarhouse's application for Employment identification number(EIN) using the information in the question. Note :Employment identification number(EIN) here is issued to Prevosti Farms and Sugarhouse by IRS here for the purposes of tax filing and reporting.
Related Questions
Saddleback manufacturing ltd. purchased 5,000 shares of its own previously issued $10 value common stock for $95,000. Thes 5,000 would be considered
Answers
Answer:
The Purchased 5,000 shares at $95,000 would be considered as Treasury stock and it will be treated as Asset
Explanation:
Journal Entry Debit Credit
Treasury stock $95,000
Cash $95,000
The 5,000 shares should be considered as authorized , issued and outstanding shares although they are deducted from paid in capital under stockholders equity section.
Critical Thinking Questions What investment options are open to Natasha? What chance does she have of earning a satisfactory return if she invests her $15,000 in (a) bluechip stocks, (b) growth stocks, (c) speculative stocks, (d) corporate bonds, or (e) municipal bonds?
Answers
Explanation:
Remember, a good investment is one that provides extra returns also called profit. Thus, Natasha faces the grim reality of accepting a certain percentage of risk for whatever investment choice she decides.
However, in terms of risk, the $15,000 could best be preserved in corporate bonds.
The common stock of Flavorful Teas has an expected return of 14.31 percent. The return on the market is 9 percent and the risk-free rate of return is 3.1 percent. What is the beta of this stock
Answers
Answer:
the beta of this stock is 1.90.
Explanation:
The Expected Return of a Equity stock is the cost of equity to the company.
The cost of equity can be determined by using the Capital Asset Pricing Model (CAPM) as follows :
Cost of Equity = Return on a risk free security + Beta × Market Risk Premium
Where,
Market Risk Premium = Return on Market - Return on a risk free security
14.31 % = 3.10 % + Beta × (9.00 % - 3.10 %)
14.31 % = 3.10 % + Beta × 5.90 %
11.21 % = Beta × 5.90 %
Beta = 1.90
In an economy with a population of 100 million persons, 50 million hold civilian jobs and 20 million are not working but are looking for a job. The unemployment rate is
Answers
half, 50%, have jobs and 20% are looking for jobs
Explanation:
Tranquility Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $ 70 and each ceiling fan requires 3 hours of machine time to manufacture. There is no direct labor. Additional information is as follows:________.
Activity Allocation Base Predetermined Overhead Allocation Rate
Materials handling Number of parts $ 0.08
Machining Machine hours 7.6
Assembling Number of parts 0.2
Packaging Number of finished units 2.7
What is the total manufacturing cost per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)
Answers
Answer:
unitary manufacturing cost= $101.1
Explanation:
Giving the following information:
Each ceiling fan has 20 separate parts.
The direct materials cost is $70 and each ceiling fan requires 3 hours of machine time to manufacture.
Activity Allocation Base Predetermined Overhead Allocation Rate
Materials handling Number of parts $ 0.08
Machining Machine hours 7.6
Assembling Number of parts 0.2
Packaging Number of finished units 2.7
First, we need to allocate overhead using the following formula:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Materials handling= 0.08*20= $1.6
Machining= 7.6*3= $22.8
Assembling= 0.2*20= $4
Packaging= 2.7*1= $2.7
Total allocate overhead per unit= $31.1
Now, we can calculate the unitary manufacturing cost:
unitary manufacturing cost= 70 + 31.1
unitary manufacturing cost= $101.1
A magazine meant for retail executives describes the latest initiatives in the retail industry. According to the classification of magazines by content, this is a(n) ________ publication.
Answers
Answer: trade publication
Explanation: a publication that describes the latest initiatives in the retail industry is an example of a trade publication which is one that shares information between people (retail executives in this instance) within a specific industry (retail industry in this instance. This is done with the aim of improving businesses or fields in addition to keeping abreast of market trends. This makes such publications very useful for filed-specific research.
Aide Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales $17,560,000 Net operating income $1,071,160 Average operating assets $4,300,000 The division's return on investment (ROI) is closest to
Answers
Answer:
24.91%
Explanation:
The formula for return on investment is given as;
Net operating income / Average operating assets
= $1,071,160 / $4,300,000
= 24.91%
Therefore, return on investment is 24.91%.
The current price of a stock is $55. Calculate the value of an American put option on the stock using a two-step binomial tree given the following information.
The strike price of the option, K = $57, each time step is one year, the risk-free interest rate,
r = 5%, u =1.25, d = 0.8, and p = 0.6282
Answers
Answer:
$5.95
Explanation:
Risk neutral probability, [tex]$ q = \frac{(1+u)^t - d}{u-d} $[/tex]
= [tex]$ \frac {1.05-0.8}{1.25-0.8} = 0.5556 $[/tex]
The value of stock lattice is shown below :
85.9375
68.75 55
55 44 35.2
t=0 t=1 t=2
Value of the American put option when the stock price is $85.9375 at t=2
= max(57-85.9375,0) = 0
The value of the American put option when the stock price is $55 at t=2
= max(57-55,0) = 2
The value of American put option when the stock price is $85.9375 at t=2
= max(57-35.2,0) = 21.8
The value of a American put option when the stock price is $68.75 at t=1
= max [tex]$ \frac{0.5556 \times 0 + 0.4444 \times 2}{1.05,57 - 68.75,0} $[/tex] = $0.84656
The value of the American put option when stock price is $44 at t=1
= max [tex]$ \frac{0.5556 \times 2 + 0.4444 \times 21.8}{1.05,57 - 44,0} $[/tex] = $13
The value of American put option today when the stock price is $55 at t=0
= max [tex]$ \frac{0.5556 \times 0.84656 + 0.4444 \times 13}{1.05,57 - 55,0} $[/tex] = $ 5.95
Thus, the value of American put option today is $5.95
The range of S is 74 while that of P is 37 across the two states. What is the hedge ratio of the put
Answers
This question is incomplete, the complete question is;
We will derive a two-state put option value in this problem.
Data: S₀ = 106; X = 112; 1 + r = 1.12. The two possibilities for ST are 149 and 75.
The range of S is 74 while that of P is 37 across the two states. What is the hedge ratio of the put
Answer: the hedge ratio of the put H = - 1/2 ≈ - 0.5
Explanation:
Given that;
S₀ = 106, X = 112, 1 + r = 1.12
Us₀ = 149 ⇒ Pu = 0
ds₀ = 75 ⇒ Pd = 37
To find the Hedge ratio using the expression
H = Pu - Pd /Us₀ - ds₀
so we substitute
H = 0 - 37 / 149 - 75
H = - 37/ 74
H = - 1/2 ≈ - 0.5
Childers Company, which uses a perpetual inventory system, has an established petty cash fund in the amount of $400. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts: December 4 Freight charge for merchandise purchased $ 62 December 7 Delivery charge for shipping to customer $ 46 December 12 Purchase of office supplies $ 30 December 18 Donation to charitable organization $ 51 If, in addition to these receipts, the petty cash fund contains $201 of cash, the journal entry to reimburse the fund on December 31 will include:
Answers
Answer:
A credit to Cash of $299
Explanation:
Journal Entry Debit Credit
Merchandise inventory $62
Delivery charges $46
Office supplies $30
Miscellaneous expenses $51
Cash over and short $100
Cash $299
Cash to be reimbursed = Minimum cash balance required - Cash balance left
Cash to be reimbursed = $500 - $201
Cash to be reimbursed = $299
Summerdahl Resort's common stock is currently trading at $39.00 a share. The stock is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity?
Answers
The question is incorrect as the dividend at the end of the year is given at $1.5 which is also the D1. So the correct question is,
Summerdahl Resort's common stock is currently trading at $39.00 a share. The stock is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50), and the dividend is expected to grow at a constant rate of 5% a year. What is its cost of common equity?
Answer:
The cost of common equity is 8.85%
Explanation:
The constant growth model of DDM values a stock whose dividends are expected to grow at a constant rate indefinitely. The model calculates the value of the stock today based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D1 / (r - g)
Where,
P0 is price todayD1 is the dividend expected at the end of the year or Year 1r is the cost of equityg is the growth rate in dividendsPlugging in the values for all the available variables, we can calculate the value of r.
39 = 1.5 / (r - 0.05)
39 * (r - 0.05) = 1.5
39r - 1.95 = 1.5
39r = 1.5 + 1.95
r = 3.45 / 39
r = 0.08846 or 8.846% rounded off to 8.85%
a pension fund has an average duration of its liabilities equal to 15 years. the fund is looking at 8-year maturity zero-coupon bonds yield perpetuities to immunize its interest rate risk how much of its portfolio should it allocate to the zero-coupon bonds to immmunize if there are no other assets funding the plan
Answers
Answer:
a = 27.6%
Explanation:
The computation of the allocation of zero coupon bonds is shown below:
But before that we need to determine the following calculations
Duration of perpetuity is
= 1.06 ÷ .0.06
= 17.67 years
Now the equation should be
Let us assume the allocation of zero coupon bond be a
15 years = a × 8 + (1 - a) × 17.67
15 years = 8a + 17.67 - 17.67a
-2.67 = -9.67a
a = 27.6%
Lance Production Company has the following information:
Standard fixed factory overhead rates per direct labor-hour $1.50
Standard variable factory overhead rates per direct labor-hour $5.00
Actual number of units produced 6,000 units
Actual factory overhead costs (includes $70,000 fixed) $78,000
Actual direct labor hours 6,000 hours
Standard factory overhead rates are based on a normal monthly volume of 5,000 units (1 standard direct labor-hour per unit)
What is Lance's variable overhead efficiency variance?
A. $4,000 (F)
B. $3,000 (F)
C. $6,000 (U)
Answers
Answer:
$0
Explanation:
Variance overhead efficiency variance = (Standard hours - Actual hours) * Standard variable overhead rate
= (6,000 hours * $1) - 6,000 hours * $5
= (6,000 hours - 6,000 hours) * $5
= 0 * $5
= $0
Thus, the Variance overhead efficiency variance = $0
Mill Company began operations on January 1,2017, and recognized income from construction-type contracts under different methods for tax purposes and financial reporting purposes. Information concerning income recognition under each method is as follows:
Year Tax Purposes Book Purposes
2017 $400,000 $ 0
2018 625,000 375,000
2019 750,000 850,000
Required Assume the income tax rate is 35% in all years and that Mill has no other temporary differences. In its December 31, 2019, balance sheet, what amount of deferred income taxes should Mill report? Indicate whether the amount is an asset or a liability.
Answers
Answer:
i. Deferred income taxes balance on December 2019 is $192,500
ii. Deferred tax asset.
Explanation:
Year Tax purpose Book purpose Difference Deferred tax book
2017 $400,000 $0 $400,000 $140,000
2018 $625,000 $375,000 $250,000 $87,500
2019 $750,000 $850,000 ($100,000) ($35,000)
Deferred tax asset balance on December 2019 = $192,500
Working
Deferred tax book
2017 = 400,000 * 35% = $140,000
2018 = 250,000 * 35% = $87,500
2019 = (100,000) * 35% = ($35,000)
ii. Book income is less than tax income in 2017 and 2018. Deferred tax asset would be accounted. Book income is higher than tax income in 2019. Deferred tax asset would be reverse (i.e. deferred tax liability). Balance at the end of December 31, 2019 would be Deferred tax asset.
Stocks that don't pay dividends yet
Goodwin Technologies, a relatively young company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. She expects Goodwin to pay a $5.5000 dividend at that time (D $5.5000) and believes that the dividend will grow by 28.60% for the following two years (D4 and D5). However, after the fifth year, she expects Goodwin's dividend to grow at a constant rate of 4.38% per year.
Goodwin's required return is 14.60%. Fill in the following chart to determine Goodwin's horizon value at the horizon date when constant growth begins and the current intrinsic value. To increase the accuracy of your calculations, carry the dividend values to four decimal places.
Term Value
Horizon value
Current Intrinsic value
Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is______.
Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:
Goodwin's investment opportunities are poor.
Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
A. True
B. False
Answers
Answer:
horizon value at year 5 = $94.3444
current intrinsic intrinsic value P₀ = $47.73
Assuming that the markets are in equilibrium, Goodwin's current expected dividend yield is and Goodwin's capital gains yield is 0(it pays no dividends).
Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:
Goodwin's investment opportunities are poor.
Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
B. False
Generally companies that are experiencing a rapid growth do not pay dividends, because they need all the cash that they can use to finance their expansion. Sometimes mature companies that have a steady growth rate will also choose not to pay dividends because they consider themselves as solid investments and not paying dividends allows them to grow more and should increase stockholders' wealth more.
Explanation:
D₃ = $5.50
D₄ = $7.073
D₅ = $9.096
D₆ = $9.642 (and a constant growth rate of 4.38%
Re = 14.60%
horizon value at year 5 = $9.642 / (14.6% - 4.38%) = $94.3444
intrinsic value P₀ = $94.3444 / 1.146⁵ = $47.73
Supposing that the markets are in equilibrium, Goodwin's current common dividend yield is and Goodwin's capital gains result is 0(it pays no dividends). False.
What is Markets Equilibrium?
The horizon value at year 5 is = $94.3444
current intrinsic intrinsic value P₀ is = $47.73
Considering when the markets are in equilibrium, Also Goodwin's current common dividend yield is and also Goodwin's capital gains yield is 0(it pays no dividends).
Goodwin has been extremely successful, but it hasn't paid a premium yet. It disseminates a report to its key investors including the subsequent declaration:
Goodwin's investment opportunities are lacking.
B. False
Commonly, companies that are undergoing rapid evolution do not pay dividends, because they require all the cash that they can use to finance their development.
Sometimes when mature companies that have a steady growth rate will also when choose not to pay dividends because they consider themselves solid investments and not paying dividends allows them to grow more and also should increase stockholders' wealth more.
Then, D₃ = $5.50
After that, D₄ = $7.073
Then, D₅ is = $9.096
After that, D₆ = $9.642 (and a constant growth rate of 4.38%
Then, Re = 14.60%
Then, horizon value at year 5 = $9.642 / (14.6% - 4.38%) = $94.3444
Therefore, intrinsic value P₀ = $94.3444 / 1.146⁵ = $47.73
Find more information about Markets Equilibrium here:
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What is the preferred order (highest preference to lowest preference) of the materiel solution alternatives outlined in the Defense Acquisition System:
Answers
Answer:
The answer is below
Explanation:
The preferred order (highest preference to lowest preference) of the materiel solution alternatives when a new development is expected to meet a requirement outlined in the Defense Acquisition System, is given as follows:
1. Identify the preferred order of materiel solutions specified in the Joint Capabilities.
2. Integration and Development System (JCIDS)
3. Defense Acquisition System
We discussed three sorting algorithms in Business 350. Which of the following was not one of those sorting algorithms?
A. Shell Sort
B. Tree Sort
C. Bubble Sort
D. Trickle Sort
Answers
Answer:
Correct Answer:
D. Trickle Sort
Explanation:
A Sorting Algorithm is used to rearrange a given array or list elements according to a comparison operator on the elements. From the ones listed, only Trickle Sort is not part of it.
A car manufacturer is considering locating an assembly plant in your region.
A. List a simple, a intermediate and a complex problem associated with this proposal?
B. What is NIMBY? Dos this come into play for this complex decision?
Answers
Answer: Perception of the society towards this.
Explanation:
When citing an industry or production site in a locality most often capital is required to get this done but in many scenario capital doesn't seems to be the problem, as the location where these industry is aimed to be planted may likely have an issue with the residents of that environment as regards planting the industry. Some times these opposition is done for obvious reasons as regards health consideration which comes with noise and air pollution but some other times there may be unjustifiable reasons for these not to be planted, probably due greed or the community seeks a share in the resources or return in investment when the firm is planted in their resident. This is a complex problem.
A simple problem would be closeness to the market. If the product in question is desired by the residents in that area, even though the manufacturer might want to be exporting but it'll be a big plus if the residents consider his products more than the external environment.
Nimby can defined as when an individual or a group opposes a decision for the citing of infrastructure and industies in their environment, claiming them to be hazardous to the residents of the environment.
This comes into play for the complex decision because if those residing in the environment don't give a "go ahead" for planting of the industry it won't be successful.
Suppose an investment offers to triple your money in 48 months (don't believe it). Required: What rate of return per quarter are you being offered? ?
a) 9.59%
b) 7.82%
c) 5.31%
d) 6.4%
e) 711%
Answers
Answer:
Rate of return per quarter = 7.11%
Explanation:
The rate of return is the percentage return earned if compounding is done quarterly. It can be worked as follows:
r= (FV/PV - 1)- 1× 100
r- rate of return
FV= Future value of the investment after 48 months
PV= Amount invested now
Let the amount invested i.e PV be 10.
If the investment is tripped, the sum earned would be 3×10 = 30
DATA
FV- 30
PV- 10
n-48/3= 16
r= ?
r = ((30/10)^1/16 -1 )× 100
r= 7.1075 × 100 = 7.11%
r= 7.11%
Rate of return per quarter = 7.11%
If the commercial mortgages on the balance sheet of this bank decline in value then the value of the bank's equity will rise.a. Trueb. False
Answers
Answer: False
Explanation:
According to the Accounting equation, the debit side must equal the credit side.
The Commercial mortgages for this bank are on the debit side so if they reduce, the credit side will have to reduce as well to remain in balance.
The Equity will therefore not rise but rather decrease in value so that the two sides will be balanced.
Use the two state call option value in this problem. Data: S0=130 ; X=143 ; 1+r=1.1. The two possibilities for ST are 160 and 109. Calculate the value of a call option on the stock with an exercise price of $143.
Answers
Answer:
10.3
Explanation:
The computation of the value of a call option is shown below:
But before that we need to do the following calculations
P = (r - d) ÷ (u - d)
where
r = 1.1
d = down price ÷ current price
= 109 ÷ 130
= 0.838
u = up price ÷ current price
= 160 ÷ 130
= 1.231
Now placing these values
= (1.1 - 0.838) ÷ (1.231 - 0.838)
= 0.6667
Now the value of the call option is
= (cu × p) + cd × (1 - p) ÷ R
= (17 × 0.6667) + 0 × (1 - 0.6667) ÷ 1.1
= 10.3
The cu could come from i.e. payoff in that case when the option is exercised
= 160 - 143
= 17
cd = payoff in that case when the option is not exercised
Laser World reports net income of $600,000. Depreciation expense is $45,000, accounts receivable increases $12,000, and accounts payable decreases $25,000. Calculate net cash flows from operating activities using the indirect method
Answers
Answer:
$608,000
Explanation:
For the indirect method, the below steps are applicable.
Net income $600,000 + Add non cash expense (depreciation) $45,000
= $645,000
We will need to account for changes in assets; which is add sources of cash and subtract use of cash. Therefore, net cash flow from operating activities is ;
= $645,000 + (-$25,000) + (-$12,000)
= $645,000 - $25,000 - $12,000
= $608,000
Note: The above negative signs indicates cash usage which reduces accounts payable and increases accounts receivable.
The return on investment can be obtained by multiplying return on equity times asset turnover.
A. True
B. False
Answers
Answer: B. False
Explanation: The return on investment defined as the benefit gained by an investor from an investment can not be obtained by multiplying return on equity times asset turnover making the assumption or statement wrong. However, the return on investment can be obtained by multiplying return on sales, which is a measure of how a firm turns sales into revenue, times asset turnover.
On January 1, 2021, Julee Enterprises borrows $31,000 to purchase a new Toyota Highlander by agreeing to a 8%, 4-year note with the bank. Payments of $756.80 are due at the end of each month with the first installment due on January 31, 2021.
Record the issuance of the note payable and the first two monthly payments. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Answers
Answer:
January 1, 2021, received loan from bank to purchase a Toyota Highlander.
Dr Toyota Highlander 31,000
Cr Notes payable 31,000
January 31, 2021, first installment paid on bank loan (8% interest rate)
Dr Interest expense 203.84
Dr Notes payable 552.96
Cr Cash 756.80
interest expense = $31,000 x 8% x 30/365 = $203.84
February 28, 2021, second installment paid on bank loan (8% interest rate)
Dr Interest expense 186.85
Dr Notes payable 569.95
Cr Cash 756.80
interest expense = ($31,000 - $552.96) x 8% x 28/365 = $186.85
A CEO decides that too many managers have made the company top heavy and wants to make the company leaner and faster. The CEO lays off 50 employees and forms a new structure that gives the remaining workers much more flexibility. What process has the CEO just executed
Answers
Answer:
Delayering
Explanation:
Delayering in any organizational setting is the removal of a particular level of management. It could lead to profit maximization for an organization because removals of such would cause a great reduction in the costs of paying for labour. In other organizations though, delayering may have negative consequences especially on the profits of the organization.
The contribution margin ratio of Kuck Corporation's only product is 75%. The company's monthly fixed expense is $456,000 and the company's monthly target profit is $42,000. Determine the dollar sales to attain the company's target profit.
Answers
Answer:
$664,000
Explanation:
Kuck corporation has a product whose contribution margin ratio is 75%
= 75/100
= 0.75
The company has a fixed expense of $456,000
The company has a target profit of $42,000
Based on the values above, the dollar sales to attain the company's target profit can be calculated as follows
Dollar sales to reach target profit = (Target profit + fixed expenses) /Contribution margin ratio
= ($456,000+$42,000)/75/100
= $498,000/0.75
= $664,000
Hence the dollar sales to reach the required company's target profit is $664,000
The network marketing sales system works by recruiting independent businesspeople who act as distributors.
a) true
b) false
Answers
Answer: False
Explanation:
The above statement that network marketing sales system works by recruiting independent businesspeople who act as distributors is wrong.
It is the multilevel marketing sales system works by recruiting independent businesspeople who then act as distributors.
What is a budget, what is the goals of a budget, and what are the three functions of budgeting, including their chief criticisms
Answers
Explanation:
A budget is an accounting tool used to estimate expected outcome; about sales, expenses etc for a certain period of time.
The goals of a budget is to have an overview of expected cost or to even attain certain goals. For example, one may write a budget for building a new house in order to have a realistic goal in mind.
Some three functions of budgeting includes;
1. Performance monitoring: a company may budget it's expenses for an entire year and after the budget period look back towards seeing how well they performed as regards keeping to their budget.
2. Income forecasting: budgeting allows a company to estimate expected income; an information that is used to get investors.
3. Decision making: a good budget serves to enable proper decision making. For example, a sales budget can help company know where to focus their resources.
Two Criticism of budget:
1. It is prone to errors.
2. It considers only financial results; often excluding behaviorial tendencies etc
Answer:
A budget is an accounting tool used to estimate expected outcome; about sales, expenses etc for a certain period of time.
Explanation:
Journalizing Business Transactions Prepare journal entries for each of the following transactions.
(a) Issue stock for $1,000 cash
(b) Purchase inventory for $500 cash
(c) Sell inventory from (b) for $2,000 on credit
(d) Record $500 for cost of inventory sold in (c)
(e) Receive $2,000 cash on receivable from (c)
Answers
Answer:
a.
Cash $1000 Dr
Common stock $1000 Cr
b.
Purchases $500 Dr
Cash $500 Cr
c.
Accounts Receivable $2000 Dr
Sales Revenue $2000 Cr
d.
Cost of Goods Sold $500 Dr
Inventory Account $500 Cr
e.
Cash $2000 Dr
Accounts Receivable $2000 Cr
Explanation:
a.
The cash received as a result of issuing shares is debited as cash is increasing while as the capital is increasing so common stock is credited.
b.
The inventory is purchased for cash so cash is credited and purchases are debited.
c.
The sale of inventory on credit means a debit to the accounts receivable account for the amount of sale and a credit to sales revenue.
d.
When inventory is purchased, we debit the purchases account and credit either cash or accounts payable.
Later on, we transfer the purchases to the inventory amount as it is purchased for the intention of sale. Thus, we credit the purchases account and debit the inventory account.
When a sale is made, we debit the cost of goods sold by the amount of inventory sold and credit the inventory account.
e.
Cash is received so it will be debit and accounts receivable be credited.
A record is the act of recording or staying abreast of any financial or non-financial activity. An accounting journal records transactions and illustrates an industry's card payment balances.
Each writing in the published article can be either a deduction or a profit.
The Journal entries of each of the transactions have been attached below.
To know more about the Journal entries of the various transactions, refer to the link below:
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The following data has been provided for a company’s most recent year of operations: Return on investment 20% Average operating assets $ 100,000 Minimum required rate of return 15% The residual income for the year was closest to:
Answers
Answer:
$5,000
Explanation:
The return on investment is 20%
= 20/100
=0.2
The average operating assets is $100,000
The minimum required rate of return is 15%
= 15/100
= 0.15
The first step is to calculate the net operating assets
= ROI× average operating assets
= 0.2×100,000
= $20,000
Therefore, the residual income can be calculated as follows
= Net operating income-(minimum required rate of return×average operating assets)
= $20,000-($100,000-0.15)
= $20,000-15,000
= $5,000
Hence the residual income for the year was closest to $5,000